QINGMEI GROUP HOLDINGS LIMITED 清美集團控股有限公司

Transcription

1 APPENDIX DATED 10 OCTOBER 2014 This Appendix is circulated to shareholders of Qingmei Group Holdings Limited (the Company ) together with the Company s Annual Report Its purpose is to explain to shareholders the rationale and provide information relating to the proposed renewal of the Share Purchase Mandate (defined herein) to be tabled at the Annual General Meeting to be held on 31 October 2014 at 4:00 p.m. at Octagon Function Room, Level 1 of the Golf Club House, Orchid Country Club, 1 Orchid Club Road, Singapore, The Notice of the Annual General Meeting and Proxy Form are enclosed with the Company s Annual Report This Appendix has not been examined or approved by the Singapore Exchange Securities Trading Limited ( SGX-ST ). The SGX-ST assumes no responsibility for the accuracy or correctness of any of the statements or opinions made or reports contained in this Appendix. QINGMEI GROUP HOLDINGS LIMITED 清美集團控股有限公司 (Registration No. CT ) (Incorporated in the Cayman Islands on 28 August 2009) APPENDIX TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE

2 DEFINITIONS For the purpose of this Appendix, the following definitions have, where appropriate, been used: 2011 Mandate : Has the meaning ascribed to it in paragraph 2 of this Appendix 2013 Mandate : The Share Purchase Mandate obtained on 30 October 2013 AGM : The annual general meeting of the Company, to be held on 31 October 2014, notice of which is given on pages of the Company s Annual Report 2014 Appendix : This appendix to Shareholders dated 10 October 2014 in relation to the renewal of the Share Purchase Mandate Articles : The articles of association of the Company, as amended from time to time Board : The board of Directors of the Company Cayman Companies Law : The Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands CDP : The Central Depository (Pte) Limited Company : Qingmei Group Holdings Limited 清美集團控股有限公司, an exempted company with limited liability incorporated under the laws of the Cayman Islands on 28 August 2009 Controlling Shareholder : In relation to a corporation, a person who has interest in the voting shares of a corporation and who exercises control over the corporation; or a person who has an interest of 15% or more of the aggregate of the nominal amount of all the voting shares in a corporation, unless he does not exercise control over the corporation Directors : The directors for the time being of the Company FY : Financial year ended 30 June Group : The Company and its subsidiaries - 2 -

3 Latest Practicable Date : 11 September 2014, being the latest practicable date prior to the printing of this Appendix Listing Manual : The listing manual of the SGX-ST, as amended, supplemented or modified from time to time Market Day : A day on which the SGX-ST is open for trading in securities Market Purchase : Has the meaning ascribed to it in paragraph 6.3 of this Appendix Maximum Price : Has the meaning ascribed to it in paragraph 6.4 of this Appendix Memorandum : The memorandum of association of the Company, as amended from time to time Off-Market Purchase : Has the meaning ascribed to it in paragraph 6.3 of this Appendix Required Price : In relation to the offer required to be made under the provisions of Rule 14 of the Take-over Code, the offer shall be in cash or be accompanied by a cash alternative at a price in accordance with Rule 14.3 of the Take-over Code which is the highest of the highest price paid by the offerors and/or person(s) acting in concert with them for the Company s Shares (i) during the offer period and within the preceding six (6) months, (ii) acquired through the exercise of instruments convertible into securities which carry voting rights within six (6) months of the offer and during the offer period, or (iii) acquired through the exercise of rights to subscribe for, and options in respect of, securities which carry voting rights within six (6) months of the offer or during the offer period; or at such price as determined by SIC under Rule 14.3 of the Take-over Code Resolution 8 : Has the meaning ascribed to it in paragraph 1 of this Appendix RMB : Renminbi, currency of the People s Republic of China EGM : An extraordinary general meeting of the Company SGX-ST : Singapore Exchange Securities Trading Limited - 3 -

4 Shareholders : Registered holders of Shares except that where the registered holder is CDP, the term Shareholders in relation to Shares held by CDP shall mean the persons named as Depositors in the Depository Register maintained by CDP and to whose Securities Accounts such Shares are credited Shares : Ordinary shares in the capital of the Company Share Purchases : Off-Market Purchases or Market Purchases of the Shares undertaken by the Company and a Share Purchase shall be construed accordingly Share Purchase Mandate : The general mandate given by Shareholders to authorise the Directors to purchase Shares in accordance with the terms set out in this Appendix and applicable laws and regulations SIC : The Securities Industry Council Singapore Companies Act : The Companies Act (Cap. 50) of Singapore Substantial Shareholder : A person who has an interest in share(s), the total votes attached to which is not less than five per cent. (5%) of the total votes attached to all the voting shares of a company Take-over Code : The Singapore Code on Take-overs and Mergers S$ : Singapore dollars, currency of the Republic of Singapore % : Per centum or percentage The terms Depositor and Depository Register shall have the meanings ascribed to them respectively by Section 130A of the Singapore Companies Act. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. Any reference in this Appendix to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Cayman Companies Law, the Singapore Companies Act, the Listing Manual, the Take-over Code or any statutory modification thereof and used in this Appendix shall, where applicable, have the meaning ascribed to it under the Cayman Companies Law, the Singapore Companies Act, the Listing Manual, the Take-over Code or such statutory modification thereof, as the case may be, unless otherwise provided. Any reference to a time of a day in this Appendix is a reference to Singapore time unless otherwise stated

5 Any discrepancies in the tables included herein between the listed amounts and totals thereof are due to rounding. The figures in RMB which are expressed in S$ (and vice-versa) are expressed based on the exchange rate of S$1.00 : RMB4.85 at the Latest Practicable Date. Such conversions are provided solely for the convenience of Shareholders and should not be construed as representations that the RMB amounts actually represent such S$ amounts as could be converted into S$ at the rate provided or at any other rate or at all

6 QINGMEI GROUP HOLDINGS LIMITED 清美集團控股有限公司 (Registration No. CT ) (Incorporated in the Cayman Islands on 28 August 2008) Directors Su Shubiao (Executive Chairman and Chief Executive Officer) Su Qingjiang (Executive Director) Su Qingyuan (Executive Director) Tan Siok Sing (Lead Independent Director) Foo Say Tun (Independent Director) Pek Yew Chai (Independent Director) Registered Office Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY Cayman Islands 10 October 2014 To: The Shareholders of Qingmei Group Holdings Limited Dear Shareholders THE PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE 1. INTRODUCTION We refer to item 9 appearing under the heading Special Business in the Notice of AGM. This item is an ordinary resolution ( Resolution 8 ) for the renewal of a general and unconditional mandate to be given for purchase or acquisition by the Company of its issued Shares. The purpose of this Appendix is to provide the Shareholders with the information relating to, and to seek their approval for, Resolution 8 at the forthcoming AGM to be held on 31 October The SGX-ST assumes no responsibility for the accuracy of any statements or opinions expressed in this Appendix. If you are in doubt as to the action that you should take, you should consult your stockbroker or other professional adviser immediately. 2. BACKGROUND The Share Purchase Mandate was first approved by the Shareholders on 31 October 2011 at an EGM ( 2011 Mandate ). The authority and limitations on the Share Purchase Mandate were set out in the Company s circular to Shareholders dated 12 October The authority contained in the 2011 Mandate has been renewed yearly. The 2013 Mandate will expire on 31 October 2014, being the date of the forthcoming AGM of the Company. It is proposed that such authority be renewed

7 Accordingly, Resolution 8 is to seek the Shareholders approval at the AGM for a renewed general and unconditional mandate to be given to the Directors to exercise all powers of the Company to purchase or otherwise acquire its issued Shares on terms of the Share Purchase Mandate. 3. SHARES PURCHASED IN THE PREVIOUS TWELVE MONTHS Pursuant to the 2013 Mandate, the Company had not bought back any Shares by way of market or off-market acquisitions. 4. RENEWAL OF THE SHARE PURCHASE MANDATE Resolution 8 if passed at the forthcoming AGM, will renew the Share Purchase Mandate from the date of the forthcoming AGM or any adjournment thereof and will continue in force until the earliest of (i) the conclusion of the next Annual General Meeting or the date by which the next Annual General Meeting is required by law to be held, whichever is earlier (whereupon it will lapse, unless renewed at such meeting); or (ii) the date on which the purchases or acquisitions of Shares by the Company pursuant to the proposed Share Purchase Mandate are carried out to the full extent mandated; or (iii) the date on which the authority contained in the proposed Share Purchase Mandate is varied or revoked by ordinary resolution of the Company in a general meeting. 5. RATIONALE FOR THE PROPOSED SHARE PURCHASE MANDATE The rationale for the Company to undertake a purchase or acquisition of its Shares are as follows: (c) in managing the business of the Company and/or the Group, the Company s management will strive to increase Shareholders value by improving, inter alia, the return on equity of the Company and/or the Group. In addition to growth and expansion of the business, Share Purchases at the appropriate price levels may be considered as one of the ways through which the return on equity of the Company and/or the Group may be enhanced. The effect is greater when the Shares are purchased when they are undervalued. If the Shares are undervalued, this may be the most profitable course of action for the Company and/or the Group; share buybacks help offset the effects of short term speculation, which may at times cause the market price of the Company s Shares to be depressed below the true value of the Company. The proposed renewal of the Share Purchase Mandate will provide the Directors with the means to restore investors confidence and to protect existing Shareholders investments in the Company in a depressed share-price situation through judicious Share Purchases; in line with international practice, the Share Purchase Mandate will provide the Company with greater flexibility in managing its capital and maximising returns to its Shareholders. To the extent that the Company has capital and surplus funds which are in excess of its possible financial needs, taking into account its growth and expansion plans, the Share Purchase Mandate will facilitate the return of excess cash and surplus funds to Shareholders, as and when the Directors are of the view that this would be in the best interests of the Company and - 7 -

8 the Shareholders, in an expedient, effective and cost-efficient manner. A share repurchase programme will also allow management to effectively manage and minimise the dilution impact (if any) associated with the Company s share plans; and (d) the Share Purchase Mandate will also provide the Company the flexibility to undertake share repurchases via Market Purchases or Off-Market Purchases at any time during the period when the Share Purchase Mandate is in force. The Directors do not propose to carry out purchases pursuant to the proposed Share Purchase Mandate to such an extent that would, or in circumstances that might result in a material adverse effect on the liquidity and/or the orderly trading of Shares and/or the financial position of the Company or the Group as a whole. The purchase or acquisition of Shares will only be undertaken if the circumstances permit and only if the Directors are of the view that such purchases are in the best interests of the Company and Shareholders. The Directors will decide whether to purchase Shares only after taking into account, among other things, the market conditions at such time, the Company s financial condition and whether such purchases will cause the Company to become insolvent (i.e. the Company is unable to pay its debts as they become due in the ordinary course of business, or the value of the Company s assets is less than the value of its liabilities including contingent liabilities), and whether such purchases represent the most efficient and cost-effective approach to enhance Share value. Share Purchases will only be made if the Directors believe that such purchases are likely to benefit the Company and increase economic value for shareholders. The Directors will ensure that the Share Purchases will not have any effect on the listing status of the Company s securities including the Shares listed on the SGX-ST. Rule 723 of the Listing Manual requires at least ten per cent. (10%) of any class of a company s listed securities to be held by the public at all times. The public, as defined in the Listing Manual, are persons other than the Directors, chief executive officer, Substantial Shareholders and Controlling Shareholders of the Company and its subsidiaries, as well as the associates (as defined in the Listing Manual) of such persons. The Directors shall safeguard the interests of public shareholders before undertaking any Share Purchases. Before exercising the authority comprised in the proposed Share Purchase Mandate, the Directors shall at all times take due cognizance of the then shareholding spread of the Company in respect of the number of Shares held by Substantial Shareholders and by non-substantial Shareholders of the Company and the volume of trading on the SGX-ST in respect of the Shares immediately before any Share Purchase. As at the Latest Practicable Date, approximately 473,940,903 Shares, representing 69.71% of a total of 679,824,874 Shares are held by the public (as defined above). Assuming that the Company purchases or acquires its Shares through Market Purchases up to the full ten per cent. (10%) limit pursuant to the Share Purchase Mandate, the number of Shares in the hands of the public would be reduced to 405,958,416 Shares, representing approximately 59.71% of the total number of Shares of the Company. The Company is of the view that there is sufficient number of Shares held by public Shareholders which would permit the Company to undertake Share Purchases of up to ten per cent. (10%) of its total number of Shares without affecting the listing status of the Shares on the SGX- ST; causing market illiquidity; or (c) affecting orderly trade

9 6. TERMS OF THE PROPOSED SHARE PURCHASE MANDATE The authority and limitations placed on the purchase or acquisition of Shares by the Company under the proposed renewal of the Share Purchase Mandate are summarised below: 6.1 Maximum Number of Shares The Company may purchase or acquire only Shares which are issued and fully paid-up. The total number of Shares that may be purchased or acquired is limited to that number of Shares representing not more than ten per cent. (10%) of the issued Shares as at the date of the last Annual General Meeting of the Company at which the Share Purchase Mandate is approved. Shares (if any), which are held as treasury shares, will be disregarded for purposes of computing the ten per cent. (10%) limit. For illustration purposes, the total number of issued Shares as at the Latest Practicable Date is 679,824,874 Shares and the exercise in full of the Share Purchase Mandate would result in the purchase or acquisition of up to 67,982,487 Shares. 6.2 Duration of Authority Purchases or acquisitions of Shares may be made, at any time from time to time, from the date of the forthcoming AGM at which the Share Purchase Mandate is approved, up to the earliest of: (c) the conclusion of the next annual general meeting of the Company or the date by which such annual general meeting is required to be held; the date on which purchases or acquisitions of Shares have been carried out to the full extent of the Share Purchase Mandate; or the date on which the authority contained in the Share Purchase Mandate is varied or revoked by an ordinary resolution of Shareholders in general meeting. 6.3 Manner of Purchase or Acquisitions of Shares Purchases or acquisitions of Shares may be made by way of: on-market purchases ( Market Purchases ), transacted on the SGX-ST through the SGX-ST s trading system or on any other securities exchange on which the Shares may for the time being be listed and quoted, through one or more duly licensed dealers appointed by the Company for the purpose; and/or off-market purchases ( Off-Market Purchases ) effected, otherwise than on a securities exchange, in accordance with an equal access scheme

10 The Directors may impose such terms and conditions which are not inconsistent with the Share Purchase Mandate, the Listing Manual and the Cayman Companies Law as they consider fit in the interests of the Company in connection with or in relation to any equal access scheme or schemes. An Off-Market Purchase must, however, satisfy all the following conditions: offers for the purchase or acquisition of Shares shall be made to every person who holds Shares to purchase or acquire the same percentage of their Shares; all of those persons shall be given a reasonable opportunity to accept the offers made; and (c) the terms of all the offers shall be the same, except that there shall be disregarded (1) differences in consideration attributable to the fact that offers may relate to Shares with different accrued dividend entitlements; (2) (if applicable) differences in consideration attributable to the fact that offers relate to Shares with different amounts remaining unpaid; and (3) differences in the offers introduced solely to ensure that each person is left with a whole number of Shares. If the Company wishes to make an Off-Market Purchase in accordance with an equal access scheme, it will issue an offer document containing at least the following information: (c) (d) (e) (f) (g) the terms and conditions of the offer; the period and procedures for acceptances; the reasons for the proposed Share Purchase or acquisition; the consequences, if any, of Share Purchases or acquisitions by the Company that will arise under the Take-over Code or other applicable take-over rules; whether the Share Purchase or acquisition, if made, would have any effect on the listing of the Shares on the SGX-ST; details of any Share Purchase or acquisition made by the Company in the previous 12 months (whether Market Purchases or Off-Market Purchases), giving the total number of Shares purchased or acquired, the purchase price per Share or the highest and lowest prices paid for the purchases or acquisitions, where relevant, and the total consideration paid for the purchases or acquisitions; and whether the Shares purchased by the Company will be cancelled or kept as treasury Shares

11 6.4 Maximum Purchase Price The purchase price (excluding brokerage, stamp duties, commissions, applicable goods and services tax, clearance fees and other related expenses) to be paid for a Share will be determined by the Directors. However, the purchase price must not exceed: in the case of a Market Purchase, 105% of the Average Closing Price (as defined below); and in the case of an Off-Market Purchase pursuant to an equal access scheme, 120% of the Average Closing Price (as defined below), in each case, excluding related expenses of the purchase or acquisition ( Maximum Price ). For the above purposes: Average Closing Price means the average of the closing market prices of a Share over the last five (5) Market Days on which transactions in Shares were recorded, preceding the day of the Market Purchase by the Company or, as the case may be, the day of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted for any corporate action that occurs after such five (5)-day market period; and day of the making of the offer means the day on which the Company announces its intention to make an offer for the purchase or acquisition of Shares from Shareholders, stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase. 6.5 Status of Purchased or Acquired Shares Under Cayman Islands law, shares purchased or acquired by a company shall be treated as cancelled on purchase or acquisition unless, subject to the memorandum and articles of association of the company, the directors of the company resolve to hold such shares in the name of the company as treasury shares prior to the purchase or acquisition. Where purchased or acquired Shares are treated as cancelled on purchase or acquisition, all rights and privileges attached to the Share shall expire on cancellation and certificates in respect thereof will be cancelled and destroyed by the Company as soon as reasonably practicable following settlement of any such purchase. The amount of the Company s issued, but not its authorised, capital will be diminished by the nominal value of those Shares accordingly. All cancelled shares will be automatically delisted by the SGX-ST. Where purchased or acquired Shares are held as treasury shares, the Company shall be entered in the register of members as holding those Shares. However, notwithstanding the foregoing, the Company shall not be treated as a member for any purpose and shall not exercise any right in respect of the treasury shares, and any purported exercise of such a right shall be void. A treasury share shall not be voted, directly or indirectly, at any meeting of the Company and shall not be counted in determining the total number of issued shares at any given time, whether for the purposes of the Articles or the

12 Cayman Companies Law. Further, no dividend may be declared or paid, and no other distribution (whether cash or otherwise) of the Company s assets (including any distribution of assets to members on a winding up) may be made to the Company, in respect of a treasury share. The Memorandum and the Articles do not prohibit the Company from holding treasury shares. Shares purchased or acquired by the Company may be held as treasury shares if a resolution is passed by the Directors to hold such Shares in the name of the Company as treasury shares prior to the purchase or acquisition of such Shares. Such treasury shares, if any, will be held and dealt with by the Company in accordance with the Cayman Companies Law. 6.6 Source of funds Pursuant to the Articles and the Cayman Companies Law, a purchase or acquisition of Shares may only be made out of the profits of the Company, or out of proceeds of a fresh issue of Shares made for that purpose or, in the manner authorised by the Articles, by a payment out of capital. At no time may the Company purchase or acquire its Shares if, as a result of the purchase or acquisition, there would no longer be any issued Shares of the Company other than Shares held as treasury shares. Only fully paid Shares may be purchased or acquired by the Company. A payment out of capital by the Company for the purchase or acquisition of Shares is not lawful unless immediately following the date on which the payment out of capital is proposed to be made, the Company shall be able to pay its debts as they fall due in the ordinary course of business. The Company may not purchase Shares for a consideration other than cash or for settlement otherwise in accordance with the trading rules of the SGX-ST. The Company intends to use internal sources of funds of the Group (comprising bank balances and cash equivalents) or external borrowings or a combination of both to fund the Company s purchases or acquisition of Shares pursuant to the Share Purchase Mandate. 7. LISTING MANUAL Under the Listing Manual, a listed company may purchase or acquire shares by way of Market Purchases or acquisitions at a price per share which is not more than five per cent. (5%) above the average of the closing market prices of the shares over the last five (5) Market Days, on which transactions in the shares were recorded, before the day on which the purchases or acquisitions were made and deemed to be adjusted for any corporate action that occurs after the relevant five (5)-day period. The Maximum Price for a Share in relation to Market Purchases by the Company, referred to in paragraph 6.4 above, conforms to this restriction. Pursuant to the requirements of Rule 886 of the Listing Manual, a listed company shall report all purchases or acquisitions of its shares to the SGX-ST not later than 9:00 a.m.: in the case of a Market Purchase, on the Market Day following the day of purchase of any of its shares; and in the case of an Off-Market Purchase under an equal access scheme, on the second Market Day after the close of acceptances of the offer. Such announcement must include details of the date of the purchases or acquisitions of the shares, the total number of shares purchased or acquired, the number of shares cancelled, the number of shares held as treasury shares, the purchase price per share or the highest and lowest prices paid for such shares (as applicable), the total consideration (including stamp

13 duties and clearing charges) paid or payable for the shares, and the cumulative number of shares purchased or acquired. Such announcement will be made in the form prescribed by the Listing Manual. While the Listing Manual does not expressly prohibit any purchase or acquisition of shares by a listed company during any particular time or times, because the listed company would be regarded as an insider in relation to any proposed purchase or acquisition of its issued shares, the Company will not undertake any purchase or acquisition of Shares pursuant to the Share Purchase Mandate at any time after a price sensitive development has occurred or has been the subject of a decision until the price sensitive information has been publicly announced. In particular, in observing the best practices recommended in the Listing Manual on securities dealings, the Company will not purchase or acquire any Shares through Market Purchases during the period of two (2) weeks immediately preceding the announcement of the Company s quarterly results or one (1) month immediately preceding the announcement of the Company s full-year results, as the case may be, and ending on the date of announcement of the relevant results. 8. FINANCIAL AND OTHER IMPACT It is not possible for the Company to realistically calculate or quantify the impact of the purchases or acquisitions that may be made pursuant to the Share Purchase Mandate on the net tangible asset value and earnings per Share as the resultant effect would depend on factors such as the aggregate number of Shares purchased or acquired, the purchase prices paid at the relevant times, whether the Shares purchased or acquired are held in treasury or immediately cancelled on purchase or acquisition, how the Shares held in treasury are subsequently dealt with by the Company in accordance with the Cayman Companies Law, and the amounts (if any) borrowed by the Company to fund the purchases or acquisitions. Where the purchase or acquisition of Shares is made out of distributable profits, such purchase or acquisitions (including costs incidental to the purchase or acquisition) will correspondingly reduce the amount of distributable profits available for cash dividends by the Company. Where the purchase or acquisition of Shares is made out of capital, the amount of distributable profits available for cash dividends by the Company will not be reduced. Where the purchase or acquisition of Shares is financed through internal resources, it will reduce the cash reserves of the Group and the Company, and thus the current assets and Shareholders funds of the Group and the Company. This will result in an increase in the gearing ratios of the Group and the Company and a decline in the current ratios of the Group and the Company. The actual impact on the gearing and current ratios will depend on the number of Shares purchased or acquired and the prices at which the Shares are purchased or acquired. Where the purchase or acquisition of Shares is financed through external borrowings or financing, there would be an increase in the gearing ratios of the Group and the Company, and a decline in the current ratios and Shareholders funds of the Group and the Company, with the actual impact dependent on the number of Shares purchased or acquired and the prices at which the Shares are purchased or acquired

14 For illustrative purposes only and on the basis of the following assumptions: (c) that the purchase or acquisition by the Company of up to 67,982,487 Shares, representing ten per cent. (10%) of its issued Shares as at the Latest Practicable Date, was made on 30 June 2014; that, in the case of Market Purchases, the Company purchased or acquired Shares at the Maximum Price of S$0.016 for each Share (being the price equivalent to 105% of the Average Closing Price of the Shares immediately preceding the Latest Practicable Date), and, in the case of Off-Market Purchases, the Company purchased or acquired Shares at the Maximum Price of S$0.018 for each Share (being the price equivalent to 120% of the Average Closing Price of the Shares immediately preceding the Latest Practicable Date); and that the purchase or acquisition of Shares by the Company, which required funds (excluding brokerage, stamp duties, applicable goods and services tax and other related expenses) amounting to, in the case of Market Purchases, approximately S$1.09 million (RMB5.29 million), and in the case of Off-Market Purchases, approximately S$1.22 million (RMB5.92 million), was financed entirely using its internal sources of funds, the financial effects of Share Purchases or acquisitions by the Company pursuant to the Share Purchase Mandate on the audited consolidated financial statements of the Group for FY2014, are set out below. 1 1 No illustration is shown for Share purchases made out of profits as the Company, being an investment holding company, does not have sufficient revenue reserves to do so

15 Off-Market Purchases Group Company Before Share Purchase/ Acquisition After Share Purchase/ Acquisition Before Share Purchase/ Acquisition After Share Purchase/ Acquisition As at 30 June 2014 RMB 000 RMB 000 RMB 000 RMB 000 Share capital (1) (S$ 000) 67,982 61,184 67,982 61,184 Shareholders funds 724, , , ,546 Net tangible assets (3) 694, , , ,546 Current assets 444, , , ,497 Current liabilities 92,381 92,381 1,880 7,800 Working capital 352, , , ,697 Total liabilities 92,381 92,381 1,880 7,800 Cash and cash equivalents 284, , Number of Shares as at 30 June ,824, ,842, ,824, ,842,387 Weighted average number of Shares outstanding during the year ended 30 June 2014 (2) 679,824, ,842, ,824, ,842,387 Financial Ratios Net tangible assets per Share (3) (RMB) Loss per Share (RMB cents) (39.0) (44.3) N/A N/A Gearing ratio (4) (times) N/A N/A N/A N/A Current ratio (5) (times) Notes: (1) Par value of S$0.10 each. (2) The weighted average number of Shares after Share Purchases or acquisitions is computed on the assumption that the Share Purchases or acquisitions were completed on 1 July (3) Net tangible assets equal total net assets less land use rights and other intangible assets. (4) Gearing ratio equals total borrowings divided by shareholders funds. (5) Current ratio equals current assets divided by current liabilities. (6) N/A means not applicable

16 Market Purchases Group Company Before Share Purchase/ Acquisition After Share Purchase/ Acquisition Before Share Purchase/ Acquisition After Share Purchase/ Acquisition As at 30 June 2014 RMB 000 RMB 000 RMB 000 RMB 000 Share capital (1) (S$ 000) 67,982 61,184 67,982 61,184 Shareholders funds 724, , , ,176 Net tangible assets (3) 694, , , ,176 Current assets 444, , , ,497 Current liabilities 92,381 92,381 1,880 7,170 Working capital 352, , , ,327 Total liabilities 92,381 92,381 1,880 7,170 Cash and cash equivalents 284, , Number of Shares as at 30 June ,824, ,842, ,824, ,842,387 Weighted average number of Shares outstanding during the year ended 30 June 2014 (2) 679,824, ,842, ,824, ,842,387 Financial Ratios Net tangible assets per Share (3) (RMB) Loss per Share (RMB cents) (39.0) (44.2) N/A N/A Gearing ratio (4) (times) N/A N/A N/A N/A Current ratio (5) (times) Notes: (1) Par value of S$0.10 each. (2) The weighted average number of Shares after Share Purchases or acquisitions is computed on the assumption that the Share Purchases or acquisitions were completed on 1 July (3) Net tangible assets equal total net assets less land use rights and other intangible assets. (4) Gearing ratio equals total borrowings divided by shareholders funds. (5) Current ratio equals current assets divided by current liabilities. (6) N/A means not applicable

17 Shareholders should note that the financial effects set out in this paragraph are purely for illustrative purposes only. In particular, it is important to note that the above analysis is based on historical FY2014 numbers and are in no way indicative of the Group s real financial position or a forecast of the Group s financial figures. The Company will take into account both financial and non-financial factors (for example, share market conditions and the performance of the Shares) in assessing the relative impact of a Share Purchase or acquisition before execution. 9. IMPLICATIONS OF TAKE-OVER CODE 9.1 Requirement to Make General Offer If as a result of any purchase or acquisition by the Company of its Shares, a Shareholder s proportionate interest in the voting capital of the Company increases, such increase will be treated as an acquisition for the purposes of the Take-over Code. If such increase results in a change in control, or as a result of such increase, a Shareholder or group of Shareholders acting in concert obtain or consolidate control, it may in certain circumstances give rise to an obligation on the part of such Shareholder or Shareholders to make a take-over offer under Rule 14 of the Take-over Code. The circumstances under which Shareholders, including Directors, and persons acting in concert with them respectively will incur an obligation to make a take-over offer under Rule 14 of the Take-over Code after a purchase or acquisition of Shares by the Company are set out in Appendix 2 ( TOC Appendix 2 ) of the Take-over Code. In relation to Directors and persons acting in concert with them, Rule 14 of the Take-over Code provides that unless exempted (or if exempted, such exemption is subsequently revoked), Directors and persons acting in concert with them will incur an obligation to make a take-over offer if, as a result of a purchase or acquisition of Shares by the Company: the percentage of voting rights held by such Directors and their concert parties in the Company increases to 30% or more; or if they together hold between 30% and 50% of the Company s voting rights, their voting rights increase by more than one per cent. (1%) in any period of six (6) months. Under TOC Appendix 2, a Shareholder not acting in concert with the Directors will not be required to make a take-over offer under Rule 14 of the Take-over Code if, as a result of the Company purchasing or acquiring its Shares, the voting rights of such Shareholder would increase to 30% or more, or, if such Shareholder holds between 30% and 50% of the Company s voting rights, the voting rights of such Shareholder would increase by more than one per cent. (1%) in any period of six (6) months. Such Shareholder need not abstain from voting in respect of the resolution authorising the Share Purchase Mandate

18 Under the Take-over Code, persons acting in concert comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal) co-operate, through the acquisition by any of them of shares in a company to obtain or consolidate control of that company. Unless the contrary is established, the following persons, inter alia, will be presumed to be acting in concert: (c) (d) (e) (f) (g) a company with any of its directors (together with their close relatives, related trusts as well as companies controlled by any of the directors, their close relatives and related trusts); a company, its parent, subsidiaries and fellow subsidiaries, and their associated companies, and companies of which such companies are associated companies, all with each other. For this purpose, ownership or control of 20% or more of the voting rights of a company will be regarded as the test of associated company status; a company with any of its pension funds and employee share schemes; a person with any investment company, unit trust or other fund in respect of the investment account which such person manages on a discretionary basis; a financial or other professional adviser, with its client in respect of the shareholdings of the adviser and the persons controlling, controlled by or under the same control as the adviser and all the funds which the adviser manages on a discretionary basis, where the shareholdings of the adviser and any of those funds in the client total ten percent. (10%) or more of the client s equity share capital; directors of a company, together with their close relatives, related trusts and companies controlled by any of them, which is subject to an offer or where they have reason to believe a bona fide offer for their company may be imminent; and an individual, his close relatives, his related trusts, any person who is accustomed to act according to his instructions, companies controlled by any of the foregoing persons and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing persons and/or entities for the purchase of voting rights. Based on the interests of the Substantial Shareholders in the Shares as at the Latest Practicable Date set out in paragraph 9.2 of this Appendix, in the event the Company undertakes purchases or acquisitions of its Shares up to the full ten per cent. (10%) limit pursuant to the Share Purchase Mandate: High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang who are parties acting in concert, based on their current aggregate shareholding interest of 30.29% in the Company may be increased to 33.65%. High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang would thus be required to make a general offer under Rule 14.1 of the Take-over Code as it would result in an increase in more than one percent. (1%) of their voting rights in a six-month period; and

19 save for High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang who are Parties acting in concert, the Company does not foresee that any other Shareholder will become obliged to make a general offer under Rule 14 of the Take-over Code. Shareholders who are in doubt as to whether they would incur any obligation to make a takeover offer as a result of any purchase or acquisition of Shares by the Company pursuant to the Share Purchase Mandate are advised to consult their professional advisers and/or the SIC and/ or other relevant authorities at the earliest opportunity. 9.2 Application of the Take-over Code As at the Latest Practicable Date, the Directors and Substantial Shareholders shareholding interests in the Company are as follows: Before Share Purchase (total issued share capital: 679,824,874) After Share Purchase (total issued share capital: 611,842,387) Direct Interest Deemed Interest Total Interest Direct Interest Deemed Interest Total Interest Directors No. of Shares % No. of Shares % No. of Shares % No. of Shares % No. of Shares % No. of Shares % Su Shubiao (1) Su Qingjiang (2) 205,883, ,883, ,883, ,883, Su Qingyuan (3) 1,067, ,816, ,883, ,067, ,816, ,883, Tan Siok Sing Foo Say Tun Pek Yew Chai Substantial Shareholders High Crown Limited (1) 204,816, ,067, ,883, ,816, ,067, ,883, Notes: (1) Mr Su Shubiao is the bother-in-law of Mr Su Qingfei, the eldest brother of Mr Su Qingyuan and Mr Su Qingjiang. (2) Mr Su Qingjiang is the brother of Mr Su Qingyuan. As such, Mr Su Qingjiang is deemed to be interested in Mr Su Qing Yuan s total interest in 205,883,971 Shares. (3) Mr Su Qingyuan is deemed to be interested in 204,816,000 Shares held by High Crown Limited, which is wholly owned by Mr Su Qingyuan. Conversely, High Crown Limited is deemed to be interested in 1,067,971 Shares held by Mr Su Qingyuan as Mr Su Qingyuan owns 100% of High Crown Limited. Save as disclosed above, the Directors and the Substantial Shareholders of the Company do not have any interest, whether direct or indirect, in the Shares. In the event the Company undertakes Share Purchases of up to ten per cent. (10%) of the issued Shares of the Company as permitted by the Share Purchase Mandate, the shareholdings and voting rights of High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang who are parties acting in concert may be increased from 30.29% to 33.65%. High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiangs shareholdings and voting rights may thus be increased by more than one per cent. (1%)

20 within six (6)-month period. Accordingly, High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang may be required to make a general offer to the other Shareholders under Rule 14.1 of the Take-over Code. 9.3 Exemption from the Requirement to Make a General Offer Pursuant to TOC Appendix 2, High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang will be exempted from the requirement to make a general offer under Rule 14.1 of the Take-over Code after any Shares Purchase subject to the following conditions: (c) (d) (e) the Appendix contains advice to the effect that by voting for Resolution 8, Shareholders are waiving their rights to a general offer at the required price from High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang who are parties acting in concert, as a result of the Company buying back its Shares, would increase their voting rights by more than one per cent. (1%) in any six (6)-month period; the names of High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang and their concerted parties (if any) at the time of the AGM and after the proposed Shares Purchases are disclosed in the Appendix; Resolution 8 is approved by a majority of those Shareholders present and voting at the meeting on a poll who could not become obliged to make an offer as a result of the Shares Purchase; High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang and their concerted parties (if any) do not vote for/or recommend Shareholders to vote in favour of the resolution to approve the Shares Purchase Mandate; within seven (7) days after the passing of the resolution to authorise a buy-back, Mr Su Qingyuan and Mr Su Qingjiang submits to SIC a duly signed form as prescribed by SIC; and High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang and their concerted parties (if any) have not acquired and will not acquire any Shares between the date on which they know that the announcement of the Shares Purchase Mandate is imminent and the earlier of: (i) (ii) the date on which the authority of the Shares Purchase Mandate expires; and the date the Company announces that it has bought back such number of Shares as authorised by the Shareholders at the latest general meeting or the date the Company decides to cease buying back its Shares, as the case may be, if such acquisitions, taken together with the Shares Purchase(s), would cause their aggregate voting rights in the Company to increase by more than one per cent. (1%) in the preceding six (6) months. If the Company ceases to buy-back its Shares and the increase in the voting rights held by High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang and their concerted parties (if any), as a result of the Company buying back its Shares at the time of such cessation is less than one per cent. (1%) in any six (6)-month period, High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang and their concerted parties (if any) will be allowed to acquire voting rights in the Company. However, any

21 increase in the percentage voting rights held by High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang and their concerted parties (if any) as a result of the Company buying back its Shares will be taken into account together with any Shares acquire by High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang and their concerted parties (by whatever means) in determining whether High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang and their concerted parties have increased their aggregate voting rights in the Company by more than one per cent. (1%) in any six (6)-month period. The Directors hereby confirm that the Substantial Shareholders of the Company are not acting in concert with any other person to assist any Shareholder (or his concert party or parties) to obtain or consolidate control of the Company and that the proposed Shares Purchases are not for any such purpose. 9.4 Advice to Shareholders It should be noted that approving the Shares Purchase Mandate will constitute a waiver by the Shareholders in respect of their right to a general offer by the Substantial Shareholders of the Company at the Required Price. Such a take-over offer, if required to be made and had not been exempted by SIC, would have to be made in cash or be accompanied by a cash alternative at not less than the highest price (excluding stamp duty and commission) paid by the Parties for any Share within the preceding six (6) months. 9.5 Form 2 Submission to the SIC Form 2 (Submission By Directors Pursuant To Appendix 2) is the prescribed form to be submitted to the SIC by Mr Su Qingyuan and Mr Su Qingjiang pursuant the conditions for exemption (see paragraph 9.3(d) above) from the requirement to make a general offer under Rule 14 of the Take- Over Code as a result of the buy-back of Shares by the Company under the Share Purchase Mandate. As at the Latest Practicable Date, Mr Su Qingyuan and Mr Su Qingjiang have informed the Company that they will be submitting a Form 2 each to the SIC within seven (7) days after the passing of Resolution DIRECTORS RECOMMENDATION Having fully considered the rationale set out on paragraph 5 of this Appendix, the Directors (save for Mr Su Qingyuan and Mr Su Qingjiang who will abstain from recommending Shareholders to vote in favour of Resolution 8) are of the opinion that the proposed renewal of the Share Purchase Mandate is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of Resolution 8 at the AGM

22 11. DIRECTORS RESPONSIBILITY STATEMENT The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Appendix and confirm, after making all reasonable enquiries, that to the best of their knowledge and belief, this Appendix constitutes full and true disclosure of all material facts about the proposed renewal of the Share Purchase Mandate, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Appendix misleading. Where information in this Appendix has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Appendix in its proper form and context. 12. ABSTINENCE FROM VOTING High Crown Limited, Mr Su Qingyuan and Mr Su Qingjiang and their concerted parties (if any), who are Shareholders of the Company, will abstain from voting at the AGM in respect of Resolution 8 relating to the renewal of the Share Purchase Mandate in view of the take-over consequences as set out in paragraph 9 above and would not accept nominations as proxy or otherwise for voting at the AGM in respect of the said Resolution TAXATION Shareholders who are in doubt as to their respective tax positions or any tax implications, or who may be subject to tax in a jurisdiction outside Singapore, should consult their own professional tax advisers. 14. DOCUMENTS FOR INSPECTION Copies of the following documents may be inspected at the office of the Company s share transfer agent in Singapore, Boardroom Corporate & Advisory Services Pte. Ltd., at 50 Raffles Place, Singapore Land Tower #32-01, Singapore during normal business hours from the date of this Appendix up to and including the date of the AGM: the Memorandum and Articles of Association of the Company; and the audited financial statements of the Company for the financial year ended 30 June SGX-ST DISCLAIMER The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Appendix. If you are in doubt as to the action that you should take, you should consult your stockbroker or other professional adviser immediately