BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED 華晨中國 … · 2018. 12. 30. · Goldman Sachs...

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

If you have sold or transferred all your shares in Brilliance China Automotive Holdings Limited,you should at once hand this circular, together with the accompanying form of proxy and reply slipto the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer or other agentthrough whom the sale or transfer was effected for transmission to the purchaser(s) or thetransferee(s).

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

BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED(華晨中國汽車控股有限公司)*

(Incorporated in Bermuda with limited liability)

(Stock Code: 1114)

VERY SUBSTANTIAL DISPOSALIN RELATION TO DISPOSAL OF 25% EQUITY INTEREST IN

BMW BRILLIANCE AUTOMOTIVE LTD.

Financial Adviser to the Company

Goldman Sachs (Asia) L.L.C.

A letter from the Board is set out on pages 8 to 26 of this circular. A notice convening a specialgeneral meeting of Brilliance China Automotive Holdings Limited to be held at Statue SquareRoom & Alexandra Room, 2nd Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central,Central, Hong Kong on Friday, January 18, 2019 at 9:00 a.m. is set out on pages N-1 to N-2 of thiscircular.

Whether or not you are able to attend the special general meeting, you are requested to completethe accompanying form of proxy in accordance with the instructions printed thereon and return itto the office of the branch share registrar of Brilliance China Automotive Holdings Limited inHong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre,183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48hours before the time appointed for the holding of the special general meeting (i.e. at or before9:00 a.m. on Wednesday, January 16, 2019 (Hong Kong time)) or any adjourned meeting thereof.Completion and return of the form of proxy will not preclude you from attending and voting inperson at the special general meeting or any adjourned meeting thereof if you so wish.

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

* for identification purposes only December 31, 2018

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Appendix I – Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . I-1

Appendix II – Financial Information of BBA . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Appendix III – Unaudited Pro Forma Financial Information of the Group . . . . III-1

Appendix IV – Letters from Grant Thornton and Goldman Sachs

in relation to Discounted Cash Flows Forecast . . . . . . . . . . . . IV-1

Appendix V – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N-1

CONTENTS

– i –

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

the following respective meanings:

“applicable percentage ratios” the five ratios as set out in Rule 14.07 of the Listing Rules

to be applied for determining the classification of a

transaction under the Listing Rules

“associate(s)” has the meaning ascribed thereto under the Listing Rules

“BBA” BMW Brilliance Automotive Ltd., a sino-foreign equity

joint venture established in the PRC in 2003 whose

effective equity interest are owned as to 50% by SJBA and

as to 50% by BMW as at the Latest Practicable Date

“BBAFC” Brilliance-BEA Auto Finance Co., Ltd., a non-wholly

owned subsidiary of the Company

“BEV” battery electric vehicles

“BMW” BMW Holding B.V., a corporation organized and existing

under the laws of the Netherlands, with its principal place

of business at Einsteinlaan 5, 2289 CC Rijswijk ZH, the

Netherlands

“BMW Group” Bayerische Motoren Werke AG, a company listed on the

Munich Stock Exchange, and its directly and indirectly

held subsidiaries (including BMW)

“Board” the board of Directors

“Brilliance’s Pre-Completion

Tax Liability”

an amount equal to 25% of any Pre-Completion Tax

Liability (which Tax Liability (a) arises in respect of or in

consequence of any income, profits or gains earned or

accrued or received before the Completion Date; or (b)

arises in respect of or in consequence of any event which

occurred on or before the Completion Date; and, in each

case, has not been provided or accounted for in the Locked

Box Accounts)

“Bye-laws” the bye-laws adopted by the Company and as amended

from time to time

“close associate(s)” has the meaning ascribed thereto under the Listing Rules

DEFINITIONS

– 1 –

“Company” Brilliance China Automotive Holdings Limited (華晨中國汽車控股有限公司)*, an exempted company incorporated

in Bermuda with limited liability on June 9, 1992, whose

shares are listed on the main board of the Stock Exchange

(stock code: 1114)

“Completion” completion of the Disposal pursuant to the terms and

conditions of the Equity Transfer Agreement

“Completion Date” the date on which the Completion takes place

“Conditions” conditions precedent of the Disposal, which should be

fulfilled prior to and for the Completion

“connected persons” has the meaning ascribed thereto under the Listing Rules

“Consideration” consideration for the transfer of the Target Equity Interest

from SJBA to BMW pursuant to the Equity Transfer

Agreement

“controlling shareholder” has the meaning ascribed thereto under the Listing Rules

“Dadong plant” the manufacturing plant of BBA at Dadong District,

Shenyang City, the PRC

“Director(s)” the director(s) of the Company

“Disposal” the proposed disposal of 25% equity interest in BBA by

SJBA to BMW in accordance with the terms and conditions

of the Equity Transfer Agreement and other Transaction

Documents

“Eighth Amendment to the JV

Contract”

the eighth amendment dated October 11, 2018 which shall

amend and restate the JV Contract

“Equity Transfer Agreement” the Equity Transfer Agreement dated October 11, 2018

entered into by and between SJBA and BMW in relation to

the transfer of the Target Equity Interest

“Goldman Sachs” Goldman Sachs (Asia) L.L.C., a corporation licensed to

carry out Type 1, Type 4, Type 5, Type 6 and Type 9

regulated activities under the SFO, which is the financial

adviser to the Company in relation to the Disposal

“Grant Thornton” Grant Thornton Hong Kong Limited, the auditor of the

Company

DEFINITIONS

– 2 –

“Group” the Company and its subsidiaries

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Hong Kong GAAP” the generally accepted accounting principles in Hong Kong

“Huachen” Huachen Automotive Group Holdings Company Limited*(華晨汽車集團控股有限公司), the controlling shareholderof the Company which was interested in approximately42.32% of the issued share capital of the Company as at theLatest Practicable Date

“ICE” internal combustion engine

“independent third party(ies)” a person or company which is not considered a connectedperson or an associate of a connected person of theCompany under the Listing Rules

“Independent Valuer” China Enterprise Appraisals Co., Ltd. (北京中企華資產評估有限責任公司), a PRC-approved independent appraisalfirm

“Investment Agreements” the two investment agreements both dated October 11,2018 entered into by and between Shenyang MunicipalGovernment and BBA

“Irrevocable Undertaking” the deed of irrevocable undertaking dated October 11, 2018entered into by Huachen in favour of BMW pursuant towhich Huachen irrevocably undertakes to, among othersthings, attend the SGM and exercise the voting rightsattached to all the Relevant Shares to approve the Disposal

“JBC” Shenyang Jinbei Automotive Co., Ltd.* (金杯汽車股份有限公司), a company incorporated in the PRC on May 14,1984, whose shares are listed on the Shanghai StockExchange (stock code: 600609)

“JV Contract” the equity joint venture contract of BBA entered into byand between SJBA and BMW on March 27, 2003, and asamended and supplemented from time to time

“Latest Practicable Date” December 28, 2018, being the latest practicable date priorto the printing of this circular to ascertain certaininformation contained herein

“LCV” light commercial vehicle

DEFINITIONS

– 3 –

“Leakage” (i) any dividend, bonus or other distribution of profits

declared, paid or made in respect of the Target Equity

Interest by BBA to SJBA, other than the dividend approved

and declared by the board of directors of BBA at the board

meeting held on July 13, 2018; (ii) any payment (including

management, consulting service, fees or cost-recharge,

bonus or other compensation) made or agreed to be made

by, or assets transferred to or liabilities assumed, or

guarantee incurred by BBA to, or for the benefit of SJBA or

any of its affiliates, other than transactions on arm’s length

third party terms; (iii) the waiver, deferral or release by

BBA of any amount owed by SJBA or any of its affiliates to

BBA; and (iv) any transaction by BBA with SJBA or any of

its affiliates other than on arm’s length third party terms,

and provided in each case, other than any Permitted

Leakage Payment

“Listing Rules” the Rules Governing the Listing of Securities on The Stock

Exchange of Hong Kong Limited, as amended from time to

time

“Locked Box Accounts” the audited financial statements of BBA for the financial

period ended on the Locked Box Date

“Locked Box Date” June 30, 2018

“MOFCOM” Ministry of Commerce of the PRC or its local delegate

“MPV” multi-purpose vehicle

“NDRC” National Development and Reform Commission of the

PRC or its local delegate

“NDRC Approval Matters” any and all matters required to be approved by NDRC (as

the original approval authority of BBA) in connection with

the transactions as contemplated under (i) the Equity

Transfer Agreement, (ii) the Eighth Amendment to the JV

Contract and the Restated JV Contract, and (iii) the

Investment Agreements, in accordance with the Policy on

Development of Automotive Industry (《汽車產業發展政策》) or other applicable PRC laws and regulations

“NEV” new energy vehicle

DEFINITIONS

– 4 –

“new Tiexi plant” a new manufacturing plant of BBA at Tiexi District,

Shenyang City, the PRC to be constructed to expand BBA’s

manufacturing capacity for certain BMW passenger car

products

“Permitted Leakage Payment” (i) any payment specifically provided for under the Equity

Transfer Agreement, and (ii) any payment specifically

approved in writing by BMW

“PRC” the People’s Republic of China (for the purpose of this

circular, excluding Hong Kong, the Macao Special

Administrative Region of the PRC and Taiwan)

“PRC GAAP” the generally accepted accounting principles in the PRC

“PRC Governmental Body” has the meaning ascribed thereto under the Listing Rules

“Pre-Completion Tax Liability” a liability of BBA and/or of any of its subsidiaries to make

or suffer an actual payment of tax to the disadvantage of

BMW, BBA, any affiliate of BMW and/or any subsidiary of

BBA

“RBJAC” Renault Brilliance Jinbei Automotive Company Limited*

(華晨雷諾金杯汽車有限公司) (formerly known as

“Shenyang Brilliance Jinbei Automobile Co., Ltd.* (瀋陽華晨金杯汽車有限公司)”), a company established in the

PRC on July 19, 1991, its effective equity interest is owned

as to 51% SJBA and as to 49% by Renault as at the Latest

Practicable Date

“Relevant Shares” the Shares held by Huachen, representing approximately

42.32% of the total voting rights of the Company as of the

Latest Practicable Date

“Remaining Group” the Company and its subsidiaries after completion of the

Disposal

“Renault” Renault SAS, a company incorporated under the laws of

France whose registered office is at 13/15 quai Alphonse le

Gallo, 92100 Boulogne Billancourt, France

“Restated Articles” the articles of association of BBA as amended and

supplemented by the Sixth Amendment to the Articles of

Association

DEFINITIONS

– 5 –

“Restated JV Contract” the amended and restated joint venture contract entered

into by and between SJBA and BMW on October 11, 2018

in relation to BBA

“RMB” Renminbi yuan, the lawful currency of the PRC

“SAMR” State Administration for Market Regulation of the PRC

“SASAC” State-owned Assets Supervision and Administration

Commission of the State Council of the PRC or its local

delegate

“SAV” sports activity vehicle

“SFO” the Securities and Futures Ordinance (Chapter 571 of the

Laws of Hong Kong), as amended from time to time

“SGM” the special general meeting of the Company to be convened

on Friday, January 18, 2019 at 9:00 a.m. for the purpose of

considering, and if thought fit, approving the Transaction

Documents and the transactions contemplated thereunder

(including the Disposal)

“Shanghai Shenhua” Shanghai Shenhua Holdings Co., Ltd., a company listed on

the Shanghai Stock Exchange

“Share(s)” shares at par value of US$0.01 each in the share capital of

the Company

“Shareholder(s)” holder(s) of the Share(s)

“Shenyang Automotive” Shenyang Brilliance Jinbei Automobile Co., Ltd.* (瀋陽華晨金杯汽車有限公司), now known as Renault Brilliance

Jinbei Automotive Company Limited* (華晨雷諾金杯汽車有限公司)

“Sixth Amendment to the Articles

of Association”

the sixth amendment dated October 11, 2018 which shall

amend and restate the articles of association of BBA

“SJBA” Shenyang JinBei Automotive Industry Holdings Co., Ltd.*

(瀋陽金杯汽車工業控股有限公司), a limited liability

company established in the PRC on July 5, 2002 and an

indirect wholly-owned subsidiary of the Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited

DEFINITIONS

– 6 –

“Target Equity Interest” 25% equity interest in BBA held by SJBA to be transferred

to BMW together with all rights and obligations attached to

it in accordance with the Equity Transfer Agreement

“Transaction Documents” collectively, the Transaction Framework Agreement, the

Equity Transfer Agreement, the Restated JV Contract and

the Restated Articles together with the ancillary documents

thereto

“Transaction Framework

Agreement”

the transaction framework agreement dated October 11,

2018 entered into by and among the Company, BMW and

SJBA in relation to, among other things, the Disposal

“US$” United States dollars, the lawful currency of the United

States

“Valuation Report” the assets valuation report titled “The Asset Valuation

Report in relation to the Proposed Transfer of Part of the

Equity Interest Shenyang JinBei Automotive Industry

Holdings Co., Ltd. Holds in BMW Brilliance Automotive

Ltd.”《瀋陽金杯汽車工業控股有限公司擬轉讓其持有的華晨寶馬汽車有限公司的部分股權項目資產評估報告》（中企華評報字(2018)第1307號） dated September 24,

2018 issued by the Independent Valuer

“ZINORO” “之諾”, a brand for NEV established by BBA in the PRC

“€” Euro, the official currency of the European Union

“%” per cent

* Denotes English translation of the name of a Chinese company or entity or vice versa and is provided for

identification purposes only.

For the purpose of this circular and for illustration purpose only, the exchange rate between

€ and RMB is 1:7.847 and no representation is made that any amount in € or RMB could have been

or could be converted at such rates or at any other rates.

DEFINITIONS

– 7 –



(Stock Code: 1114)

Executive Directors:

Mr. Wu Xiao An (also known as Mr. Ng Siu On) (chairman)

Mr. Qi Yumin (chief executive officer)

Mr. Qian Zuming (chief financial officer)

Mr. Zhang Wei

Independent Non-executive Directors:

Mr. Xu Bingjin

Mr. Song Jian

Mr. Jiang Bo

Registered Office:

Canon’s Court

22 Victoria Street

Hamilton HM12

Bermuda

Head office and principal place

of business:

Suites 1602-05

Chater House

8 Connaught Road Central

Hong Kong

December 31, 2018

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSALIN RELATION TO DISPOSAL OF 25% EQUITY INTEREST IN

BMW BRILLIANCE AUTOMOTIVE LTD.

INTRODUCTION

We refer to the announcements of the Company dated October 11, 2018 and November 1,

2018 in relation to, inter alia, the Disposal and the Transaction Documents.

On October 11, 2018, the Company had agreed with BMW on a new ownership structure of

BBA, a sino-foreign equity joint venture owned as to 50% by SJBA (an indirect wholly-owned

subsidiary of the Company) and as to 50% by BMW, together with other new products and strategic

investments in BBA as well as the extension of the current joint venture term to the year 2040,

subject to fulfilment of the Conditions, including the necessary approvals by the PRC Government.

* for identification purposes only

LETTER FROM THE BOARD

– 8 –

Accordingly, on October 11, 2018, (i) the Company, SJBA and BMW entered into the

Transaction Framework Agreement; (ii) SJBA and BMW entered into the Equity Transfer

Agreement; (iii) SJBA and BMW entered into the Restated JV Contract and the Sixth Amendment

to the Articles of Association; (iv) BBA and Shenyang Municipal Government entered into the

Investment Agreements; and (v) Huachen executed in favour of BMW the Irrevocable Undertaking.

Key terms of the Transaction Framework Agreement, the Equity Transfer Agreement, the Restated

JV Contract and the Restated Articles (as amended and supplemented by the Sixth Amendment to

the Articles of Association), the Investment Agreements and the Irrevocable Undertaking are

described in more detail below.

At the forthcoming SGM, ordinary resolutions will be proposed to seek the Shareholders’

approval for, among other things, the Transaction Documents and the transactions contemplated

thereunder (including the Disposal).

The purpose of this circular is to provide you with, among other things, (i) details of the

Transaction Documents and the transactions contemplated thereunder (including the Disposal);

(ii) the financial information of the Group and BBA; (iii) other information as required to be

disclosed under the Listing Rules; and (iv) a notice convening the SGM for considering and, if

thought fit, approving, confirming and ratifying the Transaction Documents and the transactions

contemplated thereunder (including the Disposal).

I. TRANSACTION FRAMEWORK AGREEMENT

1. Date

October 11, 2018

2. Parties

(a) The Company

(b) SJBA

(c) BMW

3. Transfer of the Target Equity Interest

Subject to the Conditions (as set out in the Equity Transfer Agreement) and in

accordance with the Equity Transfer Agreement, SJBA shall transfer the Target Equity

Interest to BMW, so that upon the Completion, the equity interest of BMW in BBA will be

increased from 50% to 75% of the registered capital of BBA.


– 9 –

4. Transaction steps

The parties shall use their best efforts to obtain all applicable approvals and procure

the convening of all meetings, the passing of all resolutions and the signing of all documents

as are necessary to implement the Disposal pursuant to the Transaction Framework

Agreement, including:

A. State-owned Assets Appraisal

SJBA and the Company had appointed the Independent Valuer to issue the

Valuation Report which has been filed with the SASAC of Liaoning Province. SASAC

of Liaoning Province issued its approval letter dated September 29, 2018 for the

transfer of the Target Equity Interest from SJBA to BMW.

B. Shareholders’ Approval

The Company shall promptly complete all required regulatory procedures for

the purpose of consummating the transactions contemplated under the Transaction

Documents in accordance with the applicable rules, regulations and requirements of

the Stock Exchange.

C. The PRC and Germany Regulatory Process

After obtaining the Shareholders’ approval at the SGM, the parties shall use

their best efforts to complete all necessary regulatory procedures in accordance with

the Equity Transfer Agreement, including the obtaining of approvals from NDRC,

MOFCOM, the approval for the anti-trust clearance application submitted to SAMR,

the clearance by the German anti-trust authority in respect of the acquisition of the

Target Equity Interest by BMW and the procuring of the issuance of a new business

license for BBA by SAMR or its local delegate, evidencing BMW as the holder of the

Target Equity Interest.

5. New Investments

The parties shall cause BBA to implement the new investments (the “New

Investments”) as follows:

(a) localization of “BMW X5” and BEV vehicles with start of production

envisaged in 2022; and

(b) all matters and investments related to the Dadong plant expansion as well as

the construction of a new Tiexi plant as set out in the Investment Agreements.


– 10 –

II. EQUITY TRANSFER AGREEMENT

1. Date

October 11, 2018

2. Parties

(a) SJBA

(b) BMW

3. Interest to be disposed of

25% equity interest in BBA held by SJBA

4. Consideration

The Consideration for the transfer of the Target Equity Interest from SJBA to BMW is

RMB29 billion (with reference to the fair value estimate of approximately RMB115.8

billion of 100% equity interest of BBA as of the Locked Box Date, i.e. June 30, 2018),

subject to adjustments as set out in more detail below, which shall be settled by BMW in

cash on the Completion Date.

The Consideration was determined after arm’s length negotiations between the

parties and their respective advisors with reference to various factors including: (i) the

Valuation Report; (ii) the consolidated financial position and performance of BBA; (iii)

publicly available valuation reference points for BBA and comparable companies; and (iv)

the commercial reasons and benefits set out in the section headed “Reasons for and Benefits

from the Disposal” below.

Publicly available valuation reference points which were referred to in the

negotiation process are primarily the trailing 12 months price-earnings ratio (“P/E Ratio”)

as of October 10, 2018 (being the trading day before the entering into of the Equity Transfer

Agreement) of the Company and comparable companies listed in Hong Kong. Given the

nature of BBA’s business, the comparable companies shortlisted mainly included Chinese

passenger vehicle manufacturers listed on the Stock Exchange with an average P/E Ratio of

7.1x. During the negotiation for the Consideration, the P/E Ratio of the Company and the

comparable companies were used to set a valuation floor. Accordingly, the P/E Ratio

implied by the Consideration for BBA, being 9.3x, was higher than that of the Company

(8.1x) and the comparable companies (7.1x) as of the date of the Equity Transfer Agreement.

Valuation Report

The Independent Valuer performed an independent valuation which involved

processes such as preliminary preparation, on-site investigation, data collection, evaluation

and calculation and internal review, to appraise the value of BBA and selected the


– 11 –

income-based approach as the adopted valuation methodology for the Valuation Report. The

income-based approach focuses on the future profitability of an enterprise, which reflects

the comprehensive profitability of various assets of an enterprise. BBA has mature products,

a reliable profit model, smooth sales channels, stable suppliers, and has accumulated brand

strength and technology. Accordingly, BBA’s future earnings and risks can be reasonably

predicted and the income-based approach is suitable for its appraisal purposes.

The income-based approach adopted in the Valuation Report was based on the free

cash flow to equity model of the discounted cash flow method which is illustrated as

follows:

Value of total shareholders’ equity = the value of operating assets+ the value of surplus assets+ the value of non-operating assets- the value of non-operating liabilities+ the value of long-term equity investment

The following is the calculation formula for operating assets value:

P =n

∑i=1

Fi

(1+r)i

Where: P: Value of BBA’s operating assets on the base date of valuation;

Fi: Projected equity free cash flow in the i-th year after the base date of

valuation;

r: Discount rate (herein referred to as cost of equity capital, Ke);

n: Forecast period;

i: the i-th year of the forecast period;

in which, the calculation of the cost of equity capital adopted the Capital Asset

Pricing Model (CAPM), which was expressed by the following formula:

Ke = rf + MRP × β + rc

Where: rf: Risk-free interest rate;

MRP: Market risk premium;

β: Coefficient of systematic risk of equity;

rc: Coefficient of adjustment for the enterprise’s specific risk.


– 12 –

In addition to the operating assets, value of BBA’s long-term equity investments was

also assessed using income-based approach. For the value of BBA’s surplus assets,

non-operating assets and non-operating liabilities, the Valuation Report adopted cost-based

approach.

The valuation of BBA is required by the applicable laws and regulations in the PRC

that are applicable to SJBA in connection with the Disposal. Based on the Valuation Report,

fair value estimate of the valuation of 100% equity interest of BBA as of the Locked Box

Date, i.e. June 30, 2018, was approximately RMB115.8 billion.

As the income-based approach with the use of discounted cash flow method has been

adopted for the valuation of BBA as set out in the Valuation Report and such valuation based

on discounted future cash flow is regarded as a profit forecast under Rule 14.61 of the

Listing Rules (the “Forecast”), the requirements under Rules 14.60A and 14.62 of the

Listing Rules are applicable. Set out below is the information relating to the Forecast:

Assumptions

The principal assumptions, including commercial assumptions, upon which the

Forecast was based include:

(i) there is no material change to the relevant prevailing laws, regulations and

policies, and in the macroeconomic conditions of the PRC; there is no material

change in political, economic and social environment of the regions where the

parties to the Disposal are in; there are no other unforeseen circumstances or

force majeure to cause material adverse changes;

(ii) the relevant interest rates, currency exchange ratios, tax bases and tax rates and

charges pursuant to policies etc. will not change materially after the Locked

Box Date;

(iii) the management of the entities being evaluated are responsible, stable and have

the ability to fulfill their duties;

(iv) the entities being evaluated are in full compliance with all relevant laws and

regulations;

(v) the accounting policy used by the entities being evaluated after the Locked Box

Date, will be basically in line with that used in the compilation of the Valuation

Report in all material respects;

(vi) on the basis of the existing model and quality of management, the scope and

model of operation of the entities being evaluated after the Locked Box Date

remain the same;

(vii) the cash inflows of the entities being evaluated are average inflows and their

cash outflows are average outflows after the Locked Box Date;


– 13 –

(viii) the valuation based on the income-based approach is developed under the

assumption that the series of cash flows generated by BBA will be limited to

May 22, 2028, being the last day of the term of the existing joint venture

agreement of BBA;

(ix) the projects for capacity increase and reformation of the entities being

evaluated can be executed as planned; and

(x) pursuant to the Notice by the Ministry of Finance, the State Administration of

Taxation and the Ministry of Science and Technology of Raising the Proportion

of Weighted Pre-tax Deduction of Research and Development Expenses (No.99

[2018] of the Ministry of Finance) (《關於提高研究開發費用稅前加計扣除比例的通知》（財稅 [2018] 99號）), it is assumed that the weighted pre-tax

deduction ratio of research and development expenses for 2018 to 2020 is 75%

whereas that for 2021 to May 22, 2028 is 50%.

Letters in relation to the discounted cash flows forecast

Grant Thornton, the auditor of the Company, has examined the arithmetical accuracy

of the calculations of the Forecast, which does not involve the adoption of accounting

policies.

The Company has received a letter from Grant Thornton regarding the calculation of

the Forecast (the “Letter from Grant Thornton”), in which Grant Thornton is of the

opinion that, so far as the arithmetical accuracy of the calculation is concerned, the Forecast

has been properly compiled in all material respects in accordance with the bases and

assumptions made by the Directors and adopted in the Valuation Report.

Goldman Sachs, the financial advisor to the Company, has reviewed the Forecast, and

has attended discussions of the Forecast involving certain Directors and the management of

the Company, the management of BBA and the Independent Valuer. Goldman Sachs has also

considered the Letter from Grant Thornton. On the basis of the foregoing, and without

giving any opinion on the reasonableness of the Valuation Report or the Forecast, or any

underlying bases and assumptions selected by the Independent Valuer (for which the

Independent Valuer and the Company are responsible), Goldman Sachs is satisfied that the

Forecast, for which the Directors are responsible, has been made by the Directors after due

and careful enquiry, and issued a letter to the Stock Exchange (the “Letter from Goldman

Sachs”) accordingly.

The Letter from Grant Thornton and the Letter from Goldman Sachs are included in

Appendix IV to this circular for the purposes of Rule 14.62 of the Listing Rules and the

Company has submitted the Letter from Grant Thornton and the Letter from Goldman Sachs

to the Stock Exchange in compliance with Rules 14.62(2) and 14.62(3) of the Listing Rules.


– 14 –

5. Adjustment to Consideration

The amount of the Consideration shall be subject to the following adjustments:

(a) increased by the amount of interest applicable to the Consideration which is

calculated on a daily basis at the rate of 6% per annum from (and including) the

Locked Box Date to (but excluding) the Completion Date;

(b) reduced by the amount of any Leakage;

(c) reduced by the amount of any Brilliance’s Pre-Completion Tax Liability; and

(d) reduced by the amount of interest on the relevant Leakage and Pre-Completion

Tax Liability calculated on a daily basis at the rate of 6% per annum from (and

including) the date of occurrence of the relevant Leakage or the

Pre-Completion Tax Liability (as the case may be) to (but excluding) the

Completion Date.

6. Conditions

The Disposal shall be subject to and conditional upon the following Conditions:

(a) the approval of the Shareholders in respect of the Disposal having been

obtained in accordance with the requirements of the Listing Rules;

(b) the approval of the NDRC Approval Matters by the NDRC having been

obtained;

(c) the approval of the Equity Transfer Agreement, the Restated JV Contract and

the Restated Articles by the MOFCOM having been obtained;

(d) the German anti-trust authority having cleared the anti-trust clearance

application for the Disposal;

(e) the approval for the anti-trust clearance application submitted to the SAMR for

the Disposal; and

(f) the SAMR or its local delegate having issued a new business license for BBA,

evidencing BMW as holder of the Target Equity Interest.

Pursuant to the Equity Transfer Agreement, none of the Conditions above is waivable

by the parties thereto. To the best of the Company’s knowledge, Condition (d) above had

been satisfied as at the Latest Practicable Date.


– 15 –

7. Pre-Completion undertakings

From the date of the Equity Transfer Agreement to the Completion Date, SJBA shall

ensure (to the extent it is able through the exercise of its voting rights as an investor in BBA)

that:

(a) the business of BBA is carried on in all material respects only in the ordinary

course;

(b) the business and operation of BBA is conducted strictly in accordance with the

existing JV Contract; and

(c) it will approve (and will cause the directors it appointed to BBA to approve) all

matters related to the New Investments, and it will not unreasonably withhold

its approval for other matters that might be presented to the board of directors

of BBA.

8. Completion

Completion shall take place on: (a) the fifth business day after the fulfilment of all of

the Conditions; or (b) any other day and time agreed by the parties in writing. It is expected

that Completion will take place by no later than 2022.

III. RESTATED JV CONTRACT AND RESTATED ARTICLES

1. Effective date

Executed on October 11, 2018 and will become effective upon the approval by

MOFCOM

2. Parties to Restated JV Contract

(a) SJBA

(b) BMW

3. Term

The term of the joint venture contract is extended to 2040


– 16 –

4. Registered capital

The registered capital of BBA shall be €150 million (approximately RMB1,177.1

million) comprising:

(a) €37.5 million (approximately RMB294.3 million) as SJBA’s capital

contribution amount, representing 25% of the total registered capital of BBA;

and

(b) €112.5 million (approximately RMB882.8 million) as BMW’s capital

contribution amount, representing 75% of the total registered capital of BBA.

5. Business scope of BBA

The business scope of BBA shall be, among other things, to produce BMW and

ZINORO passenger cars, engines, power battery, parts and components, and accessories as

well as tooling and equipment etc. therefor; to sell products produced by itself; to provide

after-sale services in connection with its products; to lease its products; to conduct research

and development in connection with automotive technologies and to transfer technologies;

to conduct import and export of various goods and technologies or to act as agent for import

and export of various goods and technologies (excluding goods and technologies of which

import and export should be carried out by appointed companies or which is prohibited by

the state); to conduct the business as a customs supervision operation premise to centrally

handle import and export, loading and unloading, storage, container assembly, temporary

deposit, disassembly, inspection, fumigation and demurrage storage for goods under

customs supervision and related business activities; to conduct wholesale and retail of used

cars, automotive and motorcycle parts and components, accessories and automotive interior

articles as well as BMW-lifestyle articles; to lease self-owned real estate; to carry out

recycling business of vehicles and the parts, components, and accessories therefor; and to

conduct all business activities necessary for or related to or ancillary to automobile

production and sales.

6. Production scale and new products

The annual production scale of BBA is estimated to be one million passenger

vehicles. In addition to the existing products of BBA, new products (including BMW

passenger cars such as the X5 model and the future BEV models) will be produced and sold

by BBA in the PRC.

7. Board of directors and senior management

After Completion, the board of directors of BBA shall consist of eight directors, of

which six directors shall be appointed by BMW and two directors shall be appointed by

SJBA. The chairman of the board of directors of BBA shall be appointed by BMW and the

vice-chairman shall be appointed by SJBA.


– 17 –

Except for the deputy general manager finance with the function of chief financialofficer (which shall be nominated by SJBA) and the deputy general manager humanresources (which shall be nominated by both SJBA and BMW), all senior corporate officersof BBA shall be nominated by BMW and appointed by the board of directors of BBA.

8. Matters requiring unanimous consent of the board of directors of BBA

The following matters, amongst others, require unanimous consent of all the directorsof BBA:

(a) amendment of the articles of association of BBA;

(b) increase, decrease, transfer, assignment or pledge of BBA’s registered capitaland the adjustment of the proportions of each party’s contribution to theregistered capital;

(c) merger of BBA with any other economic organization, or split or division ofBBA;

(d) suspension of BBA’s operation, and/or termination, dissolution or liquidationof BBA;

(e) establishment of or investment in any company by BBA; sale, transfer,assignment or disposal by BBA of any equity interest in another company;establishment of a branch by BBA in the PRC or outside of the PRC;

(f) any material connected transaction between BBA and one party to the RestatedJV Contract (or any affiliate of one party to the Restated JV Contract), unlesssuch transaction was separately approved in the business plan and budget ofBBA;

(g) the approval of any material credit lines, structured financing, or issuance ofpublic and private debentures by BBA, unless such transaction was separatelyapproved in the business plan and budget of BBA;

(h) approval of any guarantee to be made by BBA or of any mortgage, pledge, orcreation of any security interest in any material assets of BBA, that is bothoutside of BBA’s ordinary course of business and not included in the businessplan and budget of BBA; and

(i) distribution and payment of less than 30% of the Distributable Profits (asdefined below) of BBA.

9. Shares transfer restriction

Neither party shall, without the prior written consent of the other party, assign, pledgeor otherwise encumber any of its interest in the registered capital of BBA, except to itsaffiliate in accordance with the provisions of the Restated JV Contract.


– 18 –

10. Dividend policy

After paying taxes in accordance with the relevant PRC laws and making allocations

to the reserve funds, expansion funds, bonuses and welfare funds for staff workers, BBA’s

remaining profits (“Distributable Profits”) either shall be distributed between the parties

according to the parties’ ratio of contribution to BBA’s registered capital or shall be retained

or reinvested as decided by the board of directors of BBA. Except by the unanimous

approval by the board of directors of BBA, the amount of profits to be distributed by BBA

for a financial year shall be no less than 30% of the Distributable Profits of BBA generated

in the previous financial year.

IV. INVESTMENT AGREEMENTS

1. Date

October 11, 2018

2. Parties

(a) Shenyang Municipal Government

(b) BBA

3. Investments by BBA

BBA undertakes to expand the manufacturing plant of BBA at Dadong District,

Shenyang City and construct a new plant in Tiexi District, Shenyang City, subject to

compliance with the applicable PRC laws and regulations, as well as to expand its

manufacturing capacity for certain BMW branded passenger car products and introduce new

BMW models for localisation.

4. Support of Shenyang Municipal Government

In consideration of the aforesaid investments in Shenyang City, Shenyang Municipal

Government agrees to provide financial and other support to BBA including, but not limited

to: (i) facilitate the acquisition of land use right for construction of the new plant and

expansion of the existing facility by BBA and prepare such land in accordance with BBA’s

public supply and transport infrastructure requirements; (ii) coordinate with the relevant

authorities in relation to the process for obtaining the necessary approvals and licences; and

(iii) grant certain subsidies to BBA in support of its said investments.


– 19 –

V. IRREVOCABLE UNDERTAKING

1. Date

October 11, 2018

2. Parties

(a) Huachen

(b) BMW

3. Voting undertaking

Huachen irrevocably undertakes and warrants that it shall attend (either in person

through its corporate representative(s) or by proxy duly appointed) and exercise or procure

the attendance and exercise of the voting rights attached to the Relevant Shares, at the SGM

to consider and vote on the Disposal, to approve the Disposal in accordance with the terms

and subject to the conditions as set out in this circular.

4. Other undertakings

Huachen further irrevocably undertakes and warrants that it shall not do any of the

following at any time prior to the conclusion of the SGM:

(a) sell, transfer, charge, encumber, grant any option over (or cause the same to be

done) or otherwise dispose of, whether directly or indirectly, any interest in the

Relevant Shares;

(b) acquire, directly or indirectly, any additional shares, securities or other

interests of the Company (despite the foregoing, if Huachen voluntarily or

involuntarily receives, is allotted, or otherwise acquires any additional interest

in shares, securities or other interests of the Company, such shares, securities

or interests shall be deemed to be the Relevant Shares for the purpose of the

Irrevocable Undertaking);

(c) exercise any of the voting rights attached to the Relevant Shares in a manner

which is inconsistent with the Irrevocable Undertaking or which might

otherwise restrict, impede or frustrate the implementation of the Disposal; or

(d) take any action or enter into any agreement or arrangement, or permit any

agreement or arrangement to be entered into or authorise or incur any

obligation which, in relation to the Relevant Shares, would or might restrict,

impede or frustrate Huachen’s ability to attend the SGM or to exercise its vote

in favour of the Disposal.


– 20 –

INFORMATION OF THE PARTIES

1. Information on the Group

The principal activities of the Group are the manufacture and sale of BMW vehicles in thePRC through its major joint venture BBA, the manufacture and sale of automobiles and automotivecomponents through its subsidiary RBJAC, and the provision of auto financing service tocustomers and dealers through its subsidiary BBAFC.

The principal activities of SJBA are investment in the automotive industry, research,development and consulting services relating to automotive technology, automotive design anddevelopment and sales of automotive spare parts in the PRC.

2. Information on BMW

With its four brands BMW, MINI, Rolls-Royce and BMW Motorrad, BMW Group is one ofthe world’s leading premium manufacturers of automobiles and motorcycles and also providespremium financial and mobility services. The BMW production network comprises 30 productionand assembly facilities in 14 countries and it has a global sales network in more than 140 countries.To the best of the Directors’ knowledge, information and belief having made all reasonableenquiry, BMW and the ultimate beneficial owner of BMW are third parties independent of theCompany and connected persons of the Company.

3. Information on BBA

BBA is an automobile manufacturing company headquartered in Shenyang City, LiaoningProvince, China. It has been a joint venture established between SJBA and BMW since 2003. Theexisting joint venture contract term of BBA will expire in 2028. Its principal activity is theproduction, distribution and provision of sale and after-sale services of the BMW brandedpassenger vehicles in China.

Set out below is a summary of the audited financial information of BBA for the two financialyears ended December 31, 2016 and 2017 (which were audited by the auditors of BBA) and theunaudited financial information for the six months ended June 30, 2018, prepared in accordancewith the PRC GAAP, respectively:

For the year ended December 31, For the six monthsended June 30, 20182016 2017

RMB’ million RMB’ million RMB’ million(audited) (audited) (unaudited)

Total net asset 34,484.5 42,004.3 46,987.7Net profit before tax 10,453.0 13,567.2 9,589.4Net profit after tax 7,806.8 10,098.3 7,183.4

As at the Latest Practicable Date, BBA was beneficially owned as to 50% by each of SJBAand BMW, respectively. Immediately upon Completion, BBA will be beneficially owned as to 25%and 75% by SJBA and BMW, respectively.


– 21 –

REASONS FOR AND BENEFITS FROM THE DISPOSAL

BBA was established between the Group and the BMW Group in 2003. Under the prevailing

PRC laws, foreign investors are restricted from owning more than 50% interest in auto

manufacturing companies in China. Such a requirement has defined the existing ownership

structure of BBA in which the Group and BMW each owns 50% equity interest. In April 2018, the

PRC Government announced the relaxation of the foreign ownership restrictions in the auto sector,

completely lifting all foreign ownership restriction in the auto sector of the Chinese passenger

vehicles market starting from 2022. As a consequence, BMW Group will be allowed to set up its

wholly- or majority-owned manufacturing and distribution operations in China when the foreign

ownership restrictions are officially lifted.

Against these developments and background, BMW made a request to the Company to

acquire 25% stake in BBA from SJBA such that the equity interest held by BMW in BBA will be

increased to a super-majority level (i.e. 75%). Having considered, among others, the above

changes in the regulatory policies and the resulting uncertainties to the future cooperation between

the parties under the existing joint venture contract which is due to expire in 2028, the Company

had to consider the proposal from BMW while at the same time, with the support of the PRC

Government, endeavouring to agree with BMW on a long-term business plan for BBA, including a

new joint venture term together with various new products and strategic investments, to secure the

stability and sustainability of the Group’s future business beyond the expiry of its joint venture

term in 2028 stipulated under the current JV Contract.

As an integral part of the overall transaction, BMW has agreed to introduce new BMW

models for localization in the PRC, including the X5 model and future BEV models. In addition,

the parties have agreed to further increase the production capacity at BBA and build a new plant in

Tiexi District, Shenyang City in addition to the extension of the joint venture contract term to

2040. Moreover, both Liaoning Provincial Government and Shenyang Municipal Government have

committed great support for the transaction, by granting approvals for construction of the new

plant and capacity expansion of the existing plants in BBA, providing support in the construction

of related infrastructure facilities, as well as granting additional government incentives for both

the new Tiexi plant and the existing Dadong plant, in consideration of the contemplated

investments in Shenyang City. Hence, in a view to continue to sustain and provide stability to the

Group as well as to participate in the long-term development of the Chinese premium auto

industry, the Company has agreed with BMW on the Disposal alongside the introduction of new

BMW products and other strategic investments in BBA as well as the extension of the current joint

venture term.

According to the China Passenger Car Association and the China Import Car Association,

the Chinese premium passenger vehicle market experienced continued high growth with sales up

12% year-on-year during the first half of 2018. The growth in premium passenger vehicle sales was

driven by the launch of new products and strong market demand fueled by general economic

growth in China and the consumption upgrade development. Apart from the temporary interruption

from the Sino-US trade tension, the overall demand for premium passenger vehicles in China is

intact and the secular growth of Chinese premium passenger vehicle sales is expected to continue

into the next few years.


– 22 –

In addition, the BMW X5 model, which will be locally made by BBA according to its

business plan, has been a very successful car model globally and in China. The localization of the

X5, which is currently still imported by BMW, is expected to increase BBA’s revenue and earnings

in China. Further, new models are critical growth drivers in the automotive industry because they

stimulate market demand and unit sales. In the next years, BEV models are expected to experience

the highest growth rates because of China’s regulatory policies and consumer demand. The

Company believes that the launch of the X5 and new BEV models within the scope of BBA,

supported by technology contributions from BMW, will be a key revenue driver for BBA in the

future. Moreover, to capture the growing demand for premium passenger vehicles in China and the

localization of new BMW models, BMW and the Group have agreed to increase the production

capacity of BBA to one million units over time by building the new Tiexi plant and expanding the

Dadong plant and NEV powertrain plant capacity.

In addition to the aforementioned revenue drivers, the extension of the joint venture contract

term from 2028 to 2040 will mean that BBA can continue to operate and generate revenues and

earnings and capitalize on the growth potential of BMW in China for its shareholders until at least

2040.

In light of the aforesaid, although the Disposal would reduce the Group’s percentage of

earnings received from BBA, considering the growing Chinese premium auto market as well as the

future business plan of BBA, including the introduction of new models from BMW and the

establishment of new production facilities which were decided as a result of the Disposal, the

Company believes that BBA’s business may enjoy steady growth in the coming years for the

reasons set out above, which will help to alleviate the impact on the Group’s earnings due to the

Disposal. Besides, compared with the existing joint venture contract which is due to expire in

2028, it is expected that BBA will continue to contribute to the Group’s earnings until at least 2040

as a result of the Disposal.

The remaining businesses and prospects of the Group

Apart from BBA, the Group owns 51% shareholding interest in RBJAC, being a joint

venture established between the Company and Renault for a term of 50 years to manufacture and

distribute various LCV products under the JinBei, Huasong and Renault brands. As of December

31, 2017, the total assets, revenue and net loss (before impairment loss on Huasong and gain of

disposal of a subsidiary) of RBJAC were RMB8,362.4 million, RMB4,052.9 million and

RMB826.2 million, respectively, in accordance with the Hong Kong GAAP. Leveraging on

Renault’s advanced technologies, products depth and management expertise in the LCV segment,

the Company believes that RBJAC will be able to upraise the competitiveness of its existing

business while developing new growth with both JinBei and Renault LCV products. The Company

believes that the cooperation with Renault will bring substantial value addition to the Group and

thus, the joint venture will be a viable and sustainable business.


– 23 –

The view of the Board

By virtue of the aforesaid, the Board has approved the Transaction Documents and the

transactions contemplated thereunder (including the Disposal), and the Directors (including the

independent non-executive Directors) have confirmed that the terms of the Transaction Documents

and the transactions contemplated thereunder (including the Disposal) are fair and reasonable, on

normal commercial terms and in the interests of the Company and its Shareholders as a whole.

None of the Directors has a material interest in any of the Transaction Documents or the

transactions contemplated thereunder (including the Disposal). Accordingly, none of the Directors

is required to abstain from voting on the board resolutions approving the Transaction Documents

and the transactions contemplated thereunder (including the Disposal).

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios under Chapter 14 of the Listing Rules are

more than 75%, the Disposal constitutes a very substantial disposal of the Company and is

therefore subject to the reporting, announcement and Shareholders’ approval requirements under

Chapter 14 of the Listing Rules.

The Company will convene the SGM to obtain the approval of the Shareholders for the

Transaction Documents and the transactions contemplated thereunder (including the Disposal). To

the best of the Directors’ information, knowledge and belief, after having made all reasonable

enquiries, including consultations made by the Company with the Stock Exchange, neither any

Shareholder nor any of their respective associates has any material interest in the Transaction

Documents and the transactions contemplated thereunder (including the Disposal). As such, none

of the Shareholders nor their close associates would be required to abstain from voting at the SGM.

FINANCIAL EFFECTS OF THE DISPOSAL

After Completion, the Company will cease to classify BBA as a joint venture and will

classify BBA as an associate of the Company instead. The Company will record 25% of the net

income of BBA in the consolidated statement of profit or loss, 25% of other comprehensive income

of BBA in the consolidated statement of other comprehensive income, and the Company will

record 25% of BBA’s net assets in the consolidated statement of financial position as the

Company’s interests in associates. Assuming the Disposal had taken place on June 30, 2018 for

illustration purposes only, the Company expects to record an accounting gain of approximately

RMB16,738 million arising from the Disposal. Such gain represents the sum of the Consideration

of RMB29,000 million, less (a) net asset of BBA attributable to the Group of approximately

RMB12,086 million as at June 30, 2018, (b) hedging reserve of BBA attributable to the Group of

approximately RMB119 million as at June 30, 2018 and (c) the estimated transaction costs directly

attributable to the Disposal of approximately RMB57 million. For details, please see Note 4 in

Appendix III to this circular in which the unaudited pro forma financial information of the Group

for the purpose of illustrating the effects of the Disposal is set out.


– 24 –

The Board will consider the uses of the net proceeds from the Disposal (after deducting

relevant costs and expenses in connection with the Disposal) based on the situation of the

Company at Completion. The future use of proceeds is subject to a number of uncertainties as the

amount of the net proceeds to be received by the Company upon Completion will be subject to

adjustments under the Equity Transfer Agreement, and Completion is expected to take place only

in 2022 which is still over three years away.

At this time the Company’s plan is to declare and distribute a special dividend to its

Shareholders after receipt of the net proceeds. If any new business opportunity or need for working

capital arise during this period, the Company may consider them. The Company will make further

announcement to update its Shareholders of any material development as and when appropriate.

SGM

A notice convening the SGM to be held at Statue Square Room & Alexandra Room, 2nd

Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Central, Hong Kong, on Friday,

January 18, 2019 at 9:00 a.m. is set out on pages N-1 to N-2 of this circular.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you intend

to be present at the SGM, you are requested to complete the form of proxy and return it to the office

of the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor

Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong in

accordance with the instructions printed thereon before 9:00 a.m., Hong Kong time, on Wednesday,

January 16, 2019, or not less than 48 hours before the time fixed for holding of the SGM or any

adjourned meeting (as the case may be). Completion and delivery of the form of proxy will not

prevent you from attending and voting at the SGM or adjourned meeting (as the case may be) if you

so wish.

In accordance with the requirements of the Listing Rules, the resolutions to be put forward

at the SGM approving the Transaction Documents and the transactions contemplated thereunder

(including the Disposal) will be voted on by the Shareholders by way of poll.

The register of Shareholders of the Company will be closed from Tuesday, January 15, 2019

to Friday, January 18, 2019, both days inclusive, during which period no transfer of the Shares will

be effected. The record date for the SGM is Tuesday, January 15, 2019. Only Shareholders whose

names appear on the register of Shareholders on Tuesday, January 15, 2019 or their proxies or duly

authorised corporate representatives are entitled to attend and vote at the SGM. In order to

determine the list of Shareholders who are qualified to attend and vote at the SGM, all transfer

documents accompanied by the relevant share certificates must be lodged with the Company’s

branch registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services

Limited at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong

no later than 4:30 p.m., Hong Kong time on Monday, January 14, 2019.


– 25 –

RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the view that the

Transaction Documents and the transactions contemplated thereunder (including the Disposal) are

fair and reasonable, on normal commercial terms and in the interests of the Company and its

Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favor

of the resolutions approving the Transaction Documents and the transactions contemplated

thereunder (including the Disposal) at the SGM.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the Appendices to this

circular.

Yours faithfully,

For and on behalf of the Board of

Brilliance China Automotive Holdings LimitedWu Xiao An

(also known as Ng Siu On)Chairman


– 26 –

1. FINANCIAL INFORMATION OF THE GROUP

Deta ancial information of the Group for each of the three years ended December

31, 2015, 2016 and 2017 and the six months ended June 30, 2018 are disclosed in the following

annual reports of the Company for the years ended December 31, 2015, 2016 and 2017 and interim

report for the six months ended June 30, 2018, respectively, which have been published and are

available on the website of the Stock Exchange (http://www.hkex.com.hk) and the website of the

Company (http://www.brillianceauto.com)

The Annual Report 2015 of the Company for the year ended December 31, 2015

published on April 26, 2016 (available on:

http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0426/LTN20160426438.pdf),

please refer to pages 47 to 122 in particular.









•

•

•

•

The Interim Report 2018 of the Company for the six months ended June 30, 2018

published on September 26, 2018 (available on:



2. STATEMENT OF INDEBTEDNESS

As at the close of business on October 31, 2018, being the latest practicable date for the

purpose of ascertaining the indebtedness of the Group prior to the printing of this circular, the

Group had aggregate outstanding borrowings of approximately RMB4,548.5 million comprising:

(a) outstanding bank borrowings of approximately RMB173 million which were secured

by property, plant and equipment, and land lease prepayments; and

(b) unsecured loan of approximately RMB4,375.5 million.

On November 20, 2017, Shenyang XingYuanDong Automobile Component Co., Ltd.* (瀋陽興遠東汽車零部件有限公司) (“Xing Yuan Dong”), a wholly-owned subsidiary of the Company

and JBC entered into an agreement for the provision of cross guarantees in respect of each other’s

banking facilities up to the amount of RMB600 million for the period from January 1, 2018 to

December 31, 2018. As at October 31, 2018, pursuant to the aforesaid agreement, JBC and its

subsidiaries had outstanding bank loans of RMB206 million, which were supported by the Group’s

bank deposits pledged to the banks.

APPENDIX I FINANCIAL INFORMATION OF THE GROUP

– I-1 –

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, the

Group did not have at the close of business on October 31, 2018 any loan capital issued and

outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities

under acceptances or acceptable credits, debentures, mortgages, charges, hire purchase

commitments, guarantees or other material contingent liabilities.

3. WORKING CAPITAL

The Directors, after due and careful enquiry, are of the opinion that, after taking into

account the financial resources available to the Group, including internally generated funds and the

available banking facilities, the Group has sufficient working capital for its present requirements

for at least the next 12 months from the date of this circular, in the absence of unforeseeable

circumstances.

4. MATERIAL ACQUISITION

The Group has not entered into any material acquisitions after December 31, 2017, being the

date to which the latest published audited accounts of the Company have been made up.

5. FINANCIAL AND TRADING PROSPECTS

During the first six months of 2018, China’s economy showed steady growth with GDP up

6.8% compared to the same period last year. According to the China Association of Automobile

Manufacturers, total Chinese vehicle sales in the first half increased by 5.6% to 14.07 million

units. Of this figure, passenger vehicles accounted for 11.78 million units, up by 4.6%. Consistent

with prior periods, the growth in premium passenger vehicle sales had again stayed ahead of

overall market growth, and reached 12% during this period. The growth in premium passenger

vehicle sales was driven by the launch of new products and strong market demand which had

continued since the beginning of the year until the recent outbreak of the Sino-US trade conflict.

During the first half of 2018, BBA had been kept busy with implementation of production

capacity overhaul and market launches of new models. The modification of the Dadong South plant

was completed in preparation for production of the new generation X3 SAV which was launched to

the market in June 2018. The brand new X3 represents the sixth BMW model that is locally

produced by BBA, the addition of which has further strengthened the competitiveness of BBA’s

product offerings in China. The new X3 has received raving market reviews and extremely positive

customer response since launch. In addition to the X3, BBA has also introduced in March 2018 the

plug-in hybrid version of the new 5-series. This NEV version of the 5-series offers not just the

same cutting-edge innovations and class-leading driving dynamics of the traditional ICE version,

but it also adds to the NEV portfolio of BBA allowing it to position for NEV sales proliferation

over time. Alongside these new launches, the X1, 1-series sedan and 3-series also continued to

deliver increased sales volumes during the period. As a result, BBA achieved sales of 209,768

BMW vehicles in the first half of 2018, representing an increase of 13.4% when compared to the

same period in 2017.


– I-2 –

BBA has continued to expand its dealer network which reached 515 full service 4S shops

nationwide as at June 30, 2018, making it the biggest dealer network in the Chinese premium auto

segment. The company continues to work closely with its sales organisation on all fronts in an

effort to sustain the profitability of both BBA and its dealers. BBA’s sales activities also continue

to be supported by the BMW auto finance company which has been performing well and

contributing profits to BBA. In addition, BBA has also taken a 42% stake in the new Herald

International Financial Leasing Co. Ltd. (with BMW AG being the other 58% shareholder) which

together with the BMW auto finance company will continue to support the sales of BBA and its

dealers.

The Company continues to be confident about the long-term growth prospects of the

Chinese premium auto industry, despite the recent market slowdown since May due to the

disruption caused by import tariff adjustments. The Company believes the current market lull will

be short-lived, and that demand will return once the tariff related uncertainty is stabilised. The new

X3 will be a key product which will bolster up the competitiveness of BBA’s product offerings in

China, and the Company expects its sales to continue to ramp up in the second half of this year.

Furthermore, BBA is also actively finalising its NEV strategy and product lineup for the next few

years to properly position itself for participation in this rapidly growing area in China. BMW is

taking leadership as the premium E-mobility provider in China. BBA will be integrated into

BMW’s worldwide production network to facilitate export of locally produced products from

China. It is expected that the BEV variant of the X3 will be solely produced by BBA for export

worldwide after 2020. Future new products will also be equipped with both the ICE and BEV

variants to provide flexibility in meeting market demands. In light of the above, the board of BBA

is currently assessing the need for further capacity expansion (including a new greenfield plant)

and the feasibility of introducing additional BMW models into BBA for local production over

time. Concurrently, due to the recent announcement by the Chinese government to remove foreign

ownership caps on local auto companies by 2022, the two shareholders have reached agreement in

relation to the continuous cooperation in BBA, including the term of the joint venture contract,

ownership structure, and product and capacity expansion.

As for the Company’s business under RBJAC, since the formation of this venture at the

beginning of the year the new management team has been focusing its efforts on formulating both

an immediate and mid-range business plan for the company. During the past few months the

company saw a rapid gear up of its R&D and product planning effort. The strategy is to sustain the

sales of existing products by working with dealers and implementing renewed marketing

strategies, while at the same time pushing forward with the development of new products such as

the Renault Master model and a new JinBei product. Although the Company expects RBJAC to

continue to contribute negative earnings to the Group in 2018, the Company’s aim is to craft a

concrete plan to stabilise the company’s existing business, achieve cost reduction and improve

sales, and strengthen new product pipeline so as to reduce losses year-on-year and ultimately

return to profitability over time.


– I-3 –

BBAFC, the Company’s auto finance subsidiary in China, had continued to be profitable

during the first half of 2018 despite facing severe liquidity crunch and challenges in securing bank

borrowings. In addition to supporting Huachen group and RBJAC’s sales of their various products,

the company has continued to grow its businesses with Jaguar Land Rover and Tesla. The

shareholders of BBAFC have completed an equity increase in the company in 2018 and will

continue to look for ways to support the company by other means such as expansion of funding

channels and instruments, if and when necessary. The Company is confident that the growth of

BBAFC’s business will pick up again in the near future.

As at the Latest Practicable Date, save and except for the transactions which have already

been disclosed in the announcements and circulars of the Company prior to the Latest Practicable

Date (including, among others, the Disposal), the Company did not have any intention or has not

entered into any negotiation, agreement, arrangement or understanding (finalized or concluded) in

relation to (a) the acquisition of any new business; (b) any disposal, scaling-down and/or

termination of the Group’s existing business and/or major operating assets; and (c) the injection of

any new business to the Group.

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

There will be no change to the principal business of the Remaining Group as a result of the

Disposal. After the Disposal, the Remaining Group will continue to be principally engaged in the

manufacture and sale of BMW vehicles in the PRC through its major associate, BBA, the

manufacture and sale of non-BMW automobiles and automotive components through its subsidiary

RBJAC, and the provision of auto financing service to customers and dealers through its subsidiary

BBAFC. Details of the financial and trading prospects have been disclosed under the paragraph

headed “Reasons for and Benefits from the Disposal” under the section headed “Letter from the

Board” in this circular.

Following the Completion, the management discussion and analysis of the Group for the

three years ended December 31, 2015, 2016 and 2017 and for the six months ended June 30, 2018

(the “Reporting Periods”) is set out below. The financial data in respect of the Remaining Group,

for the purpose of this circular, is derived from the consolidated financial statements of the Group

for the Reporting Periods.


– I-4 –

For the Six Months Ended June 30, 2018

Liquidity and Financial Resources

As at June 30, 2018, the Group had RMB1,899.2 million in cash and cash equivalents(As at December 31, 2017: RMB1,732.1 million), RMB42.3 million in cash at central bank(As at December 31, 2017: RMB62.0 million), RMB12.7 million in short-term bankdeposits (As at December 31, 2017: RMB43.4 million) and RMB913.8 million in pledgedshort-term bank deposits (As at December 31, 2017: RMB1,713.8 million). As at June 30,2018, the Group had notes payable in the amount of RMB1,434.4 million (As at December31, 2017: RMB2,780.6 million).

As at June 30, 2018, the Group had outstanding short-term bank borrowings ofRMB4,456.4 million (As at December 31, 2017: RMB2,809.9 million) and outstandinglong-term bank borrowings of RMB70 million (As at December 31, 2017: RMB80 million).

All short-term bank borrowings as at June 30, 2018 were due within one year, beingrepayable from July 2, 2018 to June 21, 2019 (As at December 31, 2017: repayable fromJanuary 8, 2018 to November 29, 2018). As at June 30, 2018, these borrowings bore interestat rates ranging from 4.35% to 7.50% per annum (As at December 31, 2017: 3.92% to 6.45%per annum) and were denominated in Renminbi (As at December 31, 2017: same). Alllong-term bank borrowings as at June 30, 2018 were due within 3.5 years, being repayableon December 1, 2021 (As at December 31, 2017: 4 years, being repayable on December 1,2021). As at June 30, 2018, these borrowings bore interest at 5.23% per annum (As atDecember 31, 2017: 5.23% per annum) and were denominated in Renminbi (As at December31, 2017: same).

With an aim to improve its liquidity, the Group regularly monitors its accountsreceivable turnover and inventory turnover. For the six months ended June 30, 2018, theGroup’s accounts receivable turnover days was approximately 85 days, compared toapproximately 90 days for the same period in 2017. Inventory turnover days wasapproximately 86 days in the first half of 2018, compared to approximately 75 days for thesame period in 2017.

Capital Structure and Funding Policies

As at June 30, 2018, the Group’s total assets was RMB40,909.1 million (As atDecember 31, 2017: RMB37,856.1 million), which was funded by the following: (a) sharecapital of RMB397.2 million (As at December 31, 2017: RMB397.2 million), (b) reserves ofRMB29,081.9 million (As at December 31, 2017: RMB26,125.8 million), (c) total liabilitiesof RMB10,904.6 million (As at December 31, 2017: RMB11,155.9 million), and (d)contribution from non-controlling interests of RMB525.4 million (As at December 31,2017: RMB177.3 million).

As at June 30, 2018, 97.2% (As at December 31, 2017: 94.3%) of the Group’s cashand cash equivalents (comprising cash on hand, bank balances and demand deposits withinthree months of maturity when acquired) were denominated in Renminbi, whereas 2.0% (Asat December 31, 2017: 2.7%) were denominated in United States Dollar. The remainingbalance of 0.8% (As at December 31, 2017: 3%) were denominated in other currencies.


– I-5 –

Apart from the borrowings, banking facilities were in place for contingency purposes.As at June 30, 2018, the Group’s total available banking facilities for its daily operationsamounted to RMB1,933.1 million (As at December 31, 2017: RMB315.8 million) withoutany committed banking facilities.

The Group funds its short-term working capital requirement mainly through its ownoperational cash flow, short-term bank borrowings, issue of bank guaranteed notes andpayment credit from its suppliers. The Group monitors and maintains a level of cash andcash equivalents considered to be adequate by the management to finance the Group’soperations, expected expansion and product developments. Management also monitors theutilisation of bank borrowings and ensures compliance with loan covenants.

For long-term capital expenditures, the Group’s strategy is to fund these long-termcapital commitments by a combination of operational cash flow, bank borrowings, dividendsfrom joint ventures and associates, if any, and fund raising exercises in the capital market, ifand when necessary.

Capital Expenditures and Commitments

For the first six months of 2018, the Group incurred capital expenditures ofRMB107.8 million (Six months ended June 30, 2017: RMB276.9 million) mainly foracquisition of tools and moulds, machinery and equipment, and development costs fornon-BMW automobiles.

As at June 30, 2018, the Group’s capital commitments, including those authorised butnot yet contracted for, amounted to RMB372.8 million (As at December 31, 2017:RMB412.3 million). Among such, contracted capital commitments amounted to RMB260.0million (As at December 31, 2017: RMB310.4 million), which was primarily related tocapital expenditures in respect of construction projects and acquisition of plant andmachinery.

Significant Investments Held, Material Acquisitions and Disposals of Subsidiaries,Associates and Joint Ventures

Save and except for the transactions which have already been disclosed in theannouncements and circulars of the Company prior to the Latest Practicable Date(including, among others, the Disposal), there were no significant investments held, norwere there any material acquisitions or disposals of subsidiaries, associates and jointventures during the six months ended June 30, 2018.

New Business and New Products

To meet the changing customer demands and to strengthen its market position in thePRC, RBJAC will continue to evaluate, on an ongoing basis, the development of new LCVand MPV models, upgrading of existing products, expansion of its product portfolio, andpotential strategic partnerships.

It is planned that RBJAC will engage in the manufacture and sale of LCV productsunder the JinBei, Renault and Huasong brands.


– I-6 –

RBJAC will try to invigorate the JinBei brand and manufacture the Renault LCVs inthe PRC within the next few years.

Employees, Remuneration Policy and Training programmes

The Group employed approximately 6,920 employees as at June 30, 2018 (As at June30, 2017: approximately 7,150). Employee costs amounted to RMB387.1 million for the sixmonths ended June 30, 2018 (Six months ended June 30, 2017: RMB389.8 million). TheGroup will endeavour to ensure that the salary levels of its employees are in line withindustry practices and prevailing market conditions, and that employees’ remuneration isbased on performance. In addition, employees are eligible for share options under the shareoption scheme adopted by the Company.

To enhance the overall quality and professional expertise standard of all employees,the Group provides training to its employees from time to time. RBJAC has developed andimplemented “Methods for Training Management” (《培訓管理辦法》), and developed atraining system and workflow incorporating induction training for new employees, trainingfor personnel of special positions, management training, professional expertise training andquality training. The programmes cover a broad spectrum of topics such as professionalskills, quality and ability, working efficiency, team cooperation, ethics and professionalconduct. Employees are encouraged to attend training sessions to acquire the latest industryinformation and knowledge, new trends in vocational area and new information via differentlearning media including internet, in-house classes and external seminars, so as to enhancetheir ability and work quality.

Charge on Assets

As at June 30, 2018, short-term bank borrowings of RMB91 million (As at December31, 2017: RMB575 million) were secured by the Group’s buildings and tools and moulds,machinery and equipment with total net book values of approximately RMB194.5 million(As at December 31, 2017: RMB197.1 million). As at June 30, 2018, no bank borrowings aresecured by the Group’s bank guaranteed notes (As at December 31, 2017: RMB250 million).

As at June 30, 2018, long-term bank borrowings of RMB70 million (As at December31, 2017: RMB80 million) were secured by the Group’s land lease prepayments with a netbook value of RMB31.0 million (As at December 31, 2017: RMB31.2 million) andbuildings, plant and equipment with total net book value of RMB42.1 million (As atDecember 31, 2017: RMB45.3 million).

In addition, as at June 30, 2018, the Group pledged short-term bank deposits ofRMB703.2 million (As at December 31, 2017: RMB1,503.2 million) for issue of bankguaranteed notes to trade creditors, and RMB210.5 million (As at December31, 2017:RMB210.5 million) to secure bank loans granted to an associate of Huachen.

As at June 30, 2018, the Group had also pledged bank guaranteed notes receivablefrom third parties and affiliated companies in the amount of RMB78.9 million (As atDecember 31, 2017: RMB64.2 million) to secure the issue of bank guaranteed notes. As atDecember 31, 2017, the Group also pledged additional bank guaranteed notes receivablefrom third parties and affiliated companies in the amount of RMB250 million to secure bankborrowings.


– I-7 –

Future Plans for Material Investments or Additions of Capital Assets

The Company and Renault have completed an increase of the registered capital of

RBJAC in an aggregate amount of RMB0.5 billion, in proportion to their respective equity

interests in RBJAC in November 2018.

The Company, Bank of East Asia and CaixaBank, S.A. have completed an increase of

registered capital of BBAFC in an aggregate amount of RMB800 million, in proportion to

their respective equity interests in BBAFC in September 2018.

Save as disclosed above, there was no plan authorised by the Board for other material

investments or additions of capital assets during the six months ended June 30, 2018 and

since then up to the date of this circular.

Gearing Ratio

As at June 30, 2018, the gearing ratio, computed by dividing total liabilities by total

equity attributable to equity holders of the Company, was approximately 0.37 (As at

December 31, 2017: 0.42). The decrease in the gearing ratio was primarily due to the

increase in total equity attributable to equity holders of the Company as compared to

December 31, 2017.

Foreign Exchange Risks

The Group considers that exchange rate fluctuations may have some effect on the

overall financial performance of the Group but it is still at a manageable level. The Group

will continue to monitor the situation and may consider entering into hedging arrangements

in order to minimise foreign exchange risks, if and when necessary. There were no

outstanding hedging transactions as at June 30, 2018 (As at June 30, 2017: nil).

Contingent Liabilities

Pursuant to an agreement dated November 20, 2017 entered into between a member of

the Group and JBC, both parties agreed to provide cross guarantees to support each other in

obtaining banking facilities up to a maximum amount of RMB600 million for each party (As

at December 31, 2017: RMB600 million) for the period from January 1, 2018 to December

31, 2018. As at June 30, 2018, under this agreement, outstanding bank loans and other

banking facilities totaling RMB356 million (As at December 31, 2017: RMB356 million)

were utilised, of which RMB206 million (As at December 31, 2017: RMB206 million) and

RMB150 million (As at December 31, 2017: RMB150 million) were supported by the

Group’s bank deposits pledged to and corporate guarantee provided to the banks,

respectively.


– I-8 –

For the Year Ended December 31, 2017


As at December 31, 2017, the Group had RMB1,732.1 million in cash and cash

equivalents (As at December 31, 2016: RMB936.9 million), RMB62.0 million in cash at

central bank (As at December 31, 2016: RMB4.0 million), RMB43.4 million in short-term

bank deposits (As at December 31, 2016: RMB193.1 million) and RMB1,713.8 million in

pledged short-term bank deposits (As at December 31, 2016: RMB1,339.0 million). As at

December 31, 2017, the Group had notes payable in the amount of RMB2,780.6 million (As

at December 31, 2016: RMB2,330.1 million).

As at December 31, 2017, the Group had outstanding short-term bank borrowings of

RMB2,809.9 million (As at December 31, 2016: RMB1,325 million) and outstanding

long-term bank borrowings of RMB80 million (As at December 31, 2016: nil).

All short-term bank borrowings as at December 31, 2017 were due within one year,

being repayable from January 8, 2018 to November 29, 2018 (As at December 31, 2016:

repayable from January 10, 2017 to December 12, 2017). As at December 31, 2017, these

borrowings bore interest at rates ranging from 3.92% to 6.45% per annum (As at December

31, 2016: 4.35% to 5.22% per annum) and were denominated in Renminbi (As at December

31, 2016: same). All long-term bank borrowings as at December 31, 2017 were due within 4

years, being repayable on December 1, 2021 (As at December 31, 2016: nil). As at

December 31, 2017, these borrowings were interest-bearing at 5.23% per annum, and were

denominated in Renminbi (As at December 31, 2016: nil).

The Group also aims to improve liquidity by ways such as monitoring the accounts

receivable turnover and inventory turnover. For the year ended December 31, 2017, the

accounts receivable turnover rate and inventory turnover rate were 4.07 and 4.77,

respectively (As at December 31, 2016: 3.38 and 4.28, respectively).


As at December 31, 2017, the Group’s total assets was RMB37,856.1 million (As at

December 31, 2016: RMB31,043.0 million), which was funded by the following: (a) share

capital of RMB397.2 million (As at December 31, 2016: RMB396.8 million), (b) reserves of

RMB26,125.8 million (As at December 31, 2016: RMB23,327.0 million), (c) total liabilities

of RMB11,155.9 million (As at December 31, 2016: RMB8,444.5 million) and (d)

contribution from non-controlling interests of RMB177.3 million (As at December 31,

2016: negative contribution of RMB1,125.3 million).

As at December 31, 2017, 94.3% (As at December 31, 2016: 78.5%) of the Group’s

cash and cash equivalents (comprising cash on hand, bank balances and demand deposits

within 3 months of maturity when acquired) were denominated in Renminbi, whereas 2.7%

(As at December 31, 2016: 14.6%) were denominated in U.S. Dollar. The remaining balance

of 3% (As at December 31, 2016: 6.9%) were denominated in other currencies.


– I-9 –

Apart from the borrowings, banking facilities have been put in place for contingency

purposes. As at December 31, 2017, the Group’s total available banking facilities for its

daily operations amounted to RMB315.8 million (As at December 31, 2016: RMB545

million) without any committed banking facilities.

The Group funds its short-term working capital requirement mainly through its own

operational cash flow, short-term bank borrowings, issue of bank guaranteed notes and

payment credit from its suppliers. The Group monitors and maintains a level of cash and

cash equivalents considered adequate by the management to finance the Group’s operations,

expected expansion and product developments. The management also monitors the

utilisation of bank borrowings and ensures compliance with loan covenants.

For long-term capital expenditures, the Group’s strategy is to fund these long-term

capital commitments by a combination of operational cash flow, bank borrowings, dividends

from joint ventures and associates, if any, and fund raising exercises in the capital market, if

and when necessary.

Capital Expenditures and Commitments

In 2017, the Group incurred capital expenditures of RMB670.5 million (2016:

RMB398.0 million) mainly for acquisition of land use rights, tools and moulds, machinery

and equipment, and development costs for minibus.

As at December 31, 2017, the Group’s capital commitments, including those

authorised but not yet contracted for, amounted to RMB412.3 million (As at December 31,

2016: RMB474.7 million). Among such, contracted capital commitments amounted to

RMB310.4 million (As at December 31, 2016: RMB367.2 million), which was primarily

related to the capital expenditures in respect of construction projects and acquisition of

plant and machinery.

Significant Investments Held, Material Acquisitions and Disposals of Subsidiaries,

Associates and Joint Ventures

On June 23, 2017, SJBA (an indirectly wholly-owned subsidiary of the Company) and

JBC entered into an acquisition agreement, pursuant to which SJBA agreed to acquire 39.1%

equity interest in Shenyang Automotive (now known as RBJAC) from JBC for cash

consideration of RMB1. Subsequently, on July 4, 2017, the Company and Renault entered

into a framework cooperation agreement, pursuant to which the Group agreed to dispose of

49% equity interest in Shenyang Automotive (now known as RBJAC) to Renault for cash

consideration of RMB1.

Apart from those disclosed herein, there were no significant investments held, nor

were there any material acquisitions or disposals of subsidiaries, associates and joint

ventures during the year ended December 31, 2017.


– I-10 –


To meet the changing customer demands and to strengthen the Company’s marketposition in the PRC, RBJAC will continue to evaluate, on an ongoing basis, the developmentof new LCV and MPV models, upgrading of existing products, expansion of its productportfolio, and potential strategic partnerships.

Following the completion of the disposal of 49% equity interest in RBJAC by theGroup to Renault, it is planned that RBJAC will engage in the manufacture and sale of LCVproducts under the JinBei, Renault and Huasong brands.

The first goal of RBJAC will be to try to invigorate the JinBei brand and tomanufacture the Renault LCVs in the PRC within the next few years.

Employees, Remuneration Policy and Training Programmes

The Group employed approximately 6,280 employees as at December 31, 2017 (As atDecember 31, 2016: approximately 7,280). Employee costs amounted to RMB736.0 millionfor the year ended December 31, 2017 (For the year ended December 31, 2016: RMB750.2million). The Group will endeavour to ensure that the salary levels of its employees are inline with industry practices and prevailing market conditions, and that employees’remuneration is based on performance. In addition, employees are eligible for share optionsunder the share option scheme adopted by the Company.

To enhance the overall quality and professional expertise standard of all employees,the Group provides training to its employees from time to time. RBJAC has developed andimplemented “Methods for Training Management” (《培訓管理辦法》), and developed atraining system and workflow incorporating induction training for new employees, trainingfor personnel of special positions, management training, professional expertise training andquality training. The programmes cover a broad spectrum of topics such as professionalskills, quality and ability, working efficiency, team cooperation, ethics and professionalconduct. Employees are encouraged to attend training sessions to acquire the latest industryinformation and knowledge, new trends in vocational area and new information via differentlearning media including internet, in-house classes and external seminars, so as to enhancetheir ability and work quality.

Charge on Assets

As at December 31, 2017, short-term bank borrowings of RMB575 million (As atDecember 31, 2016: RMB130 million) were secured by the Group’s buildings, tools andmoulds, machinery and equipment with total net book values of approximately RMB197.1million (As at December 31, 2016: RMB193.2 million) and guaranteed bank notes ofRMB250 million (As at December 31, 2016: nil).

As at December 31, 2017, long-term bank borrowings of RMB80 million (As atDecember 31, 2016: nil) were secured by the Group’s land lease prepayments with a netbook value of RMB31.2 million (As at December 31, 2016: nil) and buildings, plant andequipment with total net book value of RMB45.3 million (As at December 31, 2016: nil).


– I-11 –

In addition, as at December 31, 2017, the Group pledged short-term bank deposits ofRMB1,503.2 million (As at December 31, 2016: RMB1,128.4 million) for issue of bankguaranteed notes to trade creditors, and RMB210.5 million (As at December 31, 2016:RMB210.5 million) to secure bank loans granted to a related party of the Group.

As at December 31, 2017, the Group had also pledged bank guaranteed notesreceivable from third parties and affiliated companies in the amount of RMB64.2 million(As at December 31, 2016: RMB116.5 million) and RMB250 million (As at December 31,2016: nil) to secure the issue of bank guaranteed notes and the bank borrowings,respectively.


As disclosed in the announcement of the Company dated July 4, 2017, following theregistration of Renault as a 49% shareholder of RBJAC, the Company and Renault willcomplete an increase of the registered capital of RBJAC in an aggregate amount of RMB1.5billion. Among this, RMB1 billion will be paid up, upon completion of the procedures forsuch capital increase and issuance of a new business license of RBJAC reflecting suchcapital increase, by the Company and Renault in proportion to their respective equityinterests in RBJAC. The remaining RMB0.5 billion will be paid up, within 12 months afterthe aforesaid completion, by the Company and Renault in proportion to their respectiveequity interests in RBJAC.

Apart from those disclosed herein, there was no plan authorised by the Board forother material investments or additions of capital assets as at the date of the Company’s2017 annual report.

Gearing Ratio

As at December 31, 2017, the gearing ratio, computed by dividing total liabilities bytotal equity attributable to equity holders of the Company, was approximately 0.42 (As atDecember 31, 2016: 0.36). The increase in the gearing ratio was primarily due to theincrease in total liabilities as compared to December 31, 2016.


The Group considers that exchange rate fluctuations may have some effect on theoverall financial performance of the Group but it is still at a manageable level. The Groupwill continue to monitor the situation and may consider entering into hedging arrangementsin order to minimise foreign exchange risks, if and when necessary. There were nooutstanding hedging transactions as at December 31, 2017 (As at December 31, 2016: nil).


On November 4, 2016, a member of the Group and JBC entered into an agreement forthe provision of cross guarantees in respect of each other’s banking facilities in themaximum amount of RMB600 million (2016: RMB600 million) for the period from January1, 2017 to December 31, 2017. At the time of entering into of the agreement, JBC was a


– I-12 –

connected person/related party of the Company. As at December 31, 2017, under thisagreement, JBC and its subsidiaries had outstanding bank loans and other banking facilitiestotalling RMB356 million (As at December 31, 2016: RMB470 million) of which RMB206million (As at December 31, 2016: RMB200 million) and RMB150 million (As at December31, 2016: RMB270 million) were supported by the Group’s bank deposits pledged to andcorporate guarantee provided to the banks, respectively.

The Group no longer provided any corporate guarantee as at December 31, 2017 forrevolving bank loans and bank guaranteed notes to Shanghai Shenhua (As at December 31,2016: RMB60 million).



As at December 31, 2016, the Group had RMB936.9 million in cash and cashequivalents (As at December 31, 2015: RMB1,070.9 million), RMB4.0 million in cash atcentral bank (As at December 31, 2015: Nil), RMB193.1 million in short-term bank deposits(As at December 31, 2015: RMB676 million) and RMB1,339.0 million in pledgedshort-term bank deposits (As at December 31, 2015: RMB1,325.5 million). As at December31, 2016, the Group had notes payable in the amount of RMB2,330.1 million (As atDecember 31, 2015: RMB2,157 million).

As at December 31, 2016, the Group had outstanding short-term bank borrowings ofRMB1,325 million (As at December 31, 2015: RMB1,585 million) and did not have anylong-term bank borrowings outstanding (As at December 31, 2015: nil).

All short-term bank borrowings as at December 31, 2016 were due within one year,being repayable from January 10, 2017 to December 12, 2017 (As at December 31, 2015:repayable from January 13, 2016 to November 10, 2016). As at December 31, 2016, theseborrowings bore interest at rates ranging from 4.25% to 5.22% per annum (As at December31, 2015: 4.35% to 6.72% per annum) and were denominated in Renminbi (As at December31, 2015: same).

The Group also aims at improving liquidity of the Group by ways such as monitoringthe accounts receivable turnover and inventory turnover. For the year ended December 31,2016, the accounts receivable turnover rate and inventory turnover rate were 3.38 and 4.28,respectively (As at December 31, 2015: 3.69 and 4.64, respectively).


As at December 31, 2016, the Group’s total assets was RMB31,043.0 million (As atDecember 31, 2015: RMB27,072.3 million), which was funded by the following: (a) sharecapital of RMB396.8 million (As at December 31, 2015: RMB395.9 million), (b) reserves ofRMB23,327.0 million (As at December 31, 2015: RMB19,499.7 million), (c) total liabilitiesof RMB8,444.5 million (As at December 31, 2015: RMB8,008.6 million) and (d) negativecontribution from non-controlling interests of RMB1,125.3 million (As at December 31,2015: RMB831.9 million).


– I-13 –

As at December 31, 2016, 78.5% (As at December 31, 2015: 90.3%) of the Group’scash and cash equivalents (comprising cash on hand, bank balances and demand depositswithin 3 months of maturity when acquired) were denominated in Renminbi, whereas 14.6%(As at December 31, 2015: 7.3%) were denominated in U.S. Dollar. The remaining balanceof 6.9% (As at December 31, 2015: 2.4%) were denominated in other currencies.

Apart from the borrowings, banking facilities have been put in place for contingencypurposes. As at December 31, 2016, the Group’s total available banking facilities for itsdaily operations amounted to RMB545.0 million (As at December 31, 2015: RMB268.4million) without any committed banking facilities.

The Group funds its short-term working capital requirement mainly through its ownoperational cash flow, short-term bank borrowings, issue of bank guaranteed notes andpayment credit from its suppliers. The Group monitors and maintains a level of cash andcash equivalents considered adequate by the management to finance the Group’s operations,expected expansion and product developments. The management also monitors theutilisation of bank borrowings and ensures compliance with loan covenants.


Capital Expenditure and Commitments

In 2016, the Group incurred capital expenditure of RMB398.0 million (2015:RMB781.9 million) mainly for acquisition of land use rights, tools and moulds, machineryand equipment, and development costs for minibus.

As at December 31, 2016, the Group’s capital commitments, including thoseauthorised but not yet contracted for, amounted to RMB474.7 million (As at December 31,2015: RMB321.6 million). Among such, contracted capital commitments amounted toRMB367.2 million (As at December 31, 2015: RMB261.8 million), which was primarilyrelated to the capital expenditure in respect of construction projects and acquisition of plantand machinery.


To meet the changing customer demands and to strengthen the Company’s marketposition in the PRC, Shenyang Automotive will continue to evaluate, on an ongoing basis,the development of new MPV models, upgrading of existing products, expansion of itsproduct portfolio, and potential strategic partnerships.

Significant Investments Held, Material Acquisitions and Disposals of Subsidiaries,Associates and Joint Ventures

There were no significant investments held, nor were there any material acquisitionsor disposals of subsidiaries, associates and joint ventures during the year ended December31, 2016.


– I-14 –

Employees, Remuneration Policy and Training Programmes

The Group employed approximately 7,280 employees as at December 31, 2016 (As at

December 31, 2015: approximately 7,410). Employee costs amounted to approximately

RMB750.2 million for the year ended December 31, 2016 (For the year ended December 31,

2015: approximately RMB722.8 million). The Group will endeavour to ensure that the

salary levels of its employees are in line with industry practices and prevailing market

conditions, and that employees’ remuneration is based on performance. In addition,

employees are eligible for share options under the share option scheme adopted by the

Company.

To enhance the overall quality and professional expertise standard of all employees,

the Group provides training to its employees from time to time. Shenyang Automotive has

developed and implemented “Methods for Training Management” (《培訓管理辦法》), and

developed a training system and workflow incorporating induction training for new

employees, training for personnel of special positions, management training, professional

expertise training and quality training. The programmes cover a broad spectrum of topics

such as professional skills, quality and ability, working efficiency, team cooperation, ethics

and professional conduct. Employees are encouraged to attend training sessions to acquire

the latest industry information and knowledge, new trends in vocational area and new

information via different learning media including internet, in-house classes and external

seminars, so as to enhance their ability and work quality.

Charge on Assets

As at December 31, 2016, bank borrowings of RMB130 million (As at December 31,

2015: RMB110 million) were secured by the Group’s buildings, tools, moulds, machinery

and equipment with total net book values of approximately RMB193.2 million (As at

December 31, 2015: RMB110.2 million).

In addition, as at December 31, 2016, the Group pledged short-term bank deposits of

RMB1,128.4 million (As at December 31, 2015: RMB1,115 million) for issue of bank

guaranteed notes to trade creditors, and RMB210.5 million (As at December 31, 2015:

RMB210.5 million) to secure bank loans granted to a related party of the Group.

As at December 31, 2016, the Group had also pledged bank guaranteed notes

receivable from third parties and affiliated companies of approximately RMB116.5 million

(As at December 31, 2015: approximately RMB66.5 million) for issue of bank guaranteed

notes.


Apart from those disclosed herein, there was no plan authorised by the Board for

other material investments or additions of capital assets as at the date of the Company’s

2016 annual report.


– I-15 –

Gearing Ratio

As at December 31, 2016, the gearing ratio, computed by dividing total liabilities bytotal equity attributable to equity holders of the Company, was approximately 0.36 (As atDecember 31, 2015: 0.40). The decrease in the gearing ratio was primarily due to continuingprofit attributable to equity holders generated during 2016.


Despite a decrease in the overseas sales of the Group, the Group considers thatexchange rate fluctuations may have some effect on the overall financial performance of theGroup but it is still at a manageable level. The Group will continue to monitor the situationand may consider entering into hedging arrangements in order to minimise foreign exchangerisks, if and when necessary. There were no outstanding hedging transactions as atDecember 31, 2016 (As at December 31, 2015: nil).


On November 10, 2015, a subsidiary of the Group and JBC entered into an agreementfor the provision of cross guarantees in respect of each other’s banking facilities in themaximum amount of RMB600 million (2015: RMB600 million) for the period from January1, 2016 to December 31, 2016. As at December 31, 2016, under this agreement, JBC and itssubsidiaries had outstanding bank loans and other banking facilities totalling RMB470million (As at December 31, 2015: RMB530 million) of which RMB200 million (As atDecember 31, 2015: RMB200 million) and RMB270 million (As at December 31, 2015:RMB330 million) were supported by the Group’s bank deposits pledged to and corporateguarantee provided to the banks, respectively. On November 4, 2016, an agreement wasentered into by both parties to provide cross guarantees for the same amount to each otherfor the period from January 1, 2017 to December 31, 2017.

In addition, the Group had provided a corporate guarantee in the maximum amount ofRMB60 million (As at December 31, 2015: RMB60 million) from January 1, 2016 toDecember 31, 2016 for revolving bank loans and bank guaranteed notes to ShanghaiShenhua. As at December 31, 2016, RMB60 million (As at December 31, 2015: RMB60million) of this corporate guarantee was utilised by Shanghai Shenhua.



As at December 31, 2015, the Group had RMB1,070.9 million in cash and cashequivalents (As at December 31, 2014: RMB1,178.6 million), RMB676 million inshort-term bank deposits (As at December 31, 2014: RMB146.1 million) and RMB1,325.5million in pledged short-term bank deposits (As at December 31, 2014: RMB1,201.1million). As at December 31, 2015, the Group had notes payable in the amount of RMB2,157million (As at December 31, 2014: RMB1,858 million).

As at December 31, 2015, the Group had outstanding short-term bank borrowings ofRMB1,585 million (As at December 31, 2014: RMB1,365 million) and did not have anylong-term bank borrowings outstanding (As at December 31, 2014: nil).


– I-16 –

All short-term bank borrowings as at December 31, 2015 were due within one year,being repayable from January 13, 2016 to November 10, 2016 (As at December 31, 2014:repayable from January 9, 2015 to November 7, 2015). As at December 31, 2015, theseborrowings bore interest at rates ranging from 4.35% to 6.72% per annum (As at December31, 2014: 5.60% to 7.20% per annum) and were denominated in Renminbi (As at December31, 2014: same).


As at December 31, 2015, the Group’s total assets was RMB27,072.3 million (As atDecember 31, 2014: RMB23,206.9 million), which was funded by the following: (a) sharecapital of RMB395.9 million (As at December 31, 2014: RMB395.9 million), (b) reserves ofRMB19,499.7 million (As at December 31, 2014: RMB16,535.5 million), (c) total liabilitiesof RMB8,008.6 million (As at December 31, 2014: RMB7,253 million) and (d) negativecontribution from non-controlling interests of RMB831.9 million (As at December 31,2014: RMB977.4 million).

As at December 31, 2015, 90.3% (As at December 31, 2014: 74.0%) of the Group’scash and cash equivalents (comprising cash on hand, bank balances and demand depositswithin 3 months of maturity when acquired) were denominated in Renminbi, whereas 7.3%(As at December 31, 2014: 24.5%) were denominated in U.S. Dollar. The remaining balanceof 2.4% (As at December 31, 2014: 1.5%) were denominated in other currencies.

Apart from the borrowings, banking facilities have been put in place for contingencypurposes. As at December 31, 2015, the Group’s total available banking facilities for itsdaily operations amounted to RMB268.4 million (As at December 31, 2014: RMB921.6million) without any committed banking facilities.

The Group funds its short-term working capital requirement mainly through its ownoperational cash flow, short-term bank borrowings, issue of bank guaranteed notes andpayment credit from its suppliers. The Group monitors and maintains a level of cash andcash equivalents considered adequate by the management to finance the Group’s operations,expected expansion and product developments. The management also monitors theutilisation of bank borrowings and ensures compliance with loan covenants.


Capital Expenditure and Commitments

In 2015, the Group incurred capital expenditure of RMB781.9 million (2014:RMB806.4 million) mainly for acquisition of land use rights, tools and moulds, machineryand equipment, and development costs for minibus.

As at December 31, 2015, the Group’s capital commitments, including thoseauthorised but not yet contracted for, amounted to RMB321.6 million (As at December 31,2014: RMB875.1 million). Among such, contracted capital commitments amounted toRMB261.8 million (As at December 31, 2014: RMB528.5 million), which was primarilyrelated to the capital expenditure in respect of construction projects and acquisition of plantand machinery.


– I-17 –


To meet the changing customer demands and to strengthen the Company’s market

position in the PRC, Shenyang Automotive will continue to evaluate, on an ongoing basis,

the development of new MPV models, upgrading of existing products and expansion of its

product portfolio.

The new premium MPV model, under the new brand Huasong which was

co-developed with the Company’s strategic partners and external consultants, commenced

sales in March 2015.

Significant Investments Held, Material Acquisitions and Disposals of Subsidiaries,

Associates and Joint Ventures

There were no significant investments held, nor were there any material acquisitions

or disposals of subsidiaries, associates and joint ventures during the year ended December

31, 2015.

Employees and Remuneration Policy, and Training Programmes

The Group employed approximately 7,410 employees as at December 31, 2015 (As at

December 31, 2014: Approximately 7,220). Employee costs amounted to approximately

RMB722.8 million for the year ended December 31, 2015 (For the year ended December 31,

2014: approximately RMB667.3 million). The Group will endeavour to ensure that the

salary levels of its employees are in line with industry practices and prevailing market

conditions, and that employees’ remuneration is based on performance. In addition,

employees are eligible for share options under the share option scheme adopted by the

Company.

To enhance the overall quality and professional expertise standard of all employees,

the Group provides training to its employees from time to time. Shenyang Automotive has

developed and implemented “Methods for Training Management” (《培訓管理辦法》), and

developed a training system and workflow incorporating induction training for new

employees, training for personnel of special positions, management training, professional

expertise training and quality training. The programmes cover a broad spectrum of topics

such as professional skills, quality and ability, working efficiency, team cooperation, ethics

and professional conduct. Employees are encouraged to attend training sessions to acquire

the latest industry information and knowledge, new trends in vocational area and new

information via different learning media including internet, in-house classes and external

seminars, so as to enhance their ability and work quality.

Charge on Assets

As at December 31, 2015, bank borrowings of RMB110 million (As at December 31,

2014: RMB65 million) were secured by the Group’s buildings with net book values of

approximately RMB110.2 million (As at December 31, 2014: RMB54.5 million).


– I-18 –

In addition, as at December 31, 2015, the Group pledged short-term bank deposits of

RMB1,115 million (As at December 31, 2014: RMB990.6 million) for issue of bank

guaranteed notes to trade creditors, and RMB210.5 million (As at December 31, 2014:

RMB210.5 million) to secure bank loans granted to a related party of the Group.

As at December 31, 2015, the Group had also pledged bank guaranteed notes

receivable from third parties and affiliated companies of approximately RMB66.5 million

(As at December 31, 2014: Approximately RMB115.3 million) for issue of bank guaranteed

notes.


Apart from those disclosed herein, there was no plan authorised by the Board for

other material investments or additions of capital assets as at the date of the Company’s

2015 annual report.

Gearing Ratio

As at December 31, 2015, the gearing ratio, computed by dividing total liabilities by

total equity attributable to equity holders of the Company, was approximately 0.40 (As at

December 31, 2014: 0.43). The decrease in the gearing ratio was primarily due to continuing

profit attributable to equity holders generated during 2015.


Despite a decrease in the overseas sales of the Group, the Group considers that

exchange rate fluctuations may have some effect on the overall financial performance of the

Group but it is still at a manageable level. The Group will continue to monitor the situation

and may consider entering into hedging arrangements in order to minimise foreign exchange

risks, if and when necessary. There were no outstanding hedging transactions as at

December 31, 2015 (As at December 31, 2014: nil).


Pursuant to an agreement entered into between a member of the Group and JBC, both

parties agreed to provide cross guarantees to support each other in obtaining banking

facilities up to a maximum amount of RMB600 million for each party (As at December 31,

2014: RMB600 million) for the period from January 1, 2015 to December 31, 2015. As at

December 31, 2015, under this agreement, JBC and its subsidiaries had outstanding bank

loans and other banking facilities totalling RMB530 million (As at December 31, 2014:

RMB586.5 million) of which RMB200 million (As at December 31, 2014: RMB200 million)

and RMB330 million (As at December 31, 2014: RMB386.5 million) were supported by the

Group’s bank deposits pledged to and corporate guarantee provided to the banks,

respectively.


– I-19 –

In addition, the Group had provided a corporate guarantee up to a maximum amount

of RMB60 million (As at December 31, 2014: RMB100 million) for the period from January

1, 2015 to December 31, 2015 for revolving bank loans and bank guaranteed notes to

Shanghai Shenhua. As at December 31, 2015, RMB60 million (As at December 31, 2014:

RMB60 million) of this corporate guarantee was utilised by Shanghai Shenhua.


– I-20 –

Set out below are the historical financial information of BMW Brilliance Automotive Ltd.

(“BBA”) which comprises the unaudited statements of financial position of BBA as at December

31, 2015, 2016 and 2017 and June 30, 2018 and the unaudited statements of profit or loss,

unaudited statements of comprehensive income, unaudited statements of changes in equity and

unaudited statements of cash flows of BBA for the years ended December 31, 2015, 2016 and 2017

and the six months ended June 30, 2017 and 2018 (the “Track Record Period”), and certain

explanatory notes (altogether the “Historical Financial Information”).

The Historical Financial Information has been prepared in accordance with paragraph

68(2)(a)(i)(A) of Chapter 14 of the Rules Governing the Listing of Securities on the Stock

Exchange and the bases of preparation and presentation as set out in note 2 to the Historical

Financial Information. The Historical Financial Information is prepared by the directors solely for

the purpose of inclusion in this circular in connection with the proposed disposal of 25% equity

interest of BBA. The auditor of Brilliance China Automotive Holdings Limited (the “Company”),

Grant Thornton Hong Kong Limited, was engaged to review the Historical Financial Information

of BBA as set out on pages II-2 to II-12 of this circular in accordance with Hong Kong Standard on

Review Engagements 2410 “Review of Interim Financial Information Performed by the

Independent Auditor of the Entity” and with reference to Practice Note 750 “Review of Financial

Information under the Hong Kong Listing Rules for a Very Substantial Disposal” issued by the

Hong Kong Institute of Certified Public Accountants.

A review is substantially less in scope than an audit conducted in accordance with Hong

Kong Standards on Auditing and consequently does not enable the auditor to obtain assurance that

the auditor would become aware of all significant matters that might be identified in an audit.

Accordingly, the auditor does not express an audit opinion. Based on their review on the Historical

Financial Information, nothing has come to their attention that causes them to believe that the

Historical Financial Information of BBA is not prepared, in all material respects, in accordance

with the basis of preparation and presentation as set out in note 2 to the Historical Financial

Information.

APPENDIX II FINANCIAL INFORMATION OF BBA

– II-1 –

Unaudited Statements of Profit or Loss

Year ended December 31,Six months ended

June 30,2015 2016 2017 2017 2018

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Revenue 92,179,364 95,504,278 111,599,149 53,042,666 63,119,593Cost of sales (76,288,043) (78,989,053) (92,252,244) (44,066,547) (51,631,418)

Gross profit 15,891,321 16,515,225 19,346,905 8,976,119 11,488,175Other income 530,145 406,992 498,899 293,462 441,232Interest income 92,723 232,084 363,538 192,323 221,879Selling expenses (2,982,581) (3,134,787) (3,466,126) (1,268,269) (1,439,257)General and administrative expenses (3,412,729) (3,747,021) (3,654,383) (1,435,306) (1,332,113)Share of results of associates 263,222 475,668 948,469 347,179 464,164Finance costs (102,717) (18,286) – – –

Profit before income tax expense 10,279,384 10,729,875 14,037,302 7,105,508 9,844,080Income tax expense (2,623,111) (2,733,257) (3,561,411) (1,768,648) (2,488,113)

Profit for the year/period 7,656,273 7,996,618 10,475,891 5,336,860 7,355,967


– II-2 –

Unaudited Statements of Comprehensive Income


June 30,2015 2016 2017 2017 2018


Profit for the year/period 7,656,273 7,996,618 10,475,891 5,336,860 7,355,967

Other comprehensive income that will be

subsequently reclassified to statement

of profit or loss, net of taxCash flow hedges:Effective portion of changes in fair value

of hedging instruments recognised

during the year/period (206,110) 1,279,982 1,431,516 1,892,304 (1,245,070)

Total comprehensive income for theyear/period 7,450,163 9,276,600 11,907,407 7,229,164 6,110,897


– II-3 –

Unaudited Statements of Changes in Equity

Issuedcapital

Statutoryreserve

Hedgingreserve

Retainedearnings Total equity


As at January 1, 2015 1,377,055 706,743 (1,737,862) 22,207,467 22,553,403

Transactions with equity holders of the

companyDividend – – – (2,000,000) (2,000,000)Allocation to statutory reserve – 21,883 – (21,883) –

– 21,883 – (2,021,883) (2,000,000)

Profit for the year – – – 7,656,273 7,656,273

Other comprehensive incomeEffective portion of changes in fair value


under cash flow hedge – – (206,110) – (206,110)

As at December 31, 2015 and

January 1, 2016 1,377,055 728,626 (1,943,972) 27,841,857 28,003,566


companyDividend – – – (2,000,000) (2,000,000)Allocation to statutory reserve – 15,009 – (15,009) –

– 15,009 – (2,015,009) (2,000,000)



– II-4 –

Unaudited Statements of Changes in Equity (Continued)

Issuedcapital

Statutoryreserve

Hedgingreserve




of hedging instruments recognisedunder cash flow hedge – – 1,279,982 – 1,279,982

As at December 31, 2016 and January 1,2017 1,377,055 743,635 (663,990) 33,823,466 35,280,166

Transactions with equity holders of thecompany

Dividend – – – (4,000,000) (4,000,000)Allocation to statutory reserve – 15,615 – (15,615) –

– 15,615 – (4,015,615) (4,000,000)



of hedging instruments recognisedunder cash flow hedge – – 1,431,516 – 1,431,516

As at December 31, 2017 1,377,055 759,250 767,526 40,283,742 43,187,573

As at January 1, 2018 1,377,055 759,250 767,526 40,283,742 43,187,573Effect on adoption of

HKFRS 15 – – – 45,070 45,070

As at January 1,2018 as restated 1,377,055 759,250 767,526 40,328,812 43,232,643

Transactions with equity holdersof the company

Dividend – – – (1,000,000) (1,000,000)Allocation to statutory reserve – 20,195 – (20,195) –

– 20,195 – (1,020,195) (1,000,000)

Profit for the period – – – 7,355,967 7,355,967


– II-5 –

Unaudited Statements of Changes in Equity (Continued)

Issuedcapital

Statutoryreserve

Hedgingreserve





under cash flow hedge – – (1,245,070) – (1,245,070)

As at June 30, 2018 1,377,055 779,445 (477,544) 46,664,584 48,343,540

As at January 1, 2017 1,377,055 743,635 (663,990) 33,823,466 35,280,166


companyAllocation to statutory reserve – 15,615 – (15,615) –

– 15,615 – (15,615) –

Profit for the period – – – 5,336,860 5,336,860



under cash flow hedge – – 1,892,304 – 1,892,304

As at June 30, 2017 1,377,055 759,250 1,228,314 39,144,711 42,509,330


– II-6 –

Unaudited Statements of Financial Position

As at December 31,As at

June 30,2015 2016 2017 2018

RMB’000 RMB’000 RMB’000 RMB’000

Non-current assetsIntangible assets 267,142 255,671 259,541 257,433Property, plant and equipment 23,177,391 30,157,362 30,227,454 30,720,545Construction-in-progress 5,813,032 2,781,865 3,100,450 1,745,955Land lease prepayment 1,840,096 1,800,534 1,761,120 1,741,412Interests in associates 2,568,726 3,044,394 6,092,863 7,290,027Deferred tax assets 4,072,685 4,022,287 4,689,946 5,612,940Derivative financial instruments 115,789 82,148 356,612 158,280Other non-current assets 549,528 176,025 207,655 337,388

Total non-current assets 38,404,389 42,320,286 46,695,641 47,863,980

Current assetsCash and cash equivalents 11,742,135 15,446,456 20,415,382 21,602,815Restricted bank deposits 12,140 4,551 2,048 –Inventories 9,921,119 11,373,629 14,264,140 16,890,271Accounts receivable 1,021,899 940,258 1,147,524 1,377,967Notes receivable 2,795,001 2,930,173 2,872,166 1,626,157Assets held for sales 291,886 303,741 – –Derivative financial instruments 79,915 34,054 712,208 91,043Other current assets 1,284,578 1,277,911 1,231,289 891,721

Total current assets 27,148,673 32,310,773 40,644,757 42,479,974

Current liabilitiesAccounts payable 14,448,441 17,671,985 20,180,414 19,875,168Other payable 10,526,421 12,018,384 12,195,337 10,131,535Derivative financial instruments 2,132,394 638,140 45,344 530,107Other current liabilities 3,399,967 3,826,661 3,384,898 1,488,198Short-term bank borrowings 2,400,000 – – –Income tax payable 480,932 279,136 842,443 1,295,854

Total current liabilities 33,388,155 34,434,306 36,648,436 33,320,862

Net current (liabilities) assets (6,239,482) (2,123,533) 3,996,321 9,159,112

Total assets less current liabilities 32,164,907 40,196,753 50,691,962 57,023,092


– II-7 –

Unaudited Statements of Financial Position (Continued)

As at December 31,As at

June 30,2015 2016 2017 2018

RMB’000 RMB’000 RMB’000 RMB’000

Non-current liabilitiesProvisions for estimated liabilities 1,322,548 1,817,660 3,447,527 3,479,348Deferred income 2,045,341 2,478,447 3,306,696 4,223,753Deferred tax liabilities 138,181 257,098 750,058 620,511Derivative financial instruments 655,271 363,382 108 355,940

Total non-current liabilities 4,161,341 4,916,587 7,504,389 8,679,552

NET ASSETS 28,003,566 35,280,166 43,187,573 48,343,540

Capital and reservesShare capital 1,377,055 1,377,055 1,377,055 1,377,055Reserves 26,626,511 33,903,111 41,810,518 46,966,485

TOTAL EQUITY 28,003,566 35,280,166 43,187,573 48,343,540


– II-8 –

Unaudited Statements of Cash Flows


June 30,2015 2016 2017 2017 2018


Cash flows from operating activitiesProfit before income tax expenses 10,279,384 10,729,875 14,037,302 7,105,508 9,844,080Adjustments forShare of results of associates (263,222) (475,668) (948,469) (347,179) (464,164)Interest income (92,723) (232,084) (363,538) (192,323) (221,879)Interest expense 102,717 18,286 – – –Provision of inventories 311,099 113,996 277,559 57,755 154,511Depreciation of property, plant and

equipment 2,312,276 3,048,038 4,478,890 1,787,382 2,110,327Amortisation of intangible assets 140,616 154,551 94,975 47,040 47,022Amortisation of land lease prepayment 37,693 39,415 39,415 19,707 19,708Amortisation of government grant (320,539) (338,944) (387,373) (188,205) (339,583)Impairment loss on property, plant and

equipment 43,118 131,994 173,845 (47,045) –Impairment loss on prepayment – – 25,032 – –Gain on disposal of property, plant and

equipment (29,060) (7,210) (16,288) (60,019) (29,881)Reversal of impairment of inventory (305,417) (224,966) (142,669) (89,268) (110,599)Unrealised exchange loss (gain) 268,570 (196,850) 81,279 194,081 51,884Fair value gain on derivative financial

instruments (74,359) – – – –Fair value loss (gain) on assets

held for sales 5,000 (948) – – –

Operating profit before working capitalchanges 12,415,153 12,759,485 17,349,960 8,287,434 11,061,426

Decrease (Increase) in inventories 2,540,758 (1,341,540) (3,025,401) 327,600 (2,670,043)(Increase) Decrease of notes receivable (113,980) (135,172) 58,007 1,137,589 1,246,009Decrease (Increase) in trade and other

receivables 1,019,267 508,212 (431,683) 152,339 425,147(Decrease) Increase in trade and other

payables (186,857) 5,738,617 2,314,514 (6,449,051) (3,518,316)Increase in provisions for estimated

liabilities 114,082 495,113 1,629,867 1,154,768 31,821

Cash generated from operations 15,788,423 18,024,715 17,895,264 4,610,679 6,576,044Corporate income tax paid (2,844,658) (3,175,763) (3,680,729) (1,688,305) (2,975,971)Interest paid (100,212) (20,791) – – –

Net cash generated from operatingactivities 12,843,553 14,828,161 14,214,535 2,922,374 3,600,073


– II-9 –

Unaudited Statements of Cash Flows (Continued)


June 30,2015 2016 2017 2017 2018


Investing activitiesAcquisition of property, plant and

equipment, intangible assets, land leaseprepayments andconstruction-in-progress (10,256,281) (8,347,758) (5,361,845) (1,511,577) (2,329,594)

Investment of associates – – (2,100,000) – (733,000)Decrease in restricted bank deposits 2,031 7,589 2,503 4,552 2,048Interest received 88,894 218,901 358,860 187,003 223,676Proceeds from disposal of property, plant

and equipment, investment property,intangible assets and assets held forsales 449,966 625,079 638,938 455,615 123,875

Proceeds from disposal of derivativefinancial instruments 77,970 – – – –

Net cash used in investing activities (9,637,420) (7,496,189) (6,461,544) (864,407) (2,712,995)

Financing activitiesProceeds from bank borrowings 3,600,000 1,200,000 – – –Repayment of bank borrowings (1,200,000) (3,600,000) – – –Government grant received 804,040 772,050 1,215,622 618,144 1,301,710Dividends paid (2,000,000) (2,000,000) (4,000,000) – (1,000,000)

Net cash generated from (used in)financing activities 1,204,040 (3,627,950) (2,784,378) 618,144 301,710

Net increase in cash and cashequivalents 4,410,173 3,704,022 4,968,613 2,676,111 1,188,788

Cash and cash equivalents at beginningof the year/period 7,333,671 11,742,135 15,446,456 15,446,456 20,415,382

Effects of exchange rate changes on thebalance of cash held in foreign currency (1,709) 299 313 521 (1,355)

Cash and cash equivalents at end of theyear/period 11,742,135 15,446,456 20,415,382 18,123,088 21,602,815


– II-10 –

I. NOTES TO THE UNAUDITED HISTORICAL FINANCIAL INFORMATION OF BBA

1. GENERAL INFORMATION

BMW Brilliance Automotive Ltd. (“BBA”) is a sino-foreign equity joint venture established in the People’s

Republic of China (the “PRC”) on May 23, 2003. The address of the registered office and the principal

places of business of BBA is 14 Shanzuizi Road, Dadong District, Shenyang. The principal activities of

BBA are the manufacture and sale of BMW vehicles in the PRC.

BBA is a joint venture owned as to 50% by Shenyang JinBei Automotive Industry Holdings Co., Ltd.

(“SJBA”) (an indirect wholly-owned subsidiary of Brilliance China Automotive Holdings Limited (the

“Company”)) and as to 50% by BMW Holding B.V. (“BMW”). On October 11, 2018, the Company has

agreed with BMW on a new ownership structure of BBA and entered into the Equity Transfer Agreement

(the “Agreement”) with SJBA and BMW. Pursuant to the Agreement, the Company agreed to sell, and

BMW agreed to acquire, 25% equity interests in BBA held by SJBA at a consideration of

RMB29,000,000,000 in 2022.

Upon the completion of proposed disposal of 25% equity interest of BBA, BBA will become an associate of

the Company.

2. BASIS OF PREPARATION

The unaudited financial information of BBA comprising the statements of financial position of BBA as atDecember 31, 2015, 2016 and 2017 and June 30, 2018, and the statements of profit or loss, the statementsof comprehensive income, the statements of changes in equity and the cash flow statements for the yearsended December 31, 2015, 2016 and 2017 and the six months ended June 30, 2017 and 2018 (the “TrackRecord Period”) and other explanatory information (“Historical Financial Information”) has beenprepared in accordance with paragraph 14.68(2)(a)(i) of the Rules Governing the Listing of Securities onThe Stock Exchange of Hong Kong Limited, and solely for the purpose of inclusion in this circular to beissued by the Company in connection with the proposed disposal of 25% equity interest of BBA.

The Historical Financial Information has been prepared in accordance with the same accounting policies asthose adopted by the Company and its subsidiaries (collectively referred to as the “Group”) in preparationof the consolidated financial statements of the Group for those respective years, except for the accountingpolicy changes that are expected to be reflected in the 2018 annual financial statements of the Group. TheHistorical Financial Information has been presented in Renminbi (“RMB”), which is also the functionalcurrency of the Group. Details of any changes in accounting policies are set out in note 3 to the HistoricalFinancial Information. The consolidated financial statements of the Group have been prepared inaccordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of CertifiedPublic Accountants (“HKICPA”).

The Historical Financial Information does not contain sufficient information to constitute a complete set offinancial statements as defined in Hong Kong Accounting Standard 1 (Revised), Presentation of Financial

Statements, or a complete condensed interim financial report as defined in Hong Kong AccountingStandard 34, Interim Financial Reporting, issued by the HKICPA and should be read in connection with therelevant published annual report of the Company and the relevant interim report of the Company for theTrack Record Period.

3. CHANGES IN ACCOUNTING POLICIES

The HKICPA has issued a number of new HKFRSs and amendments to HKFRSs that are first effective fromJanuary 1, 2018. Of these, the following new and amended standards are relevant to BBA’s HistoricalFinancial Information:

HKFRS 9 Financial InstrumentsHKFRS 15 Revenue from Contracts with Customers and the related AmendmentsAmendments to HKAS 40 Transfers of Investment PropertyAmendments to HKFRSs Annual Improvements to HKFRSs 2014-2016 CycleHK(IFRIC) – Int 22 Foreign Currency Transactions and Advance Consideration


– II-11 –

The adoption of these new and amended HKFRSs, except for HKFRS 15 “Revenue from Contracts with

Customers” and the related clarification to HKFRS 15 (hereinafter referred to as “HKFRS 15”), the details

of which are explained below, had no material impact on how the results and financial position of BBA for

the Track Record Period have been prepared or presented in the Historical Financial Information. BBA has

not applied any new standard or interpretation that is not yet effective for the current accounting period.

HKFRS 15 presents new requirements for the recognition of revenue, replacing HKAS 18 “Revenue”,

HKAS 11 “Construction Contracts”, and several revenue-related Interpretations. HKFRS 15 establishes a

single comprehensive model that applies to contracts with customers and two approaches to recognise

revenue: at a point in time or over time. The model features a contract-based five-step analysis of

transactions to determine whether, how much and when revenue is recognised.

BBA adopted HKFRS 15 using the modified retrospective approach which means that the cumulative

impact of the adoption will be recognised in retained profits as at January 1, 2018 and that comparatives

will not be restated. In summary, the following restatement was made to the amounts recognised at the date

of initial application, January 1, 2018 in respect of the effect of the adoption of HKFRS 15 by BBA:

Statement of Financial Position item:

Carryingamount on

December 31,2017

Effect ofadopting

HKFRS 15

Carryingamount onJanuary 1,

2018RMB’000 RMB’000 RMB’000

Retained earnings (Note) 40,283,742 45,070 40,328,812

Statement of Profit or Loss item:

As reported

Effect ofadopting

HKFRS 15

Withoutadoption of

HKFRS15RMB’000 RMB’000 RMB’000

Revenue (Note) 63,119,593 (26,658) 63,092,935

Note: The effects are in relation to changes in revenue recognition of dealer’s bonus and construction

service contract.


– II-12 –

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The following is the unaudited pro forma financial information of Brilliance China

Automotive Holdings Limited. (the “Company”) and its subsidiaries (collectively referred to as

the “Group”), comprising the unaudited pro forma consolidated statement of financial position as

at June 30, 2018 and the unaudited pro forma consolidated statement of profit or loss, unaudited

pro forma consolidated statement of comprehensive income and unaudited pro forma consolidated

cash flow statement for the year ended December 31, 2017 and related notes, which have been

prepared in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on

The Stock Exchange of Hong Kong Limited and with reference to Accounting Guideline 7

“Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by

the Hong Kong Institute of Certified Public Accountants. The unaudited pro forma financial

information of the Group has been prepared on the basis of the notes set out below for the purpose

of illustrating the effects of the proposed disposal of 25% equity interest of BMW Brilliance

Automotive Ltd. (“BBA”) (the “Disposal”) on the financial position of the Group as at June 30,

2018 as if the Disposal had been completed on June 30, 2018, and the Group’s financial

performance and cash flows for the year ended December 31, 2017 as if the Disposal had been

completed on January 1, 2017. Details of the Disposal are set out in the “Letter from the Board”

contained in this Circular.

The unaudited pro forma financial information has been prepared for illustrative purposes

only and is based on certain assumptions, estimates, uncertainties and other currently available

information. Accordingly, and because of its hypothetical nature, the unaudited pro forma financial

information of the Group may not give a true picture of the financial position, financial

performance or cash flows of the Group following the completion of the Disposal. Further, the

unaudited pro forma financial information of the Group does not purport to predict the Group’s

future financial position, financial performance or cash flows.

The unaudited pro forma financial information of the Group has been prepared based upon

the consolidated statement of financial position of the Group as at June 30, 2018, which have been

extracted from the published interim report of the Group for the period ended June 30, 2018, and

the consolidated statement of profit or loss and the consolidated statement of comprehensive

income of the Group and consolidated cash flow statement of the Group for the year ended

December 31, 2017, which have been extracted from the published annual report of the Group for

the year ended December 31, 2017 after taking pro forma adjustments as summarised in the

accompanying notes that are directly attributable to the Disposal had it been completed on June 30,

2018 and on January 1, 2017 respectively.

The unaudited pro forma financial information should be read in conjunction with the

historical financial information of the Group as set out in the published annual report of the Group

for the year ended December 31, 2017 and published interim report of the Group for the period

ended June 30, 2018 and other financial information contained in this circular. The unaudited pro

forma financial information of the Group does not take into account any trading or other

transactions subsequent to the date of respective financial statements of companies comprising the

Group.

APPENDIX III UNAUDITED PRO FORMA FINANCIALINFORMATION OF THE GROUP

– III-1 –

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

OF THE GROUP AS AT JUNE 30, 2018

The Group Pro forma adjustments

The Groupupon

DisposalRMB’000 RMB’000 RMB’000 RMB’000

Note 1 Note 2 Note 5

ASSETS AND LIABILITIESNon-current assetsIntangible assets 643,005 – – 643,005Property, plant and equipment 2,575,605 – – 2,575,605Land lease prepayments 85,455 – – 85,455Interests in joint ventures 24,171,770 (24,171,770) – –Interests in associates 1,684,358 12,085,885 – 13,770,243Prepayments for long-term investments 600,000 – – 600,000Available-for-sale financial assets 14,447 – – 14,447Long-term loan receivables 2,866,181 – – 2,866,181Other non-current assets 72,494 – – 72,494

Total non-current assets 32,713,315 (12,085,885) – 20,627,430

Current assetsCash and cash equivalents 1,899,171 28,943,500 (7,163,934) 23,678,737Cash at central bank 42,307 – – 42,307Short-term bank deposits 12,728 – – 12,728Pledged short-term bank deposits 913,765 – – 913,765Inventories 995,575 – – 995,575Accounts receivable 1,139,846 – – 1,139,846Notes receivable 230,190 – – 230,190Other current assets 2,962,169 – – 2,962,169

Total current assets 8,195,751 28,943,500 (7,163,934) 29,975,317

Current liabilitiesAccounts payable 2,740,513 – – 2,740,513Notes payable 1,434,437 – – 1,434,437Other current liabilities 2,076,106 – – 2,076,106Short-term bank borrowings 4,456,400 – – 4,456,400Income tax payable 18,674 – – 18,674

Total current liabilities 10,726,130 – – 10,726,130


– III-2 –

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

OF THE GROUP AS AT JUNE 30, 2018 (CONTINUED)


The Groupupon

DisposalRMB’000 RMB’000 RMB’000 RMB’000

Note 1 Note 2 Note 5

Net current (liabilities) assets (2,530,379) 28,943,500 (7,163,934) 19,249,187

Total assets less current liabilities 30,182,936 16,857,615 (7,163,934) 39,876,617

Non-current liabilitiesLong-term bank borrowings 70,000 – – 70,000Deferred government grants 108,510 – – 108,510

Total non-current liabilities 178,510 – – 178,510

NET ASSETS 30,004,426 16,857,615 (7,163,934) 39,698,107

CAPITAL AND RESERVESShare capital 397,176 – – 397,176Reserves 29,081,853 16,857,615 (7,163,934) 38,775,534

Total equity attributable to equity

holders of the Company 29,479,029 16,857,615 (7,163,934) 39,172,710Non-controlling interests 525,397 – – 525,397

TOTAL EQUITY 30,004,426 16,857,615 (7,163,934) 39,698,107


– III-3 –

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF PROFIT OR LOSS OF

THE GROUP FOR THE YEAR ENDED DECEMBER 31, 2017


The Groupupon

DisposalRMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Note 1 Note 3 Note 4 Note 5

Revenue 5,304,723 – – – 5,304,723Cost of sales (5,118,497) – – – (5,118,497)

Gross profit 186,226 – – – 186,226Other income 110,466 – 16,738,229 – 16,848,695Interest income 55,443 – – – 55,443Selling expenses (571,853) – – – (571,853)General and administrative expenses (1,192,936) – – – (1,192,936)Finance costs (137,871) – – – (137,871)Share of results of:

Joint ventures 5,233,312 (5,237,670) – – (4,358)Associates 216,979 2,618,835 – – 2,835,814

Profit before income tax expense 3,899,766 (2,618,835) 16,738,229 – 18,019,160Income tax expense (33,953) – – (7,163,934) (7,197,887)

Profit for the year 3,865,813 (2,618,835) 16,738,229 (7,163,934) 10,821,273

Attributable to:Equity holders of the Company 4,376,120 (2,618,835) 16,738,229 (7,163,934) 11,331,580Non-controlling interests (510,307) – – – (510,307)

3,865,813 (2,618,835) 16,738,229 (7,163,934) 10,821,273


– III-4 –

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE

INCOME OF THE GROUP FOR THE YEAR ENDED DECEMBER 31, 2017


The Groupupon


Note 1 Note 3 Note 4 Note 5

Profit for the year 3,865,813 (2,618,835) 16,738,229 (7,163,934) 10,821,273

Comprehensive income that will besubsequently reclassified toconsolidated statement of profit orloss, net of tax

Change in fair value of available-for-salefinancial assets (8,969) – – – (8,969)

Share of comprehensive income of a jointventure 715,758 (715,758) – – –

Share of comprehensive income of anassociate – 357,879 – – 357,879

Reclassification of hedging reserve uponDisposal – – 119,386 – 119,386

706,789 (357,879) 119,386 – 468,296

Total comprehensive incomefor the year 4,572,602 (2,976,714) 16,857,615 (7,163,934) 11,289,569

Attributable to:Equity holders of the Company 5,082,909 (2,976,714) 16,857,615 (7,163,934) 11,799,876Non-controlling interests (510,307) – – – (510,307)

4,572,602 (2,976,714) 16,857,615 (7,163,934) 11,289,569


– III-5 –

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOW OF THEGROUP FOR THE YEAR ENDED DECEMBER 31, 2017


The Groupupon


Note 1 Note 3 Note 4 Note 5 Note 1

Operating activitiesProfit before income tax expense 3,899,766 (2,618,835) 16,738,229 – 18,019,160Share of results of:

– Joint ventures (5,233,312) 5,237,670 – – 4,358– Associates (216,979) (2,618,835) – – (2,835,814)

Interest income (196,116) – – – (196,116)Interest expense 137,871 – – – 137,871Write-back of provision for

inventories sold (42,012) – – – (42,012)Depreciation of property, plant and

equipment 148,826 – – – 148,826Amortisation of intangible assets 127,051 – – – 127,051Amortisation of land lease prepayments 2,058 – – – 2,058Impairment loss on property, plant and

equipment 9,823 – – – 9,823Impairment loss on intangible assets 700,000 – – – 700,000Gain on disposal of interest in

a joint venture – – (16,738,229) – (16,738,229)Loss on disposal of property, plant and

equipment 2,653 – – – 2,653Deferred income from government grants (29,281) – – – (29,281)Write-back of provision for impairment

losses (7,408) – – – (7,408)Provision for inventories 58,941 – – – 58,941Impairment losses on:

– Accounts receivable 893 – – – 893– Loans receivable 28,495 – – – 28,495– Other receivables 19,379 – – – 19,379

Operating loss before workingcapital change (589,352) – – – (589,352)


– III-6 –

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOW OF THEGROUP FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED)


The Groupupon



Operating loss before workingcapital change (589,352) – – – (589,352)

Increase in cash at central bank (58,042) – – – (58,042)Decrease in inventories 48,016 – – – 48,016Decrease in accounts receivable 570,746 – – – 570,746Increase in loans receivable (2,483,632) – – – (2,483,632)Increase in notes receivable (67,487) – – – (67,487)Increase in other current assets (102,781) – – – (102,781)Decrease in accounts payable (45,253) – – – (45,253)Decrease in notes payable (462,569) – – – (462,569)Increase in other current liabilities 356,627 – – – 356,627

Cash used in operating activities (2,833,727) – – – (2,833,727)Interest received 301,308 – – – 301,308Corporate income tax paid (14,362) – – (7,163,934) (7,178,296)

Net cash used in operating activities (2,546,781) – – (7,163,934) (9,710,715)

Investing activitiesAcquisition of property, plant and

equipment and land lease prepaymentsand additions of intangible assets (623,927) – – – (623,927)

Increase in short-term and pledgedbank deposits (225,054) – – – (225,054)

Dividend received from an associate 168,000 – – – 168,000Dividend received from a joint venture 2,000,000 – – – 2,000,000Proceeds from disposal of property,

plant and equipment 3,456 – – – 3,456Proceeds from disposal of interest in

a joint venture – – 28,943,500 – 28,943,500Increase in other long-term assets (44,409) – – – (44,409)

Net cash generated from investingactivities 1,278,066 – 28,943,500 – 30,221,566


– III-7 –

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOW OF THEGROUP FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED)


The Groupupon



Financing activitiesProceeds from issue of shares 2,063 – – – 2,063Issue of notes payable 2,299,567 – – – 2,299,567Repayments of notes payable (1,386,464) – – – (1,386,464)Government grants received 18,402 – – – 18,402Proceeds from bank borrowings 3,090,900 – – – 3,090,900Repayments of bank borrowings (1,526,000) – – – (1,526,000)Dividends paid (277,155) – – – (277,155)Interest paid (157,464) – – – (157,464)

Net cash generated from financingactivities 2,063,849 – – – 2,063,849

Increase in cash and cash equivalents 795,134 – 28,943,500 (7,163,934) 22,574,700Cash and cash equivalents, as at

January 1, 2017 936,942 – – – 936,942

Cash and cash equivalents,as at December 31, 2017 1,732,076 – 28,943,500 (7,163,934) 23,511,642


– III-8 –

NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

1. The amounts are extracted from the unaudited consolidated statement of financial position as at June 30, 2018, as

set out in the published interim report of the Group for the six months ended June 30, 2018, and the audited

consolidated statement of profit or loss, audited consolidated statement of comprehensive income and audited

consolidated statement of cash flows of the Group for the year ended December 31, 2017 as set out in the published

annual report of the Company for the year ended December 31, 2017.

2. The adjustment represents the disposal of 25% equity interest in BBA held by Shenyang JinBei Automotive

Industry Holdings Co., Ltd. (“SJBA”), an indirect wholly-owned subsidiary of the Company as if the Disposal, for

the purpose of pro forma financial information, had taken place on June 30, 2018 and the amount has been settled

on June 30, 2018.

3. The adjustments represent the exclusion of 25% share of result of BBA for the year ended December 31, 2017 as if

the Disposal had taken place on January 1, 2017.

4. The adjustment represents the estimated gain on the Disposal as if the Disposal had taken place on June 30, 2018.

Calculation of the estimated gain on the Disposal:

Note RMB’000

Consideration 4(i) 29,000,000

Less:

25% net assets of BBA as at June 30, 2018 4(ii) (12,085,885)

25% hedging reserve of BBA as at June 30, 2018 (119,386)

Estimated transaction cost directly attributable to the Disposal 4(iii) (56,500)

Estimated gain on the Disposal 16,738,229

Notes:

(i) This represents the total consideration of the Disposal of RMB29 billion in accordance with the equity

transfer agreement. The amount of consideration shall be subject to the following adjustments:

(a) increased by the amount of interest applicable to the Consideration which is calculated on a daily

basis at the rate of 6% per annum from (and including) the locked box date to (but excluding) the

completion date;

(b) reduced by the amount of (i) any dividend, bonus or other distribution of profits declared, paid or

made in respect of the Target Equity Interest by BBA to SJBA, other than the dividend approved

and declared by the board of directors of BBA at the board meeting held on July 13, 2018; (ii) any

payment (including management, consulting service, fees or cost-recharge, bonus or other

compensation) made or agreed to be made by, or assets transferred to or liabilities assumed, or

guarantee incurred by BBA to, or for the benefit of SJBA or any of its affiliates, other than

transactions on arm’s length third party terms; (iii) the waiver, deferral or release by BBA of any

amount owed by SJBA or any of its affiliates to BBA; and (iv) any transaction by BBA with SJBA

or any of its affiliates other than on arm’s length third party terms, and provided in each case, other

than any Permitted Leakage Payment (“Leakage”);

(c) reduced by the amount of any Company’s pre-completion tax liability; and

(d) reduced by the amount of interest on the relevant Leakage and pre-completion tax liability amount

calculated on a daily basis at the rate of 6% per annum from (and including) the date of occurrence

of the relevant Leakage or the pre-completion tax liability (as the case may be) to (but excluding)

the completion date.


– III-9 –

(ii) The amount of 25% net assets of BBA was extracted from the unaudited statement of financial position of

BBA as at June 30, 2018.

(iii) The amount represented stamp duty and estimated other direct costs in relation to the Disposal which is

directly attributable expenses estimated by the directors of the Company. For the purpose of the pro forma

financial information, it is assumed that the Group will settle the directly attributable expenses by cash at

completion date.

The actual financial effects of the Disposal may be different from the amount described above and would be subject

to total consideration receivables, including the adjustment of the amount of Leakage and pre-completion tax

liability, the date of the Leakage and pre-completion tax liability occurred and the amount of interest on the

relevant Leakage and pre-completion tax liability, and the tax expense in relation to the Disposal and are therefore

subject to change upon the actual completion of the Disposal.

5. The adjustment represents the estimated tax expense on the estimated gain on the Disposal, and as if it had been

settled immediately.

Calculation of the estimated tax expense:

Note RMB’000

Consideration 4(i) 29,000,000

Less:

25% of share capital of BBA (344,264)

Assessable profit arising from the Disposal 28,655,736

Estimated tax expense in relation to the Disposal calculatedat the applicable tax rates (7,163,934)

6. No adjustments have been made to reflect any operating results or other transactions of the Group entered into

subsequent to December 31, 2017 or June 30, 2018, for the preparation of the unaudited pro forma consolidated

statement of financial position of the Group as at June 30, 2018 or the unaudited pro forma consolidated statement

of profit or loss and other comprehensive income of the Group and the unaudited pro forma consolidated statement

of cash flows of the Group for the year ended December 31, 2017.


– III-10 –

B. REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report, prepared for the purpose of incorporation in this

circular, received from the reporting accountants of the Company, Grant Thornton Hong Kong

Limited, Certified Public Accountants, Hong Kong.

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE

COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

December 31, 2018

TO THE DIRECTORS OF BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED

We have completed our assurance engagement to report on the compilation of unaudited pro

forma financial information of Brilliance China Automotive Holdings Limited. (the “Company”)

and its subsidiaries (collectively referred to as the “Group”) by the directors of the Company (the

“Directors”) for illustrative purposes only. The unaudited pro forma financial information consists

of the unaudited pro forma consolidated statement of financial position as at June 30, 2018, the

unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated

statement of comprehensive income and the unaudited pro forma consolidated cash flow statement

for the year ended December 31, 2017 and related notes as set out in Part A of Appendix III to the

circular dated December 31, 2018 (the “Circular”) issued by the Company. The applicable criteria

on the basis of which the Directors have compiled the unaudited pro forma financial information

are described in Part A of Appendix III to the Circular.

The unaudited pro forma financial information has been compiled by the Directors to

illustrate the impact of the proposed disposal of 25% equity interest of BMW Brilliance

Automotive Ltd. (the “Disposal”) on the Group’s financial position as at June 30, 2018 and the

Group’s financial performance and cash flows for the year ended December 31, 2017 as if the

Disposal had taken place at June 30, 2018 and January 1, 2017, respectively. As part of this

process, information about the Group’s financial position as at June 30, 2018 has been extracted by

the Directors from the consolidated financial statements of the Company for the period then ended,

on which an interim report has been published and the Group’s financial performance and cash

flows for the year ended December 31, 2017 has been extracted by the Directors from the

consolidated financial statements of the Company for the year then ended, on which an audit report

has been published.

Directors’ Responsibilities for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the unaudited pro forma financial information

in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock

Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting

Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment

Circulars” (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants

(“HKICPA”).


– III-11 –

Our Independence and Quality Control

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

Our firm applies Hong Kong Standard on Quality Control 1 “Quality Control for Firms thatPerform Audits and Reviews of Financial Statements, and Other Assurance and Related ServicesEngagements” issued by the HKICPA and accordingly maintains a comprehensive system ofquality control including documented policies and procedures regarding compliance with ethicalrequirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the ListingRules, on the unaudited pro forma financial information and to report our opinion to you. We donot accept any responsibility for any reports previously given by us on any financial informationused in the compilation of the unaudited pro forma financial information beyond that owed to thoseto whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on AssuranceEngagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma FinancialInformation Included in a Prospectus” issued by the HKICPA. This standard requires that thereporting accountants plan and perform procedures to obtain reasonable assurance about whetherthe Directors have compiled the unaudited pro forma financial information in accordance withparagraph 4.29 of the Listing Rules, and with reference to AG 7 issued by the HKICPA.

For the purpose of this engagement, we are not responsible for updating or reissuing anyreports or opinions on any historical financial information used in compiling the pro formafinancial information, nor have we, in the course of this engagement, performed an audit or reviewof the financial information used in compiling the pro forma financial information.

The purpose of unaudited pro forma financial information included in an investment circularis solely to illustrate the impact of a significant event or transaction on the unadjusted financialinformation of the Group as if the event had occurred or the transaction had been undertaken at anearlier date selected for purposes of the illustration. Accordingly, we do not provide any assurancethat the actual outcome of the events or transactions at June 30, 2018 or January 1, 2017 wouldhave been as presented.

A reasonable assurance engagement to report on whether the pro forma financialinformation has been properly compiled on the basis of the applicable criteria involves performingprocedures to assess whether the applicable criteria used by the Directors in the compilation of thepro forma financial information provide a reasonable basis for presenting the significant effectsdirectly attributable to the event or transaction, and to obtain sufficient appropriate evidence aboutwhether:

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


– III-12 –

• the unaudited pro forma financial information reflects the proper application of those

adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgement, having regard to

the reporting accountants’ understanding of the nature of the Group, the event or transaction in

respect of which the pro forma financial information has been compiled, and other relevant

engagement circumstances.

The engagement also involves evaluating the overall presentation of the pro forma financial

information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a

basis for our opinion.

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled on the

basis stated;

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

(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial

information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Grant Thornton Hong Kong Limited

Certified Public Accountants

Level 12

28 Hennessy Road

Wanchai

Hong Kong

Chan Tze Kit

Practising Certificate No.: P05707


– III-13 –

The following is the text of letters, prepared for the purpose of incorporation in this circular,received from (1) the reporting accountants of the Company, Grant Thornton Hong Kong Limited,Certified Public Accountants, Hong Kong; and (2) the financial adviser to the Company in relationto the Disposal, Goldman Sachs (Asia) L.L.C., respectively.

(1) LETTER FROM GRANT THORNTON

INDEPENDENT ASSURANCE REPORT ON THE DISCOUNTED FUTURE CASH FLOWSIN CONNECTION WITH THE VALUATION OF BMW BRILLIANCE AUTOMOTIVE LTD.

December 31, 2018

TO THE BOARD OF DIRECTORS OF BRILLIANCE CHINA AUTOMOTIVE HOLDINGSLIMITED

We refer to the discounted future cash flows on which the valuation of BMW BrillianceAutomotive Ltd. (the “Valuation”) dated September 24, 2018 prepared by China EnterpriseAppraisals Co., Ltd. in respect of the valuation of BMW Brilliance Automotive Ltd. (“BBA”) as atJune 30, 2018 is based. The Valuation is prepared based on the discounted future cash flows and isregarded as a profit forecast under paragraph 14.61 of the Rules Governing the Listing ofSecurities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

Directors’ Responsibilities for the Discounted Future Cash Flows

The directors of Brilliance China Automotive Holdings Limited (the “Directors”) areresponsible for the preparation of the discounted future cash flows in accordance with the basesand assumptions determined by the Directors and as set out in the Valuation (the “Assumptions”).This responsibility includes carrying out appropriate procedures relevant to the preparation of thediscounted future cash flows for the Valuation and applying an appropriate basis of preparation;and making estimates that are reasonable in the circumstances.

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the “Code ofEthics for Professional Accountants” issued by the Hong Kong Institute of Certified PublicAccountants (the “HKICPA”), which is founded on fundamental principles of integrity,objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 “Quality Control for Firms thatPerform Audits and Reviews of Financial Statements, and Other Assurance and Related ServicesEngagements” issued by the HKICPA and accordingly maintains a comprehensive system ofquality control including documented policies and procedures regarding compliance with ethicalrequirements, professional standards and applicable legal and regulatory requirements.

APPENDIX IV LETTERS FROM GRANT THORNTON AND GOLDMAN SACHSIN RELATION TO DISCOUNTED CASH FLOWS FORECAST

– IV-1 –

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion on the arithmetical accuracy of the calculations

of the discounted future cash flows on which the Valuation is based and to report solely to you, as

a body, as required by Rule 14.62(2) of the Listing Rules, and for no other purpose. We do not

assume responsibility towards or accept liability to any other person for the contents of this report.

We carried out our work in accordance with the terms of our engagement and Hong Kong

Standard on Assurance Engagements “HKSAE 3000 (Revised), Assurance Engagements Other

Than Audits or Reviews of Historical Financial Information” issued by the HKICPA. This standard

requires that we plan and perform our work to obtain reasonable assurance as to whether, so far as

the calculations are concerned, the Directors have properly compiled the discounted future cash

flows in accordance with the Assumptions as set out in the Valuation. Our work was limited

primarily to making inquiries of the Company’s management, considering the analyses and

assumptions on which the discounted future cash flows are based and checking the arithmetic

accuracy of the compilation of the discounted future cash flows. Our work does not constitute any

valuation of BBA.

Because the Valuation relates to discounted future cash flows, no accounting policies of the

Company have been adopted in its preparation. The Assumptions include hypothetical assumptions

about future events and management actions which cannot be confirmed and verified in the same

way as past results and these may or may not occur. Even if the events and actions anticipated do

occur, actual results are still likely to be different from the Valuation and the variation may be

material. Accordingly, we have not reviewed, considered or conducted any work on the

reasonableness and the validity of the Assumptions and do not express any opinion whatsoever

thereon.

Opinion

Based on the foregoing, in our opinion, so far as the calculations are concerned, the

discounted future cash flows have been properly compiled in all material respects in accordance

with the Assumptions adopted by the Directors.

Grant Thornton Hong Kong Limited

Certified Public Accountants

Level 12

28 Hennessy Road

Wan Chai

Hong Kong

Chan Tze Kit

Practising Certificate No.: P05707


– IV-2 –

(2) LETTER FROM GOLDMAN SACHS

The Board of Directors

Brilliance China Automotive Holdings Limited

Suites 1602 – 05

Chater House


Hong Kong

December 31, 2018

Ladies and Gentlemen:

We refer to the circular of Brilliance China Automotive Holdings Limited (the

“Company”), dated December 31, 2018 (the “Circular”), in relation to the proposed disposal of

25% equity interest (the “Transaction”) by Shenyang JinBei Automotive Industry Holdings Co.,

Ltd. (“SJBA”, an indirect wholly-owned subsidiary of the Company) in BMW Brilliance

Automotive Limited (the “Target”), a sino-foreign equity joint venture owned as to 50% by SJBA

and as to 50% by BMW Holding B.V. (“BMW”), together with other new products and strategic

investments in the Target, and the extension of the current joint venture term to the year 2040,

subject to fulfilment of the conditions contained in the definitive agreements relating to the

Transaction, including the necessary approvals by the PRC Government.

The Circular refers to a valuation report on the Target dated September 24, 2018 (the

“Valuation Report”) prepared by China Enterprise Appraisals Co., Ltd (the “Valuer”) and

addressed to the Company and SJBA for the purposes of the Transaction. The Valuation Report

contains a fair value estimate of the valuation of 100% equity interest of the Target as of June 30,

2018 (which was approximately RMB115.8 billion as set out on page 13 of the Circular), which

was based on, among other things, the income-based approach with the use of discounted future

cash flow method, and we understand that such valuation based on discounted future cash flow is

regarded by The Stock Exchange of Hong Kong Limited (“Stock Exchange”) as a profit forecast

(the “Forecast”) under Rule 14.61 of the Rules governing the listing of Securities on the Stock

Exchange (the “Listing Rules”). We have attended discussions on the Forecast with certain

directors and the management of the Company, the management of the Target and the Valuer. In

these discussions, the participants also discussed the historical performance of the Target and other

information considered relevant by the Valuer and the Company when preparing the Forecast,

including but not limited to the valuation method adopted, the bases and assumptions used and

certain underlying financial forecasts of the Target which formed part of the bases. We have also

considered the letter to the Directors from Grant Thornton Hong Kong Limited, dated December

31, 2018 in relation to the arithmetical accuracy of the calculations of the discounted future cash

flow on which the Forecast is based.


– IV-3 –

On the basis of the foregoing and without giving any opinion on the reasonableness of the

Valuation Report or the Forecast, or any underlying bases and assumptions selected by the Valuer

(for which the Valuer and the Company are responsible), we are satisfied that the Forecast, for

which the Directors are responsible, has been made after due and careful enquiry by the Directors.

For the avoidance of doubt, this letter does not constitute an independent valuation or fairness

opinion and is expressly limited to the matters described herein.

The work undertaken by us is for the sole purpose of reporting to you under Rule 14.62(3) of

the Listing Rules and for no other purpose. We accept no responsibility to any other person in

connection with such work.

Yours faithfully,

For and on behalf of

GOLDMAN SACHS (ASIA) L.L.C.Weigang Li

Managing Director


– IV-4 –

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept fullresponsibility, includes particulars given in compliance with the Listing Rules for the purpose ofgiving information with regard to the Group. The Directors, having made all reasonable enquiries,confirm that to the best of their knowledge and belief, the information contained in this circular isaccurate and complete in all material respects and not misleading or deceptive, and there are noother matters the omission of which would make any statement therein or in this circularmisleading.

2. DISCLOSURE OF INTERESTS

Interests of the Directors and Chief Executives

As at the Latest Practicable Date, the interests and short positions of each director,chief executive and their respective close associates in the shares, underlying shares anddebentures of the Company or any associated corporation (within the meaning of Part XV ofthe SFO) which were required to be notified to the Company and the Stock Exchangepursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positionswhich he was taken or deemed to have under such provisions of the SFO); or were requiredpursuant to Section 352 of the SFO to be entered in the register referred to therein; or wererequired pursuant to the Model Code for Securities Transactions by Directors of ListedIssuers to be notified to the Company and the Stock Exchange, are set out below:

The Company

Name ofDirectors/chief executives

Type ofinterests

Number and class of Shares held/Approximate shareholding percentage

(Note 1)

Numberof shareoptionsgranted

(Percentageof the

Company’sissuedshare

capital)Long

Position %Short

Position %

Mr. Wu Xiao An(also known asMr. Ng Siu On)

Personal 6,200,000ordinary

0.12% – – –

Mr. Qi Yumin Personal 4,500,000ordinary

0.09% – – –

Mr. Qian Zuming Personal 600,000ordinary

0.01% – – –

Note:

1. The percentage of shareholding is calculated on the basis of 5,045,269,388 ordinary shares in issue of the

Company as at the Latest Practicable Date.

APPENDIX V GENERAL INFORMATION

– V-1 –

Associated Corporation of the Company

Name ofDirectors/chiefexecutives

Name ofassociatedcorporation Type of interests

Number and class of Shares held/Approximate Shareholding percentage

(Note 1)Long

Position %Short

Position %

Mr. Wu

Xiao An

Xinchen China

Power Holdings

Limited

(“PowerXinchen”)

Trustee and

interest in a

controlled

corporation

(Note 2)

33,993,385

ordinary

2.65% – –

Beneficial interest

(in shares)

(Note 3)

8,320,041

ordinary

0.65% – –

Notes:

1. The percentage of shareholding is calculated on the basis of 1,282,211,794 ordinary shares in issue of

Power Xinchen as at the Latest Practicable Date.

2. As at the Latest Practicable Date, Power Xinchen was indirectly held as to 31.20% by the Company. The

33,993,385 shares in long position are interests of a discretionary trust under an incentive scheme of Power

Xinchen. The said trust held 33,993,385 shares of Power Xinchen. Mr. Wu Xiao An is one of the trustees of

the aforementioned trust. Mr. Wu also held 50% interests in Lead In Management Limited which is also a

trustee of the said trust. Accordingly, Mr. Wu was deemed or taken to be interested in the 33,993,385 shares

of Power Xinchen, representing approximately 2.65% of its issued share capital as at the Latest Practicable

Date.

3. Mr. Wu Xiao An held 8,320,041 shares of Power Xinchen in the capacity of beneficial owner, representing

approximately 0.65% of its issued share capital as at the Latest Practicable Date.

Save as disclosed, as at the Latest Practicable Date, none of the Directors, chief

executives or their respective close associates had any interest or short positions in the

shares, underlying shares and debentures of the Company or any associated corporation

(within the meaning of Part XV of the SFO) which were required to be notified to the

Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO

(including interests and short positions which he was taken or deemed to have under such

provisions of the SFO); or were required, pursuant to Section 352 of the SFO to be entered

into the register referred to therein; or were required, pursuant to the Model Code for

Securities Transactions by Directors of Listed Issuers to be notified to the Company and the

Stock Exchange.


– V-2 –

Interests of Substantial Shareholders

As at the Latest Practicable Date, so far as known to the Directors and chiefexecutives of the Company, the following persons, other than a Director or chief executiveof the Company had an interest or a short position in the Shares and underlying shares of theCompany as recorded in the register required to be kept by the Company under Section 336of the SFO:

Name ofShareholders

Number and class of shares held/Approximate shareholding percentage (Note 1)

LongPosition %

ShortPosition %

LendingPool %

Citigroup Inc.(Note 2)

411,529,857ordinary

8.15 11,652,055 0.23 398,935,351 7.90

GIC Private Limited(Note 3)

309,904,000ordinary

6.14 – – – –

Huachen (Note 4) 2,135,074,988ordinary

42.32 – – – –

J.P. Morgan Chase& Co. (Note 5)

355,552,033ordinary

7.04 33,308,057 0.66 311,115,572 6.16

Templeton AssetManagement Ltd.(Note 6)

356,705,276ordinary

7.07 – – – –

Notes:

1. The percentage of shareholding is calculated on the basis of 5,045,269,388 Shares in issue of the Company

as at the Latest Practicable Date.

2. The 411,529,857 Shares in long position were held as to 12,594,506 Shares as corporate interest and as to

398,935,351 Shares in the capacity as approved lending agent. The 11,652,055 Shares in short position

were held as corporate interest.

3. The 309,904,000 Shares in long position were held in the capacity as investment manager.

4. The 2,135,074,988 Shares in long position were held in the capacity as beneficial owner.

5. The 355,552,033 Shares in long position were held as to 43,549,561 Shares as corporate interest, as to

886,000 Shares were held in the capacity as investment manager, as to 900 Shares in the capacity as trustee

and as to 311,115,572 Shares in the capacity as approved lending agent. The 33,308,057 Shares in short

position were held in the capacity as corporate interest.

6. The 356,705,276 Shares in long position were held in the capacity as investment manager.

Save as disclosed herein, as at the Latest Practicable Date, there was no other person

so far as is known to the Directors and chief executives of the Company, other than a

Director or chief executive of the Company as having an interest or a short position in the

Shares and underlying shares of the Company as recorded in the register required to be kept

by the Company under Section 336 of the SFO.


– V-3 –

3. DIRECTORS’ INTEREST IN ASSETS AND/OR ARRANGEMENT

As at the Latest Practicable Date:

(a) none of the Directors or the chief executives of the Company had any direct or

indirect interests in any assets which have been, since December 31, 2017, (being the

date to which the latest published audited consolidated financial statements of the

Group were made up), acquired or disposed of by or leased to any member of the

Group, or which are proposed to be acquired or disposed of by or leased to any

member of the Group; and

(b) none of the Directors or the chief executives of the Company was materially

interested, either directly or indirectly, in any subsisting contract or arrangement that

was significant in relation to the business of the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors entered into any service contract

(excluding agreements expiring or determinable by employers within one year without payment of

compensation other than statutory compensation) with the Company or any member of the Group.

5. EXPERTS AND CONSENT

The following are the qualification of the experts who have given opinion or advice

contained in this circular:

Name Qualification

Date ofConclusionor Opinion

Goldman Sachs A licensed corporation licensedunder the Securities and FuturesOrdinance to carry out Type 1(dealing in securities), Type 4(advising on securities), Type 5(advising on future contracts),Type 6 (advising on corporatefinance) and Type 9 (assetmanagement) regulated activities

December 31, 2018

China EnterpriseAppraisals Co., Ltd.(北京中企華資產評估有限責任公司)

Qualified PRC Valuer September 24,2018

Grant Thornton Certified Public Accountantsin Hong Kong

December 31, 2018


– V-4 –

Each of the above experts has given and has not withdrawn its written consent to the issue ofthis circular with a copy of its letter and/or the reference to its name and its advice included in thiscircular in the form and context in which it respectively appears. A letter from each of GrantThornton and Goldman Sachs, respectively, dated the date of this circular, has been issued for thepurpose of incorporation herein.

As at the Latest Practicable Date, none of the above experts had any shareholding or wasbeneficially interested in, directly or indirectly, in any member of the Group or the right (whetherlegally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in anymember of the Group.

As at the Latest Practicable Date, none of the above experts had direct or indirect interests inany assets which had been since December 31, 2017 (being the date to which the latest publishedaudited consolidated financial statements of the Group were made up), acquired or disposed of byor leased to any member of the Group, or which are proposed to be acquired or disposed of by orleased to any member of the Group.

6. NO MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors confirmed that they were not aware of anymaterial adverse change in the financial or trading position of the Group since December 31, 2017,being the date to which the latest published audited consolidated financial statements of the Groupwere made up.

7. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective close associateshad any competing interests in any business that competed or was likely to compete, either directlyor indirectly, with the business of the Group.

8. MATERIAL LITIGATION

As at the Latest Practicable Date, to the best knowledge and information of the Directors,none of the members of the Group was engaged in any litigation or claims of material importance,and no litigation or claims of material importance were known to the Directors to be pending orthreatened against any member of the Group.

9. MATERIAL CONTRACTS

Other than the Transaction Documents, the Group has entered into the following contracts(not being contracts entered into in the ordinary course of business) within the two years precedingthe date of this circular which is or may be material:

(a) an equity interest transfer agreement dated June 23, 2017, entered into by andbetween SJBA and JBC in relation to, among others, the acquisition of 39.1% equityinterest in RBJAC;

(b) a framework cooperation agreement dated July 4, 2017 entered into by and betweenthe Company and Renault in relation to, among others, the transfer of 49% equityinterest in RBJAC from the Group to Renault; and


– V-5 –

(c) a cross guarantee agreement dated November 20, 2017 entered into by and between a

member of the Group and JBC, pursuant to which both parties agreed to provide cross

guarantees to support each other in obtaining banking facilities up to a maximum

amount of RMB600 million for each party for the period from January 1, 2018 to

December 31, 2018.

10. GENERAL

(a) The company secretary of the Company is Ms. Lam Yee Wah Eva, who is a fellow of

The Hong Kong Institute of Chartered Secretaries and a fellow of The Institute of

Chartered Secretaries and Administrators.

(b) The registered office of the Company is Canon’s Court, 22 Victoria Street, Hamilton

HM12, Bermuda, and the head office and principal place of business of the Company

is Suites 1602-05, Chater House, 8 Connaught Road Central, Hong Kong.

(c) The Hong Kong branch share registrar and transfer office of the Company is

Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17/F,

Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

(d) The English text of this circular shall prevail over the Chinese text in the event of

inconsistency.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection on any weekday

(Saturdays and public holidays excepted) from 9:30 a.m. to 5:00 p.m. (unless typhoon signal No. 8

or above is hoisted or a black rainstorm notice is issued) at the Company’s principal place of

business at Suites 1602-05, Chater House, 8 Connaught Road Central, Hong Kong from the date of

this circular up to and including the date of the SGM.

(a) the Transaction Documents;

(b) the letter from the Board dated December 31, 2018, the text of which is set out on

pages 8 to 26 of this circular;

(c) the annual reports of the Company for each of the three years ended December 31,

2015, 2016 and 2017 and the interim report of the Company for the six months ended

June 30, 2018;

(d) the financial information of BBA for each of the three years ended December 31,

2015, 2016 and 2017 and the six months ended June 30, 2018, the text of which is set

out in Appendix II to this circular;

(e) the unaudited pro forma financial information of the Group for the year ended

December 31, 2017, the text of which is set out in Appendix III to this circular;


– V-6 –

(f) the Letter from Grant Thornton and the Letter from Goldman Sachs, the texts of

which are set out in Appendix IV to this circular;

(g) the material contracts referred to in the paragraph headed “Material Contracts” in this

appendix;

(h) the written consents from the experts referred to in the paragraph headed “Experts

and Consents” in this appendix;

(i) the Bye-laws; and

(j) this circular.


– V-7 –

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited

take no responsibility for the contents of this notice, 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 notice.



(Stock Code: 1114)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the special general meeting of Brilliance ChinaAutomotive Holdings Limited (the “Company”) will be held at Statue Square Room & AlexandraRoom, 2nd Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Central, Hong Kong,on Friday, January 18, 2019 at 9:00 a.m. for the purposes of considering and, if thought fit, passing,with or without modification or supplementation, the following resolutions:

AS ORDINARY RESOLUTIONS

“THAT:

1. (a) the entry into of each of the Transaction Documents (as defined and describedin the circular of the Company dated December 31, 2018 (the “Circular”),copies of which are produced to the meeting, marked “A” to “D” and initialledby the chairman of the meeting for the purpose of identification) and all thetransactions contemplated thereunder (including, but not limited to, theDisposal (as defined and described in the Circular)) be and are herebyapproved, confirmed and ratified; and

(b) any one or more directors of the Company (the “Directors”) be and is/arehereby authorised to do all such acts and things, to sign and execute all otherrelevant documents and to take such steps which, in his/her/their opinion, arenecessary, appropriate, desirable or expedient to give effect to or implementthe terms of each of the Transaction Documents and the transactionscontemplated thereunder, and to agree to such variation, amendments or waiveror matters relating thereto as are, in his/her/their opinion, in the interest of theCompany and its shareholders as a whole.”

By order of the BoardBrilliance China Automotive Holdings Limited

Wu Xiao An(also known as Ng Siu On)

Chairman

December 31, 2018

* For identification purposes only


– N-1 –

Registered office:

Canon’s Court

22 Victoria Street

Hamilton HM12

Bermuda

Head office and principal place of business:

Suites 1602–05

Chater House


Hong Kong

Notes:

1. A shareholder entitled to attend and vote at the above meeting may appoint one or more than one proxies to attend

and to vote on a poll in his stead. On a poll, votes may be given either personally (or in the case of a shareholder

being a corporation, by its duly authorized representative) or by proxy. A proxy need not be a shareholder of the

Company.

2. Where there are joint registered holders of any share, any one of such persons may vote at the meeting, either

personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such

joint holders are present at the meeting personally or by proxy, that one of the said persons so present whose name

stands first on the register of shareholders of the Company in respect of such shares shall alone be entitled to vote

in respect thereof.

3. In order to be valid, the form of proxy duly completed and signed in accordance with the instructions printed

thereon together with the power of attorney or other authority, if any, under which it is signed or a notarially

certified copy thereof must be delivered to the office of the Company’s branch share registrar in Hong Kong,

Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East,

Wanchai, Hong Kong before 9:00 a.m., Hong Kong time, on Wednesday, January 16, 2019, or not less than 48 hours

before the time appointed for holding the meeting or any adjournment of the meeting.

4. Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at

the meeting if shareholders so wish and in such event, the form of proxy will be deemed revoked.

5. The ordinary resolutions set out in this notice of the meeting will be put to shareholders to vote taken by way of a

poll.

6. The register of shareholders of the Company will be closed from Tuesday, January 15, 2019 to Friday, January 18,

2019, both days inclusive, during which period no transfer of the shares will be effected. The record date for the

meeting is Tuesday, January 15, 2019. Only shareholders whose names appear on the register of shareholders on

Tuesday, January 15, 2019 or their proxies or duly authorised corporate representatives are entitled to attend and

vote at the meeting. In order to determine the list of shareholders who are qualified to attend and vote at the

meeting, all transfer documents accompanied by the relevant share certificates must be lodged with the Company’s

branch registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops

1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m., Hong

Kong time on Monday, January 14, 2019.

As at the date of this notice, the board of Directors comprises four executive Directors, Mr.

Wu Xiao An (also known as Mr. Ng Siu On) (Chairman), Mr. Qi Yumin (Chief Executive Officer),

Mr. Qian Zuming (Chief Financial Officer) and Mr. Zhang Wei; and three independent

non-executive Directors, Mr. Xu Bingjin, Mr. Song Jian and Mr. Jiang Bo.


– N-2 –

BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED 華晨中國 … · 2018. 12. 30. · Goldman Sachs...

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