The Stock Exchange of Hong Kong Limited Takes No Responsibility for the Contents of This Announcement, Makes No Representation A

Home , Weinan

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

TESSON HOLDINGS LIMITED 天臣控股有限公司 (Incorporated in Bermuda with limited liability) (Stock Code: 1201)

VOLUNTARY ANNOUNCEMENT WITH RESPECT TO (I) ESTABLISHMENT OF A PROJECT COMPANY; AND (II) MEMORANDUM OF COOPERATION IN RELATION TO THE PROPOSED STRATEGIC COOPERATION; AND INSIDE INFORMATION WITH RESPECT TO (III) UPDATES ON THE FINANCIAL PERFORMANCE OF THE GROUP FOR THE THREE MONTHS ENDED 31 MARCH 2018

This announcement contains information with respect to (I) the establishment of a project company; (II) the Memorandum in relation to the Proposed Strategic Cooperation; and (III) updates on the financial performance of the Group for the three months ended 31 March 2018.

The disclosure made in this announcement with respect to the establishment of the project company pursuant to the Cooperation Agreement and the Proposed Strategic Cooperation pursuant to the Memorandum is made by the Company on a voluntary basis.

The disclosure made in this announcement with respect to the financial performance of the Company is made by the Company pursuant to Rule 13.09 of the Listing Rules and the inside information provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

I. ESTABLISHMENT OF A PROJECT COMPANY

On 13 May 2018, Tesson New Energy, an indirect non-wholly owned subsidiary of the Company, entered into the Cooperation Agreement with Weinan Development and Suzhou Zijing, in respect of the establishment of a new project company, Tesson Weicheng, for the development of new energy vehicles, power system and related components to be produced by mainstream automobile manufacturers, including but not limited to a new vehicle model to be produced by Manufacturer A.

II. MEMORANDUM OF COOPERATION IN RELATION TO THE PROPOSED STRATEGIC COOPERATION

On 29 May 2018, Tesson New Energy entered into the Memorandum with K2 (Suzhou) in respect of, among other things, a proposed strategic cooperation in relation to a commercial vehicle power system supporting an energy vehicle manufacturing project of Manufacturer B.

III. UPDATES OF THE FINANCIAL PERFORMANCE OF THE GROUP FOR THE THREE MONTHS ENDED 31 MARCH 2018

The Board wishes to inform the Shareholders and potential investors of the Company that based on the Board’s preliminary review of the unaudited consolidated management accounts of the Group and the latest available information, (i) an extraordinary gain on disposal of the Packaging Printing Business of approximately HK$253,775,000 is expected to be recorded in current financial year; and (ii) the revenue of the Company for the three months ended 31 March 2018 was approximately RMB9,367,000, representing a decrease from approximately RMB50,400,000 as recorded in the three months ended 31 March 2017.

This announcement contains information with respect to (I) the establishment of a project company; (II) the Proposed Strategic Cooperation; and (III) updates on the financial performance of the Group for the three months ended 31 March 2018.

I. ESTABLISHMENT OF A PROJECT COMPANY

The Board hereby announces that on 13 May 2018, Tesson New Energy, an indirect non-wholly owned subsidiary of the Company, entered into the Cooperation Agreement with Weinan Development and Suzhou Zijing in respect of the establishment of a new project company, Tesson Weicheng.

THE COOPERATION AGREEMENT

Date

13 May 2018

Parties

1. Weinan Development 2. Suzhou Zijing 3. Tesson New Energy

To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, each of Weinan Development, Suzhou Zijing and their respective ultimate owners are third parties independent of and not connected with the Company or its connected persons (as defined in the Listing Rules).

Establishment of Tesson Weicheng

Pursuant to the Cooperation Agreement, Tesson Weicheng was established in May 2018. The shareholding structure and the capital commitment of Tesson Weicheng are summarized as follows:-

Shareholding in Capital Tesson Weicheng Commitment (approximate %) (RMB '000) Weinan Development 40 24,000 Suzhou Zijing 45 27,000 Tesson New Energy 15 9,000

Total 100 60,000

The terms and conditions of the Cooperation Agreement have been determined after arm’s length negotiation between the parties thereunder. The Directors consider that the terms of the Cooperation Agreement contemplated thereunder are fair and reasonable and in the interests of the Shareholders and the Company as a whole.

Suzhou Zijing and Weinan Development

Suzhou Zijing is established by Suzhou Automotive Research Institute of Tsinghua University, and cooperates with automobile manufacturers in the PRC in the research and development of automobile and related parts. Weinan Development is a state owned enterprise and principally engages in, among other things, investment holdings.

REASONS FOR AND BENEFIT OF ENTERING INTO THE COOPERATION AGREEMENT

Tesson Weicheng is established for the development of new energy vehicles, power system and related components to be produced by mainstream automobile manufacturers, including but not limited to a new vehicle model to be produced by Manufacturer A.

Manufacturer A is one of the leading automobile manufacturers in the PRC and whose shares are listed on the Shenzhen Stock Exchange. Based on its 2017 annual report, new energy vehicles will be the key production focus of Manufacturer A in the future. Accordingly, the Directors expect strong demand for battery products from Manufacturer A. The Directors are of the view that the cooperation with Weinan Development and Suzhou Zijing will enable the Group to strategically capture the continuously growing demand from Manufacturer A and other new energy vehicle manufacturers for battery products. It is expected that such cooperation will enable the Group to further enhance brand awareness in the market, improve its competitiveness and profitability, with a view to achieving a better return for the Shareholders.

II. MEMORANDUM OF COOPERATION IN RELATION TO THE PROPOSED STRATEGIC COOPERATION

The Board hereby announces that on 20 June 2018, Tesson New Energy entered into the Memorandum with K2 (Suzhou) in respect of, among other things, a proposed strategic partnership in relation to a commercial vehicle power system supporting an energy vehicle manufacturing project of Manufacturer B.

THE MEMORANDUM

Date

29 May 2018

Parties

1. Tesson New Energy 2. K2 (Suzhou)

To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, K2 (Suzhou) and its ultimate owner are third parties independent of and not connected with the Company or its connected persons (as defined in the Listing Rules).

The Proposed Strategic Cooperation

Pursuant to the terms of the Memorandum, subject to the formal cooperation agreements to be entered into among the Memorandum Parties, (i) Tesson New Energy will make equity investment in K2 (Suzhou) for the development of a commercial vehicle power system supporting an energy vehicle manufacturing project; and (ii) a technical strategic cooperation agreement will be entered into between Tesson New Energy (and/or its associated companies) and K2 USA in respect of the technical cooperation between the parties.

REASONS FOR AND BENEFIT OF ENTERING INTO THE MEMORANDUM

K2 USA, the ultimate holding company of K2 (Suzhou), principally engages in the design, development and manufacturing of lithium ion battery products in different applications, including the marine battery and starter battery. It cooperates with different commercial, industrial and government bodies, including the Navy Office of the United States.

The Company is an investment holding company and the Group principally engages in the Lithium Ion Motive Battery Business. The Directors consider that the Proposed Strategic Cooperation, if materialised, represents a prime opportunity for the Group to further enhance the quality, reliability, and stability of its battery products, power system and battery management systems. The Group may also subsequently cooperate with K2 USA for other potential projects in relation to new energy development.

In view of the above, the Directors believe that the Proposed Strategic Cooperation will be beneficial to the Company and its Shareholders as a whole. The Memorandum Parties have not entered into any formal agreement with respect to the Proposed Strategic Cooperation as at the date of this announcement.

III. UPDATES OF THE FINANCIAL PERFORMANCE OF THE GROUP FOR THE THREE MONTHS ENDED 31 MARCH 2018

Reference is made to the announcements of the Company dated 22 September 2017, 30 November 2017, and 2 January 2018, respectively, and the circular of the Company dated 6 November 2017 in relation to, among other things, the disposal of the Packaging Printing Business, and 2017 annual report of the Company dated 27 March 2018.

(1) automobile manufacturers adopted prudent production plan in general due to the uncertainty of the subsidy policy involving a potential reduction in subsidy to new energy vehicles manufacturers in the PRC; and

(2) the Group enhanced credit risk management by implementing new credit policy, resulting in sales decrease from customers who habitually delay in making payments.

The information contained in this announcement is based on the preliminary assessment on the unaudited consolidated management accounts of the Group for the first quarter of 2018 for the Shareholders’ and potential investors’ reference only. Subject to adjustments and finalisation on the consolidated management accounts, actual results of the Group may differ from the information contained in this announcement. Details of the Group’s financial information and performance for the six months ended 30 June 2018 will be disclosed in the interim results announcement to be published by the Company.

GENERAL

In respect of the Memorandum, the Board wishes to remind the Shareholders and potential investors that there is no assurance that formal cooperation agreements will be entered into between the Memorandum Parties, and the terms and conditions of the Proposed Strategic Cooperation under the formal cooperation agreements are subject to negotiation between the Memorandum Parties. The Company will make further announcement(s) in relation to the Proposed Strategic Cooperation in accordance with the requirements under the Listing Rules as and when appropriate.

The Board wishes to emphasize that the Proposed Strategic Cooperation is subject to the negotiation among the Memorandum Parties and the entering of the formal cooperation agreements, which may or may not proceed. Shareholders and potential investors of the Company are advised to exercise caution when dealings in the securities of the Company.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms and expressions have the following meanings:

“Board” board of the Directors

“Company” Tesson Holdings Limited (stock code: 1201), a company incorporated in Bermuda with limited liability, the issued shares of which are listed on the Main Board of The Stock Exchange of Hong Kong Limited

“Cooperation Agreement” the cooperation agreement dated 13 May 2018 entered into among Tesson New Energy, Weinan Development, and Suzhou Zijing

“Directors” directors of the Company

“Group” the Company and its subsidiaries

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

“K2 (Suzhou)” K2 Energy (Suzhou) Co., Ltd., a company established in the PRC with limited liability

“K2 USA” K2 Energy Solutions, Inc., the ultimate holding company of K2 (Suzhou), a company incorporated in the United States with limited liability

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

“Lithium Ion Motive Battery one of the Group’s principal business activities, which Business” is the manufacturing and sale of lithium ion motive battery, lithium ion battery module, battery charging devices, battery materials machines and production lines, new energy solution and sale of relevant equipment, investments holding and import and export trading

“Manufacturer A” a reputable automobile manufacturer based in the PRC

“Manufacturer B” a reputable automobile manufacturer based in the PRC

“Memorandum” the memorandum of cooperation entered into between Tesson New Energy and K2 (Suzhou) on 29 May 2018 in respect of the Proposed Strategic Cooperation

“Memorandum Parties” Tesson New Energy and K2 (Suzhou)

“Packaging Printing Business” one of the Group’s principal business activities, which is the manufacturing and sale of printing and manufacturing of packaging products

“Proposed Strategic the proposed cooperation in respect of a commercial Cooperation” vehicle power system supporting project of Manufacturer B

“PRC” the People’s Republic of China excluding, for the purpose of this announcement, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan

“RMB” Renminbi, the lawful currency of the PRC

“Shareholders” holder(s) of the shares of the Company

“Suzhou Zijing” Suzhou Zijing Qingyuan New Energy Automobile Technology Co., Ltd.* (蘇州紫荊清遠新能源汽車技術有限公司), a company established in the PRC with limited liability

“Tesson New Energy” Tesson New Energy Limited* (天臣新能源有限公司), a company established in the PRC with limited liability, being an indirect non-wholly owned subsidiary of the Company

“Tesson Weicheng” Weinan Tesson Weicheng New Energy Automobile Co., Ltd.* (渭南天臣威晟新能源汽車有限公司), a company established in the PRC with limited liability by Weinan Development, Suzhou Zijing and Tesson New Energy

“United States” the United States of America

“Weinan Development” Weinan Hi-tech Industrial Development Co., Ltd.* (渭南高新區產業發展有限公司), a company established in the PRC with limited liability

By Order of the Board Tesson Holdings Limited Tin Kong Chairman

Hong Kong, 20 June 2018

As at the date of this announcement, the Board comprises Ms. Cheng Hung Mui, Mr. Tin Kong, Mr. Chen Dekun and Mr. Sheng Siguang as executive Directors, and Mr. Wang Jinlin, Mr. Ng Ka Wing and Mr. See Tak Wah, as independent non-executive Directors.

* For identification purposes only