GCL Technology Holdings Limited — Proxy Solicitation & Information Statement 2008

Aug 18, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in GCL-Poly Energy Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

GCL-Poly Energy Holdings Limited 保利協鑫能源控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 3800)

CONTINUING CONNECTED TRANSACTIONS

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

CHINA EVERBRIGHT CAPITAL LIMITED

A letter from the Board is set out on pages 4 to 11 of this circular. A letter from the Independent Board Committee of the Company is set out on pages 12 to 13 of this circular. A letter from China Everbright, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 14 to 24 of this circular.

A notice convening the EGM to be held at Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on Friday, 19 September 2008 at 10:30 a.m. is set out on pages 34 to 35 of this circular.

A form of proxy for use at the EGM or any adjourned meeting is enclosed with this circular. If you are unable to attend and vote at the EGM or any adjourned meeting in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

19 August 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Coal Supply Agreement dated 9 December 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Supplemental Agreement dated 14 April 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
The Second Supplemental Agreement dated 10 June 2008 . . . . . . . . . . . . . . . . . . . . . . .	7
Annual Caps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Reasons for entering into the Coal Supply Agreement,
the Supplemental Agreement and the Second Supplemental Agreement. . . . . . . . . .	9
Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Letter from China Everbright. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34

– i –

DEFINITIONS

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

• “Agreements” collectively the Coal Supply Agreement, Supplemental Agreement and the Second Supplemental Agreement

• “Annual Caps” the maximum aggregate annual value of the Continuing Connected Transaction, details of which are set out in the section headed “Annual Cap” of this Circular

• “associate” has the same meaning ascribed to it under the Listing Rules “Board” the board of Directors “Central Coal” 中原煤炭化工有限公司 (Central Coal & Chemical Co., Ltd.*), a company incorporated in the PRC

• “China Coal” China Coal Chemical Group Ltd（中國煤化集團有限公司）, a company incorporated in Hong Kong

• “China Everbright” China Everbright Capital Limited, a corporation licensed to carry out type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities as defined under the SFO, the independent financial adviser to the Independent Board Committee and the Independent Shareholders

• “Coal Supply Agreement” the coal supply agreement dated 9 December 2007 entered into between ZCIE and ZCIG as the vendors and Suzhou Fuel Company as the purchaser in relation to the supply of blended coal

• “Company” GCL-Poly Energy Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange

• “Continuing Connected the transactions contemplated under the Coal Supply Transactions” Agreement, the Supplemental Agreement and the Second Supplemental Agreement

– 1 –

DEFINITIONS

“Controlling Shareholder”	has the same meaning ascribed to it under the Listing Rules
“Directors”	the directors of the Company
“EGM”	the extraordinary general meeting of the Company to be held
	for the purpose of, inter alia, approving the Continuing
	Connected Transactions including the Annual Caps
“Group”	the Company and its subsidiaries from time to time
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee”	the independent board committee of the Company comprising
	all the independent non-executive Directors to consider and
	advise the Independent Shareholders in respect of the terms of
	the Continuing Connected Transactions including the Annual
	Caps
“Independent Shareholders”	Shareholders other than Mr Zhu Gong Shan and his associates
“Latest Practicable Date”	13 August 2008, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining certain
	information contained in this circular
“Listing Rules”	The Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC”	the People’s Republic of China
“Second Supplemental	the second supplemental agreement dated 10 June 2008 entered
Agreement”	into between ZCIE and ZCIG as the vendors and Suzhou Fuel
	Company as the purchaser
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Share(s)”	ordinary share(s) of HK$0.10 each in the share capital of the
	Company
“Shareholders”	holders of Shares

– 2 –

	DEFINITIONS
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Supplemental Agreement”	the supplemental agreement dated 14 April 2008 entered into
	between ZCIG as the vendor and Suzhou Fuel Company as the
	purchaser
“Suzhou Fuel Company”	蘇州保利協鑫燃料有限公司(Suzhou GCL-Poly Power Fuel
	Co., Ltd.*), a company incorporated in the PRC
“ZCIE”	鄭州煤電股份有限公司(Zhengzhou Coal Industry & Electric
	Power Co., Ltd.), a company incorporated in the PRC whose
	shares are listed on the Shanghai Stock Exchange
“ZCIG”	鄭州煤炭工業（集團）有限責任公司(Zhengzhou Coal
	Industry (Group) Co., Ltd.*), a company incorporated in the
	PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“%”	per cent.

In this Circular, HK$1.1368 = RMB$1.00.

• For identification purpose only

– 3 –

LETTER FROM THE BOARD

GCL-Poly Energy Holdings Limited 保利協鑫能源控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 3800)

Executive Directors: Registered Office: ZHU Gong Shan (Chairman) Cricket Square SHA Hong Qiu Hutchins Drive, P.O. Box 2681 JI Jun Grand Cayman, KY1-1111 SHU Hua Cayman Islands YU Bao Dong SUN Wei Principal Place of Business Tong Yee Ming in Hong Kong: Suites 3601-3604, Non-Executive Director: Two Exchange Square LAW Ryan Wing Cheung 8 Connaught Road Central Hong Kong

Independent Non-Executive Directors: HENG Kwoo Seng QIAN Zhi Xin Raymond HO Chung Tai XUE Zhong Su

19 August 2008

To the Shareholders

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

On 29 July 2008, the Board announced that Suzhou Fuel Company, an indirect whollyowned subsidiary of the Company, entered into the Coal Supply Agreement with ZCIE and ZCIG on 9 December 2007 and the Supplemental Agreement with ZCIG on 14 April 2008. On 10 June 2008, Suzhou Fuel Company entered into the Second Supplemental Agreement with ZCIE and ZCIG.

– 4 –

LETTER FROM THE BOARD

Mr. Zhu Gong Shan, a Director and Controlling Shareholder, is a controlling shareholder of China Coal. China Coal holds 49% equity interest in Central Coal while ZCIE holds the remaining 51% equity interest in Central Coal.

Prior to the establishment of Central Coal, both ZCIE and ZCIG were third parties independent of the Company and its connected persons, including Mr. Zhu Gong Shan. Central Coal was established on 24 March 2008 with a business licence dated 24 March 2008.

Thus, ZCIE has become an associate of Mr. Zhu Gong Shan and a connected person to the Company since 24 March 2008 pursuant to Rule 14A.11 of the Listing Rules. As ZCIE is a subsidiary of ZCIG, ZCIG has also become an associate of Mr. Zhu Gong Shan and a connected person to the Company since 24 March 2008 pursuant to Rule 14A.11 of the Listing Rules. As such, any transactions between the Group and ZCIE and ZCIG will therefore constitute connected transactions for the Company.

Based on the calculations of the applicable percentage ratios (as defined in the Listing Rules), the Coal Supply Agreement as supplemented by the Supplemental Agreement and further supplemented by the Second Supplemental Agreement will be subject to the approval of the Independent Shareholders in accordance with Rule 14A.48 of the Listing Rules.

The purpose of this circular is to provide you with (i) further information in respect of the Agreements; (ii) the letter from China Everbright containing its advice to the Independent Board Committee and the Independent Shareholders; (iii) the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Agreements and the Annual Caps; and (iv) a notice convening the EGM at which an ordinary resolution will be proposed to seek your approval for the Agreements and the Annual Caps.

THE COAL SUPPLY AGREEMENT DATED 9 DECEMBER 2007

a. Parties

Vendors: ZCIE and ZCIG Purchaser: Suzhou Fuel Company

– 5 –

LETTER FROM THE BOARD

b. Subject matter of the Coal Supply Agreement

ZCIE and ZCIG have agreed to sell and Suzhou Fuel Company has agreed to purchase 400,000 tonnes of blended coal of net calorific as received basis value of Qnet, ar = 5,300kcal/kg (22.16MJ/kg) at the unit price of RMB368/tonne exclusive of tax (which is equivalent to approximately HK$418/tonne) for the period from 1 January 2008 to 31 December 2008. The amount payable by the Purchaser to the Vendors shall be made in advance prior to the delivery.

Suzhou Fuel Company is responsible for the railway transportation fees.

THE SUPPLEMENTAL AGREEMENT DATED 14 APRIL 2008

a. Parties

Vendor: ZCIG Purchaser: Suzhou Fuel Company

b. Subject matter of the Supplemental Agreement

ZCIG and Suzhou Fuel Company have agreed to amend the price and net calorific value of the blended coal. With effect from 1 April 2008, the unit price of blended coal of net calorific value as received basis of Qnet, ar = 5,000kcal/kg has been changed to RMB445/tonne inclusive of tax (which is equivalent to approximately HK$506/tonne).

The other provisions in the Coal Supply Agreement remains in full force and effect.

Basis of Consideration:

The consideration for the provision of blended coal under the Coal Supply Agreement and the Supplemental Agreement was agreed after arm’s length negotiation between the parties on normal commercial terms and determined by reference to the market prices of blended coal of similar net calorific value, which is mainly driven by the coal supply and demand situation from time to time.

– 6 –

LETTER FROM THE BOARD

THE SECOND SUPPLEMENTAL AGREEMENT DATED 10 JUNE 2008

a. Parties

Vendors: ZCIE and ZCIG Purchaser: Suzhou Fuel Company

b. Subject matter of the Second Supplemental Agreement

Pursuant to the Second Supplemental Agreement, ZCIE and ZCIG have agreed to sell and Suzhou Fuel Company has agreed to purchase blended coal of net calorific as received basis value of Qnet, ar = 5,000kcal/kg at market price of eastern China with unit price of blended coal of net calorific value as received basis of Qnet, ar = 5,000kcal/kg has been changed to RMB500/tonne inclusive of tax (which is equivalent to approximately HK$568/tonne) with effect from 10 June 2008 to 31 December 2008.

If the price of blended coal at the effective date of the Second Supplemental Agreement is lower than the prevailing market price of blended coal in eastern China (including reference to the sale price of peers in the industry and the quoted trading price of Qin Huang Dao Coal Trading Market（秦皇島煤炭交易市場掛牌價）), ZCIE and ZCIG may collect the difference in the price of blended coal from Suzhou Fuel Company from the date of the Second Supplemental Agreement.

Commencing from the effective date of the Second Supplemental Agreement, if any term in the Second Supplemental Agreement conflicts with the Coal Supply Agreement or the Supplemental Agreement, the term in the Second Supplemental Agreement will prevail.

c. Period

The Second Supplemental Agreement is effective from 10 June 2008, subject to obtaining approval from the Independent Shareholders at the EGM for a period of 3 years up to 10 June 2011.

Condition

The Coal Supply Agreement as supplemented by the Supplemental Agreement and further supplemented by the Second Supplemental Agreement is subject to the approval of Independent Shareholders at the EGM.

There has also been no renewal or variation made to the Agreements since 10 June 2008. Going forward, any transaction to be entered into between the Group and ZCIE and/or ZCIG will be subject to the relevant requirements under Chapter 14A of the Listing Rules.

– 7 –

LETTER FROM THE BOARD

ANNUAL CAPS

The Annual Caps for Coal Supply Agreement as supplemented by the Supplemental Agreement and further supplemented by the Second Supplemental Agreement, were calculated after taking into account of the following:

1. the historical figures of coal purchase by the Group from ZCIG and ZCIE for the six months’ period ended 30 June 2008

• The Group started to procure coal from ZCIG and ZCIE and the procurement volumes have increased gradually during the past few months. The coal purchase volume from ZCIG and ZCIE in June 2008 was about 12,000 tonnes, up from 7,700 tonnes in January 2008, with an aggregate amount of approximately RMB26,500,000 (equivalent to approximately HK$30,000,000) for the six months’ period ended 30 June 2008;

2. the anticipated annual growth rate of coal purchase computed by reference to (i) the historical and anticipated growth of the Group’s demand for coal; and

• (ii) the anticipated price movement of coal in the PRC

• During the six months ended 30 June 2008, the average purchase price (including tax) was approximately RMB453 per tonne. Since we procured coal from ZCIG and ZCIE in January 2008, the purchase price of coal have soared from RMB415 per tonne in January 2008 to approximately RMB500 per tonne in early July 2008.

3. the arm’s length business relationship between the Group and each of ZCIG and ZCIE

• Since January 2008, the Group has developed an arm’s length business relationship with ZCIG and ZCIE. In an effort to streamline its coal procurement operations, the Group intends to change its coal procurement policy by shifting coal purchase orders from small-sized coal suppliers to a few large-scale and reliable coal suppliers, including ZCIG and ZCIE gradually.

– 8 –

LETTER FROM THE BOARD

The Annual Caps for Coal Supply Agreement as supplemented by the Supplemental Agreement and further supplemented by the Second Supplemental Agreement will be as follows:–

Annual Caps for the financial years ending 31 December

2008 2011 (for the period (for the period from 24/3/2008 * from 1/1/2011 to 31/12/2008) 2009 2010 to 10/6/2011) RMB RMB RMB RMB 84,000,000 413,000,000 899,000,000 403,000,000 (equivalent to (equivalent to (equivalent to (equivalent to approximately approximately approximately approximately HK$95,000,000) HK$469,000,000) HK$1,021,000,000) HK$457,000,000)

* 24 March 2008 is the date when the transactions under the Coal Supply Agreement become continuing connected transactions.

REASONS FOR ENTERING INTO THE COAL SUPPLY AGREEMENT, THE SUPPLEMENTAL AGREEMENT AND THE SECOND SUPPLEMENTAL AGREEMENT

The Company is principally engaged in the development, management and operation of cogeneration plants in Jiangsu Province and Zhejiang Province of the PRC.

Suzhou Fuel Company is principally engaged in the operation of coal trading.

ZCIE is principally engaged in the production and sale of coal.

ZCIG is principally engaged in the production and sale of coal.

The Agreements were entered into in the usual and ordinary course of the Group’s business and terms of which were negotiated based on normal commercial terms and the consideration was determined following arm’s length negotiation.

The reason for and the benefit to the Group in entering into the Agreements is that it allows the Group to secure a stable and consistent supply of coal for its power plants at a reasonable purchase price.

As such the Directors (including the independent non-executive Directors) believe that the entering into of the Agreements and the transactions contemplated thereunder are in the ordinary and usual course of business of the Company, and that the terms of the Agreements and the Annual Caps are on normal commercial terms, fair and reasonable and in the interests of the Company and Shareholders as a whole.

– 9 –

LETTER FROM THE BOARD

EXTRAORDINARY GENERAL MEETING

The EGM will be held at Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on Friday, 19 September 2008 at 10:30 a.m.. A notice convening the EGM is set out on pages 34 to 35 of this circular. An ordinary resolution will be proposed at the EGM for the Independent Shareholders to approve the Agreements and the Annual Caps. Mr. Zhu Gong Shan, the controlling shareholder holding 48.43% of the existing issued share capital of the Company, together with his associates will therefore abstain from voting on the ordinary resolution to approve the Agreements and the Annual Caps. In compliance with the Listing Rules, the ordinary resolution will be voted by way of poll and the results of the EGM will be published after the EGM.

Enclosed is a form of proxy for use at the EGM. If you are not able to attend at the EGM in person, you are requested to complete the enclosed form of proxy and return it to the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible, but in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

RECOMMENDATIONS

The Independent Board Committee has been appointed by the Board to consider and advise the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Agreements and the Annual Caps.

China Everbright has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders with regard to the Agreements and the Annual Caps. China Everbright considers that the terms of the Agreements and the Annual Caps to be fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. The text of the letter of the advice from China Everbright containing its recommendation and the principal factors it has taken into account in arriving at its recommendation are set out on pages 14 to 24 of this circular.

The Independent Board Committee, having taken into account the advice of China Everbright, considers that the entering into of the Agreements and the transactions contemplated thereunder are in ordinary and usual course of business of the Company, and the terms of the Agreements and the Annual Caps are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends that the Independent Shareholders to vote in favour of the ordinary resolution set out in the notice of the EGM to approve the Agreements and the Annual Caps. The full text of the letter from the Independent Board Committee is set out on pages 12 to 13 of this circular.

– 10 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the advice of the Independent Board Committee set out on pages 12 to 13 in this circular and the letter of advice from China Everbright to the Independent Board Committee and the Independent Shareholders set out on pages 14 to 24 in this circular.

Your attention is also drawn to the general information of the Group contained in Appendix to this circular.

Yours faithfully,

For and on behalf of the Board of

GCL-Poly Energy Holdings Limited ZHU Gong Shan Chairman

– 11 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

GCL-Poly Energy Holdings Limited 保利協鑫能源控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 3800)

To: the Independent Shareholders

19 August 2008

Dear Sir and Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to this circular dated 19 August 2008 issued by the Company to its Shareholders, of which this letter forms part. Unless the context otherwise requires, terms defined in this circular shall have the same meanings when used in this letter.

As the Independent Board Committee, we have been appointed to advise the Independent Shareholders as to whether, in our opinion, the entering into the Agreements and the transactions contemplated thereunder are in the ordinary and usual course of business of the Company and in the interests of the Company and the Shareholders as a whole, and the terms of which and the Annual Caps are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned. None of the members of the Independent Board Committee have any direct or indirect interest in the Agreements. In addition, China Everbright has been appointed as independent financial adviser to advise the Independent Board Committee in respect of the Agreements and the Annual Caps.

We wish to draw your attention to (i) the letters of advice from China Everbright as set out on pages 14 to 24 of this circular; and (ii) the letter from the Board as set out on pages 4 to 11 of this circular, which set out information relating to, and the reasons for and benefits of the Agreements.

– 12 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

As the Company’s independent directors, we have discussed with the management of the Company the reasons for and benefits of the Agreements and the basis upon which their terms have been determined. We have considered the factors and reasons considered by, and the opinions and recommendations of, China Everbright as set out on pages 14 to 24 of this circular. We concur with the view of China Everbright that the entering into of the Agreements and the transactions contemplated thereunder are in the ordinary and usual course of business of the Company and in the interests of the Company and the Shareholders as a whole, and the terms of which and the Annual Caps are on normal commercial terms, fair and reasonable as far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution approving the Coal Supply Agreement, the Supplemental Agreement, the Second Supplemental Agreement and the Annual Cap to be proposed at the EGM.

Yours faithfully,

GCL-Poly Energy Holdings Limited

Independent Board Committee HENG Kwoo Seng QIAN Zhi Xin Raymond HO Chung Tai XUE Zhong Su

– 13 –

LETTER FROM CHINA EVERBRIGHT

The following is the text of the “Letter from China Everbright” to the Independent Board Committee and the Independent Shareholders prepared for the purpose of inclusion in this circular.

19 August 2008

To the Independent Board Committee and the Independent Shareholders of GCL-Poly Energy Holdings Limited

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the terms of and the annual caps (the “ Annual Caps ”) for the Coal Supply Agreement, Supplemental Agreement and the Second Supplemental Agreement (collectively, “ Supply Agreements ”), which were entered into between Suzhou Fuel Company (an indirect wholly-owned subsidiary of the Company), as buyer, and ZCIE and ZCIG (both of which are associates of Mr. Zhu Gong Shan, a Director and Controlling Shareholder), as sellers.

As ZCIE and ZCIG are connected persons under the definitions of the Listing Rules, the transactions contemplated under the Supply Agreements between the Group and ZCIE and ZCIG are connected transactions and are required to be approved by the Independent Shareholders, being those Shareholders, other than Mr. Zhu Gong Shan and his associates.

Details of these transactions are contained in the circular of the Company dated 19 August 2008 (the “ Circular ”), of which this letter forms part. Expressions used in this letter have the same meanings as defined in the Circular.

The Independent Board Committee, comprising all the independent non-executive Directors, has been formed to consider whether (i) the Continuing Connected Transactions under the Supply Agreements are on normal commercial terms, in the ordinary and usual course of business, and are fair and reasonable and in the interests of the Company and the Shareholders as a whole; and (ii) the Annual Caps are fair and reasonable so far as the Shareholders as a whole are concerned. We have been appointed to advise the Independent Board Committee and the Independent Shareholders in these regards.

– 14 –

LETTER FROM CHINA EVERBRIGHT

In formulating our advice and recommendation, we have relied on the information and facts supplied, and the opinions expressed, by the Directors and management of the Company (the “ Management ”) and have assumed that such information, facts and opinions are true and accurate. We have also sought and received confirmation from the Directors that no material factors have been omitted from the information supplied and opinions expressed to us. However, we have not conducted any independent investigation into the business, operations or financial condition of the Group, ZCIE and ZCIG. We have assumed that all statements and presentations made or referred to in the Circular were accurate at the time when they were made and are true at the date of the Circular.

We consider we have reviewed sufficient information to reach an informed view to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. Apart from normal professional fees for our services to the Company in connection with the engagement described above, no arrangement exists whereby China Everbright will receive any benefits from the Company, ZCIE and ZCIG, or any of their respective associates.

PRINCIPAL FACTORS AND REASONS TAKEN INTO ACCOUNT

In arriving at our opinion, we have taken into account the following principal factors and reasons:

1. Background of and reasons for the Continuing Connected Transactions

As stated in the Company’s prospectus (“ Prospectus ”) dated 31 October 2007, the Group is one of the largest foreign-owned independent cogeneration plant operators in the PRC and has been principally engaged in the development, management and operation of cogeneration plants in Jiangsu Province and Zhejiang Province of the PRC.

As advised by the Management, the coal-fired cogeneration plants within the Group are primarily fuelled by coal. As the Group does not, at present, own any coal resources capable of catering for the Group’s needs of coal. As such, the Group is required to source coal from third parties for its day-to-day production.

According to the Prospectus, a significant portion of the coal was procured from Golden Concord Fuel Company prior to 2007. Suzhou Fuel Company, an indirect whollyowned subsidiary of the Company, obtained its coal operation license on 26 December 2006 and was established to assume the contractual rights and obligations of Golden Concord Fuel Company. Since 1 January 2007, Suzhou Fuel Company has entered into new coal purchase and sales contracts with coal producers which previously entered into such contracts with Golden Concord Fuel Company prior to 1 January 2007 for the supply of coal to the coal-fired cogeneration plants within the Group.

– 15 –

LETTER FROM CHINA EVERBRIGHT

Under the Supply Agreements, each of ZCIE and ZCIG has agreed to supply coal to the Suzhou Fuel Company from time to time on normal commercial terms. The primary purpose of such transactions is to enable the Group, through Suzhou Fuel Company, to obtain steady and reliable supply of coal from ZCIE and ZCIG. As a result, it will reduce the risk of interruptions to operations of the Group’s coal-fired cogeneration plants.

Since the signing of the Coal Supply Agreement on 9 December 2007, the Group, through Suzhou Fuel Company, has procured coal from ZCIE and ZCIG. As advised by the Directors, the Group has established stable relationship with ZCIE and ZCIG, and the Group satisfies with the coal supplied by ZCIE and ZCIG in term of quality, cost and transportation reliability.

In light of the above, the Directors consider it is in the interest of the Group to secure ZCIE and ZCIG as coal suppliers of Suzhou Fuel Company.

Our views

Having considered the aforesaid, together with (i) business nature of Suzhou Fuel Company, ZCIE and ZCIG; (ii) the proven business relationship between Suzhou Fuel Company, ZCIE and ZCIG since December 2007; (iii) the non-exclusive nature of the Supply Agreements, we are of the view that the entering into of the Supply Agreements falls within the ordinary and usual course of business of the Group; and it is in the interests of the Group and the Shareholders as a whole.

2. Principal terms of the Supply Agreements and comparison with independent third parties

Pursuant to the Coal Supply Agreement as supplemented by the Supplemental Agreement and the Second Supplemental Agreement, ZCIE and ZCIG have agreed to sell and Suzhou Fuel Company has agreed to purchase blended coal for a term of three years commencing from 10 June 2008 to regulate the future supply of blended coal between Suzhou Fuel Company, ZCIE and ZCIG. As stated in the letter from the Board (“ Letter from the Board ”) in the circular, the amount payable by Suzhou Fuel Company to ZCIE and ZCIG shall be made in advance prior to the delivery.

In respect of the relevant pricing mechanism, pursuant to the Second Supplemental Agreement, ZCIE and ZCIG have agreed to sell and Suzhou Fuel Company has agreed to purchase blended coal (5,000 kcal) at the market price of eastern China (5,000 kcal) which has been changed from RMB445/tonne inclusive of tax (which is equivalent to approximately HK$506/tonne) to RMB500/tonne inclusive of tax (which is equivalent to approximately HK$568/tonne) with effect from 10 June 2008 to 31 December 2008.

– 16 –

LETTER FROM CHINA EVERBRIGHT

If the price of blended coal at the effective date of the Second Supplemental Agreement is lower than the prevailing market price of blended coal in eastern China (including reference to the sale price of peers in the industry and the quoted trading price of Qin Huang Dao Coal Trading Market（秦皇島煤炭交易市場掛牌價）), ZCIE and ZCIG are entitled to receive the difference in the price of blended coal from Suzhou Fuel Company from the date of the Second Supplemental Agreement.

In view of the above, the Directors consider that the pricing basis of the Supply Agreements are determined on normal commercial terms and with reference to the market prices of blended coal of similar net calorific value, which is mainly driven by the coal supply and demand situation from time to time.

To assess the reasonableness of the pricing basis and payment term under the Supply Agreements relating to the supply of blended coal to the Group, we have reviewed sample contracts entered into between the Group and its independent suppliers in relation thereto. Based on our review, we concur with the view of the Management that the terms of Supply Agreements, including the pricing basis and payment term, are fair and reasonable and on normal commercial terms.

We noted that ZCIE and ZCIG have agreed to sell and Suzhou Fuel Company has agreed to purchase 400,000 tonnes of blended coal for the period from 1 January 2008 to 31 December 2008 according to the Coal Supply Agreement. As advised by the Management, ZCIE and ZCIG targeted to supply 400,000 tonnes blended coal to Suzhou Fuel Company in 2008 under the Coal Supply Agreement. If such target supply volume cannot be met, it would not impose any liabilities on ZCIE, ZCIG or Suzhou Fuel Company.

Shareholders should note that there is no provision in the Supply Agreements requiring the Group to procure blended coal from ZCIE and ZCIG exclusively. In other words, the Group is not obligated to procure blended coal from ZCIE and ZCIG and would only do so if it is in the commercial interests of the Group, and it does not restrict the Group from procuring blended coal from any third parties. Therefore, we consider the Supply Agreements provide commercial flexibility to the Group to transact with other potential suppliers in the event that the Group might not be able to agree with any terms or pricing with ZCIE and ZCIG.

Furthermore, we are informed by the Management that the Coal Supply Agreement is a framework agreement, and both parties to the Supply Agreements will revise and determine target annual coal supply volume and indicated selling prices at the beginning of 2008, 2009, 2010 and 2011. ZCIE and ZCIG shall supply the agreed amount at the agreed price of blended coal to Suzhou Fuel Company according to the Supply Agreements. However, as

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LETTER FROM CHINA EVERBRIGHT

mentioned above, it would not impose any liabilities on ZCIE nor ZCIG if the target supply volume cannot be met. In case there is any adjustment in selling prices and supply volume, ZCIE and ZCIG shall issue notice to Suzhou Fuel Company for its written confirmation. Once the notice is confirmed by Suzhou Fuel Company, it will then become effective and binding.

Our views

In view of the above, we consider that the pricing bases for and the terms of the Supply Agreements are on normal commercial terms and are fair and reasonable so far as the Independents Shareholders are concerned.

3. Annual Caps

As set out in the Letter from the Board, the Directors expect that the aggregate amount of procurement of blended coal by the Group from ZCIE and ZCIG under the Supply Agreements for (i) the period between 24 March to 31 December 2008 will be approximately RMB84,000,000 (equivalent to approximately HK$95,000,000); (ii) the year ending 31 December 2009 will be approximately RMB413,000,000 (equivalent to approximately HK$469,000,000); (iii) the year ending 31 December 2010 will be approximately RMB899,000,000 (equivalent to approximately HK$1,021,000,000); and (iv) the period between 1 January and 10 June 2011 will be approximately RMB403,000,000 (equivalent to approximately HK$457,000,000).

In assessing the reasonableness of the Annual Caps, we have discussed with the Management regarding the relevant underlying principal assumptions and the bases adopted for the determination of the Annual Caps, and understand that the Company has taken into account the following factors:

• (i) The historical figures of coal purchase by the Group from ZCIG and ZCIE for the six months’ period ended 30 June 2008

As advised by the Management, the procurement of blended coal from ZCIE and ZCIG are fairly recent and had only commenced in January 2008, therefore the Group recorded a relatively minimal transaction amount from the purchase of blended coal from ZCIE and ZCIG as compared with the total purchase amount of the Group during the corresponding period. However, it is noted that the purchase volume have increased gradually during the past few months. The purchase volume from ZCIG and ZCIE increased by 55.8% from approximately 7,700 tonnes in January 2008 to approximately 12,000 tonnes in June 2008.

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LETTER FROM CHINA EVERBRIGHT

Furthermore, following the successful cooperation in recent seven months, the Management considers that the extended business relationships between the Group and ZCIE and ZCIG will allow the Group to obtain steady and reliable supply of coal from ZCIE and ZCIG, therefore, the Group intends to increase the purchase of coal from ZCIE and ZCIG on a large scale basis.

(ii) The anticipated annual growth rate of coal purchase computed by reference to (i) the historical and anticipated growth of the Group’s demand for coal; and (ii) the anticipated price movement of coal in the PRC

As advised by the Management, the Annual Caps are mainly determined with reference to (i) the Group’s historical and projected demand for coal; and (ii) the anticipated price movement of coal in the PRC for the three years ending 10 June 2011.

The Group’s historical and projected demand for coal

To assess the reasonableness of the aforesaid anticipated annual growth rate of coal purchase by the Group, we have reviewed the Group’s historical cost of coal in the Prospectus and discussed with the Management with respect to the factors affecting the Group’s projected demand for coal.

As stated in the Prospectus, we noted that the Group’s cost of coal increased by 85.4% from HK$300.2 million during the year ended 31 December 2004 to HK$556.6 million during the year ended 31 December 2006, primarily as a result of both increase in the Group’s average standard coal price and the increase in the number of power plants operated by the Group. According to financial information provided by the Group, we noted that the Group’s cost of coal further increased to HK$744.7 million during the year ended 31 December 2007.

Set out below is the actual and anticipated volumes of coal procured/to be procured by the Group from ZCIE and ZCIG for the period from 1 January 2008 to 10 June 2011

Year/period	Volume of coal
	(thousand tonnes)
For the seven months ended 31 July 2008 (Actual)	72.6
For the five months ending 31 December 2008
(Anticipated)	116
For the year ending 31 December 2009 (Anticipated)	480
For the year ending 31 December 2010 (Anticipated)	960
For the six months ending 10 June 2011 (Anticipated)	430

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LETTER FROM CHINA EVERBRIGHT

As advised by the Management, it is expected that the Group’s coal consumption will increase during the three years ending 10 June 2011 as a result of (i) rapid growth of industrial development and rising residential power demand in the PRC; and (ii) the Group’s future expansion plan.

According to the Eleventh Five Year plan for national economy and social development, the PRC Government expects to achieve an average 7.5% annual Gross Domestic Product (“ GDP ”) growth in the years 2006 to 2010. The growth rate of the power industry has grown at a rate higher than China’s GDP since 2000 as a result of the rapid growth of industrial development and the rising residential power demand following the increase in the rise of per capita income. Therefore, the Group’s coal-fired cogeneration plants is expected to be fully operated in future in order to accommodate the increasing power demand, which in turn increase the Group’s coal consumption.

In addition, the Group’s projected consumption of coal is further boosted by its future business development plan. As stated in the Prospectus, the Group will further expand its scale of production through (i) expanding and upgrading existing cogeneration plants; and (ii) making strategic acquisitions in the PRC.

In light of the above, in particular, (i) the fast historical growth of the Group’s cost of coal during the past few years; and (ii) the additional consumption of coal arising from the Group’s future business plans, we are of the view that the anticipated growth in the Group’s consumption of coal is justifiable and reasonable.

The anticipated price movement of coal in the PRC for the three years ending 10 June 2011

To assess the reasonableness of the anticipated annual growth rate of coal purchased by the Group, we have also reviewed the Group’s underlying principal assumptions and the bases on the anticipated price movement of coal in the PRC. Set out below are (i) the Group’s actual average coal price purchased

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LETTER FROM CHINA EVERBRIGHT

from ZCIE and ZCIG during the seven months ended 31 July 2008; and (ii) the Group’s actual and anticipated average coal prices (5,000 kcal) during the three years ending 10 June 2011:

Year/period	Average coal price
	(RMB/tonne)
January 2008 – July 2008 (Actual)	477.5
August 2008 – December 2008 (Anticipated)	600
January 2009 – December 2009 (Anticipated)	860
January 2010 – December 2010 (Anticipated)	936
January 2011 – June 2011 (Anticipated)	936

To evaluate the reasonableness of the above anticipated coal prices, we have reviewed the Qinhuangdao benchmark coal spot prices during the period between January 2008 and July 2008, and we noted that the Qinhuangdao benchmark coal spot prices (5,000 kcal) increased by 95.35% from RMB430/ tonne in January 2008 to RMB840/tonne in July 2008 due to tight supply and railway bottlenecks in the PRC. As advised by the Management, the coal price is expected to continue its uptrend gradually over the next few years due to robust demand for coal and railway bottlenecks in the PRC.

Taking into account that (i) the PRC market price of coal reached RMB840/tonne in July 2008 and it is expected to continue its uptrend gradually over the next few years; and (ii) the pricing bases of the Supply Agreements are determined with reference to the market prices of blended coal of similar net calorific value, the Directors anticipate the purchase cost of coal procured from ZCIE and ZCIG will increase gradually from the average purchase cost of approximately RMB477.5/tonne during the first seven months ended 31 July 2008 to approximately RMB936/tonne in 2010 and the first half of 2011.

In light of the above, we consider that the Group’s anticipated average price movement of coal in the PRC is not unjustisfied.

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LETTER FROM CHINA EVERBRIGHT

• (iii) The arm’s length business relationship between the Group and each of ZCIG and ZCIE

According to the Letter from the Board, the Group has developed an arm’s length business relationship with ZCIG and ZCIE since January 2008. In an effort to streamline its coal procurement operations, the Group intends to change its coal procurement policy by gradually shifting coal purchase orders from small-sized coal suppliers to a few large-scale and reliable coal suppliers, including ZCIG and ZCIE.

After discussion with the Management, by streamlining its coal procurement operation, the Management considers that the Group can strengthen its bargaining power when negotiating with and purchasing from its coal suppliers and producers, and is expected to obtain better purchasing terms from its coal suppliers and producers.

Our views

Having considered the above, we are of the view that the bases adopted by the Management in determining the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned.

However, Shareholders should note that the Annual Caps relate to future events and they do not represent a forecast of purchase cost to be incurred from the Continuing Connected Transactions. Consequently, we express no opinion as to how closely the actual amounts to be generated under the above Continuing Connected Transactions correspond with the Annual Caps.

4. Requirements of the Listing Rules

Pursuant to Rules 14A.37 to 14A.40 of the Listing Rules, the Continuing Connected Transactions are subject to the following annual review requirements:

• (a) each year the independent non-executive Directors must review the Continuing Connected Transactions and confirm in the annual report and accounts that the Continuing Connected Transactions have been entered into:

• in the ordinary and usual course of business of the Group;

• either on normal commercial terms or, if there are not sufficient comparable continuing connected transaction to judge whether they are on normal commercial terms, on terms no less favourable to the Group than terms available to or from (as appropriate) independent third parties; and

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LETTER FROM CHINA EVERBRIGHT

1. in accordance with the relevant agreements governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole;

2. (b) each year the auditors of the Company must provide a letter to the Board (with a copy provided to the Stock Exchange at least 10 business days prior to the bulk printing of the Company’s annual report) confirming that the Continuing Connected Transactions:

3. have received the approval of the Board;

4. are in accordance with the pricing policies of the Group;

5. have been entered into in accordance with the relevant agreements governing the Continuing Connected Transactions; and

6. have not exceeded the Annual Caps;

7. (c) the Company shall allow, and shall procure the relevant counterparties to the Continuing Connected Transactions to allow, the Company’s auditors sufficient access to their records for the purpose of reporting on the Continuing Connected Transactions as set out in paragraph (b); and

8. (d) the Company shall promptly notify the Stock Exchange and publish an announcement in accordance with the Listing Rules if it knows or has reason to believe that the independent non-executive Directors and/or auditors of the Company will not be able to confirm the matters set out in paragraphs (a) and (b) respectively.

Our views

In light of the reporting requirements attached to the Continuing Connected Transactions, in particular, (i) the restriction of the value of the Continuing Connected Transactions by way of the Annual Caps; (ii) the ongoing review by the independent non-executive Directors and auditors of the Company of the terms of the Continuing Connected Transactions and the Annual Caps not being exceeded, we are of the view that appropriate measures will be in place to govern the conduct of the Continuing Connected Transactions and safeguard the interests of the Independent Shareholders.

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LETTER FROM CHINA EVERBRIGHT

5. Recommendation

Taking into consideration of the above mentioned principal factors and reasons, we consider that (i) the Continuing Connected Transaction under the Supply Agreements were entered into on normal commercial terms in the ordinary and usual course of business of the Group, and are fair and reasonable and in the interests of the Company and the Shareholders as a whole and so far as the Independent Shareholders are concerned; and (ii) the Annual Caps are fair and reasonable so far as the shareholders as a whole and so far as the Independent Shareholders are concerned. Accordingly, we advise the Independent Shareholders and the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve the Supply Agreements and the Annual Caps.

Yours faithfully, For and on behalf of

China Everbright Capital Limited Jacky Ho Managing Director

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors of the Company

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

(i) Long position in shares of the Company

				Number of
	Number of			underlying
Name of	Ordinary Shares			shares held		Percentage
Directors/	Corporate	Personal		under equity		of issued
Chief Executive	interests		interest	derivates	Total	share capital
Zhu Gong Shan	352,518,443		–	118,395,719	470,914,162	48.43%
	(note 1)
Sha Hong Qiu	–		–	1,680,000	1,680,000	0.17%
				(note 2)
Ji Jun	–		–	1,500,000	1,500,000	0.15%
				(note 2)
Shu Hua	–		–	1,500,000	1,500,000	0.15%
				(note 2)
Yu Bao Dong	–		–	1,500,000	1,500,000	0.15%
				(note 2)
Sun Wei	–		–	1,500,000	1,500,000	0.15%
				(note 2)

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GENERAL INFORMATION

APPENDIX

Notes:

1. Mr. Zhu Gong Shan is the legal and beneficial owner of the entire issued share capital of Highexcel Investments Limited (“HIL”) and is deemed to be interested in the 352,518,443 shares held by HIL. Mr. Zhu Gong Shan is also the beneficial owner of Get Famous Investments Limited (“Get Famous”), which entered into a conditional sale and purchase agreement dated 11 August 2008 as vendor with a subsidiary of the Company as purchaser. Upon the completion of the said agreement, Get Famous or its nominee will receive convertible notes of the Company in a total amount not more than RMB127,936,000 (equivalent to approximately HK$145,627,000). Get Famous or its nominee has the right to convert any part of the principal amount of the convertible notes into shares of the Company at a conversion price of HK$1.230 (subject to adjustment).

2. The share options granted by the Company to the Directors under the Pre-IPO share option scheme. These options can be exercised by the Directors at various intervals during the period from 13 November 2010 to 12 November 2017 at an exercise price of HK$4.10.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executives of the Company had or was deemed to have any interest or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which was required (a) 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/she was taken or deemed to have under such provisions of the SFO); or (b) which was required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) which was required, pursuant to the Model Code contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

(b) Substantial Shareholders

As at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3

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GENERAL INFORMATION

APPENDIX

of Part XV of the SFO, or, who were directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at the general meeting of any other member of the Company:

Long Position in the share and underlying shares of the Company

				Percentage
				of issued
		Capacity/	Number of	share
Name	Note	nature of interest	shares held	capital
GetFamous	1	Beneficial owner	118,385,719	12.18
Investments Limited
Highexcel Investments	1	Beneficial owner	352,518,443	36.25
Limited
MS China 3 Limited	2	Beneficial owner	160,080,000	16.46
Morgan Stanley	2	Interest of controlled	160,080,000	16.46
Emerging		corporation
Markets Inc.
Morgan Stanley	2,3	Interest of controlled	160,608,000	16.52
		corporation
Poly (Hong Kong)	4	Interest of controlled	134,791,044	13.86
Investments Limited		corporation

Notes:

1. Mr. Zhu Gong Shan is the legal and beneficial owner of the entire issued share capital of Highexcel Investments Limited (“HIL”) and is deemed to be interested in the 352,518,443 shares held by HIL. Mr. Zhu Gong Shan is also the beneficial owner of Get Famous Investments Limited (“Get Famous”), which entered into a conditional sale and purchase agreement dated 11 August 2008 as vendor with a subsidiary of the Company as purchaser. Upon the completion of the said agreement, Get Famous or its nominee will receive convertible notes of the Company in a total amount not more than RMB127,936,000 (equivalent to approximately HK$145,627,000). Get Famous or its nominee has the right to convert any part of the principal amount of the convertible notes into shares of the Company at a conversion price of HK$1.230 (subject to adjustment).

2. MS China 3 Limited is a wholly-owned subsidiary of Morgan Stanley Emerging Markets Inc. which in turn is wholly-owned by Morgan Stanley. Morgan Stanley Emerging Markets Inc. and Morgan Stanley are therefore deemed to be interested in 160,080,000 Shares held by MS China 3 Limited.

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GENERAL INFORMATION

APPENDIX

1. The interest of Morgan Stanley in the Company is also held through:

2. (a) Morgan Stanley & Co. Inc. which held 25,000 Shares and is a wholly-owned subsidiary of Morgan Stanley. Morgan Stanley is therefore deemed to be interested in 25,000 Shares;

3. (b) Morgan Stanley & Co. International plc. which held 503,000 Shares and is wholly-owned by Morgan Stanley UK Group. Morgan Stanley UK Group is wholly-owned by Morgan Stanley Group (Europe) which in turn is held as to 98.3% by Morgan Stanley International Limited. Morgan Stanley International Limited is an indirect wholly-owned subsidiary of Morgan Stanley. Accordingly, Morgan Stanley is deemed to be interested in the 503,000 Shares held by Morgan Stanley & Co. International plc.

4. The interest of Poly (Hong Kong) Investments Limited is held through its indirect wholly-owned subsidiary, Power Jade Holdings Limited.

5. The total number of ordinary shares in issue as at the Latest Practicable Date was 972,419,487.

3. MATERIAL ADVERSE CHANGE

The Directors confirm that there was no material adverse change in the financial or trading position of the Company and its subsidiaries since 31 December 2007, being the date to which the latest published audited accounts of the Company and its subsidiaries were made up to.

4. CONSENT OF EXPERT

The following expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter or statements and references to its name in the form and context in which they appear:

Name

Qualification

CHINA EVERBRIGHT CAPITAL LIMITED

a corporation licensed to carry out type 1 (dealing in securities), type 4 (advising on securities), and type 6 (advising on corporate finance) regulated activities as defined under the SFO

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GENERAL INFORMATION

APPENDIX

As at the Latest Practicable Date, the above expert was not beneficially interested in the share capital of the Company and its subsidiaries nor did it have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in the Company and its subsidiaries.

As at the Latest Practicable Date, the above expert did not have any direct or indirect interest in any assets which have been since 31 December 2007 (being the date to which the latest published audited accounts of the Company were made up) acquired or disposed of by or leased to the Company and its subsidiaries, or were proposed to be acquired or disposed of by or leased to the Company and its subsidiaries.

5. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with the Company or any member of the Group which does not determinable within one year without payment of compensation, other than statutory compensation.

6. DIRECTORS’ INTERESTS IN THE COMPANY AND ITS SUBSIDIARIES’ ASSETS OR CONTRACTS

As at the Latest Practicable Date, save as disclosed in the announcements issued by the Company, none of the Directors of the Company had any interest in any assets which have been since 31 December 2007 (being the date to which the latest published audited accounts of the Company were made up) acquired or disposed of by or leased to the Company and its subsidiaries, or were proposed to be acquired or disposed of by or leased to the Company and its subsidiaries.

As at the Latest Practicable Date, save as disclosed in the announcements issued by the Company, none of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which was significant in relation to the business of the Company.

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GENERAL INFORMATION

APPENDIX

7. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, the interests of Directors or their respective associates in businesses which are considered to compete or likely to compete, either directly or indirectly, with the businesses of the Group (“Competing Business”) as required to be disclosed pursuant to the Listing Rules were as follows:

• Name of company

• Names of in which the Principal the Company’s relevant Director activities of the % interest in Directors has interest competing company competing company Mr. Zhu Gong Shan Taicang Harbour Operation of a Mr. Zhu and his associate Power Plant cogeneration owns an aggregate plant in Taicang, interest of 37% Jiangsu, the PRC

• Nanjing Cogeneration Operation of a Mr. Zhu, through Plant cogeneration companies controlled plant in Nanjing, by him, holds 100% the PRC interest

• Longgu Cogeneration Operation of a Mr. Zhu, through Plant power plant in companies controlled Longgu, Peixian, by him, holds 59% the PRC interest

• Guohua Taicang operation of a Mr. Zhu and his Power Plant power plant in associate owns an Taicang, Jiangsu, interest of 18.5%

• Lanxi Cogeneration the cogeneration Mr. Zhu, through Plant power plant is companies controlled being constructed by him, holds 100% interest

• Guangzhou Yonghe the cogeneration Mr. Zhu, beneficially Project power plant is in owns 100% interest the pre-construction stage

– 30 –

GENERAL INFORMATION

APPENDIX

	Name of company
Names of	in which the	Principal
the Company’s	relevant Director	activities of the	% interest in
Directors	has interest	competing company	competing company
	Lianyungang Baoxin	the cogeneration	Mr. Zhu, beneficially
	Biomass	power plant is	owns 100% interest
	Cogeneration Plant	being constructed
	Dongwu Cogeneration	operation of a	Mr. Zhu, through
	Project	cogeneration	company controlled by
		power plant in	him, holds 10%
		Suzhou, the PRC	interest
	Jiema Hydropower	construction of	Mr. Zhu, through his
	Project	a hydropower	associates, holds
		Station in Sichuan,	70% interest
		the PRC
	Xuzhou Incineration	in the planning stage	Mr. Zhu, through
	Power Plant	to construct an	company
		incineration power	controlled by him,
		Plant in Xuzhou,	holds 100%
		the PRC interest
	Lianyungang Wind	in the planning stage	Mr. Zhu, through
	Power Project	to construct	his associates,
		a wind station	holds 100%
		in Lianyungang,
		Jiangsu,
		the PRC

A non-competition deed was given by Mr. Zhu Gong Shan and his associates immediate prior to the initial public offering of the shares of the Company.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or their respective associates was interested in any business which competes or is likely to compete, either directly or indirectly, with business of the Group.

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GENERAL INFORMATION

APPENDIX

8. PROCEDURE FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to Article 66 of the Articles of Association, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless voting by way of a poll is required by the Listing Rules or (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the chairman of such meeting; or

• (b) by at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or

• (c) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all the Shareholders having the right to vote at the meeting; or

• (d) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and holding Shares in the Company conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Shares conferring that right; or

• (e) if required by the Listing Rules, by any Director or Directors who, individually or collectively, hold proxies in respect of shares representing 5% or more of the total voting rights at such meeting.

A demand by a person as proxy for a Shareholder or in the case of a Shareholder being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Shareholder.

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GENERAL INFORMATION

APPENDIX

9. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at Suites 3601-3604, 36th Floor, Two Exchange Square, 8 Connaught Road, Central, Hong Kong during normal business hours on any weekday (except public holidays) from the date of this circular up to and including 9 September 2008:

• 1) the memorandum and articles of association of the Company;

• 2) the Coal Supply Agreement;

• 3) the Supplemental Agreement;

• 4) the Second Supplemental Agreement;

• 5) the letter from Independent Board Committee, the text of which is set out from pages 12 to 13 of this circular;

• 6) the letter from China Everbright, the text of which is set out from pages 14 to 24 of this circular; and

• 7) the written consent from China Everbright as referred to under the section headed “Expert and consent” in this appendix;

– 33 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

GCL-Poly Energy Holdings Limited 保利協鑫能源控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 3800)

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “Meeting”) of GCL-Poly Energy Holdings Limited (the “Company”) will be held at Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on Friday, 19 September 2008 at 10:30 a.m. for the purpose of considering and, if thought fit, passing with or without modification the following resolution of the Company:

ORDINARY RESOLUTION:

“ THAT

• (a) the coal supply agreement (“Coal Supply Agreement”) for supply of blended coal dated 9 December 2007 and made between Suzhou GCL-Poly Power Fuel Co., Ltd. (“Suzhou Fuel Company”) as purchaser and Zhengzhou Coal Industry & Electric Power Co., Ltd. (“ZCIE”) and Zhengzhou Coal Industry (Group) Co., Ltd. (“ZCIG”) as the vendors (a copy of which is marked “A” and has been produced to the meeting and signed by the Chairman of the meeting for the purpose of identification, and the transactions contemplated by the Coal Supply Agreement (as amended) be and are hereby approved, confirmed and ratified;

• (b) the supplemental agreement (“Supplemental Agreement”) dated 14 April 2008 to supplement the Coal Supply Agreement entered into between ZCIG as the vendor and Suzhou Fuel Company as the purchaser (a copy of which is marked “B” and has been produced to the meeting and signed by the Chairman of the meeting for the purpose of identification) be and is hereby approved, confirmed and ratified;

• (c) the second supplemental agreement (“Second Supplemental Agreement”) dated 10 June 2008 to further supplement the Coal Supply Agreement and the Supplemental Agreement entered into between ZCIE and ZCIG as the vendors and Suzhou Fuel Company as the purchaser (a copy of which is marked “C” and has been produced to the meeting and signed by the Chairman of the meeting for the purpose of identification) be and is hereby approved, confirmed and ratified;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (d) the Annual Caps (as defined and more particularly described in the circular of the Company to its shareholders dated 19 August 2008 be and are hereby approved; and

• (e) the respective director of the Company, Suzhou Fuel Company be and are hereby authorized on behalf of the Company and Suzhou Fuel Company respectively (i) to do all such deeds, acts, matters and things as they may in their discretion consider necessary or desirable for the purpose of the implementation, or giving effect to or in connection with the Coal Supply Agreement, as supplemented by the Supplemental Agreement and the Second Supplemental Agreement or any transactions contemplated thereunder; and (ii) to exercise or enforce all of the rights of Suzhou Fuel Company under the Coal Supply Agreement, as supplemented by the Supplemental Agreement and the Second Supplemental Agreement’ and (iii) to complete the Coal Supply Agreement, as supplemented by the Supplemental Agreement and the Second Supplemental Agreement.”

By Order of the Board GCL-Poly Energy Holdings Limited Chan Yuk Chun Company Secretary

Hong Kong, 19 August 2008

Notes:

1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or, if he is the holder of two or more shares, more proxies to attend and vote instead of him. A proxy need not be a member of the Company.

2. In the case of joint holders of shares in the Company, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s), seniority being determined by the order in which names stand in the register of members.

3. In order to be valid, the form of proxy must be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under seal, or under the hand of an officer or attorney or other person duly authorised, and must be deposited with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (together with the power of attorney or other authority, if any, under which it is signed or a certified copy thereof) not less than 48 hours before the time fixed for holding of the Meeting.

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