GCL Technology Holdings Limited - Proxy Solicitation & Information Statement 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional 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(s) or transferee(s) or to the licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

This document appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of GCL-Poly Energy Holdings Limited.

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)

(1) VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS;

(2) APPLICATION FOR WHITEWASH WAIVER;

(3) AN INCREASE IN AUTHORISED SHARE CAPITAL;

(4) ALLOTMENT AND ISSUE OF THE CONSIDERATION SHARES AND ADDITIONAL SHARES; AND

(5) SPECIFIC MANDATE FOR THE NEW ISSUE

Joint financial advisers to GCL-Poly Energy Holdings Limited

ICBCI

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

First Shanghai Capital Limited

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed “Definitions” of this circular.

A letter from the Independent Board Committee is set out on page 45 of this circular.

A letter from First Shanghai Capital Limited containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 46 to 84 of this circular.

A notice of the EGM to be held at Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on Thursday, 16 July 2009, at 10:00 a.m. is set out on pages EGM-1 to EGM-3 of this circular. Whether or not you are able to attend the EGM, please complete and return the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time fixed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the EGM or any adjournment thereof should you so wish.

30 June 2009

			Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		. . . . . . . . . . . . . . .	10
Letter from the Independent Board Committee . . . . . . . . . .		. . . . . . . . . . . . . . .	45
Letter from the Independent Financial Adviser . . . . . . . . .		. . . . . . . . . . . . . . .	46
Appendix I	– Financial Information of the Group . . . . .	. . . . . . . . . . . . . . .	I–1
Appendix IIA	– Accountants’ Report of Target Group A . .	. . . . . . . . . . . . . . .	IIA–1
Appendix IIB	– Accountants’ Report of Sun Wave Group	. . . . . . . . . . . . . . .	IIB–1
Appendix IIC	– Accountants’ Report of Greatest Joy Group	. . . . . . . . . . . . .	IIC–1
Appendix III	– Management Discussion and Analysis of
	the Financial Position of the Group . . .	. . . . . . . . . . . . . . .	III–1
Appendix IV	– Management Discussion and Analysis of
	the Financial Position of:
	(a) Target Group A . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . .	IVA–1
	(b) Target Group B . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . .	IVB–1
Appendix V	– Unaudited Pro Forma Financial Information
	of the Enlarged Group . . . . . . . . . . . . . .	. . . . . . . . . . . . . . .	V–1
Appendix VI	– Property Valuation Report . . . . . . . . . . . .	. . . . . . . . . . . . . . .	VI–1
Appendix VII	– General Information . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . .	VII–1
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		. . . . . . . . . . . . . . .	EGM–1

DEFINITIONS

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

“Acquisition A”	the acquisition of 100% of the issued share capital of
	GCL Solar by the Company in accordance with the
	terms and conditions of Acquisition Agreement A
“Acquisition Agreement A”	the conditional agreement amongst the Company and
	Vendors A in relation to Acquisition A dated 3 June
	2009
“Acquisition Agreement B”	the conditional agreement between the Company and
	Vendor B in relation to Acquisition B dated 3 June
	2009
“Acquisition Agreements”	Acquisition Agreement A and Acquisition Agreement B
“Acquisition B”	the acquisition of the entire issued share capital of
	each of Greatest Joy and Sun Wave by the Company in
	accordance with the terms and conditions of
	Acquisition Agreement B
“Acquisitions”	Acquisition A and Acquisition B
“Additional Shares”	means an aggregate number of new Shares of up to
	2,212,490,422 Shares
“Announcement”	the announcement dated 22 June 2009 issued by the
	Company, in relation to the Acquisitions, the specific
	mandate for the New Issue and the Whitewash Waiver
“Asia Silicon”	Asia Silicon Technology Development Limited, a
	company incorporated in Hong Kong with limited
	liability
“Asia Silicon BVI”	Asia Silicon Technology Development Holdings
	Limited, a company incorporated in the BVI with
	limited liability
“Asia Silicon HK”	Asia Silicon Technology Development Holdings
	Limited, a company incorporated in Hong Kong with
	limited liability
“associate(s)”	has the same meaning ascribed to it under the Listing
	Rules
“Board”	the board of Directors

– 1 –

DEFINITIONS

“Bonus Billion”	Bonus Billion Group Limited, a company
	incorporated in the BVI with limited liability and
	wholly-owned by Mr. Yu
“BVI”	British Virgin Islands
“CAGR”	compound annual growth rate
“Closing Date”	the date on which the concurrent closing of the
	Acquisitions takes place
“Combined Concert Group”	Mr. Zhu, Mr. Zhang Songyi, Happy Genius, Mandra
	Esop, Mandra Materials, Mandra Silicon and parties
	acting in concert with any of them
“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
“Completion”	Completion A and Completion B
“Completion A”	completion of Acquisition A pursuant to Acquisition
	Agreement A
“Completion B”	completion of Acquisition B pursuant to Acquisition
	Agreement B
“Consideration A”	the total consideration payable by the Company to
	Vendors A for the acquisition of a 64% equity interest
	in Jiangsu Zhongneng through the acquisition of
	100% of the issued share capital of GCL Solar, the
	particulars of which are set out in the paragraph
	headed “Consideration A” in the letter from the Board
“Consideration B”	the total consideration payable by the Company to
	Vendor B for the acquisition of a 36% equity interest in
	Jiangsu Zhongneng through the acquisition of 100%
	of the issued share capital of each of Greatest Joy and
	Sun Wave, the particulars of which are set out in the
	paragraph headed “Consideration B” in the letter
	from the Board

“Consideration Shares” Consideration Shares A and Consideration Shares B “Consideration Shares A” means an aggregate of 9,051,242,615 new Shares to be allotted and issued by the Company and credited as fully paid to Vendors A upon Completion A

– 2 –

DEFINITIONS

means an aggregate of 988,530,112 new Shares to be allotted and issued by the Company and credited as fully paid to Vendor B upon Completion B

“Consideration Shares B” means an aggregate of 988,530,112 new Shares to be allotted and issued by the Company and credited as fully paid to Vendor B upon Completion B
“controlling shareholder” has the same meaning ascribed to it under the Listing Rules
“Director(s)” director(s) of the Company
“EGM” the extraordinary general meeting of the Company to be held for the purpose of inter alia approving the Acquisitions, the specific mandate for the New Issue the Whitewash Waiver, the increase in authorised share capital of the Company and the allotment and issue of the Consideration Shares and the Additional Shares
“Enlarged Group” the Group as enlarged by the Acquisitions
“Excel Bond” Excel Bond International Limited, a company incorporated in the BVI with limited liability
“Exchangeable Bonds” US$275,000,000 Class A floating rate secured exchangeable bonds due 2010, US$137,500,000 Class B floating rate secured exchangeable bonds due 2010 and US$137,500,000 Class C floating rate secured exchangeable bonds due 2010, issued by Happy Genius pursuant to the terms of a trust deed dated 5 May 2008 between Happy Genius and the Holders as amended and restated by the first supplemental trust deed dated 5 June 2008 between Happy Genius and DB Trustees (Hong Kong) Limited (in its capacity as both trustee and as security agent) and the second supplemental trust deed dated 15 June 2009 between Happy Genius and DB Trustees (Hong Kong) Limited (in its capacity as both trustee and as security agent)
“Executive” the executive Director of the Corporate Finance Division of the Securities and Futures Commission of Hong Kong or any of his delegates
“GCL Solar” GCL Solar Energy Technology Holdings Inc., a company incorporated in the Cayman Islands with limited liability
“GCL Solar HK” GCL Solar Energy Technology Holdings Limited, a company incorporated in Hong Kong with limited liability

– 3 –

DEFINITIONS

“GCL Solar Power”	GCL Solar Power (Hong Kong) Limited, a company
	incorporated in Hong Kong with limited liability
“Get Famous”	Get Famous Investments Limited, a company
	incorporated in the BVI with limited liability
“Go Power”	Go Power Holdings Limited, a company incorporated
	in the BVI with limited liability
“Greatest Joy”	Greatest Joy International Limited, a company
	incorporated in the BVI with limited liability
“Greatest Joy Group”	Greatest Joy and its subsidiaries from time to time
“Group”	the Company and its subsidiaries from time to time
“GW”	gigawatts
“Happy Genius”	Happy Genius Holdings Limited, a company
	incorporated in the BVI and an investment holding
	company ultimately beneficially wholly-owned by
	Mr. Zhu and his family
“Holders”	holders of the Exchangeable Bonds
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“IFRS”	International Financial Reporting Standards
“Independent Board Committee”	the independent board committee established by the
	Company (which shall consist of all the independent
	non-executive Directors) to advise the Independent
	Shareholders as to whether the terms and conditions
	of the Acquisitions, the specific mandate for the New
	Issue and the Whitewash Waiver are fair and
	reasonable and in the interests of the Company and
	the Shareholders as a whole and to advise the
	Independent Shareholders on how to vote, taking into
	account the recommendations of the Independent
	Financial Adviser

– 4 –

DEFINITIONS

“Independent Financial Adviser”

First Shanghai Capital Limited, a licensed corporation under the SFO to carry out type 6 (advising on corporate finance) regulated activity, being the independent financial adviser appointed by the Company to make recommendations to the Independent Board Committee and the Independent Shareholders as to whether the terms and conditions of the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole, and to advise the Independent Shareholders on how to vote

“Independent Shareholders”

the Shareholders other than Mr. Zhu and his associates, Mandra Esop and its associates, Mandra Materials and its associates, Mandra Silicon and its associates, Thornton Asset Management Service Centre Limited and its associates, and Mr. Chang Tsong-Zung and his associates, and parties acting in concert with any of them and any parties involved or interested in the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver

“Jiangsu Zhongneng”
江蘇中能硅業科技發展有限公司 (Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd.*), a company incorporated in the PRC
“Joy Big”
Joy Big Holdings Limited, a company incorporated in the BVI with limited liability and wholly-owned by Mr. Yu
“kWh”
kilowatt hour
“Last Trading Day”
3 June 2009, being the last trading date prior to the signing of the Acquisition Agreements
“Latest Practicable Date”
26 June 2009, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
“Listing Committee” the listing sub-committee of the board of directors of the Stock Exchange

The English name is a translation of its Chinese name and is included for identification purpose only

– 5 –

DEFINITIONS

“Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange

“Mandra” Mandra Esop and Mandra Materials
“Mandra Esop” Mandra Esop Limited, a company incorporated in the BVI with limited liability, which owns 1.21% of the issued share capital of GCL Solar, as at the date of this circular, which is ultimately beneficially owned by Mr. Zhang Songyi and Ms. Mui Bing How (who is Mr. Zhang Songyi’s wife)
“Mandra Materials” Mandra Materials Limited, a company incorporated in the BVI with limited liability, which owns 10.0% of the issued share capital of GCL Solar, as at the date of this circular, which is ultimately beneficially owned by Mr. Zhang Songyi and Ms. Mui Bing How (who is Mr. Zhang Songyi’s wife)

“Mandra Silicon” Mandra Silicon Limited, a company incorporated in the BVI with limited liability, and wholly-owned by Woo Foong Hong Limited, a wholly-owned subsidiary of Moonchu Foundation for Culture & Education Limited (a tax exempt charity established by, but not beneficially owned by, Mr. Zhang Songyi, Ms. Mui Bing How (who is Mr. Zhang Songyi’s wife) and Mr. Chang Tsong Zung (who is Mr. Zhang Songyi’s brother))

“Memorandum and Articles the memorandum and articles of association of the of Association” Company, as amended from time to time

“MG-Si” metallurgical silicon “Mr. Yu” Mr. Yu Bao Dong, a Director “Mr. Zhu” Mr. Zhu Gong Shan, a Director and the controlling shareholder of the Company

“MT” metric tonnes “MW” megawatts

“New Issue” the allotment and issue of the Additional Shares subject to the satisfaction of the conditions described in the letter from the Board

– 6 –

DEFINITIONS

“Other Shareholders of GCL Solar”

the other 31 shareholders of GCL Solar at Completion, other than Happy Genius, Mandra Esop, Mandra Materials and Mandra Silicon, namely Success Central Investments Limited, TB Silicon Limited, TB ZN Silicon Limited, Balderton Capital III, L.P., Successful Lane Limited, Amplewood Resources Limited, Well Beauty International Limited, Thornton Asset Management Service Centre Limited, CHANG Tsong Zung, LIN Frank, Charm Mind International Limited, Deutsche Bank AG, Faith Rise Limited, Star Right Limited, Greenrich Investments Limited, Guinness Mahon & Co. Limited, Milestone Silicon Limited, CDH New Energy Limited, Sun Ally Holdings Limited, New Horizon Melody Investment Limited, Pearl Ever Group Limited, D. E. Shaw Composite Investments Asia 5 (Cayman) Limited, Gold Alliance Properties Limited, Asia Bright International Limited, Joy Big, Bonus Billion, Success Point Investment Limited, Shining China Investments Limited, Roseclair Limited, Excel Class Holdings Limited and Total Master Holdings Limited
“Percentage Ratios” the applicable percentage ratios under Rule 14.07 of the Listing Rules
“PRC” or “China” the People’s Republic of China for the purpose of this circular, excluding Hong Kong and the Macau Special Administrative Region
“Relevant Period” the period commencing on 22 December 2008 (being the date falling six months immediately prior to the date of the Announcement) and ending on the Latest Practicable Date
“Richmore” Richmore International Development Limited, a company incorporated in Hong Kong with limited liability
“Sale Shares A” 1,033,356,685 ordinary shares of US$0.00001 each and 16,667,000 series A convertible preference shares of US$0.00001 each in the capital of GCL Solar, being the entire issued share capital of GCL Solar
“Sale Shares B” 100 ordinary shares of US$1.00 each in the capital of Greatest Joy, representing the entire issued share capital of Greatest Joy, and 100 ordinary shares of US$1.00 each in the capital of Sun Wave, representing the entire issued share capital of Sun Wave

– 7 –

DEFINITIONS

“Secured Notes”	the US$350 million secured notes to be issued by the
	Company to Happy Genius
“SFO”	the 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
“Shareholder(s)”	holders of ordinary shares in the share capital of the
	Company with the nominal value of HK$0.10 each
“Solarbuzz”	an international solar energy research and consulting
	company, which provides a range of services
	including standard industry reports and research and
	consultancy activities
“Speedy Gain”	Speedy Gain Limited, a company incorporated in
	Hong Kong with limited liability
“STC”	silicon tetrachloride
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Sun Far East”	Sun Far East Limited, a company incorporated in
	Hong Kong with limited liability
“Sun Wave”	Sun Wave Group Limited, a company incorporated in
	the BVI with limited liability
“Sun Wave Group”	Sun Wave and its subsidiaries from time to time
“Taixing”	泰興中能遠東硅業有限公司(Taixing Zhongneng Far
	East Polysilicon Technology Development Co., Ltd.*),
	a company incorporated in the PRC with limited
	liability
“Takeovers Code”	the Code on Takeovers and Mergers
“Target Group”	Target Group A and Target Group B
“Target Group A”	GCL Solar, Go Power, GCL Solar HK, Sun Far East,
	Taixing, Jiangsu Zhongneng and GCL Solar Power

The English name is a translation of its Chinese name and is included for identification purpose only

– 8 –

DEFINITIONS

“Target Group B” Greatest Joy, Richmore, Sun Wave, Asia Silicon BVI, Asia Silicon HK, Excel Bond, Asia Silicon, Wise Universe, Speedy Gain, Taixing, Jiangsu Zhongneng and GCL Solar Power
“TCS” trichlorosilane “Vendor B” Happy Genius, being the vendor in respect of Acquisition B
“Vendors A” Happy Genius, Mandra Esop, Mandra Materials, Mandra Silicon and the Other Shareholders of GCL Solar
“Whitewash Waiver” a waiver from the Executive pursuant to Note 1 on the Dispensations from Rule 26 of the Takeovers Code in respect of the obligations of Mr. Zhu and parties acting in concert with him to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by Mr. Zhu or parties acting in concert with him which would otherwise arise as a result of the issue of the Consideration Shares to Happy Genius and/or its nominee(s) upon Completion
“Wise Universe” Wise Universe Investments Limited, a company incorporated in the BVI with limited liability
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“RMB” Renminbi, the lawful currency of the PRC “US$” US dollars, the lawful currency of the United States of America
“%” per cent.

– 9 –

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: ZHU Gong Shan (Chairman) SHA Hong Qiu JI Jun SHU Hua YU Bao Dong SUN Wei TONG Yee Ming

Non-executive Director: TAM Chor Kiu

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

Principal place of business in Hong Kong: Suites 3601-4, Two Exchange Square 8 Connaught Road Central Hong Kong

Independent non-executive Directors: QIAN Zhi Xin HO Chung Tai, Raymond XUE Zhong Su YIP Tai Him

30 June 2009

To the Shareholders

Dear Sir or Madam,

(1) VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS;

(2) APPLICATION FOR WHITEWASH WAIVER;

(3) AN INCREASE IN AUTHORISED SHARE CAPITAL;

(4) ALLOTMENT AND ISSUE OF THE CONSIDERATION SHARES AND ADDITIONAL SHARES;

AND

(5) SPECIFIC MANDATE FOR THE NEW ISSUE

INTRODUCTION

Reference is made to the Announcement in relation to the Acquisitions, increase in authorised share capital of the Company, allotment and issue of the Consideration Shares and Additional Shares, specific mandate for the New Issue and the Whitewash Waiver application.

– 10 –

LETTER FROM THE BOARD

On 3 June 2009, the Company entered into the Acquisition Agreements, pursuant to which, the Company will acquire 100% of the equity interest in Jiangsu Zhongneng subject to the terms of the Acquisition Agreements.

The Acquisition Agreements consist of (1) Acquisition Agreement A, pursuant to which, the Company will acquire 64% of the equity interest in Jiangsu Zhongneng through the acquisition of Sale Shares A, subject to the terms thereof; and (2) Acquisition Agreement B, pursuant to which, the Company will acquire 36% of the equity interest in Jiangsu Zhongneng through the acquisition of Sale Shares B, subject to the terms thereof.

Pursuant to Acquisition Agreement A, Consideration A is HK$19,912,733,756, which will be satisfied at Completion A, by way of the allotment and issue of Consideration Shares A, being 9,051,242,615 new Shares, to Vendors A at an issue price of HK$2.2 for each Consideration Share A.

Pursuant to Acquisition Agreement B, Consideration B is US$830,615,000 (or the equivalent of approximately HK$6,437,266,250), which will be satisfied at Completion B: (a) as to US$200 million, by payment in cash (the source of which will be derived from funds made available to the Company from the US$300 million loan facility to be obtained by GCL Solar or its subsidiaries); (b) as to US$350 million, by the issue of the Secured Notes; and (c) as to US$280,615,000, by way of the allotment and issue of Consideration Shares B, being 988,530,112 new Shares, to Vendor B at an issue price of HK$2.2 for each Consideration Share B. It is a condition precedent to Completion B that GCL Solar or its subsidiaries shall obtain loan facilities of US$300 million, US$200 million of which is to be made available to the Company on terms to be agreed between GCL Solar and the Company to pay the cash portion of Consideration B.

The original purchase costs of Sale Shares A and Sale Shares B were approximately US$676.7 million and US$439.4 million, respectively.

The purpose of this circular is to provide you with (i) further details of the Acquisitions; (ii) a letter from the Independent Board Committee advising the Independent Shareholders as to whether the terms and conditions of the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and advising the Independent Shareholders on how to vote, taking into account the recommendations from the Independent Financial Adviser; (iii) a letter from the Independent Financial Adviser containing its recommendations to the Independent Board Committee and the Independent Shareholders as to whether the terms and conditions of the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole; and (iv) a notice of the EGM and the form of proxy.

– 11 –

LETTER FROM THE BOARD

ACQUISITION AGREEMENTS

Acquisition Agreement A

Date

3 June 2009

Parties

Vendors: (i) Happy Genius (ii) Mandra Esop (iii) Mandra Materials

(iv) Mandra Silicon

(v) Other Shareholders of GCL Solar Purchaser: The Company

Assets acquired under Acquisition Agreement A

The Company has conditionally agreed to purchase Sale Shares A and Vendors A have conditionally agreed to sell Sale Shares A, in respect of which they are the legal and beneficial owners.

Sale Shares A, in respect of which Vendors A will be the legal and beneficial owners immediately before Completion, comprise 100% of the issued share capital of GCL Solar, of which (a) Happy Genius holds 57.56%, (b) Mandra holds 10.62%, (c) Mandra Silicon holds 2.07% and (d) the Other Shareholders of GCL Solar hold 29.75%.

Consideration A

Consideration A is HK$19,912,733,756, which will be satisfied upon Completion A, by way of the allotment and issue of Consideration Shares A to Vendors A at an issue price of HK$2.2 for each Consideration Share A.

Consideration A was determined after arm’s length negotiations amongst the Company and Vendors A after taking into account a number of factors including the business prospects, financial position and performance of the Target Group, the future synergies to be derived by the Group after the successful integration of the Target Group, the reasons and benefits to be derived from the Acquisitions as described below, and also the agreed valuation of the Target Group.

– 12 –

LETTER FROM THE BOARD

The agreed valuation of the Target Group is approximately 10.4 times the audited consolidated net profit of Target Group A (attributable to both equity holders and minority interests of Target Group A) for the year ended 31 December 2008 which was RMB2,232.6 million. This valuation was determined based upon arm’s length negotiations amongst the Company and Vendors A, which took into account recent valuations of listed companies operating in a similar industry.

Consideration Shares A

Consideration Shares A represent approximately 885.05% of the existing issued share capital of the Company and 81.82% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares. The issue price for Consideration Shares A of HK$2.2 per Consideration Share A represents:

a discount of approximately 12.00% to the closing price of HK$2.5 per Share as quoted on the Stock Exchange on the Last Trading Day;
a discount of approximately 1.70% to the average closing price of approximately HK$2.238 per Share as quoted on the Stock Exchange for the last five trading days up to and including the Last Trading Day;
a premium of approximately 1.15% to the average closing price of approximately HK$2.175 per Share as quoted on the Stock Exchange for the last 10 trading days up to and including the Last Trading Day; and
a discount of approximately 18.52% to the closing price of HK$2.70 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

Consideration Shares A, when allotted and issued, shall rank pari passu in all respects with the Shares then in issue including the right to all dividends, distributions and other payments made or to be made, on the record date which falls on or after the date of such allotment and issue.

The Directors (including the Directors who form part of the Independent Board Committee after taking into account the advice of the Independent Financial Adviser) consider that Consideration A is fair and reasonable and Acquisition A is on normal commercial terms and is in the interests of the Company and the Shareholders as a whole.

The issue of Consideration Shares A will not result in a change of control of the Company.

An application will be made by the Company to the Listing Committee for the listing of, and permission to deal in, Consideration Shares A.

– 13 –

LETTER FROM THE BOARD

Conditions precedent

Completion A is conditional upon:

(1) the following conditions having been fulfilled or waived by the Company in accordance with Acquisition Agreement A:
(a) the approval by the Independent Shareholders at the EGM, of the Acquisitions, the allotment and issue by the Company of the Consideration Shares, the Whitewash Waiver and the increase of the authorised share capital of the Company to HK$2,000,000,000 comprising Shares of HK$0.10 each, with voting being taken by way of poll;
(b) the grant of the Whitewash Waiver by the Executive;
(c) the listing of, and permission to deal in, the Consideration Shares having been granted by the Stock Exchange and not having been revoked prior to Completion;
(d) the execution by each member of Vendors A of a lock-up agreement in an agreed form;
(e) the concurrent closing of Acquisition B in accordance with Acquisition Agreement B;
(f) there having been, since the date of Acquisition Agreement A, no material adverse effect on Target Group A (taken as a whole);
(g) GCL Solar or its subsidiaries having obtained and closed on a loan facility in the aggregate amount of US$300 million prior to or concurrently with Completion A in terms that are reasonably satisfactory to Happy Genius and the Company;
(h) GCL Solar or its subsidiaries having made available US$200 million from part of the funds to be borrowed pursuant to paragraph 1(g) above to the Company in such terms to be agreed between GCL Solar and the Company;
(i) each of the representations and warranties made by Vendors A in Acquisition Agreement A being true and correct in all material respects (if such representations and warranties are not qualified as to materiality) and being true and correct (if such representations and warranties are qualified as to materiality) on and as of the Closing Date; and
(j) the Company having received the tax deed of indemnity to be entered into between Happy Genius and the Company in a form satisfactory to the Company (acting reasonably) duly executed by Happy Genius;

– 14 –

LETTER FROM THE BOARD

(2) the following conditions having been fulfilled or waived by Vendors A in accordance with Acquisition Agreement A:
(a) the conditions described in paragraphs 1(a), 1(b), 1(c), 1(e), 1(g) and 1(h) above;
(b) there having been, since the date of Acquisition Agreement A, no material adverse effect on the Group (taken as a whole); and
(c) each of the representations and warranties made by the Company in Acquisition Agreement A being true and correct in all material respects (if such representations and warranties are not qualified as to materiality) and being true and correct (if such representations and warranties are qualified as to materiality) on and as of the Closing Date.

Save and except for conditions (1)(a), (b) and (c) above which cannot be waived by any party to Acquisition Agreement A, if any of the above conditions shall not have been fulfilled or waived (as the case may be) on or before a date that is 120 days after the date of Acquisition Agreement A, Acquisition Agreement A shall automatically terminate, whereupon all rights and obligations of the parties to Acquisition Agreement A shall cease to have effect except in respect of any accrued rights and obligations of the parties and certain surviving provisions.

Completion A

Completion A will take place on a day agreed between the Company and Vendors A on which all conditions precedent have been fulfilled or waived (as the case may be), and in any event, on such date prior to the date that is 120 days after the date of Acquisition Agreement A and at such location as may be agreed between Happy Genius and the Company and notified to the other members of Vendors A no less than five days prior to the agreed date (or such other date as the parties may agree in writing).

Acquisition Agreement B

Date

3 June 2009

Parties

Vendor B: Happy Genius Purchaser: The Company

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LETTER FROM THE BOARD

Assets acquired under Acquisition Agreement B

The Company has conditionally agreed to purchase and Vendor B has conditionally agreed to sell Sale Shares B.

Sale Shares B comprise the entire issued share capital of Greatest Joy, owned as to 100% by Vendor B, upon or prior to Completion B, and the entire issued share capital of Sun Wave, owned as to 100% by Vendor B, upon or prior to Completion B. Currently, 82% of the issued share capital of each of Greatest Joy and Sun Wave is owned by Vendor B and 18% of the issued share capital of each of Greatest Joy and Sun Wave is owned by Mandra Silicon. Mandra Silicon is wholly-owned by Woo Foong Hong Limited, a wholly-owned subsidiary of Moonchu Foundation for Culture & Education Limited (a tax exempt charity established by, but not beneficially owned by, Mr. Zhang Songyi, Ms. Mui Bing How (who is Mr. Zhang Songyi’s wife) and Mr. Chang Tsong Zung (who is Mr. Zhang Songyi’s brother)). It is contemplated that Mandra Silicon will transfer its interest in each of Greatest Joy and Sun Wave to Vendor B upon or prior to Completion B.

Pursuant to Acquisition Agreement B, part of Consideration B (being US$350 million) will be satisfied upon Completion B by the issue of the Secured Notes to Happy Genius. After Completion B, Happy Genius will transfer the Secured Notes received from the Company to the Holders as a partial consideration for a concurrent redemption of the Exchangeable Bonds. Happy Genius has made certain representations and warranties to the Holders relating to the Company and the Company’s business (“Holders Representations and Warranties”) in a trust deed entered into between Happy Genius and DB Trustees (Hong Kong) Limited (in its capacity as both trustee and as security agent) (the “Trust Deed”). The Company has entered into an agreement with Happy Genius pursuant to which in the event that a claim is made by the trustee under the Trust Deed based on a claimed breach of representation or warranty related to the Company, its outstanding securities or its business, the Company makes the Holders Representations and Warranties to Happy Genius at the date of that agreement and as at the date of Completion B.

Consideration B

Consideration B is US$830,615,000 (or the equivalent of approximately HK$6,437,266,250), which will be satisfied upon Completion B: (a) as to US$200 million, by payment in cash (the source of which will be derived from funds made available to the Company from the US$300 million loan facility to be obtained by GCL Solar or its subsidiaries); (b) as to US$350 million, by the issue of the Secured Notes; and (c) as to US$280,615,000, by way of the allotment and issue of Consideration Shares B, at an issue price of HK$2.2 for each Consideration Share B.

Consideration B was determined after arm’s length negotiations between the Company and Vendor B after taking into account a number of factors including the business prospects, financial position and performance of the Target Group, the future synergies to be derived by the Group after the successful integration of the Target Group, the reasons and benefits to be derived from the Acquisitions as described below, and also the agreed valuation of the Target Group.

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LETTER FROM THE BOARD

The agreed valuation of the Target Group is approximately 10.4 times the audited consolidated net profit of Target Group A (attributable to both equity holders and minority interests of Target Group A) for the year ended 31 December 2008, which was RMB2,232.6 million. This valuation was determined based upon arm’s length negotiations between the Company and Vendor B.

Consideration Shares B

Consideration Shares B represent approximately 96.66% of the existing issued share capital of the Company and 8.94% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares. The issue price for Consideration Shares B of HK$2.2 per Consideration Share B represents:

a discount of approximately 12.00% to the closing price of HK$2.5 per Share as quoted on the Stock Exchange on the Last Trading Day;
a discount of approximately 1.70% to the average closing price of approximately HK$2.238 per Share as quoted on the Stock Exchange for the last five trading days up to and including the Last Trading Day;
a premium of approximately 1.15% to the average closing price of approximately HK$2.175 per Share as quoted on the Stock Exchange for the last 10 trading days up to and including the Last Trading Day; and
a discount of approximately 18.52% to the closing price of HK$2.70 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

Consideration Shares B, when allotted and issued, shall rank pari passu in all respects with the Shares then in issue including the right to all dividends, distributions and other payments made or to be made, on the record date which falls on or after the date of such allotment and issue.

The Directors (including the Directors who form part of the Independent Board Committee after taking into account the advice of the Independent Financial Adviser) consider that Consideration B is fair and reasonable and Acquisition B is on normal commercial terms and is in the interests of the Company and the Shareholders as a whole.

The issue of Consideration Shares B will not result in a change of control of the Company.

An application will be made by the Company to the Listing Committee for the listing of, and permission to deal in, Consideration Shares B.

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LETTER FROM THE BOARD

Secured Notes

The terms of the Secured Notes have been negotiated on arm’s length basis. The principal terms of the Secured Notes are summarised below.

Issuer: Company. Holders: Holders, as of the date of the redemption, of the Exchangeable Bonds. Secured Notes US$350,000,000. principal amount: Guarantors: Each member of the Target Group (excluding Jiangsu Zhongneng, Taixing and GCL Solar Power) and each subsequently acquired, organised, direct or indirect, parent company or wholly-owned subsidiary of GCL Solar HK, Sun Wave and Greatest Joy, not established under the laws of the PRC (the “ Guarantor ” and collectively, the “ Guarantors ”).

Security: The Secured Notes will be secured by perfected first priority security interests over the following equity interests, properties and assets in favour of DB Trustees (Hong Kong) Limited, the security agent on behalf of each of the Holders to the extent legally permissible under applicable laws and regulations of the relevant jurisdictions:

(a) 36% of the equity interests of Jiangsu Zhongneng, including dividends and any other rights accruing in respect of the shares;
(b) 100% of the equity interests of each of the Guarantors; and
(c) 100% of the tangible and intangible properties and assets of each of the Company and the Guarantors.

Maturity date:

18 months from the date of issue (the “ Maturity Date ”).

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LETTER FROM THE BOARD

Scheduled amortisation:

Principal amount under the Secured Notes shall be repaid in 3 equal installments on the following dates:

(a) on the last business day of the 6-month period after the date of issue;
(b) on the last business day of the 12-month period after the date of issue; and
(c) on the Maturity Date.

Accretion rate:

5% per annum, payable concurrently with any payment of the underlying principal of the Secured Notes.

Interest:

10% per annum, payable semi-annually in arrears.

Voluntary The Secured Notes may be prepaid (together with all prepayments: interest, fees and expenses due on the prepayment date) upon five days’ notice, in minimum amounts of no less than US$25,000,000, at the option of the Company at any time.

Mandatory prepayments:

100% of the net proceeds from the following activities will be required to be paid to the Holders:

(a) issuances of equity and equity contributions to the Company by any member of the Target Group and subsidiaries thereof (except that where US$175,000,000 or more has been repaid, 50% of the net proceeds will be required to be paid to the Holders);
(b) any issuance of debt or equity-linked products by any member of the Target Group and subsidiaries thereof; and
(c) all non-ordinary course sales or other dispositions of assets by any member of the Target Group and subsidiaries thereof in excess of US$1,000,000.

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LETTER FROM THE BOARD

Ranking:

The Secured Notes constitute secured, direct, unconditional and senior obligations of the Company and Guarantors which will at all times rank pari passu in right of payment with all other existing and future senior obligations of the Company and Guarantors, and senior in right of payment to all existing and future subordinated obligations of the Company and Guarantors, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

Transferability:

Subject to applicable securities law restrictions, each of the Holders shall be permitted at any time to assign and transfer its rights in the Secured Notes and the definitive agreements to any third party.

Conditions precedent in respect of Acquisition B

Completion B is conditional upon:

(1) the following conditions having been fulfilled or waived by the Company in accordance with Acquisition Agreement B:
(a) the purchase by Vendor B from Mandra Silicon of the 18% of the issued share capital of each of Greatest Joy and Sun Wave owned by Mandra Silicon;
(b) the approval by the Independent Shareholders at the EGM, of the Acquisitions, the allotment and issue by the Company of the Consideration Shares, the Whitewash Waiver and the increase of the authorised share capital of the Company to HK$2,000,000,000 comprising Shares of HK$0.10 each, with voting being taken by way of poll;
(c) the grant of the Whitewash Waiver by the Executive;
(d) the listing of, and permission to deal in, the Consideration Shares having been granted by the Stock Exchange and not having been revoked prior to Completion B;
(e) there having been, since the date of Acquisition Agreement B, no material adverse effect on Target Group B (taken as a whole);
(f) the concurrent closing of the sale and purchase of not less than 90% of the issued share capital of GCL Solar between the Company and Vendors A;

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LETTER FROM THE BOARD

(g) GCL Solar or its subsidiaries having obtained and closed on a loan facility in the aggregate amount of US$300 million prior to or concurrently with Completion B in terms that are reasonably satisfactory to Vendor B and the Company;
(h) GCL Solar having made available US$200 million from part of the funds to be borrowed pursuant to paragraph 1(g) above to the Company in such terms to be agreed between GCL Solar and the Company;
(i) each of the representations and warranties made by Vendor B in Acquisition Agreement B being true and correct in all material respects (if such representations and warranties are not qualified as to materiality) and being true and correct (if such representations and warranties are qualified as to materiality) on and as of the Closing Date; and
(j) the Company having received the tax deed of indemnity to be entered into between Vendor B and the Company in a form satisfactory to the Company (acting reasonably) duly executed by Happy Genius;
(2) the following conditions having been fulfilled or waived by Vendor B in accordance with Acquisition Agreement B:
(a) the conditions described in paragraphs 1(b), 1(c), 1(d), 1(f), 1(g) and 1(h) above;
(b) there having been since the date of Acquisition Agreement B, no material adverse effect on the Group (taken as a whole); and
(c) each of the representations and warranties made by the Company in Acquisition Agreement B being true and correct in all material respects (if such representations and warranties are not qualified as to materiality) and being true and correct (if such representations and warranties are qualified as to materiality) on and as of the Closing Date.

Save and except for conditions (1)(b), (c) and (d) above which cannot be waived by any party to Acquisition Agreement B, if any of the above conditions shall not have been fulfilled or waived (as the case may be) on or before a date that is 120 days after the date of Acquisition Agreement B, Acquisition Agreement B shall automatically terminate, whereupon all rights and obligations of the parties to Acquisition Agreement B shall cease to have effect except in respect of any accrued rights and obligations of the parties and certain surviving provisions.

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LETTER FROM THE BOARD

Completion B

Completion B will take place on a day agreed between the Company and Vendor B on which all conditions precedent have been fulfilled or waived (as the case may be), and in any event, on such date prior to the date that is 120 days after the date of Acquisition Agreement B, and at such location as may be agreed between Vendor B and the Company (or such other date as the parties may agree in writing).

INCREASE IN AUTHORISED SHARE CAPITAL, ALLOTMENT AND ISSUE OF THE CONSIDERATION SHARES AND SPECIFIC MANDATE FOR THE NEW ISSUE

As at the date of this circular, the authorised share capital of the Company is HK$1,000,000,000 divided into 10,000,000,000 Shares of HK$0.10 each, of which 1,022,679,487 Shares have been issued and are fully paid or credited as fully paid.

The Board proposes to increase the authorised share capital of the Company from HK$1,000,000,000 to HK$2,000,000,000 by the creation of an additional 10,000,000,000 Shares of HK$0.10 each.

At the EGM, an ordinary resolution will be proposed to approve the increase of the authorised share capital of the Company.

The Directors believe that the increase in the authorised share capital of the Company is necessary so that the Company shall have sufficient authorised share capital to issue the Consideration Shares. Depending on market conditions, the Group may also carry out future fund raising exercises of the Company by issuing the Additional Shares to raise capital, the proceeds of which will be used for repayment of the Secured Notes and US$300 million of bank borrowings arising from the Acquisitions. The proposed increase in the authorised share capital of the Company will facilitate the issue of the Additional Shares. In the event that Completion does not take place, a placing will not be carried out.

At the EGM, ordinary resolutions will also be proposed to approve the allotment and issue of the Consideration Shares and the Additional Shares pursuant to Rule 13.36(1)(a) of the Listing Rules.

In relation to the proposal to approve the specific mandate for the New Issue, the Directors will be authorised to allot and issue the Additional Shares if certain conditions, as further described below, are satisfied. The maximum number of Additional Shares which may be issued and allotted pursuant to the New Issue will represent 216.34% of the Company’s current registered issued share capital.

As the New Issue is conditional on the Acquisitions and the Whitewash Waiver, the Shareholders interested in the Acquisitions and the Whitewash Waiver will be required to abstain from voting on the ordinary resolution in relation to the specific mandate for the New Issue to be considered at the EGM.

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LETTER FROM THE BOARD

Terms of the New Issue

Maximum number of Additional Shares

The maximum number of Additional Shares which can be allotted and issued pursuant to the New Issue is 2,212,490,442 Shares which represents 20% of the total number of issued Shares if enlarged by the issue of the Consideration Shares.

Issue of the Additional Shares pursuant to the New Issue

If the specific mandate for the New Issue is approved, the Directors can allot and issue all or some of the Additional Shares at any time and from time to time before the expiry date of the specific mandate for the New Issue as described below on such terms and conditions as the Directors consider to be appropriate and in the best interests of the Company and subject to the other conditions, including size, timing and price, as mentioned below.

The price at which any or all of the Additional Shares may be allotted and issued by the Directors under the New Issue will be determined by reference to the prevailing market price of the Shares at the time of offering and all other relevant market considerations. Such price will in any event not represent a discount of 20% or more to the benchmarked price (as set out in Rule 13.36(5) of the Listing Rules) of the Shares.

Approval of the Independent Shareholders

The specific mandate for the New Issue is subject to the approval being obtained from the Independent Shareholders by way of an ordinary resolution at the EGM.

Other conditions

Any allotment and issue of any Additional Shares pursuant to the New Issue is subject to the following conditions:

(a) any Additional Shares to be allotted and issued pursuant to the New Issue having been offered to investors who are independent of and not connected with the Company and the Directors, chief executive and substantial shareholder of the Company and its subsidiaries and/or any of their respective associates or any connected persons; and
(b) the listing of, and permission to deal in, any Additional Shares to be allotted and issued pursuant to the New Issue having been granted by the Stock Exchange.

Lapse of the specific mandate for the New Issue

The proposed specific mandate for the New Issue, if approved by the Independent Shareholders at the EGM, will lapse on the date falling six months after the passing of the ordinary resolution to approve the specific mandate for the New Issue at the EGM,

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LETTER FROM THE BOARD

irrespective of whether any Additional Shares covered by the New Issue have been allotted and issued in full or not.

Investors should be aware that any issue of Additional Shares pursuant to the New Issue is subject to the satisfaction of a number of terms and conditions which are more particularly set out above. There is no assurance that any of the conditions will be fulfilled. Investors should therefore exercise caution when dealing in the Shares.

The Directors (including the Directors who form part of the Independent Board Committee after taking into account the advice of the Independent Financial Adviser) consider that the proposed specific mandate for the New Issue is fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that the Independent Shareholders vote in favour of the ordinary resolution to be proposed at the EGM to approve the specific mandate for the New Issue.

SHAREHOLDING STRUCTURE OF THE COMPANY BEFORE AND AFTER COMPLETION

The following table sets out the shareholding interests in the Company (i) as at the Latest Practicable Date; and (ii) immediately after Completion (assuming that none of the controlling shareholders of the Company, Vendors A or Vendor B (and their associates) sell their Shares and the Company does not issue any new Shares):

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Beneficial Shareholders Note Mr. Zhu and his associates and parties acting in concert with any of them (namely Mandra Materials, Mandra Esop, Mandra Silicon and Mr. Zhang Songyi) 1 Morgan Stanley 2 Poly (Hong Kong) Investments Limited 3 Bonus Billion 4 Joy Big 4 Chang Tsong Zung 5 Thornton Asset Management Service Centre Limited 6 Other public Shareholders 7, 8	As at the Latest Practicable Date Number of issued Shares Approximate (%) 352,518,443 34.47 160,696,000 15.72 134,791,044 13.18 – – – – 242,000 0.02 3,520,000 0.34 370,912,000 36.27 1,022,679,487 100.00	Immediately after Completion Number of issued Shares Approximate (%) 6,213,787,609 56.17 160,696,000 1.45 134,791,044 1.22 6,108,934 0.06 13,723,098 0.12 14,611,601 0.13 32,250,582 0.29 4,486,483,346 40.56 11,062,452,214 100.00	Immediately after Completion Number of issued Shares Approximate (%) 6,213,787,609 56.17 160,696,000 1.45 134,791,044 1.22 6,108,934 0.06 13,723,098 0.12 14,611,601 0.13 32,250,582 0.29 4,486,483,346 40.56 11,062,452,214 100.00
			100.00

Notes:

(1) The 45.79% (representing 5,065,628,327 Shares) interests of Mr. Zhu and his family are held by Highexcel Investments Limited (before and after Completion) and Happy Genius (upon Completion), which are indirectly wholly-owned by Asia Pacific Energy Fund Limited, which in turn is ultimately held on trust by Credit Suisse Trust Limited for Mr. Zhu and his family. The 10.38% (representing 1,148,159,282 Shares) interests of Mr. Zhang Songyi are held by Mandra Materials, Mandra Esop and Mandra Silicon.
(2) The interests of Morgan Stanley in the Company are held through:
(a) MS China 3 Limited which holds 160,080,000 Shares and is a wholly-owned subsidiary of Morgan Stanley Emerging Markets Inc. which in turn is wholly-owned by Morgan Stanley. Morgan Stanley is therefore deemed to be interested in the 160,080,000 Shares held by MS China 3; and
(b) Morgan Stanley & Co. Inc. which holds 616,000 Shares and is a wholly-owned subsidiary of Morgan Stanley. Morgan Stanley is therefore deemed to be interested in the 616,000 Shares held by Morgan Stanley & Co. Inc.
(3) The interests of Poly (Hong Kong) Investments Limited are held through its indirect wholly-owned subsidiary, Power Jade Holdings Limited.
(4) The interests of both Bonus Billion and Joy Big are held by Mr. Yu. Bonus Billion and Joy Big are members of Vendors A.

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LETTER FROM THE BOARD

(5) Ms. Chan Wai Ho (being the wife of Mr. Chang Tsong Zung, who is one of the members of Vendors A and the brother of Mr. Zhang Songyi) is a public Shareholder who currently owns 242,000 Shares which she acquired more than six months prior to the date of the Announcement.
(6) Mr. Cheng Zai Zhong (being one of the ultimate beneficial owners of Thornton Asset Management Service Centre Limited, which is one of the members of Vendors A) is a public Shareholder who currently owns 3,520,000 Shares. Thornton Asset Management Service Centre Limited is a member of Vendors A.
(7) The 40.56% Shares held by the other public Shareholders are held: (a) as to 29.07% by the Other Shareholders of GCL Solar (other than Bonus Billion, Joy Big, Mr. Chang Tsong Zung and Thornton Asset Management Service Centre Limited) identified in note (8), (b) as to 8.14% by the Holders, which Shares shall be transferred to the Holders by Happy Genius immediately after Completion, pursuant to the redemption of the Exchangeable Bonds, and (c) as to 3.35% by the remaining public Shareholders. No member of Vendors A (other than Happy Genius, Mandra Materials, Mandra Esop and Mandra Silicon) will hold 10% or more of the issued share capital of the Company immediately after Completion.
(8) The Other Shareholders of GCL Solar (other than Bonus Billion, Joy Big, Mr. Chang Tsong Zung and Thornton Asset Management Service Centre Limited) are Success Central Investments Limited, TB Silicon Limited, TB ZN Silicon Limited, Balderton Capital III, L.P., Successful Lane Limited, Amplewood Resources Limited, Well Beauty International Limited, LIN Frank, Charm Mind International Limited, Deutsche Bank AG, Faith Rise Limited, Star Right Limited, Greenrich Investments Limited, Guinness Mahon & Co. Limited, Milestone Silicon Limited, CDH New Energy Limited, Sun Ally Holdings Limited, New Horizon Melody Investment Limited, Pearl Ever Group Limited, D. E. Shaw Composite Investments Asia 5 (Cayman) Limited, Gold Alliance Properties Limited, Asia Bright International Limited, Success Point Investment Limited, Shining China Investments Limited, Roseclair Limited, Excel Class Holdings Limited and Total Master Holdings Limited.

Upon Completion, the shareholding of the Combined Concert Group will exceed 50% of the issued share capital of the Company. The Combined Concert Group may thereafter increase its shareholdings without incurring any further obligation under Rule 26 of the Takeovers Code to make a general offer. Given that the individual members of the Combined Concert Group will hold less than 50% of the issue share capital of the Company, any further acquisition of Shares by any of them may trigger an obligation to make a mandatary general offer under Rule 26.1 of the Takeovers Code, unless a waiver from the Executive is granted.

Lock up arrangements

Members of Vendors A who will be receiving Consideration Shares A pursuant to Acquisition Agreement A and the Holders who will be transferred Shares by Happy Genius pursuant to the redemption of the Exchangeable Bonds will be signing lock up agreements in favour of the Company at Completion.

Pursuant to their respective lock up agreements:

(1) Happy Genius will undertake to have Consideration Shares A received pursuant to Acquisition Agreement A locked up for a period of 365 days after the Closing Date. However during the period commencing on the 181st day after the Closing Date and ending on the 365th day after the Closing Date, Happy Genius may dispose of up to 10% of such Shares;

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(2) the members of Vendors A, other than Happy Genius and the two members of Vendors A who hold the 16,667,000 series A convertible preference shares of US$0.00001 each in the capital of GCL Solar (TB ZN Silicon Limited and Balderton Capital III, L.P.), will each undertake to have 100% of its Shares locked up for a period of 180 days after the Closing Date; and
(3) the Holders who will be transferred Shares by Happy Genius pursuant to the redemption of the Exchangeable Bonds and the two members of Vendors A who hold the 16,667,000 series A convertible preference shares of US$0.00001 each in the capital of GCL Solar (TB ZN Silicon Limited and Balderton Capital III, L.P.), will each undertake to have the Shares received pursuant to the redemption of the Exchangeable Bonds or Acquisition Agreement A (as the case may be) locked up for a period of 120 days after the Closing Date. However:
(A) if the Company carries out one or more placements which results in the Company receiving cash proceeds, net of any transaction expenses in excess of 5% of the total cash proceeds thereof of at least US$250,000,000 (a “Qualified Placement”) occurs during the period commencing on the Closing Date and ending on a date that is 30 days after the Closing Date (the “Initial Period”), the relevant Shareholder may dispose of up to (a) 15% of its affected Shares in the second month after the Closing Date; (b) 25% of its affected Shares (plus any of its affected Shares not disposed of under (a) in the second month) in the third month after the Closing Date; and (c) 30% of its affected Shares (plus any of its affected Shares not disposed of under (a) and (b) in the second and third months respectively) in the fourth month after the Closing Date, provided in each case that the implied value of the Shares in each disposal shall be not less than 130% of the placement price;
(B) if the Company carries out one or more placements during the Initial Period but such placement or placements do not constitute a Qualified Placement, the relevant Shareholder may dispose of up to (a) 15% of its affected Shares in the second month after the Closing Date provided that the implied value of the Shares in each disposal shall be not less than 130% of the placement price; (b) 25% of its affected Shares (plus any of its affected Shares not disposed of under (a) in the second month) in the third month after the Closing Date; and (c) 30% of its affected Shares (plus any of its affected Shares not disposed of under (a) and (b) in the second and third months respectively) in the fourth month after the Closing Date;
(C) if the Company does not carry out any placement during the Initial Period, the relevant Shareholder may dispose of up to (a) one third of its affected Shares in the second month after the Closing Date; (b) one third of its affected Shares (plus any of its affected Shares not disposed of under (a) in the second month) in the third month after the Closing Date; and (c) any of its affected Shares in the fourth month after the Closing Date.

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LETTER FROM THE BOARD

INFORMATION ON THE VENDORS AND THE TARGET GROUP

Vendors

To the best understanding, knowledge and belief of the Directors, Vendors A and Vendor B are either principally engaged in investment holding activities or are individual investors.

To the best understanding, knowledge and belief of the Directors, Happy Genius is principally an investment holding company ultimately beneficially wholly-owned by Mr. Zhu and his family. Due to the existing business relationship between Mr. Zhang Songyi (who is one of the ultimate beneficial owners of Mandra Materials and Mandra Esop) and Mr. Zhu by virtue of: (i) both Mr. Zhang Songyi and Mr. Zhu being directors of GCL Solar; (ii) Mr. Zhang Songyi having a US$1.75 million investment in a wind turbine blade producing business in which Mr. Zhu is also an investor; and (iii) Mr. Zhang Songyi through Mandra Materials and Mandra Esop, being a 10.38% Shareholder after Completion, Mr. Zhang Songyi, Mandra Materials, Mandra Esop and Mandra Silicon are deemed to be parties acting in concert with Mr. Zhu. The Directors confirm that to the best of their knowledge, information and belief having made all reasonable enquiry, Vendors A (other than Happy Genius, Mandra Materials, Mandra Esop, Mandra Silicon, Bonus Billion, Joy Big, Thornton Asset Management Service Centre Limited and Mr. Chang Tsong Zung) are third parties independent of (a) the Company and (b) connected persons of the Company for the purposes of the Listing Rules.

The Target Group

The Company will acquire from Vendors A and Vendor B in aggregate 100% of the equity interest in Jiangsu Zhongneng. Jiangsu Zhongneng is the major operating company of the Target Group.

The Target Group is one of the leading suppliers of polysilicon and wafers to companies operating in the solar industry. Polysilicon is the primary raw material for wafers used in the solar and electronics industries.

The Target Group manufactures polysilicon at its production facilities, which are located in Xuzhou, Jiangsu province, China. It produced 1,094 MT of polysilicon during the first three months of 2009, which translates to an annual production volume run rate of 4,376 MT, only 17 months after commencing commercial production. For the full year 2009, the Target Group expects to produce approximately 7,500 MT of polysilicon. To the best knowledge of the Directors, there is only a small number of incumbent producers in the world with decades of experience, which are capable of achieving this production scale within such a short period of time.

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The Target Group has implemented proven technology in its polysilicon production facilities. It utilises a modified Siemens process to produce polysilicon and, starting from Xuzhou Phase II onwards, its production facilities have been designed to produce both solar and electronic grade polysilicon. The table below sets out the details of the Target Group’s production facilities, the commencement dates of commercial operations and achievement of fully-ramped production capacity for each phase:

				Achievement of
	Planned annual	Planning/	Commencement	fully-ramped
	production	construction	of commercial	production
Production facility	capacity	commencement	production	capacity
Xuzhou Phase I	1,500 MT	July 2006	October 2007	March 2008
Xuzhou Phase II	1,500 MT	August 2007	July 2008	December 2008
Xuzhou Phase III	15,000 MT	December 2007	December 2008	December 2009(1)

(1) As scheduled

The Target Group commenced construction of its Xuzhou Phase I production facility, which produces solar grade polysilicon in July 2006, and produced its first batch of polysilicon in September 2007. The Target Group intends to fully ramp up its Xuzhou Phase III production facility by December 2009. By then, the Target Group’s total annual polysilicon production capacity will reach 18,000 MT. With further technical improvements, it is anticipated that its total annual polysilicon production capacity will reach 21,000 MT by December 2010, making it one of the largest polysilicon manufacturers in the world in terms of production capacity.

TCS is one of the main and most costly production inputs used in the production of polysilicon, and to date, the Target Group has relied on third party suppliers for most of its TCS requirements. To reduce reliance on TCS from third party suppliers, which is relatively more costly to purchase, the Target Group is increasingly incorporating TCS production into its production process. The Target Group integrated the hydrochlorination process for its Xuzhou Phase I production facility and Xuzhou Phase II production facility in February and September 2008 respectively. The hydrochlorination process for its Xuzhou Phase III started operating in December 2008 and will be further ramped up during 2009. The hydrochlorination process recycles STC, which is a by-product of the polysilicon production process, into TCS and this process is critical in enabling the Target Group to reduce its production costs. The Target Group also owns Taixing which is a TCS production facility with an annual capacity of 20,000 MT located in Taizhou, Jiangsu province, China. Taixing commenced commercial production in September 2008 and the Target Group has already successfully used the TCS produced by Taixing in its polysilicon production process. For the year ended 31 December 2008, the three months ended 31 March 2009 and the month ended 31 May 2009, approximately 20.9%, 37.3% and 77.2% of the Target Group’s TCS consumption was produced in-house resulting in a production cost of RMB458.6, RMB331.0 and RMB249.5 per kilogram respectively.

In addition, the Target Group began selling wafers manufactured using polysilicon produced by the Target Group through tolling arrangements with third party manufacturers during the second quarter of 2008. The Target Group has entered into long-term polysilicon and wafer supply agreements with solar cell and module manufacturers that provide for aggregate sales volume of approximately 15.4 GW of

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wafers and approximately 33,311 MT of polysilicon. The terms of these agreements range from four years to seven years. Selling prices of the contracted polysilicon and wafers are to be negotiated and agreed upon between the Target Group and its customers before deliveries are made. Prior to its entry into such supply contracts, the Target Group sold all of its polysilicon on the spot market to major Chinese solar manufacturers.

The Target Group has established good business relationships with a number of well-established solar cell and module producers which are essentially the customers of the Target Group. Over the years, there has not been any over-reliance on any of these solar cell and module producers. In addition, the Target Group has procured and purchased each of its production inputs from a number of suppliers and does not rely on any one of them for the supply of production inputs.

For the year ended 31 December 2007, the Target Group sold 153 MT of polysilicon, all of which was sold in the last quarter of 2007. For the year ended 31 December 2008, the Target Group sold 1,530 MT of polysilicon and 39.2 MW of wafers.

The Directors believe that there is no material adverse change in the financial and trading position of the Target Group since 31 December 2008.

Risk factors

The following are possible risk factors which may relate to the Target Group:

Continuous capital investment

The business of the Target Group may require significant and continuous capital investment. Continuous capital investments may exceed the original budgets, and it is not guaranteed to achieve the intended economic results or commercial viability. Actual capital expenditures for the business of the Target Group may significantly exceed the Group’s budgets because of various factors beyond the Group’s control, which in turn may affect the Group’s financial condition.

Policies and regulations

The business of the Target Group is subject to extensive governmental regulations, policies and controls. There can be no assurance that the relevant government authorities (i) will maintain the existing laws and regulations or (ii) will not impose additional or more stringent laws or regulations. Failure to comply with the relevant laws and regulations may adversely affect the Group.

Credit availability to solar companies in China

Driven by domestic economic stimulus, availability of domestic credit to Chinese solar companies has become relatively easy. While this is helping companies in the near term, there is a concern that it may delay capital expenditure discipline and hence prolong overcapacity. In addition, there can be no assurance that this availability of domestic credit to Chinese solar companies will continue. Failure to obtain a sufficient level of credit facilities may affect the Group’s financial condition.

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LETTER FROM THE BOARD

The structure of the Target Group before and after Completion

The following diagram illustrates the shareholding of the Target Group immediately before Completion:

==> picture [431 x 314] intentionally omitted <==

----- Start of picture text -----

Other Shareholdersof GCL Solar Mandra Silicon Mandra (1) Happy Genius [(2)]
29.75% 2.07% 10.62% 57.56%
82% 82%
GCL Solar Greatest Joy Sun Wave
100% 18% 18%
GCL Solar HK
Mandra Silicon
100%
100% 100% 100%
64% 100%
Go Power Excel Bond Wise Universe Asia Silicon BVI
100% 100% 100%
Richmore Asia Silicon Speedy Gain Asia Silicon HK
100%
16% 8% 7% 5%
Sun Far East Jiangsu Zhongneng
70%
30% 100%
Taixing GCL Solar Power
----- End of picture text -----

Notes:

(1) Mandra Materials and Mandra Esop are ultimately owned and controlled by Mr. Zhang Songyi and his wife.
(2) An investment holding company ultimately beneficially wholly-owned by Mr. Zhu and his family.

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LETTER FROM THE BOARD

The following diagram illustrates the shareholding of the Target Group immediately after Completion:

==> picture [415 x 404] intentionally omitted <==

----- Start of picture text -----

Mr. Zhu and his
associates and
Thornton
parties acting in Poly Asset Other
concert with any Morgan (Hong Kong) Bonus Chang Management public
of them (namely Stanley Investments Billion Joy Big Tsong Service Share-
Mandra Materials, Limited Zung Centre holders [1]
Mandra Esop
Limited
Mandra Silicon and
Mr. Zhang Songyi)
56.17% 1.45% 1.22% 0.06% 0.12% 0.13% 0.29% 40.56%
Company [2]
100% 100% 100%
GCL Solar Greatest Joy Sun Wave
100%
100% 100% 100%
GCL Solar HK
100%
Excel Bond Wise Universe Asia Silicon BVI
100% 64%
100% 100% 100%
Go Power Richmore Asia Silicon Speedy Gain Asia Silicon HK
16% 8% 7% 5%
100%
Sun Far East Jiangsu Zhongneng
70%
30% 100%
Taixing GCL Solar Power
----- End of picture text -----

Note:

The Other Shareholders of GCL Solar (excluding Bonus Billion, Joy Big, Thornton Asset Management Service Centre Limited and Chang Tsong Zung) whose interests have been included in this category are Success Central Investments Limited, TB Silicon Limited, TB ZN Silicon Limited, Balderton Capital III, L.P., Successful Lane Limited, Amplewood Resources Limited, Well Beauty International Limited, LIN Frank, Charm Mind International Limited, Deutsche Bank AG, Faith Rise Limited, Star Right Limited, Greenrich Investments Limited, Guinness Mahon & Co. Limited, Milestone Silicon Limited, CDH New Energy Limited, Sun Ally Holdings Limited, New Horizon Melody Investment Limited, Pearl Ever Group Limited, D. E. Shaw Composite Investments Asia 5 (Cayman) Limited, Gold Alliance Properties Limited, Asia Bright International Limited, Success Point Investment Limited, Shining China Investments Limited, Roseclair Limited, Excel Class Holdings Limited and Total Master Holdings Limited.
Upon Completion, the companies which make up the Target Group will become wholly-owned subsidiaries of the Company.

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LETTER FROM THE BOARD

FINANCIAL INFORMATION OF THE TARGET GROUP

Set out below is the financial information of the Target Group based on the audited consolidated financial statements for the years ended 31 December 2007 and 2008 prepared under IFRS:

		2007	2008
	Target Group A		Target Group A
	Consolidated		Consolidated
		RMB (’000)	RMB (’000)
(Loss) profit before tax		(24,302)	2,262,377
Income tax expense		(24,353)	(29,740)
Net (loss) profit for the year ended 31 December		(48,655)	2,232,637
Net assets value as at 31 December		128,712	2,307,284
	Target Group B		Target Group B
		Combined	Combined
		(Note 1)	(Note 1)
		RMB (’000)	RMB (’000)
(Loss) before tax		–	(473,359)
Income tax expense		–	(28,423)
Net (loss) for the year ended 31 December _(Note _	2)	–	(501,782)
Net asset (liabilities) value as at 31 December		1	(501,780)

Notes:

The financial information of Target Group B is extracted from the financial statements of Greatest Joy and Sun Wave.
The net loss of Target Group B for the year ended 31 December 2008 mainly represents an impairment loss and amortization of intangible assets upon the acquisition of Jiangsu Zhongneng, net its share of results of its 36% equity interest in Jiangsu Zhongneng.

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LETTER FROM THE BOARD

REASONS AND BENEFITS OF THE ACQUISITIONS TO THE GROUP

The Group is one of the largest foreign-owned independent power cogeneration plant operators in the PRC and is principally engaged in the development, management and operation of power cogeneration plants in the PRC. In addition, the Group’s power generation plants fall into one of the categories of environmentally friendly power plants that are encouraged by the PRC government. The Directors believe that various incentives provided by the PRC government to encourage environmentally friendly power plants such as higher on-grid tariffs, higher utilisation hours, higher dispatch priority, and preferential tax treatments are beneficial to the Group as an environmentally friendly energy enterprise. Furthermore, the Group plans to develop and acquire additional environmentally friendly power plants using clean and renewable fuels, including plants using solar technology. With the vision of providing environmentally friendly energy worldwide, the Directors consider that the Acquisitions will facilitate the Group’s access to technology for large scale renewable energy related operations, after which the Group may then further develop its operations in the renewable energy industry.

The Directors believe that the Acquisitions will lead to the diversification of the Group’s current utility business portfolio. It is the intention of the Directors that the Group will continue its current business. Other than the Acquisitions, the Directors have no intention to introduce any changes to the existing business of the Group, including any redeployment of the fixed assets of the Group, nor to discontinue the employment of the Group’s employees.

In tapping into the renewable energy industry, the Group expects to create integration synergies, through raising its downstream competitiveness as well as expanding its upstream business operations. Furthermore, the Directors consider that the Acquisitions will create attractive business opportunities for the Group by enabling the Group to commercialise solar energy products for the commercial and retail market.

The Directors believe the following factors relating to the industries in which the Target Group operates are beneficial to the growth of the Group, as described in more detail below:

Solar market

Solar power is one of the most rapidly growing renewable energy sources in the world today. Over the past decade, the solar market has expanded significantly. According to European Photovoltaic Industry Association, total solar photovoltaic cumulative capacity has grown from approximately 1 GW in 1998 to 14.7 GW in 2008 (31% CAGR) on the back of increased demand for clean and renewable energy, to become a commercially strong industry. Despite this robust growth, solar still only accounts for less than 1% of global electricity generation, thus providing significant room for future development. Solar power systems generally comprise a multitude of solar modules, which are made up of multiple solar cells.

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LETTER FROM THE BOARD

According to Solarbuzz, the solar market in China is still relatively small at 35 MW in 2008, yet it is expected to undergo a profound transformation from a market dominated by off-grid rural and industrial projects, to one marked by a significant increase in large grid-connected ground mounted systems. This shift is dependent on changing project economics and increasing governmental support. The PRC’s long-term energy policy has been shaped by the PRC government’s central planning agency, the National Development and Reform Commission, with the ancillary National Energy Administration focusing on the specifics of energy supply and production. The PRC government has acknowledged its role in global carbon emissions reductions and has released a series of policy statements emphasising the PRC’s dedication to renewable energies, including the ‘Renewable Energies Law’ and the ‘Medium and Long-Term Development Plan for Renewable Energy’. The latter of the two policies calls for renewable energy to comprise 10% of total energy consumption by 2010 (with 300 MW from solar energy) and 15% by 2020 (with 1.8 GW from solar energy). However, recent policy statements have indicated that this figure may well rise to 400-500 MW by 2010, and 2 GW by 2020.

The Ministry of Finance (“MoF”) of China announced an upfront subsidy of RMB20 per watt for Building-Integrated Photovoltaic (“BIPV”) systems in April 2009. The MoF then further issued a clarification stating that the upper limit of the subsidy is RMB20 per watt for BIPV systems and RMB15 per watt for non-BIPV systems. Furthermore, Jiangsu province, where Jiangsu Zhongneng is located, has recently announced a solar Feed-In-Tariff (“FIT”) programme to support 400 MW of solar installations from 2009 to 2011. This is the first ever FIT program from China and is very encouraging for local solar companies. The FIT rates for the year 2009 will be RMB2.15 per kWh inclusive of VAT for ground mount systems, RMB3.70 per kWh inclusive of VAT for rooftop systems, and RMB4.30 per kWh inclusive of VAT for BIPV systems, and will be lower for the years 2010 and 2011.

Polysilicon market

Polysilicon is the primary raw material used by the solar and electronics industries. The solar industry produces solar wafers, cells, modules and systems that convert energy from sunlight into electricity. The electronics industry produces semiconductors for use in electronic applications. Historically, the electronics industry has been the dominant user of polysilicon. Recent rapid growth of the solar industry has placed it on an equal footing with the electronics industry in terms of polysilicon consumption. In 2007, for the first time, the solar industry consumed approximately 54% of the global polysilicon production while the electronics industry consumed the remaining 46%, according to Solarbuzz. As a result of this rapid expansion, sales to the solar industry is now the main driver affecting the price, profit and growth of the polysilicon market.

The considerable growth in the solar industry over recent years has resulted in greater demand for polysilicon. Although the raw material, MG-Si, is in abundance, there are significant barriers to entry to the market to produce high-purity polysilicon. Polysilicon production requires highly sophisticated processes and technological know-how. Furthermore, a significant scale of operations of at least 3,000-5,000 MT per annum production capacity is required in order to achieve a competitive cost position.

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LETTER FROM THE BOARD

Solar wafer industry

Polysilicon is used as feedstock for the production of monocrystalline and multicrystalline ingots. These ingots are then sliced into wafers by wire saws, which will then be used for solar cell and module production. Many companies compete in the solar wafer market. Some of the major wafer producers use a part or all of their wafer output for the in-house production of solar cells. In addition, various existing and new wafer manufacturers are expanding their production capacity to meet growing market demand. The main barriers to entry for wafer manufacturing currently include significant capital expenditure, access to high performance manufacturing equipment, availability of polysilicon, solid customer relationships with leading solar cell producers worldwide and significant manufacturing experience required to optimise manufacturing efficiency. Relationships with the leading established solar cell producers are critical to gaining feedback on wafer performance and fine-tuning wafer production to ensure a sustainable technological lead.

Strengths of the Target Group

The Directors believe that the Target Group is able to compete effectively and capitalise on the long-term growth in the market for polysilicon and wafers in the solar industry due to the Target Group’s competitive strengths described in more detail below:

Proven capability in constructing and ramping up polysilicon production capacity

The Target Group has proven its capability in constructing and ramping up polysilicon production capacity. The construction and shipment of its first batch of polysilicon from its Xuzhou Phase I and Xuzhou Phase II production facilities were completed within 15 months and 11 months, respectively. For the three months ended 31 March 2008, 30 June 2008, 30 September 2008 and 31 December 2008, the Target Group produced 302 MT, 359 MT, 565 MT and 624 MT of polysilicon, respectively, and in the three months ended 31 March 2009, the Target Group produced 1,094 MT of polysilicon. The Directors believe that the Target Group is one of the few manufacturers of polysilicon in China to have attained commercial production of approximately 400 MT per month. With the ramp up of Xuzhou Phase III by the end of 2009, the Target Group expects its annual production capacity to reach 18,000 MT. Together with technological improvements, annual production capacity is expected to increase to 21,000 MT, making the Target Group one of the largest polysilicon producers worldwide in terms of production capacity. In addition, the Target Group also has plans to construct over 1 GW of solar ingot and wafer manufacturing capacities in the next 12 months.

Proven capability in reducing production costs

The hydrochlorination process has been successfully integrated into all the polysilicon production facilities in Xuzhou and is critical in enabling the Target Group to reduce its production costs. Taixing which is a TCS production facility with an annual capacity of 20,000 MT also contributes to ensuring a steady supply of

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LETTER FROM THE BOARD

TCS. The Target Group has been able to reduce polysilicon production cycle times, electricity consumption and the use of raw materials in order to enhance production efficiency. The Target Group has thus far been able to shorten production cycles by adjusting reactor parameters as well as optimising electricity usage.

In-house research and development capabilities

The Target Group possesses proprietary technology and know-how of hydrochlorination which allows the Target Group to reduce production costs. The Target Group has successfully applied for eight patents in connection with the hydrochlorination process and reactor technology and there are 11 other patent applications pending approval. The senior management team spearheads the research and development efforts of the Target Group and sets strategic directions for the advancement of products and production processes, focusing on efforts to improve product quality, reduce manufacturing costs and broaden product markets. The Target Group has set up a research and development centre in China and intends to set up another research and development centre in the United States of America in order to develop other technologies that can assist the Target Group in addressing the future trends of the solar market.

Contracted long-term customers

The Target Group has entered into polysilicon and wafer supply agreements with cell and module manufacturers that provide for aggregate sales of approximately 15.4 GW of wafers and approximately 33,311 MT of polysilicon.

Cost effective production process, facilities and operations

The Directors believe that the advanced production processes and the equipment which the Target Group is installing at its China production facilities will enable the Target Group to achieve an effective cost structure that will converge with those of leading polysilicon producers worldwide. The Target Group intends to maximise its production efficiency by leveraging on the competitive costs of its skilled workforce, engineering and technical resources, production equipment and facilities. In addition, the close proximity of its Xuzhou production facilities to both solar and electronics product manufacturers located in the Jiangsu province, a key area for the solar and electronics manufacturing industries in China, allows customer proximity and facilitates efficient inventory management.

Experienced management team

The Target Group’s management team consists of an experienced and diversified group of entrepreneurs and professionals who have positioned the business of the Target Group to take advantage of the increased demand for polysilicon and the growing need for cost-effective alternative clean energy. The Directors believe that the members of the Target Group’s senior management team have a proven track record of establishing and successfully managing enterprises as well as constructing and operating large-scale power and chemical plants.

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LETTER FROM THE BOARD

Based on the above, the Directors (including the Directors who form part of the Independent Board Committee after taking the advice of the Independent Financial Adviser into account) consider that the terms and conditions of the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver are fair and reasonable, and in the interests of the Company and its Shareholders as a whole.

FINANCIAL AND TRADING PROSPECTS

The Group

For the year ended 31 December 2008, the Group recorded a significant growth in revenue of RMB3,693.3 million, representing an increase of 100.2% compared with a revenue of RMB1,844.7 million for the year ended 31 December 2007. Gross profit was RMB497.3 million for the year ended 31 December 2008, representing a 37.2% increase from RMB362.4 million for the same period last year. The significant increase was mainly due to several acquisitions in 2007 and the acquired power plants’ full year results being consolidated into the Group’s income statement. The profit attributable to the equity holders of the Company was RMB131.3 million for the year ended 31 December 2008 as compared with a loss of RMB266.7 million for the same period last year. The loss in 2007 was mainly due to a loss on valuation of the fair value of a convertible note issued.

In 2008, an unprecedented surge in coal prices had a negative effect on our Group. As a result of the “coal cost pass-through” mechanism enacted by the National Development and Reform Commission in 2005, electricity tariffs were increased on 1 July 2008 and 20 August 2008. However, the level of increase in on-grid tariffs fell below the increase in coal prices which affected the Group’s fuel cost significantly in the first half of 2008. Nevertheless, the Group fared better than traditional coal-fired power plant operators as the Group was able to derive higher on-grid tariffs and steam prices from the Group’s environmentally friendly energy power plants.

In November 2008, China announced a huge economic stimulus package amounting to US$586 billion on a wide array of national infrastructure projects aimed at bolstering its economy and helping to fight the effects of the global economic slowdown. The Directors believe the effect of this stimulus package will be reflected in the Group’s business and operations during the second half of 2009.

Looking forward in 2009, amid the current global economic downturn, the Directors anticipate steady demand for electricity and steam during the first half and a mild increase in demand in the second half of the year. As most of the Group’s power plants are located near the Yangtze River Delta region, which is the most important agricultural, industrial and economic centre in China, the Directors believe this area will be the first in China to rebound after the recession and consequently will benefit the Group. The Directors confidence in 2009 is also based on the recent decrease in interest rates and coal prices which will help ease the Group’s costs significantly.

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LETTER FROM THE BOARD

The Enlarged Group

Upon Completion, the Target Group will become subsidiaries of the Company and the financial information of the Target Group will be consolidated into the consolidated financial statements of the Group. Based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix V to this circular, the revenue and gross profit of the Group for the year ended 31 December 2008 was approximately RMB3,693.3 million and RMB497.3 million respectively and the unaudited pro forma revenue and gross profit of the Enlarged Group would increase to RMB7,214.8 million and RMB3,063.6 million respectively after Completion.

Looking forward in 2009, after Completion, the Enlarged Group will continue with the existing principal business of the Group in the development, management and operation of power cogeneration plants in the PRC. In addition, the Acquisitions will enable the Enlarged Group to (i) commercialise solar energy products for the commercial and retail market and (ii) gain access to technology for large scale renewable energy related operations.

The Directors consider that the Acquisitions will enhance the income and assets base of the Group. Furthermore, significant income will be generated from the manufacturing business of polysilicon and wafers in the solar industry in the PRC.

In addition, the Directors consider that the Acquisitions will create attractive business opportunities for the Group and will broaden its revenue base. In tapping into the renewable energy industry, the Group expects to create integration synergies, in particular, raising its downstream competitiveness as well as expanding its upstream business operations and achieving vertical business integration. The Directors also believe that the Acquisitions will lead to the diversification of the Group’s current utility business portfolio thereby providing significant growth potential.

FINANCIAL IMPACT OF THE ACQUISITIONS ON THE GROUP

Based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix V to this circular, the total assets of the Group as at 31 December 2008 were approximately RMB7,069.5 million and the unaudited pro forma total assets of the Enlarged Group would amount to approximately RMB23,401.8 million. The total liabilities of the Group as at 31 December 2008 were approximately RMB4,245.8 million and the unaudited pro forma liabilities of the Enlarged Group as at 31 December 2008 would amount to approximately RMB15,205.9 million. The net assets of the Group and the equity attributable to equity holders of the Company as at 31 December 2008 were approximately RMB2,823.7 million and RMB2,415.8 million respectively. The unaudited pro forma net assets of the Enlarged Group and the unaudited pro forma equity attributable to equity holders of the Company would increase to approximately RMB8,195.9 million and approximately RMB7,787.9 million respectively. It is expected that the Acquisitions will not have any adverse effect on the financial position and earnings of the Group.

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LETTER FROM THE BOARD

The profit attributable to the shareholders of the Enlarged Group for the year ended 31 December 2008 of approximately RMB1,646.7 million would be higher than the profit attributable to the shareholders of the Group of approximately RMB131.3 million, mainly due to the profit contributed by Target Group A of approximately RMB2,232.6 million and the pro forma finance costs arising from the issuance of the Secured Notes and the loan facilities of US$300 million to be obtained by GCL Solar or its subsidiaries upon Completion. Earnings per Share would increase from approximately RMB0.128 (based on the net profit attributable to the Shareholders for the year ended 31 December 2008 and 1,022,679,487 Shares in issue as at the Latest Practicable Date) to earnings per share of the Enlarged Group of approximately RMB0.149 (based on the unaudited pro forma net profit attributable to the shareholders of the Enlarged Group and 11,062,452,214 Shares being in issue upon Completion).

On Completion, the fair value of the net identifiable assets, liabilities and contingent liabilities of the Group will have to be reassessed. As a result of such reassessment, the assets and liabilities of the Group upon Completion may be different from the estimations based on the basis stated for the purpose of preparation of the unaudited pro forma financial information.

IMPLICATIONS OF THE ACQUISITIONS UNDER THE LISTING RULES

The relevant Percentage Ratios of the aggregate of the Acquisitions are more than 100%. The Acquisitions therefore constitute very substantial acquisitions of the Company under the Listing Rules and are subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

In addition, Mr. Zhu is an executive Director and the chairman of the Company. Mr. Zhu and his family own 34.47% of the total issued share capital of the Company through a family trust. Mr. Zhu and his family are therefore controlling shareholders of the Company as at the date of this circular. Happy Genius is principally an investment holding company ultimately beneficially wholly-owned by Mr. Zhu and his family. Therefore, it is an associate of Mr. Zhu and a connected person of the Company for the purposes of the Listing Rules.

Mr. Yu is an executive Director. Mr. Yu, through his wholly-owned subsidiaries, Bonus Billion and Joy Big (both of which are members of Vendors A), owns 0.23% of the total issued share capital of GCL Solar. Both Bonus Billion and Joy Big are principally investment holding companies ultimately beneficially wholly-owned by Mr. Yu. Therefore, they are associates of Mr. Yu and connected persons of the Company for the purposes of the Listing Rules.

Accordingly, the transactions contemplated under the Acquisition Agreements also constitute connected transactions for the Company under Chapter 14A of the Listing Rules and are therefore subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, Mr. Zhu, together with his family were ultimately beneficially interested in 352,518,443 Shares, being 34.47% of the total issued share capital of the Company. Mr. Zhu is also a Director and through Highexcel Investments Limited is the controlling shareholder of the Company, and through Happy Genius, is the controlling shareholder of GCL Solar, Greatest Joy and Sun Wave. Mr. Zhu and his associates are required to abstain from voting on the resolutions relating to the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver to be considered at the EGM.

As at the Latest Practicable Date, Mr. Cheng Zai Zhong (being one of the ultimate beneficial owners of Thornton Asset Management Service Centre Limited, which is one of the members of Vendors A) owned 3,520,000 Shares being 0.34% of the total issued share capital of the Company, of which he has full control over the voting rights. Accordingly, Thornton Asset Management Service Centre Limited and its associates are also required to abstain from voting on the resolutions relating to the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver to be considered at the EGM.

As at the Latest Practicable Date, Ms. Chan Wai Ho (being the wife of Mr. Chang Tsong Zung, who is one of the members of Vendors A and the brother of Mr. Zhang Songyi) owned 242,000 Shares being 0.02% of the total issued share capital of the Company, of which she has full control over the voting rights, which she acquired more than six months prior to the date of the Announcement. Accordingly, Mr. Chang Tsong Zung and his associates are also required to abstain from voting on the resolutions relating to the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver to be considered at the EGM.

Since Mr. Yu and his associates will not be Shareholders until after Completion, they will not be entitled to vote at the EGM.

IMPLICATIONS OF THE ACQUISITIONS UNDER THE TAKEOVERS CODE AND WHITEWASH WAIVER

Assuming no further Shares will be issued by the Company prior to the allotment and issue of the Consideration Shares upon Completion, the interests held by Mr. Zhu and his associates and parties acting in concert with any of them (namely Mandra Materials, Mandra Esop, Mandra Silicon and Mr. Zhang Songyi), will increase from approximately 34.47% to approximately 56.17% of the issued share capital of the Company as enlarged by the Consideration Shares. Mr. Zhu and parties acting in concert with him will, in the absence of the Whitewash Waiver, be obliged to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by them pursuant to Rule 26 of the Takeovers Code as a result of the issue of the Consideration Shares to Happy Genius upon Completion. Mr. Zhu has applied to the Executive for the Whitewash Waiver pursuant to Note 1 on Dispensations from Rule 26 of the Takeovers Code on the basis that, among other things, the Consideration Shares will be issued as the consideration for the Acquisitions pursuant to the Acquisition Agreements and the Whitewash Waiver shall be subject to the approval by the Independent Shareholders at the EGM on a vote to be taken by way of a poll whereby Mr. Zhu, his associates and parties acting in concert with any of them and any others who are involved or interested in the Acquisitions and the Whitewash Waiver will abstain from voting on the resolutions relating to the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver at the EGM. The Executive has indicated that he will grant the Whitewash Waiver subject to inter alia the approval of the Whitewash Waiver by the Independent Shareholders, by way of poll at the EGM.

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LETTER FROM THE BOARD

On 1 June 2009, Mr. Zhu’s interest in Highexcel Investments Limited was transferred to Golden Concord Group Limited. Pursuant to Note 6 to Rule 26.1 of the Takeovers Code, the Executive granted to Golden Concord Group Limited and parties acting in concert with it a waiver from the obligation to make a general offer for the Shares arising from the transfer of the shares in Highexcel Investments Limited. Highexcel Investments Limited and Golden Concord Group Limited are indirectly wholly owned by Asia Pacific Energy Fund Limited, which in turn is held under a discretionary trust by Credit Suisse Trust Limited for Mr. Zhu and his family. Save and except for the aforesaid transfer, Mr. Zhu has confirmed that he and/or parties acting in concert with him have not acquired any voting rights in the Company within the six-month period prior to the date of the Announcement and up to and including the Latest Practicable Date.

As disclosed in the announcement of the Company dated 11 August 2008, on 11 August 2008, the Company entered into a sale and purchase agreement with Get Famous in which the Company conditionally agreed to purchase Joint Loyal Holdings Limited, the consideration for which would be satisfied by the issuance of convertible notes to Get Famous in the principal amount of not exceeding RMB127,936,000. Get Famous is a company beneficially wholly-owned by Mr. Zhu. Further details of such acquisition may be found in the Company’s announcement dated 11 August 2008. Such acquisition has yet to be completed and accordingly, such convertible notes have not been issued. Save as aforesaid, as at the date of this circular:

(i) neither Mr. Zhu nor parties acting in concert with him has received an irrevocable commitment from anyone to accept the offer, which Mr. Zhu and parties acting in concert with him will, in the absence of the Whitewash Waiver, be obliged to make for all the Shares not already owned or agreed to be acquired by them pursuant to Rule 26 of the Takeovers Code as a result of the issue of the Consideration Shares to Happy Genius upon Completion;
(ii) neither Mr. Zhu nor parties acting in concert with him holds any convertible securities, warrants or options of the Company;
(iii) neither Mr Zhu nor any person acting in concert with him has entered into any outstanding derivatives in respect of securities in the Company;
(iv) there are no arrangements (whether by way of option, indemnity or otherwise) in relation to the Shares and which might be material to the offer which Mr. Zhu and parties acting in concert with him will, in the absence of the Whitewash Waiver, be obliged to make for all the Shares not already owned or agreed to be acquired by them pursuant to Rule 26 of the Takeovers Code as a result of the issue of the Consideration Shares to Happy Genius upon Completion;

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LETTER FROM THE BOARD

(v) there are no agreements or arrangements to which Mr. Zhu is a party which relate to the circumstances in which he may or may not invoke or seek to invoke a pre-condition or a condition to the offer which Mr. Zhu and parties acting in concert with him will, in the absence of the Whitewash Waiver, be obliged to make for all the Shares not already owned or agreed to be acquired by them pursuant to Rule 26 of the Takeovers Code as a result of the issue of the Consideration Shares to Happy Genius upon Completion and the consequences of its doing so; and
(vi) there are no relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company which Mr. Zhu or any person acting in concert with him has borrowed or lent, save for any borrowed shares which have been either on-lent or sold.

EGM

The EGM will be held at Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on Thursday, 16 July 2009 at 10:00 a.m. to consider and, if thought fit, approve, among other matters, the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver, the increase in the authorised share capital of the Company from HK$1,000,000,000 to HK$2,000,000,000 by the creation of an additional 10,000,000,000 Shares of HK$0.10 each and the allotment and issue of the Consideration Shares and the Additional Shares pursuant to Rule 13.36(1)(a) of the Listing Rules.

A notice convening the EGM is set out on pages EGM-1 to EGM-3 of this circular. Whether or not you are able to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time fixed for the holding of the meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the EGM if you so wish.

In accordance with the Listing Rules, the vote of the Independent Shareholders taken at the EGM to approve the Acquisition Agreements and the transactions contemplated thereunder, the specific mandate for the New Issue, the Whitewash Waiver and the increase in the authorised share capital of the Company from HK$1,000,000,000 to HK$2,000,000,000 by the creation of an additional 10,000,000,000 Shares of HK$0.10 each, will be taken by poll. The voting results will be announced after the EGM.

As Mr. Zhu is a Director and through Highexcel Investments Limited is the controlling shareholder of the Company, and through Happy Genius, is the controlling shareholder of GCL Solar, Greatest Joy and Sun Wave, Mr. Zhu and his associates are required to abstain from voting on the resolutions relating to the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver to be considered at the EGM. As Mr. Cheng Zai Zhong (being one of the ultimate beneficial owners of Thornton Asset Management Service Centre Limited, which is one of the members of Vendors A) currently owns 3,520,000 Shares, Thornton Asset Management Service Centre Limited and its associates are also required to abstain from voting on the resolutions relating to the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver to be considered at the EGM. As Ms. Chan Wai Ho (being the wife of Mr. Chang Tsong Zung,

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LETTER FROM THE BOARD

who is one of the members of Vendors A and the brother of Mr. Zhang Songyi) currently owns 242,000 Shares, which she acquired more than six months prior to the date of the Announcement, Mr. Chang Tsong Zung and his associates are also required to abstain from voting on the resolutions relating to the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver to be considered at the EGM.

RECOMMENDATION

The Company has established the Independent Board Committee, comprising all the independent non-executive Directors, to advise the Independent Shareholders as to whether the terms and conditions of the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and to advise the Independent Shareholders on how to vote, taking into account the recommendations of the Independent Financial Adviser. None of the members of the Independent Board Committee has any material interest in the Acquisitions. Your attention is drawn to the advice of the Independent Board Committee set out in its letter on page 45 of this circular.

In this connection, with the approval of the Independent Board Committee, the Company has also appointed First Shanghai Capital Limited as the Independent Financial Adviser to make recommendations to the Independent Board Committee and the Independent Shareholders as to whether the terms and conditions of the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole, and to advise the Independent Shareholders on how to vote. Your attention is drawn to the advice of the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders set out in its letter on pages 46 to 84 of this circular.

On the basis of the information set out in this circular, the Board considers that the terms and conditions of the Acquisition Agreements, the specific mandate for the New Issue and the Whitewash Waiver and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. The Board therefore recommends the Independent Shareholders to vote in favour of the resolutions relating to the aforesaid matters as set out in the notice of the EGM.

ADDITIONAL INFORMATION

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

Yours faithfully, By order of the Board GCL-Poly Energy Holdings Limited Zhu Gong Shan Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the full text of the letter from the Independent Board Committee prepared for the purpose of inclusion in 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)

30 June 2009

To the Independent Shareholders

Dear Sir/Madam

VERY SUBSTANTIAL ACQUISITIONS, CONNECTED TRANSACTIONS, THE SPECIFIC MANDATE FOR THE NEW ISSUE AND THE WHITEWASH WAIVER

We refer to the circular issued by the Company to the Shareholders dated 30 June 2009 (the “ Circular ”) of which this letter forms part. Terms defined in the Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed by the Board to consider the terms and conditions of the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver and to advise the Independent Shareholders in connection therewith. First Shanghai Capital Limited has been appointed as the Independent Financial Adviser to advise us in this regard.

We wish to draw your attention to the letter from the Board and the letter from the Independent Financial Adviser as set out in the Circular. Having considered the principal factors and reasons considered by, and the advice of, the Independent Financial Adviser as set out in its letter of advice, we consider that the terms and conditions of the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend that the Independent Shareholders vote in favour of the ordinary resolutions approving the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver at the EGM.

Yours faithfully,

For and on behalf of

the Independent Board Committee of

GCL-Poly Energy Holdings Limited

Mr. QIAN Zhi Xin Dr. HO Chung Tai, Raymond Mr. XUE Zhong Su Mr. YIP Tai Him Independent non-executive Directors

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter received from the Independent Financial Adviser setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver for inclusion in this circular.

==> picture [124 x 36] intentionally omitted <==

FIRST SHANGHAI CAPITAL LIMITED 19th Floor, Wing On House 71 Des Voeux Road Central Hong Kong

30 June 2009

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS; APPLICATION FOR WHITEWASH WAIVER; AND SPECIFIC MANDATE FOR THE NEW ISSUE

INTRODUCTION

We refer to our engagement to advise the Independent Board Committee and the Independent Shareholders in relation to the Company’s proposed acquisitions of 100% of the equity interest in Jiangsu Zhongneng (the “Acquisitions”) under the Acquisition Agreements and all the transactions contemplated thereunder including the application for the Whitewash Waiver, and the specific mandate for the New Issue, details of which are set out in the circular of the Company dated 30 June 2009 (the “Circular”) to the Shareholders of which this letter forms a part. Unless the context otherwise requires, terms used in this letter shall have the same meanings as those defined in the Circular.

The Acquisitions constitute very substantial acquisitions for the Company under the Listing Rules. As Happy Genius, one of the vendors, is ultimately beneficially wholly-owned by Mr. Zhu and his family, the controlling Shareholders, Happy Genius is a connected person of the Company under the Listing Rules and the Acquisitions therefore constitute connected transactions for the Company under the Listing Rules. The Acquisitions and the allotment and issuance of the Consideration Shares require the approval of the Independent Shareholders at the EGM.

Immediately following the Completion, the interests held by Mr. Zhu, his associates and parties acting in concert with any of them, will increase from approximately 34.47% to approximately 56.17% of the issued share capital of the Company as enlarged by the Consideration Shares. Mr. Zhu has therefore made an application to the Executive for the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Whitewash Waiver from an obligation to make a mandatory general offer under Rule 26 of the Takeovers Code in respect of the Shares not owned by Mr. Zhu, his associates and parties acting in concert with any of them immediately following the Completion. The Executive has indicated that he will grant the Whitewash Waiver to Mr. Zhu subject to, among other things, the approval of the Independent Shareholders of the Acquisitions and the Whitewash Waiver at the EGM on a vote taken by poll.

As the New Issue is conditional on the Acquisitions and the Whitewash Waiver, the New Issue is subject to the approval of the Independent Shareholders at the EGM.

The Independent Board Committee, comprising all the independent non-executive Directors, namely Mr. Yip Tai Him, Mr. Qian Zhi Xin, Ir. Dr. Raymond Ho Chung Tai and Mr. Xue Zhong Su, has been formed to advise the Independent Shareholders on the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver. We, First Shanghai Capital Limited, have been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

In putting forth our opinion and recommendation, we have relied on the accuracy of the information and representations included in the Circular and provided to us by the Directors and the Group, and have assumed that all such information and representations made or referred to in the Circular and provided to us by the Directors and the Group were true at the time they were made and continued to be true up to the time of the holding of the EGM. We have also assumed that all statements of belief, opinion and intention made in the Circular were reasonably made after due enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the Group and have been advised that no material facts have been withheld or omitted from the information provided and referred to in the Circular. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have not, however, conducted any independent verification of the information included in the Circular and provided to us by the Directors and the Group nor have we conducted any form of investigation into the business, affairs or future prospects of the Group and the Target Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion, we have considered the following principal factors and reasons:

1. Business and financial performance of the Group

(i) Business and history of the Group

The Group was wholly-owned by Mr. Zhu prior to its listing on the Main Board of the Stock Exchange in November 2007. Since its listing on the Main Board of the Stock Exchange, the Group has been principally engaged in the development, management and operation of power cogeneration plants in the PRC and is currently one of the largest foreign-owned independent power cogeneration plant operators in the PRC.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group has been seeking strategic acquisition opportunities in order to maintain the Group’s leadership role in the PRC’s environmentally friendly energy power sector, including acquiring environmentally friendly power plants using different kinds of clean and renewable fuels, and relevant upstream business operations, as demonstrated from the following acquisitions made by the Group: (i) in the first quarter of 2008, the Group completed the acquisition of 100% equity interest of Xilingol Guotai Wind Power Generation Co., Ltd., where the Group has the right to develop a wind generation power plant in Inner Mongolia; and (ii) in August 2008, the Group entered into a conditional sale and purchase agreement for the acquisition of 55% equity interest in Inner Mongolia Duolun Golden Concord Mining Ltd., which is engaged in coal mining business in Inner Mongolia, though this transaction has not yet been completed as at the Latest Practicable Date.

(ii) Financial performance of the Group

Consolidated income statement of the Group

The following are summaries of the audited results of the Group for the years ended 31 December 2007 and 31 December 2008.

Revenue Gross profit Profit from operations Profit/(loss) before tax Income tax credit/(expense) Profit/(loss) for the year	Year ended 31 December 2007 2008 RMB’000 RMB’000 (audited) (audited) 1,844,661 3,693,330 362,434 497,310 262,452 420,915 (215,839) 206,862 4,027 (27,140) (211,812) 179,722

For the year ended 31 December 2008, the Group was organized into five business segments: coal-fuelled & resources comprehensive utilization (“RCU”) cogeneration plants (including coal, gangue, coal sludge and other low heat value fuels), gas-fuelled cogeneration plants, biomass-fuelled cogeneration plants, coal trading and incineration plant & others (including a municipal solid waste incineration plant, a wind power plant under

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

construction and other activities relating to the power plant industry). The following table shows the performance of the different business segments of the Group for the year ended 31 December 2008.

	Coal-fuelled &	Gas-fuelled	Biomass-fuelled		Incineration	Incineration
	RCU plants	plants	plants	Coal trading	plant & others		Consolidated
	RMB’000	RMB’000	RMB’000	RMB’000		RMB’000	RMB’000
Revenue	1,755,853	1,005,983	274,069	636,582		20,843	3,693,330
Segment
result	200,680	164,478	40,359	26,106		41,589	473,212

For the year ended 31 December 2007, a substantial portion of the Group’s consolidated revenue and contribution to profit from operations were derived from the coal-fuelled & RCU cogeneration plants and gas-fuelled cogeneration plants.

For the year ended 31 December 2008, coal-fuelled & RCU cogeneration plants were the largest contributors to the revenue of the Group, followed by gas-fuelled cogeneration plants, biomass-fuelled cogeneration plants, coal trading and incineration plant & others. Revenue generated from cogeneration plants, in aggregate, accounted for approximately 82.2% of total revenue of the Group for the year ended 31 December 2008.

For the year ended 31 December 2008, the Group’s revenue increased significantly by approximately 100.2% to approximately RMB3,693.3 million, which was mainly due to the acquisition of cogeneration plants during the year ended 31 December 2007 where full year revenue was consolidated into the Group’s income statement for the year ended 31 December 2008. However, the Group’s gross profit margin and operating profit margin decreased from approximately 19.6% and 14.2% for the year ended 31 December 2007 to approximately 13.5% and 11.4% for the year ended 31 December 2008, respectively, as a result of the increase in average unit cost of coal for electricity generation and steam generation by approximately 30.5% and 24.5%, respectively, for the year ended 31 December 2008. Profit from operations of the Group increased by approximately 60.4% to approximately RMB420.9 million for the year ended 31 December 2008.

In addition to the increase in profit from operations, the non-recurrence of a loss on fair value of convertible notes, which amounted to approximately RMB339.7 million for the year ended 31 December 2007, also contributed to the Group’s turnaround from a loss making position for the year ended 31 December 2007 to a net profit of approximately RMB179.7 million for the year ended 31 December 2008.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Consolidated balance sheet of the Group

The following is a summary of the Group’s assets and liabilities as at 31 December 2007 and 31 December 2008.

Non-current assets Current assets Total assets Current liabilities Non-current liabilities Total liabilities Equity attributable to Shareholders Minority interests Total equity	31 December 2007 RMB’000 (audited) 5,119,191 1,747,649	31 December 2008 RMB’000 (audited) 5,662,150 1,407,390
	6,866,840 2,157,303 2,072,657 4,229,960 2,272,791 364,089	7,069,540
		2,542,028 1,703,785
		4,245,813
		2,415,757 407,970
	2,636,880	2,823,727

As at 31 December 2008, the Group had total assets of approximately RMB7,069.5 million, representing an increase of approximately 3.0% when compared with the same as at 31 December 2007. Non-current assets amounted to approximately RMB5,662.2 million as at 31 December 2008, representing approximately 80.1% of the Group’s total assets as at 31 December 2008, among which, property, plant and equipment amounted to approximately RMB4,948.4 million, representing approximately 70.0% of the Group’s total assets. Current assets of the Group mainly comprised of bank balances and cash, pledged bank deposits, and trade and other receivables. As at 31 December 2008, bank balances and cash and pledged bank deposits, and trade and other receivables amounted to approximately RMB701.1 million and RMB468.5 million respectively, representing approximately 9.9% and 6.6% of the Group’s total assets respectively.

As at 31 December 2008, total liabilities of the Group amounted to approximately RMB4,245.8 million, representing an increase of approximately 0.4% when compared with the same as at 31 December 2007. Bank borrowings of the Group decreased slightly from approximately RMB3,479.7 million as at 31 December 2007 to approximately RMB3,249.2 million as at 31 December 2008 and accounted for approximately 76.5% of the Group’s total liabilities as at 31 December 2008.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on such balances, the current ratio and gearing ratio (being total borrowings divided by equity attributable to Shareholders plus total borrowings) of the Group decreased from approximately 0.81 times and 60.5% as at 31 December 2007 to approximately 0.55 times and 57.4% as at 31 December 2008, respectively.

2. Business and financial performance of the Target Group

(i) Business of the Target Group

The Target Group is principally engaged in the manufacture and sale of polysilicon and wafers to companies operating in the solar industry.

The Target Group manufactures polysilicon at its production facilities located in Xuzhou, Jiangsu province, the PRC. The production facilities of the Target Group comprise of three phases, which are Xuzhou Phase I, Xuzhou Phase II and Xuzhou Phase III. Both Xuzhou Phase I and Xuzhou Phase II have reached their respective designed annual production capacity of 1,500 MT in March 2008 and December 2008 respectively. The Xuzhou Phase III production facilities commenced commercial production in December 2008 and is expected to reach its designed annual production capacity of 15,000 MT by December 2009. It is expected that the Target Group’s total annual polysilicon production capacity will reach 18,000 MT after Xuzhou Phase III is fully ramped up by December 2009. With further technical improvements, the Target Group’s total annual polysilicon production capacity is expected to reach 21,000 MT by December 2010. For the year ending 31 December 2009, the Target Group expects to produce approximately 7,500 MT of polysilicon.

In addition to polysilicon, the Target Group also produces wafers, through tolling arrangements with third party manufacturers using polysilicon produced by the Target Group beginning from the second quarter of 2008. The Target Group intends to construct its own in-house wafers and ingot manufacturing facilities with 1 GW capacities in the next 12 months. Currently, the Target Group has entered into long-term polysilicon and wafer supply agreements with solar cell and module manufacturers that provide for aggregate sales volume of approximately 15.4 GW of wafers and approximately 33,311 MT of polysilicon from 2008 up to 2015. Selling prices of the contracted polysilicon and wafers are to be negotiated and agreed upon between the Target Group and its customers before the deliveries are made.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Target Group recycles STC, a by-product of the polysilicon production process, into TCS, which is one of the main and most costly inputs in the polysilicon production process, by the hydrochlorination process. The hydrochlorination process was integrated into the production facilities of Xuzhou Phase I, Xuzhou Phase II and Xuzhou Phase III in February, September and December 2008, respectively, and is critical in enabling the Target Group to reduce its production costs. Prior to the in-house hydrochlorination process being installed, the Target Group relied on third party suppliers for most of its TCS requirements. In addition, the Target Group also owns Taixing, a TCS production facility with an annual capacity of 20,000 MT located in Taizhou, Jiangsu province, the PRC. Taixing commenced commercial production in September 2008 and the Target Group has already successfully used the TCS produced by Taixing in its polysilicon production process. For the year ended 31 December 2008, the three months ended 31 March 2009 and the month ended 31 May 2009, approximately 20.9%, 37.3% and 77.2% of the Target Group’s TCS consumption was produced in-house.

We are advised that the Target Group has commissioned PHOTON Consulting LLC, a solar energy research consultancy, in preparing a report (the “PHOTON Report”) on the global polysilicon production volume and cost forecast from 2008 to 2012. The PHOTON Report published in June 2009 has tracked companies either producing or with aspirations to produce silicon and applied consistent screening criteria to discount their respective production aspirations. According to the PHOTON Report, the Target Group is currently the largest polysilicon producer in the PRC and one of the leading polysilicon producers in Asia. By 2011, the Target Group is expected to become one of the top 5 polysilicon producers in the world. Furthermore, from 2008 to 2012, the Target Group is expected to have one of the highest polysilicon production growth rates among leading global polysilicon producers.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) Financial information of the Target Group

As the audited consolidated financial statements of the Target Group A consolidate the financial information of the principal operating company of the Target Group, Jiangsu Zhongneng, and the Target Group B has only equity accounted for the financial information of Jiangsu Zhongneng, we will focus our analysis on the financial information of the Target Group A.

Consolidated income statement of the Target Group A

The following are summaries of the audited results of the Target Group A for the period from 13 November 2006 to 31 December 2006 and the two years ended 31 December 2007 and 31 December 2008 based on the audited consolidated financial statements of the Target Group A as set out in Appendix IIA to the Circular.

13 November

	13 November
Revenue Gross profit (Loss)/Profit before tax Income tax expense (Loss)/profit for the year	2006 to 31 December 2006 RMB million (audited) – – (2.6) – (2.6)	Year ended 31 December 2007 2008 RMB million RMB million (audited) (audited) 301.8 3,521.4 220.5 2,554.7 (24.3) 2,262.4 (24.4) (29.7) (48.7) 2,232.6
			2,232.6

The sales volume of polysilicon and wafers of the Target Group A for the period from 13 November 2006 to 31 December 2006 and the two years ended 31 December 2007 and 31 December 2008, respectively, are set out in the following table:

13 November

	13 November
	to
	31 December	Year ended 31 December
	2006	2007	2008
Polysilicon (MT)	–	153*	1,530
Wafers (MW)	–	–	39.2

* All of which were sold in the three months ended 31 December 2007

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Since the Target Group A only made its first commercial shipment of polysilicon in October 2007, the Target Group A did not record any revenue for the period from 13 November 2006 to 31 December 2006. As Xuzhou Phase I reached its designed annual production capacity in March 2008, and Xuzhou Phase II commenced commercial production in July 2008 and reached its designed annual production capacity in December 2008, the sales volume and revenue of the Target Group A increased significantly for the year ended 31 December 2008. As the Target Group A operated commercially for the whole year ended 31 December 2008, revenues increased by approximately 10.7 times year-on-year to approximately RMB3,521.4 million for the year ended 31 December 2008. Gross profit margin of the Target Group A remained stable, decreasing slightly from approximately 73.1% for the year ended 31 December 2007 to approximately 72.5% for the year ended 31 December 2008 as a result of the decrease in average selling price.

The Target Group A recorded a net loss of approximately RMB48.7 million for the year ended 31 December 2007, which was mainly attributable to the Target Group A only making its first commercial shipment of polysilicon in October 2007 and the gross profit generated for the year ended 31 December 2007 was not enough to cover (i) administrative expenses of approximately RMB120.6 million; (ii) change in fair value of convertible loan notes and change in fair value of convertible redeemable preferred shares, in aggregate, of approximately RMB104.8 million; and (iii) finance costs of approximately RMB37.8 million for the year ended 31 December 2007.

For the year ended 31 December 2008, as the Target Group A fully ramped up its Xuzhou Phase I and Xuzhou Phase II polysilicon production facilities, the Target Group A recorded significant increases in revenue and gross profit. As the administrative expenses, change in fair value of convertible loan notes and finance costs increased by a smaller extent than that of the revenue and gross profit, the Target Group A recorded profit before tax and profit for the year of approximately RMB2,262.4 million and RMB2,232.6 million for the year ended 31 December 2008, respectively. The increase in the administrative expenses was mainly due to (i) increase in salaries and other staff costs as a result of headcount increase; (ii) increase in depreciation and other office expenses; and (iii) write off of intangible assets during the year ended 31 December 2008.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Consolidated balance sheet of the Target Group A

The following is a summary of the Target Group A’s assets and liabilities as at 31 December 2007 and 31 December 2008 based on the audited consolidated financial statements of the Target Group A as set out in Appendix IIA to the Circular.

Non-current assets Current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets	31 December 2007 RMB million (audited) 1,207.2 464.0	31 December 2008 RMB million (audited) 6,442.6 2,491.6
	1,671.2 442.7 1,099.8 1,542.5	8,934.2
		2,491.5 4,135.4
		6,626.9
	128.7	2,307.3

As at 31 December 2008, the Target Group A had total assets of approximately RMB8,934.2 million, representing an increase of approximately 434.6% when compared with the same as at 31 December 2007, which was mainly due to (i) the increase in property, plant and equipment, and deposits for acquisition of plant and equipment of approximately RMB4,033.5 million and RMB1,058.9 million, respectively, as the Target Group A invested in and developed Xuzhou Phase II and Xuzhou Phase III during the year ended 31 December 2008; and (ii) the increase in bank balances and cash of approximately RMB1,454.7 million. As at 31 December 2008, property, plant and equipment of the Target Group A amounted to approximately RMB5,052.8 million, representing approximately 56.6% of the Target Group A’s total assets, and deposits for acquisition of plant and equipment amounted to approximately RMB1,180.1 million, representing approximately 13.2% of the Target Group A’s total assets. The property, plant and equipment, and deposits for acquisition of plant and equipment mainly comprised of the production facilities of Xuzhou Phase I, Xuzhou Phase II and Xuzhou Phase III. As at 31 December 2008, current assets of the Target Group A mainly comprised of bank balances and cash, and restricted bank balances, which amounted to approximately RMB1,745.8 million and RMB276.7 million, respectively, representing approximately 19.5% and 3.1% of the Target Group A’s total assets, respectively. As advised by the management of the Group, loans to related companies and amounts due from related companies of the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Target Group A amounted to approximately RMB200.0 million and RMB96.4 million, respectively, under the current assets as at 31 December 2008 and would not be settled before the Completion. The Company will comply with the relevant requirements under the Listing Rules in this respect.

As at 31 December 2008, total liabilities of the Target Group A amounted to approximately RMB6,626.9 million, representing an increase of approximately 329.6% when compared with the same as at 31 December 2007. Bank borrowings of the Target Group A increased from approximately RMB586.0 million as at 31 December 2007 to approximately RMB3,096.0 million as at 31 December 2008 and accounted for approximately 46.7% of the Target Group A’s total liabilities as at 31 December 2008. Convertible loan notes increased from approximately RMB448.8 million as at 31 December 2007 to approximately RMB498.3 million as at 31 December 2008 and convertible redeemable preferred shares decreased from approximately RMB225.0 million as at 31 December 2007 to approximately RMB171.5 million as at 31 December 2008, both of which were attributable to changes in their fair values during the year. Convertible loan notes and convertible redeemable preferred shares accounted for approximately 7.5% and 2.6% of the Target Group A’s total liabilities as at 31 December 2008, respectively. As advised by the management of the Group, amounts due to immediate holding company and amounts due to related companies of the Target Group A amounted to approximately RMB103.4 million and RMB7.1 million respectively under the current liabilities as at 31 December 2008 and would not be settled before the Completion. The Company will comply with the relevant requirements under the Listing Rules in this respect.

As the Target Group A’s operations expanded substantially during the year ended 31 December 2008, both total assets and total liabilities of the Target Group A recorded significant increases for the year ended 31 December 2008. The increase in total assets was also attributable to the net profit recorded by the Target Group A for the year ended 31 December 2008 of approximately RMB2,232.6 million. Despite the bank borrowings of the Target Group A increasing from approximately RMB586.0 million as at 31 December 2007 to approximately RMB3,096.0 million as at 31 December 2008, the net debt to equity ratio (being total borrowings, bank and other borrowings, net of cash and bank balances divided by total equity) of the Target Group A decreased from approximately 830% as at 31 December 2007 to approximately 86% as at 31 December 2008.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Financial information of the Sun Wave Group

As stated in the audited consolidated financial statements of the Sun Wave Group as set out in Appendix IIB to the Circular, the Sun Wave Group did not record any revenue for the two years ended 31 December 2007 and 31 December 2008. The Sun Wave Group recorded a net loss of approximately RMB250.2 million for the year ended 31 December 2008, which was mainly attributable to the share of result of an associate net of amortization and impairment loss on intangible asset in respect of outstanding long term contracts for sales of polysilicon and wafers and net of tax, in aggregate, of approximately RMB270.5 million.

As at 31 December 2008, total assets of the Sun Wave Group amounted to approximately RMB1,433.2 million, approximately 100.0% of which was interests in an associate, Jiangsu Zhongneng, and total liabilities of the Sun Wave Group amounted to approximately RMB1,683.4 million, approximately 98.7% of which was amount due to immediate holding company, which will be assigned to the Company on Completion.

Financial information of the Greatest Joy Group

As stated in the audited consolidated financial statements of the Greatest Joy Group as set out in Appendix IIC to the Circular, the Greatest Joy Group did not record any revenue since the date of incorporation of Greatest Joy on 25 April 2007 to 31 December 2008. The Greatest Joy Group recorded a net loss of approximately RMB251.6 million for the year ended 31 December 2008, which was mainly attributable to the share of result of an associate net of amortization and impairment loss on intangible asset in respect of outstanding long term contracts for sales of polysilicon and wafers and net of tax, in aggregate, of approximately RMB247.7 million.

As at 31 December 2008, total assets of the Greatest Joy Group amounted to approximately RMB1,128.1 million, approximately 100.0% of which was interests in an associate, Jiangsu Zhongneng, and total liabilities of the Greatest Joy Group amounted to approximately RMB1,379.8 million, approximately 98.7% of which was amounts due to immediate holding company, which will be assigned to the Company on Completion.

In conclusion, the Target Group A operated commercially for the whole year ended 31 December 2008 and recorded a net profit of approximately RMB2,232.6 million. It is expected that the Target Group A’s total annual polysilicon production capacity will reach 18,000 MT after the production facility of Xuzhou Phase III is fully ramped up by December 2009, and will reach 21,000 MT by December 2010 with further technical improvements. Currently, the Target Group A has entered into long-term polysilicon and wafer supply agreements with solar cell and module manufacturers to secure aggregate sales volume of approximately 15.4 GW of wafers and approximately 33,311 MT of polysilicon from 2008 up to 2015. The Acquisitions are expected to contribute to the revenue base and profitability of the Enlarged Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Overview of the global solar industry

(i) Overview of the polysilicon industry

Polysilicon is the primary raw material used by the photovoltaic (“PV”) and electronics industries. The PV industry uses polysilicon to produce solar wafers, cells, modules and systems that convert energy from sunlight into electricity. The electronics industry uses polysilicon to produce semiconductors for use in electronic applications. Unless otherwise stated, most of the information on the global solar industry is based on a research report (the “Solarbuzz Report”), namely “Annual World Photovoltaic Market Review”, prepared by Solarbuzz in March 2009. According to the Solarbuzz Report, 2008 marked a turning point in the pattern of polysilicon use – semiconductor demand for polysilicon was reduced as a result of the global economic slowdown, but solar demand for polysilicon soared in response to buoyant end-markets through the first nine months of the year, though both the solar and semiconductor markets were in decline by the fourth quarter due to the onset of the global financial crisis. Polysilicon demand for semiconductor and PV use from 2004 to 2008 is set out below:

Polysilicon demand for semiconductor and PV use (2004-2008)

==> picture [372 x 240] intentionally omitted <==

----- Start of picture text -----

Semiconductor Si Demand PV Si Demand
60,000
49,128
50,000
40,000
30,000 27,673
22,447 23,570
22,155
19,088 20,042 20,232
20,000 17,166
12,935
10,000
0
2004 2005 2006 2007 2008
Source: Solarbuzz
Tonne per annum
----- End of picture text -----

As a result of the significant increase in demand, sales to the PV industry is now the main driver affecting the price, profit and growth of the polysilicon market.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

According to the Solarbuzz Report, spot prices for solar grade polysilicon were in the range of US$230-375/kg during the first half of 2008 before rising to a peak of US$400-450/kg by mid-2008, with some low volume transactions exceeding US$500/kg. Still-tight polysilicon supply in the first nine months of 2008 sustained high spot prices and encouraged continued polysilicon capacity expansions by both the major incumbents and new start-ups, many of whom were based in the PRC.

However, the onset of the global financial crisis in the third quarter of 2008 led to a new environment of tighter global financing and slowing economic growth. The tight credit environment meant downstream solar companies were unable to obtain the necessary financing for new projects, which had a ripple effect up the value chain. Combined with the sudden downturn of the Spanish PV market, which was the largest PV market in the world in 2008 and one of the PRC’s key export market, polysilicon prices began to decline. In the last quarter of 2008, polysilicon spot price decreased significantly from US$250-300/kg in October to US$180-210/kg in November and then US$150/kg by December. According to the Solarbuzz Report, the weighted average polysilicon price for the full year of 2009 is projected to be US$75-87/kg.

As capacity expansion throughout the manufacturing chain continued unabated through the third quarter of 2008, the downturn in the Spanish market in the fourth quarter of 2008 trigged a transition from supply shortage to excess. According to a report published by the European Photovoltaic Industry Association in April 2009, namely “Global Market Outlook for Photovoltaics Until 2013” (the “EPIA Report”), a diversification of the market is taking place with countries adopting appropriate support policies. Given the current crisis context, high uncertainties over the 2009 market exist. The PV sector is hoping markets such as the US, Germany, France and Italy with favourable policy frameworks can further accelerate PV deployment in these countries. It is expected that the PV market could reach 7 GW in 2009, depending on individual countries’ development, and 22 GW in 2013 if appropriate policies, such as feed-in-tariffs, are in place.

(ii) Overview of global solar industry

PV technology involves the direct conversion of sunlight to electricity, which is accomplished when solar cells are exposed to light energy. Over the past decade, the solar market has expanded significantly. According to the EPIA Report, total solar PV cumulative capacity has grown from approximately 1.0 GW in 1998 to

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14.7 GW in 2008, representing a CAGR of approximately 31%. The growth of the global cumulative PV installed capacity from 1998 to 2008 is as follows:

Global cumulative PV installed capacity (1998 – 2008)

==> picture [368 x 188] intentionally omitted <==

----- Start of picture text -----

16,000
14,730
14,000
12,000
10,000 9,162
8,000
6,770
6,000 5,167
3,847
4,000 2,795
2,201
1,762
2,000 962 1,166 1,428
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
CAGR = 31%
MW
----- End of picture text -----

Source: European Photovoltaic Industry Association

The global solar industry experienced significant growth in 2008. Below is a chart showing the size of each major PV country market in 2008:

Size of each major PV country market in 2008

==> picture [378 x 178] intentionally omitted <==

----- Start of picture text -----

Spain 2,463
Germany 1,855
USA 357
South Korea 276
Italy 242
Japan 230
0 500 1,000 1,500 2,000 2,500 3,000
MW
----- End of picture text -----

Source: Solarbuzz

According to the Solarbuzz Report, Spain became the largest PV market in the world in 2008, growing by 285% year-on-year to reach 2.46 GW. The rapid growth of the Spanish market arose as a result of the government policy that sets feed-in tariff terms at very attractive prices. The market was further boosted by a deadline for installations to be completed and registered by 27 September 2008 in order to enjoy

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the prevailing feed-in tariff levels. According to the new legislation announced on 27 September 2008, feed-in tariffs for ground-mounted systems were higher than previously anticipated, thus ensuring attractive investment returns for PV installations (though a cap of 500 MW was introduced for 2009). However, since the fourth quarter of 2008, end-user demand almost grounded to a halt due to the onset of the global financial crisis and funding for PV installations became difficult to secure.

The German market had to accommodate a decrease in feed-in tariffs of 5%6.5% in 2008. However, in the fourth quarter of 2008, when the Spanish market came to a near stand-still, large volumes of modules were re-allocated from Spain to Germany. According to the Solarbuzz Report, the solar market in Germany grew 40% from 1,328 MW in 2007 to 1,855 MW in 2008.

Similarly, according to the Solarbuzz Report, the US solar market recorded a growth rate of 62% in 2008, reaching 357 MW in 2008. This was despite the US suffering one of its worst economic downturns. The US government has remained a strong advocate of solar power. In October 2008, the US Congress passed the Emergency Economic Stabilization Act of 2008 and President Bush signed the US$18 billion legislation into law, extending the 30% federal solar tax credits, for eight more years, up to 2016. This tax credit extends to both residential and commercial solar installations, and the previous cap of US$2,000 for residential solar installations was removed. Moreover, the new law allows utilities to benefit from the tax credit, thus encouraging utilities with a tax equity appetite to invest in solar projects to diversify their energy portfolio.

In Italy, the solar market showed significant growth in 2008 due to a combination of generous funding system and very good insolation conditions. According to the Solarbuzz Report, the market grew 169% from 90 MW in 2007 to 242 MW in 2008.

With 276 MW of new installed capacity in 2008, up from 50 MW in 2007, South Korea’s market also underwent dramatic growth in 2008. The government issued an update of the Basic Plan of National Energy (2008-2030) in February 2009, stating its intention to increase the current 2.8% share of renewable energy in total energy production to 4.3% by 2015, 6.1% by 2020 and 11% by 2030. According to this plan, Korea aims to source 0.13% of its total primary energy supply from solar energy by 2012, which corresponds to a cumulative capacity of 1.3 GW.

According to the Solarbuzz Report, the solar market in the PRC is still relatively small at 35MW in 2008. Yet it is expected to undergo a profound transformation from a market dominated by off-grid rural and industrial projects, to one marked by a significant increase in large grid-connected ground mounted systems. This shift is dependent on changing project economics and increasing governmental support. The PRC’s long-term energy policy has been shaped by the government’s central planning agency, the National Development and Reform Commission, with the ancillary National Energy Administration focusing on the specifics of energy supply and production. The government has acknowledged its

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role in global carbon emissions reductions and has released a series of policy statements emphasizing the PRC’s dedication to renewable energies, including the “ Renewable Energies Law ” and the “ Medium and Long-Term Development Plan for Renewable Energy ”. The latter of the two policies calls for renewable energy to comprise 10% of total energy consumption by 2010 (with 300 MW from solar energy) and 15% by 2020 (with 1.8 GW from solar energy). However, recent policy statements have indicated that this figure may very well rise to 400-500 MW by 2010, and 2 GW by 2020.

To provide concrete support to the solar industry, China’s Ministry of Finance (MoF) announced an upfront subsidy of RMB20 per watt for building integrated photovoltaic (BIPV) systems in April 2009. The MoF then further issued a clarification stating that the upper limit of the subsidy is RMB20 per watt for BIPV systems and RMB15 per watt for non-BIPV systems.

Furthermore, Jiangsu province of the PRC, where Jiangsu Zhongneng is located, has recently announced a solar feed-in-tariff (FIT) program to support 400MW of solar installations from 2009 to 2011. This is the first FIT program from the PRC and is very encouraging for local solar companies. The FIT rates for the year 2009 will be RMB2.15 per kWh inclusive of VAT for ground mount system, RMB3.70 per kWh inclusive of VAT for rooftop systems, and RMB4.3 per kWh inclusive of VAT for BIPV systems, and will be lower for years 2010 and 2011.

According to the Solarbuzz Report’s balanced energy scenario, worldwide solar demand is expected to increase from 5.9 GW in 2008 to 8.3 GW in 2013, as shown by the chart below:

Expected worldwide solar demand from 2008 to 2013 (balanced energy scenario)

==> picture [334 x 178] intentionally omitted <==

----- Start of picture text -----

9,000 8,311
8,000
6,959
7,000
5,948 5,906
5,686
6,000
5,168
5,000
4,000
3,000
2,000
1,000
0
2008 2009 2010 2011 2012 2013
CAGR = 7%
MW
----- End of picture text -----

Source: Solarbuzz

Due to the expected strong demand for solar power going forward, the Directors are optimistic on the long-term prospects of the solar industry as well as

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the polysilicon market. The Directors are of a view that given countries all over the world are initiating incentives to support the adoption of solar energy, the Target Group is well-positioned to capture such business opportunities going forward. Based on the above analysis and discussions with the Group’s senior management, we concur with the Directors’ view that the prospects of the solar industry and the polysilicon market are optimistic in long-term. Given the competitive strengths of the Target Group set out in the section headed “Reasons for the Acquisitions” below, the Target Group should be benefit from the above-mentioned favorable policies initiated by the PRC government and other countries for the industry.

4. Reasons for the Acquisitions

As stated in the letter from the Board in the Circular, the Acquisitions provide an opportunity for the Group to gain access to technology for large scale renewable energy related operations, which will enable the Group to further develop its operations in the renewable energy industry. In particular, given the Group’s experience in operating power plants, the Acquisitions would facilitate the Group’s entrance to the solar energy power plant operation business. The Directors consider that by making further advancements in the renewable energy industry, the Group will be able to (i) diversify its current utility business portfolio; (ii) create integration synergies through raising its downstream competitiveness as well as expanding its upstream business operations; and (iii) commercialize solar energy products for the commercial and retail markets.

In addition, the Directors believe that the Target Group possesses the following competitive strengths, which will enable it to compete effectively in the market for polysilicon and wafers in the solar industry:

(i) proven capabilities in constructing and ramping up polysilicon production facilities and is expected to reach an annual production capacity of 21,000 MT by the end of 2010;
(ii) the ability to reduce production costs by integrating hydrochlorination process into the production process which in turn reduce reliance on TCS from third party suppliers, and by reducing polysilicon production cycle times;
(iii) in-house research and development capabilities to improve product quality, reduce manufacturing costs and broaden product markets;
(iv) secured polysilicon and wafer supply agreements with solar cell and module manufacturers;
(v) advanced production processes and equipment, and its manufacturing facilities are located close to both solar and electronics product manufacturers in the PRC, which would allow greater customer proximity and facilitates efficient inventory management; and
(vi) experienced management team with successful track record and strong technical expertise.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

After taking into account (i) that the Group has been seeking strategic acquisition opportunities in order to maintain the Group’s leadership role in the PRC’s renewable energy power sector, including acquiring environmentally friendly power plants and relevant upstream business operations as explained in the section “Business and financial performance of the Group” above; (ii) the optimistic prospects of the solar industry and the polysilicon market as mentioned in the section headed “Overview of the global solar industry” above; and (iii) the strengths of the Target Group as mentioned in the above paragraph, we concur with the Directors’ view that the Acquisitions are in the interests of the Company and its Shareholders as a whole.

5. Principal terms of the Acquisition Agreements

(i) Assets to be purchased

The target companies under the Acquisitions are GCL Solar, Sun Wave and Greatest Joy, which indirectly hold 64%, 20% and 16% of the equity interest in Jiangsu Zhongneng, the major operating company of the Target Group, respectively. The Company will be interested in the entire issued share capital of each of the members of the Target Group upon Completion, which in turn own the entire equity interest in Jiangsu Zhongneng. Pursuant to the terms of the Acquisition Agreement A, the Company has conditionally agreed to purchase Sale Shares A and Vendors A have conditionally agreed to sell Sale Shares A, which comprise the entire issued share capital of GCL Solar. Pursuant to the terms of the Acquisition Agreement B, the Company has conditionally agreed to purchase and Vendor B has conditionally agreed to sell Sale Shares B, which comprise the entire issued share capital of Greatest Joy and the entire issued share capital of Sun Wave.

(ii) Consideration

As set out in the letter from the Board in the Circular, the aggregate consideration (the “Total Consideration”) for Sale Shares A and Sale Shares B of approximately HK$26,350,000,000 was determined after arm’s length negotiations among the Company, Vendors A and Vendor B after taking into account a number of factors including the business prospects, financial position and performance of the Target Group, the future synergies to be derived by the Group after the successful integration of the Target Group, the reasons and benefits to be derived from the Acquisitions, and the agreed valuation of the Target Group.

The agreed valuation of the Target Group is approximately 10.4 times the audited consolidated net profit of Target Group A (attributable to both equity holders and minority interests of Target Group A) for the year ended 31 December 2008, which was approximately RMB2,232.6 million, which was determined based upon arm’s length negotiations amongst the Company, Vendors A and Vendor B, which took into account recent valuations of listed companies operating in a similar industry.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We noted that the Sale Shares A and Sale Shares B were acquired by the Vendors A and Vendor B during the period from May 2007 to May 2009 at an aggregate acquisition cost of approximately US$1,116.1 million, where Mandra Materials and Happy Genius first acquired their respective Sale Shares A in May and September 2007, respectively, and Happy Genius agreed to acquire the Sale Shares B in December 2007 which completed in May 2008. Having considered that Happy Genius and Mandra Materials acquired their respective interests in the Target Group before the Target Group commenced commercial operation, we consider it may not be appropriate to directly compare their respective original acquisitions costs at the time the Target Group had not yet commenced commercial operation with the Total Consideration where the Target Group had already recorded profit.

In assessing the fairness and reasonableness of the Total Consideration for the Target Group, we note that there are no companies listed on the Stock Exchange or on other stock exchanges in the PRC that are actively engaged in the manufacture and sale of polysilicon. In this regard, we have extended our research into all companies listed in other stock exchanges around the world actively engaged in the manufacture and sale of polysilicon based on their published information in their respective website and the stock exchange they are listed and identified five listed companies (the “Comparable Companies”) based on the above criteria. Set out below is a table comparing the price to earnings ratio (the “P/E Ratio”) represented by the Total Consideration against those of the Comparable Companies based on their closing prices at the Latest Practicable Date and their latest published earnings per share:

	Country	Market
Company	of listing	capitalization	P/E Ratio
		(HK$ million)
		(Note 1)	(Note 2)
OCI Company Ltd.	South Korea	25,455.4		12.92
MEMC Electronic Materials,	United States	31,108.0		10.50
Inc.
Wacker Chemie AG	Germany	45,755.7		9.11
Renewable Energy	Norway	37,507.9		8.69
Corporation ASA
Tokuyama Corporation	Japan	15,816.1		N/A
High				12.92
Low				8.69
Average				10.31
Median				9.81
Total Consideration (Note 3)		26,350.0		10.4

Source: Bloomberg

Notes:

(1) Market capitalization as at the Latest Practicable Date and translated from local currencies to HK$ based on the relevant exchange rates at the Latest Practicable Date.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(2) Calculated based on the closing prices of the companies as at the Latest Practicable Date and the audited profits for the financial year ended 31 December 2008, save for Tokuyama Corporation which was loss making for the year ended 31 March 2009.
(3) Calculated by dividing the Total Consideration by the audited consolidated net profit of Target Group A (attributable to both equity holders and minority interests of Target Group A) for the year ended 31 December 2008 of approximately RMB2,232.6 million.

As shown in the table above, the P/E Ratios of those Comparable Companies range from 8.69 to 12.92 with average and median of 10.31 and 9.81, respectively. The P/E Ratio represented by the Total Consideration is within the range and slightly above the average and the median of the P/E Ratios of the Comparable Companies.

(iii) Settlement of the Total Consideration

(a) Consideration A

Consideration A of approximately HK$19,912,733,756 will be settled by the allotment and issuance of Consideration Shares A at an issue price of HK$2.2 (the “Issue Price”) for each Consideration Share A.

(b) Consideration B

Consideration B of approximately US$830,615,000 (equivalent to approximately HK$6,437,266,250) will be satisfied (i) as to US$200,000,000 by payment in cash; (ii) as to US$350,000,000 by the issuance of the Secured Notes; and (iii) as to approximately US$280,615,000 by the allotment and issuance of Consideration Shares B at the Issue Price of HK$2.2 for each Consideration Share B.

Except for US$200 million which will be settled by payment in cash (the source of which will be derived from funds make available to the Company from the US$300 million loan facility to be obtained by GCL Solar or its subsidiaries), the Total Consideration will be settled entirely by the allotment and issuance of the Consideration Shares and the issuance of the Secured Notes. Pursuant to a supplemental trust deed dated 15 June 2009 entered into between Happy Genius and DB Trustees (Hong Kong) Limited, the US$200 million cash, the Secured Notes and 900,000,000 Consideration Shares B will be used as consideration for the redemption of the Exchangeable Bonds after Completion B. The Exchangeable Bonds were the secured exchangeable bonds due 2010 with principal amount of US$550 million issued by Happy Genius.

Pursuant to the terms of the Acquisition Agreements, GCL Solar or its subsidiaries have to obtain and close on a loan facility in the aggregate amount of US$300 million prior to or concurrently with the Completion in terms that are reasonably satisfactory to Happy Genius and the Company; and to make available

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

US$200 million from part of the funds to be borrowed, as mentioned above, to the Company in such terms to be agreed between GCL Solar and the Company prior to the Completion for the Group to finance the cash portion of the Total Consideration.

We have discussed with the management of the Group about the rationale of financing the Total Consideration by the above-mentioned way. The Board has considered possibility of raising funds through other equity or debt financing methods, such as placing of new Shares, rights issue, open offer and raising bank and other borrowings. However, having considered that (i) the market capitalization of the Group as at the Latest Practicable Date of approximately HK$2,761.2 million is relatively small compared with the Total Consideration of approximately HK$26,350.0 million; and (ii) the Group has just completed the placing of 50,000,000 new Shares at HK$1.55 per Share on 3 June 2009, the Board considers that the Group may not be able to raise sufficient funds to finance the Total Consideration at the time of entering into of the Acquisition Agreements in a timely manner by way of placing of new Shares, rights issue or open offer where the issuance of the Consideration Shares and the Secured Notes allows (i) the Group to finance a substantial portion of the Total Consideration in a timely manner without any cash outlay; and (ii) more time for the Group to raise fund for the repayment of the Secured Notes.

We are advised that the secured bank borrowings of the Group excluding trade related bank borrowings bear a fixed interest rate of approximately 4.37% to 11.16% or variable interest rate of approximately 90% to 130% of the People’s Bank of China’s Benchmark Borrowing Rate of the PRC (the “Benchmark Rate”, i.e. 4.86% to 5.94% depending on maturity as at the Latest Practicable Date); and the unsecured bank borrowings of the Group excluding trade related bank borrowings bear a fixed interest rate of approximately 5.30% to 10.80% or variable interest rate of approximately 100% to 110% of the Benchmark Rate. Having considered (i) the net assets of the Group as at 31 December 2008 of approximately RMB2,823.7 million; and (ii) bank borrowings of the Group as at 31 December 2008 of approximately RMB3,249.2 million, the management of the Group are of the view that it may not be easy to obtain new bank and other borrowings to the scale of US$350 million (equivalent to approximately RMB2,380 million) with terms more favorable than the Secured Notes.

The Secured Notes bear an interest rate of 10% per annum (payable semi-annually in arrears) with maturity of 18 months and payable in 3 equal installments on (i) the last business day of the 6-month period after the date of issue; (ii) the last business day of the 12-month period after the date of issue; and (iii) the maturity date. In addition to the interest rate, the Secured Notes bear an accretion rate of 5% per annum, which shall be made concurrently with any payment of the underlying principal of the Secured Notes and can be paid either in cash or in Shares (to be valued at the trading price of the Shares when the repayment is made) at the option of the Company. The Secured Notes have an effective interest rate of approximately 15.6%, which is above the range of the existing borrowings of the Group. We are of the view that the effective interest rate is acceptable after taking into account (i) the substantial amount of the Secured Notes; (ii) the Secured Notes

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do not charge any premium for early repayment, which provides flexibility for the Group should it consider early repayment by raising bank or other borrowings with different terms or other financing alternatives is in the interest of the Group at some point during the 18 months term; and (iii) the fact that the issuance of the Secured Notes allows the Group to finance part of the Total Consideration in a timely manner.

The terms of the Secured Notes also provide mandatory prepayment clause where the Group has to repay part of the principal amounts of the Secured Notes in the event of certain fund raising exercises. The terms of the Secured Notes show that Happy Genius, the controlling Shareholder, agrees to defer part of the payment of the consideration in cash for the Sale Shares B until there is available fund to the Group which, in our view, is in the interest of the Company and the Shareholders as a whole. Details of the terms of the Secured Notes are set out in the letter from the Board in the Circular.

As set out in the letter from the Board in the Circular, depending on market conditions, the Group may also carry out future fund raising exercises of the Company by issuing the Additional Shares to raise capital, the proceeds of which will be used for repayment of the Secured Notes and US$300 million bank borrowings arising from the Acquisitions.

(iv) Issue Price for the Consideration Shares
(a) Comparison of the Issue Price with market price

The Issue Price of HK$2.2 represents:

(1) a discount of approximately 18.52% to the closing price of HK$2.70 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(2) a discount of approximately 12.00% to the closing price of HK$2.5 per Share as quoted on the Stock Exchange on the Last Trading Day;
(3) a discount of approximately 1.70% to the average of the closing prices as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day of approximately HK$2.238 per Share;
(4) a premium of approximately 1.15% to the average of the closing prices as quoted on the Stock Exchange for the last 10 trading days up to and including the Last Trading Day of approximately HK$2.175 per Share;
(5) a premium of approximately 32.77% to the average of the closing prices as quoted on the Stock Exchange for the last 30 trading days up to and including the Last Trading Day of approximately HK$1.657 per Share;

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(6) a premium of approximately 118.47% to the average of the closing prices as quoted on the Stock Exchange for the last 90 trading days up to and including the Last Trading Day of approximately HK$1.007 per Share;
(7) a premium of approximately 166.02% to the average of the closing prices as quoted on the Stock Exchange for the last 180 trading days up to and including the Last Trading Day of approximately HK$0.827 per Share; and
(8) a discount of approximately 22.26% to the audited consolidated net asset value attributable to equity holders of the Company per Share of approximately HK$2.83 as at 31 December 2008 (as calculated by the equity attributable to equity holders of the Company of approximately RMB2,415.8 million as at 31 December 2008 and the number of outstanding Shares of 972,419,487 as at 31 December 2008).
(b) Analysis of past performance of the Shares
(1) Share price performance

The chart below shows the closing prices of the Shares traded on the Stock Exchange since its listing on the Stock Exchange on 13 November 2007 up to and including the Latest Practicable Date (the “Period”):

==> picture [299 x 175] intentionally omitted <==

----- Start of picture text -----

6
5
4
3
Issue Price: HK$2.2
2
1
0
Closing Price (HK$)
Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 26-June-09
----- End of picture text -----

Source: Bloomberg

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As shown in the chart above, the Share price showed a downward trend from 13 November 2007 to 6 November 2008, decreasing from HK$4.52 on 13 November 2007 to HK$0.41 on 6 November 2008. The Share price fluctuated between HK$0.41 and HK$0.68 during the period from 6 November 2008 to 25 March 2009. The Share price then increased notably from HK$0.62 on 25 March 2009 to HK$2.50 on the Last Trading Day.

After trading hours on 25 March 2009, the Company announced its annual results for the year ended 31 December 2008 with profit of approximately RMB179.7 million compared with loss of approximately RMB211.8 million for the year ended 31 December 2007. The Share price increased from HK$0.62 to HK$0.90 on 26 March 2009.

After trading hours on 14 May 2009, the Company announced that it had entered into a placing agreement to place a maximum of 50,000,000 new Shares at HK$1.55 per Share (the “Placing”) to independent third parties. The Share price decreased from HK$1.90 to HK$1.82 on 15 May 2009. The Placing was completed on 3 June 2009.

After the release of the Announcement, the Share price increased from HK$2.50 to HK$2.88 on 23 June 2009 and closed at HK$2.70 as at the Latest Practicable Date. Neverthless, the Share price was below the Issue Price during most of the Period.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(2) Analysis of trading volume of the Shares

Set out below is the monthly and average daily trading volume of the Shares and the respective percentages of the average daily trading volume compared to the total issued Shares and to the Shares held by public on the Stock Exchange during the Period:

			% of average
		Average daily	daily trading	% of average
		trading volume	volume of the	daily trading
	Monthly	of the Shares	Shares to the	volume of the
	trading volume	during the	total issued	Shares to
	of Shares	month	Shares	public float
	(million Shares)	(million Shares)
			(Note 1)	(Note 2)
2007
November	599.22	42.80	4.40	7.34
December	102.87	5.41	0.56	0.93
2008
January	50.201	2.282	0.235	0.391
February	27.860	1.466	0.151	0.251
March	38.357	2.019	0.208	0.346
April	38.716	1.844	0.190	0.316
May	86.259	4.313	0.444	0.737
June	84.980	4.249	0.437	0.685
July	36.104	1.641	0.169	0.265
August	15.109	0.795	0.082	0.128
September	18.443	0.878	0.090	0.142
October	24.403	1.162	0.120	0.188
November	60.849	3.042	0.313	0.493
December	104.121	4.958	0.510	0.804
2009
January	28.927	1.607	0.165	0.260
February	24.931	1.247	0.128	0.202
March	84.247	3.829	0.394	0.621
April	91.687	4.584	0.471	0.743
May	204.563	10.766	1.107	2.037
June_(Note 3)_	208.943	29.849	2.940	7.511

Source: Bloomberg

Notes:

(1) Calculated based on the average number of issued Shares for each month during the Period.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(2) Calculated based on the average number of public float Share for each month during the Period obtained from Bloomberg.
(3) Up to the Latest Practicable Date where the Shares were suspended during 4 June 2009 to 22 June 2009.

Trading volumes of the Shares during most of the months of the Period as shown above were in general thin, representing less than 1% of the total issued Shares per month and less than 1% of the Shares in public float except for November 2007 when the Company was just listed on the Stock Exchange, May 2009 when the Company announced the Placing, and June 2009 when the Company released the Announcement, though the Directors are not aware of any reasons for the increase in trading volumes of the Shares prior to the release of the Announcement.

We noted that the Issue Price represents a discount of approximately 22.26% to the audited consolidated net asset value attributable to equity holders of the Company per Share, however, given the historical share price movement analysed above where (i) the Issue Price represents premiums to the average of the closing prices of the Shares for the last 10, 30, 90 and 180 trading days prior to the issue of the Announcement, (ii) the Issue Price is above the price of the Shares during most of the Period, and (iii) the thin trading volumes of the Shares, we consider that the Issue Price is fair and reasonable so far as the Independent Shareholders are concerned.

Having considered (i) the benefits attributable to the Group as mentioned in the section headed “Reasons for the Acquisitions” above; (ii) that the P/E Ratio of the Target Group represented by the Total Consideration is within the range of the P/E Ratios of the Comparable Companies; (iii) that the settlement method of the Total Consideration enables the Group to complete the Acquisitions without any immediate cash outlay to the Group and provides flexibility for the Group to repay the principal amount of the Secured Notes; (iv) that the Issue Price is above the historical Share price for most of the Period and the placing price of HK$1.55 per Share under the independent Placing just completed on 3 June 2009; and (v) that the trading volume of the Shares is generally thin, we are of the view that the terms of the Acquisition Agreements, including the Total Consideration and the settlement terms, are fair and reasonable and the Acquisitions are in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

6. Risk factors

The Acquisitions will extend the business risk of the Enlarged Group as set out under the “Risk factors” section in the letter from the Board in the Circular. The Independent Shareholders may wish to bear in mind the following risk factors when considering the Acquisitions:

Continuous capital investment

Policies and regulations

Credit availability to solar companies in China

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

7. Effects of the Acquisitions

(i) Dilution of existing public Shareholders’ holdings

The following table illustrates the shareholding interests in the Company (i) as at the Latest Practicable Date; and (ii) immediately after Completion (assuming that none of the controlling Shareholders, Vendors A or Vendor B (and their associates) sell their Shares and the Company will not issue any other new Shares):

Beneficial Shareholders Note Mr. Zhu and his associates and parties acting in concert with any of them (namely Mandra Materials, Mandra Esop, Mandra Silicon and Mr. Zhang Songyi) 1 Morgan Stanley 2 Poly (Hong Kong) Investments Limited 3 Bonus Billion 4 Joy Big 4 Public Shareholders: Chang Tsong Zung 5 Thornton Asset Management Service Centre Limited 6 Existing Public Shareholders 7 Other Shareholders of GCL Solar 7 Holders 7	As at the Latest Practicable Date Number of issued Shares Approximate (%) 352,518,443 34.47 160,696,000 15.72 134,791,044 13.18 – – – – 242,000 0.02 3,520,000 0.34 370,912,000 36.27 – – – – 1,022,679,487 100.00	Immediately after Completion Number of issued Shares Approximate (%) 6,213,787,609 56.17 160,696,000 1.45 134,791,044 1.22 6,108,934 0.06 13,723,098 0.12 14,611,601 0.13 32,250,582 0.29 370,912,000 3.35 3,215,571,346 29.07 900,000,000 8.14 11,062,452,214 100.00	Immediately after Completion Number of issued Shares Approximate (%) 6,213,787,609 56.17 160,696,000 1.45 134,791,044 1.22 6,108,934 0.06 13,723,098 0.12 14,611,601 0.13 32,250,582 0.29 370,912,000 3.35 3,215,571,346 29.07 900,000,000 8.14 11,062,452,214 100.00
			100.00

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

(1) The 45.79% interests (representing 5,065,628,327 Shares) of Mr. Zhu and his family are held by Highexcel Investments Limited (before and after Completion) and Happy Genius (upon Completion), which are indirectly wholly-owned by Asia Pacific Energy Fund Limited, which in turn is ultimately held on trust by Credit Suisse Trust Limited for Mr. Zhu and his family. The 10.38% interests (representing 1,148,159,282 Shares) of Mr. Zhang Songyi are held by Mandra Materials, Mandra Esop and Mandra Silicon.
(2) The interests of Morgan Stanley in the Company are held through:
(a) MS China 3 Limited, which holds 160,080,000 Shares and is a wholly-owned subsidiary of Morgan Stanley Emerging Markets Inc., which in turn is wholly-owned by Morgan Stanley. Morgan Stanley is therefore deemed to be interested in the 160,080,000 Shares held by MS China 3; and
(b) Morgan Stanley & Co. Inc., which holds 616,000 Shares and is a wholly-owned subsidiary of Morgan Stanley. Morgan Stanley is therefore deemed to be interested in the 616,000 Shares held by Morgan Stanley & Co. Inc.
(3) The interests of Poly (Hong Kong) Investments Limited are held through its indirect wholly-owned subsidiary, Power Jade Holdings Limited.
(4) The interests of both Bonus Billion and Joy Big are held by Mr. Yu. Bonus Billion and Joy Big are members of Vendors A.
(5) Ms. Chan Wai Ho (being the wife of Mr. Chang Tsong Zung, who is one of the members of Vendors A and the brother of Mr. Zhang Songyi) is a public Shareholder who currently owns 242,000 Shares which she acquired more than six months prior to the date of the Announcement.
(6) Mr. Cheng Zai Zhong (being one of the ultimate beneficial owners of Thornton Asset Management Service Centre Limited, which is one of the members of Vendors A) is a public Shareholder who currently owns 3,520,000 Shares. Thornton Asset Management Service Centre Limited is a member of Vendors A.
(7) The 40.56% Shares held by the other public Shareholders are held: (a) as to 29.07% by the Other Shareholders of GCL Solar (other than Bonus Billion, Joy Big, Chang Tsong Zung, Thornton Asset Management Service Centre Limited), (b) as to 8.14% by the Holders, which Shares shall be transferred to the Holders by Happy Genius after Completion, pursuant to the redemption of the Exchangeable Bonds, and (c) as to 3.35% by the existing public Shareholders. No member of Vendors A (other than Happy Genius, Mandra Materials, Mandra Esop and Mandra Silicon) will hold 10% or more of the issued share capital of the Company immediately after Completion.

The interests of the existing public Shareholders will be diluted from approximately 36.27% to approximately 3.35% immediately upon the allotment and issuance of the Consideration Shares under the Acquisitions on Completion. The level of dilution to the existing public Shareholders is significant.

We noted that (i) the Target Group has just commenced commercial operation of its first production facilities in the last quarter of 2007 and recorded profit for one financial year; (ii) the Acquisitions would increase the net current liabilities and the gearing of the Enlarged Group if the Enlarged Group cannot raise funds from equity financing to repay the Secured Notes and the bank borrowings arising from the Acquisitions

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

after Completion and; (iii) the Group’s proposed acquisition of the Target Group will extend the business risk of the Enlarged Group as set out under the “Risk factors” section below. However, having considered that:

(i) the Acquisitions provide an opportunity for the Group to gain access to solar energy technology, which will enable the Group to further develop its operations in the renewable energy industry,
(ii) the optimistic prospects of the global solar industry in long-term as mentioned in the section headed “Overview of the global solar industry” above,
(iii) the Total Consideration and the settlement method which we consider fair and reasonable as mentioned in the section headed “Principal terms of the Acquisition Agreements” above,
(iv) the Acquisitions allow the Group to acquire the Target Group, which has a net asset of approximately RMB2,307.3 million as at 31 December 2008 and recorded net profit of approximately RMB2,232.6 million for the year ended 31 December 2008, without any cash outlay, which will contribute to the revenue base and profitability of the Enlarged Group after Completion as mentioned under the paragraphs headed “Financial effects of the Acquisitions on the Group” below,
(v) the Independent Shareholders will participate in a much larger business after Completion which would enhance the earnings per Share of the Enlarged Group, and
(vi) the internal resources of the Group are not sufficient to satisfy amount of the Total Consideration, where the current structure allows the Group to finance the Acquisitions partly by the Consideration Shares and the Secured Notes,

on balance, we are of the view that the level of dilution is acceptable.

(ii) Financial effects of the Acquisitions on the Group
(a) Earnings

Upon Completion, the Target Group will become wholly-owned subsidiaries of the Company and their results will be consolidated into the financial statements of the Enlarged Group. In view of the profitable track record of the Target Group for the year ended 31 December 2008, the Target Group is expected to contribute to the revenue and earnings of the Enlarged Group after Completion.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As disclosed in the unaudited pro forma financial information of the Enlarged Group contained in Appendix V to the Circular, assuming the acquisition of 100% equity interest of GCL Solar was completed as at 1 January 2008, the acquisition of 20% and 16% equity interests in Jiangsu Zhongneng through the acquisition of 100% equity interests in Sun Wave and Greatest Joy were completed in April 2008 and May 2008, respectively, the profit attributable to the Shareholders of the Enlarged Group for the year ended 31 December 2008 would be improved from profit of approximately RMB131.3 million to approximately RMB1,646.7 million, which is principally attributable to the profit contributed by the Target Group A of approximately RMB2,232.6 million less the pro forma finance costs arising from the issuance of the Secured Notes and the loan facilities of US$300 million to be obtained by GCL Solar or its subsidiaries prior to or upon the Completion. Earnings per Share would increase from approximately RMB0.128 (based on the net profit attributable to the Shareholders for the year ended 31 December 2008 and 1,022,679,487 Shares in issue as at the Latest Practicable Date) to approximately RMB0.149 (based on the unaudited pro forma net profit attributable to the Shareholders of the Enlarged Group and 11,062,452,214 Shares to be in issue upon Completion).

In addition, as mentioned in part (b) below, goodwill would be recognized in the consolidated balance sheet of the Enlarged Group as a result of the Acquisitions and will be subject to the annual impairment review in accordance with the accounting policies of the Enlarged Group. The goodwill would not have any material impact on the Enlarged Group’s earnings unless impairment loss is required to be recognized.

(b) Net asset value

As at 31 December 2008, the Group had net current liabilities of approximately RMB1,134.6 million. According to the unaudited pro forma financial information of the Enlarged Group contained in Appendix V to the Circular, the net current liabilities of the Enlarged Group would increase to approximately RMB2,064.1 million assuming Completion had taken place on 31 December 2008, which is mainly attributable to the issue of the Secured Notes as a result of the Acquisitions. As set out in the letter from the Board in the Circular, depending on market conditions, the Group may also carry out future fund raising exercises of the Company by issuing the Additional Shares to raise capital, the proceeds of which will be used for repayment of the Secured Notes and US$300 million bank borrowings arising from the Acquisitions. If the completion of the above fund raising exercises to repay the Secured Notes is successful, the net current liabilities position of the Enlarged Group are expected to improve.

According to the unaudited pro forma financial information of the Enlarged Group contained in Appendix V to the Circular, net assets attributable to the Shareholders of the Enlarged Group would increase significantly from approximately RMB2,415.8 million to approximately

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RMB7,787.9 million assuming Completion had taken place on 31 December 2008. The above increase is mainly due to the goodwill arising from the Acquisitions (being the surplus of the Total Consideration over the estimated fair value of the identifiable assets and liabilities of the Target Group), the consolidation of the net assets of the Target Group, and the issuance of the Secured Notes. Net asset value per Share would be decreased from approximately RMB2.36 (based on the net assets attributable to the Shareholders as at 31 December 2008 and 1,022,679,487 Shares in issue as at the Latest Practicable Date) to approximately RMB0.70 (based on the unaudited pro forma net assets attributable to the Shareholders of the Enlarged Group and 11,062,452,214 Shares to be in issue upon Completion) as the issue price for the Consideration Shares is assumed to be HK$0.61 (the market price of the Shares as at 31 December 2008) for the preparation of the unaudited pro forma financial information of the Enlarged Group, which is lower than the net asset value per Share before the Completion.

The actual amount of goodwill that arises from the Acquisitions would be determined on the date of Completion. Since the fair value of the identifiable assets and liabilities of the Target Group at Completion may be substantially different from the estimates used for the purpose of preparation of the unaudited pro forma financial information, the actual goodwill arising from the Acquisitions may be different from the estimated goodwill. The amount of goodwill will be maintained in the consolidated balance sheet of the Enlarged Group and subject to regular impairment assessment. Any impairment loss would be recognised as an expense in the Enlarged Group’s consolidated income statement.

(c) Gearing and working capital

The Total Consideration will be satisfied by the issuance of the Consideration Shares and the Secured Notes, and the payment of cash of US$200 million. Pursuant to the terms of the Acquisition Agreements, GCL Solar or its subsidiaries have to make available US$200 million from part of the funds to be borrowed to the Company prior to or upon the Completion, which can be used by the Company to finance the cash portion of the Total Consideration. Accordingly, the Acquisitions would not result in net cash outflow to the Group.

The Group’s gearing ratio (being total borrowings divided by equity attributable to Shareholders plus total borrowings) as at 31 December 2008 was 57.4%. After the Completion, the total borrowings will be increased from approximately RMB3,249.2 million to approximately RMB11,224.8 million, the gearing ratio of the Enlarged Group as calculated on the basis of the pro forma financial information as contained in Appendix V to the Circular will only increase to approximately 59.0% as the equity attributable to the Shareholders will also increase from approximately RMB2,415.8 million to approximately RMB7,787.9 million.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The aforesaid pro forma statement is prepared based on the historical financials of the Target Group. As the operations, location and jurisdiction of the Target Group business differ from that of the existing business of the Group, there is no assurance that the performance of the Enlarged Group thereafter would be similar to those historical figures as reported in the pro forma financial statements as set out in Appendix V to the Circular.

8. Whitewash Waiver

Immediately following completion of the Acquisitions and assuming that no further Shares will be issued by the Company prior to the allotment and issuance of the Consideration Shares upon Completion, the shareholding of Mr. Zhu, his associates and parties acting in concert with any of them (namely Mandra Materials, Mandra Esop, Mandra Silicon and Mr. Zhang Songyi) will increase from approximately 34.47% to approximately 56.17%. Under Rule 26.1 of the Takeovers Code, Mr. Zhu, his associates and parties acting in concert with any of them are required to make a mandatory general offer for all the issued Shares not already owned or agreed to be acquired by them immediately following Completion unless the Whitewash Waiver is obtained. In this regard, Mr. Zhu has made an application to the Executive for the Whitewash Waiver, which is subject to, among other things, the approval of the Independent Shareholders on a vote by poll at the EGM.

Shareholders should note that after Completion of the Acquisitions, the Combined Concert Group will hold more than 50% of the issued share capital of the Company. As such, any further acquisition of interest in the Company by the Combined Concert Group may not be subject to the obligation to make a general offer under the Takeovers Code. Given that the individual members of the Combined Concert Group will hold less than 50% of the issued share capital of the Company, any further acquisition of Shares by any of them may trigger an obligation to make a mandatory general offer under Rule 26.1 of the Takeovers Code, unless a waiver from the Executive is granted.

As the Acquisitions are conditional upon, among other things, the approval of the Whitewash Waiver by the Independent Shareholders at the EGM, if the Whitewash Waiver is not approved, the Acquisitions will not proceed and no general offer obligation will be triggered. In the event the Acquisitions cannot proceed, the Group and the Shareholders will not be able to enjoy the benefits that would arise from the Acquisitions as discussed above.

9. Specific mandate for the New Issue

(i) Reasons for and benefits of the specific mandate for the New Issue

At the annual general meeting of the Company (“AGM”) held on 30 May 2008, a general mandate (the “Issue Mandate”) was given to the Directors to allot, issue and deal with additional Shares not exceeding 20% of the issued share capital of the Company as at the date of the AGM. As at the date of the AGM, 972,679,487 Shares were in issue and accordingly, a maximum of 194,535,897 Shares can be issued under the Issue Mandate assuming no Shares are repurchased by the Company. On 3 June

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2009, the Placing had been completed and a total of 50,000,000 Shares were issued and allotted under the Issue Mandate. As at the Latest Practicable Date, the Issue Mandate has not been utilized since it was granted and the number of Shares allowed to be issued under the Issue Mandate is 144,535,897 Shares.

Pursuant to the terms of the Acquisition Agreements, the Secured Notes will be issued by the Company and US$300 million bank borrowings will be raised by the Enlarged Group upon Completion. As set out in the letter from the Board in the Circular, depending on market conditions, the Group may carry out future fund raising exercises by issuing the Additional Shares to raise capital, the proceeds of which will be used for repayment of the Secured Notes and US$300 million bank borrowings arising from the Acquisitions.

After Completion, the issued share capital of the Company will increase from 1,022,679,487 Shares to 11,062,452,214 Shares. The number of Shares allowed to be issued under the Issue Mandate may not be sufficient for the Group to raise fund to finance repayment of the Secured Notes and US$300 million bank borrowings arising from the Acquisitions. Accordingly, the specific mandate for the New Issue is therefore sought to authorise the Directors to allot and issue the Additional Shares.

After Completion, the Enlarged Group will be subject to the interest expenses related to the Secured Notes and the US$300 million bank borrowings to be obtained. Given the Secured Notes do not charge any premium for early repayment, the early repayment of the Secured Notes and the US$300 million bank borrowings will save interest costs of the Enlarged Group. The specific mandate for the New Issue provides the Enlarged Group flexibility for issuing Additional Shares and using the proceeds to repay the Secured Notes and US$300 million bank borrowings in appropriate time.

The management of the Group advised us that the Group will also consider other financing alternatives such as debt financing and bank borrowings. However, the appropriateness of such alternatives depends on the Enlarged Group’s profitability, financing position, cost of funding and the prevailing market condition. In addition, these alternatives may be subject to lengthy due diligence and negotiation. We consider that it is reasonable to make reference to the then financial position of the Enlarged Group in order to decide on the appropriate financing alternatives to repay the Secured Notes and US$300 million bank borrowings. The Directors advised us that they would exercise due and careful consideration when choosing the best method of financing.

We consider that the specific mandate for the New Issue will provide the Company with an additional financing alternative after the Completion and it is reasonable for the Company to have the flexibility in deciding the efficient use of its funds. Based on the above, we are of the view that the specific mandate for the New Issue is in the interests of the Company and the Independent Shareholders as a whole. In addition, since the proceeds raised from the New Issue will be used to repay the Secured Notes and US$300 million bank borrowings arising from the Acquisitions, if Completion does not take place, the New Issue will not be carried out.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) Terms and conditions of the specific mandate for the New Issue

(a) Number of Additional Shares

The maximum number of Additional Shares which may be issued and allotted pursuant to the New Issue is 2,212,490,442 Shares, representing 20% of the total number of issued Shares as enlarged by the issue of the Consideration Shares.

(b) Expiry date

The specific mandate for the New Issue will lapse on the date falling six months after the passing of the ordinary resolution to approve the specific mandate for the New Issue at the EGM, the Directors can allot and issue all or some of the Additional Shares at any time and from time to time before the lapse of the specific mandate for the New Issue.

(c) Issue price of Additional Shares

The issue price of the Additional Shares which may be issued and allotted pursuant to the New Issue will be determined by reference to the prevailing price of the Shares at the time of offering and relevant market considerations, and in any event will not represent a discount of 20% or more to the benchmark price (as set out in Rule 13.36(5) of the Listing Rules) of the Shares.

(d) Restriction on offerees of the Additional Shares

The Additional Shares which may be issued and allotted pursuant to the New Issue can only be offered to investors who are independent of and not connected with the Company and the Directors, chief executive and substantial shareholder of the Company and its subsidiaries and/or any of their respective associates or any connected persons.

We noted that the terms and conditions of the specific mandate for the New Issue impose certain restrictions on the Company to allot and issue the Additional Shares by (i) setting the maximum number of Additional Shares can be allotted and issued where the percentage of which is comparable to the general mandate to allot and issue Shares at the annual general meeting of the Company; (ii) limiting the period of the specific mandate for the New Issue and the issue price of the Additional Shares; and (iii) in particular, restricting the Additional Shares to be allotted and issued only to independent third parties, we consider that the terms thereof are fair and reasonable.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iii) Financial effects of the New Issue to the Enlarged Group

(a) Earnings

Given the proceeds raised from the New Issue will be used to repay the Secured Notes and US$300 million bank borrowings of the Enlarged Group arising from the Acquisitions, the interest expenses of the Enlarged Group for the Secured Notes and US$300 million bank borrowings will decrease after the Secured Notes and US$300 million bank borrowings is repaid and will contribute to the earnings of the Enlarged Group.

(b) Net asset value

Since the proceeds raised from the New Issue will be used to repay the Secured Notes and US$300 million bank borrowings of the Enlarged Group arising from the Acquisitions, the New Issue is not expected to have material effects on the net asset value of the Enlarged Group.

(c) Gearing and working capital

After the proceeds raised from the New Issue are used to repay the Secured Notes and US$300 million bank borrowings arising from the Acquisitions, the total borrowings and the gearing of the Enlarged Group is expected to decrease. As the funds raised from the New Issue will be used to repay the Secured Notes and US$300 million bank borrowings from the Acquisitions, the New Issue is not expected to have any material cash flow effects on the Enlarged Group.

(iv) Potential dilution to Independent Shareholders’ shareholding

The maximum number of Additional Shares which may be allotted and issued pursuant to the New Issue is 2,212,490,442 Shares, representing 20% of the total number of issued Shares as enlarged by the issue of the Consideration Shares. Assuming full utilization of the specific mandate for the New Issue and no further Shares are issued or repurchased by the Company following the Completion, the aggregate shareholding of the existing public Shareholders will be further diluted from approximately 3.35% immediately after Completion as set out in the section headed “Effects of the Acquisitions” above to approximately 2.79%.

Taking into account the benefits of the specific mandate for the New Issue as discussed above and all the Shareholders immediately after the completion of the New Issue will be diluted proportionately, we consider the above potential dilution of shareholding of the existing public Shareholders to be acceptable.

In summary, given (i) the specific mandate for the New Issue will provide an additional financing alternative to the Enlarged Group to repay the Secured Notes and the US$300 million bank borrowings arising from the Acquisitions within the six months

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

period; (ii) the Additional Shares will only be offered to independent third parties with the issue price will not represent a discount of 20% or more to the benchmark price of the Shares as set out in Rule 13.36(5) of the Listing Rules; (iii) the proceeds raised from the New Issue will be used to repay the Secured Notes and US$300 million bank borrowings arising from the Acquisitions, which will decrease the interest expenses and gearing of the Enlarged Group; and (iv) all the Shareholders will be diluted proportionately, we are of the view that the terms of the specific mandate for the New Issue are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

RECOMMENDATION

Having considered the above-mentioned principal factors and reasons, in particular,

(i) the Acquisitions provide an opportunity for the Group to gain access to solar energy technology, which will enable the Group to further develop its operations in the renewable energy industry, and would facilitate the Group’s entrance to the solar energy power plant operation business;
(ii) the optimistic prospects of the global solar industry in long-term;
(iii) the P/E Ratio of the Target Group represented by the Total Consideration is within the range of the P/E Ratios of the Comparable Companies;
(iv) the settlement method of the Total Consideration enables the Group to complete the Acquisitions without any immediate cash outlay and provides flexibility for the Group to repay the principal amount of the Secured Notes;
(v) given the general thin trading volume of the Shares, the Issue Price is above the historical Share price for most of the Period and the placing price of HK$1.55 per Share under the independent Placing just completed on 3 June 2009;
(vi) the Target Group is expected to contribute to the revenue and earnings of the Enlarged Group after Completion given the first profitable track record of the Target Group for the year ended 31 December 2008 as mentioned under the section headed “Financial effects of the Acquisitions on the Group” above;
(vii) the acceptable dilution effect to the Independent Shareholders given the Independent Shareholders will participate in a much larger business and the Acquisitions would improve the earnings per Share of the Enlarged Group after Completion; and
(viii) the specific mandate for the New Issue will provide an additional financing alternative to the Enlarged Group to repay the Secured Notes and the US$300 million bank borrowings with reasonable terms,

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

we consider that the Acquisition Agreements are on normal commercial terms, and the terms of the Acquisition Agreements, the specific mandate for the New Issue and the Whitewash Waiver are fair and reasonable so far as the Independent Shareholders are concerned; and the entering into of the Acquisition Agreements and the granting of the specific mandate for the New Issue and the Whitewash Waiver are in the interests of the Group and the Shareholders as a whole.

Based on the above analysis, we therefore recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolutions relating to the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver, at the EGM. We also recommend the Independent Shareholders to vote in favour of the resolutions in relation to the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver at the EGM.

Yours faithfully, For and on behalf of

First Shanghai Capital Limited

Helen Zee Managing Director

Fanny Lee Executive Director

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. THREE YEARS FINANCIAL SUMMARY

Set out below is a summary of the audited consolidated results and assets and liabilities of the Group for each of the three years ended 31 December 2008 as extracted from the respective published audited financial statements:

Consolidated Income Statement

For the year ended 31 December 2008 2007 2006 RMB’000 RMB’000 RMB’000 (Restated)1 (Restated)1 3,693,330 1,844,661 933,356 (3,196,020) (1,482,227) (728,978) 497,310 362,434 204,378 168,476 109,245 37,791 (7,093) – – (213,426) (142,594) (67,135) (24,352) (66,633) (3,673) 420,915 262,452 171,361 (258,746) (161,513) (108,195) 44,693 19,772 47,906 – (339,738) (88,835) – 3,188 – – – 69,251 206,862 (215,839) 91,488 (27,140) 4,027 (3,549) 179,722 (211,812) 87,939 131,298 (266,744) 59,790 48,424 54,932 28,149 179,722 (211,812) 87,939 RMB RMB RMB 0.14 (0.57) 0.15	For the year ended 31 December 2008 2007 2006 RMB’000 RMB’000 RMB’000 (Restated)1 (Restated)1 3,693,330 1,844,661 933,356 (3,196,020) (1,482,227) (728,978) 497,310 362,434 204,378 168,476 109,245 37,791 (7,093) – – (213,426) (142,594) (67,135) (24,352) (66,633) (3,673) 420,915 262,452 171,361 (258,746) (161,513) (108,195) 44,693 19,772 47,906 – (339,738) (88,835) – 3,188 – – – 69,251 206,862 (215,839) 91,488 (27,140) 4,027 (3,549) 179,722 (211,812) 87,939 131,298 (266,744) 59,790 48,424 54,932 28,149 179,722 (211,812) 87,939 RMB RMB RMB 0.14 (0.57) 0.15	For the year ended 31 December 2008 2007 2006 RMB’000 RMB’000 RMB’000 (Restated)1 (Restated)1 3,693,330 1,844,661 933,356 (3,196,020) (1,482,227) (728,978) 497,310 362,434 204,378 168,476 109,245 37,791 (7,093) – – (213,426) (142,594) (67,135) (24,352) (66,633) (3,673) 420,915 262,452 171,361 (258,746) (161,513) (108,195) 44,693 19,772 47,906 – (339,738) (88,835) – 3,188 – – – 69,251 206,862 (215,839) 91,488 (27,140) 4,027 (3,549) 179,722 (211,812) 87,939 131,298 (266,744) 59,790 48,424 54,932 28,149 179,722 (211,812) 87,939 RMB RMB RMB 0.14 (0.57) 0.15
497,310 168,476 (7,093) (213,426) (24,352) 420,915 (258,746) 44,693 – – – 206,862 (27,140)	362,434 109,245 – (142,594) (66,633) 262,452 (161,513) 19,772 (339,738) 3,188 – (215,839) 4,027	204,378 37,791 – (67,135 (3,673
		171,361 (108,195 47,906 (88,835 – 69,251
		91,488 (3,549
179,722	(211,812)
131,298 48,424	(266,744) 54,932	59,790 28,149
179,722 RMB 0.14	(211,812) RMB (0.57)

1 The presentation currency has been changed for the year ended 2008, and as a result, the comparative figures have been restated for the years ended 31 December 2006 and 2007.

* no exceptional items and extraordinary items for the years ended 31 December 2006, 2007 and 2008.

Dividends

The Board proposed the payment of a final dividend of HK2.3 cents per Share for the year ended 31 December 2008 based on the register of members of the Company on 25 May 2009 and it was approved by Shareholders in an annual general meeting.

No dividend was paid or proposed for the years ended 31 December 2007 and 2006.

– I-1 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Consolidated Balance Sheet

As at 31 December 2008 2007 2006 RMB’000 RMB’000 RMB’000 (Restated) (Restated) 4,948,386 4,657,533 2,232,339 227,824 234,132 73,660 245,322 72,992 459,107 116,011 116,703 – 14,053 14,795 – 8,692 11,660 11,500 – – 600 56,359 – 10,000 14,503 11,376 1,737 31,000 – 1,096	As at 31 December 2008 2007 2006 RMB’000 RMB’000 RMB’000 (Restated) (Restated) 4,948,386 4,657,533 2,232,339 227,824 234,132 73,660 245,322 72,992 459,107 116,011 116,703 – 14,053 14,795 – 8,692 11,660 11,500 – – 600 56,359 – 10,000 14,503 11,376 1,737 31,000 – 1,096	As at 31 December 2008 2007 2006 RMB’000 RMB’000 RMB’000 (Restated) (Restated) 4,948,386 4,657,533 2,232,339 227,824 234,132 73,660 245,322 72,992 459,107 116,011 116,703 – 14,053 14,795 – 8,692 11,660 11,500 – – 600 56,359 – 10,000 14,503 11,376 1,737 31,000 – 1,096
5,662,150 258,804 468,489 8,608 25,785 943 231,034 413,727 1,407,390 827,485 54,003 8,474 1,652,066 2,542,028	5,119,191 125,985 546,793 8,952 19,326 614 241,931 804,048 1,747,649 615,402 45,606 4,589 1,491,706 2,157,303	2,790,039
		42,189 137,257 2,675 59,389 – 145,280 187,503
		574,293
		244,251 264,390 783 389,480
		898,904

– I-2 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

As at 31 December 2008 2007 2006 RMB’000 RMB’000 RMB’000 (Restated) (Restated) (1,134,638) (409,654) (324,611) 4,527,512 4,709,537 2,465,428 74,510 62,373 9,949 1,597,181 1,987,981 1,149,500 – – 783,923 32,094 22,303 – 1,703,785 2,072,657 1,943,372 2,823,727 2,636,880 522,056 92,779 92,779 101 2,322,978 2,180,012 315,074 2,415,757 2,272,791 315,175 407,970 364,089 206,881 2,823,727 2,636,880 522,056	As at 31 December 2008 2007 2006 RMB’000 RMB’000 RMB’000 (Restated) (Restated) (1,134,638) (409,654) (324,611) 4,527,512 4,709,537 2,465,428 74,510 62,373 9,949 1,597,181 1,987,981 1,149,500 – – 783,923 32,094 22,303 – 1,703,785 2,072,657 1,943,372 2,823,727 2,636,880 522,056 92,779 92,779 101 2,322,978 2,180,012 315,074 2,415,757 2,272,791 315,175 407,970 364,089 206,881 2,823,727 2,636,880 522,056	As at 31 December 2008 2007 2006 RMB’000 RMB’000 RMB’000 (Restated) (Restated) (1,134,638) (409,654) (324,611) 4,527,512 4,709,537 2,465,428 74,510 62,373 9,949 1,597,181 1,987,981 1,149,500 – – 783,923 32,094 22,303 – 1,703,785 2,072,657 1,943,372 2,823,727 2,636,880 522,056 92,779 92,779 101 2,322,978 2,180,012 315,074 2,415,757 2,272,791 315,175 407,970 364,089 206,881 2,823,727 2,636,880 522,056
92,779 2,322,978 2,415,757 407,970	92,779 2,180,012 2,272,791 364,089	101 315,074
		315,175 206,881
2,823,727	2,636,880

– I-3 –

APPENDIX I FINANCIAL INFORMATION OF THE GROUP

II. AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 31 DECEMBER 2008

Set out below are the audited financial statements of the Group as extracted from the annual report of the Group for the year ended 31 December 2008:

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2008

Notes Revenue 8 Cost of sales Gross profit Other income 10 Distribution and selling expenses Administrative expenses Other expenses Profit from operations Finance costs 11 Share of results of associates 19 Loss on increase in fair value of convertible note 29 Discount on acquisition of a subsidiary 32 Profit (loss) before tax Income tax (expense) credit 12 Profit (loss) for the year 13 Attributable to: Equity holders of the Company Minority interests Earnings (loss) per share – Basic 16	2008 RMB’000 3,693,330 (3,196,020)	2007 RMB’000 (Restated) 1,844,661 (1,482,227) 362,434 109,245 – (142,594) (66,633) 262,452 (161,513) 19,772 (339,738) 3,188 (215,839) 4,027 (211,812) (266,744) 54,932 (211,812) RMB (0.57)
	497,310 168,476 (7,093) (213,426) (24,352) 420,915 (258,746) 44,693 – – 206,862 (27,140)	362,434 109,245 – (142,594 (66,633
		262,452 (161,513 19,772 (339,738 3,188
		(215,839 4,027
	179,722
	131,298 48,424	(266,744 54,932
	179,722 RMB 0.14

– I-4 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED BALANCE SHEET

At 31 December 2008

Notes NON-CURRENT ASSETS Property, plant and equipment 17 Prepaid lease payments 18 Interests in associates 19 Goodwill 20 Other intangible assets 21 Available-for-sale investments 22 Pledged bank deposits 25 Deferred tax assets 30 Deposits for acquisitions of property, plant and equipment CURRENT ASSETS Inventories 23 Trade and other receivables 24 Prepaid lease payments 18 Amounts due from related companies 26 Tax recoverables Pledged bank deposits 25 Bank balances and cash 25 CURRENT LIABILITIES Trade and other payables 27 Amounts due to related companies 26 Tax payables Borrowings – due within one year 28 NET CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES	2008 RMB’000 4,948,386 227,824 245,322 116,011 14,053 8,692 56,359 14,503 31,000	2007 RMB’000 (Restated) 4,657,533 234,132 72,992 116,703 14,795 11,660 – 11,376 – 5,119,191 125,985 546,793 8,952 19,326 614 241,931 804,048 1,747,649 615,402 45,606 4,589 1,491,706 2,157,303 (409,654) 4,709,537
	5,662,150 258,804 468,489 8,608 25,785 943 231,034 413,727 1,407,390 827,485 54,003 8,474 1,652,066 2,542,028 (1,134,638) 4,527,512	5,119,191
		125,985 546,793 8,952 19,326 614 241,931 804,048
		1,747,649
		615,402 45,606 4,589 1,491,706
		2,157,303
		(409,654
		4,709,537

– I-5 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Notes NON-CURRENT LIABILITIES Deferred income Borrowings – due after one year 28 Deferred tax liabilities 30 NET ASSETS CAPITAL AND RESERVES Share capital 31 Reserves Equity attributable to equity holders of the Company MINORITY INTERESTS TOTAL EQUITY	2008 RMB’000 74,510 1,597,181 32,094 1,703,785 2,823,727 92,779 2,322,978 2,415,757 407,970 2,823,727	2007 RMB’000 (Restated) 62,373 1,987,981 22,303
		2,072,657
		2,636,880

		92,779 2,180,012
		2,272,791 364,089
		2,636,880

– I-6 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2008

		At	tributable to equity holders o	tributable to equity holders o	f the Company	f the Company
Share Capital RMB’000 101 – – – 19,394 37,038 8,770 27,476 – – – – – – – – – 92,779 – – – – – –	Share premium RMB’000 102,736 – – – 775,749 (37,038) 350,779 1,099,054 (79,315) – – – – – – – – 2,211,965 – – – – – –	Capital reserves C RMB’000 (note a) 115,972 – – – – – – – – – – – – – – – – 115,972 – – – – – –	ontribution from a shareholder RMB’000 59,519 – – – – – – – – – 5,736 8,227 – – – – – 73,482 – 915 – – – –	Other reserve RMB’000 (note b) 2,843 – – – – – – – – – – – – – – 7,345 – 10,188 – – – – 8,044 –	Share options reserve RMB’000 – – – – – – – – – – – – – – 2,100 – – 2,100 – – – 10,753 – –	Investment revaluation reserve RMB’000 (note c) – 6,390 – 6,390 – – – – – – – – – – – – – 6,390 – – – – – –	(Deficit) retained profits RMB’000 34,004 – (266,744) (266,744) – – – – – – – – – – – (7,345) – (240,085) 131,298 – – – (8,044) –	Sub-total RMB’000 315,175 6,390 (266,744) (260,354) 795,143 – 359,549 1,126,530 (79,315) – 5,736 8,227 – – 2,100 – – 2,272,791 131,298 915 – 10,753 – –	Minority interests RMB’000 206,881 – 54,932 54,932 – – – – – 178,815 – – 1,039 1,169 – – (78,747) 364,089 48,424 – 1,600 – – (6,143)	Total RMB’000 522,056 6,390 (211,812)
										(205,422) 795,143 – 359,549 1,126,530 (79,315) 178,815 5,736 8,227 1,039 1,169 2,100 – (78,747)
										2,636,880
										179,722
										915 1,600 10,753 – (6,143)
92,779	2,211,965	115,972	74,397	18,232	12,853	6,390	(116,831)	2,415,757	407,970	2,823,727

– I-7 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Notes:

(a) Capital reserve represents the excess of the net assets of subsidiaries acquired by the Company under the group reorganisation over consideration paid.
(b) Other reserves represent the aggregate amount of reserve fund and enterprise development fund.

Pursuant to a Board resolution of each relevant subsidiary established in the PRC, the subsidiary is required to transfer 3% of its profit after tax as per statutory financial statements (as determined by the management of the subsidiary) to the reserve fund until the fund balance reaches 50% of the registered capital of the subsidiary. The transfer to this fund must be made before distributing dividends to shareholders. The fund can be used to make up for previous years’ losses or, expand the existing operations or can be converted into additional capital of the subsidiary.

Pursuant to a Board resolution of each relevant subsidiary established in the PRC, the subsidiary is required to transfer 2% of its profit after tax as per statutory financial statements (as determined by the management of the subsidiary) to the enterprise development fund. The fund can only be used for development and is not available for distribution to shareholders.

(c) Investment revaluation reserve represents the differences between the fair value and carrying amount of the net assets attributable to the previous interest in the associates when the acquisition of a subsidiary is achieved in stages.

– I-8 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2008

Note OPERATING ACTIVITIES Profit (loss) before tax Adjustments for: Interest expenses Depreciation Release of prepaid lease payments Amortization of intangible assets Loss on disposal of property, plant and equipment Exchange loss Share of results of associates Interest income Waiver of other payable Amortisation of connection fee income Share based payment expense Allowance for trade and other receivables Impairment of goodwill Impairment of available-for-sale investments Loss on increase in fair value of convertible note Subscription interest income Discount on acquisition of a subsidiary 32 Operating cash flows before movements in working capital Increase in inventories Decrease (increase) in trade and other receivables (Increase) decrease in amounts due from related companies Increase (decrease) in trade and other payables Increase (decrease) in amounts due to related companies Increase in deferred income Cash generated from operations Income taxes paid NET CASH FROM OPERATING ACTIVITIES	2008 RMB’000 206,862 258,746 245,530 8,572 742 3,288 12,610 (44,693) (17,505) (4,070) (5,957) 10,753 4,794 692 2,968 – – –	2007 RMB’000 (Restated) (215,839) 161,513 159,173 3,502 49 110 11,755 (19,772) (10,496) – (2,329) 2,100 4,270 – – 339,738 (22,293) (3,188) 408,293 (19,374) (86,107) 22,277 (46,637) (88,176) 26,793 217,069 (3,072) 213,997
	683,332 (132,819) 74,209 (16,819) 24,985 9,755 18,094 660,737 (16,920) 643,817	408,293 (19,374 (86,107 22,277 (46,637 (88,176 26,793
		217,069 (3,072
		213,997

– I-9 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Notes INVESTING ACTIVITIES Purchases of property, plant and equipment Value-added tax refund on purchase of plant and machinery Increase in deposits for acquisition of property, plant and equipment Acquisitions of subsidiaries 32 Acquisitions of associates 19 Acquisition of prepaid lease payments Increase in pledged bank deposits Repayment from related companies Proceeds on disposal of property, plant and equipment Interest received Dividend from an associate Acquisitions arising from achieving control on associates 32 Subscription interest received Decrease in loan receivable NET CASH USED IN INVESTING ACTIVITIES FINANCING ACTIVITIES New loans raised Repayments of borrowings Advance from related companies Dividends paid to minority shareholders Interest paid Contribution from minority shareholders Proceeds from issue of new shares Redemption of convertible note Issue cost of new shares NET CASH (USED IN) FROM FINANCING ACTIVITIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS AT END OF THE YEAR represented by bank balances and cash	2008 RMB’000 (335,633) 36,868 (31,000) (16,568) (145,988) (1,920) (41,603) 10,681 3,646 12,947 18,945 – – –	2007 RMB’000 (Restated) (256,355) 13,945 – (88,194) (26,633) (7,604) (34,150) 86,209 1,275 10,496 53,187 100,921 22,293 600 (124,010) 963,900 (785,007) (151,346) (47,437) (162,468) 1,039 1,126,530 (328,518) (78,380) 538,313 628,300 187,503 (11,755) 804,048
	(489,625) 1,524,858 (1,755,298) (4,799) (46,483) (251,781) 1,600 – – – (531,903) (377,711) 804,048 (12,610)	(124,010
		963,900 (785,007 (151,346 (47,437 (162,468 1,039 1,126,530 (328,518 (78,380
		538,313
		628,300 187,503 (11,755
	413,727

– I-10 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2008

1. GENERAL INFORMATION

The Company is an exempted company with limited liability incorporated in the Cayman Islands on 12 July 2006 under the Companies Law, Cap 22 of the Cayman Islands. The shares of the Company are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 13 November 2007. The address of the registered office of the Company is at Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands and the principal place of business is at Suite 3601-3604, Two Exchange Square, 8 Connaught Road Central, Hong Kong.

The Company is an investment holding company. The principal activities of its subsidiaries and associates are development, construction, management and operation of cogeneration and power plants and trading of coal in the People’s Republic of China (the “PRC”).

Change of Presentation Currency

The directors considered Renminbi (“RMB”) as the functional currency of the group entities as the principal operations of the Company and its subsidiaries (the “Group”) are conducting businesses in the PRC in which those transactions are predominantly denominated in RMB. The Group used Hong Kong Dollars (“HK$”) as the presentation currency for the convenience of the readers. During the year ended 31 December 2008, the Group implemented a new ERP accounting system and the directors considered it is more appropriate and convenient to use RMB as both the functional and presentation currency on the financial reporting for the Company. As a result, the comparative figures have been restated and resulted in the decrease of exchange reserve of approximately HK$76,892,000 for the year ended 31 December 2007.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Group finance its capital intensive operations by short-term and long-term bank borrowings and shareholders’ equity. It had net current liabilities of approximately RMB1,134,638,000 as at 31 December 2008 with short-term bank borrowings of approximately RMB1,267,163,000 which will be matured in 2009. The directors of the Company believe those short-term bank borrowings could be renewed on an annual basis at the discretion of the Company within the limit approved by banks.

As at the reporting date, the Group has renewed short-term bank borrowings of approximately RMB151,500,000 with banks and with corresponding maturity dates extended to 2010. Further, subsequent to year end, the Group has obtained direct confirmations from certain banks which stated that they do not foresee any reasons to withdraw in the foreseeable future the existing facilities of the above mentioned short- term bank borrowings in the aggregate amount of RMB1,093,663,000 and expect to renew the relevant loan facilities with similar terms upon maturity. The Group has obtained additional banking facilities of approximately RMB120,000,000 from banks for operating use subsequent to year end.

The directors of the Company are of the opinion that, taking into account the presently available banking facilities and internal financial resources of the Group, the Group has sufficient working capital for its present requirements within one year from the balance sheet date. Hence, the consolidated financial statements have been prepared on a going concern basis.

– I-11 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”)

In the current year, the Group has applied the following amendments and interpretations (“new IFRSs”) issued by the International Accounting Standards Board (“IASB”) and International Financial Reporting Interpretations Committee (“IFRIC”) which are or have become effective.

IAS 39 & IFRS 7 Reclassification of Financial Assets (Amendments) IFRIC-Int 11 IFRS 2: Group and Treasury Share Transactions IFRIC-Int 12 Service Concession Arrangements IFRIC-Int 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

The adoption of the new IFRSs had no material effect on how the results and financial position for the current or prior accounting periods have been prepared and presented. Accordingly, no prior year adjustment has been required.

The Group has not early applied the following new and revised standards, amendments or interpretations that have been issued but not yet effective.

IFRSs (Amendments) Improvements to IFRSs[1] IAS 1 (Revised) Presentation of Financial Statements[2] IAS 23 (Revised) Borrowing Costs[2] IAS 27 (Revised) Consolidated and Separate Financial Statements[3] IAS 32 & 1 Puttable Financial Instruments and Obligations Arising on (Amendments) Liquidation[2] IAS 39 (Amendment) Eligible Hedged Items[3] IFRS 1 & IAS 27 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or (Amendments) Associate[2] IFRS 2 (Amendment) Vesting Conditions and Cancellation[2] IFRS 3 (Revised) Business Combination[3] IFRS 7 (Amendment) Improving Disclosures about Financial Instruments[2] IFRS 8 Operating Segments[2] IFRIC 9 & IAS 39 Embedded Derivatives[4] (Amendments) IFRIC 13 Customer Loyalty Programmes[5] IFRIC 15 Agreements for the Construction of Real Estate[2] IFRIC 16 Hedges of a Net Investment in a Foreign Operation[6] IFRIC 17 Distributions of Non-cash Assets to Owners[3] IFRIC 18 Transfer of Assets from Customers[7]

1 Effective for annual periods beginning on or after 1 January 2009 except the amendments to IFRS 5, effective for annual periods beginning on or after 1 July 2009
2 Effective for annual periods beginning on or after 1 January 2009 3 Effective for annual periods beginning on or after 1 July 2009
4 Effective for annual periods ending on or after 30 June 2009
5 Effective for annual periods beginning on or after 1 July 2008
6 Effective for annual periods beginning on or after 1 October 2008
7 Effective for transfers on or after 1 July 2009

The application of IFRS 3 (revised) may affect the Group’s accounting for business combination for which the acquisition date is on or after 1 January 2010. IAS 27 (revised) will affect the accounting treatment on changes to the Group’s ownership interest in a subsidiary. The directors of the Company anticipate that the application of the other new and revised standards, amendments or interpretations will have no material impact on the results and the financial position of the Group.

– I-12 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

4. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared under the historical cost basis except for certain financial instruments, which were measured at fair values, as explained in the accounting policies set out below.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are consolidated or deconsolidated respectively in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Minority interests in the net assets of consolidated subsidiaries are presented separately from the Group’s equity therein. Minority interests in the net assets consist of the amount of those interests as at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

Business combination involving entities under common control

The consolidated financial statements incorporate the financial statements items of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling party.

The net assets of the combining entities or businesses are consolidated using the existing book values from the controlling parties’ perspective. No amount is recognised in respect of goodwill or excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the continuation of the controlling party’s interest.

The consolidated income statement includes the results of each of the combining entities or businesses from the earliest date presented or since the date when the combining entities or businesses first came under the common control, where this is a shorter period, regardless of the date of the common control combination.

The comparative amounts in the consolidated financial statements are presented as if the entities or businesses had been combined when they first came under common control.

– I-13 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Business combination other than entities under common control

The acquisition of businesses is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 “Business Combinations” are recognised at their fair values at the acquisition date.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss, whereas the acquisition from the equity holders of the Company, the excess is recognised in equity.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Business combination achieved in stages

When a business combination involves more than one exchange transaction, each exchange transaction is treated separately by the acquirer, using the cost of the transaction and fair value information at the date of each exchange transaction, to determine the amount of any goodwill associated with that transaction. The acquiree’s net assets are stated at fair value at the date of acquisition when control is achieved. Any adjustment to those fair values relating to previously held interests (including but not limited to interests which were equity accounted under IAS 28 “Investments in Associates”) of the acquirer is a revaluation and is accounted for as an adjustment directly in equity.

Goodwill

Goodwill arising on an acquisition of a business for which the agreement date is on or after 1 January 2005 represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the relevant business at the date of acquisition. Such goodwill is carried at cost less any accumulated impairment losses.

Capitalised goodwill arising on an acquisition of a business is presented separately in the consolidated balance sheet.

For the purposes of impairment testing, goodwill arising from an acquisition is allocated to each of the relevant cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the acquisition. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, and whenever there is an indication that the unit may be impaired. For goodwill arising on an acquisition in a financial year, the cash-generating unit to which goodwill has been allocated is tested for impairment before the end of that financial year. When the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated to reduce the carrying amount of any goodwill allocated to the unit first, and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated income statement. An impairment loss for goodwill is not reversed in subsequent periods.

On subsequent disposal of the business, the attributable amount of goodwill capitalised is included in the determination of the amount of profit or loss on disposal.

– I-14 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Investments in associates

An associate is an entity over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

The results and assets and liabilities of associates are incorporated in the consolidated financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for pre-acquisition dividends and post-acquisition changes in the Group’s share of the net assets of the associates, less any identified impairment loss. When the Group’s share of losses of an associate equal or exceeds the Group’s interest in that associate, the Group discontinues recognising its share of further losses. An additional share of losses is provided for and a liability is recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of that associate.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment.

Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss, whereas the acquisition from the equity holders of the Company, the excess is recognised in equity.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

Property, plant and equipment

Property, plant and equipment other than construction in progress are stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

Depreciation is charged to write off the cost of items of property, plant and equipment, other than construction in progress, over their estimated useful lives and after taking into account their estimated residual value, using the straight line method.

Construction in progress represents property, plant and equipment in the course of construction for production or for its own use purposes. Construction in progress is carried at cost less any recognised impairment loss. Construction in progress is classified to the appropriate category of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the consolidated income statement in the year in which the item is derecognised.

Prepaid lease payments

Payment for obtaining land use rights is accounted for as prepaid lease payments and is charged to the consolidated income statement on a straight line basis over the lease terms as stated in the relevant land use right certificates granted for usage by the Group in the PRC and the remaining of operating licence of the PRC entities, which ever is the shorter.

– I-15 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Intangible assets

Intangible assets acquired in a business combination are identified and recognised separately from goodwill when they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets with finite useful lives are carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful lives is provided on a straight-line basis over their estimated useful lives. Alternatively, intangible assets with indefinite useful lives are carried at cost less any subsequent accumulated impairment losses (see the accounting policy in respect of impairment losses on tangible and intangible assets below).

Impairment losses on tangible and intangible assets other than goodwill

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average cost method.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold and services provided in the normal course of business, net of discounts and sales related taxes.

Revenue from the sales of electricity is recognised when electricity has been delivered on grid and measured at tariff determined by the relevant local government authority.

Revenue from the sales of steam is recognised when steam has been delivered and measured at prices specified under the terms of the relevant contracts.

Sales of coal and scrap materials are recognised when the goods are delivered and title has passed.

Consultancy fee and management fee income are recognised when the services are provided.

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

Dividend income from investments is recognised when the shareholder’s rights to receive payments have been established.

Connection fee income in relation to transmission of steam is recognised on a straight line basis over the period of expected lives of steam transmission services with reference to the terms of the operating licence of the relevant entities.

– I-16 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Deferred income

Deferred income represents connection fee income not yet recognised in relation to steam transmission services.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessor

Rental income from operating leases is recognised in the consolidated income statement on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as an expense on a straight-line basis over the lease term.

The Group as lessee

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a reduction of rental expense over the lease term on a straight-line basis.

Foreign currencies

The functional currency of the Company and its subsidiaries is RMB. The consolidated financial statements are also presented in RMB.

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the year in which they arise.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are capitalised as part of the cost of those assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the year in which they are incurred.

Government grants

Government grants are recognised as income over the periods necessary to match them with the related costs. Grants related to depreciable assets are presented as a deduction from the carrying amount of the relevant assets and are released to income over the useful lives of the assets. Grants related to expense items are recognised in the same period as those expenses are charged in the consolidated income statement and are reported separately as other income.

– I-17 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Retirement benefit costs

Payments to defined contribution retirement benefit plans or state-managed retirement benefit schemes or the Mandatory Provident Fund Scheme are charged as an expense when employees have rendered services entitling them to the contributions.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when a group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs (other than financial assets and financial liabilities at fair value through profit or loss) that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

The Group’s financial assets are classified into loans and receivables and available-for-sale financial assets.

– I-18 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest basis for debt instruments.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including trade and other receivables, amounts due from related companies, pledged bank deposits and bank balances) are carried at amortised cost using the effective interest method, less any identified impairment losses.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.

At each balance sheet date subsequent to initial recognition, available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured at cost less any identified impairment losses at each balance sheet date subsequent to initial recognition.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

For an available-for-sale equity investment, a significant or prolonged decline in the fair value of that investment below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial reorganisation.

For financial assets carried at amortised cost, an impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

– I-19 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade and other receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a trade and other receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment losses was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities and equity

Financial liabilities and equity instruments issued by a group entity are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. The Group’s financial liabilities are generally classified into financial liabilities at fair value through profit and loss (“FVTPL”) and other financial liabilities.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Interest expense is recognised on an effective interest basis other than those financial liability designated as at FVTPL, of which the interest expense is included in net gains or losses.

Financial liabilities at fair value through profit or loss

Convertible note of the Company was designated at FVTPL on initial recognition.

At each balance sheet date subsequent to initial recognition, financial liabilities at FVTPL were measured at fair value, with changes in fair value recognised directly in profit or loss in the period in which they arise. The net gain or loss recognised in profit or loss included any interest paid on the financial liabilities.

Convertible note

The convertible note of the Company consisted of the liability component and embedded derivatives (such as embedded conversion option, early redemption option and interest adjustment derivative). Conversion options that were not settled by the exchange of a fixed amount for a fixed number of the Company’s equity instrument was considered as embedded derivatives not closely related to the host contract (the liability component).

The Group elected to designate its convertible note with embedded derivatives as financial liabilities at FVTPL on initial recognition. At each balance sheet date subsequent to initial recognition, the entire convertible note was measured at fair value, with changes in fair value recognised directly in profit or loss in the year in which they arise.

Transaction costs that were directly attributable to the issue of the convertible note designated as financial liabilities at FVTPL were recognised immediately in profit or loss.

– I-20 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Other financial liabilities

Other financial liabilities (including trade and other payables, amounts due to related parties and borrowings) are subsequently measured at amortised cost, using the effective interest method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Transaction costs of equity transaction

The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided. The costs of an equity transaction that is abandoned are recognised as an expense.

Transaction costs related jointly to concurrent offering of some shares and listing of shares are allocated using a basis of allocation that is rational and consistent with similar transactions.

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Group has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised directly in equity is recognised in profit or loss.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Share-based payment transactions

Equity-settled share-based payment transactions

Share options granted to employees

At each balance sheet date, the Group revises its estimates of the number of options that are expected to ultimately vest. The impact of the revision of the estimates during the vesting period, if any, is recognised in profit or loss, with a corresponding adjustment to share options reserve.

At the time when the share options are exercised, the amount previously recognised in share options reserve will be transferred to share premium. When the share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognised in share options reserve will be transferred to retained profits.

– I-21 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

5. KEY SOURCES OF ESTIMATION UNCERTAINTY

The following are the key assumptions concerning the future, and key sources of estimation uncertainty at 31 December 2008, that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial year.

Useful lives and impairment of property, plant and equipment

The Group’s management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. Management will increase the depreciation charge where useful lives are expected to be shorter than estimated, or it will write-off or write-down obsolete or non-strategic assets that have been abandoned or sold. As at 31 December 2008, the carrying amount of property, plant and equipment is RMB4,948,386,000 (2007: RMB4,657,533,000 restated).

Estimated impairment of trade and other receivables

Where there is objective evidence of impairment loss, the Group takes into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). Where the actual future cash flows are less than expected, a material impairment loss may arise. As at 31 December 2008, the carrying amount of trade and other receivables is RMB468,489,000 (2007: RMB546,793,000 restated), net of allowance for doubtful debts of RMB10,564,000 (2007: RMB5,770,000 restated).

Expected lives of steam transmission services in relation to the recognition of connection fee income

The Group’s management determines the estimated lives of steam transmission services in relation to the recognition of connection fee income with reference to the remaining terms of the operating licence of the relevant entities. This estimate is based on the historical experience with respect to the estimated useful lives of steam transmission services of similar nature and functions. Management will accelerate the recognition of connection fee income where the actual service periods of steam transmission are shorter than the estimated lives of steam transmission services. As at 31 December 2008, the carrying amount of deferred connection fee income is RMB74,510,000 (2007: RMB62,373,000, restated).

6. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from prior year.

The capital structure of the Group consist of debts, which includes amounts due to related companies and borrowings, as disclosed in notes 26 and 28 respectively, net of bank balances and equity attributable to equity holders of the Company, comprising issued share capital and reserves.

The directors of the Company review the capital structure on a periodical basis. As a part of this review, the directors consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the directors, the Group will balance its overall capital structure through the issue of new shares, new debts or the redemption of existing debts.

– I-22 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

7. FINANCIAL INSTRUMENTS

a. Categories of financial instruments

Financial assets Loans and receivables (including cash and cash equivalents) Available-for-sale financial assets Financial liabilities Amortised cost	2008 RMB’000 1,132,688 8,692 4,057,131	2007 RMB’000 (Restated) 1,496,304 11,660

		4,078,268

b. Financial risk management objectives and policies

The Group’s major financial instruments include trade and other receivables, trade and other payables, amounts due from (to) related companies, borrowings, pledged bank deposits and bank balances. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments includes market risk (interest rate risk and currency risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risks

The Group’s activities expose it primarily to the financial risks of changes in interest rate risk and foreign currency rate risk. Market risk exposures are further measured by sensitivity analysis. There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk from 2007. Details of each type of market risks are described as follows:

(i) Interest rate risk

The Group is exposed to fair value interest rate risk in relation to fixed-rate pledged bank deposits and bank deposits and fixed-rate borrowings (see note 28 for details of these borrowings). The Group currently has not entered into interest rate swaps to hedge against its exposure to changes in fair values of the pledged bank deposits, bank deposits and borrowings.

The Group’s cash flow interest rate risk relates primarily to variable-rate borrowings (see note 28 for details of these borrowings) and bank balances. It is the Group’s policy to keep its borrowings at floating rate of interests so as to minimise the fair value interest rate risk.

– I-23 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Sensitivity analysis

The sensitivity analysis have been determined based on the exposure to interest rates for variable-rate borrowings and bank balances at the balance sheet date. In the opinion of the directors, the variable-rate bank balances are not interest sensitive to the market risk, and accordingly, no such sensitivity analysis is presented. For variable-rate borrowings, the analysis is prepared assuming the variable-rate borrowings outstanding at the balance sheet date were outstanding throughout the year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s profit for the year ended 31 December 2008 would decrease/increase by approximately RMB9,555,000 (2007: loss for the year increase/decrease by approximately RMB8,439,000, restated). This is mainly attributable to the Group’s exposure to interest rates on its variable-rate borrowings.

The Group’s sensitivity to interest rates has increased during the current year mainly due to the increase in variable-rate borrowings.

(ii)

Currency risk

The Group does not have significant exposure to foreign currency risk as majority of the Group’s operations are in the PRC and transactions are denominated in RMB which is the functional currency of the group entities except for certain bank balances denominated in Hong Kong dollars (“HK$”) and United States dollars (“US$”). The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities at 31 December 2008 are as follows:

	Assets	Assets	Liabilities	Liabilities
	2008	2007	2008	2007
	RMB’000	RMB’000	RMB’000	RMB’000
		(Restated)		(Restated)
HK$	2,175	48,994	2,818	–
US$	33,133	306,447	–	–

As at 31 December 2007, part of the bank balances kept as bank deposits were the proceeds raised from IPO not yet utilised and were denominated in HK$ and United States Dollars (“US$”), which are not the functional currency of the relevant group entities and hence expose the Group to foreign currency risk.

Sensitivity analysis

This sensitivity analysis details the Group’s sensitivity to a 5% increase and decrease in RMB against the US$ and HK$. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 5% change in foreign currency rates. If RMB had strengthened/weakened 5% against HK$, the Group’s profit for the year ended 31 December 2008 would have increased/decreased by RMB32,000 (2007: loss for the year decreased/increased by RMB2,450,000, restated). If RMB had strengthened/weakened 5% against US$, the Group’s profit for the year ended 31 December 2008 would have decreased/increased by RMB1,656,000 (2007: loss for the year increased/decreased by RMB15,322,000, restated).

– I-24 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Group’s sensitivity to foreign currency has decreased during the current year mainly due to conversion of bank deposits from US$ and HK$ to RMB.

In the management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the exposure during the year.

Credit risk

As at 31 December 2008, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties is arising from the carrying amount of the respective recognised financial assets as stated in the consolidated balance sheet.

In order to minimise the credit risk, the Group reviews the recoverable amount of each individual trade debt periodically to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

The Group has been dependent on the local electric power bureaus and a small number of steam customers for a substantial portion of its business. The local electric power bureaus accounted for a total of 57% (2007: 68%) of the Group’s trade receivables as at 31 December 2008. The failure of any of these customers to make required payments could have a substantial negative impact on the Group’s results. The management considers that the local electric power bureaus are state-owned and have strong financial ability and good creditability and accordingly, there is no significant credit risk.

The credit risk on liquid funds is limited because the counterparties are reputable banks in PRC and Hong Kong.

Liquidity risk

The Group has net current liabilities amounting to approximately RMB1,134,638,000 at 31 December 2008 (2007: RMB409,654,000, restated). The Group is exposed to liquidity risk of being unable to raise sufficient funds to meet its financial obligations when they fall due.

To manage the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents considered adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, the management monitors the utilisation of bank borrowings to ensure adequate unutilised banking facilities and compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liquidity. As at 31 December 2008, the Group has borrowings of approximately RMB3,249,247,000 (2007: RMB3,479,687,000, restated). Details of which are set out in note 28.

As mentioned in note 2, the directors of the Company believe the short-term bank borrowings of approximately RMB1,267,163,000 could be renewed on an annual basis at the discretion of the Company within the limit approved by banks and accordingly they are satisfied that the Group will be able to meet in full its financial obligations as they fall due for the foreseeable future.

– I-25 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Liquidity and interest risk tables

The following table details the Group’s remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.

Less than 3 months RMB’000 667,786 54,003 215,934 84,988 1,022,711	3 months to 1 year RMB’000 86,095 – 688,875 844,386 1,619,356	1-2 years RMB’000 – – 4,364 545,814 550,178	2-5 years RMB’000 – – 58,713 753,446 812,159	Over 5 years Total undiscounted cash flows RMB’000 RMB’000 – 753,881 – 54,003 – 967,886 594,725 2,823,359 594,725 4,599,129	Over 5 years Total undiscounted cash flows RMB’000 RMB’000 – 753,881 – 54,003 – 967,886 594,725 2,823,359 594,725 4,599,129	Carrying amount RMB’000 753,881 54,003 918,663 2,330,584
						4,057,131

531,739 45,606 231,121 87,227	21,236 – 790,326 593,282	– – 99,683 395,640	– – 354,631 557,005	– – 220,454 626,393	552,975 45,606 1,696,215 2,259,547	552,975 45,606 1,493,960 1,985,727
895,693	1,404,844	495,323	911,636	846,847	4,554,343	4,078,268

c. Fair value

The fair value of financial assets and financial liabilities is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices or rates from observable current market transactions.

The directors of the Company consider that the carrying amounts of all financial assets and financial liabilities recorded at cost or amortised cost in the consolidated financial statements approximate their corresponding fair values.

– I-26 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

8. REVENUE

An analysis of the Group’s revenue for the year is as follows:

Sales of electricity Sales of steam Sales of coal	2008 RMB’000 2,188,735 827,214 677,381 3,693,330	2007 RMB’000 (Restated) 1,470,168 374,493 –
		1,844,661

9. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

The Group is principally engaged in development, construction, management and operation of power plants and trading of coal in PRC.

After the initial public offering (“IPO”) in November 2007, the Group acquired 7 subsidiaries which composed of 6 cogeneration plants (fuelled by coal and other low heat value fuels) and a coal trading company. The Group also acquired 2 associates which are engaged in cogeneration plants fuelled by natural gas and coal and coal sludge respectively. Their performance and results were accounted into the financial statements of the Group since their respective dates of acquisitions. Besides, 2 cogeneration plants fuelled by biomass fuels were approved as biomass power plants by the PRC Government in November 2007.

For management purposes, the Group classified its business into five business segments in the current year. Two additional segments, namely biomass fuelled plants and coal trading were introduced in the current year as a result of the conversion of coal fuelled plants to biomass fuelled plants and the acquisitions set out above.

Coal fuelled & resources comprehensive utilisation (“RCU”) plants: cogeneration plants fuelled by coal, gangue, coal sludge and other low heat value fuels.
Gas fuelled plants: cogeneration plant mainly fuelled by natural gas.
Biomass fuelled plants: cogeneration plants mainly fuelled by biomass materials.
Coal trading: procurement and sales of coal for intra-group cogeneration plants and other external customers.
Incineration plant & others: including a municipal solid waste incineration plant, a wind power plant (which is currently under construction) and other activities relating to the power plant industry.

– I-27 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Segmental information about these businesses are presented below:

Consolidated Income Statement

For the year ended 31 December 2008

Coal-fuelled & RCU plants Gas-fuelled plant Biomass fuelled plants RMB’000 RMB’000 RMB’000 Revenue 1,755,853 1,005,983 274,069 Inter-segment sales – – – External sales 1,755,853 1,005,983 274,069 Segment result 200,680 164,478 40,359 Unallocated income Unallocated expense Finance costs Share of results of associates 2,118 42,575 – Profit before tax Income tax expenses Profit for the year Inter-segment sales are charged at prevailing market rates.	Coal trading RMB’000 1,556,106 (919,524) 636,582 26,106 –	Incineration plant & Others Consolidated RMB’000 RMB’000 20,843 4,612,854 – (919,524) 20,843 3,693,330 41,589 473,212	Incineration plant & Others Consolidated RMB’000 RMB’000 20,843 4,612,854 – (919,524) 20,843 3,693,330 41,589 473,212
			3,693,330

			473,212
		–	17,505 (69,802) (258,746) 44,693
			206,862 (27,140)
			179,722

Consolidated Balance Sheet

At 31 December 2008

	Coal-fuelled		Biomass		Incineration
	& RCU	Gas-fuelled	fuelled	Coal	plant &
	plants	plant	plants	trading	Others	Consolidated
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Assets
Segment assets	3,729,074	1,117,592	626,463	73,790	542,466	6,089,385
Interests in associates	74,788	170,534	–	–	–	245,322
Unallocated corporate assets						734,833
Consolidated total assets						7,069,540

Liabilities
Segment liabilities	539,654	85,787	44,851	48,952	248,939	968,183
Unallocated corporate liabilities						3,277,630
Consolidated total liabilities						4,245,813

– I-28 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Other Information

For the year ended 31 December 2008

Coal-fuelled & RCU plants RMB’000 Capital additions of property, plant and equipment 170,485 Capital additions of prepaid lease payments 1,920 Depreciation of property, plant and equipment 172,425 Release of prepaid lease payments to income statement 7,680 Amortisation of intangible assets 742 Impairment of available-for-sale investments 2,968 Impairment of goodwill 692 Allowance on trade and other receivables 4,622 Loss on disposal of property, plant and equipment 3,104 Consolidated Income Statement For the year ended 31 December 2007 Revenue – External sales Segment result Unallocated income Unallocated expense Finance costs Share of results of associates Loss on increase in fair value of convertible note Discount on acquisition of a subsidiary Loss before tax Income tax credit Loss for the year	Gas-fuelled plant RMB’000 28,897 – 51,165 356 – – – – 4 Coal-fuelled & RCU plants RMB’000 (Restated) 1,145,241 195,569 18,134		Biomass fuelled plants Coal trading Incineration plant & Others Consolidated RMB’000 RMB’000 RMB’000 RMB’000 41,742 1,052 338,009 580,185 – – – 1,920 12,824 728 8,388 245,530 156 – 380 8,572 – – – 742 – – – 2,968 – – – 692 172 – – 4,794 – 165 15 3,288 Gas-fuelled plant Incineration plant & Others Consolidated RMB’000 RMB’000 RMB’000 (Restated) (Restated) (Restated) 683,760 15,660 1,844,661 105,166 29,732 330,467 32,789 (100,804) (161,513) 1,638 – 19,772 (339,738) 3,188 (215,839) 4,027 (211,812)

– I-29 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Consolidated Balance Sheet

At 31 December 2007

	Coal-fuelled		Incineration
	& RCU	Gas-fuelled	plant &
	plants	plant	Others	Consolidated
	RMB’000	RMB’000	RMB’000	RMB’000
	(Restated)	(Restated)	(Restated)	(Restated)
Assets
Segment assets	4,306,477	1,173,831	251,931	5,732,239
Interests in associates	72,992	–	–	72,992
Unallocated corporate assets				1,061,609
Consolidated total assets				6,866,840

Liabilities
Segment liabilities	502,875	117,378	82,660	702,913
Unallocated corporate liabilities				3,527,047
Consolidated total liabilities				4,229,960

Other Information
For the year ended 31 December 2007
	Coal-fuelled		Incineration
	& RCU	Gas-fuelled	plant &
	plants	plant	Others	Consolidated
	RMB’000	RMB’000	RMB’000	RMB’000
	(Restated)	(Restated)	(Restated)	(Restated)
Capital additions of property,
plant and equipment	1,573,095	1,023,430	3,171	2,599,696
Capital additions of
prepaid lease payments	153,222	17,028	–	170,250
Depreciation of property,
plant and equipment	110,918	40,020	8,235	159,173
Release of prepaid
lease payments to
income statement	2,827	295	380	3,502
Amortisation of intangible assets	49	–	–	49
Loss on disposal of property,
plant and equipment	110	–	–	110
Allowance on trade and
other receivables	4,270	–	–	4,270

Geographical segments

Substantially all of Group’s assets are located in the PRC and operations were substantially carried out in the PRC. Accordingly, no geographical segment information for the year is presented.

– I-30 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

10. OTHER INCOME

Government grants (Note 40) Consultancy fee income (Note a) Interest income Sales of scrap materials Management fee income Waiver of other payables Amortisation of connection fee income Rental income Others Subscription interest income (Note b)	2008 RMB’000 60,483 36,646 17,505 14,526 14,111 4,070 5,957 3,166 12,012 – 168,476	2007 RMB’000 (Restated) 42,697 – 10,496 8,745 12,573 – 2,329 4,027 6,085 22,293
		109,245

Note:

(a) Consultancy fee income mainly represents (i) provision for consultancy services for the construction of steam supply pipes for the property developer to supply steam to its customers; (ii) provision of consultancy services on the setting up of operation and management system and maintenance services for a power plant and boilers facilities; and (iii) provision of technical support and consultancy services for planning and organization of the preliminary work, including the application of preliminary approval, equipment selection, construction design, open bid preparation and contract review, before the commencement of construction of power generation facilities.
(b) The subscription interest income was the interest income generated from the subscription period before the listing of the Company on the Stock Exchange.

11. FINANCE COSTS

Interest on: Bank borrowings Discounted bills Other finance costs Total borrowing costs Less: Interest capitalised	2008 RMB’000 245,021 13,387 338	2007 RMB’000 (Restated) 161,947 4,227 214
	258,746 –	166,388 (4,875
	258,746	161,513

– I-31 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

12. INCOME TAX (EXPENSE) CREDIT

The tax (expense) credit comprises: Current tax: Current year (Under) overprovision in prior years Deferred tax (note 30)	2008 RMB’000 (20,117) (359)	2007 RMB’000 (Restated) (4,579) 517 (4,062) 8,089 4,027
	(20,476) (6,664)	(4,062 8,089
	(27,140)

The income tax (expense) credit for the year represents income tax in the PRC which is calculated at the prevailing tax rate on the taxable income of subsidiaries in the PRC.

Prior to 1 January 2008, pursuant to the then relevant laws and regulations in the PRC, foreign invested enterprises that were engaged in the energy industry, upon approval by the State Administration of Taxation, enjoyed a preferential enterprise income tax rate of 15% on the assessable profits. All PRC subsidiaries engaged in energy industry enjoyed this preferential tax rate. In addition, certain PRC subsidiaries were exempted from PRC Foreign Enterprise Income Tax (“FEIT”) for two years starting from their first profit making year and followed by a 50% reduction on the FEIT for the next three years.

In addition, some cogeneration plants within the Group were granted income tax deduction for procuring domestic power generation equipment.

On 16 March 2007, the PRC promulgated the Law of the PRC on Enterprise Income Tax (the “New Law”) by Order No. 63 of the President of the PRC. On 6 December 2007, the State Council of the PRC issued Implementation Regulation of the New Law. The New Law and Implementation Regulation have imposed a single income tax rate of 25% for all PRC enterprises with effect from 1 January 2008. According to the Circular of the State Council on the Implementation of Transitional Preferential Policies for Enterprise Income Tax (Guofa [2007] No.39), those entities that previously enjoyed tax incentive rate of 15% would have to increase their applicable tax rate progressively to 25% over a five-year transitional period. The tax exemption and deduction from FEIT for the foreign investment enterprises is still applicable until the end of the five-years transitional period under the New Law based on the revised income tax rate.

Tax rate of 18% (2007: 15%) is adopted for the tax reconciliation as such tax rate is applicable to most of the Group’s operation in the PRC for year ended 31 December 2008.

The subsidiaries located in other jurisdictions, have no assessable profits for the year.

No provision for Hong Kong Profits Tax has been made as the Group did not have any assessable profit arising in Hong Kong for the year.

The Group, which has subsidiaries that are tax resident in the PRC, is subject to the PRC dividend withholding tax of 5% or 10% for those non PRC resident immediately holdings company registered in Hong Kong and British Virgin Islands respectively, when and if undistributed earnings are declared to be paid as dividends commencing on 1 January 2008 to the extent those dividends are paid out of profits that arose on or after 1 January 2008. Accordingly, a provision for dividend withholding tax of RMB10,495,000 has been recognised for the year ended 31 December 2008.

– I-32 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The tax (expense) credit for the year can be reconciled to the profit (loss) before tax as follows:

2008 RMB’000 Profit (loss) before tax 206,862 Tax at the PRC tax rate of 18% (2007: 15%) (37,235) Tax effect of expenses not deductible for tax purposes (10,378) Tax effect of different tax rate of subsidiaries (1,639) Tax effect of share of results of associates 8,045 Tax effect of income not taxable for tax purposes 2,338 Effect of tax exemption/deduction granted to PRC subsidiaries 28,953 (Under) overprovision in prior years (359) Tax effect of tax losses not recognised (6,798) Withholding tax (10,495) Others 428 Decrease in opening deferred tax liability resulting from a decrease in applicable tax rates – Tax (expense) credit for the year (27,140) Details of movements in deferred tax have been set out in note 30. 13. PROFIT (LOSS) FOR THE YEAR 2008 RMB’000 Profit (loss) for the year has been arrived at after charging: Staff costs, including directors’ remuneration Salaries, wages and other benefits 148,510 Share based payment expense 10,753 Retirement benefits scheme contributions 7,765 Total staff costs 167,028 Auditor’s remuneration 4,839 Cost of inventories recognised as expense 2,760,370 Depreciation 245,530 Release of prepaid lease payments to income statement 8,572 Amortisation of intangible assets (included in administrative costs) 742 Allowance for trade and other receivables 4,794 Impairment of available-for-sale investments 2,968 Impairment of goodwill 692 Exchange loss, net 12,610 Loss on disposal of property, plant and equipment 3,288 Listing expenses –	2008 RMB’000 206,862	2007 RMB’000 (Restated) (215,839) 32,375 (66,595) (153) 2,966 5,581 28,874 517 – – – 462 4,027 2007 RMB’000 (Restated) 99,342 2,100 6,106 107,548 4,315 1,179,678 159,173 3,502 49 4,270 – – 11,755 110 50,498
	(37,235) (10,378) (1,639) 8,045 2,338 28,953 (359) (6,798) (10,495) 428 –	32,375 (66,595 (153 2,966 5,581 28,874 517 – – – 462

– I-33 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

14. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

Particulars of the emoluments of directors and the five highest paid employees are as follows:

(a) Directors’ emoluments

The emoluments paid or payable to each director are set out below:

For the year ended 31 December 2008

Name of director Mr. ZHU Gong Shan Mr. SHA Hong Qiu Mr. JI Jun Mr. SHU Hua Mr. YU Bao Dong Ms. SUN Wei Mr. LAU Wai Yip (Note 1) Mr. TONG Yee Ming (Note 2) Mr. LAW Ryan Wing Cheung (Note 1) Mr. TAM Chor Kiu (Note 2) Mr. QIAN Zhi Xin Mr. HENG Kwoo Seng Ir Dr. HO Raymond Chung Tai Mr. XUE Zhong Su	Directors’ fee RMB’000 – – – – – – – – – – 89 178 268 89 624	Salaries and other benefits Retirement benefit scheme contributions RMB’000 RMB’000 – – 1,883 67 1,526 15 1,227 49 1,398 43 – – 784 24 917 41 – – – – – – – – – – – – 7,735 239	Share based payment RMB’000 – 633 565 565 565 565 – – – – – – – – 2,893	Total RMB’000 – 2,583 2,106 1,841 2,006 565 808 958 – – 89 178 268 89
				11,491

Notes:

(1) Mr. Lau Wai Yip retired as an executive director on 30 May 2008 and Mr. Law Ryan Wing Cheung resigned as a non-executive director on 3 October 2008.
(2) Mr. Tong Yee Ming appointed as non executive director on 31 July 2008 and Mr. Tam Chor Kiu appointed as a non executive director on 3 October 2008.

– I-34 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

For the year ended 31 December 2007

Name of director Mr. ZHU Gong Shan Mr. SHA Hong Qiu Mr. JI Jun Mr. SHU Hua Mr. YU Bao Dong Ms. SUN Wei Mr. LAU Wai Yip Mr. LAW Ryan Wing Cheung Mr. QIAN Zhi Xin Mr. HENG Kwoo Seng Ir Dr. HO Raymond Chung Tai Mr. XUE Zhong Su	Directors’ fee RMB’000 (Restated) – – – – – – – – 47 93 95 19 254	Salaries and other benefits Retirement benefit scheme contributions RMB’000 RMB’000 (Restated) (Restated) – – 328 11 278 – 58 – 1,033 35 – – 684 25 – – – – – – – – – – 2,381 71	Share based payment RMB’000 (Restated) – 115 103 103 103 103 103 – – – – – 630	Total RMB’000 (Restated) – 454 381 161 1,171 103 812 – 47 93 95 19
				3,336

No directors waived any emoluments and no incentive paid on joining and no compensation for loss of office for both years.

(b) Employees’ emoluments

During the year, of the five highest paid individuals of the Group, five (2007: three) were directors of the Company, whose emoluments are included in (a) above. The emoluments of the five individuals with the highest emoluments during the year are as follows:

Salaries and other allowances Retirement benefits scheme contributions	2008 RMB’000 9,278 215 9,493	2007 RMB’000 (Restated) 4,489 99
		4,588

The emoluments of each of the above five individuals are within the following bands:

Nil to RMB1,000,000 RMB1,000,001 – RMB1,500,000 RMB1,500,001 – RMB2,000,000 RMB2,000,001 – RMB2,500,000 RMB2,500,001 – RMB3,000,000	2008 Number of employees 1 – 1 2 1 5	2007 Number of employees 2 3 – – –
		5

– I-35 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

15. DIVIDENDS

The Board proposed the payment of a final dividend of HK2.3 cents per share for the year ended 31 December 2008 based on the register of members of the Company on 25 May 2009 and to be approved by shareholders in annual general meeting.

No dividend was paid or proposed for the year ended 31 December 2007.

16. EARNINGS (LOSS) PER SHARE

The calculation of the basic earnings (loss) per share attributable to the ordinary equity holders of the Company is based on the following data:

Earnings (loss) for the purpose of calculation of basic earnings (loss) per share Weighted average number of shares Basic earnings (loss) per share Earnings (loss) for the purpose of calculation of basic earnings (loss) per share Represented by: Profit from ordinary operation Non-recurring items Loss on increase in fair value of convertible note Listing expenses less subscription interest income Discount on acquisition of a subsidiary Loss from non-recurring items Basic earnings (loss) per share – Profit from ordinary operation – Loss from non-recurring items	2008 RMB’000 131,298 2008 (’000) 972,419 2008 RMB 0.14 2008 RMB’000 131,298	2007 RMB’000 (Restated) (266,744) 2007 (’000) 467,513 2007 RMB (Restated) (0.57) 2007 RMB’000 (Restated) (266,744) 98,011 (339,738) (28,205) 3,188 (364,755) 2007 RMB (Restated) 0.21 (0.78) (0.57)
	131,298 – – – –	98,011 (339,738 (28,205 3,188
		(364,755
	2008 RMB 0.14 – 0.14

– I-36 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

For the purpose of calculation of number of shares for the calculation of basic loss per share for the year ended 31 December 2007, the 388,220,000 shares issued pursuant to the captialisation issue was assumed to occur as at 1 January 2007.

The employee share options has no dilution effect on the profit (loss) per share for both years as the average market price of the Company’s shares was lower than the exercise price of the options.

17. PROPERTY, PLANT AND EQUIPMENT

Buildings RMB’000 809,402 20,076 11,747 – 465,654 –	Power generation plant and machinery RMB’000 1,605,608 95,116 8,495 (409) 1,848,278 (13,945)	Office equipment RMB’000 18,291 2,164 3,879 (1,715) 9,656 –	Motor vehicles Construction in progress RMB’000 RMB’000 10,300 22,170 – (117,356) 2,661 224,430 (692) – 8,126 16,770 – –	Motor vehicles Construction in progress RMB’000 RMB’000 10,300 22,170 – (117,356) 2,661 224,430 (692) – 8,126 16,770 – –	Total RMB’000 2,465,771 – 251,212 (2,816) 2,348,484 (13,945)
1,306,879 15,045 9,558 – – – 1,331,482 (63,881) (34,864) – (98,745) (55,045) – (153,790)	3,543,143 204,875 72,991 (5,150) – (12,602) 3,803,257 (156,714) (118,295) 213 (274,796) (177,530) 1,105 (451,221)	32,275 – 5,231 (3,314) 43 – 34,235 (8,460) (3,565) 738 (11,287) (7,328) 1,734 (16,881)	20,395 – 2,302 (3,204) – – 19,493 (4,376) (2,449) 480 (6,345) (5,627) 1,895 (10,077)	146,014 (219,920) 489,735 – 325 (24,266) 391,888 – – – – – – –	5,048,706 – 579,817 (11,668) 368 (36,868)
					5,580,355
					(233,431) (159,173) 1,431
					(391,173) (245,530) 4,734
					(631,969)
1,177,692 1,208,134	3,352,036 3,268,347	17,354 20,988	9,416 14,050	391,888 146,014	4,948,386

					4,657,533

– I-37 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The following rates are used for depreciation of property, plant and equipment other than construction in progress:

Buildings 3%-5% Power generation plant and machinery 3%-5% Office equipment 20%-33% Motor vehicles 20%

The Group has pledged buildings with carrying values of approximately RMB786,656,000 at 31 December 2008 (2007: RMB814,680,000, restated) and power generation plant and machinery with carrying values of approximately RMB2,409,029,000 at 31 December 2008 (2007: RMB2,509,653,000, restated) to secure banking facilities granted to the Group.

18. PREPAID LEASE PAYMENTS

The Group’s prepaid lease payments represent leasehold land in the PRC under medium-term lease.

Analysed for reporting purposes as:

Non-current assets Current assets	2008 RMB’000 227,824 8,608 236,432	2007 RMB’000 (Restated) 234,132 8,952
		243,084

The Group has pledged land use rights with carrying values of approximately RMB199,831,000 at 31 December 2008 (2007: RMB222,287,000, restated) to secure banking facilities granted to the Group.

19. INTERESTS IN ASSOCIATES

Unlisted investments in associates, at cost Share of post-acquisition profits, net of dividends received Carrying amounts of interests in associates	2008 RMB’000 200,443 44,879 245,322	2007 RMB’000 (Restated) 72,806 186
		72,992

As at 31 December 2008 and 2007, the Group had interests in the following associates established and operated in the PRC:

	Equity interests held	Equity interests held		Proportion of voting	Proportion of voting	Principal
Name of company	by the	Group		power held		activity
	2008	2007		2008	2007
阜寧協鑫環保熱電有限公司	60%	60%		54.5%	54.5%	Operation of
Funing Golden Concord		(Note a)				a power station
Environmental Protection						and trading
Co-generation Co., Ltd						of coal
(“Funing Cogeneration Plant”)
華潤協鑫（北京）熱電有限公司	49%		–	42.9%	–	Operation of
China Resources Golden Concord	(Note b)					a power station
(Beijing) Co-generation Power
Co., Ltd (“China Resources
Beijing Cogeneration Plant”)

– I-38 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Notes:

(a) On 13 November 2007, the Group acquired 29.4% interest on Funing Cogeneration Plant, resulting in a goodwill of RMB15,994,000 (see note 32(iii)). On 27 November 2007, the Group acquired additional 30.6% equity interest in Funing Cogeneration Plant from a company controlled by a shareholder of the Company at a cash consideration of approximately RMB26,633,000. The discount on acquisition of approximately RMB8,227,000 was credited directly to equity of the Group as a capital contribution from a shareholder.

Following the completion of acquisition, the Group holds 60% of the registered capital of Funing Cogeneration Plant. However, under the articles of association of Funing Cogeneration Plant, the Group can only appoint six out of eleven directors to the board of directors of Funing Cogeneration Plant, which is less than two-thirds majority which is required to pass financing and operating policies of Funing Cogeneration Plant. The directors of the Company consider that the Group does exercise significant influence over Funing Cogeneration Plant and it is therefore classified as an associate of the Group.

In 2008, the associate declared pre-acquisition dividend of approximately RMB321,000 which is set off against the cost of investment. Such dividend has not yet paid as at year end.

(b) In January 2008, the Group acquired 49% equity interest of China Resources Beijing Cogeneration Plant from a company controlled by a shareholder of the Company for a consideration of RMB145,988,000, including professional fee of RMB200,000. A discount on a acquisition of RMB915,000 has been credited directly to equity of the Group as a capital contribution from a shareholder.

Subsequent to the acquisition, the Group received pre-acquisition dividend of 2007 of approximately RMB 18,945,000 which is set off with the cost of investment for the year ended 31 December 2008.

The Group is able to exercise significant influence over China Resources Beijing Cogeneration Plant because it has the power to appoint three out of seven directors of that company.

The summarised financial information in respect of the Group’s associates is set out below:

Total assets Total liabilities Net assets Group’s share of net assets of associates Revenue Profit for the year Group’s share of results of associates for the year	2008 RMB’000 896,400 450,383 446,017 229,328 364,955 90,417 44,693	2007 RMB’000 (Restated) 239,010 144,014
		94,996

		56,998

		680,902

		41,933

		19,772

– I-39 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

20. GOODWILL

COST At 1 January Acquisitions of subsidiaries (note 32) As at 31 December IMPAIRMENT At 1 January Impairment loss recognised As at 31 December CARRYING AMOUNTS At 31 December	2008 RMB’000 116,703 –	2007 RMB’000 (Restated) – 116,703
	116,703 – (692) (692)	116,703
		– –
		–
	116,011	116,703

For the purposes of impairment testing, goodwill have been allocated to individual cash generating units (“CGUs”), including four subsidiaries, namely Dongtai Suzhong Environmental Protection Co-generation Co., Ltd. (“Dongtai Cogeneration Plant”), Jia Xing Environmental Protection Cogen-Power Co., Ltd. (“Jiaxing Cogeneration Plant”), Peixian Mine-site Environmental Cogen-Power Co., Ltd. (“Peixian Cogeneration Plant”) and Xuzhou Baoxin Sludge Power Co., Ltd. (“Xuzhou Cogeneration Plant”) which are included in coal-fuelled or RCU cogeneration plants segment. The carrying amounts of goodwill allocated to these units are as follows:

Dongtai Cogeneration Plant Jiaxing Cogeneration Plant Peixian Cogeneration Plant Xuzhou Cogeneration Plant	2008 RMB’000 29,298 65,818 20,895 – 116,011	2007 RMB’000 (Restated) 29,298 65,818 20,895 692
		116,703

During the year, the Group has not assessed the recoverable amount of goodwill allocated to Xuzhou Cogeneration Plant and directly recognized an impairment loss of RMB692,000 (2007: Nil) to that CGU as the amount involved is minimal. Other than above, the Group determines that the recoverable amounts exceed the carrying amounts of the remaining CGUs containing goodwill and therefore, no impairment has been recognised.

– I-40 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The recoverable amounts of the remaining CGUs are determined by reference to a business valuation performed by Jones Lang LaSalle Sallmanns Limited, an independent and recognised international business valuer as at 31 December 2008 and 2007. The recoverable amounts of these CGUs have been determined based on value in use calculations. That calculation uses cash flow projections based on financial budgets approved by management covering a five-year period for Dongtai Cogeneration Plant, Peixian Cogeneration Plant and Jiaxing Cogeneration Plant at a discount rate of 13.93% (2007: 13.38%). No growth rate has been assumed beyond the five-year period up to the remaining operating licences of these CGUs. Other key assumptions for the value in use calculations relate to the estimation of cash inflows/outflows which include budgeted sales and gross margin. Such estimation is based on the unit’s past performance and management’s expectations for the market development. Management believes that any reasonably possible change in any of these assumptions would not cause the aggregate carrying amount of these CGUs to exceed the aggregate recoverable amount of these CGUs.

21. OTHER INTANGIBLE ASSETS

COST As 1 January Acquisitions of subsidiaries (note 32) At 31 December AMORTISATION At 1 January Provided for the year At 31 December CARRYING AMOUNTS At 31 December	2008 RMB’000 14,844 –	2007 RMB’000 (Restated) – 14,844
	14,844 49 742 791	14,844
		– 49
		49
	14,053	14,795

The intangible assets represent customer lists and were purchased as part of a business combination from a third party. The intangible assets have definite useful lives. Such intangible assets are amortised on a straight- line basis over 20 years.

22. AVAILABLE-FOR-SALE INVESTMENTS

			2008	2007
			RMB’000	RMB’000
				(Restated)
Unlisted	equity	investments	8,692	11,660

The unlisted equity investments represent investments in unlisted equity securities issued by private entities established in the PRC. They are measured at cost less impairment, if any, at the balance sheet date because the range of reasonable fair value estimates is so significant that the directors of the Company are of the opinion that their fair values cannot be measured reliably.

During the year, one of the investments is placed under liquidation. The Company has assessed for the impairment of such investment based on objective evidence, to the extent that the carrying amount exceeded the estimated net recoverable amount, an impairment loss of RMB2,968,000 (2007: Nil) has been recognised.

– I-41 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

23. INVENTORIES

Fuel Spare parts Consumables	2008 RMB’000 221,502 35,797 1,505 258,804	2007 RMB’000 (Restated) 102,349 23,441 195
		125,985

24. TRADE AND OTHER RECEIVABLES

Trade receivables Less: allowance for doubtful debts Other receivables Less: allowance for doubtful debts Prepayments Deposit for acquisition of a subsidiary (note 38)	2008 RMB’000 373,940 (7,915)	2007 RMB’000 (Restated) 383,726 (3,230
	366,025 42,407 (2,649) 39,758 42,706 20,000	380,496
		53,043 (2,540
		50,503
		115,794 –
	468,489	546,793

Trade receivables at the balance sheet date mainly comprise amounts receivable from the sales of electricity, steam and coal trading. The Group generally allows an average credit period of 30 to 90 days to its trade customers. The aged analysis of trade receivables, net of allowances, is as follows:

0-90 days 91-180 days Over 180 days	2008 RMB’000 362,487 3,033 505 366,025	2007 RMB’000 (Restated) 376,119 3,188 1,189
		380,496

Over 98% of the trade receivables are neither past due nor impaired. The management considers that these receivables have the best credit scoring attributable under the credit review policy used by the Group.

– I-42 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Included in the Group’s trade receivables are debtors with a carrying amount of approximately RMB3,538,000 which are past due at 31 December 2008 (2007: RMB4,377,000, restated) for which the Group has not provided allowance for doubtful debts as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over these receivables.

Full allowance has been made for impairment of certain trade and other receivables which has been past due and considered as doubtful debts by the management of the Group. Movement of the allowance for doubtful debts for trade and other receivable is set out as follows:

Balance at beginning of the year Impairment loss recognised on receivables Balance at end of the year	2008 RMB’000 5,770 4,794 10,564	2007 RMB’000 (Restated) 1,500 4,270
		5,770

25. BANK BALANCES AND PLEDGED BANK DEPOSITS

Bank balances

Bank balances carry interest at floating rates ranging from 0.01% to 5.22% (2007: 0.72% to 4.80%) and fixed rates at 0.10% to 8.22% per annum.

Pledged bank deposits

These bank deposits carry fixed interest rates ranging from 0.36% to 8.22% (2007: 0.72% to 5.49%) per annum. The pledged bank deposits will be released upon the settlement of the relevant bills and notes payable and bank borrowings.

Pledged bank deposits represent deposits pledged to banks to secure banking facilities granted to the Group. Deposits amounting to RMB231,034,000 (2007: RMB241,931,000, restated) have been pledged to secure bills and notes payables and short term borrowings granted to the Group and are therefore classified as current assets. Deposits amounting to RMB56,359,000 (2007: Nil) have been pledged to secure long term borrowings granted to the Group and are therefore classified as non-current assets.

– I-43 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

26. AMOUNTS DUE FROM (TO) RELATED COMPANIES

Amounts due from: Non-trade related: Related companies in which directors of the Company have beneficial interests 上海思創能源有限公司嘉興市秀洲工業區宏業開發建設投資有限公司徐州天能鍋爐機械銷售有限公司 Associates A shareholder Trade-related: Related companies in which directors of the Company have beneficial interests aged within 90 days	2008 RMB’000 – – –	2007 RMB’000 (Restated) 6,991 20 2
	– 8,960 – 8,960 16,825	7,013 12,295 12
		19,320
		6
	25,785	19,326

For non-trade related amounts due from related companies, the amounts are unsecured and non-interest bearing.

For trade related amounts due from related companies, the amounts are unsecured, non-interest bearing and with a credit term of 90 days.

Amounts due to: Non-trade related: Related companies in which directors of the Company have beneficial interests Trade-related: Related companies in which directors of the Company have beneficial interests aged within 90 days	2008 RMB’000 43,158	2007 RMB’000 (Restated) 44,516
	10,845	1,090
	54,003	45,606

For non-trade related amounts due to related companies, the amounts are unsecured, non-interest bearing and repayable on demand.

For trade related amounts due to related companies, the amounts are unsecured, non-interest bearing and with a credit term of 90 days.

– I-44 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

27. TRADE AND OTHER PAYABLES

Trade payables 0-90 days 91-180 days Over 180 days Bills and notes payable (trade) 0-90 days 91-180 days Bills and notes payable (non-trade) Construction payables Other payables Dividend payables to minority shareholders of subsidiaries Deposits received from customers Deposit received for disposal of a subsidiary (note 38) Other tax payables Interest payables Accruals	2008 RMB’000 87,535 11,311 10,784	2007 RMB’000 (Restated) 130,437 4,045 4,786
	109,630 72,417 64,000 136,417 20,161 360,468 69,772 40,245 37,671 4,403 18,371 17,188 13,159	139,268
		10,068 9,841
		19,909
		– 158,337 148,837 80,585 26,319 – 25,943 6,039 10,165
	827,485	615,402

Trade payables principally comprise amounts outstanding for purchases of coal and ongoing costs. The average credit period for trade purchases is 30 to 90 days.

28. BORROWINGS

Short-term bank borrowings Long-term bank borrowings due within one year due after one year Representing: Secured Unsecured	2008 RMB’000 1,267,163 384,903 1,597,181 3,249,247	2007 RMB’000 (Restated) 1,151,256 340,450 1,987,981
		3,479,687

	2,197,624 1,051,623	2,502,277 977,410
	3,249,247	3,479,687

– I-45 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The bank borrowings are repayable as follows:

Within one year In the second year In the third year In the fourth year In the fifth year After five years Less: Amounts due within one year shown under current liabilities Amounts due after one year	2008 RMB’000 1,652,066 403,014 237,404 216,404 212,404 527,955	2007 RMB’000 (Restated) 1,491,706 415,396 402,396 238,396 140,396 791,397
	3,249,247 (1,652,066)	3,479,687 (1,491,706
	1,597,181	1,987,981

The bank borrowings carry fixed and variable interest rates with reference to the People’s Bank of China’s Benchmark Borrowing Interest Rate of the PRC (“Benchmark Rate”) are analysed as follows:

Fixed-rate borrowings Variable-rate borrowings	2008 RMB’000 Interest 918,663 5.04% to 7.56% 2,330,584 Benchmark Rate -1% to +3.0% 3,249,247	2007 RMB’000 Interest (Restated) 1,493,960 4.19% to 7.81% 1,985,727 Benchmark Rate -1% to + 2.0% 3,479,687

The borrowings are arranged at fixed and variable interest rates and expose the Group to fair value interest rate risk and cash flow interest rate risk, respectively. Certain borrowings are guaranteed by minority shareholders of subsidiaries and related companies which have common directors to the Company.

Certain borrowings are secured by property, plant and equipment, prepaid lease payments and bank deposits as set out in notes 17, 18 and 25, respectively.

All bank borrowings are denominated in RMB which is the functional currency of the Group.

– I-46 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

29. CONVERTIBLE NOTE

The movement of the convertible note was set out as follows:

At 1 January 2007 Change in fair value recognised in income statement Conversion to ordinary shares of the Company Redemption At 31 December 2007	Total Shown as (US$’000) RMB’000 (Restated) 100,000 783,923 50,999 339,738 (106,852) (795,143) (44,147) (328,518) – –

In November 2006, the Company issued a convertible note for a principal amount of US$88,000,000 to an independent third-party, MS China 3 Limited (the “Note Holder”). 60% of the principal amount, representing US$52,800,000 (the “Convertible Amount”) was convertible and redeemable and the remaining 40% of the principal amount, representing US$35,200,000 (the “Loan Amount”) was redeemable but not convertible. The convertible note was denominated in United States dollars and was secured by certain equity interests of the Company’s subsidiaries and associates.

The initial conversion price was US$112.20 per share and the initial number of ordinary shares issuable upon conversion of the Convertible Amount was 470,588 (assuming a total of 1,000,000 ordinary shares issued and outstanding as of note issuance date), which should represent 32% of the total number of ordinary shares issued and outstanding as of the note issuance date on a fully diluted basis. The conversion price was subject to certain anti-dilution adjustments.

The fair value of the convertible note at the conversion date was determined based on the fair value of the shares issued and cash settled by the Company to the Note Holder, in aggregate of approximately US$150,999,000 (equivalent to approximately RMB1,123,661,000, restated).

Upon listing of the Company’s shares on 13 November 2007, all the Convertible Amount was automatically converted into 203,280,000 shares of the Company at a price of HK$4.1 each, amounting to approximately HK$833,448,000 (equivalent to approximately RMB795,143,000, restated) and all the Loan Amount was redeemed together with interest on the note, amounting to US$44,174,000 (equivalent to approximately RMB328,518,000, restated).

The increase in fair value of the convertible note of approximately US$50,999,000 (equivalent to approximately RMB339,738,000, restated) was recognised in the consolidated income statement for the year ended 31 December 2007.

– I-47 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

30. DEFERRED TAX

The followings are the major deferred tax (liabilities) assets recognised and the movement thereon, during the year.

At 31 December 2006 (Restated) Effect of change in tax rate (Restated) Acquisitions of subsidiaries_(note 32)_ (Restated) Credit to the income statement for the year (Restated) At 31 December 2007 and 1 January 2008 (Restated) Credit (charge) to the income Statement for the year At 31 December 2008	Intangible assets RMB’000 – – (3,311) –	Property plant and equipment RMB’000 – – (2,331) 157	Prepaid lease payments RMB’000 – – (20,375) 147	With- holding tax Borrowings RMB’000 RMB’000 – – – – – (1,024) – 393	With- holding tax Borrowings RMB’000 RMB’000 – – – – – (1,024) – 393	Deferred income RMB’000 1,738 462 6,287 6,930	Total RMB’000 1,738 462 (20,754) 7,627
	(3,311) 54	(2,174) 185	(20,228) 498	– (10,494)	(631) 54	15,417 3,039	(10,927) (6,664)
	(3,257)	(1,989)	(19,730)	(10,494)	(577)	18,456	(17,591)

Deferred tax liabilities and assets are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted.

For the purpose of balance sheet presentation, certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances for financial reporting presentation purposes:

Deferred tax assets Deferred tax liabilities	2008 RMB’000 14,503 (32,094) (17,591)	2007 RMB’000 (Restated) 11,376 (22,303)
		(10,927)

At the balance sheet date, the Group has unused tax losses of RMB42,613,000 (2007: Nil) available for offset against future profits. No deferred tax asset has been recognized.

– I-48 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

31. SHARE CAPITAL

Ordinary shares of HK$0.1 each Authorised: At beginning of year Increase on 22 October 2007 (Note a) At end of year Issued and fully paid: At beginning of year Capitalisation issue (Note a) Issue of shares upon conversion of convertible note (Note b) Issue of shares on 13 November 2007 for the acquisitions of subsidiaries and associate (Note c) Issue of shares on 13 November 2007 pursuant to IPO (Note d) At end of year	Number of shares 2008 2007 (’000) (’000) 10,000,000 3,800 – 9,996,200 10,000,000 10,000,000 Number of shares 2008 2007 (’000) (’000) 972,419 1,000 – 388,220 – 203,280 – 91,919 – 288,000 972,419 972,419	Amount 2008 2007 (HK$’000) (HK$’000) 1,000,000 380 – 999,620 1,000,000 1,000,000 Amount 2008 2007 RMB’000 RMB’000 (Restated) 92,779 101 – 37,038 – 19,394 – 8,770 – 27,476 92,779 92,779	Amount 2008 2007 (HK$’000) (HK$’000) 1,000,000 380 – 999,620 1,000,000 1,000,000 Amount 2008 2007 RMB’000 RMB’000 (Restated) 92,779 101 – 37,038 – 19,394 – 8,770 – 27,476 92,779 92,779
			92,779

Notes:

(a) Pursuant to the written resolution of Highexcel Investment Limited, the then sole shareholder of the Company, on 22 October 2007, the authorised share capital was increased to HK$1,000,000,000. The directors of the Company were authorised to capitalise the sum of HK$38,822,000 (approximately RMB37,038,000) and apply in paying up in full at par 388,220,000 shares for allotment and issue to the shareholder whose name appeared on the register of members of the Company at the close of business on 22 October 2007 (or as he might direct) in proportion (as nearly as possible without involving fractions) to his then existing shareholdings in the Company and such shares to be allotted and issued shall rank pari passu in all respects with existing issued shares.
(b) On 13 November 2007, the Company issued 203,280,000 shares to the Note Holder upon conversion of the Convertible Amount of the convertible note at a price of HK$4.1 per share, amounting to HK$833,448,000 (equivalent to RMB795,143,000), the details of which have been set out in note 29.
(c) On 13 November 2007, the Company issued 91,919,487 shares to Poly (Hong Kong) Investment Company Limited (“Poly Hong Kong”), at a price of HK$4.1 each, amounting to approximately HK$376,870,000 (equivalent to RMB359,549,000), as partial consideration in exchange for the equity interests in certain entities which have then become subsidiaries and an associate of the Company. Details are set out in note 32 to the consolidated financial statements.
(d) On 13 November 2007, the Company issued 288,000,000 shares for cash pursuant to the IPO at a price of HK$4.1 each and listing of the Company’s shares on the Stock Exchange.

– I-49 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

32. ACQUISITION OF SUBSIDIARIES

(i) In March 2008, the Group acquired 100% equity interest of 鍚林郭勒國泰風力發電有限公司 from a company controlled by a shareholder of the Company for a consideration of approximately RMB20,014,000. The acquisition of the subsidiary is accounted for as acquisition of assets and assumption of liabilities.

The net assets of the subsidiary acquired as of the date of acquisition are as follows:

Property, plant and equipment Deposits for purchase of property, plant and equipment Bank balances and cash Other payables Total consideration satisfied by: Cash Net cash outflow arising from the acquisition: Cash consideration paid Cash and cash equivalents acquired	RMB’000 368 21,452 3,446 (5,252) 20,014 20,014 (20,014) 3,446 (16,568)

– I-50 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(ii) Upon the amendment to the Articles of Association of Suzhou Industrial Park Blue Sky Gas Cogen-Power Co., Ltd. (“Suzhou Cogeneration Plant”) registered on 13 March 2007, the Group obtained the power to control Suzhou Cogeneration Plant, accordingly, it was accounted for as a subsidiary of the Group since 13 March 2007. The net assets of Suzhou Cogeneration Plant as of the date of transfer from an associate to a subsidiary were as follows:

Property, plant and equipment
Prepaid lease payments
Inventories
Trade and other receivables
Amounts due from related companies
Bank balances and cash
Trade and other payables
Dividend payables to minority shareholders
Amounts due to related companies
Deferred income
Borrowings
Deferred tax liabilities
Minority interests
Transfer from an associate to a subsidiary
Net cash inflow arising from the acquisition:
Cash and cash equivalents acquired

Carrying
amounts of
net assets
approximate
to fair value
RMB’000
(Restated)
1,004,865
13,725
16,042
98,562
57,711
96,394
(93,513)
(27,238)
(49)
(4,623)
(845,904)
(2,529)
313,443
(153,587)
159,856
96,394

(iii) On 13 November 2007, the Company issued 91,919,487 shares to Poly Hong Kong, at a price of HK$4.1 each, amounting to approximately HK$376,870,000 (equivalent to RMB359,549,000) together with a cash of HK$50,000,000 (equivalent to RMB47,702,000) as consideration to acquire the entire share capital of NCHK Power (Taicang) Limited, Well United Interments Limited, Master Chief Holding Limited, Green Island Development Limited, High Praise Development Limited, Giant Merit Development Limited and Golden Concord Energy (Jia Xing) Limited from Poly Hong Kong which indirectly held 50.1% equity interests in each of Dongtai Cogeneration Plant and Peixian Cogeneration Plant, 51% equity interests in each of Jiaxing Cogeneration Plant and Taicang Poly Xiexin Thermal Power Co., Ltd. (“Taicang Poly Cogeneration Plant”), 36.75% equity interest in Xuzhou Cogeneration Plant and 29.4% equity interest in Funing Cogeneration Plant (collectively the “Poly Acquisition”).

Upon completion of the Poly Acquisition, Dongtai Cogeneration Plant, Peixian Cogeneration Plant, Jiaxing Cogeneration Plant, Xuzhou Cogeneration Plant and Taicang Poly Cogeneration Plant became subsidiaries of the Group and their results had then been consolidated by the Group, resulting in goodwill on acquisition of Dongtai Cogeneration Plant, Peixian Cogeneration Plant, Jiaxing Cogeneration Plant and Xuzhou Cogeneration Plant of approximately of RMB116,703,000 and discount on acquisition of Taicang Poly Cogeneration Plant of approximately RMB3,188,000.

– I-51 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The net assets acquired from Poly Acquisition to the Group as of the date of acquisition were as follows:

Property, plant and equipment Prepaid lease payments Interest in an associate Available-for-sale investments Goodwill Other intangible assets Deferred tax assets Inventories Trade and other receivables Amounts due from related companies Pledged bank deposits Bank balances and cash Trade and other payables Tax payables Dividend payables to minority shareholders Amounts due to related companies Deferred income Borrowings Deferred tax liabilities Goodwill Discount on acquisition Minority interests Revaluation reserve on previously held interests Interests in associates Total consideration satisfied by: Cash Fair value of shares issued Net cash inflow arising on acquisitions: Cash consideration paid Cash and cash equivalents acquired	Carrying amounts in the book of acquiree before acquisition RMB’000 (Restated) 1,072,538 56,250 37,604 160 9,501 7,876 5,593 33,984 119,347 21,086 52,500 52,228 (157,196) (1,265) (12,008) (25,556) (23,336) (745,910) (2,111) 501,285	Fair value adjustments RMB’000 (Restated) 7,346 78,558 7,487 – – 1,423 – – – – – – – – – – – – (20,507) 74,307	Fair value RMB’000 (Restated) 1,079,884 134,808 45,091 160 N/A 9,299 5,593 33,984 119,347 21,086 52,500 52,228 (157,196) (1,265) (12,008) (25,556) (23,336) (745,910) (22,618) 566,091 116,703 (3,188) (25,228) (6,390) (240,737) 407,251 47,702 359,549 407,251 (47,702) 52,229 4,527
			116,703 (3,188 (25,228 (6,390 (240,737

– I-52 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(iv) On 19 November 2007 and 29 November 2007, the Group aggregately acquired 100% equity interests of Tongxiang Puyuan Xiexin Environmental Protection Cogeneration Co., Ltd. 桐鄉濮院協鑫環保熱電有限公司 (“Puyuan Cogeneration Plant”) from companies controlled by a shareholder of the Company for a total consideration of RMB90,740,000, restated. In the opinion of the directors, the fair value of net assets acquired approximated to the carrying amounts of those net assets at the acquisition date. The acquisition had been accounted for using the purchase method. The discount on acquisition of approximately RMB3,894,000, restated was credited directly to equity of the Group as a capital contribution from a shareholder.

The net assets of Puyuan Cogeneration Plant at the date of acquisition were as follows:

Property, plant and equipment
Prepaid lease payments
Other intangible assets
Inventories
Trade and other receivables
Bank balances and cash
Trade and other payables
Amounts due to related companies
Borrowings
Deferred tax liabilities
Discount on acquisition directly to equity
Total consideration satisfied by:
Cash
Net cash outflow arising on acquisition:
Cash consideration paid
Cash and cash equivalents acquired

Carrying
amounts of
net assets
approximate
to fair value
RMB’000
(Restated)
262,710
14,113
5,545
5,285
46,501
4,532
(47,896)
(44,956)
(150,000)
(1,200)
94,634
(3,894)
90,740
90,740
(90,740)
4,532
(86,208)

(v) On 30 November 2007, the Group acquired 100% equity interests of 蘇州保利協鑫燃料有限公司 (“Suzhou Fuel Company”) from a company controlled by a shareholder of the Company for a consideration of RMB13,360,000. In the opinion of the directors, the fair value of net assets acquired approximated to the carrying amounts of those net assets at the acquisition date. The acquisition had been accounted for using the purchase method. The discount on acquisition of approximately RMB1,842,000 was credited directly to equity of the Group as a capital contribution from a shareholder.

– I-53 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The net assets of Suzhou Fuel Company as of the date of acquisition were as follows:

Property, plant and equipment Inventories Trade and other receivables Amounts due from related companies Bank balances and cash Trade and other payables Amounts due to related companies Tax Payable Borrowings Discount on acquisition directly to equity Total consideration satisfied by: Cash Net cash outflow arising on acquisition: Cash consideration paid Cash and cash equivalents acquired	Carrying amounts of net assets approximate to fair value RMB’000 (Restated) 1,025 9,110 63,245 40,556 11,374 (53,799) (35,372) (937) (20,000) 15,202 (1,842) 13,360 13,360 (13,360) 11,374 (1,986)

For the year ended 31 December 2007, the subsidiaries acquired contributed RMB9,972,000 to the Group’s profit for the period between the date of acquisitions and the balance sheet date.

If the acquisitions had been completed on 1 January 2007, total group revenue for the year ended 31 January 2007 would have been RMB2,547,652,000 and loss for the year ended 31 December 2007 would have been RMB177,734,000. The proforma information was for illustrative purpose only and was not necessarily an indication of revenue and results of the Group that actually would have been achieved had the acquisitions been completed on 1 January 2007, nor was it intended to be a projection of future results.

33. MAJOR NON-CASH TRANSACTIONS

On 13 November 2007, the Company issued 91,919,487 new shares at HK$4.1 each amounting to approximately HK$376,870,000 as partial consideration to Poly Hong Kong for acquisition of equity interests in certain subsidiaries and an associate as set out in note 32.

– I-54 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

34. OPERATING LEASES

The Group as lessee

Minimum lease payments paid under operating leases in the year: Buildings Staff quarters Motor vehicles and other assets Natural gas transmission network Others	2008 RMB’000 6,827 867 259 7,839 320 16,112	2007 RMB’000 (Restated) 5,997 486 415 6,669 –
		13,567

At the balance sheet date, the Group had commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Within one year In the second to fifth years inclusive After five years	2008 RMB’000 6,538 3,299 – 9,837	2007 RMB’000 (Restated) 6,012 6,199 49
		12,260

Operating lease payments represent rental payables by the Group for certain properties, motor vehicles and other assets. Leases are negotiated and rentals are fixed for terms from one to three years.

The Group as lessor

Rental income credited to the income statement during the year: Pipeline transmission networks Staff quarters Land use rights Motor vehicles Others	2008 RMB’000 2,045 886 35 – 200 3,166	2007 RMB’000 (Restated) 3,834 72 – 121 –
		4,027

– I-55 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

At the balance sheet date, the Group had contracted with tenants for the future minimum lease payments.

Within one year In the second to fifth years inclusive After five years	2008 RMB’000 1,027 1,609 1,935 4,571	2007 RMB’000 (Restated) 144 573 1,953
		2,670

35. CAPITAL COMMITMENTS

Capital expenditure in respect of acquisition of property, plant and equipment contracted for but not provided Capital expenditure in respect of acquisition of property, plant and equipment authorised but not contracted for	2008 RMB’000 81,731 40,000	2007 RMB’000 (Restated) 121,802

		125,000

36. SHARE BASED PAYMENT TRANSACTIONS

Equity-settled share option scheme:

Pursuant to a written resolution of the sole shareholder on 22 October 2007, a share option scheme (“Pre-IPO Share Option Scheme”) was adopted by the Company. Pursuant to the Pre-IPO Share Option Scheme, the Company may grant options to the employees of the Company or of its subsidiaries to subscribe for shares of the Company.

The total number of shares may be issued upon the exercise of all options granted on 13 November 2007 under the Pre-IPO Share Option Scheme for directors and employees under continuous employment contract is 28,940,000 (2007: 31,260,000) shares representing approximately 3.0% (2007: 3.2%) of issued share capital of the Company at the balance sheet date. The estimated fair value of the options at the date of grant was approximately HK$1.7626 per share and exercise period from 13 November 2010 to 12 November 2017.

There was no movement on the number of share options granted under Pre-IPO Share Option Scheme between the date of grant to 31 December 2007. The following table discloses movement of the Company’s share option held by directors and employees during the year.

Directors Employees under continuous employment contract	Outstanding at 1 January 2008 7,680,000 23,580,000 31,260,000	Exercised during the year – – –	Lapsed or cancelled during the year – (2,320,000) (2,320,000)	Outstanding at 31 December 2008 7,680,000 21,260,000
				28,940,000

– I-56 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note:

On or before 12 November 2010, no options granted to the directors and/or employees shall vest.

During the period from 13 November 2010 to 12 November 2011, a cumulative maximum of 20% of the share options granted to the directors and/or employees shall vest.

During the period from 13 November 2011 to 12 November 2012, a cumulative maximum of 50% of the share options granted to the directors and/or employees shall vest.

During the period from 13 November 2012 to 12 November 2013, a cumulative maximum of 100% of the share options granted to the directors and/or employees shall vest.

The fair value of the options has been estimated using the Binominal model. The inputs into the model are as follows:

	2007
Market price	HK$4.10
Exercise price	HK$4.10
Expected volatility	44.68%
Expected life	3-5 years
Risk-free rate	3.47%
Expected dividend yield	1.50%

Expected volatility was determined by using the volatility of the stock return of comparable listed companies as at the valuation date. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non transferability, exercise restrictions and behavioural considerations.

The Group recognised the total expense of RMB10,753,000 (2007: RMB2,100,000, restated) for the year ended 31 December 2008 in relation to share options granted by the Company.

Binomial model has been used to estimate the fair value of the options. The variables and assumptions used in computing the fair value of the share options are based on the directors’ best estimate. The value of an option varies with different variables of certain subjective assumptions.

37. RETIREMENT BENEFITS SCHEME

(a) The PRC

The Group’s full-time employees in the PRC are covered by a government sponsored defined contribution pension scheme, and are entitled to a monthly pension from their retirement dates. The PRC Government is responsible for the pension liability to these retired employees. The Group is required to make annual contributions to the retirement plan at a rate of 18% to 22% of employees’ salaries, which are charged to operations as an expense when the contributions are due.

(b) Hong Kong

The Group participates in a pension scheme, which was registered under the Mandatory Provident Fund Scheme Ordinance (the “MPF Ordinance”), for all its employees in Hong Kong. The scheme is a defined contribution scheme and is funded by contributions from employers and employees according to the provisions of the MPF Ordinance.

– I-57 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

During the year, the total amounts contributed by the Group to the scheme in Hong Kong and charged to the consolidated income statement represent contributions payable to the scheme by the Group at rates specified in the rules of the scheme are as follows:

	2008	2007
	RMB’000	RMB’000
		(Restated)
Amount contributed and charged to
the consolidated income statement	328	166

38. POST BALANCE SHEET EVENTS

(i) On 11 August 2008, the Group entered into a conditional sale and purchase agreement with a company controlled by a shareholder of the Company for the acquisition of 55% equity interest in 內蒙古多倫協鑫礦業有限責任公司 Inner Mongolia Duolun Golden Concord Mining Ltd., a joint venture company established in the PRC and engaged in coal mining business in Inner Mongolia, the PRC. The aggregate consideration for the equity interest and the capital injection will not be more than RMB127,936,000 and will be settled by the issue of convertible notes of the Company. As at 31 December 2008, the transaction has not been completed. Details of this transaction are set out in the Company’s announcement dated 11 August 2008 and a circular dated 22 September 2008.
(ii) On 15 April 2008, Park Bright Investments Limited (“Park Bright”), a wholly owned subsidiary of the Group, entered into a conditional sale and purchase agreement at a consideration of RMB35,700,000 with an independent third party for acquisition of 75% equity interest in Profit Excel Investments Limited, which directly holds 70% equity interest in Lincang Runda Hydropower Plant Company Limited, a joint venture company engaged in operating hydropower plants in Yunan, the PRC. As at 31 December 2008, a deposit of RMB20,000,000 has been paid by the Group (see note 24). Details are set out in Company’s announcements dated 15 April 2008. The transaction has not been completed.

On 12 November 2008, the Group entered into another sale and purchase agreement with a company controlled by a shareholder of the Company for the disposal of the entire issued capital of Park Bright. The consideration for the disposal was HK$25,000,000 in cash, resulting in an estimated gain on disposal of RMB1,751,000. A deposit of HK$5,000,000 (approximately RMB4,403,000) has been received by the Group before 31 December 2008 (see note 27). As at 31 December 2008, the transaction has not been completed. Details of this transaction are set out in the Company’s announcement dated 12 November 2008.

(iii) On 16 February 2009, 40,980,000 share options have been granted by the Company to the employees of the Group (including directors and executives of the Group) and its associated companies at an exercise price of HK$0.59 per share. Details of the grant are set out in the Company’s announcement dated 16 February 2009.

– I-58 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

39. RELATED PARTY TRANSACTIONS

Apart from details of the balances with related companies disclosed in the consolidated balance sheet on pages 71 and 72 and in note 26 and transactions and other arrangements with related companies disclosed in notes 19, 28 and 32, the Group had also entered into the following significant transactions with related parties during the year.

	2008	2007
	RMB’000	RMB’000
		(Restated)
Transactions with related companies in which directors of
the Company have beneficial interests:
Construction related services expense	5,199	10,807
Consultancy service fee income	20,200	–
Deposit received	4,448	–
Management fee income	14,400	10,833
Office expense	2,078	1,586
Purchase of coal	47,159	343,227
Rental expense	2,827	11,252
Rental income	1,086	–
Sale of coal	145,714	3,570
Training income	184	–
Purchase of property, plant and equipment and
construction in progress	–	976
Purchase of consumables and spare parts	–	990
Service fee expense	–	1,335
Transactions with associates:
Management income	500	–
Sale of coal	27,892	1,738
Purchase of coal	–	1,006
Service fee income	–	2,881
Transactions with minority shareholders of a subsidiary
and its controlling shareholders:
Purchase of coal	6,320	8,557
Rental expense	4,000	–
Sales of steam	685	–

Compensation of key management personnel

The remuneration of directors and other members of key management are as follows:

Salaries and other allowances Retirement benefits scheme contributions	2008 RMB’000 11,251 239 11,490	2007 RMB’000 (Restated) 5,832 110
		5,942

The remuneration of directors and key executives is determined by having regard to the performance of individuals and market trends.

– I-59 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

40. GOVERNMENT GRANTS INCOME

Incentive subsidies (Note a) Value-added tax refund related to expenses (Note b) Amounts credited to consolidated income statement Value-added tax refund related to depreciable assets (note 17) (Note c) Total government grants income	2008 RMB’000 45,935 14,548 60,483 36,868 97,351	2007 RMB’000 (Restated) 30,293 12,404
		42,697 13,945
		56,642

Notes:

(a) Incentive subsidies were received from the relevant PRC Government to encourage the operations of certain PRC subsidiaries for the growth in supply of electricity and development of environmental friendly electricity generation. There were no specific conditions attached to the grants and, therefore, the Group recognised the grants upon receipt. The subsidies were granted on a discretionary basis to the Group during the year.
(b) During the years ended 31 December 2008 and 2007, the Group received refund of value-added tax from the relevant PRC Tax Authority for purchasing environmental friendly raw materials. They were granted if the total environmental friendly raw materials consumed represented more than 60% of total raw materials of PRC subsidiaries. There were no other specific conditions attached to the grants and, therefore, the Group recognised the grants upon receipt. The directors believe that the Group can continue maintaining the usage of environmental friendly materials. In addition, the Group received refund of value-added tax from local government to encourage the establishment of operation in that region.
(c) The refund of value-added tax on purchases of depreciable assets has been deducted from the carrying amount of the relevant assets. The amount is transferred to income in the form of reduced depreciation charges over the useful lives of the relevant assets. This policy has resulted in a reduction of depreciation charges by approximately RMB1,446,000 for the year ended 31 December 2008 (2007: RMB755,000, restated). As at 31 December 2008, an amount of approximately RMB61,638,000 (2007: RMB26,215,000, restated) remains to be amortised.

– I-60 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

41. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY

				Issued and
	Date of	Place of		fully paid	Attributable
	incorporation/	incorporation/		share/	equity interest of
	establishment/	establishment/		registered	the Group %		Principal
Name of subsidiaries	registration	registration		capital	At 31 December		activity
					2008	2007
Baoying Xiexin Biomass	27 February 2004	PRC		US$17,700,000	100	100	Operation of
Electric-Power Co., Ltd. *1							a power
寶應協鑫生物質發電有限公司							station
Lianyungang Xiexin Biomass	4 March 2004	PRC	RMB105,500,000		100	100	Operation of
Electric-Power Generation Co.,							a power
Ltd.*1							station
連雲港協鑫生物質發電有限公司
Rudong Golden Concord	21 November 2003	PRC		RMB81,960,000	100	100	Operation of
Environmental Protection							a power
Cogen-Power Co., Ltd. *1							station
如東協鑫環保熱電有限公司
Taicang Xiexin Refuse Incineration	14 June 2004	PRC		RMB88,000,000	100	100	Operation of
Power Co., Ltd. *2							a power
太倉協鑫垃圾焚燒發電有限公司							station
Huzhou Golden Concord	16 October 2003	PRC		US$10,710,000	94.77	94.77	Operation of
Environmental Protection							a power
Cogen-Power Co., Ltd.3							station
湖州協鑫環保熱電有限公司
Fengxian Xinyuan Biological	6 June 2003	PRC		RMB66,000,000	51	51	Operation of
Environmental Heat and Power					(Note a)		a power
Co., Ltd.3							station
豐縣鑫源生物質環保熱電有限公司
Haimen Xinyuan Environmental	30 December 2002	PRC		US$8,000,000	51	51	Operation of
Protection Co-generation Co., Ltd.3					(Note a)		a power
海門鑫源環保熱電有限公司							station
Kunshan Xinyuan Environmental	21 August 2002	PRC		RMB116,200,000	51	51	Operation of
Protection Cogen-Power Co., Ltd.3					(Note a)		a power
昆山鑫源環保熱電有限公司							station
Yangzhou Harbour Sludge Power	3 January 2003	PRC		US$14,068,000	51	51	Operation of
Co., Ltd.3					(Note a)		a power
揚州港口污泥發電有限公司							station
Shanghai GCL-Poly Electricity	12 October 2006	PRC		RMB1,000,000	100	100	Provision of
Operating Management Co., Ltd.*5							management
上海保利協鑫電力運行管理有限公司							services
Hugesuccess Investments Limited	28 April 2006	British Virgin		US$1	100	100	Investment
宏成投資有限公司		Islands					holding
		(“BVI”)

– I-61 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

				Issued and
	Date of	Place of		fully paid	Attributable
	incorporation/	incorporation/		share/	equity interest		of
	establishment/	establishment/		registered	the Group %			Principal
Name of subsidiaries	registration	registration		capital	At 31 December			activity
					2008	2007
Wise Able Investments Limited	22 March 2006	BVI		US$1	100	100		Investment
智能投資有限公司								holding
Tongxiang City Wu Town Xiexin	2 February 2007	PRC		RMB3,000,000	94.77	94.77		Operation of
Thermal Power Company Limited3								boilers and
桐鄉市烏鎮協鑫熱力有限公司								trading of
								steam
Lianyungang Xinneng Sludge Power	19 October 2006	PRC		US$9,550,000	100	100		Operation of
Co., Ltd.*4								a power
連雲港鑫能污泥發電有限公司								station
Winpak Investment Limited	31 August 2006	Hong Kong		HK$1	100	100		Investment
榮栢投資有限公司								holding
Suzhou Industrial Park Blue Sky Gas	30 December 2003	PRC	RMB300,000,000		51	51		Operation of
Cogen-Power Co., Ltd.3					(Note a)			a power
蘇州工業園區藍天燃氣熱電有限公司								station
Dongtai Suzhong Environmental	15 May 2001	PRC		US$8,000,000	100	100		Operation of
Protection Co-generation Co., Ltd.4								a power
東台蘇中環保熱電有限公司								station
Jia Xing Environmental Cogen-Power	26 September 2003	PRC		RMB98,400,000	95	95		Operation of
Co., Ltd. *3								a power
嘉興協鑫環保熱電有限公司								station
Peixian Mine-site Environmental	16 August 2000	PRC		US$8,000,000	100	100		Operation of
Cogen-Power Co., Ltd.1								a power
沛縣坑口環保熱電有限公司								station
Taicang Poly Xiexin Thermal Power	4 November 1996	PRC		US$15,200,000	100	100		Operation of
Co., Ltd.1								a power
太倉保利協鑫熱電有限公司								station
Xuzhou Baoxin Sludge Power Co.,	23 December 2001	PRC		RMB99,200,000	75	75		Operation of
Ltd.3								a power
徐州保鑫污泥發電有限公司								station
Tongxiang Puyuan Xiexin	18 April 2006	PRC		US$14,800,000	100	100		Operation of
Environmental Protection								a power
Cogeneration Co., Ltd.*4								station
桐鄉濮院協鑫環保熱電有限公司
GCL-Poly Power Fuel Co., Ltd.*4	15 December 2006	PRC		US$7,000,000	100	100		Coal trading
保利協鑫電力燃料有限公司
Xilingol Guotai Wind Power	16 August 2007	PRC	RMB100,000,000		100		–	Operation of
Generation Co., Ltd*4								a wind
鍚林郭勒國泰風力發電有限公司								power
								station
								(under
								construction)

* For identification only

– I-62 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

These companies were established in the PRC in the form of sino-foreign equity joint venture enterprise and approved to be converted into wholly foreign-owned enterprise upon the Corporate Reorganisation in 2007.
These companies were established in the PRC in the form of domestic-invested company and approved to be converted into wholly foreign-owned enterprise upon the Corporate Reorganisation in 2007.
These companies were established in the PRC in the form of sino-foreign equity joint venture enterprise.
These companies were established in the PRC in the form of wholly foreign-owned enterprise.
The company was established in the PRC in form of foreign invested enterprise (wholly owned by legal entity).
Note a: The Group has the right to appoint a majority of the directors on the respective boards of directors and control the operating and financial activities of these subsidiaries.

The above table lists the subsidiaries of the Group which, in the opinion of the directors, principally affected the results or assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

None of the subsidiaries had issued any debt securities at the end of the year.

42. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform with the current year’s presentation.

III. INDEBTEDNESS STATEMENT

As at 31 May 2009, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group and the Enlarged Group had outstanding indebtedness as follows:

Borrowings

As at 31 May 2009, the total outstanding bank borrowings of the Group and the Enlarged Group are as follows:

Bank borrowings Secured Unsecured	The Group RMB’000 2,444,973 850,160 3,295,133	The Target Group RMB’000 2,475,000 696,000 3,171,000	The Enlarged Group RMB’000 4,919,973 1,546,160
			6,466,133

As at 31 May 2009, (i) the Group’s advance from a related company of approximately RMB32,950,000 is unsecured, interest-free and repayable on demand; (ii) the Enlarged Group’s advance from Happy Genius, an immediate holding company of the Target Group of approximately US$15,250,000 is unsecured, interest-free and repayable on 20 June 2009. The repayment date of the advance has subsequently been extended to 20 June 2010 and; (iii) the Enlarged Group’s advances from Happy Genius of approximately HK$3,427,262,000 are unsecured, interest free and repayable on demand.

– I-63 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Convertible loan notes

On 10 September 2007, GCL Solar issued the convertible loan notes for a principal amount of US$60,000,000 to an independent third-party. As at 31 May 2009, the nominal value of the outstanding convertible loan notes of the Enlarged Group was US$60,000,000.

Convertible redeemable preferred Shares

As at 31 May 2009, GCL Solar had outstanding 16,667,000 Series A convertible redeemable preferred Shares (the “Shares”). Such Shares have an initial par share value of US$1.2 and the nominal value of the Shares outstanding on 31 May 2009 was US$20,000,000.

Pledge of assets

As at 31 May 2009, the bank borrowings were secured by the pledge of certain property, plant and equipment, prepaid lease payments and bank deposits of the Group and the Enlarged Group in the PRC with their net book values as follows:

Pledge of assets Property, plant and equipment Prepaid lease payments Bank deposits	The Group RMB’000 2,845,127 196,811 427,307 3,469,245	The Target Group RMB’000 410,990 – 187,635 598,625	The Enlarged Group RMB’000 3,256,117 196,811 614,942
			4,067,870

As at 31 May 2009, in the Enlarged Group, 64% of the equity interests in Jiangsu Zhongneng has been pledged to secure the convertible loan notes issued by GCL Solar. In addition, the assets of Greatest Joy, Sun Wave and their subsidiaries, including aggregate 36% equity interest in Jiangsu Zhongneng, have been pledged to secure the Exchangeable Bonds issued by Happy Genius.

As at 31 May 2009, the Group and the Enlarged Group did not have material contingent liabilities.

Save as disclosed above, the Group and the Enlarged Group did not have any other outstanding bank or other borrowings, mortgages, charges, debentures or other loan capital, bank overdrafts, loans or other similar indebtedness, guarantee, liabilities under acceptances (other than normal trade bills), acceptance credits, hire purchase or other finance lease commitments or other contingent liabilities.

As at the Latest Practicable Date, the Directors have confirmed that there has been no material change in the indebtedness and contingent liabilities of the Group and the Enlarged Group.

– I-64 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

IV. WORKING CAPITAL

The Enlarged Group is in negotiations with certain banks for new banking facilities and/or may undertake private placing of the new Shares of the Company to finance the term loan and Secured Notes of US$300 million and US$350 million, respectively. Taking into consideration of new banking facilities obtained and/or the completion of the private placing of the new Shares of the Company as mentioned above, the Directors are of the opinion that, in the absence of unforeseeable circumstances and after taking into account the Enlarged Group’s current bank balances and financial resources, the Enlarged Group has sufficient working capital for its present requirements and for its requirements for the next twelve months from the date of this circular.

In any event, if the Enlarged Group is unable to successfully obtain the term loan, the Acquisitions would not be able to proceed to Completion due to the obtaining of the term loan being a condition precedent to Completion. The Directors also believe that without the availability of funds raised from the private placing of the new Shares of the Company, the Group would be able to find alternative sources of funding, such as rights issues and open offers. In addition, to the best belief of the Directors, the Group will be able to obtain additional banking facilities from various banks due to the Group’s good existing relationships with such banks. Furthermore, the Directors are confident that they are able to negotiate with the Holders to extend the maturity of the Secured Notes. Without the new banking facilities and the private placing of the new Shares of the Company, the Directors are of the opinion that the Enlarged Group has sufficient working capital for the next twelve months from the date of this circular.

V. VALUATION OF THE PROPERTY INTEREST

To comply with the Listing Rules, the Company has engaged Jones Lang LaSalle Sallmanns Limited to value the property interests of the Group and the Target Group. Details of the property valuation reports are set out in Appendix VI to this circular. Disclosure of the reconciliation of the net book value and the valuation as required under Rule 5.07 of the Listing Rules is set out below:

The Group

Valuation of the property interest as at 30 April 2009 as set out in the valuation report included in Appendix VI to this circular (note 1) Net book value of the property interest as at 31 December 2008 Add: Construction costs for buildings for the period from 1 January 2009 to 30 April 2009 Less: Depreciation for the period from 1 January 2009 to 30 April 2009 Net book value of the property interest as at 30 April 2009 Net revaluation surplus	RMB’000 1,437,106 17,786 (20,956)	RMB’000 1,695,547
		1,433,936
		261,611

– I-65 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Target Group

Valuation of the property interest as at 30 April 2009 as set out in the valuation report included in Appendix VI to this circular (note 1) Net book value of the property interest as at 31 December 2008 Add: Construction costs for buildings for the period from 1 January 2009 to 30 April 2009 Less: Depreciation for the period from 1 January 2009 to 30 April 2009 Net book value of the property interest as at 30 April 2009 Net revaluation surplus	RMB’000 958,714 70,300 (14,707)	RMB’000 1,106,931 1,104,307
		92,624

Note 1 : For the purpose of this reconciliation, the reference value for the properties without proper title certificates of RMB181,202,000 and RMB288,864,000 for the Group and Target Group respectively are included.

– I-66 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

==> picture [71 x 55] intentionally omitted <==

30 June 2009

The Directors

GCL-Poly Energy Holdings Limited

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding GCL Solar Energy Technology Holdings Inc. (formerly named as GCL Silicon Technology Holdings Inc. and Asia Silicon Technology Holdings Inc. and known as the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) for the period from 13 November 2006 to 31 December 2006, the two years ended 31 December 2007 and 31 December 2008 (the “Relevant Periods”) for inclusion in the circular issued by GCL-Poly Energy Holdings Limited, a company incorporated in the Cayman Islands with its shares being listed on the main board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), dated 30 June 2009 in connection with the proposed acquisition of 100% equity interest in the Company, pursuant to an agreement dated 3 June 2009 (“Agreement”) entered into between GCL-Poly Energy Holdings Limited and the various shareholders of the Company (the “Circular”).

The Company was incorporated in the Cayman Islands on 9 May 2007. Pursuant to a group reorganisation, details of which are set out in note 2 to the Financial Information, all the shareholders of GCL Solar Energy Technology Holdings Limited (formerly named as GCL Silicon Technology Holdings Limited and Asia Silicon Technology Holdings Limited and known as “GCL Solar HK”) exchanged their equity interest in GCL Solar HK for shares in the Company in proportion of their interest in GCL Solar HK. As a result, GCL Solar HK became a wholly owned subsidiary of the Company and the Company has become the holding company of the Group since 21 August 2007. Accordingly, the Financial Information of the Group has been prepared on the basis as if the Company had always been the holding company of the Group using principles of merger accounting since the date of incorporation of GCL Solar HK. The Company is an investment holding company. No audited financial statements have been prepared for the Company since its date of incorporation as it was incorporated in a country where there is no statutory audit requirement.

– IIA-1 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

As at the date of this report, the Company has direct and indirect interests in the following subsidiaries:

				Proportion of nominal	Proportion of nominal	Proportion of nominal
				value of issued share
	Date of	Place of	Issued and fully	capital/ registered			Interest
	incorporation/	incorporation/	paid share/	capital held by the			attributable
Name of the company	establishment	establishment	registered capital	Company			to the	Principal activity
				Directly	Indirectly		Company
				%		%	%
GCL Solar HK	13 November 2006	Hong Kong	HK$1	100		–	100	Investment
								holding
江蘇中能硅業科技發展有限公司	7 March 2006	The People’s	RMB1,620,000,000	–		64	64	Manufacture and
Jiangsu Zhongneng Polysilicon		Republic of						sale of
Technology Development Co.,		China (“PRC”)						polysilicon
Ltd. (formerly named as Jiangsu
Zhongneng Photovoltaic
Development Co., Ltd. and
known as “JZPTD”)*(note)
泰興中能遠東硅業有限公司Taixing	12 June 2008	PRC	US$4,318,804	–	89.2		89.2	Manufacture of
Zhongneng Far East Polysilicon								raw material of
Technology Development Co.,								polysilicon for
Ltd.* (“TZPTD”)								JZPTD
江蘇協鑫硅材料科技發展有限公司	16 October 2008	PRC	RMB500,000,000	–		64	64	Inactive
Jiangsu GCL Polysilicon
Technology Development Co.,
Ltd.* (“JGCPTD”)
Go Power Holdings Limited	28 November 2007	British Virgin	US$1	100		–	100	Investment
(“Go Power”)		Islands						holding
Sun Far East Limited	7 December 2007	Hong Kong	HK$1	–	100		100	Investment
(“Sun Far East”)								holding
協鑫光伏電力（香港）有限公司GCL	29 April 2009	Hong Kong	HK$75,950,000	–		64	64	Inactive
Solar Power (Hong Kong)
Limited (“GCL Solar Power”)

Note: JZPTD was acquired by GCL Solar HK on 13 December 2006.

The financial year-end date of the Company and its subsidiaries is 31 December. The statutory financial statements of JZPTD for the period from 7 March 2006 (date of establishment) to 31 December 2006 and the years ended 31 December 2007 and 2008, which were prepared in accordance with relevant accounting principles and regulations applicable to enterprises established in PRC, were audited by 徐州正大會計師事務所有限公司 Xuzhou Zhengda Certified Public Accountants Company Limited*, a firm of certified public accountants registered in the PRC. The statutory financial statements of GCL Solar HK for the period from 13 November 2006 (date of incorporation) to 31 December 2007, which were prepared in accordance with relevant accounting principles and regulations applicable to companies established in Hong Kong, were audited by us. No audited

The English name is for identification purpose only

– IIA-2 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

financial statements have been prepared for Go Power as it was incorporated in jurisdictions where there is no statutory audit requirement. No audited financial statements have been prepared for TZPTD, JGCPTD, Sun Far East and GCL Solar Power as these entities have not yet appointed auditor.

For the purpose of this report, the directors of the Company have prepared the consolidated financial statements of the Group for the Relevant Periods in accordance with the accounting policies in compliance with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) (the “IFRS Financial Statements”). We have, for the purpose of this report, performed independent audit procedures on IFRS Financial Statements in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and have examined the IFRS Financial Statements in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

The Financial Information of the Group for the Relevant Periods set out in this report has been prepared based on the IFRS Financial Statements for the purpose of preparing our report for inclusion in the Circular without making any adjustments. The preparation of the IFRS Financial Statements is the responsibility of the directors of the Company, who approved their issue. The directors of GCL-Poly Energy Holdings Limited are responsible for the contents of the Circular in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the IFRS Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, the Financial Information, together with the notes thereon gives, for the purpose of this report, a true and fair view of the state of affairs of the Group as at 31 December 2006, 2007 and 2008 and of the consolidated results and consolidated cash flows of the Group for the Relevant Periods.

– IIA-3 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

A. FINANCIAL INFORMATION

CONSOLIDATED INCOME STATEMENT

13 November 2006 to 31 December 2006 NOTES RMB’000 Revenue – Cost of sales – Gross profit – Other income 9 424 Administrative expenses (1,852) Change in fair value of convertible loan notes 29 – Change in fair value of convertible redeemable preferred shares 31 – Change in fair value of embedded derivative instruments 32 – Gain on disposal of a subsidiary 40 – Finance costs 10 (1,148) (Loss) profit before tax (2,576) Income tax expense 11 – (Loss) profit for the period/year 12 (2,576) Attributable to: Equity holders of the Company (1,653) Minority interests (923) (2,576)	Year ended 31 December 2007 2008 RMB’000 RMB’000 301,766 3,521,444 (81,234) (966,788) 220,532 2,554,656 14,056 68,482 (120,629) (213,701) (25,054) (105,259) (79,738) 40,271 – (9,912) 4,335 – (37,804) (72,160) (24,302) 2,262,377 (24,353) (29,740) (48,655) 2,232,637 (89,579) 1,374,399 40,924 858,238 (48,655) 2,232,637	Year ended 31 December 2007 2008 RMB’000 RMB’000 301,766 3,521,444 (81,234) (966,788) 220,532 2,554,656 14,056 68,482 (120,629) (213,701) (25,054) (105,259) (79,738) 40,271 – (9,912) 4,335 – (37,804) (72,160) (24,302) 2,262,377 (24,353) (29,740) (48,655) 2,232,637 (89,579) 1,374,399 40,924 858,238 (48,655) 2,232,637
– 424 (1,852) – – – – (1,148) (2,576) –	220,532 14,056 (120,629) (25,054) (79,738) – 4,335 (37,804) (24,302) (24,353)	2,554,656 68,482 (213,701 (105,259 40,271 (9,912 – (72,160
		2,262,377 (29,740
(2,576)	(48,655)
(1,653) (923)	(89,579) 40,924	1,374,399 858,238
(2,576)	(48,655)

– IIA-4 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

CONSOLIDATED BALANCE SHEET

At 31 December 2006 2007 RMB’000 RMB’000 135,647 1,019,306 103,448 56,642 – – – – 309,999 121,131 – 2,837 – 7,309	At 31 December 2006 2007 RMB’000 RMB’000 135,647 1,019,306 103,448 56,642 – – – – 309,999 121,131 – 2,837 – 7,309	2008 RMB’000 5,052,765 183,843 4,282 5,040 1,180,053 9,540 7,054
549,094 – – 185 2,004 131,193 – – 39,345 172,727 – 13,210 – – – 128,000 195,000 – – 48,842 – 385,052 (212,325) 336,769	1,207,225 6,654 46,000 17,924 1,116 1,000 – 100,251 291,020 463,965 11,680 110,090 21,259 – – 8,006 100,000 31,662 160,000 – – 442,697 21,268 1,228,493	6,442,577
		67,069 80,000 21,984 3,736 96,360 200,000 276,678 1,745,768
		2,491,595
		48,857 569,479 232,073 7,948 103,409 7,069 – 28,360 996,000 – 498,328
		2,491,523
		72
		6,442,649

– IIA-5 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

At 31 December 2006 2007 RMB’000 RMB’000 – – – – – – 246,000 426,000 – 448,775 – 225,006 – – 246,000 1,099,781 90,769 128,712	At 31 December 2006 2007 RMB’000 RMB’000 – – – – – – 246,000 426,000 – 448,775 – 225,006 – – 246,000 1,099,781 90,769 128,712	2008 RMB’000 1,751,717 33,954 107,102 2,061,228 – 171,452 9,912
		4,135,365
		2,307,284

– 13,982 13,982 76,787	75 (125,110) (125,035) 253,747	75 1,200,206
		1,200,281 1,107,003
90,769	128,712	2,307,284

– IIA-6 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to equity holders of the Company Share capital Capital reserve Statutory reserve fund Accumulated (losses) profits Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note) – – – – – – – – (1,653) (1,653) – – – – – – – – – – – 15,635 – – 15,635	Attributable to equity holders of the Company Share capital Capital reserve Statutory reserve fund Accumulated (losses) profits Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note) – – – – – – – – (1,653) (1,653) – – – – – – – – – – – 15,635 – – 15,635	Attributable to equity holders of the Company Share capital Capital reserve Statutory reserve fund Accumulated (losses) profits Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note) – – – – – – – – (1,653) (1,653) – – – – – – – – – – – 15,635 – – 15,635	Attributable to equity holders of the Company Share capital Capital reserve Statutory reserve fund Accumulated (losses) profits Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note) – – – – – – – – (1,653) (1,653) – – – – – – – – – – – 15,635 – – 15,635	Attributable to equity holders of the Company Share capital Capital reserve Statutory reserve fund Accumulated (losses) profits Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note) – – – – – – – – (1,653) (1,653) – – – – – – – – – – – 15,635 – – 15,635	Minority Interests RMB’000 – (923) 62,110 15,600 –	Total RMB’000 – (2,576) 62,110 15,600 15,635
– – 75 – – – – – 75 – – – – – –	15,635 – – 100,702 – – – – 116,337 – – (49,083) – – –	– – – – – – 8,609 – 8,609 – 160,713 – – – –	(1,653) (89,579) – – – – (8,609) (150,215) (250,056) 1,374,399 (160,713) – – – –	13,982 (89,579) 75 100,702 – – – (150,215) (125,035) 1,374,399 – (49,083) – – –	76,787 40,924 – – 135,600 436 – – 253,747 858,238 – – (6,718) 9,000 (7,264)	90,769 (48,655) 75 100,702 135,600 436 – (150,215)
						128,712 2,232,637 – (49,083) (6,718) 9,000 (7,264)
75	67,254	169,322	963,630	1,200,281	1,107,003	2,307,284

Note: In accordance with the articles of association of the subsidiaries of the Company registered in the People’s Republic of China (the “PRC”) and the relevant PRC laws and regulations, these subsidiaries are required to transfer at least 10% of their profit after taxation, which is determined in accordance with the PRC accounting rules and regulations, to a statutory reserve fund (including the general reserve fund and enterprise expansion fund, where appropriate). Transfer to this statutory reserve fund is subject to the approval of the respective board of directors, and is discretionary when the balance of such fund has reached 50% of the registered capital of the respective company. Statutory reserve fund can only be used to offset accumulated losses or to increase capital.

– IIA-7 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

CONSOLIDATED CASH FLOW STATEMENT

13 November 2006 to 31 December 2006 RMB’000 OPERATING ACTIVITIES (Loss) profit before tax (2,576) Adjustments for: Finance costs 1,148 Bank interest income (424) Depreciation of property, plant and equipment 62 Amortisation of prepaid lease payments 121 Amortisation of other deferred income – Loss on disposal of property, plan and equipment – Gain on disposal of a subsidiary – Exchange gain related to convertible loan notes – Exchange gain related to convertible redeemable preferred shares – Change in fair value of convertible loan notes – Change in fair value of convertible redeemable preferred shares – Change in fair value of embedded derivative instruments – Operating cash flows before movements in working capital (1,669) Increase in inventories – Increase in trade receivables – Decrease (increase) in deposits, prepayments and other receivables 711 Increase in amounts due from related companies – Increase in trade payables – (Decrease) increase in other payables and accruals (4,788) Increase in advances from customers – Decrease (increase) in amounts due to related companies – Increase in deferred revenue – Cash (used in) generated from operations (5,746) Income taxes paid – NET CASH (USED IN) FROM OPERATING ACTIVITIES (5,746)	Year ended 31 December 2007 2008 RMB’000 RMB’000 (24,302) 2,262,377 37,804 72,160 (2,781) (17,311) 17,608 96,388 1,587 1,303 – (4,170) – 7,687 (4,335) – (15,607) (26,496) (4,947) (13,283) 25,054 105,259 79,738 (40,271) – 9,912 109,819 2,453,555 (6,654) (60,415) (46,000) (34,000) (18,350) (4,060) – (18,344) 11,680 37,177 57,120 24,579 21,259 1,962,531 18,506 (937) – 33,954 147,380 4,394,040 – (32,787) 147,380 4,361,253	Year ended 31 December 2007 2008 RMB’000 RMB’000 (24,302) 2,262,377 37,804 72,160 (2,781) (17,311) 17,608 96,388 1,587 1,303 – (4,170) – 7,687 (4,335) – (15,607) (26,496) (4,947) (13,283) 25,054 105,259 79,738 (40,271) – 9,912 109,819 2,453,555 (6,654) (60,415) (46,000) (34,000) (18,350) (4,060) – (18,344) 11,680 37,177 57,120 24,579 21,259 1,962,531 18,506 (937) – 33,954 147,380 4,394,040 – (32,787) 147,380 4,361,253
(1,669) – – 711 – – (4,788) – – – (5,746) – (5,746)	109,819 (6,654) (46,000) (18,350) – 11,680 57,120 21,259 18,506 – 147,380 – 147,380	2,453,555 (60,415 (34,000 (4,060 (18,344 37,177 24,579 1,962,531 (937 33,954
		4,394,040 (32,787
		4,361,253

– IIA-8 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

13 November 2006 to 31 December 2006 NOTES RMB’000 INVESTING ACTIVITIES Advance to related companies (125,515) Deposits paid for acquisition of plant and equipment (39,777) Purchase of property, plant and equipment (11,529) Acquisition of subsidiaries 39 191,401 Interest received 424 Increase in restricted bank deposits – Deposits paid for prepaid lease payments – Addition of prepaid lease payments – Proceeds from government grants (included in other deferred income) – Repayment from related companies – Disposal of a subsidiary 40 – Purchase of intangible asset Proceeds on disposal of prepaid lease payments – NET CASH FROM (USED IN) INVESTING ACTIVITIES 15,004	13 November 2006 to 31 December 2006 NOTES RMB’000 INVESTING ACTIVITIES Advance to related companies (125,515) Deposits paid for acquisition of plant and equipment (39,777) Purchase of property, plant and equipment (11,529) Acquisition of subsidiaries 39 191,401 Interest received 424 Increase in restricted bank deposits – Deposits paid for prepaid lease payments – Addition of prepaid lease payments – Proceeds from government grants (included in other deferred income) – Repayment from related companies – Disposal of a subsidiary 40 – Purchase of intangible asset Proceeds on disposal of prepaid lease payments – NET CASH FROM (USED IN) INVESTING ACTIVITIES 15,004	Year ended 31 December 2007 2008 RMB’000 RMB’000 (1,000) (278,016) (121,131) (1,180,053) (601,543) (3,595,093) (128,000) – 2,781 17,311 (100,251) (176,427) (2,837) (6,703) (623) (135,369) – 119,220 131,193 1,000 91,647 – – (2,540) – 4,245 (729,764) (5,232,425)	Year ended 31 December 2007 2008 RMB’000 RMB’000 (1,000) (278,016) (121,131) (1,180,053) (601,543) (3,595,093) (128,000) – 2,781 17,311 (100,251) (176,427) (2,837) (6,703) (623) (135,369) – 119,220 131,193 1,000 91,647 – – (2,540) – 4,245 (729,764) (5,232,425)
	15,004	(729,764)	(5,232,425

– IIA-9 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

13 November 2006 to 31 December 2006 NOTES RMB’000 FINANCING ACTIVITIES Interest paid (1,148) Interest paid on convertible loan notes – Contribution from immediate holding company 15,635 Contribution from minority shareholders 15,600 Repayment to related companies – Repayment of other borrowings – Payment of issue costs on issuance of convertible loan notes – Proceeds on issue of convertible loan notes – New bank loans raised – Proceeds from issue of shares – Repayment of bank borrowings – Payment for repurchase of shares – Payment of issue costs on bank borrowings – Dividend paid to a minority shareholder – Advance from immediate holding company – Advance from related companies – NET CASH FROM FINANCING ACTIVITIES 30,087 NET INCREASE IN CASH AND CASH EQUIVALENTS 39,345 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD/YEAR – CASH AND CASH EQUIVALENTS AT END OF THE PERIOD/YEAR, represented by bank balances and cash 39,345	Year ended 31 December 2007 2008 RMB’000 RMB’000 (18,778) (64,228) (12,082) (29,210) 100,702 – 135,600 9,000 (95,000) (108,967) (48,842) – (19,026) – 451,410 – 340,000 3,730,420 75 – – (1,220,420) – (49,083) – (45,850) – (7,264) – 102,555 – 8,967 834,059 2,325,920 251,675 1,454,748 39,345 291,020 291,020 1,745,768	Year ended 31 December 2007 2008 RMB’000 RMB’000 (18,778) (64,228) (12,082) (29,210) 100,702 – 135,600 9,000 (95,000) (108,967) (48,842) – (19,026) – 451,410 – 340,000 3,730,420 75 – – (1,220,420) – (49,083) – (45,850) – (7,264) – 102,555 – 8,967 834,059 2,325,920 251,675 1,454,748 39,345 291,020 291,020 1,745,768
30,087 39,345 –	834,059 251,675 39,345	2,325,920
		1,454,748 291,020
39,345	291,020

– IIA-10 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

The Company is a private limited company incorporated in the Cayman Islands. The address of the registered office is Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand Cayman KY1-1112, Cayman Islands, and the address of the principal place of business is Xuzhou City, Jiangsu Province, The People’s Republic of China (the “PRC”). In the opinion of the directors, its immediate holding company is Happy Genius Holdings Limited (“HG”), a company incorporated in the British Virgin Islands. Its ultimate holding company is Boulina Investments Limited, a company incorporated in the British Virgin Islands.

The Company is an investment holding company. The principal activities of the Group are manufacture and sale of polysilicon and related products.

The financial statements are presented in Renminbi (“RMB”), which is the same as the functional currency of the Company and its subsidiaries.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

GCL Solar HK was incorporated by HG on 13 November 2006 and subsequently on 13 December 2006, GCL Solar HK acquired 64% equity interest in JZPTD and its wholly owned subsidiary Jiangsu Sunshine Jiangyuan Science and Technology Co., Ltd (“JSJST”) (note 39). GCL Solar HK together with JZPTD and JSTST hereinafter referred to as “Entities Under Common Control”. From December 2006 to April 2007, the sole shareholder of HG (“Sole Shareholder”) sold certain equity interest of HG to various independent third parties and the proceeds amounted to approximately RMB15,635,000 and RMB100,702,000 are contributed to the Group during 2006 and 2007, respectively. On 9 May 2007, the Company was incorporated by HG. Pursuant to a restructuring agreement entered on 21 August 2007, all the owners of GCL Solar HK exchanged their equity interest in GCL Solar HK for shares in the Company in proportion of their interest in GCL Solar HK. As a result, GCL Solar HK became a wholly owned subsidiary of the Company.

The Entities Under Common Control were consolidated based on historical costs at which they were recorded in their respective books. Accordingly, the consolidated income statements, statements of changes in equity and cash flows statements include the results, changes in equity and cash flows of the Entities Under Common Control as if the current group structure had been in existence throughout the Relevant Periods, or since their respective dates of incorporation or establishment where this is a shorter period, or up to the date of disposal. The consolidated balance sheets of the Group as at 31 December 2006, 2007 and 2008 have been prepared to present the assets and liabilities of the Entities Under Common Control as at the respective dates. The Group has accounted for the Entities Under Common Control by using the principles of merger accounting as if the current group structure had been in existence at those dates.

3. APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”)

For the purpose of preparing and presenting the Financial Information for the Relevant Periods, the Group adopted International Accounting Standards (“IASs”), IFRSs, amendments and interpretations issued by International Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”) of the IASB that are effective for the Group’s financial year beginning on 1 January 2008 consistently for the Relevant Periods.

– IIA-11 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

4. SIGNIFICANT ACCOUNTING POLICIES

At the date of this report, IASB has issued the following new and revised standards, amendments and interpretations that have been issued but not yet effective.

IFRSs (Amendments) Improvements to IFRSs May 2008[1] IFRSs (Amendments) Improvements to IFRSs April 2009[2] IAS 1 (Revised) Presentation of Financial Statements[3] IAS 23 (Revised) Borrowing Costs[3] IAS 27 (Revised) Consolidated and Separate Financial Statements[4] IAS 32 & 1 (Amendments) Puttable Financial Instruments and Obligations Arising on Liquidation[3] IAS 39 (Amendment) Eligible hedged items[4] IFRS 1 & IAS 27 (Amendments) Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate[3] IFRS 2 (Amendment) Vesting Conditions and Cancellations[3] IFRS 2 (Amendment) Group Cash-settled Shares-based Payment Transactions[4] IFRS 3 (Revised) Business Combinations[5] IFRS 7 (Amendment) Improving Disclosures about Financial Instruments[3] IFRS 8 Operating Segments[3] IFRIC – Int 9 & IAS 39 Embedded Derivatives[6] (Amendments) IFRIC – Int 13 Customer Loyalty Programmes[7] IFRIC – Int 15 Agreements for the Construction of Real Estate[3] IFRIC – Int 16 Hedges of a Net Investment in a Foreign Operation[8] IFRIC – Int 17 Distribution of Non-cash Assets to Owners[5] IFRIC – Int 18 Transfers of Assets from Customers[9]

1 Effective for annual periods beginning on or after 1 January 2009 except the amendments to IFRS 5, effective for annual periods beginning on or after 1 July 2009

2 Effective for annual periods beginning on or after 1 January 2009, 1 July 2009 and 1 January 2010, as appropriate

3 Effective for annual periods beginning on or after 1 January 2009

4 Effective for annual periods beginning on or after 1 January 2010

5 Effective for annual periods beginning on or after 1 July 2009

6 Effective for annual periods ending on or after 30 June 2009

7 Effective for annual periods beginning on or after 1 July 2008

8 Effective for annual periods beginning on or after 1 October 2008

9 Effective for transfers on or after 1 July 2009

The application of IFRS 3 (Revised) may affect the Group’s accounting for business combination for which the acquisition date is on or after 1 January 2010. IAS 27 (Revised) will affect the accounting treatment for changes in Group’s ownership interest in a subsidiary. The directors of the Company is currently evaluating the impact, if any, of the other new and revised standards, amendments or interpretations on the results and the financial position of the Group.

The Financial Information has been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values, as explained in the accounting policies set out below.

The Financial Information has been prepared in accordance the following accounting policies which conform with IFRSs issued by the IASB. In addition, the Financial Information includes the applicable disclosure required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

Basis of consolidation

Financial Information incorporates the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

– IIA-12 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

The results of subsidiaries acquired or disposed of during the period/year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

On acquisition of additional interest in a subsidiary, the excess of the cost of acquisition over the carrying amount of assets and liabilities of the subsidiaries is recognised as goodwill.

Minority interests in the net assets of consolidated subsidiaries are presented separately from the Group’s equity therein. Minority interests in the net assets consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

Business combinations

Business combination involving entities under common control

The Financial Information incorporates the financial statements items of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling party.

Business combination other than entities under common control

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

– IIA-13 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Goodwill

Goodwill arising on an acquisition of a business represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the relevant business at the date of acquisition. Such goodwill is carried at cost less any accumulated impairment losses.

Capitalised goodwill arising on an acquisition of a business is presented separately in the consolidated balance sheet.

On subsequent disposal of the relevant cash-generating unit, the attributable amount of goodwill capitalised is included in the determination of the amount of profit or loss on disposal.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold and in the normal course of business, net of sales related taxes.

Revenue from sale of goods is recognised when the goods are delivered and title has passed.

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Dividend income from investments is recognised when the shareholders’ rights to receive payments have been established.

Deferred revenue

The Group entered into long-term supply contracts for supply of goods with pre-determined volumes and prices. Under the contract terms, different pre-determined prices are billed to the customers over the contracts periods. Revenue under long-term contracts is recognised in the consolidated income statement based on the actual volumes sold and the weighted average prices over the contractual periods. Revenue relating to the difference between pre-determined prices and the weighted average prices is recognised as deferred revenue on the consolidated balance sheets.

Property, plant and equipment

Property, plant and equipment including buildings held for use in the production or supply of goods or services, or for administration purposes (other than construction in progress) are stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

– IIA-14 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Depreciation is provided to write off the cost of items of property, plant and equipment other than construction in progress over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method, at the following rates per annum:

Buildings Over the shorter of lease terms or 5% Plant and machinery 6[2] ∕3% Furniture, fixtures and equipment 20% Motor vehicles 20%

Construction in progress includes property in the course of construction for production or for its own use purposes. Construction in progress is carried at cost less any recognised impairment loss. Construction in progress is classified to the appropriate category of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Prepaid lease payments

Payments for obtaining land use rights are accounted for as prepaid lease payments and are charged to the consolidated income statement on a straight-line basis over the lease terms. Prepaid lease payments which are to be charged to the consolidated income statement in the next twelve months or less are classified as current assets.

Leasing

The Group as lessee

Foreign currencies

The functional currency of the Company and its subsidiaries is RMB. The consolidated financial statements are also presented in RMB.

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise.

Borrowing costs

– IIA-15 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Government grants

Government grants are recognised as income over the periods necessary to match them with the related costs. Grants related to depreciable assets are presented as other deferred income and are released to income over the useful lives of the assets.

Retirement benefit costs

Payments to state-managed retirement benefit schemes and the Mandatory Provident Fund Scheme are charged as an expense when employees have rendered services entitling them to the contributions.

Intangible assets

Intangible assets acquired separately and with finite useful lives are carried at costs less accumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful lives is provided on a straight-line basis over their estimated useful lives.

Gains or losses arising from derecognition of an intangible asset are measured at the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the consolidated income statement when the asset is derecognised.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period/year. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet dates.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Financial Information and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other then in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to profit or loss.

– IIA-16 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when a group entity becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities on initial recognition. Transaction costs directly attributable to the issuance of financial liabilities at fair value through profit or loss are recognised directly in profit or loss.

Financial assets

The Group’s financial assets are loans and receivables. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including trade receivables, other receivables, amounts due from related companies, loans to related companies, restricted bank balances and bank balances) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment loss on financial assets below).

Impairment of financial assets

significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

– IIA-17 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Financial liabilities and equity

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The Group’s financial liabilities are generally classified into financial liabilities at fair value through profit and loss (“FVTPL”) and other financial liabilities.

Effective interest method

Interest expense is recognised on an effective interest basis other than financial liability designated at FVTPL, of which the interest expense is included in change in fair value of financial liabilities designated at FVTPL.

Financial liabilities at fair value through profit or loss

Financial liabilities at FVTPL comprise convertible loan notes, convertible redeemable preferred shares and embedded derivative instruments.

At each balance sheet date subsequent to initial recognition, financial liabilities at FVTPL are measured at fair value, with changes in fair value recognised directly in profit or loss in the period in which they arise.

Other financial liabilities

Financial liabilities including trade payables, other payables, amount due to immediate holding company, amounts due to related companies, loans from related companies, bank borrowings and other borrowings are subsequently measured at amortised cost, using the effective interest method.

Convertible loan notes

The convertible loan notes of the Company consist of both liability component, conversion option and embedded derivatives (including early redemption option and strike adjustment derivative (see note 29 for details) which are not closely related to the host liability contract. Conversion options that will not be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company’s own equity instruments are considered as embedded derivatives not closely related to the host contract (the liability component).

The Group has elected to designate its convertible loan notes with embedded derivatives as financial liabilities at FVTPL on initial recognition as the convertible loan notes contain one or more embedded derivatives. At each balance sheet date subsequent to initial recognition, the convertible loan notes are measured at fair value, with changes in fair value recognised directly in profit or loss in the period in which they arise. The change in fair value recognised in profit or loss includes any interest paid for the convertible loan notes.

Transaction costs that are directly attributable to the issue of the convertible loan notes designated as financial liabilities at FVTPL are recognised immediately in profit or loss.

– IIA-18 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Convertible redeemable preferred shares

Convertible redeemable preferred shares that are redeemable and convertible to ordinary shares at the option of the holder. The conversion option will be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company’s own equity instruments are considered as embedded derivatives not closely related to the host contract.

The Group has elected to designate its convertible redeemable preferred shares with embedded derivatives as financial liabilities at FVTPL on initial recognition as the convertible redeemable preferred shares contain one or more embedded derivatives. At each balance sheet date subsequent to initial recognition, the entire convertible loan notes are measured at fair value, with changes in fair value recognised directly in profit or loss in the period in which they arise.

Embedded derivative instruments

Derivatives embedded in non-derivative host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair value with changes in fair value recognised in profit or loss.

Equity instrument

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Repurchase of equity instruments

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in the consolidated income statement on the purchase or cancellation of the Company’s own equity instruments.

Derecognition

Share-based payment transactions

Equity-settled share-based payment transactions

Share options granted to employees

The fair value of services received determined by reference to the fair value of share options granted at the grant date is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity (share options reserve). At each balance sheet date, the Group revises its estimates of the number of options that are expected to ultimately vest. The impact of the revision of the estimates during the vesting period, if any, is recognised in profit or loss, with a corresponding adjustment to share options reserve.

– IIA-19 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Impairment losses on tangible and intangible assets other than goodwill (see the accounting policy in respect of goodwill above)

5. KEY SOURCES OF ESTIMATION UNCERTAINTY

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Useful lives and impairment of property, plant and equipment

The Group’s management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. Management will increase the depreciation charge where useful lives are expected to be shorter than expected, or it will write-off or write-down obsolete or non-strategic assets that have been abandoned or sold. As at 31 December 2006, 2007 and 2008, the carrying amounts of property, plant and equipment are approximately RMB135,647,000, RMB1,019,306,000 and RMB5,052,765,000, respectively.

Fair value of the convertible loan notes, convertible redeemable preferred shares and embedded derivative instruments

For the convertible loan notes, convertible redeemable preferred shares and embedded derivative instruments, no quoted prices in an active market exist. The fair values for the derivatives embedded in convertible note, redeemable preferred shares and embedded derivative instruments are established by using valuation techniques. These techniques include using recent arm’s length market transactions, with reference to the current fair value of similar instruments, discounted cash flow analysis and option pricing models. Valuation techniques are certified by independent and recognised international business valuers before being implemented for valuation and are calibrated to ensure that outputs reflect market conditions. Valuation models established by the valuers make the maximum use of market inputs and rely as little as possible on the Group’s specific data. However, it should be noted that some inputs, such as credit and counterparty risk and risk correlations, require management estimates. Management estimates and assumptions are reviewed periodically and are adjusted if necessary. Should any of the estimates and assumptions changed, it may lead to a change in the fair values of the convertible loan notes, convertible redeemable preferred shares and embedded derivative instruments. The carrying amount of the convertible loan notes, convertible redeemable preferred shares and embedded derivative instruments as at 31 December 2008 are approximately RMB498,328,000 (2007: RMB448,775,000), RMB171,452,000 (2007: RMB225,006,000) and RMB9,912,000 (2007: nil), respectively.

6. CAPITAL RISK MANAGEMENT

The capital structure of the Group consists of debt, which mainly includes amounts due to related companies disclosed in note 21, bank borrowings, convertible loan notes and convertible redeemable preferred shares disclosed in notes 27, 29 and 31, respectively, and equity comprising issued share capital and reserves.

– IIA-20 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

The directors of the Group review the capital structure regularly. As part of this review, the directors consider the cost of capital and the risks associated with each class of capital. Based on recommendation of the directors, the Group will balance its overall capital structure through the issues of new shares, new debts or the redemption of existing debt.

7. FINANCIAL INSTRUMENTS

7a. Categories of financial instruments

Financial assets Loans and receivables (including cash and cash equivalents) Financial liabilities Amortised cost FVTPL Convertible loan notes Convertible redeemable preferred shares Embedded derivative instruments	At 31 December 2006 2007 RMB’000 RMB’000 170,672 439,757 630,974 768,932 – 448,775 – 225,006 – –	2008 RMB’000 2,405,806

		3,667,045

		498,328 171,452 9,912

7b. Financial risk management objectives and policies

The Group’s major financial instruments include trade receivables, other receivables, amounts due from related companies, loans to related companies, restricted bank balances, bank balances, trade payables, other payables, amount due to immediate holding company, amounts due to related companies, loans from related companies, bank borrowings, other borrowings, convertible loan notes, convertible redeemable preferred shares and embedded derivative instruments. Details of the financial instruments are disclosed in respective notes. The risks associated with these financial instruments include market risk (currency risk and interest rate risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risk

Currency risk

Certain bank balances, amounts due to immediate holding company, convertible loan notes, convertible redeemable preferred shares and embedded derivative instruments of the Group are denominated in foreign currencies, which expose the Group to foreign currency risk. The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure by closely monitoring the movement of foreign currency rate.

– IIA-21 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

No material foreign currency denominated monetary assets and liabilities are noted at 31 December 2006. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at 31 December 2007 and 2008 are as follows:

	Assets		Liabilities	Liabilities
	At 31 December		At 31 December
	2007	2008	2007	2008
	RMB’000	RMB’000	RMB’000	RMB’000
Euro	–	11,595	–	3,292
Hong Kong dollar	235	1,098	1,085	6,246
United States dollar	80,040	16,398	673,781	779,809

Sensitivity analysis

The following table details the Group’s sensitivity to a 5% increase and decrease in RMB against the relevant foreign currencies. 5% is the sensitivity rate used which represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 5% change in foreign currency rates. A positive number below indicates a decrease in loss or increase in profit for the year where RMB strengthen 5% against the relevant currency. For a 5% weakening of RMB against the relevant currency, there would be an equal and opposite impact on the loss/profit for the year, and the balances below would be negative.

					United	States
	Euro		Hong Kong dollar		dollar
	2007	2008	2007	2008	2007	2008
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
(Increase)decrease in
loss/(decrease)increase In
profit for the year	–	(415)	43	257	29,687	38,171

Interest rate risk

The Group is exposed to fair value interest rate risk in relation to fixed-rate loans to (from) related companies, restricted bank deposits and bank borrowings (see notes 22, 23, 26 and 27 for details of loans to (from) related companies, restricted bank deposits and bank borrowings, respectively).

The Group is also exposed to cash flow interest rate risk in relation to variable-rate restricted bank deposits, bank balances, bank borrowings and convertible loan notes (see notes 23, 24, 27 and 29 for details of restricted bank deposits, bank balances, bank borrowings and convertible loan notes, respectively).

It is the Group’s policy to maintain an appropriate level between its fixed-rate and variable-rate borrowings so as to minimise the fair value and cash flow interest rate risk. The Group’s exposures to interest rates on financial liabilities are detailed in liquidity risk management section of this note. The Group’s cash flow interest risk is mainly concentrated on the fluctuation of benchmark interest rate of Chinese Central Bank arising from the bank borrowings and London Interbank Offered Rate (“LIBOR”) arising from the convertible loan notes.

– IIA-22 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments. The analysis is prepared assuming the financial instruments outstanding at the respective balance sheet dates were outstanding for the whole period/year. A 50 basis point increase or decrease is used which represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s loss for the period ended 31 December 2006 would increase/decrease by approximately RMB1,033,000; the Group’s loss for the year ended 31 December 2007 would decrease/increase by approximately RMB12,058,000; and the Group’s profit for the year ended 31 December 2008 would decrease/increase by approximately RMB23,000. This is mainly attributable to the Group’s exposure to interest rates on its variable-rate restricted bank deposits, bank balances, bank borrowings, redeemable preferred shares and convertible loan notes.

Credit risk

As at 31 December 2006, 2007 and 2008, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties is arising from the carrying amount of the respective recognised financial assets as stated in the consolidated balance sheet.

In order to minimise the credit risk, the Group conducts credit evaluations of customers and generally requires an advance payment from customers. As at 31 December 2007 and 2008, credit terms are granted to a customer in PRC only which were secured by a letter of credit issued by a PRC bank. The management of the Group also has monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of its financial assets including trade receivables, amounts due from and loans to related companies at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

The credit risk on liquid funds is limited because the counterparties are banks that are principally government-owned financial institutions with high credit ratings and quality.

Liquidity risk

To manage the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of bank borrowings and ensures compliance with loan covenants.

The following table details the Group’s remaining contractual maturity for its financial liabilities. For non-derivative financial liabilities, the table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. For derivative instruments, they are settled on a net basis and undiscounted net cash outflows are presented.

– IIA-23 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Liquidity and interest risk tables

Weighted average interest rate Repayable on demand or less than 3 months % RMB’000 At 31 December 2006 Other payables – 13,132 Amounts due to related companies – 128,000 Loans from related companies 6.49 103,163 Bank borrowings – variable rate 6.63 4,079 Other borrowings – 48,842 297,216 At 31 December 2007 Non-derivative financial instruments Trade payables – 11,680 Other payables – 58,479 Amounts due to related companies – 8,006 Loans from related companies 6.49 101,622 Bank borrowings – fixed rate 6.73 30,337 – variable rate 7.44 30,003 240,127 FVTPL Convertible loan notes 8.72 9,505 Convertible redeemable preferred shares – – 9,505	3 months to 1 year RMB’000 – – 97,568 12,238 – 109,806	1 to 2 years RMB’000 – – – 16,317 – 16,317	2 to 5 years RMB’000 – – – 255,518 – 255,518	Total undis- counted cash flows Carrying amount at 31 December 2006 RMB’000 RMB’000 13,132 13,132 128,000 128,000 200,731 195,000 288,152 246,000 48,842 48,842 678,857 630,974	Total undis- counted cash flows Carrying amount at 31 December 2006 RMB’000 RMB’000 13,132 13,132 128,000 128,000 200,731 195,000 288,152 246,000 48,842 48,842 678,857 630,974
					630,974

11,680 58,479 8,006 101,622 30,337 30,003	– 4,767 – – – 136,950	– – – – – 338,869	– – – – – 112,314	11,680 63,246 8,006 101,622 30,337 618,136	11,680 63,246 8,006 100,000 30,000 556,000
240,127	141,717	338,869	112,314	833,027	768,932

9,505 –	28,514 –	574,325 –	– 217,902	612,344 217,902	448,775 225,006
9,505	28,514	574,325	217,902	830,246	673,781

– IIA-24 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Weighted average interest rate Repayable on demand or less than 3 months % RMB’000 At 31 December 2008 Non-derivative financial instruments Trade payables – 48,857 Other payables – 250,719 Amount due to immediate holding company – 103,409 Amount due to related companies – 7,069 Bank borrowings – fixed rate 6.52 238,077 – variable rate 7.44 70,886 719,017 FVTPL Convertible loan notes 7.12 7,297 Convertible redeemable preferred shares – – Embedded derivative instruments – – 7,297	3 months to 1 year RMB’000 – 160,991 – – 412,350 465,435 1,038,776	1 to 2 years RMB’000 – – – – – 1,043,707 1,043,707	2 to 5 years RMB’000 – – – – – 1,243,740 1,243,740	Total undis- counted cash flows Carrying amount at 31 December 2006 RMB’000 RMB’000 48,857 48,857 411,710 411,710 103,409 103,409 7,069 7,069 650,427 630,000 2,823,768 2,427,228 4,045,240 3,628,273	Total undis- counted cash flows Carrying amount at 31 December 2006 RMB’000 RMB’000 48,857 48,857 411,710 411,710 103,409 103,409 7,069 7,069 650,427 630,000 2,823,768 2,427,228 4,045,240 3,628,273
					3,628,273

7,297 – –	528,000 – –	– 205,038 9,912	– – –	535,297 205,038 9,912	498,328 171,452 9,912
7,297	528,000	214,950	–	750,247	679,692

7c. Fair value

The fair value of financial assets and financial liabilities are determined as follows:

the fair value of embedded derivative instruments is calculated using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contract; and
the fair value of convertible loan notes and convertible redeemable preferred shares is calculated using discounted cash flow analysis using the applicable yield curve for the duration of the instruments using option pricing models.

The directors consider the carrying amounts of financial assets and financial liabilities carried at amortised cost in the consolidated financial statements approximate to their fair values.

– IIA-25 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

8. SEGMENT INFORMATION

The Group has been operating in one business segment, being the manufacture and sale of polysilicon and related products. The Group has determined that it has one primary geographical segment as its operations are substantially carried in the PRC, and its production facilities and other operating assets are substantially located in the PRC. Accordingly, no analyses by business segment and geographical area of operations or customers are provided.

9. OTHER INCOME

Exchange gain Government grants (Note 42) Bank interest income	13 November 2006 to 31 December 2006 RMB’000 – – 424 424	Year ended 31 December 2007 2008 RMB’000 RMB’000 11,275 47,001 – 4,170 2,781 17,311 14,056 68,482	Year ended 31 December 2007 2008 RMB’000 RMB’000 11,275 47,001 – 4,170 2,781 17,311 14,056 68,482
			68,482

10. FINANCE COSTS

Interest on: Bank borrowings wholly repayable within five years Loans from related companies Amortisation of issue costs relating to bank borrowings wholly repayable within five years Issue costs incurred for amount due to immediate holding company Issue costs on issuance of convertible loan notes Total borrowing costs Less: Interest capitalised	13 November 2006 to 31 December 2006 RMB’000 804 597 – – –	Year ended 31 December 2007 2008 RMB’000 RMB’000 34,664 126,789 9,051 385 – 7,078 – 854 19,026 –	Year ended 31 December 2007 2008 RMB’000 RMB’000 34,664 126,789 9,051 385 – 7,078 – 854 19,026 –
	1,401 (253)	62,741 (24,937)	135,106 (62,946
	1,148	37,804	72,160

– IIA-26 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

11. INCOME TAX EXPENSE

PRC Enterprise Income Tax (“EIT”) Current tax Underprovision in prior years PRC dividend withholding tax Deferred tax (Note 18)	13 November 2006 to 31 December 2006 RMB’000 – –	Year ended 31 December 2007 2008 RMB’000 RMB’000 31,662 – – 1,125	Year ended 31 December 2007 2008 RMB’000 RMB’000 31,662 – – 1,125
	– – –	31,662 – (7,309)	1,125 28,360 255
	–	24,353	29,740

The income tax expense represents income tax in the PRC which is calculated at the prevailing tax rate on the taxable income of the group entities in the PRC. The Group’s subsidiaries in the PRC are subject to PRC EIT at the applicable tax rate of 33% less a 3% exemption of local income tax up to 31 December 2007.

Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. The Company is tax exempt under the laws of the Cayman Islands. No provision for Hong Kong Profits Tax has been made as the Group’s profits neither arises in, nor is derived from, Hong Kong for the Relevant Periods.

Pursuant to the relevant laws and regulations in the PRC, JZPTD was entitled to the exemptions from EIT for two years starting from its first profit-making year, followed by a 50% tax relief for the next three years. JZPTD is entitled to this tax exemption in 2007, its first profit-making year. However, as there were less than six months of operations in 2007, JZPTD elected to defer the commencement of the tax exemption period to 2008.

On 16 March 2007, the PRC promulgated the Law of the PRC on EIT (the “New Law”) by Order No. 63 of the President of the PRC. On 6 December 2007, the State Council of the PRC issued Implementation Regulation of the New Law. Under the New Law and Implementation Regulation, the EIT rate of the Group’s subsidiaries in the PRC was reduced from 33% to 25% from 1 January 2008 onwards.

For the year ended 31 December 2007, JZPTD purchased plant and machinery manufactured in the PRC. In accordance with the PRC tax regulations, JZPTD received 40% of the purchased amount as an investment tax credit resulting in a tax deduction of approximately RMB25,987,000.

Under the New Law of PRC, withholding tax is imposed on dividends declared in respect of profits earned by PRC subsidiaries from 1 January 2008 onwards. Deferred taxation has not been provided for in the Financial Information in respect of temporary differences attributable to accumulated profits of the PRC subsidiaries amounting approximately RMB1,373,832,000 as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

For the year ended 31 December 2008, JZPTD was required by the PRC government to increase its registered capital in order to obtain approval to increase its production capacity. JZPTD increased its registered capital by RMB1,000,000,000 through recapitalisation of its undistributed earnings, out of which RMB886,258,000 was recapitalised from its earnings subsequent to 1 January 2008. Such recapitalisation is deemed to be a distribution to the Company and accordingly, a provision for PRC dividend withholding tax of approximately RMB28,360,000 has been recognised based on the applicable tax rate of 5% on distributed earnings of JZPTD shared by the Company.

– IIA-27 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

The income tax expense for the period/year can be reconciled to the (loss) profit before tax as follows:

13 November 2006 to 31 December 2006 RMB’000 (2,576)	Year ended 31 December 2007 2008 RMB’000 RMB’000 (24,302) 2,262,377	Year ended 31 December 2007 2008 RMB’000 RMB’000 (24,302) 2,262,377

(850) 2 – 769 – 2 – – 77 –	(8,020) 12,673 (1,430) 6,277 – 45,012 – – (4,172) (25,987)	565,594 11,492 (609 – (10,389 22,442 1,125 28,360 (588,275 –
–	24,353	29,740

12. (LOSS) PROFIT FOR THE PERIOD/YEAR

(Loss) profit for the period/year has been arrived at after charging: Staff costs, including directors’ remuneration (Note 13) Salaries, wages and other benefits Retirement benefit scheme contributions Amortisation of prepaid lease payments Auditor’s remuneration Cost of inventories recognised as expenses Depreciation of property, plant and equipment Loss on disposal of property, plant and equipment	13 November 2006 to 31 December 2006 RMB’000 336 119	Year ended 31 December 2007 2008 RMB’000 RMB’000 27,504 93,720 1,401 6,937	Year ended 31 December 2007 2008 RMB’000 RMB’000 27,504 93,720 1,401 6,937
	455	28,905	100,657
	121 – – 62 –	1,587 5,765 81,234 17,608 –	1,303 5,876 966,788 96,388 7,687

– IIA-28 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

13. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

(a) Directors’ emoluments

No emolument is paid or payable to the directors of the Company during the period/year ended 31 December 2006 and 2007. The emoluments paid or payable to each of the two (2007: nil) directors during the year ended 31 December 2008 were as follows:

2008 Fees Other emoluments Salaries and other benefits Contributions to retirement benefits schemes Total emolument	Hunter Jiang RMB’000 – 1,733 71 1,804	Zhu Gong Shan RMB’000 – 1,558 – 1,558	Total 2008 RMB’000 – 3,291 71
			3,362

(b) Employees’ emoluments

Of the five individuals with the highest emoluments in the Group, two (2006 and 2007: nil) were the directors of the Company whose emoluments are included in the disclosures in note 13(a) above. The emoluments of the remaining three (2006 and 2007: five) individual are as follows:

Salaries and other benefits Retirement benefits scheme contributions Total emolument	2006 RMB’000 273 11 284	2007 RMB’000 2,966 119 3,085	2008 RMB’000 3,332 6
			3,338

– IIA-29 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

14. PROPERTY, PLANT AND EQUIPMENT

Buildings RMB’000 – – –	Plant and machinery RMB’000 – – –	Furniture, fixtures and equipment RMB’000 – 1,016 572	Motor vehicles Construction in progress RMB’000 RMB’000 – – 2,310 117,930 – 13,881	Motor vehicles Construction in progress RMB’000 RMB’000 – – 2,310 117,930 – 13,881	Total RMB’000 – 121,256 14,453
– – 175,476 – 175,476 131,480 156,607 – 463,563 – – – 2,243 – 2,243 13,829 – 16,072	– – 732,718 – 732,718 75,738 805,092 – 1,613,548 – – – 13,779 – 13,779 76,018 – 89,797	1,588 16,135 3,790 (84) 21,429 25,620 – (8,522) 38,527 – 34 34 1,058 (9) 1,083 4,928 (835) 5,176	2,310 3,124 – (505) 4,929 10,487 – – 15,416 – 28 28 528 (54) 502 1,613 – 2,115	131,811 938,262 (911,984) (55,728) 102,361 3,894,209 (961,699) – 3,034,871 – – – – – – – – –	135,709 957,521 – (56,317)
					1,036,913 4,137,534 – (8,522)
					5,165,925
					– 62
					62 17,608 (63)
					17,607 96,388 (835)
					113,160
– 173,233 447,491	– 718,939 1,523,751	1,554 20,346 33,351	2,282 4,427 13,301	131,811 102,361 3,034,871	135,647

					1,019,306

					5,052,765

15. PREPAID LEASE PAYMENTS

The prepaid lease payments represent leasehold land in the PRC under medium term lease.

– IIA-30 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Analysed for reporting purposes as: Current asset Non-current asset	At 31 December 2006 2007 RMB’000 RMB’000 2,004 1,116 103,448 56,642 105,452 57,758	2008 RMB’000 3,736 183,843
		187,579

16. GOODWILL AND IMPAIRMENT TESTING

TZPTD was established on 12 June 2008 in the PRC through a wholly-owned subsidiary of the Company and an independent third party, which held 70% and 30% ownership interest in TZPTD, respectively. The principal activity of TZPTD is the production of raw materials of polysilicon for JZPTD. On 13 November 2008, JZPTD acquired the 30% ownership interest in TZPTD held by the independent third party for a consideration of RMB11,000,000. The fair value of the 30% net assets of TZPTD acquired was approximately RMB6,718,000 and a goodwill of approximately RMB4,282,000 was recognised. The consideration of RMB11,000,000 remained outstanding as at 31 December 2008.

During the year ended 31 December 2008, management of the Group has determined that there is no impairment on the goodwill arising from the acquisition of TZPTD as the amount involved is insignificant.

17. INTANGIBLE ASSET

The Group’s intangible asset represents license fee paid in 2008 for technical know-how relating to the production process. The intangible asset is carried at cost less accumulated amortisation and is amortised on a straight-line basis over its estimated useful life of 15 years. No amortisation expense has been recognised for the year ended 31 December 2008 as the amount involved is insignificant.

18. DEFERRED TAX

The following are the major deferred tax assets (liabilities) recognised and movements thereon during the Relevant Periods:

Charge to consolidated income statement for the year, at 31 December 2007 and 1 January 2008 Credit (charge) to consolidated income statement for the year At 31 December 2008	Property, plant and equipment Pre-operating expenses RMB’000 RMB’000 3,441 3,868 3,613 (3,868) 7,054 –	Total RMB’000 7,309 (255)
		7,054

– IIA-31 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

At 31 December 2006, 2007 and 2008, the Group has deductible temporary differences of approximately RMB29,871,000, RMB84,215,000 and RMB41,636,000 in relation to the property, plant and equipment, pre-operating expenses and other temporary differences. No deferred tax asset has been recognised in respect of the deductible temporary differences as at 31 December 2006 as it is not probable that taxable profit will be available against which the deductible temporary differences can be utilised. At 31 December 2007 and 2008, deferred tax asset has been recognised in respect of the deductible temporary differences amounted to approximately RMB29,237,000 and RMB28,214,000, respectively. No deferred tax asset has been recognised in respect of the remaining deductible temporary differences as at 31 December 2007 and 2008 as it is not probable that taxable profit will be available against which the deductible temporary differences can be utilised.

19. INVENTORIES

Raw materials Work in progress Finished goods	At 31 December 2006 2007 RMB’000 RMB’000 – 1,965 – 4,072 – 617 – 6,654	2008 RMB’000 12,389 29,263 25,417
		67,069

20. TRADE RECEIVABLES

Before accepting any new customer, the Group will assess the potential customer’s credit quality. As at 31 December 2007 and 2008, all trade receivables are aged within the credit period of 30 days and no trade receivable balance is past due at the balance sheet dates for which the Group has not provided for impairment loss. The amounts have been settled after the respective balance sheet dates.

21. AMOUNT(S) DUE FROM (TO) RELATED COMPANIES/IMMEDIATE HOLDING COMPANY

The amounts due from related companies are non-trade related, unsecured, non-interest bearing and repayable on demand.

			At 31 December
Name of related company	Relationship	2006	2007	2008
		RMB’000	RMB’000	RMB’000
上海思創能源有限公司	A company whose	131,193	–	–
Shanghai Creative Energy	principal
Co., Ltd.*	shareholder is
	also a director of
	JZPTD
蘇州協鑫置業有限公司	A company	–	–	65,000
Suzhou Golden Concord	controlled by the
Real Estate Co., Ltd.*	son of Mr. Zhu
	which is the
	director and
	Chairman of the
	Company (“Mr.
	Zhu”)

– IIA-32 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Name of related company Relationship 桐鄉濮院協鑫熱電有限公司 Tongxiang Puyuan Xiexin Environmental Protection Cogeneration Co., Ltd. A company controlled by Mr. Zhu 錫林郭勒中能硅業有限公司 Xilinhot Zhongneng Polysilicon Co., Ltd. A company controlled by Mr. Zhu 徐州經濟開發區熱電有限公司 Xuzhou Economic Development Zone Electricity Co., Ltd. A company controlled by Mr. Zhu 徐州金山橋熱電有限公司 Xuzhou Jinshanqiao Co-gen Co., Ltd. A company controlled by the son of Mr. Zhu	At 31 December 2006 2007 RMB’000 RMB’000 – – – – – 1,000 – – 131,193 1,000	2008 RMB’000 5,033 13,016 – 13,311
		96,360

English name for identification purpose only The maximum amounts outstanding in respect of amounts due from related companies disclosed pursuant to Section 161B of the Hong Kong Companies Ordinance are as follows:

	13 November	13 November	13 November
		2006 to
	31 December			Year ended 31 December
Name of related company			2006	2007	2008
		RMB’000		RMB’000	RMB’000
上海思創能源有限公司
Shanghai Creative Energy Co., Ltd.*		299,300		–	–
蘇州協鑫置業有限公司
Suzhou Golden Concord Real Estate Co., Ltd.*			–	–	65,000
桐鄉濮院協鑫熱電有限公司
Tongxiang Puyuan Xiexin Environmental
Protection Cogeneration Co., Ltd.*			–	–	6,700
錫林郭勒中能硅業有限公司
Xilinhot Zhongneng Polysilicon Co., Ltd.*			–	–	83,015
徐州經濟開發區熱電有限公司
Xuzhou Economic Development Zone
Electricity Co., Ltd.*			–	1,000	1,000
徐州金山橋熱電有限公司
Xuzhou Jinshanqiao Co-gen Co., Ltd.*			–	–	33,367

English name for identification purpose only

– IIA-33 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

The amount due to immediate holding company is non-trade related, unsecured, non-interest bearing and is repayable on 20 June 2009 and subsequently extended to 20 June 2010 on 19 June 2009.

The amounts due to related companies are trade related, unsecured, non-interest bearing and are repayable on demand except for the amount of approximately RMB128,000,000 as at 31 December 2006, which represented the consideration payable related to the acquisition of JZPTD in 2006 (note 39), unsecured, non-interest bearing and was repaid 2007.

22. LOANS TO RELATED COMPANIES

Particulars of the loans to related companies disclosed pursuant to Section 161B of the Hong Kong Companies Ordinance are as follows:

Name of related company Terms At 31 December 2008 RMB’000 蘇州協鑫置業有限公司 Suzhou Golden Concord Real Estate Co., Ltd. Unsecured, interest-bearing at 5.58% per annum and repayable by 10 December 2009 100,000 徐州金山橋熱電有限公司 Xuzhou Jinshanqiao Co-gen Co., Ltd. Unsecured, interest-bearing at 6.66% per annum and repayable by 7 November 2009 100,000 200,000 English name for identification purpose only 23. RESTRICTED BANK BALANCES At 31 December 2006 2007* RMB’000 RMB’000 Bank balances restricted for use of: Making interest payments on convertible loan notes (the bank balances are denominated in United States dollars) – 21,074 Securing the issuance of short-term letters of credit for purchase of property, plant and equipment (the bank balances are denominated in RMB) – 79,177 – 100,251	Maximum amount outstanding during the year ended 31 December 2008 RMB’000 100,000 100,000

	2008 RMB’000 6 276,672
	276,678

The deposits carry interest at prevailing market rates.

– IIA-34 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

24. BANK BALANCES

Bank balances carry interest at market rates which range from 0.01% to 3.95% per annum.

25. TRADE PAYABLES

The following is an aged analysis of trade payables at the balance sheet date:

Within 30 days 31 – 60 days 60 – 90 days	At 31 December 2006 2007 RMB’000 RMB’000 – 10,353 – 1,327 – – – 11,680	2008 RMB’000 46,634 1,352 871
		48,857

The average credit period on purchase of goods is 90 days. The Group has financial risk management policies in place to ensure that all payables are within the credit timeframe.

26. LOANS FROM RELATED COMPANIES

Name of related company Relationship Terms 國泰能源投資有限公司 Guotai Energy Investment Co., Ltd. A company controlled by Mr. Zhu Unsecured, interest-bearing at 6.4872% and repayable by 28 August 2007 太倉港環保發電有限公司 Taicang Harbour Golden Concord Electric-Power Generation Co., Ltd. A company controlled by Mr. Zhu Unsecured, interest-bearing at 6.4872% and repayable on demand	At 31 December 2006 2007 RMB’000 RMB’000 95,000 – 100,000 100,000 195,000 100,000	2008 RMB’000 – –
		–

English name for identification purpose only

– IIA-35 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

27. BANK BORROWINGS

Bank borrowings Less: Issue costs (Note) Less: current portion Non-current portion	At 31 December 2006 2007 RMB’000 RMB’000 246,000 586,000 – –	At 31 December 2006 2007 RMB’000 RMB’000 246,000 586,000 – –	2008 RMB’000 3,096,000 (38,772)
	246,000 –	586,000 (160,000)	3,057,228 (996,000)
	246,000	426,000	2,061,228

Note: Amounts represent the unamortised portion of issue costs on bank borrowings and are amortised over the terms of relevant bank borrowings.

Details of the bank borrowings before set off by this unamortised issue costs are as follows:

– 246,000 246,000	– 586,000 586,000	2,500,000 596,000
		3,096,000

– – 246,000 246,000 –	160,000 366,000 60,000 586,000 (160,000)	996,000 900,000 1,200,000
		3,096,000 (996,000)
246,000	426,000	2,100,000

Analysed as:

Fixed-rate borrowings Variable-rate borrowings	At 31 December 2006 2007 RMB’000 RMB’000 – 30,000 246,000 556,000 246,000 586,000	2008 RMB’000 630,000 2,466,000
		3,096,000

– IIA-36 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

The ranges of effective interest rate on the Group’s borrowings are:

	2006	2007	2008
Fixed-rate borrowings	–	6.73%	5.02% to 8.27%
Variable-rate borrowings	6.63%	6.75% to 8.22%	7.29% to 8.32%

All bank borrowings are denominated in RMB, the functional currency of the respective group entities.

28. OTHER BORROWINGS

Other borrowings represent advances received from the PRC government for financing JZPTD’s operations. It was unsecured, non-interest bearing and fully repaid during 2007.

29. CONVERTIBLE LOAN NOTES

On 10 September 2007, the Company issued convertible loan notes in two tranches for a principal amount of US$60,000,000 to an independent third-party (the “Note Holder”), of which US$20,000,000 was redeemable but not convertible (“Tranche A”) and the remaining US$40,000,000 was either convertible into the Company’s shares or redeemable (“Tranche B”). Tranche A and Tranche B were issued simultaneously and can only be transferred together in equal proportion and may ultimately be terminated by either redemption or conversion simultaneously at the option of the Note Holder, including upon an initial public offering (“IPO”) event. Since Tranche A and Tranche B cannot exist independently, they have been considered as a single instrument. The convertible loan notes are denominated in United States dollar and are secured by the Company’s 64% equity interest in JZPTD.

The maturity date of the convertible loan notes is on 10 September 2009. The convertible loan notes carry interest at the three months LIBOR deposit rate plus 3% per annum in the first year and three months LIBOR deposit rate plus 5% per annum in the second year. Interest is payable in arrears each quarter.

The convertible loan notes are subject to a number of covenants, such as the maintenance of certain financial ratios, restrictions on granting collateral, disposals of existing assets, the making of payments to shareholders and affiliates and the making of investments. If the covenants are not met, the convertible loan notes may become immediately due and payable at 125% of the principal amount plus any accrued and unpaid interest. In the opinion of the directors, the Group met these conditions in the required period.

Tranche B is convertible into 3% of outstanding ordinary shares if a qualifying IPO occurs prior to 10 September 2009. Since the Company’s functional currency is in RMB and the convertible loan notes are denominated in United States dollar, the conversion is not settled by the exchange of a fixed monetary amount for a fixed number of equity interments, the conversion option is considered not to be closely related to the host contract (the liability component). Upon exercise of the conversion options of Tranche B, if the market capitalization of the Company at conversion is less than US$2,560,000,000, the Group must pay the Note Holder 3% the difference between US$2,560,000,000 and the market capitalisation of the Company at conversion (“Strike Adjustment”). The redemption terms of the convertible loan notes are as follows:

(a) In the event the Group is obligated to pay additional amounts related to withholding tax or other taxation amounts as a result of any change or amendment to the tax law or regulations of the relevant jurisdiction that would otherwise reduce the yield of the Note Holder, subject to agreement by the Note Holder, the Group may redeem the convertible loan notes. If the Note Holder decides not to have the Group redeemed the convertible loan notes, the Group will no longer be obligated to gross up the payments to the Note Holder;

– IIA-37 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

(b) Under the terms of the convertible loan notes, the Company shall redeem all of the convertible loan notes at 100% plus accrued interest before 31 January 2008 at the request of the Note Holder. The Note Holder waives the right on such redemption if they have not provided notice of redemption by 31 January 2008. The Note Holder has not provided such notice of redemption and as a result the convertible loan notes will automatically convert upon a qualifying IPO or redeem at maturity on 10 September 2009;
(c) The Group shall redeem the convertible loan notes at 125% of the outstanding principal amount plus accrued interest at maturity on 10 September 2009 or upon liquidation of the Group; and
(d) The Note Holder may require the convertible loan notes to be redeemed at 125% of the outstanding principal amount plus accrued interest in the events of default or non-compliance with the covenants under the convertible loan notes agreement.

The convertible loan notes are measured at fair value with changes in fair value recognised in the consolidated income statement. The movement of the Convertible Notes is set out below:

Convertible Notes issued on 10 September 2007 Interest payment Change in fair value recognised in the consolidated income statement Exchange gain At 31 December 2007 and 1 January 2008 Interest payment Change in fair value recognised in the consolidated income statement Exchange gain At 31 December 2008	Original currency US$’000 60,000 (1,663) 3,449 –	Shown as RMB’000 451,410 (12,082) 25,054 (15,607) 448,775 (29,210) 105,259 (26,496) 498,328
	61,786 (4,274) 15,401 –	448,775 (29,210 105,259 (26,496
	72,913

The convertible loan notes were valued at fair value by the directors with reference to a valuation report carried out by Jones Lang LaSalle Sallmanns Limited (“Jones Lang LaSalle Sallmanns”), an independent and recognised international business valuers, on 31 December 2007 and 2008, at approximately US$61,786,000 (approximately RMB448,775,000) and US$72,913,000 (approximately RMB498,328,000), respectively. The change in fair value of the convertible loan notes of approximately RMB25,054,000 and RMB105,259,000, has been recognised in the consolidated income statements for the year ended 31 December 2007 and 2008, respectively. The change in fair value was mainly due to change in market risk factors. The fair value attributable to change in its credit risk is considered immaterial.

The issue cost of the Convertible Notes amounted to approximately RMB19,026,000 has been recognised in the consolidated income statements for the year ended 31 December 2007.

The assumptions adopted for the valuation of the convertible loan notes as of 31 December 2007 are as follows:

(1) Yield to maturity of 20.74% was used by reference to estimated credit rating of the Group;
(2) The probability of the exercise of options of the Strike Adjustment is insignificant.

– IIA-38 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

(3) Risk-free rate – 3.29% was used by reference to the yield of a 1 year United States of American treasury bonds;
(4) Volatility – 47.61% for the underlying share price has consider the historical price movements of comparable companies; and
(5) Dividend yield – assumed to be 0% per annum
The assumptions adopted for the valuation of the convertible loan notes as of 31 December 2008 are as follows:
(1) Yield to maturity of 10.85% was used by reference to estimated credit rating of the Group;
(2) The probability of the exercise of options of the Strike Adjustment is insignificant; and
(3) The probability of the exercise of the conversion option is insignificant.

30. DEFERRED REVENUE

In 2008, the Group entered into long-term supply contracts for supply of goods with pre-determined volumes and prices. Revenue under long-term contracts is recognised in the consolidated income statement based on the actual volumes sold and the weighted average prices over the contractual periods. Revenue relating to the difference between pre-determined prices and the weighted average prices is recognised as deferred revenue on the consolidated balance sheets.

As at 31 December 2008, after re-negotiation with the Group’s customers, the original pre-determined prices as stated in several long-term supply contracts were found to be no longer applicable. As a result, a deferred revenue of approximately RMB583,563,000, representing the difference between the original pre-determined prices and the weighted average prices, was recognised as revenue during the year ended 31 December 2008.

31. CONVERTIBLE REDEEMABLE PREFERRED SHARES

On 29 August 2007, a shareholder transferred 16,667 ordinary shares of the Company to certain investors for a consideration of US$20,000,000. These shares were immediately redesignated as 16,667,000 Series A convertible redeemable preferred shares (the “Preferred Shares”). The Preferred Shares have been recognised at their initial fair value of US$20,000,000 (RMB150,215,000) with a per share value of US$1.2. The excess of fair value of the Preferred Shares over the retired ordinary shares was approximately RMB150,215,000 and had been charged to the accumulated losses.

The Preferred Shares are non-interest bearing and convertible into ordinary shares at any time at the option of the holder at a conversion ratio of one-to-one subject to certain anti-dilution provisions (mainly including adjustment for the Company’s share split or combination) and a one-time performance adjustment based on the Group’s net profit for the year ended 31 December 2008. Since the Company’s functional currency is in RMB and the Preferred Shares are denominated in United States dollar, the conversion is not settled by the exchange of a fixed monetary amount for a fixed number of equity interments, the conversion option is considered not to be closely related to the host. The Preferred Shares will be automatically converted into ordinary shares upon a qualifying IPO. The preferred shareholders participate in cash and non-cash dividends on a pro rata basis to all ordinary shares on an as-converted basis.

The Preferred Shares carry liquidation preference to receive, prior to any distribution to the holders of ordinary shares or any class of shares, an amount per share equal to 100% of the Preferred Shares issue price plus all accrued or declared but unpaid dividends. If the Group has insufficient assets, it is required to distribute its assets ratably to the preferred shareholders. The preferred shareholders, after receiving their proportional amount are entitled to further participate in the distribution of the remaining assets of the Group ratably among all the holders of outstanding ordinary shares and Preferred Shares on an as-converted basis.

– IIA-39 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

In the event the Group’s audited consolidated net income under accounting principles generally accepted in the United States of America (“U.S. GAAP”) is lower than 95% of the target of US$150,000,000 (the “2008 Profit Target”), HG, shall transfer an additional number of ordinary shares (“Additional shares”) to the holder so that the shareholding percentage of each preferred shareholder equals the product of (a) initial shareholding percentage and (b) the quotient of the 2008 Profit Target divided by the audited consolidated net income. To the extent that HG does not have sufficient ordinary shares to fulfill the performance adjustment, the Company shall make up for the difference by issuing additional ordinary shares to the preferred shareholder. In the event that, as a result of the performance adjustment, the shareholding percentage of the preferred shareholders combined exceeds 10% of total issued shares of the Company, the preferred shareholders will have the right to request the Company to redeem the outstanding preferred shares at 150% of the preferred shares issue price. If the Company does not have sufficient cash legally available to redeem the shares, HG shall purchase the shares. In the opinion of the management of the Company, HG has sufficient ordinary shares to fulfil the performance adjustment if the 2008 Profit Target cannot be met.

The major redemption terms of the Preferred Shares are as follows:

(a) In the event of a breach of certain non-competition covenants by HG or the Company, the preferred shareholders have the right to put their Preferred Shares at 100% of the Preferred Shares issue price plus any accrued but unpaid dividends of the Preferred Shares either to the Company or to HG.
(b) If the audited consolidated earnings before interest and income tax for the period from 1 January 2007 to 31 March 2008 under U.S. GAAP is less than US$20,000,000, the preferred shareholders have a right to put the Preferred Shares for redemption at 150% of the Preferred Shares issue price plus any accrued but unpaid dividends to the Company or to HG. In the opinion of the directors, the Group met this condition in the said period.
(c) If the Group does not effect a qualifying IPO by August 2010, the preferred shareholders have a right to put the Preferred Shares at 150% of the Preferred Shares issue price plus any accrued and unpaid dividends of the Preferred Shares either to the Company or to HG. If upon exercise of this put right, the Company and HG do not have sufficient funds to redeem or purchase the shares, HG will pledge a number of ordinary shares to the preferred shareholders to make up the difference in price. If the ordinary shares are not redeemed or repurchased within a 12-months period, the preferred shareholders will become the owner of the pledged ordinary shares and all obligations under the preferred share agreement will thereby be fulfilled.

The Preferred Shares are measured at fair value with changes in fair value recognised in the consolidated income statements. The movement of the Preferred Shares is set out below:

Preferred Shares issued on 29 August 2007 Change in fair value recognised in the consolidated income statement Exchange gain At 31 December 2007 and 1 January 2008 Change in fair value recognised in the consolidated income statement Exchange gain At 31 December 2008	Original currency US$’000 20,000 10,978 –	Shown as RMB’000 150,215 79,738 (4,947) 225,006 (40,271) (13,283) 171,452
	30,978 (5,892) –	225,006 (40,271 (13,283
	25,086

– IIA-40 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

32. EMBEDDED DERIVATIVE INSTRUMENTS

The Preferred Shares were valued at fair value by the directors with reference to a valuation report carried out by Jones Lang LaSalle Sallmanns, on 31 December 2007 and 2008, at approximately US$30,978,000 (approximately RMB225,006,000) and US$25,086,000 (approximately RMB171,452,000), respectively. The change in fair value of approximately RMB79,738,000 and RMB40,271,000, has been recognised in the consolidated income statements for the year ended 31 December 2007 and 2008, respectively. The change in fair value was mainly due to change in market risk factors. The fair value attributable to change in its credit risk is considered immaterial.

The assumptions adopted for the valuation of the Preferred Shares as of 31 December 2007 are as follows:

(1) The probability of the preferred shareholders for redemption and conversion was estimated to be 25% and 75%, respectively;
(2) The time to redemption and conversion was assumed to be 2.66 years and 0.42 years, respectively;
(3) Risk-free rate – 3.25%, 3.41%, 3.29%, 3.02% and 3.06% were used by reference to the yield of 3-month, 6-month, 1-year, 2-year and 3-year United States of American treasury bonds, respectively;
(4) Volatility – 57.09% and 58.58% were used for 32-month volatility and 5-month volatility, respectively, based on the historical price movements of comparable companies; and
(5) Dividend yield – assumed to be 0% per annum.

The assumptions adopted for the valuation of the Preferred Shares as of 31 December 2008 are as follows:

(1) The probability of the preferred shareholders for redemption and conversion option is estimated to be 10% and 90%, respectively;
(2) The time to redemption and conversion was assumed to be 1.65 years and 0.75 years, respectively;
(3) Risk-free rate – 0.12%, 0.23%, 0.34%, 0.77% and 1.00% were used by reference to the yield of 3-month, 6-month, 1-year, 2-year and 3-year United States of American treasury bonds, respectively;
(4) Volatility – 82.85% and 74.05% were used for 32-month volatility and 5-month volatility, respectively, based on the historical price movements of comparable companies; and
(5) Dividend yield – assumed to be 0% per annum.

On 27 June 2008, JZPTD entered into a long-term machinery supply contract according to which the purchase price of the machinery to be acquired was denominated in currencies which are not the functional currency of JZPTD. Accordingly, the contract contains embedded foreign currency forward contracts, which are required to be separated from the long-term machinery supply contract as they have not been considered as clearly and closely related to the supply contract.

The notional amounts of the contract price denominated in foreign currencies are US$50,634,864 and EUR87,955,236. The amounts are contracted to be settled over 2008 to 2010. At 31 December 2008, the outstanding contract amounts are to be settled in a series of 50 maturity dates within the period from 5 January 2009 to 15 December 2010.

The embedded foreign currency derivatives are measured at fair value at the balance sheet date. Their fair values are determined based on the quoted market prices provided by counterparty financial institutions for equivalent instruments at the balance sheet date. The valuation is carried by Ernst & Young Advisory Services Limited, independent professional valuers not connected to the Group.

– IIA-41 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

33. SHARE CAPITAL

For the purpose of the preparation of the consolidated balance sheets, the balance of the share capital as at 31 December 2006 represents the share capital of GCL Solar HK. The authorised share capital of GCL Solar HK was HK$10,000 divided into 10,000 ordinary shares. As at 31 December 2006, one share was issued at par.

Movement of the share capital during the year ended 31 December 2007 and 2008 is set out below:

Authorised:

Upon incorporation of the Company At date of incorporation (9 May 2007) at US$1 each Subdivision of one share of US$1 each into 100 shares of US$0.01 each (Note a) At 31 December 2007 and 1 January 2008 at US$0.01 each Subdivision of one share of US$0.01 each into 100 shares of US$0.0001 each (Note a) Subdivision of one share of US$0.0001 each into 10 shares of US$0.00001 each (Note a) At 31 December 2008 at US$0.00001 each	Number of shares 1,000,000 99,000,000	Amount US$ 1,000,000 –
	100,000,000 9,900,000,000 90,000,000,000	1,000,000 – –
	100,000,000,000	1,000,000

Issued and fully paid:

Upon incorporation of the Company At date of incorporation (9 May 2007) at US$1 each (Note c) Subdivision of one share of US$1 each into 100 shares of US$0.01 each (Note a) Shares issued during the period (Note b) Designated as Series A convertible redeemable preferred shares (Note c) At 31 December 2007 and 1 January 2008 at US$0.01 each Subdivision of one share of US$0.01 each into 100 shares of US$0.0001 each (Note a) Shares repurchased and cancelled (Note d) Subdivision of one share of US$0.0001 each into 10 shares of US$0.00001 each (Note a) At 31 December 2008 at US$0.00001 each	Number of shares 1 99 999,900 (16,667)	Amount Shown in the financial statements as US$ RMB’000 1 – – – 9,999 75 (167) –	Amount Shown in the financial statements as US$ RMB’000 1 – – – 9,999 75 (167) –
	983,333 97,349,967 (500,000) 880,499,700	9,833 – (50) –	75 – – –
	978,333,000	9,783	75

– IIA-42 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

Notes:

(a) On 13 June 2007, an ordinary resolution was passed by the shareholder of the Company to approve the subdivision of each issued and unissued shares of US$1 each in the authorised share capital into 100 ordinary shares of US$0.01 each.

On 21 February 2008, an ordinary resolution was passed by the shareholders of the Company to approve the subdivision of each issued and unissued shares of US$0.01 each in the authorised share capital into 100 ordinary shares of US$0.0001 each.

On 18 July 2008, an ordinary resolution was passed by the shareholders of the Company to approve the subdivision of each issued and unissued shares of US$0.0001 each in the authorised share capital into 10 ordinary shares of US$0.00001 each.

(b) The Company was incorporated with an authorised share capital of US$1,000,000 divided into 1,000,000 ordinary shares of US$1 each. At the date of incorporation, 1 ordinary share of US$1 was issued at par to the subscriber to the Memorandum of Association to provide the initial capital to the Company. On 21 August 2007, the Company issued 999,900 ordinary shares with US$0.01 par value in return for equity interest in GCL Solar HK (note 2). The new shares rank pari passu with the existing shares in all respects.
(c) On 29 August 2007, a shareholder transferred 16,667 ordinary shares of US$0.01 each to certain investors for a consideration of approximately RMB150,215,000 (US$20,000,000). These shares were immediately redesignated as Series A convertible redeemable preferred shares with details set out in note 31.
(d) On 25 February 2008, 500,000 ordinary shares of US$0.0001 each were repurchased for a consideration of approximately RMB49,083,000 (US$7,000,000). The repurchased shares were cancelled and the issued share capital of the Company was reduced by the nominal value thereof. The consideration of the shares repurchase of approximately RMB49,083,000 (US$7,000,000) was charged to the capital reserve.

34. MAJOR NON-CASH TRANSACTIONS

During the Relevant Periods, the Group entered into the major non-cash transactions as follows:

Property, plant and equipment purchased which had not yet been paid at balance sheet dates and included in other payables Deposits paid for acquisition of property, plant and equipment transferred to additions of property, plant and equipment	13 November 2006 to 31 December 2006 RMB’000 2,924 –	Year ended 31 December 2007 2008 RMB’000 RMB’000 45,979 421,310 309,999 121,131	Year ended 31 December 2007 2008 RMB’000 RMB’000 45,979 421,310 309,999 121,131

			121,131

(b) On 13 December 2006, the Group acquired 64% of the issued share capital of JZPTD from related companies for a consideration of RMB128,000,000. The consideration was not yet paid at 31 December 2006 and recorded as amounts due to related companies as set out in note 39 and was subsequent paid during 2007.

– IIA-43 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

(c) On 13 November 2008, JZPTD acquired additional 30% interest in TZPTD for a consideration of RMB11,000,000 with details set out in note 16. The consideration was not yet paid and recorded as other payables at 31 December 2008.
(d) During 2008, the Group acquired intangible asset of approximately RMB5,040,000 with details set out in note 17, of which approximately RMB2,500,000 was not yet paid and recorded as other payables at 31 December 2008.

35. OPERATING LEASES

	13 November
	2006 to
	31 December	Year ended 31 December
	2006	2007	2008
	RMB’000	RMB’000	RMB’000
Minimum lease payments paid under
operating leases in respect of rented
premises during the period/year	–	2,889	3,107

At the balance sheet dates, the Group has commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:

Within one year In the second to fifth year inclusive	At 31 December 2006 2007 RMB’000 RMB’000 – 1,248 – 798 – 2,046	2008 RMB’000 3,275 2,611
		5,886

Operating lease payments represent rentals payable by the Group for certain of its office premises. Leases are negotiated and rentals are fixed for terms ranging from one to three years.

36. COMMITMENTS

(a) Capital commitments

		31 December
	2006	2007	2008
	RMB’000	RMB’000	RMB’000
Capital expenditure in respect of
acquisition of property, plant and
equipment contracted for but not
provided in the Financial Information	239,282	436,595	3,358,793

(b) Other commitments

During the year ended 31 December 2008, the Group entered into certain long-term supply contracts under which the Group contracted to supply a pre-determined volume of products during the various periods commenced in 2008 to 2015. The customers are required to make an interest-free and non-refundable advance. Such advance is deductible from payment for sales starting from January 2010, 2012 or 2013. As of December 31, 2008, RMB1,751,717,000 of which amount was received and was recorded as advances from customers under non-current liabilities.

– IIA-44 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

37. PLEDGE OF ASSETS

As at 31 December 2007 and 2008, 64% equity interest in JZPTD has been pledged to secure convertible loan notes issued by the Company. As a result of the pledge, JZPTD is restricted in their ability to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances.

38. SHARE-BASED PAYMENT TRANSACTIONS

On 15 August 2007, the directors of the Company adopted a share option plan to grant options to its employees and directors to purchase ordinary shares of the Company subject to vesting requirements. The total number of ordinary shares which may be issued upon exercise of all options shall not exceed 5% of the total number of issued ordinary shares as of 15 August 2007. The options have an exercise price of US$0.5 per share (after share split per note 33). The options can only be exercised after either (i) upon public listing of the Company; or (ii) certain events constitute a change in control of the Company prior to public listing of the Company and the management has elected to accelerate the exercisability of the options. If either of the foregoing conditions are not satisfied, the options will lapse.

On 15 August 2007, the Company granted two options to one of the Company’s directors and one employee to purchase 2,000 ordinary shares of the Company. On 29 February 2008, the two options were cancelled. On the same date, the Company granted additional 5,000,000 share options to its directors and employees to purchase 50,000,000 ordinary shares of the Company with exercise price of US$0.5 per share. Each option is exercisable into 10 ordinary shares. The options granted become exercisable following the expiry of one year after the public listing of the Company and must be exercised within 10 years from the date of grant. The options vest each year over a period of four years.

All the figures have been adjusted for the effect of share split per note 33

The following table discloses movements of the Company’s share options held by its directors and employees during the Relevant Periods:

Granted on 15 August 2007, outstanding at 31 December 2007 and 1 January, 2008 Granted on 29 February 2008 Cancelled on 29 February 2008 Outstanding at 31 December 2008	Number of options Weight average exercise price 2 US$0.5 5,000,000 US$0.5 (2) US$0.5 5,000,000 US$0.5

As at 31 December 2007 and 2008, none of the outstanding options were vested and no option was available for future grant.

During the Relevant Periods, share options were granted on 15 August 2007 and 29 February 2008. No fair value was estimated for the options granted on 15 August 2007 as the directors of the Company are of the opinion that the amount involved is insignificant. The estimated fair value of the options granted on 29 February 2008 was approximately US$69,442,000.

– IIA-45 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

The fair value of the options has been estimated using the Binominal model. The assumptions used in determining the fair value of the options are as follows:

Risk free interest rate	3.71%
Expected volatility	60.65%
Dividend yield	0%
Sub-optimal factor	1. 5

Expected volatility was determined by using the volatility of the stock return of comparable listed companies as at the valuation date. The sub-optimal factor indicates the correlation between the employees exercise behaviour and the underlying share price. It is expected that the employees may exercise the options when the share price is 1.5 times the exercise price.

No compensation cost related to the options grant has been recognised for the Relevant Periods, as the vesting period is based on occurrence of events stated above.

39. ACQUISITION OF ASSETS IN SUBSIDIARIES

On 13 December 2006, the Group acquired 64% of the issued share capital of JZPTD for a consideration of RMB128,000,000 from companies controlled by Mr. Zhu who was unrelated to the Group as at the acquisition date. JZPTD had a wholly-owned subsidiary, JSJST at the date of acquisition. The acquisition has been accounted for as acquisition of assets and liabilities as JZPTD and JSJST have not yet commenced their planned business at the date of acquisition.

The net assets acquired in the transaction are as follows:

Net assets acquired:
Property, plant and equipment
Prepaid lease payments
Deposits for acquisition of property, plant and equipment
Amounts due from related companies
Deposits, prepayments and other receivables
Bank balances and cash
Other payables and accruals
Loans from related companies
Bank borrowings
Other borrowings
Minority interests
Total consideration satisfied by amount due to related companies
Net cash inflow arising on acquisition:
Bank balances and cash acquired

RMB’000
121,256
105,573
270,222
5,678
896
191,401
(15,074)
(195,000)
(246,000)
(48,842)
190,110
(62,110)
128,000
191,401

As at 31 December 2006, the consideration of RMB128,000,000 remained unsettled and was recorded as amounts due to related companies and was settled in 2007.

– IIA-46 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

40. DISPOSAL OF A SUBSIDIARY

On 20 June 2007, JZPTD entered into a sale and purchase agreement with its minority shareholders to dispose of its entire equity interest in a subsidiary, JSJST for a consideration of RMB98,560,000. The disposal resulted in a gain of approximately RMB4,335,000.

The net assets of JSJST at the date of disposal are as follows:

Net assets disposed of: Property, plant and equipment Prepaid lease payments Deposits, prepayments and other receivables Bank balances and cash Other payables and accruals Amounts due to related companies Minority interests Gain on disposal of a subsidiary Total consideration satisfied by cash Net cash outflow arising on disposal: Cash consideration Bank balances and cash disposed of	RMB’000 56,254 46,730 611 6,913 (6,219 (10,500
	93,789 436 4,335
	98,560

	98,560 (6,913
	91,647

41. RELATED PARTY DISCLOSURES

During the Relevant Periods, the Group also entered into the following transactions with related parties:

	13 November
	2006 to
	31 December	Year ended 31 December
	2006	2007	2008
	RMB’000	RMB’000	RMB’000
Sales of goods to related companies	–	50,978	140,641
Rental expense paid to a related company	–	813	797
Steam supply expense paid to related companies	–	–	6,963
Consultancy fee paid to a related company	–	2,603	–
Management fee paid to related companies	–	10,217	22,405
Interest on loans form related companies	597	9,051	385
Issue cost incurred for amount due to
immediate holding company	–	–	854

– IIA-47 –

APPENDIX IIA

ACCOUNTANTS’ REPORT OF TARGET GROUP A

The related companies are entities in which the Mr. Zhu or his son have beneficial interests.

As at 31 December 2006 and 2007, deposits for acquisition of property, plant and equipment amounting to approximately RMB288,200,000 and RMB30,130,000 are paid to a related company and are recorded in deposits for acquisition of property, plant and equipment as non-current assets. Details of balances and other arrangements with related parties are disclosed in the consolidated balance sheets on page 4 and notes 2, 21, 22, 26, 31, 33, 34, 36, 37, 39 and 40.

Compensation of key management personnel, being directors’ remuneration as set out in note 13 has been determined by reference to the performance of individuals and market trends.

42. GOVERNMENT GRANTS

In 2008, the Group received government grants of RMB119,220,000 as subsidies for the construction of its property. The amounts have been recorded in other deferred income and are transferred to income over the useful lives of the property. This policy has resulted in a credit to the consolidated income statement for the year ended 31 December 2008 amounted to approximately RMB4,170,000. As at 31 December 2008, an amount of approximately RMB115,050,000 remains to be amortised, of which approximately RMB7,948,000 is to be amortised in the next twelve months or less and therefore classified as current liabilities. The remaining amount of approximately RMB107,102,000 is to be amortised after twelve months and therefore classified as non-current liabilities.

B. SUBSEQUENT EVENTS

No significant events took place subsequent to 31 December 2008.

C. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Company or any of its subsidiaries have been prepared in respect of any period subsequent to 31 December 2008.

Yours faithfully,

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong

– IIA-48 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

30 June 2009

==> picture [71 x 55] intentionally omitted <==

The Directors

GCL-Poly Energy Holdings Limited

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding Sun Wave Group Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) for the period from 11 September 2006 (date of incorporation of Speedy Gain Limited) to 31 December 2006 and the years ended 31 December 2007 and 2008 (the “Relevant Periods”) for inclusion in the circular issued by GCL-Poly Energy Holdings Limited, a company incorporated in the Cayman Islands with its shares being listed on the main board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), dated 30 June 2009 in connection with the proposed very substantial acquisition of Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. through the acquisition of 100% equity interest in GCL Solar Energy Technology Holdings Inc., Greatest Joy International Limited and the Company (the “Circular”).

The Company was incorporated in the British Virgin Islands on 7 December 2007. Pursuant to a group reorganisation, details of which are set out in note 2 to the Financial Information, the Company has become the holding company of the Group since 25 February 2008.

As at 31 December 2008 and the date of this report, the Company has direct and indirect interests in the following subsidiaries:

				Proportion of nominal	Proportion of nominal	Proportion of nominal
			Issued and	value of issued share			Interest
	Date of	Place of	fully paid		capital held by		attributable to
Name of the company	incorporation	incorporation	share capital		the Company		the Company		Principal activity
				Directly		Indirectly
					%	%		%
亞洲硅材料科技發展控股有限公司	8 November 2007	British Virgin	US$100		100	–		100	Investment holding
Asia Silicon Technology		Islands
Development Holdings Limited		(“BVI”)
(“ASTDH BVI”)
亞洲硅材料科技發展控股有限公司	6 December 2007	Hong Kong	HK$1		–	100		100	Investment holding
Asia Silicon Technology
Development Holdings Limited
(“ASTDH”)
亞洲硅材料科技發展有限公司	7 December 2007	Hong Kong	HK$1		–	100		100	Investment holding
Asia Silicon Technology
Development Limited (“ASTD”)
卓寶國際有限公司	21 November 2007	BVI	US$1		100	–		100	Investment holding
Excel Bond International Limited
(“Excel Bond”)

– IIB-1 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

				Proportion of nominal	Proportion of nominal
			Issued and	value of issued share		Interest
	Date of	Place of	fully paid	capital held by		attributable to
Name of the company	incorporation	incorporation	share capital	the Company		the Company	Principal activity
				Directly	Indirectly
				%	%	%
佳馳有限公司	11 September 2006	Hong Kong	HK$1	–	100	100	Investment holding
Speedy Gain Limited
(“Speedy Gain”)
智宇投資有限公司	1 August 2007	BVI	US$1	100	–	100	Investment holding
Wise Universe Investments Limited
(“Wise Universe”)

The financial year-end date of the Company and its subsidiaries is 31 December. The statutory financial statements of Speedy Gain for the period from 11 September 2006 (date of incorporation) to 31 December 2007 were audited by Clement C. W. Chan & Co., Certified Public Accountants. No audited financial statements have been prepared for ASTDH and ASTD since their respective dates of incorporations as they have not carried on any business other than the transactions relating to the group reorganisation referred to in note 2. No audited financial statements have been prepared for ASTDH BVI, Excel Bond and Wise Universe as they are not subject to statutory audit requirement for companies incorporated in the BVI. No audited financial statements have been prepared for Speedy Gain for the year ended 31 December 2008. For the purpose of this report, we have however reviewed all the relevant transactions of ASTDH BVI, ASTDH, ASTD, Excel Bond and Wise Universe since their respective dates of incorporations and Speedy Gain for the year ended 31 December 2008 and carried out such procedures as we considered necessary for inclusion of the financial information relating to these companies in this Circular.

For the purpose of this report, the directors of the Company have prepared the consolidated financial statements of the Group for the Relevant Periods in accordance with the accounting policies in compliance with International Financial Reporting Standards (“IFRSs”) (the “IFRS Financial Statements”). We have, for the purpose of this report, performed independent audit procedures on the IFRS Financial Statements in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and have examined the IFRS Financial Statements in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

In our opinion, the Financial Information, together with the notes thereon gives, for the purpose of this report, a true and fair view of the state of affairs of the Group and the Company as at 31 December 2007 and 2008 and of the consolidated results and cash flows of the Group for the Relevant Periods.

– IIB-2 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

A. FINANCIAL INFORMATION

CONSOLIDATED INCOME STATEMENTS

Notes Revenue Other income 8 Administrative expenses Share of result of an associate 13 Loss before tax Income tax expense 9 Loss for the year 10	Year ended 31 December 2007 2008 RMB’000 RMB’000 – – 117 36,864 (117) (121) – (270,542) – (233,799) – (16,351) – (250,150)

– IIB-3 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

CONSOLIDATED BALANCE SHEETS

The Group At 31 December 2007 2008 RMB’000 RMB’000 – – – 1,433,180	The Group At 31 December 2007 2008 RMB’000 RMB’000 – – – 1,433,180	The Company At 31 December 2007 2008 RMB’000 RMB’000 – 1 – –	The Company At 31 December 2007 2008 RMB’000 RMB’000 – 1 – –
– 1,433,180 – – 1 – 54,526 47 54,527 47 – 1 54,526 – – 1,660,775 – 8,862 54,526 1,669,638 1 (1,669,591) – 13,738		– – – – – – – – – – – –	1
			1,660,775 – –
			1,660,775
			– – 1,660,775 –
			1,660,775
			–
			–
1	(250,149)	–	1

1 –	1 (250,150)	– –	1 –
1	(250,149)	–	1

– IIB-4 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

At 1 January 2007 Issue of shares during the year At 31 December 2007 and 1 January 2008 Group restructuring Issue of shares during the year Loss and total recognised expenses for the year Transfer At 31 December 2008	Share capital RMB’000 – 1 1 (1) 1 – – 1	Statutory reserve fund RMB’000 (Note) – – – – – – 50,223 50,223	Accumulated loss RMB’000 – – – – – (250,150) (50,223) (300,373)	Total RMB’000 – 1 1 (1) 1 (250,150) – (250,149)

Note: In accordance with the articles of association of the associate of the Group registered in the People’s Republic of China (the “PRC”) and the relevant PRC laws and regulations, the associate is required to transfer at least 10% of its profit after taxation, which is determined in accordance with the PRC accounting rules and regulations, to a statutory reserve fund (including the general reserve fund and enterprise expansion fund, where appropriate). Transfer to this statutory reserve fund is subject to the approval of the respective board of directors, and is discretionary when the balance of such fund has reached 50% of the registered capital of the associate. Statutory reserve fund can only be used to offset accumulated losses or to increase capital.

– IIB-5 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

CONSOLIDATED CASH FLOW STATEMENTS

Note OPERATING ACTIVITIES Loss before tax Adjustments for: Bank interest income Exchange gain Share of result of an associate Operating cash flows before movements in working capital Increase in other payables NET CASH USED IN OPERATING ACTIVITIES INVESTING ACTIVITIES Acquisition of an associate 13 Interest received NET CASH FROM (USED IN) INVESTING ACTIVITIES FINANCING ACTIVITIES Advance from (repayment to) a related company Advance from immediate holding company NET CASH FROM FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT END OF THE YEAR, represented by bank balances and cash	Year ended 31 December 2007 2008 RMB’000 RMB’000 – (233,799) (117) (118) – (36,746) – 270,542 (117) (121) – 1 (117) (120) – (1,697,472) 117 118 117 (1,697,354) 54,526 (54,526) – 1,697,521 54,526 1,642,995 54,526 (54,479) – 54,526 54,526 47	Year ended 31 December 2007 2008 RMB’000 RMB’000 – (233,799) (117) (118) – (36,746) – 270,542 (117) (121) – 1 (117) (120) – (1,697,472) 117 118 117 (1,697,354) 54,526 (54,526) – 1,697,521 54,526 1,642,995 54,526 (54,479) – 54,526 54,526 47
	(117) – (117) – 117 117 54,526 – 54,526 54,526 –	(121 1
		(120
		(1,697,472 118
		(1,697,354
		(54,526 1,697,521
		1,642,995
		(54,479 54,526
	54,526

– IIB-6 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

The Company is a private limited company incorporated in the British Virgin Islands (“BVI”). The address of the registered office is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, the BVI, and the address of the principal place of business is Suite 3601-4, Two Exchange Square, 8 Connaught Road Central, Hong Kong. In the opinion of the directors, its immediate holding company is Happy Genius Holdings Limited, a company incorporated in the BVI. Its ultimate holding company is Asia Pacific Energy Fund Limited, a company incorporated in the BVI which is ultimately controlled by Mr. Zhu Gong Shan (“Mr. Zhu”).

The Company is an investment holding company. During the Relevant Periods, the Company acquired interests in an associate. The principal activities of its associate are set out in note 13.

The Financial Information is presented in Renminbi (“RMB”), which is the same as the functional currency of the Company and its subsidiary.

The Financial Information has been prepared on a going concern basis because the immediate holding company has agreed not to demand for repayment of the amount due to immediate holding company and to provide additional funding to the Group such that the Group is able to meet its financial obligations in full as they fall due in the foreseeable future.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

On 25 February 2008, the Company acquired the entire equity interest in Excel Bond, Wise Universe and ASTDH BVI and their wholly owned subsidiaries, ASTD, Speedy Gain and ASTDH from parties/entities controlled by Mr. Zhu.

The consolidated income statements, statements of changes in equity and cash flows statements include the results, changes in equity and cash flows of the Company and ASTDH BVI, ASTDH, ASTD, Excel Bond, Wise Universe and Speedy Gain as if these entities had been the subsidiaries of the Company throughout the Relevant Periods or since their respective dates of incorporation where this is a shorter period. The consolidated balance sheet of the Group as at 31 December 2007 has been prepared to present the assets and liabilities of the Company and ASTDH BVI, ASTDH, ASTD, Excel Bond, Wise Universe and Speedy Gain as if these entities had been the subsidiaries of the Company as at that date.

The Group did not incur any revenue or expense during the period from 11 September 2006 to 31 December 2006.

The Group did not have any assets and liabilities as at 31 December 2006 except for share capital of Speedy Gain of HK$1 (RMB1) and an amount due from immediate holding company of the same amount. Accordingly, consolidated income statements, consolidated statement of changes in equity and consolidated cash flow statements for the period from 11 September 2006 to 31 December 2006 and the consolidated balance sheet as at 31 December 2006 are not presented.

3. APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”)

The Group has adopted all of the new and revised International Accounting Standards (“IASs”), IFRSs and amendments issued by International Accounting Standards Board (“IASB”) and the interpretations developed by International Financial Reporting Interpretations Committee (“IFRIC”), which are effective for the financial year beginning on 1 January 2008 consistently in the preparation of its Financial Information throughout the Relevant Periods.

– IIB-7 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

4. SIGNIFICANT ACCOUNTING POLICIES

At the date of this report, the IASB has issued the following new and revised standards, amendments and interpretations which are not yet effective during the Relevant Periods.

1 Effective for annual periods beginning on or after 1 January 2009 except the amendments to IFRS 5, effective for annual periods beginning on or after 1 July 2009

2 Effective for annual periods beginning on or after 1 January 2009, 1 July 2009 and 1 January 2010, as appropriate

3 Effective for annual periods beginning on or after 1 January 2009

4 Effective for annual periods beginning on or after 1 January 2010

5 Effective for annual periods beginning on or after 1 July 2009

6 Effective for annual periods ending on or after 30 June 2009

7 Effective for annual periods beginning on or after 1 July 2008

8 Effective for annual periods beginning on or after 1 October 2008

9 Effective for transfers on or after 1 July 2009

The Group has not early adopted these new and revised standards, amendments and interpretations in the preparation of the Financial Information for the Relevant Periods. The directors of the Company anticipated that the application of these new and revised standards, amendments and interpretations will have no material effect on the results and the financial position of the Group.

The Financial Information has been prepared under the historical cost basis and in accordance with the following accounting policies which conform with IFRSs. In addition, the Financial Information includes the applicable disclosure required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

Basis of consolidation

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

– IIB-8 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

Investment in subsidiaries

Investments in subsidiaries are stated at cost less any identified impairment losses.

Interests in an associate

An associate is an entity over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

The results and assets and liabilities of an associate are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, investments in an associate are carried in the consolidated balance sheet at cost as adjusted for pre-acquisition dividends and post-acquisition changes in the Group’s share of the net assets of the associate, less any identified impairment loss. When the Group’s share of losses of an associate equals or exceeds its interest in that associate, the Group discontinues recognising its share of further losses. An additional share of losses is provided for and a liability is recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of that associate.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

Revenue recognition

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the Relevant Periods. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

– IIB-9 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and an associate, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to profit or loss.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when a group entity becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities on initial recognition.

Financial assets

The Group’s financial assets are loans and receivables.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including amounts due from subsidiaries, amounts due from shareholders and bank balances) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment loss on financial assets below).

Impairment of financial assets

significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

– IIB-10 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

Financial liabilities and equity

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Effective interest method

Interest expense is recognised on an effective interest basis.

Financial liabilities

Financial liabilities including other payables, amount due to a related company and amount due to immediate holding company are subsequently measured at amortised cost, using the effective interest method.

Equity instrument

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Derecognition

Impairment losses on tangible assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

– IIB-11 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

5. CAPITAL RISK MANAGEMENT

The capital structure of the Group consists of debt, which mainly includes amount due to immediate holding company disclosed in note 16, and equity comprising issued share capital and reserves.

6. FINANCIAL INSTRUMENTS

6a. Categories of financial instruments

Financial assets Loans and receivables (including cash and cash equivalents) Financial liabilities Amortised cost	The Group At 31 December 2007 2008 RMB’000 RMB’000 54,527 47 54,526 1,660,776	The Company At 31 December 2007 2008 RMB’000 RMB’000 – 1,660,775 – 1,660,775	The Company At 31 December 2007 2008 RMB’000 RMB’000 – 1,660,775 – 1,660,775

			1,660,775

6b. Financial risk management objectives and policies

The Group’s major financial instruments include amounts due from shareholders, bank balances, other payables, amount due a related company and amount due to immediate holding company. Details of the financial instruments are disclosed in respective notes. The risks associated with these financial instruments include currency risk, credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risk

Currency risk

Certain bank balances, amounts due from shareholders, other payables, amount due to a related company and amount due to immediate holding company of the Group are denominated in foreign currencies, which expose the Group to foreign currency risk. The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure by closely monitoring the movement of foreign currency rate. The currency risk of the Company is insignificant.

– IIB-12 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at 31 December 2007 and 2008 are as follows:

The Group Hong Kong dollar United States dollar The Company Hong Kong dollar	Assets At 31 December 2007 2008 RMB’000 RMB’000 1 – 54,526 47 Assets At 31 December 2007 2008 RMB’000 RMB’000 1 1,660,775	Liabilities At 31 December 2007 2008 RMB’000 RMB’000 54,526 1,660,775 – – Liabilities At 31 December 2007 2008 RMB’000 RMB’000 – 1,660,775

Sensitivity analysis

The following table details the Group’s sensitivity to a 5% increase and decrease in RMB against the relevant foreign currencies. 5% is the sensitivity rate used which represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 5% change in foreign currency rates. A positive/negative number below indicates a decrease/increase in loss for the year where RMB strengthen 5% against the relevant currency. For a 5% weakening of RMB against the relevant currency, there would be an equal and opposite impact on the loss for the year.

				Hong Kong	dollar	United Stated	dollar
				2007	2008	2007	2008
				RMB’000	RMB’000	RMB’000	RMB’000
Loss	for	the	year	2,726	83,039	(2,726)	(2)

Credit risk

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

Liquidity risk

The Group has net current liabilities and net liabilities amounting to approximately RMB1,669,591,000 and RMB250,149,000, respectively, at 31 December 2008. The Group is exposed to liquidity risk of being unable to raise sufficient funds to meet its financial obligations when they fall due.

As mentioned in Note 1, the immediate holding company has agreed not to demand for repayment of the amount due to immediate holding company and to provide additional funding to the Group such that the Group is able to meet its financial obligations in full as they fall due for the foreseeable future.

– IIB-13 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

The following table details the Group’s remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. All financial liabilities are non-interest bearing. The table therefore includes only principal cash flows.

Liquidity tables

The Group At 31 December 2007 Amount due to a related company At 31 December 2008 Other payables Amount due to immediate holding company The Company At 31 December 2008 Amount due to immediate holding company	Repayable on demand Total undiscounted cash flows RMB’000 RMB’000 54,526 54,526 Repayable on demand Total undiscounted cash flows RMB’000 RMB’000 1 1 1,660,775 1,660,775 1,660,776 1,660,776 Repayable on demand Total undiscounted cash flows RMB’000 RMB’000 1,660,775 1,660,775	Carrying amount RMB’000 54,526

		Carrying amount RMB’000 1 1,660,775
		1,660,776

		Carrying Amount RMB’000 1,660,775

6c. Fair value

The directors consider the carrying amounts of financial assets and financial liabilities carried at amortised cost in the consolidated financial statements approximate to their fair values.

7. REVENUE AND SEGMENT INFORMATION

The Company is an investment holding company. During the Relevant Periods, its only investment is an investment in an associate (note 13). Accordingly, no revenue has been recognised during the Relevant Periods. No analyses by business segment and geographical area of operations or customers are provided.

8. OTHER INCOME

Bank interest income Exchange gain	Year ended 31 December 2007 2008 RMB’000 RMB’000 117 118 – 36,746 117 36,864	Year ended 31 December 2007 2008 RMB’000 RMB’000 117 118 – 36,746 117 36,864
		36,864

– IIB-14 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

9. INCOME TAX EXPENSE

Income tax expense for the year ended 31 December 2008 represents the current tax charge approximately RMB2,613,000 and deferred tax charge of approximately RMB13,738,000 (note 17) in respect of the PRC dividend withholding tax.

On 12 September 2008, the associate was required by the PRC government to increase its registered capital in order to obtain approval to increase its production capacity. The associate increased its registered capital by RMB1,000,000,000 through recapitalisation of its undistributed earnings, out of which approximately RMB886,258,000 was recapitalised from its earnings subsequent to 1 January 2008. Such recapitalisation is deemed to be a distribution to the Group and accordingly, a provision for PRC dividend withholding tax of approximately RMB6,250,000 and RMB2,613,000 has been recognised for the period from 1 January 2008 to the date of acquisition of the associate and from the date of acquisition onwards, based on the applicable tax rate of 5% on approximately RMB125,000,000 and RMB52,251,000 deemed distribution to the Group, respectively. The provision for the PRC pre-acquisition dividend withholding tax of approximately RMB6,250,000 has been directly debited to the cost of investment in an associate as disclosed in note 13.

The Company and its subsidiaries incorporated in the BVI are tax exempted under the laws of the BVI. No provision for Hong Kong Profits Tax has been made in the consolidated financial statements as the Group has no assessable profit for the Relevant Periods.

On 26 June 2008, the Hong Kong Legislative Council passed the Revenue Bill 2008 which reduced corporate profits tax rate from 17.5% to 16.5% effective from the year of assessment 2008/2009. Therefore, Hong Kong Profits Tax is calculated at 17.5% and 16.5% of the estimated assessable profit for the years ended 31 December 2007 and 2008, respectively, if any.

The income tax expense for the Relevant Periods can be reconciled to the loss before tax as follows:

Loss before tax Tax at Hong Kong Profits Tax rate of 17.5% for 2007 and 16.5% for 2008 Tax effect of expenses not deductible for tax purpose Tax effect of income not taxable for tax purpose Tax effect of share of result of an associate PRC dividend withholding tax Income tax expense LOSS FOR THE YEAR Loss for the year has been arrived at after charging: Auditor’s remuneration	Year ended 31 December 2007 2008 RMB’000 RMB’000 – (233,799) – (38,577) 20 20 (20) (6,082) – 44,639 – 16,351 – 16,351 Year ended 31 December 2007 2008 RMB’000 RMB’000 8 –

10. LOSS FOR THE YEAR

Staff cost, including directors remuneration are borne by the immediate holding company for the Relevant Periods. Auditor’s remuneration for the year ended 31 December 2008 is borne by the immediate holding company.

– IIB-15 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

11. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

No emolument is paid or payable to the directors and employees of the Company during the Relevant Periods.

12. INVESTMENTS IN SUBSIDIARIES

		The Company
		2007	2008
		RMB’000	RMB’000
Unlisted	investments	–	1

Details of the Company’s subsidiaries as at 31 December 2008 are disclosed on page IIB-1 and IIB-2.

13. INTERESTS IN AN ASSOCIATE

Cost of investment in an associate, unlisted, adjusted for PRC pre-acquisition dividend withholding tax of RMB6,250,000 Share of post-acquisition profit Amortisation and impairment loss of intangible asset, net of tax	The Group At 31 December 2007 2008 RMB’000 RMB’000 – 1,703,722 – 350,120 – (620,662) – 1,433,180	The Group At 31 December 2007 2008 RMB’000 RMB’000 – 1,703,722 – 350,120 – (620,662) – 1,433,180
		1,433,180

On 30 April 2008, the Group acquired 20% equity interest of 江蘇中能硅業科技發展有限公司 Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. (“JZPTD”) from the then shareholders of JZPTD at aggregate consideration of approximately RMB1,697,472,000. JZPTD is engaged in manufacture and sale of polysilicon and wafer products. Upon acquisition, the Group has identified an intangible asset in respect of outstanding long term contracts signed with third parties for polysilicon and wafer products. The intangible asset is measured at the fair value of approximately RMB8,243,000,000, determined by reference to a valuation performed by Jones Lang LaSalle Sallmanns Limited (“Jones Lang LaSalle Sallmanns”), an independent international business valuer at 30 April 2008. The fair value of the intangible asset of approximately RMB1,648,600,000 and the corresponding deferred tax liability of approximately RMB247,290,000, attributable to the Group has been recognised on the same date. Goodwill of approximately RMB36,441,000 arising on acquisition of an associate during the year ended 31 December 2008 has been recognised.

– IIB-16 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

The summarised financial information in respect of the Group’s associate as at 31 December 2008 is set out below:

Total assets Total liabilities Net assets Group’s share of net assets of an associate Share of carrying amount of intangible asset acquired, net of tax Goodwill Revenue Profit for the year Group’s share of result of an associate for the year Amortisation and impairment loss on intangible asset, net of tax (Note)	RMB’000 9,375,049 (6,294,591) 3,080,458 616,091 780,648 36,441 1,433,180 3,521,444 1,750,601 350,120 (620,662) (270,542)

Note:

The amount included amortisation of approximately RMB109,906,000 and impairment loss of the intangible asset acquired of approximately RMB510,756,000, net of tax effect of approximately RMB97,804,000, attributable to the Group from the date of acquisition to 31 December 2008.

The Group has assessed the impairment loss of intangible asset by reference to a business valuation performed by Jones Lang LaSalle Sallmanns at 31 December 2008, using income approach. That calculation uses cash flow projections based on financial budgets approved by management covering a seven-year period at a discount rate of 15.08%. Other key assumptions for the valuation relate to the estimation of cash inflow/outflows which include budget sales and gross margin. Such estimation is based on the associate’s past performance and management’s expectations for the market development. Based on the valuation, the Group has recognised impairment loss of intangible asset of approximately RMB510,756,000, net of tax effect of approximately RMB97,804,000 attributable to the Group from the date of acquisition to 31 December 2008, due to the revision of the terms of those outstanding long term contracts.

14. AMOUNTS DUE FROM SUBSIDIARIES AND SHAREHOLDERS

The amounts due from subsidiaries and shareholders are non-trade related, unsecured, non-interest bearing and are repayable on demand.

15. BANK BALANCES

Bank balances carry interest at market rates which range from 3.85% to 4.30% per annum and 0.03% to 4.30% per annum for the years ended 31 December 2007 and 2008, respectively.

– IIB-17 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

16. AMOUNTS DUE TO IMMEDIATE HOLDING COMPANY AND A RELATED COMPANY

The amount due to immediate holding company is non-trade related, unsecured, non-interest bearing and is repayable on demand.

The amount due to a related company is non-trade related, unsecured, non-interest bearing and is repayable on demand. The related company is an entity controlled by Mr. Zhu.

17. DEFERRED TAX LIABILITY

At 1 January 2007, 31 December 2007 and 1 January 2008 Charged to income statement for the year (note 9) At 31 December 2008	PRC dividend withholding tax The Group The Company RMB’000 RMB’000 – – 13,738 – 13,738 –	PRC dividend withholding tax The Group The Company RMB’000 RMB’000 – – 13,738 – 13,738 –
		–

A provision for PRC dividend withholding tax of approximately RMB13,738,000 based on 5% on the remaining undistributed earnings of approximately RMB274,766,000 attributable to the Group during the year ended 31 December 2008 has been recognised.

There was no significant unprovided deferred taxation for the year or at the balance sheet date.

18. SHARE CAPITAL

For the purpose of the preparation of the consolidated balance sheets, the balance of the share capital as at 31 December 2007 represents the aggregate share capital of ASTDH BVI, Excel Bond, and Wise Universe. The authorised share capital of ASTDH BVI, Excel Bond, and Wise Universe were US$50,000 divided into 50,000 ordinary shares. As at 31 December 2007, 1 share of Excel Bond and Wise Universe amounting to RMB7 each and 100 shares of ASTDH BVI amounting to RMB731 were issued at par.

Authorised: Upon incorporation of the Company At date of incorporation on 7 December 2007 and at 31 December 2007 and 2008 at US$1 each Number of shares Issued and fully paid: Upon incorporation of the Company Shares issued during the year and as at 31 December 2008 100	Number of shares 50,000 Amount US$ 100	Amount US$’000 50

		Shown in the financial statements as RMB’000 1

– IIB-18 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

The Company was incorporated with an authorised share capital of US$50,000 divided into 50,000 ordinary shares of US$1 each. On 12 January 2008, the Company issued 100 ordinary shares of US$1 at par value. The new shares rank pari passu with the existing shares in all respects.

19. COMMITMENT

As at 31 December 2008, the Group has capital expenditure of approximately RMB36,000,000 in respect of additional investment in JZPTD that were authorised but not contracted for.

20. PLEDGE OF ASSETS

As at 31 December 2008, the assets of the Group, including 20% equity interest in JZPTD has been pledged to secure the exchangeable bonds issued by the immediate holding company.

21. RELATED PARTY DISCLOSURES

During the Relevant Periods, the Group also entered into the following transactions with related parties:

					Year ended 31 December	Year ended 31 December
					2007	2008
					RMB’000	RMB’000
Management	fee	paid	to	a related company	65	–
Management	fee	paid	to	immediate holding company	–	107

The related company is an entity controlled by Mr. Zhu.

Details of balances with related parties and other arrangements are disclosed in the consolidated balance sheets on page IIB-4 and notes 14 and 16.

There is no compensation to key management personnel, including directors’ remuneration during the Relevant Periods.

– IIB-19 –

APPENDIX IIB ACCOUNTANTS’ REPORT OF SUN WAVE GROUP

B. SUBSEQUENT EVENTS

No significant events took place subsequent to 31 December 2008.

C. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Company or any of its subsidiaries have been prepared in respect of any period subsequent to 31 December 2008.

Yours faithfully,

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong

– IIB-20 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

==> picture [71 x 55] intentionally omitted <==

30 June 2009

The Directors

GCL-Poly Energy Holdings Limited

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding Greatest Joy International Limited (the “Company”) and its subsidiary (hereinafter collectively referred to as the “Group”) for the period from 25 April 2007 (date of incorporation) to 31 December 2007 and year ended 31 December 2008 (the “Relevant Periods”) for inclusion in the circular issued by GCL-Poly Energy Holdings Limited, a company incorporated in the Cayman Islands with its shares being listed on the main board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), dated 30 June 2009 in connection with the proposed very substantial acquisition of Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. through the acquisition of 100% equity interest in GCL Solar Energy Technology Holdings Inc., Sun Wave Group Limited and the Company (the “Circular”).

The Company was incorporated in the British Virgin Islands on 25 April 2007. Pursuant to a group reorganisation, details of which are set out in note 2 to the Financial Information, the Company has become the holding company of the Group since 25 February 2008.

As at 31 December 2008 and the date of this report, the Company has direct interest in the following subsidiary:

				Proportion of
				nominal value
				of issued
			Issued and	share capital	Interest
	Date of	Place of	fully paid	held by the	attributable to		Principal
Name of the company	incorporation	incorporation	share capital	Company	the Company		activity
				%		%
富多國際發展有限公司	16 May 2007	Hong Kong	HK$1	100		100	Investment
Richmore International							holding
Development Limited
(“Richmore”)

The financial year-end date of the Company and its subsidiary is 31 December. The statutory financial statements of Richmore for the period from 16 May 2007 (date of incorporation) to 31 December 2007 were audited by Clement C. W. Chan & Co., Certified Public Accountants. No audited financial statements have been prepared for Richmore for the year ended 31 December 2008. For the purpose of this report, we have however reviewed all the relevant transactions of Richmore for the year ended 31 December 2008 and carried out such procedures as we considered necessary for inclusion of the financial information relating to this company.

– IIC-1 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

For the purpose of this report, the directors of the Company have prepared the consolidated financial statements of the Group for the Relevant Periods in accordance with the accounting policies in compliance with International Financial Reporting Standards (“IFRSs”) (the “IFRS Financial Statements”). We have, for the purpose of this report, performed independent audit procedures on the IFRS Financial Statements in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and have examined the IFRS Financial Statements in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

In our opinion, the financial information, together with the notes thereon gives, for the purpose of this report, a true and fair view of the state of affairs of the Group and the Company as at 31 December 2007 and 2008 and of the consolidated results and cash flows of the Group for the Relevant Periods.

– IIC-2 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

A. FINANCIAL INFORMATION

CONSOLIDATED INCOME STATEMENTS

Notes Revenue Other income 8 Administrative expenses Share of result of an associate 13 Loss before tax Income tax expense 9 Loss for the period/year 10	25 April 2007 (date of incorporation) to 31 December 2007 RMB’000 – 24 (24) – – – –	Year ended 31 December 2008 RMB’000 – 8,378 (231) (247,707) (239,560) (12,072) (251,632)

– IIC-3 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

CONSOLIDATED BALANCE SHEETS

The Group At 31 December 2007 2008 RMB’000 RMB’000 – – – 1,128,134	The Group At 31 December 2007 2008 RMB’000 RMB’000 – – – 1,128,134	The Company At 31 December 2007 2008 RMB’000 RMB’000 – – – –	The Company At 31 December 2007 2008 RMB’000 RMB’000 – – – –
– 1,128,134 – – 23 3 23 3 23 – – 1,361,688 – 7,090 23 1,368,778 – (1,368,775) – 10,990		– – – – – – – – – –	–
			1,361,689 –
			1,361,689
			– 1,361,688 –
			1,361,688
			1
			–
–	(251,631)	–	1

– –	1 (251,632)	– –	1 –
–	(251,631)	–	1

– IIC-4 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

At 25 April 2007 (date of incorporation) Issue of share At 31 December 2007 and 1 January 2008 Issue of shares Loss and total recognised expense for the year Transfer At 31 December 2008	Share capital RMB’000 – – – 1 – – 1	Statutory reserve fund RMB’000 (Note) – – – – – 40,178 40,178	Accumulated loss RMB’000 – – – – (251,632) (40,178) (291,810)	Total RMB’000 – – – 1 (251,632) – (251,631)

– IIC-5 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

CONSOLIDATED CASH FLOW STATEMENTS

Note OPERATING ACTIVITIES Loss before tax Adjustments for: Bank interest income Exchange gain Share of result of an associate Operating cash flows before movements in working capital Increase (decrease) in amount due to a related company NET CASH USED IN OPERATING ACTIVITIES INVESTING ACTIVITIES Acquisition of an associate 13 Interest received NET CASH FROM (USED IN) INVESTING ACTIVITIES FINANCING ACTIVITY Advance from immediate holding company CASH FROM FINANCING ACTIVITY NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD/YEAR CASH AND CASH EQUIVALENTS AT END OF THE PERIOD/YEAR, represented by bank balances	25 April 2007 (date of incorporation) to 31 December 2007 RMB’000 – (24) – –	Year ended 31 December 2008 RMB’000 (239,560) (231) (8,147) 247,707 (231) (23) (254) (1,369,833) 231 (1,369,602) 1,369,836 1,369,836 (20) 23 3
	(24) 23 (1) – 24 24 – – 23 –	(231 (23
		(254
		(1,369,833 231
		(1,369,602
		1,369,836
		1,369,836
		(20 23
	23

– IIC-6 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

The Company is an investment holding company. During the Relevant Periods, the Company acquired interests in an associate. The principal activities of its associate are set out in note 13.

The Financial Information is presented in Renminbi (“RMB”), which is the same as the functional currency of the Company and its subsidiary.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

On 25 February 2008, the Company acquired the entire equity interest in Richmore International Development Limited (“Richmore”) from an entity controlled by Mr. Zhu.

The consolidated income statements, statements of changes in equity and cash flows statements include the results, changes in equity and cash flows of the Company and Richmore as if Richmore had been the subsidiary of the Company since its date of incorporation. The consolidated balance sheet of the Group as at 31 December 2007 have been prepared to present the assets and liabilities of the Company and Richmore as if Richmore had been the subsidiary of the Company as at that date.

3. APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”)

The Group has adopted all of the new and revised International Accounting Standards (“IASs”), IFRSs and amendments issued by International Accounting Standards Board (“IASB”) and the interpretations developed by International Financial Reporting Interpretations Committee (“IFRIC”), which are effective for the financial year beginning on 1 January 2008 consistently in the preparation of its financial information throughout the Relevant Periods.

– IIC-7 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

4. SIGNIFICANT ACCOUNTING POLICIES

At the date of this report, the IASB has issued the following new and revised standards, amendments and interpretations which are not yet effective during the Relevant Periods.

1 Effective for annual periods beginning on or after 1 January 2009 except the amendments to IFRS 5, effective for annual periods beginning on or after 1 July 2009

2 Effective for annual periods beginning on or after 1 January 2009, 1 July 2009 and 1 January 2010, as appropriate

3 Effective for annual periods beginning on or after 1 January 2009

4 Effective for annual periods beginning on or after 1 January 2010

5 Effective for annual periods beginning on or after 1 July 2009

6 Effective for annual periods ending on or after 30 June 2009

7 Effective for annual periods beginning on or after 1 July 2008

8 Effective for annual periods beginning on or after 1 October 2008

9 Effective for transfers on or after 1 July 2009

The Financial Information has been prepared under the historical cost basis and in accordance with the following accounting policies which conform with IFRSs. In addition, the financial information includes the applicable disclosure required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

Basis of consolidation

The Financial Information incorporates the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

– IIC-8 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

Investment in a subsidiary

Investment in a subsidiary is stated at cost less any identified impairment losses.

Interests in an associate

An associate is an entity over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

Revenue recognition

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

– IIC-9 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other then in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in a subsidiary and an associate, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to profit or loss.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when a group entity becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities on initial recognition.

Financial assets

The Group’s financial assets are loans and receivables.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including amount due from a subsidiary and bank balances) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment loss on financial assets below).

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each balance sheet dates. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected. Objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

– IIC-10 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

Financial liabilities and equity

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Effective interest method

Interest expense is recognised on an effective interest basis.

Financial liabilities

Financial liabilities including amount due to a related company and amount due to immediate holding company are subsequently measured at amortised cost, using the effective interest method.

Equity instrument

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Derecognition

Impairment losses on tangible assets

– IIC-11 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

5. CAPITAL RISK MANAGEMENT

The capital structure of the Group consists of debt, which mainly includes amount due to a related company and amount due to immediate holding company disclosed in note 16, and equity comprising issued share capital and reserves.

6. FINANCIAL INSTRUMENTS

6a. Categories of financial instruments

Financial assets Loans and receivables (including cash and cash equivalents) Financial liabilities Amortised cost	The Group At 31 December 2007 2008 RMB’000 RMB’000 23 3 23 1,361,688	The Company At 31 December 2007 2008 RMB’000 RMB’000 – 1,361,689 – 1,361,688	The Company At 31 December 2007 2008 RMB’000 RMB’000 – 1,361,689 – 1,361,688

			1,361,688

6b. Financial risk management objectives and policies

The Group’s major financial instruments include, bank balances, amount due to a related company and amount due to immediate holding company. Details of the financial instruments are disclosed in respective notes. The risks associated with these financial instruments include currency risk, credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risk

Currency risk

Certain bank balances, amount due to a related company and amount due to immediate holding company of the Group are denominated in foreign currencies, which expose the Group to foreign currency risk. The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure by closely monitoring the movement of foreign currency rate. The currency risk of the Company is insignificant.

– IIC-12 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at 31 December 2007 and 2008 are as follows:

The Group

Hong Kong dollar United States dollar *The Company* Hong Kong dollar	Assets At 31 December 2007 2008 RMB’000 RMB’000 – – 23 3 Assets At 31 December 2007 2008 RMB’000 RMB’000 – 1,361,689	Liabilities At 31 December 2007 2008 RMB’000 RMB’000 23 1,361,688 – – Liabilities At 31 December 2007 2008 RMB’000 RMB’000 – 1,361,688

Sensitivity analysis

The following table details the Group’s sensitivity to a 5% increase and decrease in RMB against the relevant foreign currencies. 5% is the sensitivity rate used which represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 5% change in foreign currency rates. A positive/negative number below indicates a decrease/increase in loss for the period/year where RMB strengthen 5% against the relevant currency. For a 5% weakening of RMB against the relevant currency, there would be an equal and opposite impact on the loss for the period/year.

				Hong Kong	dollar	United States	dollar
				2007	2008	2007	2008
				RMB’000	RMB’000	RMB’000	RMB’000
Loss	for	the	period/year	1	68,084	(1)	–

Credit risk

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

Liquidity risk

The Group has net current liabilities and net liabilities amounting to approximately RMB1,368,775,000 and RMB251,631,000, respectively, at 31 December 2008. The Group is exposed to liquidity risk of being unable to raise sufficient funds to meet its financial obligations when they fall due.

– IIC-13 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

The following table details the Group’s remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. All financial liabilities are non-interest bearing. The table therefore includes only principal cash flows.

Liquidity tables

The Group

At 31 December 2007 Amount due to a related company At 31 December 2008 Amount due to immediate holding company *The Company* At 31 December 2008 Amount due to immediate holding company	Repayable on demand Total undiscounted cash flows RMB’000 RMB’000 23 23 Repayable on demand Total undiscounted cash flows RMB’000 RMB’000 1,361,688 1,361,688 Repayable on demand Total undiscounted cash flows RMB’000 RMB’000 1,361,688 1,361,688	Carrying amount RMB’000 23

		Carrying amount RMB’000 1,361,688

		Carrying amount RMB’000 1,361,688

6c. Fair value

The directors consider the carrying amounts of financial assets and financial liabilities carried at amortised cost in the consolidated financial statements approximate to their fair values.

– IIC-14 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

7. REVENUE AND SEGMENT INFORMATION

8. OTHER INCOME

Bank interest income Exchange gain	25 April 2007 (date of incorporation) to 31 December 2007 RMB’000 24 – 24	Year ended 31 December 2008 RMB’000 231 8,147
		8,378

9. INCOME TAX EXPENSE

Income tax expense for the year ended 31 December 2008 represents the current tax charge of approximately RMB1,082,000 and deferred tax charge of approximately RMB10,990,000 (note 17) in respect of the PRC dividend withholding tax.

On 12 September 2008, the associate was required by the PRC government to increase its registered capital in order to obtain approval to increase its production capacity. The associate increased its registered capital by RMB1,000,000,000 through recapitalisation of its undistributed earnings, out of which approximately RMB886,258,000 was recapitalised from its earnings subsequent to 1 January 2008. Such recapitalisation is deemed to be a distribution to the Group and accordingly, a provision for PRC dividend withholding tax of approximately RMB6,008,000 and RMB1,082,000 has been recognised for the period from 1 January 2008 to the date of acquisition of the associate and from the date of acquisition onwards, based on the applicable tax rate of 5% on approximately RMB120,162,000 and RMB21,639,000 deemed distribution to the Group, respectively. The provision for PRC pre-acquisition dividend withholding tax of approximately RMB6,008,000 has been directly debited to the cost of investment in an associate as disclosed in note 13.

The Company is tax exempt under the laws of the BVI. No provision for Hong Kong Profits Tax has been made in the consolidated financial statements as the Company’s subsidiary incorporated in Hong Kong has no assessable profit for Relevant Periods.

On 26 June 2008, the Hong Kong Legislative Council passed the Revenue Bill 2008 which reduced corporate profits tax rate from 17.5% to 16.5% effective from the year of assessment 2008/2009. Therefore, Hong Kong Profits Tax is calculated at 17.5% and 16.5% of the estimated assessable profit for the period ended 31 December 2007 and year ended 31 December 2008, respectively, if any.

– IIC-15 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

The income tax expense for the Relevant Periods can be reconciled to the loss before tax as follows:

Loss before tax Tax at Hong Kong Profits Tax rate of 17.5% for 2007 and 16.5% for 2008 Tax effect of expenses not deductible for tax purpose Tax effect of income not taxable for tax purpose Tax effect of share of result of an associate PRC dividend withholding tax Income tax expense	25 April 2007 (date of incorporation) to 31 December 2007 RMB’000 –	Year ended 31 December 2008 RMB’000 (239,560

	– 4 (4) – –	(39,527 38 (1,382 40,871 12,072
	–	12,072

10. LOSS FOR THE PERIOD/YEAR

	25 April 2007
	(date of
	incorporation)	Year ended
	to 31 December	31 December
	2007	2008
	RMB’000	RMB’000
Loss for the period/year has been arrived at after
charging:
Auditor’s remuneration	7	–

11. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

No emolument is paid or payable to the directors and employees of the Company during the Relevant Periods.

12. INVESTMENT IN A SUBSIDIARY

		The Company
		2007	2008
		RMB’000	RMB’000
Unlisted	investment	–	–

Details of the Company’s subsidiary as at 31 December 2008 are described on page IIC-1.

– IIC-16 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

13. INTERESTS IN AN ASSOCIATE

Cost of investment in an associate, unlisted, adjusted for PRC pre-acquisition dividend withholding tax of RMB6,008,000 Share of post-acquisition profit Amortisation and impairment loss of intangible asset, net of tax	The Group At 31 December 2007 2008 RMB’000 RMB’000 – 1,375,841 – 259,935 – (507,642) – 1,128,134

On 27 May 2008, the Group acquired 16% equity interest 江蘇中能硅業科技發展有限公司 Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. (“JZPTD”) from the then shareholders of JZPTD at aggregate considerations of approximately RMB1,369,833,000. JZPTD is engaged in manufacture and sale of polysilicon and wafer products. The Group is considered to be able to exercise significant influence over JZPTD because it has the power to appoint one out of the nine directors of that company. Upon acquisition, the Group has identified an intangible asset in respect of outstanding long term contracts signed with third parties for polysilicon and wafer products. The intangible asset is measured at the fair value of RMB8,332,000,000, determined by reference to a valuation performed by Jones Lang LaSalle Sallmanns Limited (“Jones Lang LaSalle Sallmanns”), an independent international business valuer at 27 May 2008. The fair value of the intangible asset of approximately RMB1,333,280,000 and the corresponding deferred tax liability of approximately RMB199,992,000, attributable to the Group has been recognised on the same date. Goodwill of RMB9,615,000 arising on acquisition of an associate during the year ended 31 December 2008 has been recognised.

– IIC-17 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

The summarised financial information in respect of the Group’s associate as at 31 December 2008 is set out below:

Total assets Total liabilities Net assets Group’s share of net assets of an associate Share of carrying amount of intangible asset acquired, net of tax Goodwill Revenue Profit for the year Group’s share of result of an associate for the year Amortisation and impairment loss on intangible asset, net of tax (Note)	RMB’000 9,375,049 (6,294,591) 3,080,458 492,873 625,646 9,615 1,128,134 3,521,444 1,624,593 259,935 (507,642) (247,707)

Note:

The amount included amortisation of approximately RMB88,885,000 and impairment loss of the intangible asset acquired of approximately RMB418,757,000, net of tax effect of approximately RMB80,187,000, attributable to the Group from the date of acquisition to 31 December 2008.

The Group has assessed the impairment loss of intangible asset by reference to a business valuation performed by Jones Lang LaSalle Sallmanns at 31 December 2008, using income approach. That calculation uses cash flow projections based on financial budgets approved by management covering a seven-year period at a discount rate of 15.08%. Other key assumptions for the valuation relate to the estimation of cash inflow/outflows which include budget sales and gross margin. Such estimation is based on the associate’s past performance and management’s expectations for the market development. Based on the valuation, the Group has recognised impairment loss of intangible assets of approximately RMB418,757,000, net of tax effect of approximately RMB80,187,000 attributable to the Group from the date of acquisition to 31 December 2008, due to the revision of the terms of those outstanding long term contracts.

14. AMOUNT DUE FROM A SUBSIDIARY

The amount due from a subsidiary is non-trade related, unsecured, non-interest bearing and is repayable on demand.

15. BANK BALANCES

Bank balances carry interest at market rates which at 3.85% per annum for the period ended 31 December 2007 and range from 0.04% to 1.60% per annum for the year ended 31 December 2008.

16. AMOUNTS DUE TO A RELATED COMPANY AND IMMEDIATE HOLDING COMPANY

The amount due to immediate holding company is non-trade related, unsecured, non-interest bearing and is repayable on demand.

– IIC-18 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

The amount due to a related company represents management fee payable to the related company. It is unsecured, non-interest bearing and is repayable on demand. The related company is an entity controlled by Mr. Zhu.

17. DEFERRED TAX LIABILITY

	PRC dividend
	withholding tax
	The Group
	RMB’000
At 1 January 2007, 31 December 2007 and 1 January 2008	–
Charged to income statement for the year (note 9)	10,990
At 31 December 2008	10,990

A provision for PRC dividend withholding tax of approximately RMB10,990,000 based on 5% on the remaining undistributed earnings of approximately RMB219,813,000 attributable to the Group during the year ended 31 December 2008 has been recognised.

There was no significant unprovided deferred taxation for the year or at the balance sheet dates.

18. SHARE CAPITAL

Authorised: At date of incorporation on 25 April 2007 and at 31 December 2007 and 2008 at US$1 each Number of shares Issued and fully paid: Shares issued at date of incorporation on 25 April 2007 1 At 31 December 2007 and 1 January 2008 1 Shares issued during the year 99 At 31 December 2008 100	Number of shares 50,000 Amount US$ 1	Amount US$ 50,000

		Shown in the financial statements as RMB’000 –
1 99	1 99	– 1
100	100	1

The Company was incorporated with an authorised share capital of US$50,000 divided into 50,000 ordinary shares of US$1 each. At date of incorporation, 1 ordinary share of US$1 was issued at par to the subscriber to provide the initial capital to the Company. On 11 April 2008, the Company issued 99 ordinary shares of US$1 at par value for the purpose of raising additional capital. The new shares rank pari passu with the existing shares in all respects.

– IIC-19 –

APPENDIX IIC ACCOUNTANTS’ REPORT OF GREATEST JOY GROUP

19. COMMITMENT

As at 31 December 2008, the Group has capital expenditure of approximately RMB28,800,000 in respect of additional investment in JZPTD that were authorised but not contracted for.

20. PLEDGE OF ASSETS

As at 31 December 2008, the assets of the Group, including 16% equity interest in JZPTD has been pledged to secure the exchangeable bonds issued by the immediate holding company.

21. RELATED PARTY DISCLOSURES

During the Relevant Periods, the Group also entered into the following transactions with related parties:

					25 April 2007
					(date of
					incorporation)	Year ended 31
					to 31 December	December
					2007	2008
					RMB’000	RMB’000
Management	fee	paid	to	a related company	18	–
Management	fee	paid	to	immediate holding company	–	226

Details of balances with related parties and other arrangements are disclosed in the consolidated balance sheets on page IIC-4 and notes 14 and 16.

There is no compensation to key management personnel, including directors’ remuneration during the Relevant Periods.

B. SUBSEQUENT EVENTS

No significant events took place subsequent to 31 December 2008.

C. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Company or its subsidiary have been prepared in respect of any period subsequent to 31 December 2008.

Yours faithfully, Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong

– IIC-20 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

For the year ended 31 December 2008

OVERVIEW

Acquisition of new power plants

The acquisition of 100% equity interest of Xilingol Guotai Wind Power Generation Co., Ltd., (“Huitengliang Wind Power Plant”) and 49% equity interest of China Resources Golden Concord (Beijing) Cogeneration Power Co., Ltd, (“China Resources Beijing Cogeneration Plant”) were completed in the first quarter of the year. For the Huitengliang Wind Power Plant, the Group has the right to develop a wind generation power plant with a total installed capacity of 49.5 MW in Inner Mongolia. This was the first wind generation power plant of the Group.

Generation Capacity

As at 31 December 2008, the Group (including subsidiaries and associated power plants) operates 14 coal-fuelled cogeneration plants and resources comprehensive utilization plants, 2 gas-fuelled cogeneration plants, 2 biomass cogeneration plants and 1 solid waste incineration plant, with an attributable installed capacity of 697.8MW and an attributable steam extraction capacity of 1,756.4 tonne/h, representing an increase of 17.4% and 12.4% respectively as compared to attributable installed capacity of 594.3MW and attributable steam extraction capacity of 1,562.4 tonne/h as at 31 December 2007. The increase was mainly due to the acquisition of 49% equity interest in China Resources Beijing Cogeneration plant and the expansion of installed capacity in Lianyungang Xinneng Cogeneration Plant and Puyuan Cogeneration Plant during the year.

Employees

The Group considers its employees as its most important resources. As at 31 December 2008, the Group had approximately 2,045 employees in Hong Kong and the PRC. Total employee costs for the year ended 31 December 2008, including directors’ emoluments, amounted to RMB167.0 million. Employee remuneration is based on individual performance, working experience, qualifications and the prevailing industry practice. Apart from basic remuneration and statutory retirement benefit schemes, employee benefits include discretionary bonus and share options granted to eligible employees.

The management believes the Group’s success and long-term growth depends upon the quality, performance and commitment of our employees. To this end, the Group sponsored a number of training and development programmes for its employees at various levels in 2008.

– III-1 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

FINANCIAL REVIEW

Revenue

The revenue of the Group for the year ended 31 December 2008 was RMB3,693.3 million, representing an increase of 100.2% as compared with RMB1,844.7 million in the previous year. The significant increase was mainly due to several acquisitions in 2007. The full year revenue of those power plants which became subsidiaries of the Group in 2007 was consolidated into the Group’s income statement for the year ended 31 December 2008.

The following table sets out the Group’s revenue contribution by business segments:

Coal fuelled and resource comprehensive utilization plants Gas fuelled plants Biomass fuelled plants Coal trading Municipal solid waste incineration plant Total revenue	2008 RMB million 1,755.9 1,006.0 274.1 636.5 20.8 3,693.3	2007 RMB million (Restated) 1,145.2 683.8 – – 15.7
		1,844.7

Gross profit margin

Overall gross profit margin for the year was 13.5% compared to 19.6% for the same period last year. The decrease stemmed from the substantial surge in coal price in 2008.

Other income

Other income amounted to RMB168.5 million for the year ended 31 December 2008, representing a 54.2% increase from RMB109.2 million for the same period last year. The increase was mainly due to the consolidation of the first full year of other income from the acquisition of subsidiaries and the increase in (1) government subsidies income granted by the local government during the year, (2) revenue from technical support and consultation services provided to customers; and (3) revenue of scrap materials.

Finance costs

The finance costs of the Group for the year 2008 were RMB258.7 million, representing an increase of 60.2% compared to RMB161.5 million in 2007. The increase was mainly due to the consolidation of the first full year’s finance costs from the acquisition of subsidiaries.

– III-2 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

Share of results of associates

For the year ended 31 December 2008, share of results of associates was derived mainly from the Group’s share of 49% profit in China Resources Beijing Cogeneration Plant which was acquired in January 2008.

Income tax

Income tax expenses for the year ended 31 December 2008 were RMB27.1 million, as compared with a credit of RMB4.0 million for the year ended 31 December 2007. The increase was due to the Group being subject to withholding taxes on dividend income for those subsidiaries established in the PRC beginning 1 January 2008. Apart from that, Suzhou Cogeneration Plant was no longer entitled to full tax exemption since 1 January 2008.

Profit attributable to equity holders of the Company

Profit attributable to equity holders of the Company amounted to RMB131.3 million, compared with a loss of RMB266.7 million in 2007. The loss in 2007 was mainly due to a loss on valuation of the fair value of a convertible note issued.

Liquidity and financial resources

			2008	2007
			RMB million	RMB million
Net	cash	from operating activities	643.8	214.0
Net	cash	used in investing activities	(489.6)	(124.0)
Net	cash	(used in)/from financing activities	(531.9)	538.3

Net cash from operating activities represented the main source of cash for the Group. The net cash from operating activities in 2008 amounted to RMB643.8 million which was higher than RMB214.0 million in 2007 due to the increase in profit from operations. Net cash used in investing activities was mainly used in the acquisition of a 49% equity interest in China Resources Beijing Cogeneration Plant, properties, power generation plant and machinery. The main financing activities of the Group in 2008 were repayments of loans and bank interest and drawdown of new borrowings. During the year, the Group repaid loans of RMB1,755.3 million and drew down new loans of RMB1,524.8 million.

The Group’s net current liabilities as at 31 December 2008 were RMB1,134.6 million which was higher than RMB409.6 million in the previous year. The increase in net current liabilities was mainly due to the increase in long term investments and that approximately RMB390.8 million long term borrowings as at 31 December 2007 became short-term borrowings in 2008. In view of the fact that the Company’s nature of business is utility related and the Group’s profitable performance in 2008, the Board is confident that these

– III-3 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

short-term borrowings will be renewed by the banks on their respective due dates. As at the reporting date, the Group has renewed short-term bank borrowings of approximately RMB151.5 million with corresponding maturity dates extending to 2010. Subsequent to year end, the Group has obtained direct confirmations from certain banks stating that they do not foresee any reasons to withdraw the existing facilities of the above mentioned short-term bank borrowings in the aggregate amount of RMB1,093.7 million in the foreseeable future and expect to renew the relevant loan facilities with similar terms upon maturity. The Group has also obtained additional banking facilities of approximately RMB120.0 million from banks to fund operations subsequent to year end.

To manage liquidity risk, the Group regularly monitors current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash in the short and long term. The directors of the Company believe that the Group will have sufficient cash resources to fund its operations for at least the next 12 months.

As at 31 December 2008, the Group’s total assets were RMB7,069.5 million (2007: RMB6,866.8 million). As at 31 December 2008, the bank balances, cash and pledged bank deposits held by the Group amounted to RMB701.1 million (2007: RMB1,046.0 million).

Borrowings

As at 31 December 2008, the Group’s total borrowings amounted to RMB3,249.2 million (2007: RMB3,479.7 million).

As at 31 December 2008, all of the Group’s borrowings were denominated in RMB. The borrowings carry both fixed and floating rate interest at rates with reference to the Benchmark Borrowing Rate of The People’s Bank of China.

Key financial ratios of the Group

Current ratio Quick ratio Net debt to equity	31 December 2008 0.55 0.45 105.5%	31 December 2007 0.81 0.75 107.0%

Foreign currency risk

All of the Group’s revenue, cost of sales and most of the administrative expenses are denominated in RMB. Besides some of the bank deposits which are denominated in Hong Kong Dollars and US Dollars, most of our assets and liabilities are also denominated in RMB. Since RMB is our functional currency, our foreign currency risk exposure therefore is mostly confined to assets denominated in Hong Kong and US Dollars.

For the year ended 31 December 2008, the Group did not purchase any foreign currency and interest rate derivatives or related hedging instruments.

– III-4 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

Pledge of assets

As at 31 December 2008, property, plant and equipment and prepaid lease payments with a carrying value of approximately RMB3,195.7 million and RMB199.8 million respectively, were pledged as security for certain banking facilities granted to the Group. Apart from these, bank deposits in an aggregate amount of RMB287.4 million were pledged to banks to secure bills, notes payable and short term borrowings granted to the Group. The pledged bank deposits will be released upon repayment of the relevant borrowings and/or bills and notes payable.

Capital commitments

As at 31 December 2008, the Group had capital commitments in respect of the acquisition of property, plant and equipment contracted for but not provided in the financial statements amounting to approximately RMB81.7 million (2007: RMB121.8 million) and authorised but not contracted for capital commitments amounting to RMB40.0 million (2007: RMB125.0 million).

Contingent liabilities

The Group did not have any material contingent liabilities as at 31 December 2008.

For the year ended 31 December 2007

FINANCIAL REVIEW

Revenue and operating profit

Revenue and operating profit for the year ended 31 December 2007 was RMB1,844.7 million and RMB262.5 million respectively, compared to RMB933.4 million and RMB171.4 million in 2006. The sharp increase in revenue and operating profit was mainly attributable to the results of Suzhou Cogeneration Plant, which was previously equity accounted for as an associate, having been consolidated as a subsidiary of the Group in March 2007 after the Group obtained control over its operating and financial policies. In addition, the results of the acquisitions of Taicang Poly Cogeneration Plant, Dongtai Cogeneration Plant, Jiaxing Cogeneration Plant, Peixian Cogeneration Plant, Xuzhou Cogeneration Plant, Puyuan Cogeneration Plant and Suzhou Fuel Company (collectively the “New Acquisitions”) were included in the consolidated income statement from the respective effective dates of such acquisitions.

– III-5 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

The following table sets out the Group’s revenue contribution by business segments.

Coal fuelled and resource comprehensive utilization plants Gas fuelled plants Municipal solid waste incineration plant Total revenue	2007 RMB million (Restated) 1,145.2 683.8 15.7
	1,844.7

Results excluding Suzhou Cogeneration Plant and New Acquisitions of subsidiaries

To provide more comparable basis with 2006, the results of Suzhou Cogeneration Plant and New Acquisitions have been taken out. The following is an analysis of the operations excluding the Suzhou Cogeneration Plant and the New Acquisitions so that the two years are more comparable.

	2007
	(excluding
	Suzhou
	Cogeneration
	Plant and
	New
	Acquisitions)	2006
	RMB’000	RMB’000
Revenue	1,051,531	933,356
Cost of sales	(837,670)	(728,978)
Gross profit	213,861	204,377
Gross profit margin (%)	20.3%	21.9%

Gross profit

Gross profit in 2007 amounted to RMB213.9 million, representing an increase of RMB9.5 million, from RMB204.4 million in 2006. It was mainly attributable to the expansion and upgrade of the existing power plants. In addition, a full year operation for 2007 has been recorded for Taicang Incineration Plant and Xinneng Cogeneration Plant, which commenced operations in October 2006 and in November 2006, respectively. Gross profit margin decreased slightly to 20.3% in 2007 from 21.9% in 2006 mainly due to the increase in coal price.

– III-6 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

Share of results of associates

The Group’s share of results of associates dropped significantly by RMB28.1 million in 2007 from RMB47.9 million to RMB19.8 million. This was mainly due to the transfer of Suzhou Cogeneration Plant from an associate to a subsidiary. In addition, following the further acquisitions of equity interests in the Dongtai Cogeneration Plant, Jiaxing Cogeneration Plant, Peixian Cogeneration Plant, Taicang Poly Cogeneration Plant and Xuzhou Cogeneration Plant, all these plants which were accounted for as associates of the Group are now fully consolidated as our subsidiaries.

Loss from non-recurring items

Upon the listing of the Shares on the Stock Exchange, the Group recorded a loss on the fair value of the convertible note of RMB339.7 million due to the conversion of the convertible amount and the redemption of the convertible note together with accrued interest. The fair value of the convertible note at the conversion date is determined based on the fair value of the Shares issued and cash paid by the Company to the holder of the convertible note. The loss is a non-cash transaction and will not recur as the convertible note was extinguished immediately after the listing of the Shares on the Stock Exchange. The Group has also recorded a net amount of RMB28.2 million representing listing expenses, net of subscription interest income. In addition, the Group has recorded a discount on the acquisition of a subsidiary of RMB3.2 million. If all these non-recurring items are excluded, the profit attributable to Shareholders from ordinary operations would be RMB98.0 million compared to RMB86.6 million in 2006.

Loss for the year

As a result of the above factors, the Group recorded a loss of RMB211.8 million for the year ended 31 December 2007 as compared with a profit of RMB87.9 million for the year ended 31 December 2006.

Liquidity and financial resources

For the year ended 31 December 2007, the Group’s primary sources of funding were cash generated from operating and financing activities, including the issuance of new Shares on 13 November 2007 and new bank loans. The Group’s principal liquidity requirements were for the redemption of the loan amount of the non-convertible portion of the convertible note together with accrued interest, new investment financing and capital expenditures.

The Group’s net current liabilities as at 31 December 2007 were RMB409.6 million (2006: RMB324.6 million). This was because the Group’s capital expenditures were mainly financed by short-term borrowings and these short-term borrowings are expected to be renewable on an annual basis.

– III-7 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

To manage the liquidity risk, the Group regularly monitors current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash in the short and long term. In particular, subsequent to 31 December 2007, the Group has obtained confirmations from lending banks to the effect that they agree to renew their short-term loan facilities in the aggregate amount of RMB889.2 million outstanding as of 31 December 2007.

As at 31 December 2007, Shareholders’ funds increased to RMB2,636.9 million as compared to RMB522.1 million as at 31 December 2006. The sharp increase was mainly attributable to the issue of new shares to Poly Investment (HK) Limited for the acquisition of its interests in certain power plants, conversion of the convertible portion of the convertible note and the issuance of new Shares to the public upon the listing of the Shares on the Stock Exchange on 13 November 2007.

As at 31 December 2007, the Group’s total assets were RMB6,866.8 million as compared with RMB3,364.3 million in 2006. Bank balances and cash including pledged bank deposits were RMB1,046.0 million as compared with RMB342.8 million in 2006.

Borrowings

As at 31 December 2007, the Group’s total borrowings amounted to RMB3,479.7 million as compared with RMB1,539.0 million in 2006.

As at 31 December 2007, all the Group’s borrowings were denominated in RMB. The borrowings carry both fixed and floating rate interest at rates with reference to the Benchmark Borrowing Rate of The People’s Bank of China.

Foreign currency risk

Most of the Group’s fuel costs and operating expenses, including our salaries and other personnel costs and other purchases, sales and administration costs, are denominated in RMB, and we collect all of our revenue in RMB. The Group expects to continue to incur a significant portion of its operating costs, and to recognise operating revenue in RMB. The Group foreign currency exposure currently relates only to the proceeds raised from the listing of the Shares on the Stock Exchange not yet utilised and hence deposited in US dollars and HK dollars bank accounts.

Key financial ratios of the Group

	31 December	31 December
	2007	2006
Current ratio	0.81	0.64
Quick ratio	0.75	0.59
Net debt to equity	107%	380%

– III-8 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

Pledge of assets

As at 31 December 2007, property, plant and equipment and prepaid lease payments with a carrying value approximately RMB3,324.3 million and RMB222.3 million respectively, were pledged as security for certain banking facilities granted to the Group. Apart from these, bank deposits in an aggregate amount of RMB241.9 million were pledged to banks to secure bills and notes payable and short term borrowings granted to the Group. The pledged bank deposits will be released upon repayment of the relevant borrowings and/or bills and notes payable.

Capital Commitments

As at 31 December 2007, the Group had capital commitments in respect of the acquisition of property, plant and equipment contracted for but not provided in the financial statements amounting to approximately RMB121.8 million and authorised but not contracted for capital commitments amounting RMB125.0 million.

Contingent liabilities

As at 31 December 2007, there were no material contingent liabilities. As at 31 December 2006, the Group had given guarantees of RMB102.5 million to certain banks for banking facilities granted to associates and a related company. All these guarantees had been released in order to prepare for the listing of the Company on the Stock Exchange.

Employees

The Group values quality employees as the most important resources. As at 31 December 2007, the Group had approximately 1,826 employees in Hong Kong and the PRC.

Year ended 31 December 2006

OVERVIEW

The Company was incorporated and registered as an exempted company with limited liability in the Cayman Islands on 12 July 2006. Pursuant to a reorganisation to rationalise the structure of the Group in preparation for the public listing of the Shares on the Stock Exchange, the Company became the holding company of the then subsidiaries of the Group.

FINANCIAL REVIEW

Revenue

For the year ended 31 December 2006, revenue increased by 7.8% from RMB866.1 million during the year ended 31 December 2005, to RMB933.4 million. This was mainly due to increasing volume of steam sales to existing and new customers and the fact that the Lianyungang Xiexin Cogeneration Plant and the Baoying Cogeneration Plant commenced full year of commercial production of steam in 2006.

– III-9 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

Gross profit and gross margin

Gross profit increased significantly to RMB204.4 million during the year ended 31 December 2006, as compared to RMB154.8 million during the year ended 31 December 2005. Gross margin in 2006 was 21.9%, as compared with 17.9% in 2005. The increase in gross margin principally reflects the fact that the Group was able to produce more energy with the same amount of fuel resulting in improved thermal efficiency of its power plants during the comparable period.

Other income

Other income increased by 36.7% to RMB37.8 million during the year ended 31 December 2006, as compared to RMB27.6 million during the year ended 31 December 2005. The increase in other income partly reflects an increase in government subsidies and interest income during the year ended 31 December 2006.

Loss on increase in fair value of convertible note

The Company issued the convertible note on 7 November 2006. The fair value of the convertible note is measured at each balance sheet date. Any change in the fair value is recognised as profit or loss in the income statement. For the year ended 31 December 2006, the increase in fair value of the convertible note resulted in a loss of RMB88.8 million.

Share in results of associates

The share in results of associates was derived from the share in the results of Suzhou, Dongtai, Jiaxing, Peixian, Taicang Poly and Xuzhou Cogeneration Plant. The Group acquired its equity interest in each of the associated cogeneration as a result of the corporate reorganization in July 2006.

Income tax

Income tax expenses of RMB3.5 million were recorded during the year ended 31 December 2006, as compared with an income tax credit of RMB0.2 million during the year ended 31 December 2005, reflecting the fact that certain power plants, including Fengxian Cogeneration Plant, the Haimen Cogeneration Plant and the Kunshan Cogeneration Plant, had started to make assessable profits.

Profit for the year

The profit for the year was RMB87.9 million for the year ended 31 December 2006, as compared to RMB55.6 million for the year ended 31 December 2005.

– III-10 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

Liquidity and capital resources

For the year ended 31 December 2006, the Group’s principal sources of liquidity were cash generated from operations and financing activities, including the issuance of the convertible note on 7 November 2006. As at 31 December 2006, the total outstanding amount of the convertible note was US$100.0 million. The Group’s principal liquidity requirements were for new investments financing, capital expenditures and working capital purposes. As at 31 December 2006, the bank balances, cash and pledged bank deposits held by the Group amounted to RMB342.8 million.

The Group’s net current liabilities as at 31 December 2006 were RMB324.6 million, which was lower than that of RMB387.7 million as at 31 December 2005.

Borrowings

As at 31 December 2006, the Group’s total borrowings amounted to RMB1,539.0 million.

As at 31 December 2006, all the Group’s borrowings were denominated in RMB. The borrowings carry both fixed and floating rate interest rates with reference to the Benchmark Borrowing Rate of The People’s Bank of China.

Key Financial Ratios of the Group

	31 December
	2006
Current ratio	0.64
Quick ratio	0.59
Net debt to equity	380%

Pledge of assets

As at 31 December 2006, property, plant and equipment and prepaid lease payments with a carrying value approximately RMB980.4 million and RMB49.5 million respectively, were pledged as security for certain banking facilities granted to the Group. Apart from these, bank deposits in an aggregate amount of RMB155.3 million were pledged to banks to secure bills and notes payable and short term borrowings granted to the Group. The pledged bank deposits will be released upon repayment of the relevant borrowings and/or bills and notes payable.

Capital Commitments

As at 31 December 2006, the Group had capital commitments in respect of the acquisition of property, plant and equipment contracted for but not provided in the financial statements amounting to approximately RMB20.9 million and authorised but not contracted for capital commitments amounting RMB114.4 million.

– III-11 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF THE GROUP

Contingent liabilities

As at 31 December 2006, the Group had given guarantees of RMB102.5 million to certain banks for banking facilities granted to associates and a related company.

Qualifications

There are no qualifications contained in the auditors’ report of the Group in respect of each of the years ended 31 December 2006, 2007 and 2008.

– III-12 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

BUSINESS REVIEW

Production

Target Group A supplies polysilicon and wafers to companies operating in the solar industry. Polysilicon is the primary raw material for wafers used in the solar and the electronics industries. It manufactures polysilicon at the production facilities of its operating company, Jiangsu Zhongneng, which are located in Xuzhou, Jiangsu Province, China. Jiangsu Zhongneng was founded in March 2006 and upon completion and full production capacity ramp-up of its planned expansion to 21,000 MT per year by December 2010, the management of Target Group A believes Jiangsu Zhongneng will be one of the leading polysilicon producers globally in terms of production capacity. Jiangsu Zhongneng began selling wafers through tolling arrangements with third party manufacturers in the second quarter of 2008 and expects wafer sales to contribute a majority of its revenue after 2009. Jiangsu Zhongneng also intends to construct its own in-house wafer and ingot manufacturing facilities in the near future. Jiangsu Zhongneng commenced construction of its Xuzhou Phase I production facility, which produces solar grade polysilicon, in July 2006, and produced its first batch of polysilicon in September 2007. Jiangsu Zhongneng made its first commercial shipment of polysilicon in October 2007. During the years ended 31 December 2007, 31 December 2008 and the three months ended 31 March 2009, Jiangsu Zhongneng produced 154 MT, 1,850 MT and 1,094 MT of polysilicon, respectively.

Jiangsu Zhongneng ramped up its Xuzhou Phase I production facility to its designed annual capacity of 1,500 MT in March 2008. Jiangsu Zhongneng commenced commercial production of its Xuzhou Phase II production facility in July 2008 and the facility was fully ramped up by December 2008. In December 2007, Jiangsu Zhongneng commenced preparation for the construction of its Xuzhou Phase III production facility, which is expected to have an aggregate annual production capacity of 15,000 MT. Jiangsu Zhongneng’s Xuzhou Phase III production facility commenced commercial production in December 2008. Jiangsu Zhongneng intends to fully ramp up its Xuzhou Phase III production facility by December 2009. By then, Jiangsu Zhongneng’s total annual polysilicon production capacity will reach 18,000 MT. With further technical improvements, Jiangsu Zhongneng’s total annual polysilicon production capacity should reach 21,000 MT by December 2010. Jiangsu Zhongneng has implemented proven technologies in its polysilicon production facilities. It utilises a modified Siemens process to produce polysilicon and, starting from Xuzhou Phase II onwards, its production facilities are designed to produce both solar and electronic grade polysilicon.

Jiangsu Zhongneng intends to construct wafer and ingot production facilities in the near future as well as explore opportunities to further expand its wafer production capacity through strategic acquisitions and partnerships. Until Jiangsu Zhongneng has sufficient in-house wafer production capacity, it will continue to rely on wafer tolling arrangements to support its wafer sales.

– IVA-1 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Revenue

Jiangsu Zhongneng’s polysilicon revenue is determined by the amount of MT of polysilicon that it is able to sell as well as the average selling prices of its polysilicon. Jiangsu Zhongneng’s wafer revenue is determined based upon the number of wafers that it is able to sell as well as the average selling prices of its wafers. Through September 30, 2007, Jiangsu Zhongneng had no revenue and its production prior to that date was minimal. For the year ended 31 December 2007, Jiangsu Zhongneng sold 153 MT of polysilicon, all in the last quarter. For the year ended 31 December 2008, Jiangsu Zhongneng sold 1,530 MT of polysilicon and 39.2 MW of wafers. Target Group A and Jiangsu Zhongneng’s revenue for the years ended 31 December 2007 and 2008 were RMB301.8 million and RMB3,521.4 million, respectively.

Jiangsu Zhongneng has entered into polysilicon and wafer supply agreements with cell and module manufacturers that provide aggregate sales of approximately 15.4 GW of wafers and approximately 33,311 MT of polysilicon from 2008 up to 2015. Prior to entering into these supply agreements, Jiangsu Zhongneng sold all of its polysilicon on the spot market to major Chinese solar manufacturers.

Jiangsu Zhongneng has been operating in one business segment, being the manufacture and sale of polysilicon and related products. Jiangsu Zhongneng has determined that it has one primary geographical segment as its operations are substantially carried in the PRC, and its production facilities and other operating assets are substantially located in the PRC.

Cost of sales

Jiangsu Zhongneng’s cost of sales in respect of polysilicon sales is affected primarily by its ability to control raw material costs, to achieve economies of scale in its operations and to efficiently manage its supply chain.

Cost of sales in Jiangsu Zhongneng’s operations primarily consists of:

TCS. Jiangsu Zhongneng uses TCS to produce polysilicon. TCS is one of the main and most costly production inputs and, until 31 December 2008, Jiangsu Zhongneng relied heavily on third party suppliers for its TCS requirements. To reduce its reliance on TCS from third party suppliers, Jiangsu Zhongneng is increasingly incorporating TCS production into its own production process. Jiangsu Zhongneng integrated the hydrochlorination process in its Xuzhou Phase I production facility in February 2008 and in its Xuzhou Phase II production facility in September 2008. The hydrochlorination process for Xuzhou Phase III has started operating in February 2009 and will be further ramped up throughout 2009. For the year ended 31 December 2008, the three months ending March 31, 2009 and the month ended 31 May 2009, approximately 20.9%, 37.3% and 77.2% of the TCS that Jiangsu Zhongneng consumed, respectively, was produced in-house. Taixing, one of Target Group A’s subsidiaries, constructed a TCS production facility with an annual production capacity of 20,000 MT in Taizhou, Jiangsu Province, China, which

– IVA-2 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

commenced commercial production in September 2008. Jiangsu Zhongneng has already successfully used the TCS produced through Taixing in its own polysilicon production process. The management of Target Group A expects its process integration initiatives will substantially reduce Jiangsu Zhongneng’s reliance on third parties for its TCS requirements as well as its TCS costs in the future.

Electricity. The cost of electricity is a substantial component of Jiangsu Zhongneng’s total cost of sales. It sources electricity from the Xuzhou Electricity Company at market prices, which can vary.

Tolling fees. Jiangsu Zhongneng pays tolling fees in connection with the wafers it sells to its customers. Before Jiangsu Zhongneng commences in-house production of wafers, it will pay a per wafer tolling fee on all its sales of wafers.

Other materials and inputs. The production of polysilicon requires water, steam, metallurgical silicon, or MG-Si, sulphuric acid and sodium hydroxide as the most significant inputs. In respect of such inputs, Jiangsu Zhongneng purchases water on long-term contracts and the other products on the spot market.

General and administrative expenses

Target Group A’s general and administrative expenses consist primarily of salaries and benefits for its administrative and finance personnel, other travel and other corporate expenses, professional fees for consultants and experts, bank charges and the depreciation of equipment used for administrative purposes.

Research and development expenses

Target Group A’s research and development expenses have been minimal as Target Group A has focused on initial production. Research and development expenses have been included in general and administrative expenses. Target Group A’s research and development expenses consist primarily of raw materials costs used in research and development activities, salaries and employee benefits for research and development personnel, and equipment costs relating to the design, development, testing and enhancement of Jiangsu Zhongneng’s production process.

Selling and marketing expenses

Target Group A incurred no material selling and marketing expenses through 31 December 2008. To date, Target Group A’s selling expenses have been included in general and administrative expenses. Target Group A’s selling and marketing expenses consist primarily of advertising costs, packaging and shipping costs, salaries and employee benefits of sales personnel, sales-related travel and entertainment expenses and other selling and marketing expenses including sales commissions paid to its sales agents.

– IVA-3 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Taxation

Prior to 1 January 2008, Jiangsu Zhongneng was subject to PRC enterprise income tax at a rate of 33.0%, which included a 30.0% state income tax and a 3.0% local income tax. For the year ended 31 December 2007, Jiangsu Zhongneng was exempt from local income tax. As of 1 January 2008, Jiangsu Zhongneng became subject to the new Enterprise Income Tax Law, which provides for a national 25% rate applicable to most enterprises and replaces the prior income tax rate subject to the benefits that had previously been granted.

Jiangsu Zhongneng has received approval for a two-year tax exemption from the enterprise income tax for the years ended 31 December 2008 and 2009 and will be taxed at 50.0% of the new Enterprise Income Tax tax rate for the years ending 31 December 2010, 2011 and 2012, providing a tax rate of 12.5%.

In addition, under the new Enterprise Income Tax Law, an enterprise established outside of the PRC with “de facto management bodies” within the PRC may be considered a resident enterprise and will normally be subject to enterprise income tax at the rate of 25% of its global income. The rule implementing the Enterprise Income Tax Law provides that the term “de facto management bodies” refers to management bodies which have material management and control over all aspects of the business, including without limitation, the production, operation, personnel, finance, and assets of the enterprise. However, it is still unclear if the PRC tax authorities would subsequently determine that, notwithstanding GCL Solar’s status as the Cayman Islands holding company of Target Group A operating business in the PRC, with administrative headquarters and personnel in Hong Kong, GCL Solar should be classified as a resident enterprise, whereby its global income will be subject to PRC income tax at a rate of 25%. In any event, Target Group A does not expect to derive substantial earnings from outside the PRC in the foreseeable future. A foreign investor would be subject to a 10% tax for dividends received from its PRC enterprise, provided that such foreign investor does not set up any entity in China. However, as Jiangsu Zhongneng is owned directly by GCL Solar HK, which is a non-resident enterprise, and as Hong Kong has an arrangement with the PRC under which the tax rate from dividend income is 5%, dividends paid by Jiangsu Zhongneng would be subject to a 5% withholding tax.

Pursuant to the Interim Regulations on Value Added Tax and its Implementation Rules issued in 1993, all entities and individuals that are engaged in the sale of goods, the provision of repairs and replacement services and the importation of goods in China are generally required to pay value-added tax (“VAT”), at a rate of 17% of the gross sales proceeds received. The management of Target Group A anticipates that most of Target Group A’s initial sales will be made domestically.

Target Group A expects to have minimal taxable income in jurisdictions other than China. Under current laws of the Cayman Islands, GCL Solar is not subject to income or capital gains tax. Additionally, dividend payments made by GCL Solar are not subject to withholding tax in the Cayman Islands.

– IVA-4 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Employees

Target Group A considers its employees as its most important resources. Employee remuneration is based on individual performance, working experience, qualifications and the prevailing industry practice. Apart from basic remuneration and statutory retirement benefit schemes, employee benefits include discretionary bonus and share options granted to eligible employees.

The management believes its success and long-term growth depends upon the quality, performance and commitment of its employees. To this end, Target Group A sponsored a number of training and development programmes for its employees at various levels in 2006, 2007 and 2008.

FINANCIAL REVIEW

For the year ended 31 December 2008

Revenue and cost of sales

Revenue for the year ended 31 December 2008 was RMB3,521.4 million, representing an increase of 10.7 times from RMB301.8 million for the year ended 31 December 2007. This significant increase was primarily due to Jiangsu Zhongneng only commencing its operations in the last quarter of 2007. Jiangsu Zhongneng fully ramped up its Xuzhou Phase I and Xuzhou Phase II polysilicon production facilities during 2008 and hence, more polysilicon was produced and sold. Cost of sales for the year ended 31 December 2008 was RMB966.8 million, a 10.9 times increase from RMB81.2 million for the year ended 31 December 2007.

Gross profit and gross profit margin

Target Group A’s gross profit increased 10.6 times from RMB220.5 million for the year ended 31 December 2007 to RMB2,554.7 million for the year ended 31 December 2008. This increase was mainly attributable to the full year effect of 2008 as Jiangsu Zhongneng made its first commercial shipment of polysilicon in October 2007. Gross profit margin decreased slightly from 73.1% for the year ended 31 December 2007 to 72.5% for the year ended 31 December 2008 as a result of a decrease in average selling price.

Other income

Other income amounted to RMB68.5 million for the year ended 31 December 2008, representing a 3.9 times increase from RMB14.1 million for the year ended 31 December 2007. The increase was mainly attributable to an increase in foreign exchange gains, bank interest income and government grants. Jiangsu Zhongneng received government grants to subsidise the construction of its property in 2008. These grants have been recorded in other deferred income and are transferred to income over the useful lives of the property.

– IVA-5 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Administrative expenses

Administrative expenses amounted to RMB213.7 million for the year ended 31 December 2008, representing an increase of 77.2% from RMB120.6 million for the year ended 31 December 2007. This increase was primarily due to i) increase in salaries and other staff costs as a result of headcount increase; ii) increase in depreciation and other office expenses due to the growth in operating structure; and iii) write off of intangible assets.

Change in fair value of convertible loan note

GCL Solar issued the convertible loan note on 10 September 2007. The fair value of the convertible loan note is measured at each balance sheet date. Any change in the fair value is recognised as profit or loss in the income statement. For the year ended 31 December 2008, the increase in fair value of the convertible loan note resulted in a loss of RMB105.3 million.

Change in fair value of convertible redeemable preferred shares

GCL Solar issued the convertible redeemable preferred shares on 29 August 2007. The fair value of the convertible redeemable preferred shares is measured at each balance sheet date with any change in the fair value being recognised as profit or loss in the income statement. For the year ended 31 December 2008, the decrease in fair value of the convertible redeemable preferred shares resulted in a profit of RMB40.3 million.

Change in fair value of embedded derivative instruments

On 27 June 2008, Jiangsu Zhongneng entered into a long-term wafer machinery supply contract, under which the purchase price of the machinery to be acquired, was denominated in currencies which are not the functional currency used by Jiangsu Zhongneng and accordingly, the contract contains embedded foreign currency forward contracts. The fair value of the embedded derivative instruments are measured at each balance sheet date with any change in the fair value being recognised as profit or loss in the income statement. For the year ended 31 December 2008, the increase in fair value of the embedded derivative instruments resulted in a loss of RMB9.9 million.

Finance cost

Target Group A’s finance cost was RMB72.2 million for the year ended 31 December 2008, representing a 91.0% increase from RMB37.8 million for the year ended 31 December 2007. This was primarily due to i) the full year effect of the interest expenses from GCL Solar’s convertible loan notes which was issued in the September 2007; and ii) increase in interest expenses from Jiangsu Zhongneng’s PRC bank loans.

– IVA-6 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Income tax expense

Target Group A’s income tax expense was RMB29.7 million for the year ended 31 December 2008, representing an increase of 21.7% as compared to RMB24.4 million for the year ended 31 December 2007. Income tax expense in 2008 mainly represented PRC dividend withholding tax as Jiangsu Zhongneng recapitalised part of its earnings subsequent to 1 January 2008. Income tax expense in 2007 represented PRC Enterprise Income Tax. Jiangsu Zhongneng has received approval for a two-year tax exemption from the enterprise income tax for the years ended 31 December 2008 and 2009.

Profit/loss for the year and profit/loss attributable to equity holders of Target Group A

Profit for the year ended 31 December 2008 was RMB2,232.6 million, as compared to a loss for the year ended 31 December 2007 of RMB48.7 million. Profit attributable to equity holders of Target Group A was RMB1,374.4 million for the year ended 31 December 2008, as compared to loss attributable to equity holders of Target Group A of RMB89.6 million for the year ended 31 December 2007. The loss in 2007 was mainly due to Jiangsu Zhongneng making its first commercial shipment of polysilicon only in October 2007.

Liquidity

Net cash from operating activities Net cash used in investing activities Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents as at the beginning of the year Cash and cash equivalents as at the end of the year	2008 RMB million 4,361.3 (5,232.4) 2,325.9	2007 RMB million 147.4 (729.8) 834.1 251.7 39.3 291.0
	1,454.8 291.0	251.7 39.3
	1,745.8

Net cash from operating activities represented the main source of cash for Target Group A. The net cash from operating activities in 2008 amounted to RMB4,361.3 million, which was higher than RMB147.4 million in 2007 due to the increase in profit from operations and advances received from Jiangsu Zhongneng’s long-term supply agreement customers. Net cash used in investing activities for the year ended 31 December 2008 was mainly cash and deposits paid for the acquisition of properties, plant and machinery and the increase in restricted bank deposits, which was partly offset by proceeds from government grants. The main financing activities of Target Group A in 2008 were repayments of bank borrowings, payment of interest and the drawdown of new bank borrowings. In 2008, Target Group A repaid bank borrowings of RMB1,220.4 million and drew down new bank borrowings of RMB3,730.4 million.

– IVA-7 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Bank borrowings

As at 31 December 2007 and 31 December 2008, Target Group A’s total gross bank borrowings (excluding issuance costs) amounted to RMB586.0 million and RMB3,096.0 million, respectively. The table below shows Target Group A’s total bank borrowings and their respective maturity profile.

Secured bank borrowings Unsecured bank borrowings Maturity profile of borrowings Repayable: Within one year After one year but within two years After two years but within five years Target Group A’s total borrowings	31 December 2008 RMB million 2,500.0 596.0	31 December 2007 RMB million – 586.0
	996.0 900.0 1,200.0	160.0 366.0 60.0
	3,096.0	586.0

As at 31 December 2008, all of Target Group A’s bank borrowings were denominated in RMB. The bank borrowings carry both fixed and floating rate interest at rates with reference to the Benchmark Borrowing Rate of The People’s Bank of China. The effective interest rates of the fixed-rate bank borrowings range from 5.02% to 8.27% while the effective interest rates of the variable rate bank borrowings range from 7.29% to 8.32%.

Foreign currency risk

All of Target Group A’s revenue, cost of sales and most of its administrative expenses are denominated in RMB. Certain bank balances, amounts due to related companies, convertible loan notes, convertible redeemable preferred shares and embedded derivative instruments of Target Group A are denominated in foreign currencies, which are exposed to foreign currency risk. Though Target Group A currently does not have a foreign currency hedging policy, the management monitors foreign exchange exposure by closely reviewing foreign exchange rate movements. In the future, Target Group A may, as it deems appropriate, enter into financial instruments including forward foreign exchange contracts, to hedge against the potential impact of foreign currency risk on its operations.

Key Financial Ratios

	31 December
	2008
Current ratio	1.00
Quick ratio	0.97
Net debt to equity	86%

– IVA-8 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Pledge of assets

As at 31 December 2008, certain property, plant and equipment were pledged as security for certain banking facilities granted to Jiangsu Zhongneng. In addition, bank deposits in the aggregate amount of RMB276.7 million were pledged to banks to secure bills and notes payable granted to Jiangsu Zhongneng. The pledged bank deposits will be released upon repayment of the relevant bills and notes payable.

In addition, 64% equity interest in Jiangsu Zhongneng has been pledged to secure convertible loan notes issued by GCL Solar.

Employees

As at 31 December 2008, Target Group A had approximately 1,417 employees in Hong Kong and the PRC. Total staff costs for the year ended 31 December 2008, including directors’ emoluments, amounted to RMB100.7 million.

Capital commitments

As at 31 December 2008, Target Group A had capital commitments in respect of the acquisition of property, plant and equipment contracted for but not provided in the financial statements amounting to approximately RMB3,358.8 million.

Other commitments

During the year ended 31 December 2008, Jiangsu Zhongneng entered into certain long-term supply agreements under which Jiangsu Zhongneng contracted to supply a pre-determined volume of products during various periods between 2008 and 2015. Customers are required to make an interest-free advance payment. Such advance payments are deductible from the payment for sales starting from January 2010, 2012 or 2013. As of December 31, 2008, RMB1,751.7 million of such advance payments were received and recorded as advances from customers under non-current liabilities.

Contingent liabilities

Target Group A did not have any material contingent liabilities as at 31 December 2008.

For the year ended 31 December 2007

Revenue

Revenue for the year ended 31 December 2007 was RMB301.8 million. No revenue was derived from 2006 as Jiangsu Zhongneng made its first commercial shipment of polysilicon in October 2007.

– IVA-9 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Other income

Other income was RMB14.1 million for the year ended 31 December 2007, representing a 34.3 times increase from RMB0.4 million for the year ended 31 December 2006. The increase was mainly attributable to increases in foreign exchange gains and bank interest income.

Administrative expenses

Administrative expenses amounted to RMB120.6 million for the year ended 31 December 2007, representing a 62.5 times increase from RMB1.9 million for the year ended 31 December 2006. This increase was primarily due to i) increase in salaries and other staff costs as a result of headcount increase; and ii) increase in professional expenses in relation to the restructuring of Target Group A and issuance of convertible redeemable preferred shares and convertible loan notes.

Change in fair value of convertible loan note

GCL Solar issued the convertible loan note on 10 September 2007. The fair value of the convertible loan note is measured at each balance sheet date. Any change in the fair value is recognised as profit or loss in the income statement. For the year ended 31 December 2007, the increase in fair value of the convertible loan note resulted in a loss of RMB25.1 million.

Change in fair value of convertible redeemable preferred shares

GCL Solar issued the convertible redeemable preferred shares on 29 August 2007. The fair value of the convertible redeemable preferred shares is measured at each balance sheet date with any change in the fair value being recognised as profit or loss in the income statement. For the year ended 31 December 2007, the increase in fair value of the convertible loan note resulted in a loss of RMB79.7 million

Gain on disposal of a subsidiary

Jiangsu Zhongneng entered into a sale and purchase agreement with its minority shareholders to dispose of its entire equity interest in a subsidiary, Jiangsu Sunshine Jiangyuan Science and Technology Co., Ltd, for a consideration of RMB98.6 million. The disposal resulted in a gain of approximately RMB4.3 million.

Finance cost

Target Group A’s finance costs amounted to RMB37.8 million for the year ended 31 December 2007, compared to RMB1.1 million for the year ended 31 December 2006. This increase was driven by i) costs relating to the issuance of convertible loan notes in September 2007; and ii) increase in interest expenses from Jiangsu Zhongneng’s PRC bank loans.

– IVA-10 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Income tax expense

Target Group A’s income tax expense was RMB24.4 million for the year ended 31 December 2007. Income tax expense in 2007 represented PRC enterprise income tax.

Loss for the year and loss attributable to equity holders of Target Group A

Loss for the year ended 31 December 2007 was RMB48.7 million, as compared to a loss of RMB2.6 million for the period from 13 November 2006 to 31 December 2006. Loss attributable to equity holders of Target Group A was RMB89.6 million for the year ended 31 December 2007, as compared to loss attributable to equity holders of Target Group A of RMB1.7 million for the period from 13 November 2006 to 31 December 2006.

Liquidity

Net cash from/(used in) operating activities Net cash (used in)/from investing activities Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents as at the beginning of the year/period Cash and cash equivalents as at the end of the year/period	2007 RMB million 147.4 (729.8) 834.1	13 November 2006 to 31 December 2006 RMB million (5.7) 15.0 30.0 39.3 – 39.3
	251.7 39.3	39.3 –
	291.0

The net cash provided by operating activities in 2007 mainly represented cash generated from the sale of polysilicon. Net cash used in investing activities for the year ended 31 December 2007 was mainly cash and deposits paid for the acquisition of properties, plant and machinery and subsidiaries, and the increase in restricted bank deposits. The main financing activities of Target Group A in 2007 included the draw down of new bank borrowings, the issuance of convertible loan notes, and contributions from the immediate holding company and minority shareholders. During the year, Target Group A drew down new bank borrowings of RMB340.0 million, received the proceeds from the convertible loan notes issuance of RMB451.4 million, and obtained contributions from the immediate holding company and minority shareholders of RMB100.7 million and RMB135.6 million respectively.

– IVA-11 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Bank borrowings

As at 31 December 2006 and 31 December 2007, Target Group A’s total bank borrowings amounted to RMB246.0 million and RMB586.0 million, respectively. The table below shows Target Group A’s total bank borrowings and their respective maturity profile.

Secured bank borrowings Unsecured bank borrowings Maturity profile of bank borrowings Repayable: Within one year After one year but within two years After two years but within five years Target Group A’s total bank borrowings	31 December 2007 RMB million – 586.0	31 December 2006 RMB million – 246.0
	160.0 366.0 60.0	– – 246.0
	586.0	246.0

As at 31 December 2007, all of Target Group A’s bank borrowings were denominated in RMB. The bank borrowings carry both fixed and floating interest rates with reference to the Benchmark Borrowing Rate of The People’s Bank of China. The effective interest rate of fixed rate bank borrowings is 6.73% and the effective interest rates of variable rate bank borrowings range from 6.75% to 8.22%.

Foreign currency risk

All of Target Group A’s revenue, cost of sales and most of the administrative expenses are denominated in RMB. Certain bank balances, convertible loan notes and convertible redeemable preferred shares of Target Group A are denominated in foreign currencies, thereby increasing exposure to foreign currency risk. Though Target Group A currently does not have a foreign currency hedging policy, the management monitors foreign exchange exposure by closely reviewing foreign exchange rate movements. In the future, Target Group A may as it deems appropriate, enter into financial instruments including forward foreign exchange contracts, to hedge against the potential impact of any foreign currency risk on its operations.

Key Financial Ratios

	31 December
	2007
Current ratio	1.05
Quick ratio	1.03
Net debt to equity	830%

– IVA-12 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Pledge of assets

As at 31 December 2007, bank deposits in an aggregate amount of RMB100.3 million were pledged to banks to secure bills and notes payable granted to Jiangsu Zhongneng. The pledged bank deposits will be released upon repayment of the relevant bills and notes payable.

In addition, 64% equity interest in Jiangsu Zhongneng has been pledged to secure convertible loan notes issued by GCL Solar as at 31 December 2007.

Employees

As at 31 December 2007, Target Group A had approximately 384 employees in Hong Kong and the PRC. Total staff costs for the year ended 31 December 2007, including directors’ emoluments, amounted to RMB28.9 million.

Capital commitments

As at 31 December 2007, Target Group A had capital commitments in respect of the acquisition of property, plant and equipment contracted, but not provided for, in the financial statements amounting to approximately RMB436.6 million.

Contingent liabilities

Target Group A did not have any material contingent liabilities as at 31 December 2007.

13 November 2006 to 31 December 2006

Other income

Other income in 2006 represented bank interest income.

Administrative expenses

Administrative expenses amounted to RMB1.9 million for the year ended 31 December 2006, which mainly consisted of staff costs and professional fees.

Finance cost

Target Group A’s finance costs in 2006 mainly represented interest expenses from Jiangsu Zhongneng’s PRC bank loans and loans from related companies.

Bank borrowings

As at 31 December 2006, all of Target Group A’s bank borrowings were denominated in RMB. The bank borrowings carry floating interest rates with reference to the Benchmark Borrowing Rate of the People’s Bank of China. The effective interest rate is 6.63%.

– IVA-13 –

APPENDIX IVA MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP A

Acquisition of assets in a subsidiary

On 13 December 2006, Target Group A acquired 64% of the equity interests in Jiangsu Zhongneng for a consideration of RMB128.0 million from companies controlled by Mr. Zhu. Jiangsu Zhongneng had a wholly-owned subsidiary, Jiangsu Sunshine Jiangyuan Science and Technology Co., Ltd at the date of acquisition. The acquisition has been accounted for as acquisition of assets and liabilities as Jiangsu Zhongneng and Jiangsu Sunshine Jiangyuan Science and Technology Co., Ltd had not yet commenced their planned business operation at the date of acquisition.

Liquidity

The net cash used in operating activities from 13 November 2006 to 31 December 2006 mainly represented various operating expenses. Net cash provided by investing activities from 13 November 2006 to 31 December 2006 comprised of cash received from the acquisition of subsidiaries, offset by cash and deposits paid for the acquisition of properties, plant and machinery and advanced to related companies. The main financing activities of Target Group A in 2006 were derived from the contributions of the immediate holding company and minority shareholders.

Key Financial Ratios

	31 December
	2006
Current ratio	0.45
Quick ratio	0.45
Net debt to equity	443%

Pledge of assets

None of Target Group A’s assets were pledged as at 31 December 2006.

Employees

As at 31 December 2006, Target Group A had approximately 63 employees in the PRC. Total staff costs for the period from 13 November 2006 to 31 December 2006, including directors’ emoluments, amounted to RMB0.5 million.

Capital commitments

As at 31 December 2006, Target Group A had capital commitments in respect of the acquisition of property, plant and equipment contracted for but not provided in the financial statements amounting to approximately RMB239.3 million.

Contingent liabilities

Target Group A did not have any material contingent liabilities as at 31 December 2006.

– IVA-14 –

APPENDIX IVB MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP B

Target Group B refers to Sun Wave and Greatest Joy together with their subsidiaries. Both companies are investment holding companies. Sun Wave and Greatest Joy through their subsidiaries acquired 20% and 16% of the equity interest in Jiangsu Zhongneng in April and May 2008, respectively. It represents the principal asset of these companies since that date. Both Sun Wave and Greatest Joy were inactive before acquiring the equity interest in Jiangsu Zhongneng. Sun Wave and Greatest Joy do not have any employees nor have they incurred any staff costs since incorportion.

FINANCIAL REVIEW OF SUN WAVE AND ITS SUBSIDIARIES

For the year ended 31 December 2008

Other income

Other income was RMB36.9 million for the year ended 31 December 2008, as compared to RMB0.1 million for the year ended 31 December 2007. The increase was mainly attributable to foreign exchange gains.

Share of result of an associate

Share of results of an associate amounted to a loss of RMB270.5 million for the year ended 31 December 2008. The amount represented amortisation and impairment loss of intangible assets, net of share of post-acquisition profit from Jiangsu Zhongneng. An intangible asset in respect of outstanding polysilicon and wafer supply agreements entered into between Jiangsu Zhongneng and cell and module manufacturers was recognised on the acquisition of Jiangsu Zhongneng. Based on the valuation performed by Jones Lang LaSalle Sallmanns at 31 December 2008, Sun Wave recognised impairment loss of intangible assets (net of tax) of RMB510.8 million due to the revision of outstanding polysilicon and wafer supply agreements terms.

Income tax expense

Sun Wave and its subsidiaries’ income tax expense was RMB16.4 million for the year ended 31 December 2008. Income tax expense in 2008 mainly represented PRC dividend withholding tax.

Loss for the year

Loss for the year ended 31 December 2008 of RMB250.2 million mainly represented share of loss of an associate for the year.

Acquisition of subsidiaries

On 30 April 2008, Sun Wave Group acquired 20% of the equity interests of Jiangsu Zhongneng at aggregate considerations of approximately RMB1,697.5 million. Upon acquisition, Sun Wave Group has identified an intangible asset in respect of outstanding long term contracts signed with third parties for polysilicon and wafer products. The fair value of the intangible asset (net of tax) of approximately RMB1,401.3 million attributable to Sun Wave Group has been recognised on the same date. Goodwill of approximately RMB36.4 million arising on this acquisition has also been recognised.

– IVB-1 –

APPENDIX IVB MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP B

Liquidity

The major cash flow activities for the year ended 31 December 2008 was the cash paid for the acquisition of a 20% equity interest in Jiangsu Zhongneng and advances received from Happy Genius for the abovementioned acquisition.

Capital commitments

As at 31 December 2008, Sun Wave and its subsidiaries had a capital expenditure of approximately RMB36.0 million in respect of additional investment in Jiangsu Zhongneng that were authorised but not contracted for.

Pledge of assets

As at 31 December 2008, the assets of Sun Wave and its subsidiaries, including a 20% equity interest in Jiangsu Zhongneng, have been pledged to secure the Exchangeable Bonds issued by Happy Genius.

Foreign currency risk

Certain bank balances, amounts due from shareholders, other payables, amounts due to a related company and amounts due to immediate holding company of the Sun Wave Group are denominated in foreign currencies, thereby increasing exposure to foreign currency risk. Though Sun Wave Group currently does not have a foreign currency hedging policy, the management monitors foreign exchange exposure by closely reviewing foreign exchange rate movements. In the future, Sun Wave Group may as it deems appropriate, enter into financial instruments including forward foreign exchange contracts, to hedge against the potential impact of any foreign currency risk on its operations.

Contingent liabilities

Sun Wave Group did not have any material contingent liabilities as at 31 December 2008.

FINANCIAL REVIEW OF GREATEST JOY AND ITS SUBSIDIARY

For the year ended 31 December 2008

Other income

Other income was RMB8.4 million for the year ended 31 December 2008. Other income mainly represented foreign exchange gains.

– IVB-2 –

APPENDIX IVB MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP B

Share of result of an associate

Share of results of an associate amounted to a loss of RMB247.7 million for the year ended 31 December 2008. The amount represented amortisation and impairment loss of intangible assets, net of share of post-acquisition profit from Jiangsu Zhongneng. An intangible asset in respect of outstanding polysilicon and wafer supply agreements entered into between Jiangsu Zhongneng and cell and module manufacturers was recognised on the acquisition of Jiangsu Zhongneng. Based on the valuation performed by Jones Lang LaSalle Sallmanns at 31 December 2008, Greatest Joy recognised impairment loss of intangible asset (net of tax) of RMB418.8 million due to the revision of the terms of those outstanding polysilicon and wafer supply agreements.

Income tax expense

Greatest Joy and its subsidiary’s income tax expense was RMB12.1 million for the year ended 31 December 2008. Income tax expense in 2008 mainly represented PRC dividend withholding tax.

Loss for the Year

Loss for the year ended 31 December 2008 of RMB251.6 million mainly represented share of loss of an associate for the year.

Acquisition of subsidiaries

On 27 May 2008, Greatest Joy Group acquired 16% of the equity interests of Jiangsu Zhongneng at aggregate considerations of approximately RMB1,369.8 million. Upon acquisition, Greatest Joy Group has identified an intangible asset in respect of outstanding long term contracts signed with third parties for polysilicon and wafer products. The fair value of the intangible asset (net of tax) of approximately RMB1,133.3 million attributable to Greatest Joy Group has been recognised on the same date. Goodwill of approximately RMB9.6 million arising on this acquisition has also been recognised.

Liquidity

The major cash flow activities for the year ended 31 December 2008 was the cash paid for the acquisition of a 16% equity interest in Jiangsu Zhongneng and advances received from Happy Genius for the abovementioned acquisition.

Capital commitments

As at 31 December 2008, Greatest Joy and its subsidiary have capital expenditures of approximately RMB28.8 million in respect of additional investments in Jiangsu Zhongneng that were authorised but not contracted for.

– IVB-3 –

APPENDIX IVB MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION OF TARGET GROUP B

Pledge of assets

As at 31 December 2008, the assets of Greatest Joy and its subsidiary, including a 16% equity interest in Jiangsu Zhongneng have been pledged to secure the Exchangeable Bonds issued by Happy Genius.

Foreign currency risk

Certain bank balances, amounts due to a related company and amounts due to the immediate holding company of the Greatest Joy Group are denominated in foreign currencies, thereby increasing exposure to foreign currency risk. Though Greatest Joy Group currently does not have a foreign currency hedging policy, the management monitors foreign exchange exposure by closely reviewing foreign exchange rate movements. In the future, Greatest Joy Group may as it deems appropriate, enter into financial instruments including forward foreign exchange contracts, to hedge against the potential impact of any foreign currency risk on its operations.

Contingent liabilities

Greatest Joy Group did not have any material contingent liabilities as at 31 December 2008.

– IVB-4 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the unaudited pro forma financial information of the Enlarged Group as if the Acquisitions have been completed on 31 December 2008 for the pro forma consolidated balance sheet and at the commencement of the year ended 31 December 2008 for the pro forma consolidated income statement and pro forma consolidated cash flow statement. The accompanying unaudited pro forma financial information of the Enlarged Group has been prepared to illustrate the effect of the acquisition of 100% of the equity interest in Jiangsu Zhongneng subject to the terms of Acquisition Agreement A and Acquisition Agreement B.

Pursuant to Acquisition Agreement A, the Company will acquire 64% of the equity interest in Jiangsu Zhongneng through the acquisition of 1,033,356,685 ordinary shares of US$0.00001 each, being 100% of the issued share capital of GCL Solar, and 16,667,000 series A convertible redeemable preferred shares of US$0.00001 each of GCL Solar.

Pursuant to Acquisition Agreement B, the Company will acquire 36% of the equity interest in Jiangsu Zhongneng through the acquisition of 100% of the issued share capital of Greatest Joy and Sun Wave.

The accompanying unaudited pro forma financial information is based on a number of assumptions, estimates, uncertainties and currently available information, and is provided for illustrative purposes. Accordingly, as a result of the uncertain nature of the accompanying unaudited pro forma financial information of the Enlarged Group, it may not give a true picture of the actual financial position or results of the Enlarged Group’s operations.

For the purpose of unaudited pro forma financial information, it is assumed that the Company acquired 100% of the issued share capital of GCL Solar, Greatest Joy and Sun Wave, the fair values of the identifiable assets and liabilities of Jiangsu Zhongneng acquired upon the Acquisitions are assumed to be the same as their carrying amounts shown in the financial statements of GCL Solar and the fair value of other identifiable assets and liabilities of GCL Solar, Sun Wave and Greatest Joy are assumed to be the same as their carrying amounts shown in the financial statements of the respective companies.

1. The Unaudited Pro Forma Consolidated Balance Sheet of the Enlarged Group

The unaudited pro forma consolidated balance sheet of the Enlarged Group is prepared based on the audited consolidated balance sheet of the Group as at 31 December 2008 which has been extracted from the annual report of the Group as set out in Appendix I to this circular and the audited balance sheets of GCL Solar, Sun Wave and Greatest Joy as at 31 December 2008 as set out in Appendices IIA, IIB and IIC, respectively, and adjusted to reflect the effect of the Acquisitions.

The unaudited pro forma consolidated balance sheet has been prepared for illustrative purpose only and, because of its hypothetical nature, may not give a true picture of the financial position of the Enlarged Group as at 31 December 2008 or any future date.

– V-1 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Unaudited pro forma consolidated balance sheet of the Enlarged Group as at 31 December 2008

The Group RMB’000 4,948,386 227,824 245,322 116,011 14,053 8,692 56,359 14,503 31,000 –	GCL Solar RMB’000 5,052,765 183,843 – 4,282 5,040 – – 7,054 1,180,053 9,540	Sun Wave RMB’000 – – 1,433,180 – – – – – – –	Greastest Joy Pro forma adjustments Pro forma adjustments RMB’000 RMB’000 Notes RMB’000 Notes – – 1,128,134 (1,433,180) 2(i) (1,128,134) 2(ii) – 3,520,757 1 (v) 3,204,258 2(vii) – – – – – –	Pro forma Enlarged Group RMB’000 10,001,151 411,667 245,322 6,845,308 19,093 8,692 56,359 21,557 1,211,053 9,540
5,662,150 258,804 468,489 8,608 25,785 943 231,034 413,727 1,407,390 827,485 54,003 8,474 – 1,652,066 – 2,542,028 (1,134,638) 4,527,512	6,442,577 67,069 101,984 3,736 296,360 – 276,678 1,745,768 2,491,595 858,357 110,478 28,360 498,328 996,000 – 2,491,523 72 6,442,649	1,433,180 – – – – – – 47 47 1 1,660,775 8,862 – – – 1,669,638 (1,669,591) (236,411)	1,128,134 – – – – – – 3 2,040,000 3 (1,360,000) 2(iii) (5,320) 1(v) (1,680) 2(vii) 3 – 1,361,688 (1,660,775) 2(viii) (1,361,688) 2(viii) 7,090 – – – 1,586,667 2(iv) 1,368,778 (1,368,775) (240,641)	18,829,742
				325,873 570,473 12,344 322,145 943 507,712 2,832,545
				4,572,035
				1,685,843 164,481 52,786 498,328 2,648,066 1,586,667
				6,636,171
				(2,064,136)
				16,765,606

– V-2 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The Group RMB’000 74,510 1,597,181 – – 32,094 – – 1,703,785 2,823,727	GCL Solar RMB’000 141,056 2,061,228 – 171,452 – 9,912 1,751,717 4,135,365 2,307,284	Sun Wave RMB’000 – – – – 13,738 – – 13,738 (250,149)	Greastest Joy Pro forma adjustments Pro forma adjustments RMB’000 RMB’000 Notes RMB’000 Notes – – 2,040,000 3 – 793,333 2(iv) – (171,452) 1(i) 10,990 43,962 1(iv) – – 10,990 (251,631)	Pro forma Enlarged Group RMB’000 215,566 5,698,409 793,333 – 100,784 9,912 1,751,717
				8,569,721
				8,195,885

92,779 2,322,978 2,415,757 407,970	75 1,200,206 1,200,281 1,107,003	1 (250,150) (250,149) –	1 (75) 1(ii) (1) 2(i) 793,968 1(iii) (1) 2(ii) 86,713 2(v) (251,632) (1,200,206) 1(ii) 250,150 2(i) 4,049,240 1(iii) 251,632 2(ii) 442,237 2(v) (251,631) – (1,107,003) 2(vi)	973,460 6,814,455
				7,787,915 407,970
2,823,727	2,307,284	(250,149)	(251,631)	8,195,885

– V-3 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

2. The Unaudited Pro Forma Consolidated Income Statement of the Enlarged Group

The unaudited pro forma consolidated income statement is prepared based on the audited consolidated income statement of the Group for the year ended 31 December 2008 which has been extracted from the annual report of the Group as set out in Appendix I to this circular and the audited consolidated income statements of GCL Solar, Sun Wave and Greatest Joy for the year ended 31 December 2008 as set out in Appendices IIA, IIB and IIC, respectively, and adjusted to reflect the effect of the Acquisitions.

For the purpose of preparing the proforma income statement, it is assumed that (a) the acquisition of 64% equity interests in Jiangsu Zhongneng through the acquisition of 100% equity interest of GCL-Solar was completed as at 1 January 2008 and (b) the acquisition of 20% and 16 % equity interests in Jiangsu Zhongneng through the acquisition of 100% equity interests in Sun Wave and Greatest Joy were completed in April 2008 and May 2008, respectively, as disclosed in the accountants’ reports in Appendix IIB and IIC. The acquisition of 20% and 16% equity interest in Jiangsu Zhongneng through the acquisitions of Sun Wave and Greatest Joy is considered as the acquisition of additional interests in a subsidiary, Jiangsu Zhongneng.

The unaudited pro forma consolidated income statement has been prepared for illustrative purpose only and, because of its hypothetical nature, may not give a true picture of the results of the Enlarged Group for the year ended 31 December 2008 or any future period.

– V-4 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Unaudited pro forma consolidated income statement of the Enlarged Group for the year ended 31 December 2008

The Group RMB’000 3,693,330 (3,196,020)	GCL Solar RMB’000 3,521,444 (966,788)	Sun Wave RMB’000 – –	Greatest Joy Pro forma adjustments Pro forma adjustments RMB’000 RMB’000 Notes RMB’000 Notes – – 11,586 4(i)	Pro forma Enlarged Group RMB’000 7,214,774 (4,151,222
497,310 168,476 (7,093) (213,426) (24,352) 420,915 (258,746) – – – 44,693 206,862 (27,140)	2,554,656 68,482 – (213,701) – 2,409,437 (72,160) (105,259) 40,271 (9,912) – 2,262,377 (29,740)	– 36,864 – (121) – 36,743 – – – – (270,542) (233,799) (16,351)	– 8,378 (11,586) 4(i) – (231) – 8,147 – (103,836) 5(ii) (297,500) 5(i) – – (40,271) 5(iii) – (247,707) 518,249 5(iv) (239,560) (12,072) (43,962) 4(ii)	3,063,552 270,614 (7,093 (427,479 (24,352
				2,875,242 (732,242 (105,259 – (9,912 44,693
				2,072,522 (129,265
179,722	2,232,637	(250,150)	(251,632)	1,943,257

131,298 48,424	1,374,399 858,238	(250,150) –	(251,632) (43,962) 4(ii) (297,500) 5(i) (103,836) 5(ii) 518,249 5(iv) (40,271) 5(iii) 610,055 5(v) – (610,055) 5(v)	1,646,650 296,607
179,722	2,232,637	(250,150)	(251,632)	1,943,257

– V-5 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

3. The Unaudited Pro Forma Consolidated Cash Flow Statement of the Enlarged Group

The unaudited pro forma consolidated cash flow statement is prepared based on the audited consolidated cash flow statement of the Group for the year ended 31 December 2008 which has been extracted from the annual report of the Group as set out in Appendix I to this circular and the audited consolidated cash flow statements of GCL Solar, Sun Wave and Greatest Joy for the year ended 31 December 2008 as set out in Appendices IIA, IIB and IIC, respectively, and adjusted to reflect the effect of the Acquisitions.

For the purpose of preparing the proforma cash flow statement, it is assumed that (a) the acquisition of 64% equity interests in Jiangsu Zhongneng through the acquisition of 100% equity interest of GCL-Solar was completed as at 1 January 2008 and (b) the acquisition of 20% and 16 % equity interests in Jiangsu Zhongneng through the acquisition of 100% equity interests in Sun Wave and Greatest Joy were completed in April 2008 and May 2008, respectively, as disclosed in the accountants’ reports in Appendix IIB and IIC. The acquisition of 20% and 16% equity interest in Jiangsu Zhongneng through the acquisitions of Sun Wave and Greatest Joy is considered as the acquisition of additional interests in a subsidiary, Jiangsu Zhongneng.

The unaudited pro forma consolidated cash flow statement has been prepared for illustrative purpose only and, because of its hypothetical nature, may not give a true picture of the results of the Enlarged Group for the year ended 31 December 2008 or any future period.

– V-6 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Unaudited pro forma consolidated cash flow statement of the Enlarged Group for the year ended 31 December 2008

OPERATING ACTIVITIES Profit (loss) before tax Adjustments for: Depreciation Interest expenses Release of prepaid lease payments Amortisation of intangible assets Loss on disposal of property, plant and equipment Exchange loss (gain) Change in fair value of convertible loan notes Change in fair value of convertible redeemable preferred shares Change in fair value of embedded derivative instruments Interest income Waiver of other payable Amortisation of deferred income Share of results of associates Share based payment expense Allowance for trade and other receivables Impairment of goodwill Impairment of available-for-sales investments Operating cash flows before movements in working capital Increase in inventories Decrease (increase) in trade and other receivables Increase in amounts due from related companies Increase in trade and other payables Increase in advances from customers Increase (decrease) in amounts due to related companies Increase in deferred income	The Group RMB’000 206,862 245,530 258,746 8,572 742 3,288 12,610 – – – (17,505) (4,070) (5,957) (44,693) 10,753 4,794 692 2,968	GCL Solar RMB’000 2,262,377 96,388 72,160 1,303 – 7,687 (39,779) 105,259 (40,271) 9,912 (17,311) – (4,170) – – – – –	Sun Wave RMB’000 (233,799) – – – – – (36,746) – – – (118) – – 270,542 – – – –	Greatest Joy Pro forma adjustments Pro forma adjustments RMB’000 RMB’000 Notes RMB’000 Notes (239,560) (144,107) 220,749 – – 103,836 5(ii) 297,500 5(i) – – – (8,147) – – 40,271 5(iii) – (231) – – 247,707 (518,249) 5(iv) – – – –	Pro forma Enlarged Group RMB’000 2,072,522 341,918 732,242 9,875 742 10,975 (72,062) 105,259 – 9,912 (35,165) (4,070) (10,127) (44,693) 10,753 4,794 692 2,968
	683,332 (132,819) 74,209 (16,819) 24,985 – 9,755 18,094	2,453,555 (60,415) (38,060) (18,344) 61,756 1,962,531 (937) 33,954	(121) – – – 1 – – –	(231) – – – – – (23) –	3,136,535 (193,234) 36,149 (35,163) 86,742 1,962,531 8,795 52,048

– V-7 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The Group RMB’000 660,737 (16,920)	GCL Solar RMB’000 4,394,040 (32,787)	Sun Wave RMB’000 (120) –	Greatest Joy Pro forma adjustments Pro forma adjustments RMB’000 RMB’000 Notes RMB’000 Notes (254) –	Pro forma Enlarged Group RMB’000 5,054,403 (49,707)
643,817 (335,633) 36,868 (31,000) – – – – (16,568) – (145,988) (1,920) – (41,603) 10,681 3,646 12,947 18,945 (489,625)	4,361,253 (3,595,093) – (1,180,053) (2,540) (278,016) 119,220 4,245 – – – (6,703) (135,369) (176,427) 1,000 – 17,311 – (5,232,425)	(120) – – – – – – – – – (1,697,472) – – – – – 118 – (1,697,354)	(254) – – – – – – – – 291,020 6(i) 54,549 6(ii) (5,320) 1(v) – (1,360,000) 2(iii) (1,680) 2(vii) (1,369,833) 1,697,472 6(iii) 1,369,833 6(iii) – – – – – 231 – (1,369,602)	5,004,696
				(3,930,726) 36,868 (1,211,053) (2,540) (278,016) 119,220 4,245 323,681 (1,361,680) (145,988) (8,623) (135,369) (218,030) 11,681 3,646 30,607 18,945
				(6,743,132)

– V-8 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The Group RMB’000 1,524,858 (1,755,298) – (4,799) (46,483) (251,781) 1,600 – – – –	GCL Solar RMB’000 3,730,420 (1,220,420) – (108,967) (7,264) (93,438) 9,000 (49,083) (45,850) 102,555 8,967	Sun Wave RMB’000 – – – – – – – – – 1,697,521 (54,526)	Greatest Joy Pro forma adjustments Pro forma adjustments RMB’000 RMB’000 Notes RMB’000 Notes – 2,040,000 3 – – (1,586,667) 2(iv) – – – (103,836) 5(ii) (257,834) 5(i) – – – 1,369,836 (1,697,472) 6(iii) (1,369,833) 6(iii) –	Pro forma Enlarged Group RMB’000 7,295,278 (2,975,718) (1,586,667) (113,766) (53,747) (706,889) 10,600 (49,083) (45,850) 102,607 (45,559)
(531,903) (377,711) 804,048 (12,610)	2,325,920 1,454,748 291,020 –	1,642,995 (54,479) 54,526 –	1,369,836 (20) 23 (291,020) 6(i) (54,549) 6(ii) –	1,831,206
				92,770 804,048 (12,610)
413,727	1,745,768	47	3	884,208

– V-9 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

4. Notes to the Unaudited Pro Forma Financial Information of the Enlarged Group

Notes:

The consideration for Acquisition A shall be satisfied by the issue of Consideration Shares A which means 9,051,242,615 new Shares of par value HK$0.10 to be issued by the Company. The fair value of Consideration Shares A is estimated to be approximately HK$5,521,258,000 (equivalent to approximately RMB4,843,208,000) in total, which is determined by reference to the market price of the Company’s ordinary shares of HK$0.61 as at 31 December 2008 as if the Acquisition A would have been completed on 31 December 2008 and is subject to finalisation at the date of completion of the Acquisition A. Acquisition A is accounted for as a business combination using the purchase method of accounting in accordance with International Financial Reporting Standard 3 “Business Combinations” (“IFRS 3”).

The adjustment represents :

(i) the elimination of convertible redeemable preferred shares of GCL Solar RMB171,452,000;
(ii) the elimination of share capital and reserves of GCL Solar amounted to approximately RMB75,000 and RMB1,200,206,000, respectively;
(iii) the Consideration for Acquisition A amounted to approximately HK$5,521,258,000 (equivalent to approximately RMB4,843,208,000), comprising of the par value of Consideration Shares A amounted to approximately HK$905,124,000 (equivalent to approximately RMB793,968,000) and the share premium amounted to approximately HK$4,616,134,000 (equivalent to RMB4,049,240,000) ;
(iv) the recognition of deferred tax liability of approximately RMB43,962,000 in respect of dividend withholding tax on 64% share of undistributed earnings of Jiangsu Zhongeng in 2008 not recognised by GCL Solar. The liability arising from the provision of dividend withholding tax will not be covered by the tax deed of indemnity entered into before Completion; and
(v) the recognition of goodwill arising from Acquisition A amounted to approximately RMB3,520,757,000 and the transaction costs of approximately RMB5,320,000.
The consideration for Acquisition B shall be satisfied by (i) cash of US$200,000,000 (equivalent to approximately RMB1,360,000,000; (ii) Secured Notes of US$350,000,000 (equivalent to approximately RMB2,380,000,000; and (iii) issue of Consideration Shares B, which means 988,530,112 new Shares of par value HK$0.10 to be issued by the Company. The fair value of Consideration Shares B is estimated to be approximately HK$603,003,000 (equivalent to approximately RMB528,950,000) in total, which is determined by reference to the market price of the Company’s ordinary shares of HK$0.61 as at 31 December 2008 as if the Acquisition B would have been completed on 31 December 2008 and is subject to finalisation at the date of completion of the Acquisition B.

The adjustment represents:

(i) the elimination of share capital, reserve and interest in an associate of Sun Wave amounted to approximately RMB1,000 and RMB250,150,000 and RMB1,433,180,000 (including the intangible asset of RMB780,648,000 and goodwill of RMB36,441,000), respectively;
(ii) the elimination of share capital, reserve and interest in an associate of Greatest Joy amounted to approximately RMB1,000, RMB251,632,000 and RMB1,128,134,000 (including the intangible asset of RMB625,646,000 and goodwill of RMB9,615,000), respectively;

– V-10 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(iii) the payment of cash consideration of US$200,000,000 (equivalent to approximately RMB1,360,000,000);
(iv) the issue of Secured Notes of US$350,000,000 (equivalent to approximately RMB2,380,000,000), comprising approximately RMB1,586,667,000 due within one year and RMB793,333,000 due after one year from the completion date of Acquisition B. The Secured Notes will be repaid in 3 equal instalments at the end of the 6-month period, 12-month period and 18-month period after the date of issue. The Secured Notes will carry accretion rate of 5% per annum, payable concurrently with the payment of the underlying principal of the Secured Notes and interest at 10% per annum, payable semi-annually in arrears. It is assumed the fair value of the Secured Notes is the same as the nominal value at the issue date;
(v) the recognition of Consideration Shares B to be issued amounted to approximately HK$603,003,000 (equivalent to approximately RMB528,950,000), comprising of the par value of Consideration Shares B amounted to approximately HK$98,853,000 (equivalent to approximately RMB86,713,000) and the share premium amounted to approximately RMB442,237,000;
(vi) the elimination of minority interests in respect of 36% share of net assets of Jiangsu Zhongneng after the completion of Acquisition B amounted to approximately RMB1,107,003,000;
(vii) the recognition of goodwill arising from Acquisition B amounted to approximately RMB3,204,258,000, and the transaction costs of approximately RMB1,680,000; and

Goodwill resulting from Acquisition B represents the difference between the consideration paid and the carrying values of the net assets of Jiangsu Zhongneng attributable to the additional 36% equity interest acquired and the carrying amount of other assets and liabilities of Sun Wave and Greatest Joy.

Details of goodwill arising from Acquisition B are as follows:

Consideration B Issue of new Shares Issue of Secured Notes Cash Transaction costs Less: net assets acquired Goodwill	RMB’000 528,950 2,380,000 1,360,000 4,268,950 1,680 4,270,630 (1,066,372) 3,204,258

– V-11 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The net assets acquired as follows:

36% equity interests in Jiangsu Zhongneng Bank balances Trade and other payables Tax liabilities Deferred tax liabilities	Sun Wave RMB’000 615,002 47 (1) (8,862) (13,738)	Greatest Joy RMB’000 492,001 3 – (7,090) (10,990)	Total RMB’000 1,107,003 50 (1) (15,952) (24,728)
			1,066,372

(viii) the assignment of the right in the amount due from Sun Wave and Greatest Joy amounted to approximately RMB1,660,775,000 and RMB1,361,688,000, respectively by Happy Genius to the Company.

For notes 1 and 2 above, for the purpose of the purchase price allocation, the fair values of the identifiable assets and liabilities of GCL Solar, Sun Wave and Greatest Joy are estimates made by the Directors as if the Acquisition A and B were completed on 31 December 2008. The fair values of the identifiable assets and liabilities of Jiangsu Zhongneng acquired upon the Acquisitions are assumed to be the same as their carrying amounts shown in the financial statements of GCL Solar and the fair values of the other identifiable assets and liabilities of GCL Solar, Sun Wave and Greatest Joy are assumed to be the same as their carrying amounts shown in the financial statements of the respective companies at that date. Since the fair value of the identifiable assets (including other intangible assets) and liabilities of GCL Solar, Sun Wave and Greatest Joy at the date of completion of the Acquisitions may be substantially different from the estimated fair value used in the preparation of this unaudited pro forma financial statements of assets and liabilities of the Enlarged Group, the final amount of identifiable assets (including other intangible assets), liabilities and contingent liabilities, as well as goodwill to be recognized in connection with Acquisition A and B could be different from the estimated amount stated herein.

The adjustment represents the condition precedent to the completion of Acquisition B that GCL Solar or its subsidiaries shall obtain a three-year term loan facilities of US$300,000,000 (equivalent to RMB2,040,000,000), which shall carry interest at 1.5% above one-year LIBOR per annum based on quotations from the bank.
The adjustment represents:
(i) the elimination of intra-group transactions for the year ended 31 December 2008 amounted to RMB11,586,000 between the Group and GCL Solar.

Details of the intra-group transactions are as follows:

Consultancy fees from Jiangsu Zhongneng, as disclosed in the announcement of the Company dated 20 October 2008 Management fees from Jiangsu Zhongneng, as disclosed in the announcement of the Company dated 8 October 2008 and 2 March 2009 Rental income from Jiangsu Zhongneng Total	RMB’000 6,700 4,000 886
	11,586

– V-12 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(ii) the recognition of deferred tax liability of approximately RMB43,962,000 in respect of dividend withholding tax on 64% share of undistributed earnings of Jiangsu Zhongeng in 2008 not recognised by GCL Solar.
The adjustment represents:
(i) the provision of annual finance cost at accretion rate of 5% per annum and interest rate of 10% per annum, approximately RMB297,500,000, on Secured Notes of US$350,000,000 (equivalent to RMB2,380,000,000) assumed to be issued as at 1 January 2008 and the interest paid of RMB257,834,000 ;
(ii) the provision of annual finance cost at 1.5% above 1-year LIBOR per annum plus commission fees of 2% p.a., approximately RMB103,836,000, arising from the three-year term loan facilities of US$300,000,000 (equivalent to RMB2,040,000,000) assumed to be obtained by GCL Solar or its subsidiaries as at 1 January 2008 and the interest paid of the same amount;
(iii) the reversal of the change in fair value of convertible redeemable preferred shares of RMB40,271,000;
(iv) the reversal of share of result of Jiangsu Zhongneng of Sun Wave and Greatest Joy amounted to approximately RMB270,542,000 (net of amortisation and impairment loss of intangible asset of approximately RMB620,662,000) and RMB247,707,000 (net of amortisation and impairment loss of intangible asset of approximately RMB507,642,000), respectively; and
(v) the elimination of profit attributable to minority interests in the books of GCL Solar amounted to approximately RMB610,055,000, as if acquisitions of Sun Wave and Greatest Joy were completed in April and May 2008 respectively after they had acquired 20% and 16% equity interest in Jiangsu Zhongneng.
The adjustment represents:
(i) the cash inflow of approximately RMB291,020,000 arising from the completion of Acquisition A, that is the cash and cash equivalent of GCL Solar as at 1 January 2008;
(ii) the cash inflow resulting from acquisition of Sun Wave and Greatest Joy amounted to RMB54,526,000 and RMB23,000, respectively, in an aggregate amount of RMB54,549,000, that is the cash and cash equivalent of Sun Wave and Greatest Joy at 1 January 2008; and
(iii) the elimination of the cash outflow from acquisition of an associate by Sun Wave and Greatest Joy amounted to RMB1,697,472,000 and RMB1,369,833,000, respectively, and the corresponding cash inflow from advances from immediate holding company recorded in the books of Sun Wave and Greatest Joy.

– V-13 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

B. REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report, prepared for inclusion in this circular, in respect of the Group’s unaudited pro forma financial information, received from the reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong.

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ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

TO THE DIRECTORS OF GCL-POLY ENERGY HOLDINGS LIMITED

We report on the unaudited pro forma financial information of GCL-Poly Energy Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), which has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the proposed acquisitions of 100% of issued share capital of GCL Solar Energy Technology Holdings Inc., Greatest Joy International Limited and Sun Wave Group Limited, might have affected the financial information presented, for inclusion in Appendix V of the circular dated 30 June 2009 (the “Circular”). The basis of preparation of the unaudited pro forma financial information is set out on pages V-1 to V-13 to the Circular.

Respective responsibilities of directors of the Company and reporting accountants

It is the responsibility solely of the directors of the Company to prepare the unaudited pro forma financial information in accordance with paragraph 29 of Chapter 4 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” issued by the Hong Kong Institute of Certified Public Accountants.

It is our responsibility to form an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

– V-14 –

APPENDIX V

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants. Our work consisted primarily of comparing the unadjusted financial information with source documents, considering the evidence supporting the adjustments and discussing the unaudited pro forma financial information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purpose of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

The unaudited pro forma financial information is for illustrative purpose only, based on the judgements and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in future and may not be indicative of:

the financial position of the Group as at 31 December 2008 or any future date; or
the results and cash flows of the Group for the year ended 31 December 2008 or any future period.

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled by the directors of the Company 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 29(1) of Chapter 4 of the Listing Rules.

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong 30 June 2009

– V-15 –

APPENDIX VI

PROPERTY VALUATION REPORT

The following is the text of a letter, summary of values and valuation certificates, prepared for the purpose of incorporation in this circular received from Jones Lang LaSalle Sallmanns Limited, an independent valuer, in connection with its valuation as at 30 April 2009 of the property interests of the Enlarged Group.

==> picture [132 x 42] intentionally omitted <==

30 June 2009

The Board of Directors GCL-Poly Energy Holdings Limited Suites 3601 to 3604, Two Exchange Square 8 Connaught Road Central Hong Kong

Dear Sirs,

In accordance with your instructions to value the properties in which GCL-Poly Energy Holdings Limited (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) and GCL Solar Energy Technology Holdings Inc. (the “Target Company”) and their respective subsidiaries (hereinafter together referred to as the “Target Group”) have interests in the People’s Republic of China (the “PRC”) and Hong Kong, we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the capital values of the property interests as at 30 April 2009 (the “date of valuation”). For the purpose of this report, the Group and the Target Group are hereinafter together referred to as the Enlarged Group.

Our valuation has been undertaken with regard to the agreements entered into between the Company and various selling shareholders of the Target Company.

Our valuation of the property interests represents the market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”.

We have valued the property interests of property nos. 2, 15, 17 and 19 in Group I and Group II by direct comparison approach assuming sale of the property interest in its existing state with the benefit of immediate vacant possession and by making reference to comparable sales transactions as available in the relevant market.

– VI-1 –

APPENDIX VI

PROPERTY VALUATION REPORT

Due to the nature of the buildings and structures of property nos. 1, 3 to 14, 16, 18 and 20 to 25 in Group I and Group II and the particular locations in which they are situated, there are unlikely to be relevant market comparable sales readily available. The property interests have therefore been valued on the basis of their depreciated replacement cost.

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

In valuing the property interests of certain portion of property no. 1 in Group I and property no. 26 in Group III which are currently under construction, we have assumed that they will be developed and completed in accordance with the latest development proposal provided to us by the Enlarged Group. In arriving at our opinion of value, we have taken into account the construction cost and professional fees relevant to the stage of construction as at the date of valuation and the remainder of the cost and fees to be expended to complete the development.

We have attributed no commercial value to the property interest in Group IV, which has not been assigned to the Target Group as at the date of valuation, thus the title of the property is not invested in the Target Group.

We have attributed no commercial value to the property interests in Group V, Group VI and Group VII, which are leased by the Enlarged Group, due either to the short-term nature of the lease or the prohibition against assignment or sub-letting or otherwise due to the lack of substantial profit rent.

Our valuation has been made on the assumption that the seller sells the property interests in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the property interests.

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

In valuing the property interests, we have complied with all requirements contained in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the RICS Valuation Standards (6[th] Edition) published by the Royal Institution of Chartered Surveyors; and the HKIS Valuation Standards on Properties (1[st] Edition 2005) published by the Hong Kong Institute of Surveyors.

– VI-2 –

APPENDIX VI

PROPERTY VALUATION REPORT

We have relied to a very considerable extent on the information given by the Enlarged Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have been shown copies of various title documents including State-owned Land Use Rights Certificates, Building Ownership Certificates and official plans relating to the property interests and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interests in the PRC and any material encumbrance that might be attached to the property interests or any tenancy amendment. We have relied considerably on the advice (“Legal Opinion”) given by the Company’s PRC legal advisers – Grandall Legal Group, concerning the validity of the property interests in the PRC.

We have not carried out detailed measurements to verify the correctness of the areas in respect of the properties but have assumed that the areas shown on the title documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the properties. However, we have not carried out investigation to determine the suitability of the ground conditions and services for any development thereon. Our valuation has been prepared on the assumption that these aspects are satisfactory and that no unexpected cost and delay will be incurred during construction. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defect. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defect. No tests were carried out on any of the services.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Enlarged Group. We have also sought confirmation from the Enlarged Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to arrive an informed view, and we have no reason to suspect that any material information has been withheld.

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

The continued turmoil and instability in the financial markets is continuing to cause volatility and uncertainty in the world’s capital markets and real estate markets. There are low levels of liquidity in the real estate market and transaction levels are significantly reduced, resulting in a lack of clarity as to pricing levels and the market drivers. This, combined with a general weakening of sentiment towards real estate, has resulted in a continual reappraisal of local property prices. Many transactions that are occurring involve vendors who are more compelled to sell, or purchasers who will only buy at discounted prices. In this environment, prices and values are going through a period of heightened volatility whilst the market absorbs the various issues and reaches its conclusions. The period required to negotiate a sale may also extend considerably beyond the normally expected period, which would also reflect the nature and size of the property.

– VI-3 –

APPENDIX VI

PROPERTY VALUATION REPORT

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

Yours faithfully, for and on behalf of

Jones Lang LaSalle Sallmanns Limited Paul L. Brown

B.Sc. FRICS FHKIS Director

Note: Paul L. Brown is a Chartered Surveyor who has 26 years’ experience in the valuation of properties in the PRC and 29 years of property valuation experience in Hong Kong, the United Kingdom and the Asia-Pacific region.

– VI-4 –

APPENDIX VI

PROPERTY VALUATION REPORT

SUMMARY OF VALUES

Group I – Property interests held and occupied by the Target Group in the PRC

No.
Property
Capital value in
existing state as at
30 April 2009
Interest
attributable
to the Enlarged
Group
RMB
1.
4 parcels of land,
various buildings and
structures
No. 66 Yangshan Road
Xuzhou Economic
Development Zone
Xuzhou City
Jiangsu Province
The PRC
818,067,000
100%
2.
25 residential units,
25 garages and 2 attics
Building nos. 06 and 07
Huaqiao Garden
No. 168 Binhe Road
Chengxiang Town
Taicang City
Jiangsu Province
The PRC
No commercial
value
100%
3.
2 parcels of land,
various buildings and
structures
No. 88 Qidong Road
Taixing Economic
Development Zone
Taixing City
Jiangsu Province
The PRC
No commercial
value
100%
Sub-total:
818,067,000

Capital value
attributable to
the Enlarged
Group as at
30 April 2009
RMB
818,067,000
No commercial
value
No commercial
value

818,067,000

Note: According to the information provided by the Target Group, the potential tax liability which would arise on the disposal of property interests in Group I are PRC Business Tax of 5% of consideration, PRC Land Appreciation Tax (ranging from 30% to 60% of the appreciated amount), PRC Enterprises Income Tax of 25% of net profit. But the likelihood of any tax liability being crystalised is remote as the Target Group has no intention to dispose of the properties at present.

– VI-5 –

APPENDIX VI

PROPERTY VALUATION REPORT

Group II – Property interests held and occupied by the Group in the PRC

				Capital value
			Interest	attributable to
		Capital value in	attributable	the Enlarged
		existing state as at	to the Enlarged	Group as at
No.	Property	30 April 2009	Group	30 April 2009
		RMB		RMB
4.	2 parcels of land,	99,615,000	51%	50,804,000
	various buildings and
	structures
	No. 1899
	Xiushan East Road
	Haimen City
	Jiangsu Province
	The PRC
5.	2 parcels of land,	85,649,000	100%	85,649,000
	various buildings and
	structures located at
	Group 14, Hongqiao
	Village
	Juegang Town
	Rudong City
	Jiangsu Province
	The PRC
6.	A parcel of land,	103,477,000	100%	103,477,000
	various buildings and
	structures
	No. 2 Qi Xin Road
	Anyi Industrial Zone
	Baoying County
	Jiangsu Province
	The PRC
7.	A parcel of land,	78,447,000	100%	78,447,000
	various buildings and
	structures No. 82
	Huan Cheng South
	Road, Ganyu County
	Lianyungang City
	Jiangsu Province
	The PRC

– VI-6 –

APPENDIX VI

PROPERTY VALUATION REPORT

				Capital value
			Interest	attributable to
		Capital value in	attributable	the Enlarged
		existing state as at	to the Enlarged	Group as at
No.	Property	30 April 2009	Group	30 April 2009
		RMB		RMB
8.	A parcel of land,	84,599,000	100%	84,599,000
	various buildings and
	structures located at
	No. 188 Xinhu District
	Shuangfeng Town
	Taicang City
	Jiangsu Province
	The PRC
9.	A parcel of land,	100,083,000	94.77%	94,849,000
	various buildings and
	structures located at
	Lianshi Industrial Zone
	Lianshi Town
	Huzhou City
	Zhejiang Province
	The PRC
10.	A parcel of land,	155,586,000	51%	79,349,000
	various buildings and
	structures
	No. 199 Gudu Road
	Economic Development
	Zone
	Yangzhou City
	Jiangsu Province
	The PRC
11.	A parcel of land,	71,244,000	51%	36,334,000
	various buildings and
	structures located at
	Beiyuan Road
	Industrial Zone
	Feng County
	Jiangsu Province
	The PRC

– VI-7 –

APPENDIX VI

PROPERTY VALUATION REPORT

				Capital value
			Interest	attributable to
		Capital value in	attributable	the Enlarged
		existing state as at	to the Enlarged	Group as at
No.	Property	30 April 2009	Group	30 April 2009
		RMB		RMB
12.	2 parcels of land,	126,896,000	51%	64,717,000
	various buildings and
	structures
	No. 2008 Xiaolin Road
	Yushan Town
	Kunshan City
	Jiangsu Province
	The PRC
13.	A parcel of land,	4,451,000	51%	2,270,000
	various buildings and
	structures
	No. 55 Sutong Road
	Suzhou Industrial Park
	Jiangsu Province
	The PRC
14.	2 parcels of land,	99,447,000	51%	50,718,000
	various buildings and
	structures
	No. 1 Xinglong Street
	Suzhou Industrial Park
	Jiangsu Province
	The PRC
15.	House A5, Xuelian	1,502,000	51%	766,000
	Garden
	Luzhi Town
	Wuzhong District
	Suzhou City
	Jiangsu Province
	The PRC

– VI-8 –

APPENDIX VI

PROPERTY VALUATION REPORT

				Capital value
			Interest	attributable to
		Capital value in	attributable	the Enlarged
		existing state as at	to the Enlarged	Group as at
No.	Property	30 April 2009	Group	30 April 2009
		RMB		RMB
16.	2 parcels of land,	99,785,000	100%	99,785,000
	various buildings and
	structures
	No. 188 Luoyang Road
	Chengxiang Town
	Taicang City
	Jiangsu Province
	The PRC
17.	Units 601, 602 and 604	No commercial	100%	No commercial
	Building no. 5	value		value
	Huiyang Er Cun
	Chengxiang Town
	Taicang City
	Jiang Province
	The PRC
18.	2 parcels of land,	59,395,000	100%	59,395,000
	various buildings and
	structures located at the
	northern side of
	Fengpei Road
	Pei County
	Xuzhou City
	Jiangsu Province
	The PRC
19.	A residential unit on	No commercial	100%	No commercial
	Level 6	value		value
	Block 6, Xin Pei Xiao Qu
	Fengpei Road
	Pei Country
	Xuzhou City
	Jiangsu Province
	The PRC

– VI-9 –

APPENDIX VI

PROPERTY VALUATION REPORT

				Capital value
			Interest	attributable to
		Capital value in	attributable	the Enlarged
		existing state as at	to the Enlarged	Group as at
No.	Property	30 April 2009	Group	30 April 2009
		RMB		RMB
20.	2 parcels of land,	71,541,000	100%	71,541,000
	various buildings and
	structures located at
	Hongguang Village
	Xiejiawan
	Dongtai Town
	Dongtai City
	Jiangsu Province
	The PRC
21.	A parcel of land,	104,525,000	75%	78,394,000
	various buildings and
	structures located at
	Sanhuan West Road
	Duanzhuang Village
	Xuzhou City
	Jiangsu Province
	The PRC
22.	A parcel of land,	108,111,000	95%	102,705,000
	various buildings and
	structures
	No. 88 Hongye Road
	Xiuzhou Industrial Zone
	Jiaxing City
	Zhejiang Province
	The PRC
23.	2 parcels of land,	31,620,000	100%	31,620,000
	various buildings and
	structures
	No. 4 Zhujiang Road
	Lianyungang Economic
	Development Zone
	Lianyungang City
	Jiangsu Province
	The PRC

– VI-10 –

APPENDIX VI

PROPERTY VALUATION REPORT

No.
Property
Capital value in
existing state as at
30 April 2009
Interest
attributable
to the Enlarged
Group
RMB
24.
2 parcels of land,
various buildings and
structures located at
Jianyuan Road
Puyuan Town
Tongxiang City
Zhejiang Province
The PRC
5,756,000
100%
25.
A parcel of land,
various buildings and
structures located at
Xin Miao Shi Village
Puyuan Town
Tongxiang City
Zhejiang Province
The PRC
22,616,000
100%
Sub-total:
1,514,345,000

Capital value
attributable to
the Enlarged
Group as at
30 April 2009
RMB
5,756,000
22,616,000

1,203,791,000

Note: According to the information provided by the Group, the potential tax liability which would arise on the disposal of property interests in Group II are PRC Business Tax of 5% of consideration, PRC Land Appreciation Tax (ranging from 30% to 60% of the appreciated amount), PRC Enterprises Income Tax (10% or 20% of net profit). But the likelihood of any tax liability being crystalised is remote as the Group has no intention to dispose of the properties at present.

– VI-11 –

APPENDIX VI

PROPERTY VALUATION REPORT

Group III – Property interest held under development by the Group in the PRC

No. Property Capital value in existing state as at 30 April 2009 Interest attributable to the Enlarged Group RMB 26. A parcel of land, various buildings and structures under construction located at Beilike and Baiyinkulun Pastures Xilinhaote City Inner Mongolia Autonomous Region The PRC No commercial value 100% Sub-total: Nil	Capital value attributable to the Enlarged Group as at 30 April 2009 RMB No commercial value
	Nil

Note: According to the information provided by the Group, the potential tax liability which would arise on the disposal of property interest in Group III are PRC Business Tax of 5% of consideration, PRC Land Appreciation Tax (ranging from 30% to 60% of the appreciated amount). But the likelihood of any tax liability being crystalised is remote as the Group has no intention to dispose of the property at present.

– VI-12 –

APPENDIX VI

PROPERTY VALUATION REPORT

Group IV – Property interest contracted to be acquired by the Target Group in the PRC

No. Property Capital value in existing state as at 30 April 2009 Interest attributable to the Enlarged Group RMB 27. Building nos. 10 to 13 and nos. 15 to 18, Wanhao Emerald Town located at the eastern side of Jing Liu Road and the southern side of Yangshan Road Xuzhou City Jiangsu Province The PRC No commercial value 100% Sub-total: Nil	Capital value attributable to the Enlarged Group as at 30 April 2009 RMB No commercial value
	Nil

Note: According to the information provided by the Target Group, the potential tax liability which would arise on the disposal of property interest in Group IV are PRC Business Tax of 5% of consideration, PRC Land Appreciation Tax (ranging from 30% to 60% of the appreciated amount), PRC Enterprises Income Tax of 25% of net profit. But the likelihood of any tax liability being crystalised is remote as the Target Group has no intention to dispose of the property at present.

– VI-13 –

APPENDIX VI

PROPERTY VALUATION REPORT

Group V – Property interests rented and occupied by the Group in the PRC

		Capital value in
		existing state as at
No.	Property	30 April 2009
		RMB
28.	Villa Flat D, Economic Island	No commercial
	Qing Jian Lake	value
	Yangchenghu Avenue
	Suzhou Industry Park
	Suzhou City
	Jiangsu Province
	The PRC
29.	Unit 401, Building no. 11	No commercial
	Gaobang Er Cun	value
	Suzhou Industry Park
	Suzhou City
	Jiangsu Province
	The PRC
30.	Unit 305, Building no. 37	No commercial
	Gulou Yi Cun	value
	Suzhou Industry Park
	Suzhou City
	Jiangsu Province
	The PRC
31.	Unit 205, Building no. 20	No commercial
	Gulou Yi Cun	value
	Suzhou Industry Park
	Suzhou City
	Jiangsu Province
	The PRC
32.	Unit 1411	No commercial
	Jinxiu Plaza	value
	Huainan Industry Zone
	Huainan City
	Anhui Province
	The PRC

– VI-14 –

APPENDIX VI

PROPERTY VALUATION REPORT

		Capital value in
		existing state as at
No.	Property	30 April 2009
		RMB
33.	A residential unit of a	No commercial
	single-storey building	value
	No. 117 Shanqian Road
	Zhangjiagang City
	Jiangsu Province
	The PRC
34.	Level 9, New Shanghai	No commercial
	International Tower	value
	No. 360 Pudong South Road
	Shanghai
	The PRC
35.	A parcel of land,	No commercial
	various buildings	value
	and structures located
	at the northern side of
	312 State Highway
	Kuatang Town
	Suzhou Industrial Zone
	Jiangsu Province
	The PRC
36.	Units 306 to 308 of	No commercial
	a 3-storey building	value
	No. 187 Nadamu Road
	Xilinhaote City
	Inner Mongolia
	Autonomous Region
	The PRC
37.	A parcel of land located at	No commercial
	the eastern bound of Great Canal	value
	and northern side of
	Xinmin Gate
	Baoying County
	Jiangsu Province
	The PRC

– VI-15 –

APPENDIX VI

PROPERTY VALUATION REPORT

No. Property

A parcel of land located at Wangzhuang & Panzhuang Jinzhuang Village Shanyang Township Baoying County Jiangsu Province The PRC 39. A parcel of land located at Wangpo Village Tacheng Town Ganyu County Lianyungang City Jiangsu Province The PRC 40. A parcel of land No. 200 Gudu Road Economic Development Zone Yangzhou City Jiangsu Province The PRC

Sub-total:

Capital value in existing state as at 30 April 2009 RMB No commercial value

No commercial value

Nil

– VI-16 –

APPENDIX VI

PROPERTY VALUATION REPORT

Group VI – Property interest rented and occupied by the Target Group in the PRC

					Capital value in
					existing state as at
No.	Property				30 April 2009
					RMB
41.	Units 01, 02	and 03A			No commercial
	on Level 19, Tower 2,				value
	Kerry Plaza
	No. 1 Zhongxin Si Road
	Shenzhen City
	Guangdong	Province
	The PRC
				Sub-total:	Nil

Group VII – Property interest			rented and occupied by	the Group in	Hong Kong
					Capital value in
					existing state as at
No.	Property				30 April 2009
					RMB
42.	Portions of Suites 3601				No commercial
	to 3604 on the 36th Floor				value
	Two Exchange Square
	8 Connaught Road
	Central
	Hong Kong
				Sub-total:	Nil

			Capital value in		Capital value
			exising state		attributable to
			as at		the Enlarged
			30 April 2009		Group as at
			RMB		30 April 2009
					RMB
		Grand-total:	2,332,412,000		2,021,858,000

– VI-17 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group I – Property interests held and occupied by the Target Group in the PRC

No. Property

4 parcels of land, various buildings and structures No. 66 Yangshan Road Xuzhou Economic Development Zone Xuzhou City Jiangsu Province The PRC

Description and tenure

The property comprises 4 parcels of land with a total site area of approximately 697,049.91 sq.m., 47 buildings and various ancillary structures erected thereon which were completed in various stages between 2007 and 2009.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently 818,067,000 occupied by the Target Group for manufacture, 100% interest office and ancillary attributable to purposes except for the the Enlarged CIP which is under Group: construction. RMB818,067,000

Particulars of occupancy

The buildings have a total gross floor area of approximately 154,314.59 sq.m.

The buildings mainly include industrial buildings, office buildings, dormitories, canteen, guardhouse, etc.

The structures mainly include boundary fences, afforestation roads, etc.

The property also comprises 22 buildings and various structures (the “CIP”) which are under construction. The CIP is scheduled to be completed in August 2009. The total gross floor area of the CIP buildings upon completion will be approximately 86,769 sq.m.

The land use rights of the property have been granted for terms with various expiry dates between 19 August 2056 and 29 September 2058 for industrial use.

– VI-18 –

APPENDIX VI

PROPERTY VALUATION REPORT

Notes:

Pursuant to 4 State-owned Land Use Rights Grant Contracts all dated 16 October 2006 and a Supplementary Agreement dated 16 September 2008, the land use rights of the property were contracted to be granted to Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. (“Jiangsu Zhongneng”), a wholly owned subsidiary of the Target Company, for terms of 50 years for industrial use. The total land premium was RMB176,659,338.
Pursuant to 4 State-owned Land Use Rights Certificates – Xu Tu Guo Yong (2007) No. 6180 dated 12 December 2007, Xu Tu Guo Yong (2008) No. 00173 dated 11 January 2008, Xu Tu Guo Yong (2008) No. 33940 dated 18 December 2008 and Xu Tu Guo Yong (2008) No.33943 dated 16 December 2008 issued by the Land Resources Bureau of Xuzhou City, the land use rights of 4 parcels of land with a total site area of approximately 697,049.91 sq.m. have been granted to Jiangsu Zhongneng for various terms with expiry dates between 19 August 2056 and 29 September 2058 for industrial use.
Pursuant to 8 Building Ownership Certificates – Xu Fang Quan Zheng Jin Shan Zi Nos. 11317 to 11319, 11409 and 11410 dated 10 June 2008 and 8 July 2008, Guo Xu Fang Quan Zheng Jin Shan Qiao Zi Nos. 11889 to 11891 dated 23 April 2009 issued by the Building Administrative Bureau of Xuzhou City, 28 buildings with a total gross floor area of approximately 74,586.59 sq.m. are owned by Jiangsu Zhongneng.
Pursuant to a Construction Work Planning Permit – No. 2008JS35 in favour of Jiangsu Zhongneng, the CIP of the property have been approved for construction.
Pursuant to a Construction Work Commencement Permit – Xu Jian Shi Zheng No. J2008086 in favour of Jiangsu Zhongneng, permission by the relevant local authority was given to commence the construction work of the CIP.
As advised by Jiangsu Zhongneng, the total construction cost of the CIP is estimated to be approximately RMB770,000,000, of which RMB523,685,000 had been paid as at the date of valuation.
In the valuation of this property, we have attributed no commercial value to the 19 buildings with a total gross floor area of approximately 79,728 sq.m. which have not obtained building ownership certificates. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the 19 buildings (excluding the land) as at the date of valuation would be RMB158,498,000 assuming all relevant title certificates have been obtained and the buildings could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The 4 State-owned Land Use Rights Certificates and 8 Building Ownership Certificates that Jiangsu Zhongneng has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenures stated in the 4 State-owned Land Use Rights Certificates, Jiangsu Zhongneng is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations;
c. As at the date of this Legal Opinion, the land use rights of 4 parcels of land are not subject to any mortgage; and
d. As Jiangsu Zhongneng has obtained all relevant planning and construction permits for the said CIP, there will be no legal impediment of obtaining Building Ownership Certificates.

– VI-19 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

				Capital value in
				existing state as
No.	Property	Description and tenure	Particulars of occupancy	at 30 April 2009
				RMB
2.	25 residential units,	The property comprises 25	The property is currently	No commercial
	25 garages and	residential units, 25 garages	occupied by the Target	value
	2 attics, Building	and 2 attics of two	Group for dormitory
	nos. 06 and 07	25-storey residential	purpose.
	Huaqiao Garden	buildings completed in
	No. 168 Binhe Road	2006.
	Chengxiang Town
	Taicang City	The property has a total
	Jiangsu Province	gross floor area of
	The PRC	approximately
		3,866.67 sq.m.

Notes:

Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. (“Jiangsu Zhongneng”), a wholly owned subsidiary of the Target Company, has entered into a Commodity Property Sale & Purchase Contract with Taicang Huaqiao Real Estate Co., Ltd. to purchase 25 residential units with a total gross floor area of approximately 3,866.67 sq.m., 25 garages and 2 attics at a total consideration of RMB14,498,748.
In the valuation of this property, we have attributed no commercial value to the property which has not obtained any proper title certificates. However, for reference purposes, we are of the opinion that the capital value of the property as at the date of valuation would be RMB23,007,000 assuming all relevant title ownership certificates have been obtained and the property could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As Taicang Huaqiao Real Estate Co., Ltd. has obtained a Pre-sale Permit, there is no legal impediment for Jiangsu Zhongneng to apply for the Building Ownership Certificates for the property.

– VI-20 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

No. Property

2 parcels of land, various buildings and structures No. 88 Qidong Road Taixing Economic Development Zone Taixing City Jiangsu Province The PRC

Description and tenure

The property comprises 2 parcels of land with a total site area of approximately 53,360 sq.m., 10 buildings and various ancillary structures erected thereon which were completed in about 2008.

Capital value in existing state as at 30 April 2009

Particulars of occupancy

RMB The property is currently No commercial occupied by the Target value Group for production, storage and ancillary purposes.

The buildings have a total gross floor area of approximately 4,623.5 sq.m.

The buildings mainly include industrial buildings, pump rooms, and an office building, etc.

The structures mainly include boundary fences, afforestation, roads, etc.

The land use rights of a parcel of land with a site area of approximately 17,267 sq.m. have been granted for a term expiring on 16 March 2059 for industrial use.

Notes:

Pursuant to a Contract dated 28 December 2007 and a Supplementary Contract dated 24 December 2008 both entered into between Jiangsu Taixing Economic Development Zone Management Committee and Taixing Zhongneng Far East Polysilicon Technology Development Co., Ltd. (“Taixing Zhongneng”), a wholly owned subsidiary of the Target Company, the land use rights of the property with a site area of 53,360 sq.m. were contracted to be granted to Taixing Zhongneng for a term of 50 years for industrial use. The total land premium was RMB6,720,000.
Pursuant to a State-owned Land Use Rights Certificate – Tai Guo Yong (2009) No. 442220 dated 31 March 2009 issued by the Land Resources Bureau of Taixing City, the land use rights of a parcel of land with a site area of approximately 17,267 sq.m. have been granted to Taixing Zhongneng for a term expiring on 16 March 2059 for industrial use.
In the valuation of this property, we have attributed no commercial value to the property, which have not obtained any proper title certificates. However, for reference purpose, we are of the opinion that the capital value of the property as at the date of valuation would be RMB32,442,000 assuming all relevant title certificates have been obtained and they could be freely transferred.

– VI-21 –

APPENDIX VI

PROPERTY VALUATION REPORT

We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As no legal land grant contract was signed with regard to the land mentioned in note 2, there was certain legal defect in the cause of obtaining the State-Owned Land Use Rights Certificate – Tai Guo Yong (2009) No. 442220. However, it should not be withdrawn as Taixing Zhongneng has obtained a Construction Land Planning Permit – Tai Gui Hua Di Zi Di No. 3212832008100072 issued by the Planning Bureau of Taixing City;
b. As no construction permits were obtained for the 6 buildings erected on the land mentioned in note 2, there is legal impediment to obtain relevant Building Ownership Certificates and may be risk of being required to dismantle the illegal improvements; and
c. There is no land title obtained for the land parcel with a site area of approximately 36,093 sq.m. and relevant construction permits obtained for the 4 buildings erected thereon. Taixing Zhongneng wil be of punishment risk by the land planning authorities; However, Taixing Zhongneng is of the view that there would be no material adverse impact on its business operations arising from the dismantlement or reconstruction of these buildings.

– VI-22 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group II – Property interests held and occupied by the Group in the PRC

No. Property Description and tenure 4. 2 parcels of land, The property comprises 2 various buildings and parcels of land with a total structures site area of approximately No. 1899 Xiushan 120,968 sq.m., 20 buildings East Road and various ancillary Haimen City structures erected thereon Jiangsu Province which were completed in The PRC about 2003. The buildings have a total gross floor area of approximately 18,454.08 sq.m. The buildings mainly include a main industrial building, office building, a dormitory, warehouses, guard houses, etc.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently 99,615,000 occupied by the Group for power generation, 51% interest ancillary office and attributable to dormitory purposes. the Enlarged Group: RMB50,804,000

The structures mainly include a water cooling tower, chimney, boundary walls, roads, etc.

The land use rights of the property have been granted for a term of 50 years expiring on 9 February 2053 for industrial use.

Notes:

Pursuant to 2 State-owned Land Use Rights Certificates – Hai Guo Yong (2006) Zi No. 071251 and 071254 both dated 20 October 2006 issued by the Land Resources Bureau of Haimen City, the land use rights of 2 parcels of land with a total site area of approximately 120,968 sq.m. have been granted to Haimen Xinyuan Environmental Protection Co-generation Power Co., Ltd (“Haimen Cogeneration Plant”), a 51% interest owned subsidiary of the Company, for terms of 50 years both expiring on 9 February 2053 for industrial use.
Pursuant to 4 Building Ownership Certificates – Hai Zheng Fang Fang Quan Zheng Zi Nos. 1009951 to 1009954 all dated 2 June 2005 issued by the People’s Government of Haimen City, 18 buildings with a total gross floor area of approximately 18,272.08 sq.m. are owned by Haimen Cogeneration Plant.
Pursuant to a Maximum Amount Mortgage Contract, the parcel of land with a site area of approximately 52,931 sq.m. and 10 buildings mentioned above in note 2 with a total gross floor area of approximately 11,110.83 sq.m., are subject to a mortgage in favour of Shanghai Pudong Development Bank Nantong Branch as security for a loan with the maximum amount of RMB20,000,000 for a term of 2 years commencing from 17 November 2008 and expiring on 11 November 2009.

– VI-23 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Maximum Amount Mortgage Contract dated 20 January 2007, the buildings mentioned in note 2 except the portion mentioned in note 3 are subject to a mortgage in favour of Agriculture Bank Haimen Branch as security for a loan for a term of 2 years.
In the valuation of this property, we have attributed no commercial value to the 2 buildings with a total gross floor area of approximately 182 sq.m. which have not been obtained Building Ownership Certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB119,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The 2 State-owned Land Use Rights Certificates and 4 Building Ownership Certificates that Haimen Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenures stated in the 2 State-owned Land Use Rights Certificates, Haimen Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations;
c. As at the date of this Legal Opinion, the titled buildings and land are subject to mortgages (mentioned in notes 3 and 4) and are restricted by the mortgage; and
d. 2 buildings with a total gross floor area of approximately 182 sq.m. have not obtained proper title documents. There are risks that Haimen Cogeneration Plant may be required by the relevant authority to dismantle these buildings. However, the demolition would have no substantial negative impact on the business operatiions.

– VI-24 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

No. Property

2 parcels of land, various buildings and structures located at Group 14, Hongqiao Village Juegang Town Rudong City Jiangsu Province The PRC

Description and tenure

The property comprises 2 parcels of land with a total site area of approximately 112,762.2 sq.m., 14 buildings and various ancillary structures erected thereon which were completed in about 2005.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently 85,649,000 occupied by the Group for power generation, 100% interest ancillary office and attributable to dormitory purposes. the Enlarged Group: RMB85,649,000

Particulars of occupancy

The buildings have a total gross floor area of approximately 16,858.53 sq.m.

The buildings mainly include office building, industrial building, warehouse, 110 KV transformer, etc.

The structures mainly include chimney, ash-shed, boundary walls, roads,etc.

The land use rights of the property have been granted for terms of 50 years with various expiry dates on 16 May 2054 and 13 July 2058 for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Grant Contract dated 2 April 2008, the land use rights of a parcel of land with a site area of approximately 9,225.4 sq.m. were contracted to be granted to Rudong Golden Concord Environmental Protection Cogen-Power Co., Ltd. (“Rudong Cogeneration Plant”), a wholly owned subsidiary of the Company, for a term of 50 years for industrial use. The total land premium was RMB1,660,572.
Pursuant to 2 State-owned Land Use Rights Certificates – Dong Guo Yong (2004) No. 100131 dated 12 May 2004 and Dong Guo Yong (2008) No. 100162 dated 7 August 2008 issued by the People’s Government of Rudong County, the land use rights of 2 parcels of land with a total site area of approximately 112,762.2 sq.m. have been granted to Rudong Cogeneration Plant for terms of 50 years with the expiry dates on 16 May 2054 and 13 July 2058 respectively, for industrial use.
Pursuant to 4 Building Ownership Certificates – Dong Fang Quan Zheng Jue Gang Zi Nos. 0520238-1 and 0520238-2 dated 23 August 2005, Dong Fang Quan Zheng Jue Gang Zi No. 0720232 dated 4 December 2007 and Dong Fang Quan Zheng Jue Gang Zi No. 0720250 dated 27 December 2007 issued by the People’s Government of Rudong County, 14 buildings with a total gross floor area of approximately 16,858.53 sq.m. are owned by Rudong Cogeneration Plant.

– VI-25 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Maximum Amount Mortgage Contract, the land stated in Dong Guo Yong (2004) No. 100131 and buildings of Building nos. 1, 2 and 3 stated in Dong Fang Quan Zheng Jue Gang Zi No. 0520238-1 and Building nos. 5 and 6 of Dong Fang Quan Zheng Jue Gang Zi No. 0520238-2 are subject to mortgage in favour of China Agriculture Bank Rudong Branch as security for a loan with the maximum amount of RMB15,000,000 for a term of 10 years commencing from 29 January 2007 and expiring on 20 May 2017.
Pursuant to a Maximum Amount Mortgage Contract, the land use rights stated in note 4 of Dong Guo Yong (2004) No. 100131 and buildings except the portion stated in note 4 of Dong Fang Quan Zheng Jue Gang Zi nos. 0520238-1, 0520238-2 and 0720250 with a total gross floor area of approximately 5,996.15 sq.m. are subject to mortgages in favour of Nantong City Rural Credit Cooperatives Ba Chang Cooperatives as security for a loan with the maximum amount of RMB15,000,000 for a term of one year commencing from 8 May 2009 and expiring on 15 April 2010.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The 2 State-owned Land Use Rights Certificates and 4 Building Ownership Certificates that Rudong Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenures stated in the 2 State-owned Land Use Rights Certificates, Rudong Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations; and
c. As at the date of this Legal Opinion, the buildings and land use rights of a parcel of land mentioned in notes 4 and 5 are subject to mortgages in favour of Agricultural Bank of China Rudong Branch and Nantong City Rural Credit Cooperatives Ba Chang Cooperatives and are restricted by the mortgages.

– VI-26 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 6. A parcel of land, The property comprises a The property is currently 103,477,000 various buildings and parcel of land with a site occupied by the Group structures area of approximately for power generation, 100% interest No. 2 Qi Xin Road 120,025.7 sq.m., 32 ancillary office and attributable to Anyi Industrial Zone buildings and various dormitory purposes the Enlarged Baoying County ancillary structures erected except for a portion of Group: Jiangsu Province thereon which were the land with a site area RMB103,477,000 The PRC completed in various stages of approximately between 2004 and 2007. 18,666.76 sq.m. which is currently rented to two The buildings have a total independent third parties gross floor area of for industrial purpose.

No. Property

The buildings have a total gross floor area of approximately 27,593.32 sq.m.

The buildings mainly include office building, industrial building warehouses, etc.

The structures mainly include water cooling tower, chimney, boundary walls, roads, etc.

The land use rights of the property have been granted for a term of 50 years expiring on 12 April 2055 for public infrastructure use.

Notes:

Pursuant to a State-owned Land Use Rights Grant Contract – (2005) No. 32 dated 12 April 2005 entered into between the Land Resources Bureau of Baoying County and Baoying Xiexin Biomass Environmental Protection Cogeneration Co., Ltd. (“Baoying Cogeneration Plant”), a wholly owned subsidiary of the Company, the land use rights of a parcel of land with a site area of approximately 119,995 sq.m. were contracted to be granted to Baoying Cogeneration Plant for a term of 50 years commencing from the date of assigning the land for infrastructure use. The land premium was RMB13,799,425.
Pursuant to a State-owned Land Use Rights Certificate – Bao Ying Guo Yong (2005) Zi No. 0335, dated 13 April 2005 issued by the People’s Government of Baoying County, the land use rights of a parcel of land with a site area of approximately 120,025.7 sq.m. have been granted to Baoying Cogeneration Plant for a term of 50 years expiring on 12 April 2055 for infrastructure use.
Pursuant to 5 Building Ownership Certificates – Bao Fang Quan Zheng An Yi Zi Nos. 212989 and 212990 both dated 9 January 2006, Bao Fang Quan Zheng An Yi Zi nos. 217582 and 217583 both dated 13 September 2006, and Bao Fang Quan Zheng An Yi Zi No. 224485 dated 13 September 2007 issued by the People’s Government of Baoying County, 22 buildings with a total gross floor area of approximately 20,095.94 sq.m. are owned by Baoying Cogeneration Plant.

– VI-27 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Supplementary Land Use Agreement dated 27 May 2008 entered into between Baoying Cogeneration Plant and two independent third parties, Yangzhou Jilida Copper Company Limited and Yangzhou Tongsheng Material Recycle Company Limited, a portion of land with a site area of approximately 18,666.76 sq.m. is rented from Baoying Cogeneration Plant to the above two independent third parties for a term of 20 years commencing from 16 July 2006 and expiring on 15 July 2026, at a current annual rental of RMB150,000.
Pursuant to a Mortgage Contract–34303 Nong Yin Jie Zi (2004) Di No. 051, the land use rights mentioned in note 2 and 20 buildings mentioned in note 3, are subject to a mortgage in favour of Agricultural Bank Baoying Branch as security for a loan for a term of 5 years commencing from 18 October 2006 and expiring on 17 October 2011.
In the valuation of this property, we have attributed no commercial value to the 10 buildings with a total gross floor area of approximately 7,497.38 sq.m. which have not been obtained any Building Ownership Certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB11,808,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Certificate and 5 Building Ownership Certificates that Baoying Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenure stated in the State-owned Land Use Rights Certificate, Baoying Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations;
c. As at the date of this Legal Opinion, land use rights mentioned in note 2 and 20 buildings mentioned in note 3, are subject to mortgages in favour of Baoying Branch of Agricultural Bank of China and are restricted by the mortgages; and
d. The Supplementary Land Use Agreement mentioned in note 4 is valid, binding, and forcible.

– VI-28 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Description and tenure

No. Property

A parcel of land, The property comprises a various buildings and parcel of land with a site structures area of approximately No. 82 Huan Cheng 110,000 sq.m., 18 buildings South Road, and various ancillary Ganyu County structures erected thereon Lianyungang City which were completed in Jiangsu Province various stages between The PRC 2005 and 2007.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently 78,447,000 occupied by the Group for power generation and 100% interest ancillary purposes. attributable to the Enlarged Group: RMB78,447,000

The buildings have a total gross floor area of approximately 19,361.8 sq.m. The buildings mainly include composite office building, industrial building, 110 KV transformer station etc.

The structures mainly include water cooling tower, chimney, boundary wall roads, etc.

The land use rights of the property have been granted for a term of 50 years expiring on 1 April 2055 for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Grant Contract dated 2 March 2005 entered into between the Land Resources Bureau of Ganyu County and Lianyungang Xiexin Biomass Electric-Power Generation Co., Ltd. (“Lianyungang Xiexin Cogeneration Plant”), a wholly owned subsidiary of the Company, the land use rights of the property with a site area of approximately 110,000 sq.m. were contracted to be granted to Lianyungang Xiexin Cogeneration Plant for a term of 50 years commencing from the date of assigning the land for industrial use. The land premium was RMB12,045,000.
Pursuant to a State-owned Land Use Rights Certificate – Gan Guo Yong (2007) Zi No. 00173 dated 13 March 2007 issued by the Land Resources Bureau of Ganyu County, the land use rights of a parcel of land with a site area of approximately 110,000 sq.m. have been granted to Lianyungang Xiexin Cogeneration Plant for a term of 50 years expiring on 1 April 2055 for industrial use.
Pursuant to 2 Building Ownership Certificates – Gan Fang Quan Zheng Qing Zi Nos. Q00003594 and Q00003594-1 all dated 6 September 2006 issued by the People’s Government of Ganyu County, 10 buildings with a total gross floor area of approximately 12,782.55 sq.m. are owned by Lianyungang Xiexin Cogeneration Plant.

– VI-29 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Land Use Rights Mortgage Contract dated 16 March 2007, the land use rights of a parcel of land with a site area of approximately 110,000 sq.m. are subject to a mortgage in favour of China Construction Bank Ganyu Branch as security for a loan with a maximum amount of RMB12,200,000 for a term of 5 years commencing from 21 January 2007 and expiring on 21 December 2012.
Pursuant to a Real Estate Mortgage Contract dated 17 January 2007, the buildings stated in Building Ownership Certificates – Gan Fang Quan Zheng Qing Zi Nos. Q00003594 are subject to a mortgage in favour of China Construction Bank Ganyu Branch as security for a loan with a maximum amount of RMB23,500,000 for a term within 2 years after the expiry of statute of limitation in litigation.
In the valuation of this property, we have attributed no commercial value to the 8 buildings with a total gross floor area of approximately 6,579.25 sq.m. which have not been obtained any Building Ownership Certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB7,414,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Certificate and 2 Building Ownership Certificates that Lianyungang Xiexin Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenure stated in the State-owned Land Use Rights Certificate, Lianyungang Xiexin Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations;
c. As at the date of this Legal Opinion, the captioned buildings and land use rights stated in the 2 building ownership certificates and the State-owned Land Use Rights Certificate, are subject to mortgages in favour of China Construction Bank Co., Ltd. Ganyu Branch and are restricted by the mortgages; and
d. There are 3 buildings with a total gross floor area of approximately 6,579.25 sq.m. have not obtained Building Ownership Certificates. Pursuant to relevant PRC laws and regulations, there are risks that Lianyungang Xiexin Cogeneration Plant will have to dismantle these buildings or be fined by governmental instruction.

– VI-30 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

No. Property

Description and tenure

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB

A parcel of land, various buildings and structures located at No. 188 Xinhu District Shuangfeng Town Taicang City Jiangsu Province The PRC

The property comprises a parcel of land with a site area of approximately 66,675 sq.m., 13 buildings and various ancillary structures erected thereon which were completed in about 2006.

The property is currently 84,599,000 occupied by the Group for power generation 100% interest purpose. attributable to the Enlarged Group: RMB84,599,000

The buildings have a total gross floor area of approximately 18,519.31 sq.m.

The buildings mainly include industrial building, warehouse sewage-treatment building, etc.

The structures mainly include a water cooling tower, chimney, boundary wall roads, etc.

The land use rights of the property have been granted for a term of 50 years expiring on 30 May 2055 for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Grant Contract dated 27 May 2005 entered into between the Land Resources Bureau of Taicang City and Taicang Xiexin Refuse Incineration Power Co., Ltd. (“Taicang Incineration Plant”), a wholly owned subsidiary of the Company, the land use rights of the property with a site area of approximately 66,675 sq.m. were contracted to be granted to Taicang Incineration Plant for a term of 50 years commencing from the date of assigning the land for industrial use. The land premium was RMB9,501,187.5.
Pursuant to a State-owned Land Use Rights Certificate – Tai Guo Yong (2005) No. 52000003 dated 5 July 2005 issued by the People’s Government of Taicang City, the land use rights of a parcel of land with a site area of approximately 66,675 sq.m. have been granted to Taicang Incineration Plant for a term of 50 years expiring on 30 May 2055 for industrial use.
Pursuant to a Building Ownership Certificate – Tai Fang Quan Zheng Cheng Xiang Zi No. 00000649 dated 12 September 2007 issued by the People’s Government of Taicang City, 13 buildings with a total gross floor area of approximately 18,519.31 sq.m. are owned by Taicang Incineration Plant.
Pursuant to a Maximum Amount Mortgage Contract, the land use rights of a parcel of land with a site area of approximately 66,675 sq.m. are subject to a mortgage in favour of Agricultural Bank of China Taicang Branch as security for a loan with a maximum amount of RMB9,000,000 for a term of 7 years commencing from 3 August 2007 and expiring on 20 December 2014.

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APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Mortgage Contract, a portion of buildings mentioned in note 3 with a total gross floor area of approximately 17,336.76 sq.m. are subject to a mortgage in favour of Agricultural Bank of China Taicang Branch as security for a loan for a term of 3 years commencing from 3 August 2007 and expiring on 6 July 2010.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Certificate and Building Ownership Certificate that Taicang Incineration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenure stated in the State-owned Land Use Rights Certificate, Taicang Incineration Plant is entitled to transfer, lease and mortgage the property in compliance with the relevant PRC and regulations; and
c. As at the date of this Legal Opinion, the buildings mentioned in note 5 and the land use rights of the property are subject to a mortgage in favour of Agricultural Bank of China Taicang Branch and are restricted by the mortgage.

– VI-32 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

No. Property

A parcel of land, various buildings and structures located at Lianshi Industrial Zone Lianshi Town Huzhou City Zhejiang Province The PRC

Description and tenure

The property comprises a parcel of land with a site area of approximately 82,482.79 sq.m., 21 buildings and various ancillary structures erected thereon which were completed in various stages between 2004 and 2007.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently 100,083,000 occupied by the Group for power generation, 94.77% interest ancillary office and attributable to the dormitory purposes. Enlarged Group: RMB94,849,000

The buildings have a total gross floor area of approximately 16,605.13 sq.m.

The buildings mainly include industrial building, office building, a canteen warehouse dormitory, etc.

The structures mainly include water cooling tower, chimney, boundary walls roads, etc.

The land use rights of the property have been granted for a term of 50 years expiring on 28 October 2054 for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Grant Contract – Hu Tu Rang Zi (2004) No. 481 dated 29 October 2004 entered into between the Land Resources Bureau of Huzhou City and Huzhou Golden Concord Environmental Protection Cogen-Power Co., Ltd. (“Huzhou Cogeneration Plant”), a 94.77% interest owned subsidiary of the Company, the land use rights of the property with a site area of approximately 82,417 sq.m. were contracted to be granted to Huzhou Cogeneration Plant for a term commencing from the date of assigning the land. The land premium was RMB12,271,891.30.
Pursuant to a State-owned Land Use Rights Certificate – Hu Zhou Guo Yong (2006) No. 71-12101 dated 31 July 2006 issued by the People’s Government of Huzhou City, the land use rights of a parcel of land with a site area of approximately 82,482.79 sq.m. have been granted to Huzhou Cogeneration Plant for a term of 50 years expiring on 28 October 2054 for industrial use.
Pursuant to 5 Building Ownership Certificates – Hu Fang Quan Zheng Hu Zhou Shi Zi Nos. 00203594 and 00203595 both dated 29 August 2006, and Hu Fang Quan Zheng Hu Zhou Shi Zi Nos. 00208064 to 00208066 all dated 30 October 2007, issued by the Planning and Construction Bureau of Huzhou City, 18 buildings with a total gross floor area of approximately 16,553.47 sq.m. are owned by Huzhou Cogeneration Plant.

– VI-33 –

PROPERTY VALUATION REPORT

APPENDIX VI

In the valuation of this property, we have attributed no commercial value to the 3 buildings with a total gross floor area of approximately 51.66 sq.m. which have not been obtained Building Ownership Certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB62,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.
Pursuant to a Maximum Amount Mortgage Contract, the land use rights stated in note 2 and the buildings referring to Building Ownership Certificates – Hu Fang Quan Zheng Hu Zhou Shi Zi Nos. 00203594 and 00203595 stated in note 3 are subject to a mortgage in favour of China Zheshang Bank Co., Ltd, as security for a loan with maximum amount of RMB38,500,000 for a term of 2 years commencing from 1 November 2007 and expiring on 13 October 2009.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Certificate and 5 Building Ownership Certificates that Huzhou Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenures stated in the State-owned Land Use Rights Certificate, Huzhou Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations;
c. As at the date of this Legal Opinion issued, the land use rights of the property and a portion of buildings mentioned in note 3 are subject to a mortgage in favour of China Zheshang Bank Co., Ltd, and are restricted by the mortgage;
d. 4 buildings have not obtained Buildings Ownership Certificates. As the Construction Planning Permit has been obtained, there will be no risks for Huzhou Cogeneration Plant of being required by the relevant authority to dismantle these buildings.

– VI-34 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

No. Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 30 April 2009 RMB

A parcel of land, The property comprises a various buildings and parcel of land with a site structures area of approximately No. 199 Gudu Road 200,182.6 sq.m., 28 Economic buildings and various Development Zone ancillary structures erected Yangzhou City thereon which were Jiangsu Province completed in about 2004. The PRC

The buildings have a total gross floor area of approximately 32,135.97 sq.m.

The buildings mainly include an industrial building, office building, water-treatment building, dormitories, etc.

The property is currently occupied by the Group for power generation, ancillary office and dormitory purposes. Except that a portion of land with a total gross site area of approximately 8,333.36 sq.m., and a portion of buildings with a total gross floor area of approximately 207.2 sq.m. are let to Yangzhou Jinqiu New Construction Material Co., Ltd., an independent third party, for manufacture, office, and dormitory use.

155,586,000

51% interest attributable to the Enlarged Group: RMB79,349,000

The structures mainly include water-cooling tower, chimney, boundary walls, roads, etc.

The property also includes a wharf which extends from the property to the harbour and is connected by a steel conveying bridge.

The land use rights of the property have been granted for a term of 50 years expiring on 5 June 2053 for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate – Yang Guo Yong (2005) No. 0498 dated 15 July 2005 issued by the Land Resources Bureau of Yangzhou, the land use rights of a parcel of land with a site area of approximately 200,182.6 sq.m. have been granted to Yangzhou Harbor Sludge Power Co., Ltd. (“Yangzhou Cogeneration Plant”), a 51% interest owned subsidiary of the Company for a term of 50 years expiring on 5 June 2053 for industrial use.
Pursuant to a Building Ownership Certificate – Yang Fang Quan Zheng Guang Zi No. 0021108521 dated 26 May 2005 issued by the Housing Management Bureau of Yangzhou, 27 buildings with a total gross floor area of approximately 26,889.97 sq.m. are owned by Yangzhou Cogeneration Plant.

– VI-35 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Tenancy Agreement dated 22 May 2008 entered into between Yangzhou Cogeneration Plant and Yangzhou Jinqiu New Construction Material Co., Ltd., (“Yangzhou Jinqiu”) an independent third party, a parcel of land with a site area of approximately 5,333.36 sq.m is let to Yangzhou Cogeneration Plant for a term of one year commencing from 1 January 2008 and expiring on 31 December 2008. As confirmed by Yangzhou Cogeneration Plant, the said Tenancy Agreement is still in force at present.
Pursuant to a Join Venture Agreement dated 21 June 2006 entered into between Yangzhou Cogeneration Plant and Yangzhou Jinqiu, a parcel of land with a gross site area of approximately 3,000 sq.m and an office unit and a dormitory with a total gross floor area of approximately 207.2 sq.m are let to Yangzhou Cogeneration Plant for a term of 25 years commencing from 25 June 2006 and expiring on 24 June 2031, on an annual rent of RMB100,000 with growth rate of 2% every 5 years, exclusive water, telephone and electricity charges.
Pursuant to a Land Use Rights Mortgage Contract, the land use rights of a parcel of land stated in note 1 are subject to a mortgage in favour of Agricultural Bank of China Yangzhou City Development Zone Branch for assuring a 8 years loan commencing from 30 July 2005 and expiring on 30 September 2013.
Pursuant to a Real Estate Mortgage Contract, the buildings stated in note 2 are subject to a mortgage in favour of Agricultural Bank of China Yangzhou City Development Zone Branch for assuring an 10 years loan commencing from 30 September 2003 and expiring on 30 September 2013.
In the valuation of this property, we have attributed no commercial value to the 1 building with a total gross floor area of approximately 5,246 sq.m. which has not been obtained Building Ownership Certificate. However, for reference purposes, we are of the opinion that the depreciated replacement cost of the building (excluding the land) as at the date of valuation would be RMB8,140,000 assuming all relevant title ownership certificates have been obtained and the building could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Certificate and Building Ownership Certificate that Yangzhou Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenure stated in the State-owned Land Use Rights Certificate, Yangzhou Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations; however, Yangzhou Cogeneration Plant should process the rename procedure for the captioned Building Ownership Certificate as soon as can;
c. As at the date of this Legal Opinion issued, the buildings and land use rights mentioned in notes 5 and 6 are subject to a mortgage in favour of Agricultural Bank of China Yangzhou City Development Zone Branch and are restricted by the mortgage; and
d. The Join Venture Agreement mentioned in note 4 is valid, binding, and forcible.

– VI-36 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as at 30 April 2009 RMB 71,244,000

Description and tenure

Particulars of occupancy

No. Property

A parcel of land, The property comprises a The property is currently 71,244,000 various buildings and parcel of land with a site occupied by the Group structures located at area of approximately for power generation, 51% interest Beiyuan Road 141,792.5 sq.m., 15 ancillary office and attributable to the Industrial Zone buildings and various dormitory purposes Enlarged Group: Feng County ancillary structures erected except for a portion of RMB36,334,000 Jiangsu Province thereon which were the land with a site area The PRC completed in various stages of approximately between 2003 and 2004. 2,660 sq.m. which is currently rented to an The buildings have a total independent third party gross floor area of for production purpose.

The buildings have a total gross floor area of approximately 22,172,11 sq.m.

The buildings mainly include industrial building, office building, dormitory, water treatment building, etc.

The structures mainly include cisterns, a well, a playground, boundary walls and roads.

The land use rights of the property have been granted for a term of 50 years expiring on 15 August 2052 for public facility use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate – Feng Tu Guo Yong (2003) Zi No. 613 dated 17 August 2003 issued by the People’s Government of Feng County, the land use rights of a parcel of land with a site area of approximately 141,792.5 sq.m. have been granted to Fengxian Xinyuan Biological Environmental Heat and Power Co., Ltd. (“Fengxian Cogeneration Plant”), a 51% interest owned subsidiary of the Company, for a term of 50 years expiring on 15 August 2052 for public facility use.
Pursuant to 5 Building Ownership Certificates – Feng Fang Quan Zheng Gong Zi Nos. 275 to 278 and Feng Fang Quan Zheng Gong Zi No. 275-1 dated 20 February 2004 and 28 August 2007 respectively issued by the Housing Management Bureau of Feng County, 15 buildings with a total gross floor area of approximately 22,172,11 sq.m. are owned by Fengxian Cogeneration Plant.
Pursuant to a Tenancy Agreement, a portion of the land with a site area of approximately 2,660 sq.m. is leased to Gang Wang, an independent third party, for a term of 5 years commencing from 1 January 2005 and expiring on 31 December 2009 at an annual rent of RMB10,000, exclusive of water, gas and electricity charges.

– VI-37 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Real Estate Mortgage Contract, a portion of buildings mentioned in note 2 with a total gross floor area of approximately 24,016 sq.m. are subject to a mortgage in favour of the Bank of China Fengxian Branch as security for a loan for a term of 6 years commencing from 15 April 2004 and expiring on 10 August 2010.
Pursuant to a Mortgage Contract, the parcel of land mentioned in note 1 is subject to a mortgage in favour of the Bank of China Fengxian Branch as security for a loan for a term expiring on 11 August 2010.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Certificate and 5 Building Ownership Certificates that Fengxian Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenure stated in the State-owned Land Use Rights Certificate, Fengxian Cogeneration Plant is entitled to transfer, lease and mortgage the property in compliance with the relevant PRC laws and regulations;
c. As at the date of this Legal Opinion, the property is subject to mortgages in favour of Bank of China Fengxian Branch and are restricted by the mortgage; and
d. The Tenancy Agreement mentioned in note 4 is valid, binding, and forcible.

– VI-38 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Description and tenure

No. Property

2 parcels of land, The property comprises 2 various buildings and parcels of land with a total structures site area of approximately No. 2008 Xiaolin 138,664.3 sq.m., 29 Road buildings and various Yushan Town ancillary structures erected Kunshan City Jiangsu thereon which were Province completed in various stages The PRC between 2003 and 2006.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently 126,896,000 occupied by the Group for power generation, 51% interest ancillary office and attributable to the dormitory purposes. Enlarged Group: RMB64,717,000

Particulars of occupancy

The buildings have a total gross floor area of approximately 32,153.53 sq.m.

The buildings mainly include main factory buildings, office building, warehouse, dormitory, etc.

The structures mainly include water-cooling tower, chimney, boundary walls, roads, etc.

The land use rights of the property were granted for terms of 50 years expiring on 23 October 2052 for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Grant Contract – Kun Di Rang He (2004) Zi No. 179 in April 2004 entered into between the Land Resources Bureau of Kunshan City and Kunshan Xinyuan Environmental Protection Cogen-Power Co., Ltd. (“Kunshan Cogeneration Plant”), a 51% interest owned subsidiary of the Company, the land use rights of the property with a site area of approximately 133,333.3 sq.m. were contracted to be granted to Kunshan Cogeneration Plant. The land premium was RMB21,333,328.
Pursuant to 2 State-owned Land Use Rights Certificates – Kun Guo Yong (2005) Zi Nos. 1200500492 and 1200500493 all dated 22 July 2005 issued by the Land Resources Bureau of Kunshan City, the land use rights of 2 parcels of land with a total area of approximately 138,664.3 sq.m. have been granted to Kunshan Cogeneration Plant for terms of 50 years expiring on 23 October 2052 for industrial use.
Pursuant to 25 Building Ownership Certificates – Kun Fang Quan Zheng Cheng Bei Zi Nos. 101090365 to 101090381 and 101090383 to 101090390 all dated 4 December 2008 issued by the Kunshan Housing Management Bureau, 25 buildings with a total gross floor area of approximately 23,152.8 sq.m. are owned by Kunshan Cogeneration Plant.
Pursuant to a Maximum Amount Mortgage Contract, the land use rights of a parcel of land with a site area of approximately 14,558 sq.m. are subject to a mortgage in favour of Hua Xia Bank Co., Ltd. Suzhou Branch as security for a loan with a maximum amount of RMB1,500,000 for a term of 3 years commencing from 1 December 2006 and expiring on 1 December 2009.

– VI-39 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Maximum Amount Mortgage Contract, the land use rights of a parcel of land with a site area of approximately 124,106.3 sq.m. are subject to a mortgage in favour of Bank of Communication Co., Ltd. Kunshan Branch as security for a loan with a maximum amount of RMB4,511,000 for a term of 3 years commencing from 4 December 2008 and expiring on 3 December 2011.
In the valuation of this property, we have attributed no commercial value to 4 buildings with a total gross floor area of approximately 9,000.73 sq.m. which have not been obtained Building Ownership Certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB20,876,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The 2 State-owned Land Use Rights Certificates that Kunshan Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations, notwithstanding the paid land premium is less than the amount stated in the State-owned Land Use Rights Grant Contract. In common practice, it is not likely to pay the overdue land premium, as the local government owes some certain service in return;
b. The 25 Building Ownership Certificates that Kunshan Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
c. During the tenures stated in the State-owned Land Use Rights Certificate, Kunshan Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with relevant PRC laws and regulations;
d. As at the date of this Legal Opinion, a portion of buildings mentioned in note 3 and the land use rights mentioned in note 2 are subject to mortgages in favour of Huaxia Bank Co., Ltd. Suzhou Branch and Bank of Communication Co., Ltd. Kunshan Branch and are restricted by the mortgage; and
e. 4 buildings with a total gross floor area of approximately 9,000.73 sq.m. have not obtained Buildings Ownership Certificates, 2 of which with a total gross floor area of approximately 3,974.14 sq.m have not obtained Construction Planning Permits. There are risks that Kunshan Cogeneration Plant may be required by the relevant authority to dismantle these buildings. Kunshan Cogeneration Plant is in process of obtaining proper title documents for one of the 2 said buildings with gross floor area of approximately 3,949.14 sq.m, which would have no legal impediment . As to the other said building with a gross floor area of approximately 25 sq.m, demolition would have no substantial negative impact on the business operations.

– VI-40 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Description and tenure

No. Property

A parcel of land, The property comprises a various buildings and parcel of land with a site structures area of approximately No. 55 Sutong Road 5,896.13 sq.m. and 3 Suzhou Industrial buildings and various Park ancillary structures erected Jiangsu Province thereon which were The PRC completed in various stages between 2003 and 2006.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently 4,451,000 occupied by the Group for power generation, 51% interest ancillary office purposes. attributable to the Enlarged Group: RMB2,270,000

Particulars of occupancy

The buildings have a total gross floor area of approximately 1,883.16 sq.m.

The buildings mainly include industrial building, pump and switch room guard house, etc.

The structures mainly include chimney, facility infrastructures, cisterns, boundary walls, roads, etc.

The land use rights of the property have been granted for a term expiring on 31 December 2046, for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate – Su Gong Yuan Guo Yong (2005) No. 01142 dated 28 October 2005 issued by the People’s Government of Suzhou City, the land use rights of the parcel of land with a site area of approximately 5,896.13 sq.m. have been granted to Suzhou Industrial Park Blue Sky Gas Cogen-Power Co., Ltd. (“Suzhou Cogeneration Plant”), a 51% interest owned subsidiary of the Company, for a term expiring on 31 December 2046 for industrial use.
Pursuant to a Building Ownership Certificate – Su Fang Quan Zheng Yuan Qu Zi No. 00087863 dated 5 November 2005 issued by the Housing Management Bureau of Suzhou City, 2 buildings with a total gross floor area of approximately 1,815.74 sq.m. are owned by Suzhou Cogeneration Plant.
In the valuation of the property, we have attributed no commercial value to a building with a gross floor area of approximately 67.42 sq.m. which has not been obtained Building Ownership Certificate. However, for reference purposes, we are of the opinion that the depreciated replacement cost of the building (excluding the land) as at the date of valuation would be RMB48,000 assuming all relevant title ownership certificates have been obtained and the building could be freely transferred.

– VI-41 –

APPENDIX VI

PROPERTY VALUATION REPORT

We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Certificate and Building Ownership Certificate that Suzhou Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenure stated in the State-owned Land Use Rights Certificate, Suzhou Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations; and
c. The property is not subject to any mortgage.

– VI-42 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 14. 2 parcels of land, The property comprises 2 The property is currently 99,447,000 various buildings and parcels of land with a total occupied by the Group structures site area of approximately for power generation, 51% interest No. 1 Xinglong Street 108,620.48 sq.m. and 12 ancillary office and attributable to the Suzhou Industrial buildings and various dormitory purposes Enlarged Group: Park ancillary structures erected except for a parcel of RMB50,718,000 Jiangsu Province thereon which were land with a site area of The PRC completed in 2005. approximately 23,522.7 sq.m. is currently The have a total vacant.

No. Property

The buildings have a total gross floor area of approximately 14,633.94 sq.m.

The buildings mainly include industrial building, office building, canteen, warehouse, etc.

The structures mainly include chimney, cooling tower, facility infrastructures, boundary walls, roads, etc.

The land use rights of the property have been granted for terms of 50 years with expiry dates on 17 October 2054 and 30 December 2056 for public infrastructure and industrial uses respectively.

Notes:

Pursuant to 2 State-owned Land Use Rights Transfer Contracts – Nos. 1I0298 and 1I0484 dated between18 October 2004 and 31 December 2007 entered into between China-Singapore Suzhou Industrial Park Development Co., Ltd. and Suzhou Industrial Park Blue Sky Gas Cogen-Power Co., Ltd. (“Suzhou Cogeneration Plant”), a 51% interest owned subsidiary of the Company, the land use rights of the property with a site area of approximately 108,620.48 sq.m. were contracted to be granted to Suzhou Cogeneration Plant for a term of 50 years with the expiry dates on 17 October 2054 and 30 December 2056 for public infrastructure and industrial uses respectively.. As confirmed by the Company, the total land premium was at a total consideration of RMB10,345,704.84.
Pursuant to 2 State-owned Land Use Rights Certificates – Su Gong Yuan Guo Yong (2004) No. 0153 dated 12 November 2004 and Su Gong Yuan Guo Yong (2007) No. 01110 issued by the People’s Government of Suzhou City, the land use rights of 2 parcels of land with a total site area of approximately 108,620.48 sq.m. have been granted to Suzhou Cogeneration Plant for terms with the expiry dates on 17 October 2054 and 30 December 2056 for public infrastructure and industrial uses respectively.

– VI-43 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Building Ownership Certificate – Su Fang Quan Zheng Yuan Qu Zi No. 00184464 dated 18 April 2007 issued by the Housing Management Bureau of Suzhou Industrial Park, 9 buildings with a gross floor area of approximately 12,342.84 sq.m. are owned by Suzhou Cogeneration Plant.
In the valuation of the property, we have attributed no commercial value to 3 buildings with a total gross floor area of approximately 2,291 sq.m. which have not been obtained Building Ownership Certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB6,971,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The 2 State-owned Land Use Rights Certificates and a Building Ownership Certificate that Suzhou Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenures stated in the State-owned Land Use Rights Certificates, Suzhou Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations;
c. The property is not subject to any mortgage; and
d. 5 buildings with a total gross floor area of approximately 2,358.52 sq.m have not obtained Building Ownership Certificates. Pursuant to relevant PRC laws and regulations, there are risks that Suzhou Cogeneration Plant may have to dismantle these buildings or be fined by governmental instruction.

– VI-44 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 15. House A5 The property comprises a The property is currently 1,502,000 Xuelian Garden parcel of land with a site vacant. Luzhi Town area of approximately 515.3 51% interest Wuzhong District sq.m. and a 2-storey attributable to the Suzhou City building erected thereon Enlarged Group: Jiangsu Province which was completed in RMB766,000 The PRC about 1998. The building has a gross floor area of approximately 276.03 sq.m. The land use rights of the property have been granted for a term expiring on 14 May 2071 for residential use.

No. Property

Notes:

Pursuant to a State-owned Land Use Rights Certificate – Wu Gong Yuan (2006) No. 01586 dated 7 March 2006 issued by the People’s Government of Suzhou City, the land use rights of a parcel of land with a site area of approximately 515.3 sq.m. have been granted to Suzhou Industrial Park Blue Sky Gas Cogen-Power Co., Ltd. (“Suzhou Cogeneration Plant”), a 51% interest owned subsidiary of the Company, for a term expiring on 14 May 2071 for residential use.
Pursuant to a Building Ownership Certificate – Su Fang Quan Zheng Wu Zhong Zi No. 00057433 dated 24 February 2006 issued by the Housing Management Bureau of Suzhou City, a building with a gross floor area of approximately 276.03 sq.m. is owned by Suzhou Cogeneration Plant.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Certificate and Building Ownership Certificate that Suzhou Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenure stated in the State-owned Land Use Rights Certificate, Suzhou Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations; and
c. The property is not subject to any mortgage.

– VI-45 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Description and tenure

No. Property

2 parcels of land, The property comprises 2 various buildings and parcels of land with a site structures area of approximately No. 188 Luoyang Road 142,201.7 sq.m. and 40 Chengxiang Town buildings and various Taicang City ancillary structures erected Jiangsu Province thereon which were The PRC completed in various stages between 1998 and 2004.

The buildings have a total gross floor area of approximately 33,420.69 sq.m.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently 99,785,000 occupied by the Group for power generation, 100% interest ancillary office and attributable to the dormitory purposes Enlarged Group: except for portion of the RMB99,785,000 land of the property which is currently rented to other third parties for industrial purposes (refer to notes 3 and 4).

Particulars of occupancy

The buildings mainly include industrial building, office building, warehouse and control room, etc.

The structures mainly include chimney, wells, cisterns, wharf, boundary wall, road, etc.

The land use rights of the property have been granted for a term of 50 years expiring on 14 April 2054 and 1 June 2054 respectively for industrial use.

Notes:

Pursuant to 2 State-owned Land Use Rights Certificates – Tai Guo Yong (2005) Nos. 501000291 and 501000350 dated 15 August 2005 and 23 December 2005 respectively issued by the People’s Government of Taicang City, the land use rights of 2 parcels of land with a total site area of approximately 142,201.7 sq.m. have been granted to Taicang Poly Xiexin Thermal Power Co., Ltd. (“Taicang Poly Cogeneration Plant”), a wholly owned subsidiary of the Company, for terms of 50 years expiring on 14 April 2054 and 1 June 2054 respectively for industrial use.
Pursuant to 7 Building Ownership Certificates – Tai Fang Quan Zheng Cheng Xiang Zi nos. 00068018 dated on 7 January 2008, Tai Fang Quan Zheng Cheng Xiang Zi nos. 0100077253 to 0100077256, 0100077261 and 0100077263 all dated on 9 March 2009 issued by the People’s Government of Taicang City, the building ownership rights of 35 buildings with a total gross floor area of approximately 28,979 sq.m. are owned by Taicang Poly Cogeneration Plant.
According to a Land Lease Agreement dated 1 November 2005 entered into between Taicang Poly Cogeneration Plant and Taicang Rong Xuan Metal Products Co. Ltd. (“Taicang Metal”), portion of the land of the property with a site area of approximately 3,333.35 sq.m. is rented to Taicang Metal for a term of 8 years commencing from 1 November 2005 and expiring on 1 November 2013 at an annual rental of RMB25,000.

– VI-46 –

PROPERTY VALUATION REPORT

APPENDIX VI

According to a Land Lease Contract dated 5 July 2008 entered into between Taicang Poly Cogeneration Plant and Suzhou Hongfeng Wind-Power Molds Co., Ltd. (“Suzhou Hongfeng”), portion of land of the property with a site area of approximately 6,750 sq.m. is rented to Suzhou Hongfeng for a term of 3 years commencing from 1 July 2008 and expiring on 30 June 2011 at an annual rental of RMB243,000.
Pursuant to a Maximum Amount Mortgage Contract, the buildings stated in Building Ownership Certificates – Tai Fang Quan Zheng Cheng Xiang Zi Nos. 00068018 and the land use rights stated in State-owned Land Use Rights Certificates – Tai Guo Yong (2005) nos. 501000350 are subject to a mortgage in favour of China Agriculture Bank Taicang Branch as security for a loan with a maximum amount of RMB3,600,000 for a term of 2 years commencing from 18 January 2008 and expiring on 18 January 2010.
Pursuant to a Maximum Amount Mortgage Contract, the land use rights stated in State-owned Land Use Rights Certificates – Tai Guo Yong (2005) Nos. 501000291 are subject to a mortgage in favour of Bank of Communication Co., Ltd. Taicang Branch as security for a loan with a maximum amount of RMB1,400,000 for a term of 2 years commencing from 18 January 2008 and expiring on 18 January 2010.
In the valuation of this property, we have attributed no commercial value to 5 buildings with a total gross floor area of approximately 4,441.69 sq.m. which have not been obtained Building Ownership Certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB5,222,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The 2 State-owned Land Use Rights Certificates and 7 Building Ownership Certificates that Taicang Poly Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenures stated in the 2 State-owned Land Use Rights Certificates, Taicang Poly Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations;
c. As at the date of this Legal Opinion, the land use rights of the property and a portion of buildings mentioned in note 5 are subject to mortgages in favour of Agricultural Bank of China Taicang Branch and Bank of Communication Co., Ltd. Taicang Branch and are restricted by the mortgages;
d. 5 buildings with a total gross floor area of approximately 4,441.69 sq.m. have not obtained Buildings Ownership Certificates. There are risks that Taicang Poly Cogeneration Plant would have to dismantle these buildings or be fined by governmental instruction;
e. The PRC legal advisers can not verify that the effectiveness of the Land Lease Contract mentioned in note 3 is uncertain; and
f. The Land Lease Contract mentioned in note 4 is valid, binding, and forcible.

– VI-47 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 17. Units 601, 602 and The property comprises The property is currently No commercial 604, Building no. 5 3 units on Level 6 of a occupied by the Group value Huiyang Er Cun 6-storey residential for dormitory purpose. Chengxiang Town building completed in 1998. Taicang City Jiang Province The property has a total The PRC gross floor area of approximately 449.9 sq.m.

No. Property

Notes:

Pursuant to 3 Building Ownership Certificates – Tai Fang Quan Zheng Cheng Xiang Zi Nos. 73463, 73466, and 73471 all dated 1 September 2008 issued by the People’s Government of Taicang City, the building ownership rights of 3 units with a total gross floor area of approximately 449.90 sq.m. are owned by Taicang Poly Xiexin Thermal Power Co., Ltd. (“Taicang Poly Cogeneration Plant”), a wholly owned subsidiary of the Company.
In the valuation of this property, we have attributed no commercial value to the property which has not obtained land use rights certificates. However, for reference purposes, we are of the opinion that the capital value of the property as at the date of valuation would be RMB1,755,000 assuming all relevant title ownership certificates have been obtained and the property could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The 3 Building Ownership Certificates that Taicang Poly Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations; and
b. Taicang Poly Cogeneration Plant has not obtained corresponding State-Owned Land Use Rights Certificates for the property. Therefore, Taicang Poly Cogeneration Plant does not have full real rights for the said residential units. Nevertheless, because the units are occupied by the group for employee accommodations, this defect may not cause material negative effects on business operations.

– VI-48 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Description and tenure

No. Property

2 parcels of land, The property comprises various buildings and 2 parcels of land with a site structures located at area of approximately the northern side of 103,639.2 sq.m., Fengpei Road 28 buildings and various Pei County ancillary structures erected Xuzhou City thereon which were Jiangsu Province completed in various stages The PRC between 2000 and 2001.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently 59,395,000 occupied by the Group for power generation, 100% interest ancillary office and attributable to the dormitory purposes. Enlarged Group: RMB59,395,000

The buildings have a total gross floor area of approximately 24,209.87 sq.m. The buildings mainly include administration building, industrial building, water treatment building, etc.

The structures mainly include water-cooling tower, chimney, boundary wall and road, playground, etc.

The land use rights of the property have been granted for a common term of 50 years expiring on 22 December 2049 for industrial use.

Notes:

Pursuant to 2 State-owned Land Use Rights Certificates – Pei Guo Yong (2000) Zi Nos. T-0463 and T-0464 all dated 22 October 2000 issued by the People’s Government of Pei County, the land use rights of 2 parcels of land with a total site area of approximately 103,639.2 sq.m. have been granted to Peixian Mine-site Environmental Cogen-Power Co., Ltd. (“Peixian Cogeneration Plant”), a wholly owned subsidiary of the Company, for a term of 50 years expiring on 16 December 2049 for industrial use.
Pursuant to 2 Building Ownership Certificates – Pei Fang Quan Zheng Zi Di nos. 00016125 and 00016127 dated 18 September 2007 issued by the Housing Management Bureau of Pei County, 23 buildings with a total gross floor area of approximately 21,503.7 sq.m. are owned by Peixian Cogeneration Plant.
Pursuant to a Land Use Rights Mortgage Agreement, the land use rights stated in State-owned Land Use Rights Certificates – Pei Guo Yong (2000) Zi No. T-0463. are subject to a mortgage in favour of Agricultural Bank of China Peixian Branch for assuring a 4-year loan commencing from 16 May 2006 and expiring on 10 December 2010.

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APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Maximum Amount Mortgage Agreement, a portion of the buildings stated in Building Ownership Certificatse – Pei Fang Quan Zheng Zi Di No. 00016127 are subject to a mortgage in favour of Agricultural Bank of China Peixian Branch as security for a loan for a term of 5 years commencing from 16 May 2005 and expiring on 15 May 2010.
Pursuant to a Maximum Amount Mortgage Agreement, a portion of the buildings stated in Building Ownership Certificate – Pei Fang Quan Zheng Zi Di no. 00016125 and the portion of land use rights stated in State-owned Land Use Rights Certificate – Pei Guo Yong (2000) Zi No. T-0464 are subject to a mortgage in favour of peixian rural Credit Cooperatives urban Credit Cooperatives as security for a loan for a term of 3 years commencing from 3 June 2008 and expiring on 2 June 2011.
In the valuation of this property, we have attributed no commercial value to the 5 building with a total gross floor area of approximately 2,706,12 sq.m. which has not been obtained building ownership certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB5,023,000 assuming all relevant title ownership certificates have been obtained and the building could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The 2 State-owned Land Use Rights Certificates and 2 Building Ownership Certificates that Peixian Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenures stated in the 2 State-owned Land Use Rights Certificates, Peixian Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property subject to the relevant PRC laws and regulations;
c. As at the date of this Legal Opinion issued, the property is subject to mortgages in favour of Agricultural Bank of China Pei Country Branch and Peixian Rural Credit Cooperatives Urban Credit Cooperatives and are restricted by the mortgages; and
d. There are 5 buildings have not obtained Building Ownership Certificates and relevant Planning Permits. Pursuant to relevant PRC laws and regulations, there are risks that Peixian Xiexin Cogeneration Plant may have to dismantle these buildings or be fined by governmental instruction.

– VI-50 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 19. A residential unit on The property comprises a The property is currently No commercial Level 6, Block 6 residential unit on Level 6 occupied by the Group value Xin Pei Xiao Qu of a 6-storey building for dormitory purpose. Fengpei Road completed in about 2000. Pei Country Xuzhou City The unit has a gross floor Jiangsu Province area of approximately The PRC 145 sq.m. The land use rights of the property have been granted for a term of 70 years for residential use.

Notes:

In the valuation of this property, we have attributed no commercial value to it as there is no proper title certificate. However, for reference purposes, we are of the opinion that the capital value of the property as at the date of valuation would be RMB261,000 assuming all relevant title ownership certificates have been obtained and the property could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The property has not obtained Building Ownership Certificate and relevant Planning Permits. There are risks that Peixian Xiexin Cogeneration Plant may have to dismantle the building or be fined by governmental instruction.

– VI-51 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

No. Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 30 April 2009 RMB

2 parcels of land, The property comprises various buildings and 2 parcels of land with a structures located at total site area of Hongguang Village approximately Xiejiawan 96,742.5 sq.m., Dongtai Town 29 buildings and various Dongtai City ancillary structures erected Jiangsu Province thereon which were The PRC completed in various stage between 1997 and 2001.

The buildings have a total gross floor area of approximately 27,145.24 sq.m.

The property is currently 71,541,000 occupied by the Group for power generation, 100% interest ancillary office and attributable to the dormitory purposes Enlarged Group: except for a portion of RMB71,541,000 land with a site area of approximately 10,000.05 sq.m. together with Level 1 of the dormitory which are currently rented to Dongtai Hengfeng New Model Construction Material Co. Ltd, an independent third party, for industrial purpose.

The buildings mainly include industrial building, office building, control building, dormitory building, pump rooms, etc.

The structures mainly include chimney, underground drainage cisterns, a wharf, etc.

The land use rights of the property have been granted for terms of 50 years expiring on 6 September 2051 for industrial use.

Notes:

Pursuant to 2 State-owned Land Use Rights Certificates – Dong Guo Yong (2001) Zi Nos. 280501 and 280502 all dated 18 September 2001 issued by the Land Resources Bureau of Dongtai City, the land use rights of 2 parcels of land with a total site area of approximately 96,742.5 sq.m. have been granted to Dongtai Suzhong Environmental Protection Co-generation Co., Ltd. (“Dongtai Cogeneration Plant”), a wholly owned subsidiary of the Company, for terms of 50 years expiring on 6 September 2051 for industrial use.
Pursuant to 5 Building Ownership Certificates – Dong Tai Shi Fang Quan Zheng Dong Cheng Qu Zi Nos. 01404801 to 01404805 all dated 26 September 2001 issued by the Dongtai Municipal People’s Government, 25 buildings with a total gross floor area of approximately 24,583.24 sq.m. are owned by Dongtai Cogeneration Plant.
Pursuant to a Land Lease Agreement dated 12 December 2006 between Dongtai Cogeneration Plant and Dongtai Hengfeng New Model Construction Material Co. Ltd, a portion of land with a site area of approximately 10,000.05 sq.m. together with Level 1 of dormitory are rented to Dongtai Hengfeng New Model Construction Material Co. Ltd, an independent third party, for a term of 10 years commencing from 12 December 2006 and expiring on 11 December 2016, at an annual rental of RMB28,000 exclusive of water and electricity charges.

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APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Maximum Amount Mortgage Contract, a portion of buildings mentioned in note 2 with a total gross floor area of approximately 2,984.01 sq.m. are subject to a mortgage in favour of Agriculture Bank Dongtai Branch as security for a loan for a term of 3 years commencing from 13 January 2004 and expiring on 9 January 2007. As Dongtai Cogeneration Plant confirmed, the mortgage has been extended to 31 December 2010.
Pursuant to a Maximum Amount Mortgage Contract, a portion of buildings mentioned in note 2 with a total gross floor area of approximately 8,610.85 sq.m. are subject to a mortgage in favour of Agriculture Bank Dongtai Branch as security for a loan for a term of 3 years commencing from 15 November 2004 and expiring on 31 December 2007. As Dongtai Cogeneration Plant confirmed, the mortgage has been extended to 31 December 2010.
Pursuant to a Maximum Amount Mortgage Contract, a portion of buildings mentioned in note 2 with a total gross floor area of approximately 5,674.52 sq.m. are subject to a mortgage in favour of Agriculture Bank Dongtai Branch as security for a loan for a term of 3 years commencing from 20 September 2004 and expiring on 31 December 2007. As Dongtai Cogeneration Plant confirmed, the mortgage has been extended to 31 December 2010.
Pursuant to a Maximum Amount Mortgage Contract, a portion of land mentioned in note 1 with a total site area of approximately 7,460 sq.m. is subject to a mortgage in favour of Agriculture Bank Dongtai Branch as security for a loan for a term of 3 years commencing from 15 November 2004 and expiring on 31 December 2007. As Dongtai Cogeneration Plant confirmed, the mortgage has been extended to 31 December 2010.
Pursuant to a Maximum Amount Mortgage Contract, a portion of land mentioned in note 1 with a total site area of approximately 42,000sq.m. is subject to a mortgage in favour of Agriculture Bank Dongtai Branch as security for a loan for a term of 3 years commencing from 20 September 2004 and expiring on 31 December 2007. As Dongtai Cogeneration Plant confirmed, the mortgage has been extended to 31 December 2010.
In the valuation of this property, we have attributed no commercial value to 4 buildings with a total gross floor area of approximately 2,562 sq.m. which have not obtained building ownership certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of the 4 buildings (excluding the land) as at the date of valuation would be RMB3,373,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The 2 State-owned Land Use Rights Certificates and 5 Building Ownership Certificates that Dongtai Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenures stated in the 2 State-owned Land Use Rights Certificates, Dongtai Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property in compliance with the elevant PRC laws and regulations;
c. As at the date of this Legal Opinion issued, the property is subject to mortgages in favour of Dongtai Branch of Agricultural Bank of China and are restricted by the mortgages;
d. Despite that Dongtai Cogeneration Plant has not obtained relevant Construction Permits and the Final Acceptance of Construction Certificate, there will be no substantial legal impediment to Dongtai Cogeneration Plant regarding of the current operations and validity of the property interest;
e. 4 buildings with a total gross floor area of approximately 2,562 sq.m. have not obtained relevant Planning Permits and Building Ownership Certificates. There are risks that Dongtai Cogeneration Plant may have to dismantle these buildings by governmental instruction. However, the demolition would have no substantial negative impact on the business operations; and
f. The Land Lease Agreement mentioned in note 3 is valid, binding, and forcible.

– VI-53 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

No. Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 30 April 2009 RMB

A parcel of land, The property comprises a various buildings and parcel of land with a site structures located at area of approximately Sanhuan West Road 109,199.1 sq.m., Duanzhuang Village 21 buildings and various Xuzhou City ancillary structures erected Jiangsu Province thereon which were The PRC completed in various stages between 2002 and 2003.

The buildings have a total gross floor area of approximately 23,324.68 sq.m.

The property is currently 104,525,000 occupied by the Group for power generation, 75% interest ancillary office and attributable to the dormitory purposes Enlarged Group: except for an office RMB78,394,000 building with a total gross floor area of approximately 1,300 sq.m. are rented to Suzhou Xiexin Real Estate Development Co., Ltd, a connected third party for office use.

The buildings mainly include industrial building, ancillary buildings, office building, dormitory, etc.

The structures mainly include chimney, water cooling tower, boundary walls, roads, etc.

The land use rights of the property have been granted for a term of 50 years commencing from 25 September 2003.

Notes:

Pursuant to a State-owned Land Use Rights Certificate – Xu Tu Guo Yong (2003) No. 19983 dated 25 September 2003 issued by the People’s Government of Xuzhou City, the land use rights of a parcel of land with a site area of approximately 109,199.1 sq.m. have been granted to Xuzhou Western Environmental Cogeneration Power Co., Ltd. (“Xuzhou Cogeneration Plant”), a 75% interest owned subsidiary of the Company, for a term of 50 years commencing from 25 September 2003 for industrial use.
Pursuant to 4 Building Ownership Certificates – Xu Fang Quan Zheng Quan Shan Zi Nos. 60487 to 60490 all dated 19 January 2003 issued by the Xuzhou House & Real Estate Management Bureau, 16 buildings with a total gross floor area of approximately 21,719.68 sq.m. are owned by Xuzhou Cogeneration Plant.
In the valuation of this property, we have attributed no commercial value to 8 buildings with a total gross floor area of approximately 1,754 sq.m. which have not been obtained building ownership certificates. However, for reference purposes, we are of the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB1,263,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.

– VI-54 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Lease Agreement dated 1 April 2009, entered into between Xuzhou Cogeneration Plant and Suzhou Xiexin Real Estate Development Co., Ltd, a connected third party, an office building with a total gross floor area of approximately 1,300 sq.m. is leased to Xuzhou Cogeneration Plant for a term of one year commencing from 1 April 2009 and expiring on 31 March 2010.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Certificate and 4 Building Ownership Certificates that Xuzhou Cogeneration Plan has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenure stated in the State-owned Land Use Rights Certificate, Xuzhou Cogeneration Plan is entitled to transfer, lease and mortgage the portion of titled property in compliance with the relevant PRC laws and regulations;
c. 9 buildings have not obtained Building Ownership Certificates. Among which, a plum room with a gross floor area of approximately 80 sq.m, is situated on a parcel of collectively-owned land, therefore, there are legal impediments of obtaining Building Ownership Certificate. As to the rest 8 buildings, there are risks that Xuzhou Cogeneration Plan may have to dismantle these buildings or be fined by governmental instruction. However, the demolition would have no negative legal impact on business operations; and
d. The Lease Agreement mentioned in note 4 is valid, binding, and forcible.

– VI-55 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

No. Property

Description and tenure

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB

A parcel of land, various buildings and structures No. 88 Hongye Road Xiuzhou Industrial Zone Jiaxing City Zhejiang Province The PRC

The property comprises a parcel of land with a site area of approximately 84,379.4 sq.m., 21 buildings and various ancillary structures erected thereon which were completed in various stages between 2005 and 2008.

The property is currently 108,111,000 occupied by the Group for power generation, 95% interest ancillary office and attributable to the dormitory purposes. Enlarged Group: RMB102,705,000

The buildings have a total gross floor area of approximately 20,786.32 sq.m.

The buildings mainly include industrial building, office building, warehouse, 35KV switch room, etc.

The structures mainly include a water cooling tower, chimney, boundary walls and roads, etc.

The land use rights of the property have been granted for a term of 50 years expiring on 11 March 2054 for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Grant Contract – Jai Tu Xiu Zhou Zheng He (2004) No. 1040 dated 3 March 2004 entered into between the Land Resources Bureau of Jiaxing City and Jaixing Golden Concord Environmental Protection Cogen-Power Co., Ltd. (“Jiaxing Cogeneration Plant”), a 95% interest owned subsidiary of the Company, the land use rights of the property with a site area of approximately 106,666 sq.m. were contracted to be granted to Jiaxing Cogeneration Plant for a term of 50 years commencing from the date of approving by the local government for industrial use. The land premium was RMB16,106,566.
Pursuant to a State-owned Land Use Rights Certificate – Jia Xing Guo Yong (2006) No. 1643 dated 5 September 2005 issued by the People’s Government of Jaixing City, the land use rights of a parcel of land with a site area of approximately 84,379.4 sq.m. have been granted to Jiaxing Cogeneration Plant for a term of 50 years expiring on 11 March 2054 for industrial use.
Pursuant to 13 Building Ownership Certificates – Jia Fang Chan Zheng Xiu Zhou Zi Nos. 00186298, 00186301 to 00186312 all dated 20 September 2006 issued by the Planning and Construction Bureau of Jaixing City, 13 buildings with a total gross floor area of approximately 20,321.61 sq.m. are owned by Jiaxing Cogeneration Plant.

– VI-56 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to 2 Mortgage Contracts, the land use rights of the captioned land and a portion of buildings erected thereon with a total gross floor area of approximately 20,321.61 sq.m. are subject to mortgages in favour of Pudong Development Bank Hangzhou Branch Qingtai Sub-branch as security for loans with a maximum amount of RMB80,000,000 for a term of 5 years commencing from 27 August 2007 and expiring on 20 August 2012;
In the valuation of this property, we have attributed no commercial value to the 8 buildings with a total gross floor area of approximately 464.71 sq.m. which have not been obtained Building Ownership Certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB1,435,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Certificate and 13 Building Ownership Certificates that Jiaxing Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations;
b. During the tenures stated in the State-owned Land Use Rights Certificate, Jiaxing Cogeneration Plant is entitled to transfer, lease and mortgage the portion of titled property subject to the relevant PRC laws and regulations;
c. As at the date of this Legal Opinion, the land use rights of the property and a portion of buildings mentioned in note 4 are subject to mortgages in favour of Pudong Development Bank Hangzhou Branch Qingtai Sub-branch and are restricted by the mortgages; and
d. There are 8 buildings with a total gross floor area of approximately 464.71 sq.m. have not obtained proper title documents. Pursuant to relevant PRC laws and regulations, there are risks that these buildings may be required by the relevant authority to be dismantled. However, as Jiaxing Cogeneration Plant has obtained State-owned Land Use Rights Certificate and Construction Land Planning Permit, there will be no legal impediment for Jiaxing Cogeneration Plant to acquire all needed proper title documents.

– VI-57 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 23. 2 parcels of land, The property comprises The property is currently 31,620,000 various buildings and 2 parcels of land with a occupied by the Group structures total site area of for industrial purpose. 100% interest No. 4 Zhujiang Road approximately attributable to the Lianyungang 68,080.3 sq.m., 9 buildings Enlarge Group: Economic and various ancillary RMB31,620,000 Development Zone structures erected thereon Lianyungang City which were completed in Jiangsu Province about 2002. The PRC

No. Property

The buildings have a total gross floor area of approximately 14,685.38 sq.m. The buildings mainly include industrial building, office building, water-treatment building, transformer rooms, etc.

The structures mainly include water-cooling tower foundation, boundary fences, roads, gates, etc.

The land use rights of the property have been granted for terms with the expiry dates on 18 December 2051 and 28 June 2057.

Notes:

Pursuant to 2 State-owned Land Use Rights Grant Contracts – Nos. 0000327 and GF-2000-2601 entered into between the Land Resources Bureau of Lianyungang City and Lianyungang Xinneng Sludge Power Co., Ltd (“Xinneng Cogeneration Plant”), a wholly owned subsidiary of the Company, the land use rights of the property with a total site area of approximately 68,080.3 sq.m. were contracted to be granted to Xinneng Cogeneration Plant for a term expiring on between 18 December 2051 and 18 June 2057 for industrial use. The total land premium was RMB7,865,481.
Pursuant to 2 State-owned Land Use Rights Certificates – Lian Guo Yong (2007) Zi No. LY000252 dated 15 February 2007 and Lian Guo Yong (2008) Zi No. LY000144 dated 2 January 2008 issued by the Land Resources Bureau of Lianyungang City, the land use rights of 2 parcels of land with a total site area of approximately 68,080.3 sq.m. have been granted to Xinneng Cogeneration Plant for a term with the expiry dates on 18 December 2051 and 28 June 2057 for industrial use.
Pursuant to 2 Building Ownership Certificates – Lian Feng Quan Zheng Kai Zi Nos. K00101444 and K00101444-1 both dated 7 February 2007 issued by the Housing Administration Bureau of Lianyungang City, 7 buildings with a total area of approximately 12,701.38 sq.m. are owned by Xinneng Cogeneration Plant.

– VI-58 –

APPENDIX VI

PROPERTY VALUATION REPORT

Pursuant to a Mortgage Contract, the buildings mentioned in note 3 are subject to mortgage in favour of Bank of Communication Co., Ltd. Lianyungang Branch as security for loans with maximum amount of RMB35,000,000 for a term of 6 years commencing from 21 March 2007 and expiring on 6 February 2013.
In the valuation of this property, we have attributed no commercial value to the 2 buildings with a total gross floor area of approximately 1,984 sq.m. which have not been obtained Building Ownership Certificates. However, for reference purposes, we are of the opinion that the depreciated replacement cost of these buildings (excluding the land) as at the date of valuation would be RMB3,853,000 assuming all relevant title ownership certificates have been obtained and the buildings could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The 2 State-owned Land Use Rights Certificates and 2 Building Ownership Certificates that Xinneng Cogeneration Plant has obtained are legally valid and under protection of the PRC laws and regulations, and
b. During the tenures stated in the 2 State-owned Land Use Rights Certificates, Xinneng Cogeneration Plant is entitled to transfer, lease and mortgage the protion of titled property in compliance with the elevant PRC laws and regulations;
c. As at the date of this Legal Opinion, the buildings mentioned in note 3 are subject to a mortgage in favour of Bank Of Communication Co., Ltd. Lianyungang Branch and are restricted by the mortgages; and
d. Pursuant to a Mortgage Contract, the portion of land use rights mentioned in note 2 was subject to a mortgage in favor of Bank of Communication Co., Ltd. Lianyungang Branch for a term of one year commencing from 7 February 2007 to 6 February 2008. As confirmed by Xinneng Cogeneration Plant, the mortgage registry has not been extended with nor withdrawn from the relevant authority. The PRC legal advisers suggest that Xinneng Cogeneration Plant should withdraw the mortgage registry as soon as it can.

– VI-59 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Description and tenure

No. Property

2 parcels of land, The property comprises various buildings and 2 parcels of land with a structures located at total site area of Jianyuan Road approximately Puyuan Town 12,741.79 sq.m., 10 Tongxiang City buildings and various Zhejiang Province ancillary structures erected The PRC thereon which were completed in various stages between 2001 and 2007.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently 5,756,000 occupied by the Group for power generation, 100% interest ancillary office and attributable to the dormitory purposes. Enlarged Group: RMB5,756,000

The buildings have a total gross floor area of approximately 4,209.1 sq.m.

The buildings mainly include office building, boiler rooms, warehouse, etc.

The structures mainly include a water cooling tower, chimney, boundary walls, roads, etc.

The land use rights of the property have been granted for a term of 50 years with the expiry dates on 31 December 2052 and 31 December 2054 for industrial use.

Notes:

Pursuant to an Assets Transferring Contract dated 29 September 2007 entered into between Puyuan Cogeneration Plant and Tongxiang Puyuan Maoshancheng Development Company Limited (桐鄉市濮院毛衫城開發建設有限公司), the land use rights of a parcel of land with a site area of approximately 9,851.88 sq.m. were contracted to be transferred to Puyuan Co-generation Co., Ltd (“Puyuan Cogeneration Plant”), a wholly owned interest owned subsidiary of the Company.
Pursuant to 2 State-owned Land Use Rights Certificates – Tong Guo Yong (2008) Zi Di No. 04573 and Tong Guo Yong (2008) Zi Di No. 04575 both dated 12 April 2008 issued by the Land Resources Bureau of Tongxiang City, the land use rights of 2 parcel of land with a total site area of approximately 12,741.79 sq.m. have been granted to Puyuan Cogeneration Plant for a term of 50 years with the expiry dates on 9 December 2051 and 27 January 2053 respectively, for industrial use.
Pursuant to 4 Building Ownership Certificates – Tong Zi Nos. 00126919 to 00126922 dated 19 March 2008 issued by the People’s Government of Tongxiang City, 4 buildings with a total gross floor area of approximately 2,142.38 sq.m. are owned by Puyuan Cogeneration Plant.

– VI-60 –

PROPERTY VALUATION REPORT

APPENDIX VI

In the valuation of this property, we have attributed no commercial value to the 6 buildings with a total gross floor area of approximately 2,066.72 sq.m. which have not been obtained any title certificates. However, for reference purposes, we are of the opinion that the capital value of the 6 buildings as at the date of valuation would be RMB2,218,000 assuming all relevant title ownership certificates and construction permits have been obtained and they could be freely transferred.
Pursuant to a Maximum Amount Mortgage Contract, a portion of buildings mentioned in note 3 above with a total gross floor area of approximately 2,142.38 sq.m. and the land use rights mentioned in note 2 are subject to a mortgage in favour of Shanghai Pudong Development Bank Jiaxing Tongxiang Branch for assuring a 3-year loan commencing from 16 February 2009 and expiring on 16 February 2012.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As the total transferring consideration of the contract mentioned in note 1 has not been fully paid by Puyuan Cogeneration Plant, the PRC legal advisers can not verify that the full land use rights of the captioned land has been legally obtained by Puyuan Cogeneration Plant;
b. Because of the problem mentioned above, the PRC legal advisers can not verify that Puyuan Cogeneration Plant has obtained the full legal rights of the buildings of the 4 Building Ownership Certificates;
c. As at the date of this Legal Opinion, the portion of the property mentioned in note 5 is subject to a mortgage in favour of Shanghai Pudong Development Bank Jiaxing Tongxiang Branch and are restricted by the mortgage; and
d. 6 of the captioned buildings have not obtained relevant Construction Planning Permits or Building Ownership Certificates. Pursuant to relevant PRC laws and regulations, there are risks that Puyuan Cogeneration Plant may have to dismantle these buildings or be fined by governmental instruction.

– VI-61 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

No. Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 30 April 2009 RMB

A parcel of land, various buildings and structures located at Xin Miao Zhi Village Puyuan Town Tongxiang City Zhejiang Province The PRC

The property comprises a parcel of land with a site area of approximately 76,664.2 sq.m., 18 buildings and various ancillary structures erected thereon which were completed in 2007.

The property is currently 22,616,000 occupied by the Group for power generation, 100% interest ancillary office and attributable to the dormitory purposes. Enlarged Group: RMB22,616,000

The buildings have a total gross floor area of approximately 18,423.8 sq.m.

The buildings mainly include office building, boiler rooms, warehouse, etc.

The structures mainly include water cooling tower, chimney, boundary walls, roads, etc.

The land use rights of the property have been granted for a term of 50 years expiring on 4 December 2054 for industrial use.

Notes:

Pursuant to a Land Granted Contract dated 15 August 2005 entered into between Puyuan Co-generation Co., Ltd (“Puyuan Cogeneration Plant”), a wholly owned subsidiary of the Company, and Tongxiang Puyuan Industrial Zone Development Company Limted, the land use rights of a parcel of land with a site area of approximately 81,918 sq.m. were contracted to be transferred to Puyuan Cogeneration Plant at total consideration of RMB11,070,000.
Pursuant to a State-owned Land Use Rights Certificate – Tong Guo Yong (2006) No. 06794 dated 12 June 2006 issued by the Land Resources Bureau of Tongxiang City, the land use rights of a parcel of land with a site area of approximately 76,664.2 sq.m. have been granted to Puyuan Cogeneration Plant, for a term of 50 years expiring on 4 December 2054 for industrial use.
In the valuation of this property, we have attributed no commercial value to 18 buildings with a total gross floor area of approximately 18,423.8 sq.m. and which have not been obtained any title certificates. However, for reference purposes, we are of the opinion that the capital value of the 19 buildings as at the date of valuation would be RMB66,314,000 assuming all relevant title ownership certificates have been obtained and they could be freely transferred.
Pursuant to a Mortgage Contract, the land use rights of the property are subject to a mortgage in favour of Bank of China Zhejiang Provincial Branch for assuring a 5-year loan commencing from 18 July 2006 and expiring on 30 July 2011.

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APPENDIX VI

PROPERTY VALUATION REPORT

We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. Puyuan Cogeneration Plant entered into the State-Owned Land Use Rights Contract with a State-owned enterprise in stead of the local land resources authority, and the relevant legal procedure to obtain a State-Owned Land Use Rights Certificate has not been completed either. Therefore, despite the said State-Owned Land Use Rights Certificate has already been obtained, the PRC legal advisers can not verify that the full land use rights of the captioned land has been legally obtained by Puyuan Cogeneration Plant;
b. As at the date of this Legal Opinion, the land use rights of the property are subject to a mortgage in favour of Bank of China Zhejiang Provincial Branch and are restricted by the mortgage; and
c. The captioned 19 buildings have not obtained relevant Construction Planning Permits or Building Ownership Certificates. Pursuant to relevant PRC. laws and regulations, there are risks that Puyuan Cogeneration Plant may have to dismantle these buildings or be fined by governmental instruction. Nevertheless, it has been confirmed by Puyuan Cogeneration Plant that these buildings are in the process of obtaining Building Ownership Certificates, and no substantial legal impediment for Puyuan Cogeneration Plant to obtain the relevant title certificates has been found.

– VI-63 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group III – Property interest held under development by the Group in the PRC

Capital value in existing state as Description and tenure Particulars of occupancy at 30 April 2009 RMB The property comprises a The property is currently No commercial of land with a site under construction. value

No. Property Description and tenure 26. A parcel of land, The property comprises a various buildings and parcel of land with a site structures under area of approximately construction located 76,164 sq.m., at Beilike and 4 buildings and various Baiyinkulun Pastures ancillary structures which Xilinhaote City are being constructed Inner Mongolia thereon. Autonomous Region The PRC The property is scheduled to be completed in August 2009. Upon completion, the buildings of the property will have a total gross floor area of approximately 1,289 sq.m. upon completion.

The land use rights of the property have been granted for a term of 50 for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Grant Contract – Xi Shi Guo Tu (He) Zi (2008) No. 4 dated 10 August 2008, entered into between the Land Resources Bureau of Xilinhaote City and Xilinuole Guo Tai Wind Power Co., Ltd. (“Xilinguole”), 錫林郭勒國泰風力發電有限公司 a wholly owned subsidiary of the Company, the land use rights of the property with a site area of approximately 76,164 sq.m. were contracted to be granted to Xilinguole for a term of 50 years commencing from the date of approving by the local government for industrial use. The land premium was RMB5,483,808.
As advised by the Xilinguole, the total construction cost of the property is estimated to be approximately RMB36,362,900, of which RMB 21,391,900 had been paid as at the date of valuation.
We have not been provided with the relevant Construction Permits for the property.
In the valuation of this property, we have attributed no commercial value to the property which has not been obtained proper title certificates and construction approvals. However, for reference purposes, we are of the opinion that the capital value of the property as at the date of valuation would be RMB40,531,000 assuming all relevant title ownership certificates have been obtained and the property could be freely transferred.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The State-owned Land Use Rights Grant Contract mentioned in note 1 is legally valid and under protection of the PRC laws and regulations; and
b. There is no substantial legal risk for Xilinguole to obtain the State-owned Land Use Rights Certificate.

– VI-64 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group IV – Property interest contracted to be acquired by the Target Group in the PRC

				Capital value in
				existing state as
No.	Property	Description and tenure	Particulars of occupancy	at 30 April 2009
				RMB
27.	Building nos. 10 to 13	The property comprises	The property is currently	No commercial
	and nos. 15 to 18,	eight 6-storey residential	vacant	value
	Wanhao Emerald	buildings (including the
	Town located at the	basement) completed in
	eastern side of Jing	about 2009.
	Liu Road and the
	southern side of	The property has a total
	Yangshan Road	gross floor area of
	Xuzhou City	approximately
	Jiangsu Province	29,312.13 sq.m.
	The PRC

Notes:

Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd., (“Jiangsu Zhongneng”), a wholly owned subsidiary of the Target Company, has entered into a Commodity Property Sale & Purchase Contract with Xuzhou Wanhao Real Estate Co., Ltd. (the “Developer”) dated 23 April 2008 to purchase 8 residential buildings (including the basement) at a total consideration of RMB79,357,620.
As at the date of valuation, the property has not been assigned to Jiangsu Zhongneng and thus the title of the property has not been vested in Jiangsu Zhongneng. Therefore we have attributed no commercial value to the property. However, for reference purpose, we are of the opinion that the capital value of the property as at the date of valuation would be RMB74,917,000, on condition that the relevant title certificates have been obtained by Jiangsu Zhongneng and Jiangsu Zhongneng is entitled to freely transfer, lease, mortgage or otherwise dispose of the property.
As confirmed by Jiangsu Zhongneng, a sum of approximately RMB70,221,778 had been paid to purchase the property up to the date of valuation.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As the Developer has obtained all the relevant construction permits relating to the property, there is no legal impediment for Jiangsu Zhongneng to apply for Building Ownership Certificates of the property.

– VI-65 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group V – Property interests rented and occupied by the Group in the PRC

Capital value in existing state as
No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB
1. Villa Flat D Economic The property comprises a The property is currently No commercial Island Qing Jian Lake 2-storey villa completed in occupied by the Group value Yangchenghu Avenue about 2005. for office purpose. Suzhou Industry Park Suzhou City Jiangsu The property has a lettable Province area of approximately The PRC 814 sq.m. The property is rented to GCL-Poly Power Fuel Co., Ltd. for a term of 2 years commencing from 1 January 2008 and expiring on 31 December 2009, at the nil rent exclusive of water, telephone and electricity charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to GCL-Poly Power Fuel Co., Ltd. (“Fuel Company”), a wholly owned subsidiary of the Company, from Suzhou Industry Zone Wei Ting Town Business Center, an independent third party, for a term of 2 years commencing from 1 January 2008 and expiring on 31 December 2009 at the nil rent, exclusive of water, telephone and electricity charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not draw the conclusion that Suzhou Industry Zone Wei Ting Town Business Center is entitled to let the captioned property to Fuel Company; and
b. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not verify neither the Tenancy Agreement is legally valid nor there is no other cause that would result in termination of the Tenancy Agreement in advance.

– VI-66 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 29. Unit 401, Building no. 11 The property comprises a The property is currently No commercial Gaobang Er Cun unit on Level 4 of a 4-storey occupied by the Group value Suzhou Industry Park residential building for residential purpose. Suzhou City completed in about 2005. Jiangsu Province The PRC The property has a lettable area of approximately 74 sq.m. The property is rented to Suzhou GCL-Poly Power Fuel Co., Ltd. for a term of one year commencing from 10 September 2008 expiring on 9 September 2009, at a monthly rent of RMB1,800, exclusive of management fee, water, telephone and electricity charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to Suzhou GCL-Poly Power Fuel Co., Ltd. (“Suzhou Fuel Company”), a wholly owned subsidiary of the Company, from Sun Zhiming, an independent third party, for a term of one year commencing from 10 September 2008 and expiring on 9 September 2009 at a monthly rent of RMB1,800, exclusive of management fee, water, telephone and electricity charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not draw the conclusion that Sun Zhiming is entitled to let the captioned property to Suzhou Fuel Company; and
b. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not verify neither the Tenancy Agreement is legally valid and forcible nor there is no other cause that would result in termination of the Tenancy Agreement in advance.

– VI-67 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 30. Unit 305, Building no. 37 The property comprises a The property is currently No commercial Gulou Yi Cun Suzhou unit on Level 3 of a 4-storey occupied by the Group value Industry Park residential building for residential purpose. Suzhou City completed in about 2005. Jiangsu Province The PRC The property has a lettable area of approximately 74 sq.m. The property is rented to GCL-Poly Power Fuel Co., Ltd. from an independent party for a term of one year commencing from 13 September 2008 and expiring on 12 September 2009, at a monthly rent of RMB1,900, exclusive of water, cable television and electricity charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to GCL-Poly Power Fuel Co., Ltd. (“Fuel Company”), a wholly owned subsidiary of the Company, from Jiang Zhengguo, an independent third party, for a term of one year commencing from 13 September 2008 and expiring on 12 September 2009 at a monthly rent of RMB1,900, exclusive of water, cable television and electricity charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not draw the conclusion that Jiang Zhengguo is entitled to let the captioned property to Fuel Company; and
b. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not verify neither the Tenancy Agreement is legally valid nor there is no other cause that would result in termination of the Tenancy Agreement in advance.

– VI-68 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 31. Unit 205, Building no. 20 The property comprises a The property is currently No commercial Gulou Yi Cun unit on Level 2 of a 4-storey occupied by the Group value Suzhou Industry Park residential building for residential purpose. Suzhou City completed in about 2005. Jiangsu Province The PRC The property has a lettable area of approximately 74 sq.m. The property is rented to GCL-Poly Power Fuel Co., Ltd. from an independent party for a term of one year commencing from 8 March 2008 and expiring on 7 March 2010, at a monthly rent of RMB1,300, exclusive of water and electricity charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to GCL-Poly Power Fuel Co., Ltd. (“Fuel Company”), a wholly owned subsidiary of the Company, from Zhu Quansheng, an independent third party, for a term of one year commencing from 8 March 2008 and expiring on 9 March 2010 at a monthly rent of RMB1,300, exclusive of water and electricity charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not draw the conclusion that Zhu Quansheng is entitled to let the captioned property to Fuel Company; and
b. As at the date of this Legal Opinion issued, based on the given information, the PRC legal advisers can not verify neither the Tenancy Agreement is legally valid nor there is no other casue that would result in termination of the Tenancy Agreement in advance.

– VI-69 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

				Capital value in
				existing state as
No.	Property	Description and tenure	Particulars of occupancy	at 30 April 2009
				RMB
32.	Unit 1411, Jinxiu Plaza	The property comprises a	The property is currently	No commercial
	Huainan Industry Zone	unit on Level 14 of a	occupied by the Group	value
	Huainan City	16-storey residential	for residential purpose.
	Anhui Province	building completed in
	The PRC	about 2002.
		The property has a lettable
		area of approximately
		114.48 sq.m.
		The property is rented to
		GCL-Poly Power Fuel Co.,
		Ltd. from an independent
		party for a term of one year
		commencing from 1 March
		2009 and expiring on
		28 February 2010, at a
		monthly rent of RMB1,300,
		exclusive of water,
		telephone and electricity
		charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to GCL-Poly Power Fuel Co., Ltd. (“Fuel Company”), a wholly owned subsidiary of the Company, from Du Yuhua, an independent third party, for a term of one year commencing from 1 March 2009 and expiring on 28 February 2010 at a monthly rent of RMB1,300, exclusive of water, telephone and electricity charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not draw the conclusion that Du Yuhua is entitled to let the captioned property to Fuel Company; and
b. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers cannot verify neither the Tenancy Agreement is legally valid nor there is no other cause that would result in termination of the Tenancy Agreement in advance.

– VI-70 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 33. A residential unit of a The property comprises a The property is currently No commercial single-storey building residential unit of a occupied by the Group value No. 117 Shanqian single-storey residential for residential purpose. Road building completed in Zhangjiagang City about 2002. Jiangsu Province The PRC The property has a lettable area of approximately 74 sq.m. The property is rented to Suzhou GCL-Poly Power Fuel Co., Ltd. from an independent party for a term of one year commencing from 24 December 2008 and expiring on 23 December 2009, at an annual rent of RMB12,500, exclusive of water, gas and electricity charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to Suzhou GCL-Poly Power Fuel Co., Ltd. (“Suzhou Fuel Company”), a wholly owned subsidiary of the Company, from Lu Xiaoqing, an independent third party, for a term of one year commencing from 24 December 2008 and expiring on 23 December 2009 at an annual rent of RMB12,500, exclusive of water, gas and electricity charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not draw the conclusion that Lu Xiaoqing is entitled to let the captioned property to Suzhou Fuel Company; and
b. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers cannot verify neither the Tenancy Agreement is legally valid nor there is no other cause that would result in termination of the Tenancy Agreement in advance.

– VI-71 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 34. Level 9, New Shanghai The property comprises the The property is currently No commercial International Tower whole of Level 9 of a occupied by the Group value No. 360 Pudong 39-storey office building for office purpose. South Road completed in about 1997. Shanghai The PRC The property has a total lettable area of approximately 1,434.14 sq.m. The property is rented to Shanghai GCL-Poly Electricity Operating Management Co., Ltd. from an independent third party for a term of 3 years commencing from 1 January 2007 and expiring on 31 December 2010, at a monthly rent of RMB235,558 exclusive of management fees, water and electricity charges.

Notes:

Pursuant to a Tenancy Agreement and a Tenancy Transfer Agreement, the property is leased to Shanghai GCL-Poly Electricity Operating Management Co., Ltd.(“Management Company”), a wholly owned subsidiary of the Company, from Shanghai Guo Neng Investment Co., Ltd., an independent third party, for a term of 3 years commencing from 1 January 2007 and expiring on 31 December 2010 at a monthly rent of RMB235,558 exclusive of management fees, water and electricity charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. Shanghai Guo Neng Investment Co., Ltd. is entitled to let the property to Management Company; and
b. The PRC legal advisers have not found any violation of the Tenancy Agreement from both parties nor any cause that would result in termination of the Tenancy Agreement in advance.

– VI-72 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

No. Property Description and tenure

A parcel of land, The property comprises a various buildings and parcel of land with a total structures located at site area of approximately the northern side of 24,956.11 sq.m., 10 312 State Highway buildings and various Kuatang Town ancillary structures erected Suzhou Industrial thereon which were Zone completed in various stages Jiangsu Province between 1986 and 2004. The PRC

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently No commercial occupied by the Group value for industrial purpose.

The buildings have a total gross floor area of approximately 7,898.6 sq.m. The buildings mainly include an industrial building, a water-treatment building, pump rooms, transformer room, conveying stands, toilet, etc.

The structures mainly include a water-cooling tower, an ash-shed boundary walls and roads.

The property is rented to Suzhou Industrial Park Blue Sky Gas Cogen-Power Co., Ltd. for a term of one year commencing from 15 September 2008 and expiring on 14 September 2009, at an annual rent of RMB1,200,000 inclusive of equipments rental fee.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to Suzhou Industrial Park Blue Sky Gas Cogen-Power Co., Ltd. (“Suzhou Cogen-Power Co., Ltd.”), a 51% interest owned subsidiary of the Company, from Suzhou Industrial Park Municipal Development Group Limited (“Suzhou Development Group”), a connected party, for a term of one year commencing from 15 September 2008 and expiring on 14 September 2009 at an annual rent of RMB1,200,000 inclusive of equipments rental fee.
We have not been provided with any title certificates of the property.

– VI-73 –

APPENDIX VI

PROPERTY VALUATION REPORT

We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not draw a conclusion that Suzhou Development Group is entitled to let the captioned parcel of land to Suzhou Cogen-Power Co., Ltd.; and
b. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not verify neither the Tenancy Agreement is legally valid nor there is no other cause that would result in termination of the Tenancy Agreement in advance.

– VI-74 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 36. Units 306 to 308 of a The property comprises The property is currently No commercial 3-storey building 3 units on Level 3 of a occupied by the Group value No. 187 Nadamu Road 3-storey office building for office purpose. Xilinhaote City completed in about 1982. Inner Mongolia Autonomous Region The property has a total The PRC lettable area of approximately 56.7 sq.m.

The property is rented to 錫林郭勒國泰風力發電有限公司 from an independent third party for a term commencing from 26 May 2008 and expiring on 26 May 2009, at an annual rent of RMB25,200, exclusive of management fees, water and electricity charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to 錫林郭勒國泰風力發電有限公司 (“Guotai Wind power”), a wholly owned subsidiary of the Company from Liu Hongyu, an independent third party, for a term commencing from 26 May 2008 and expiring on 26 May 2009 at an annual rent of RMB25,200 exclusive of management fees, water and electricity charges. As confirmed by Guotai Wind Power, the said Tenancy Agreement is still in force at present.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this legal opinion, based on the given information, the PRC legal advisers can not draw the conclusion that Liu Hongyu is entitled to let the captioned property to Guotai Wind power; and
b. The PRC legal advisers have not found any violation of the Tenancy Agreement from both parties nor any cause that would result in termination of the Tenancy Agreement in advance.

– VI-75 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

				Capital value in
				existing state as
No.	Property	Description and tenure	Particulars of occupancy	at 30 April 2009
				RMB
37.	A parcel of land	The property comprises a	The property is currently	No commercial
	located at	parcel of land with gross	occupied by the Group	value
	the eastern Bound of	site area of approximately	for storage purpose.
	Great Canal	4,875 sq.m.
	and northern side of
	Xinmin Gate	The property is rented to
	Xiqingkan	Baoying Cogeneration Plant
	Baoying County	for a term of 2 years
	Jiangsu Province	commencing from 1
	The PRC	January 2008 expiring on 31
		December 2009, at an
		annual rent of RMB35,000,
		exclusive of management
		fee, water, telephone and
		electricity charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to Baoying Xiexin Biomass Environmental Protection Cogeneration Co., Ltd. (“Baoying Cogeneration Plant”), a wholly owned subsidiary of the Company, from Baoying Great Canal Management Office, an independent third party, for a term of 2 years commencing from 1 January 2008 and expiring on 31 December 2009, at an annual rent of RMB35,000, exclusive of management fee, water, telephone and electricity charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this Legal Opinion, based on the given information, the PRC legal advisers can not verify neither the Tenancy Agreement is legally valid nor there is no other cause that would result in termination of the Tenancy Agreement in advance.

– VI-76 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

				Capital value in
				existing state as
No.	Property	Description and tenure	Particulars of occupancy	at 30 April 2009
				RMB
38.	A parcel of land	The property comprises a	The property is currently	No commercial
	located at	parcel of land with a site	occupied by the Group	value
	Wangzhuang &	area of approximately	for storage purpose.
	Panzhuang Jinzhuang	28,000.14 sq.m.
	Village Shanyang
	Township	The property is rented to
	Baoying County	Baoying Cogeneration Plant
	Jiangsu Province	for a term of 15 years
	The PRC	commencing from 9 May
		2007 expiring on 8 May
		2022, at an annual rent of
		RMB24,100, exclusive of
		management fee, water,
		telephone and electricity
		charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to Baoying Xiexin Biomass Environmental Protection Cogeneration Co., Ltd. (“Baoying Cogeneration Plant”), a wholly owned subsidiary of the Company, from Baoying Shanyang Township House, an independent third party, for a term of 15 years commencing from 9 May 2007 and expiring on 8 May 2022, at an annual rent of RMB24,100, exclusive of management fee, water, telephone and electricity charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. Baoying Cogeneration Plant has not obtained the land use rights for the captioned land legally. This may result in relevant governmental authority evicting the property, and taking action for indemnity against Baoying Cogeneration Plant.

– VI-77 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 39. A parcel of land The property comprises a The property is currently No commercial located at parcel of land with a site occupied by the Group value Wangpo Village area of approximately for storage purpose. Tacheng Town 14,000 sq.m. Ganyu County Lianyungang City The property is rented to Jiangsu Province Lianyungang Xiexin The PRC Cogeneration Plant for a term of 5 years commencing from 1 June 2007 and expiring on 1 June 2012, at an annual rent of RMB15,750, inclusive of management fee, water, telephone and electricity charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to Lianyungang Xiexin Biomass Electric-Power Generation Co., Ltd. (“Fuel Company”), a wholly owned subsidiary of the Company, from the Villager Committee of Lianyungang City Guanyu County Tacheng Town Wanpo Village (“Village Committee”), an independent third party, for a term of 5 years commencing from 1 June 2007 expiring on 1 June 2012, at an annual rent of RMB15,750, inclusive of management fee, water, telephone and electricity charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this legal opinion, based on the given information, the PRC legal advisers can not draw the conclusion that Village Committee is entitled to let the property to Lianyungang Xiexin Cogeneration Plant; and
b. The PRC legal advisers have not found any violation of the Tenancy Agreement from both parties nor any cause would result in termination of the Tenancy Agreement in advance.

– VI-78 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

				Capital value in
				existing state as
No.	Property	Description and tenure	Particulars of occupancy	at 30 April 2009
				RMB
40.	A parcel of land	The property comprises a	The property is currently	No commercial
	No. 200 Gudu Road	parcel of land with gross	occupied by the Group	value
	Economic	site area of approximately	for storage purpose.
	Development Zone	3,300.02 sq.m.
	Yangzhou City
	Jiangsu Province	The property is rented to
	The PRC	Yangzhou Cogeneration
		Plant for a term of 5 years
		commencing from 8 April
		2003 and expiring on 7
		April 2008, at an annual
		rent of RMB20,000.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to Yangzhou Harbor Sludge Power Co., Ltd. (“Yangzhou Cogeneration Plant”), a 51% interest owned subsidiary of the Company, from Yangzhou No. 2 Power Plant Co., Ltd (“No. 2 Power Plant”), an independent third party, for a term of 5 years commencing from 8 April 2003 and expiring on 7 April 2008, at an annual rent of RMB20,000. Yangzhou Cogeneration Plant is currently occupying the land without a new Tenancy Agreement.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. As at the date of this legal opinion, based on the given information, the PRC legal advisers can not draw the conclusion that No. 2 Power Plant is entitled to let the captioned property to Fuel Company; and
b. As at the date of this legal opinion, the PRC legal advisers can not verify that Yangzhou Cogeneration Plant has paid the due rent of the said leased land use rights timely. Pursuant to the said Tenancy Agreement, Yangzhou Cogeneration Plant would have to pay a penalty of RMB5,000 for rental overdue. Additionally, No. 2 Power Plant has the right to terminate the Tenancy Agreement in advance.

– VI-79 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group VI – Property interest rented and occupied by the Target Group in the PRC

Capital value in existing state as No. Property Description and tenure Particulars of occupancy at 30 April 2009 RMB 41. Units 01, 02 and 03A The property comprises 3 The property is currently No commercial on Level 19 units on Level 19 of a occupied by the Target value Tower 2, Kerry Plaza 23-storey office building Company for office No. 1 Zhongxin Si Road completed in about 2008. purpose. Shenzhen City Guangdong Province The property has a lettable The PRC area of approximately 918.62 sq.m. The property is rented to the Target Company for a term of 3 years commencing from 1 July 2008 and expiring on 30 June 2011, at a monthly rent of RMB179,131, exclusive of management fees and air-condition charges.

Notes:

Pursuant to a Tenancy Agreement, the property is leased to the Target Company from Kerry Real Estate (Shenzhen) Co., Ltd., an independent third party, for a term of 3 years commencing from 1 July 2008 and expiring on 30 June 2011 at a monthly rent of RMB179,131 exclusive of management fees and air-condition charges.
We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. Kerry Real Estate (Shenzhen) Co., Ltd is entitled to let the captioned property to the Target Company; and
b. The said Tenancy Agreement is in compliance with relevant PRC laws and regulations; and
c. The PRC legal advisers have not found any violation of the Tenancy Agreement from both parties nor any cause would result in termination of the Tenancy Agreement in advance.

– VI-80 –

APPENDIX VI

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group VII – Property interest rented and occupied by the Group in Hong Kong

No. Property

Portions of Suites 3601 to 3604 on the 36th Floor Two Exchange Square 8 Connaught Place Central Hong Kong

Description and tenure

The property comprises portions of Suites 3601 to 3604 on the 36th floor of a 51-storey commercial building completed in about 1984.

Capital value in existing state as Particulars of occupancy at 30 April 2009 RMB The property is currently No commercial occupied by the value Company for office purpose.

Particulars of occupancy

The property has a total gross floor area of approximately 1,383 sq.ft.

The property is licensed to the Company from Golden Concord Holdings Limited, a connected party of the Company, for a term expiring on 30 April 2010 at a monthly service fee calculated at 21% of all expenses, including but not limited to rental, management charge, government rates, electricity charges, internet and telephone charges, ISDN and water charges etc., incurred by Golden Concord Holdings Limited in renting and operating the office situated in the property.

Notes:

The registered owner of the property is The Hongkong Land Property Company Limited and registered vide Memorial No. 3069643 dated 2 June 1986.
Golden Concord Holdings Limited (“GCL (Hong Kong)”) is wholly owned by Mr. Zhu, the ultimate controlling shareholder of the Company.
Pursuant to a Tenancy Agreement dated 17 April 2007 entered between GCL (Hong Kong) and The Hong Kong Land Property Company Limited, Suites 3601 to 3604 on 36th Floor of Two Exchange Square with a floor area approximately of 6,450 sq.ft. are leased to GCL (Hong Kong) for a term expiring on 30 April 2010 at a monthly rent of HK$619,740 exclusive of management charge.
Pursuant to an Office Service Agreement dated 22 October 2007 entered into between GCL (Hong Kong) and the Company for occupying portions of the property with a total gross floor area of approximately 1,383 sq.ft. and enjoying other facilities and services in relation to the property, the Company should pay 21% of all the expenditures GCL (Hong Kong) spent on occupying the property, including rental, management charge, government rates, electricity charges, internet and telephone charges, ISDN and water charges etc. The Agreement was signed for a term of three years commencing from 1 May 2007 and expiring on 30 April 2010.

– VI-81 –

APPENDIX VII

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules and the Takeovers Code for the purpose of giving information with regard to the Company. The Directors jointly and severally 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, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement herein misleading.

This circular also includes particulars given in compliance with the Listing Rules and the Takeovers Code for the purpose of giving information with regard to the Combined Concert Group. Mr. Zhu and the directors of the Combined Concert Group jointly and severally 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, opinions expressed in this circular (other than that relating to the Group) have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement herein misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date were as follows:

Authorised share capital 10,000,000,000 Shares of HK$0.10 each Issued share capital 972,419,487 Shares of HK$0.10 each as at 31 December 2008 260,000 Shares of HK$0.10 each issued in May 2009 due to exercise of share options 50,000,000 Shares of HK$0.10 each issued on 3 June 2009 under a placing agreement 1,022,679,487 Shares of HK$0.10 each as at the Latest Practicable Date	HK$ 1,000,000,000

	97,241,948.70 26,000 5,000,000 102,267,948.70

Save as disclosed above, no Shares have been issued since 31 December 2008 (the date to which the latest audited consolidated financial statements of the Company have been made up) up to the Latest Practicable Date.

– VII-1 –

APPENDIX VII

GENERAL INFORMATION

All the issued Shares shall rank pari passu with each other in all respects, including the right to all dividends, voting and interests in capital. No part of the share capital of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares to be listed or dealt in on any other stock exchange.

Details of share options, which were granted by the Company to the Directors, pursuant to the pre-IPO share option scheme and the share option scheme, both adopted by the Shareholders on 22 October 2007 are detailed in the table below. Such share options can be exercised by the Directors at various intervals during the period from 1 April 2009 to 15 February 2019 at an exercise price of HK$4.10 and HK$0.59, respectively.

(i) Pre-IPO share option scheme

Name or category
of participant
Date of grant
Exercise
period
Exercise
price
HK$
Directors/
chief executive
Sha Hong Qiu
13.11.2007
13.11.2010 to
12.11.2017
4.10
13.11.2011 to
12.11.2017
4.10
13.11.2012 to
12.11.2017
4.10
Ji Jun
13.11.2007
13.11.2010 to
12.11.2017
4.10
13.11.2011 to
12.11.2017
4.10
13.11.2012 to
12.11.2017
4.10

Number of options

Granted
during
the period
from 1.1.2009
to the Latest
Practicable
Date
Lapsed or
cancelled
during
the period
from 1.1.2009
to the Latest
Practicable
Date
Exercised
during
the period
from 1.1.2009
to the Latest
Practicable
Date
Outstanding
as at
31.12.2008
Outstanding
as at
the Latest
Practicable
Date
–
–
–
336,000
336,000
504,000
504,000
840,000
840,000
–
–
–
300,000
300,000
450,000
450,000
750,000
750,000

– VII-2 –

APPENDIX VII

GENERAL INFORMATION

Name or category of participant Date of grant Exercise period Exercise price HK$ Shu Hua 13.11.2007 13.11.2010 to 12.11.2017 4.10 13.11.2011 to 12.11.2017 4.10 13.11.2012 to 12.11.2017 4.10 Yu Bao Dong 13.11.2007 13.11.2010 to 12.11.2017 4.10 13.11.2011 to 12.11.2017 4.10 13.11.2012 to 12.11.2017 4.10 Sun Wei 13.11.2007 13.11.2010 to 12.11.2017 4.10 13.11.2011 to 12.11.2017 4.10 13.11.2012 to 12.11.2017 4.10 Non-director employee (in aggregate) 13.11.2007 13.11.2010 to 12.11.2017 4.10 13.11.2011 to 12.11.2017 4.10 13.11.2012 to 12.11.2017 4.10 Total		Number of options	Number of options	Number of options
	Granted during the period from 1.1.2009 to the Latest Practicable Date – – – –	Lapsed or cancelled during the period from 1.1.2009 to the Latest Practicable Date – – – (356,000) (534,000) (890,000)	Exercised during the period from 1.1.2009 to the Latest Practicable Date – – – –	Outstanding as at 31.12.2008 300,000 450,000 750,000 300,000 450,000 750,000 300,000 450,000 750,000 4,252,000 6,378,000 10,630,000	Outstanding as at the Latest Practicable Date 300,000 450,000 750,000 300,000 450,000 750,000 300,000 450,000 750,000 3,896,000 5,844,000 9,740,000
	–	(1,780,000)	–	28,940,000	27,160,000

– VII-3 –

APPENDIX VII

GENERAL INFORMATION

(ii) Share option scheme

Name or category
of participant
Date of grant
Exercise
period
Exercise
price
HK$
Directors/chief
executive
Sha Hong Qiu
16.2.2009
1.04.2009 to
15.02.2019
0.59
16.02.2010 to
15.02.2019
0.59
16.02.2011 to
15.02.2019
0.59
16.02.2012 to
15.02.2019
0.59
16.02.2013 to
15.02.2019
0.59
Ji Jun
16.2.2009
1.04.2009 to
15.02.2019
0.59
16.02.2010 to
15.02.2019
0.59
16.02.2011 to
15.02.2019
0.59
16.02.2012 to
15.02.2019
0.59
16.02.2013 to
15.02.2019
0.59
Shu Hua
16.2.2009
1.04.2009 to
15.02.2019
0.59
16.02.2010 to
15.02.2019
0.59
16.02.2011 to
15.02.2019
0.59
16.02.2012 to
15.02.2019
0.59
16.02.2013 to
15.02.2019
0.59

Number of options

Granted
during
the period
from 1.1.2009
to the Latest
Practicable
Date
Lapsed or
cancelled
during
the period
from 1.1.2009
to the Latest
Practicable
Date
Exercised
during
the period
from 1.1.2009
to the Latest
Practicable
Date
Outstanding
as at
31.12.2008
Outstanding
as at
the Latest
Practicable
Date
336,000
–
–
–
336,000
336,000
336,000
336,000
336,000
336,000
336,000
336,000
336,000
300,000
–
–
–
300,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
–
–
–
300,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000

– VII-4 –

APPENDIX VII

GENERAL INFORMATION

Number of options

					Lapsed or
				Granted	cancelled	Exercised
				during	during	during
				the period	the period	the period		Outstanding
				from 1.1.2009	from 1.1.2009	from 1.1.2009		as at
				to the Latest	to the Latest	to the Latest	Outstanding	the Latest
Name or category		Exercise	Exercise	Practicable	Practicable	Practicable	as at	Practicable
of participant	Date of grant	period	price	Date	Date	Date	31.12.2008	Date
			HK$
Yu Bao Dong	16.2.2009	1.04.2009 to	0.59	300,000	–	–	–	300,000
		15.02.2019
		16.02.2010 to	0.59	300,000				300,000
		15.02.2019
		16.02.2011 to	0.59	300,000				300,000
		15.02.2019
		16.02.2012 to	0.59	300,000				300,000
		15.02.2019
		16.02.2013 to	0.59	300,000				300,000
		15.02.2019
Sun Wei	16.2.2009	1.04.2009 to	0.59	300,000	–	–	–	300,000
		15.02.2019
		16.02.2010 to	0.59	300,000				300,000
		15.02.2019
		16.02.2011 to	0.59	300,000				300,000
		15.02.2019
		16.02.2012 to	0.59	300,000				300,000
		15.02.2019
		16.02.2013 to	0.59	300,000				300,000
		15.02.2019
Tong Yee Ming	16.2.2009	1.04.2009 to	0.59	300,000	–	–	–	300,000
		15.02.2019
		16.02.2010 to	0.59	300,000				300,000
		15.02.2019
		16.02.2011 to	0.59	300,000				300,000
		15.02.2019
		16.02.2012 to	0.59	300,000				300,000
		15.02.2019
		16.02.2013 to	0.59	300,000				300,000
		15.02.2019

– VII-5 –

APPENDIX VII

GENERAL INFORMATION

Name or category of participant Date of grant Exercise period Exercise price HK$ Non-director employees 16.2.2009 1.04.2009 to 15.02.2019 0.59 (in aggregate) 16.02.2010 to 15.02.2019 0.59 16.02.2011 to 15.02.2019 0.59 16.02.2012 to 15.02.2019 0.59 16.02.2013 to 15.02.2019 0.59 24.4.2009 1.5.2009 to 23.4.2019 1.054 24.4.2010 to 23.4.2019 1.054 24.4.2011 to 23.4.2019 1.054 24.4.2012 to 23.4.2019 1.054 24.4.2013 to 23.4.2019 1.054 Total		Number of options	Number of options	Number of options
	Granted during the period from 1.1.2009 to the Latest Practicable Date 6,360,000 6,360,000 6,360,000 6,360,000 6,360,000 608,000 608,000 608,000 608,000 608,000	Lapsed or cancelled during the period from 1.1.2009 to the Latest Practicable Date 80,0000 160,000 160,000 160,000 160,000 –	Exercised during the period from 1.1.2009 to the Latest Practicable Date 260,000 – – – – –	Outstanding as at 31.12.2008 – – – – – –	Outstanding as at the Latest Practicable Date 6,020,000 6,200,000 6,200,000 6,200,000 6,200,000 608,000 608,000 608,000 608,000 608,000
	44,020,000	720,000	260,000	–	43,040,000

Save as disclosed in this paragraph headed “Share Capital” of this Appendix VII, the Company did not have any outstanding options, warrants, derivatives or securities convertible into Shares as at the Latest Practicable Date.

– VII-6 –

APPENDIX VII

GENERAL INFORMATION

3. MARKET PRICES

The table below shows the closing prices of the Shares quoted on the Stock Exchange (i) at the end of each of the six calendar months immediately preceding the date of the Announcement; (ii) on the Last Trading Day; and (iii) on the Latest Practicable Date:

Date	Closing Price
	(HK$)
Latest Practicable Date	2.70
Last Trading Day	2.50
29 May 2009	2.17
30 April 2009	1.01
31 March 2009	0.93
27 February 2009	0.55
30 January 2009	0.56
31 December 2008	0.61

Note: The lowest and highest closing prices of the Shares as quoted on the Stock Exchange during the period between the beginning of the six months preceding the date of the Announcement and the Latest Practicable Date were HK$0.53 on 21 January 2009 and HK$2.88 on 23 June 2009 respectively.

4. DISCLOSURE OF INTERESTS

(a) Directors of the Company

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive 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); (b) to be and were recorded in the register required to be kept pursuant to Section 352 of the SFO; or (c) to otherwise be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities

– VII-7 –

APPENDIX VII

GENERAL INFORMATION

Transactions by Directors of Listed Issuers as adopted by the Company (the “Model Code”), were as follows:

(i) Long position in the Shares and underlying Shares

				Number of
				underlying		Percentage of
				Shares held		issued share
Name of Director/	Number of			under equity		capital of
chief executive	ordinary Shares	held		derivates	Total	the Company
	Corporate	Personal
	interests	interests
Mr. Zhu	5,965,628,327		–	118,395,719	6,084,024,046	594.91
	(notes 1, 2, 3)			(note 4)
Sha Hong Qiu	–		–	3,360,000	3,360,000	0.33
				(note 5)
Ji Jun	–		–	3,000,000	3,000,000	0.29
				(note 5)
Shu Hua	–		–	3,000,000	3,000,000	0.29
				(note 5)
Mr. Yu	19,832,032		–	3,000,000	22,832,032	2.23
	(note 6)			(note 5)
Sun Wei	–	2,843,000		3,000,000	5,843,000	0.57
				(note 5)
Tong Yee Ming	–	20,000		1,500,000	1,520,000	0.15
				(note 5)

(ii) Short position in the Shares and underlying Shares

				Number of
				underlying		Percentage of
				Shares held		issued share
Name of Director/	Number of			under equity		capital of
chief executive	ordinary Shares	held		derivates	Total	the Company
	Corporate	Personal
	interests	interests
Mr. Zhu	900,000,000		–	–	900,000,000	88
	(note 3)

– VII-8 –

APPENDIX VII

GENERAL INFORMATION

Notes:

(1) The interests of Mr. Zhu are held by Highexcel Investments Limited and Happy Genius, which are wholly-owned by Golden Concord Group Limited, which in turn is wholly-owned by Asia Pacific Energy Holdings Limited. Asia Pacific Energy Holdings Limited is in turn wholly-owned by Asia Pacific Energy Fund Limited. Asia Pacific Energy Fund Limited is ultimately held under a discretionary trust by Credit Suisse Trust Limited for Mr. Zhu and his family.
(2) Highexcel Investments Limited holds 352,518,443 Shares.
(3) Upon Completion, Happy Genius will receive 4,713,109,884 Shares as the consideration for the Acquisitions. Immediately after the Completion, 900,000,000 Shares will be transferred by Happy Genius to the Holders pursuant to the redemption of the Exchangeable Bonds.
(4) Mr. Zhu is the legal and beneficial owner of the entire issued share capital of Get Famous. On 11 August 2008, a subsidiary of the Company and Get Famous entered into a sale and purchase agreement pursuant to which such subsidiary conditionally agreed to acquire and Get Famous agreed to sell, the entire issued share capital of Joint Loyal Holdings Limited. The consideration for such acquisition is to be satisfied by the issuance of convertible notes by the Company to Get Famous in the principal amount of not exceeding RMB127,936,000. Get Famous or its nominee has the right to convert any part of the principal amount of the convertible notes into Shares at a conversion price of HK$1.230 (subject to adjustment). If Get Famous exercises all the principal amount of the convertible notes, a total of 118,395,719 Shares will be converted. As at the Latest Practicable Date, none of such convertible notes had been issued since the completion of such acquisition had yet to be completed.
(5) These are share options granted by the Company to the Directors, pursuant to the pre-IPO share option scheme and the share option scheme, both adopted by the Shareholders on 22 October 2007. Such share options can be exercised by the Directors at various intervals during the period from 1 April 2009 to 15 February 2019 at an exercise price of HK$4.10 and HK$0.59, respectively.
(6) Mr. Yu is the ultimate beneficial owner of Bonus Billion and Joy Big. Bonus Billion and Joy Big are both members of Vendors A. Upon Completion, Bonus Billion and Joy Big will in aggregate receive 19,832,032 Shares as part of their share of Consideration A.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive 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 in which he/she was taken or deemed to have under such provisions of the SFO); (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, to be notified to the Company and the Stock Exchange.

– VII-9 –

APPENDIX VII

GENERAL INFORMATION

(b) Substantial Shareholders

(i) 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 which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 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 meetings of any other member of the Enlarged Group:
(i) Long Position in the Shares and underlying Shares

			Number of	Percentage
			Shares/	of issued
		Capacity/	underlying	share
Name	Note	nature of interest	Shares	capital
Amplewood Resources	1	Beneficial interest	51,720,220	5.06
Limited
Asia Pacific Energy Fund	2, 3, 4	Interest in a controlled	5,965,628,327	583.33
Limited		corporation
Balderton Capital III, L.P.	1	Beneficial interest	150,000,000	14.67
Faith Rise Limited	1	Beneficial interest	202,173,387	19.77
CDH New Energy Limited	1	Beneficial interest	202,173,387	19.77
Credit Suisse Trust	2, 3, 4	Trustee	5,965,628,327	583.33
Limited
D. E. Shaw Composite	1, 5	Beneficial interest	101,086,633	9.88
Investments Asia 5
(Cayman) Limited
D. E. Shaw Composite	4, 5	Beneficial interest	415,204,301	40.60
Portfolios, L.L.C.
Excel Class Holdings	6	Beneficial interest	345,005,628	33.74
Limited
Get Famous	7	Interest in a controlled	118,395,719	11.58
		corporation

– VII-10 –

APPENDIX VII

GENERAL INFORMATION

			Number of	Percentage
			Shares/	of issued
		Capacity/	underlying	share
Name	Note	nature of interest	Shares	capital
Greenrich Investments	1	Beneficial interest	175,221,333	17.13
Limited
Guinness Mahon & Co.	1	Beneficial interest	202,173,387	19.77
Limited
Mandra Esop	1, 8	Beneficial interest	103,440,439	10.11
Mandra Materials	1, 8	Beneficial interest	857,693,644	83.87
Mandra Silicon	1	Beneficial interest	187,025,199	18.29
Milestone Silicon Limited	1	Beneficial interest	303,260,142	29.65
Morgan Stanley	9	Interest in a controlled	160,696,000	15.72
		corporation
New Horizon Melody	1	Beneficial interest	101,086,755	9.88
Investment Ltd.
Pearl Ever Group Limited	1	Beneficial interest	134,782,217	13.18
Poly (Hong Kong)	10	Interest in a controlled	134,791,044	13.18
Investments Limited		corporation
Star Right Limited	1	Beneficial interest	202,173,509	19.77
Success Central	1	Beneficial interest	76,239,397	7.46
Investments Limited
Sun Ally Holdings Limited	1	Beneficial interest	161,738,783	15.82
TB Silicon	1	Beneficial interest	410,477,524	40.14
Total Master Holdings	6	Beneficial interest	129,300,549	12.64
Limited

– VII-11 –

APPENDIX VII

GENERAL INFORMATION

(ii) Short Position in the Shares and underlying Shares

			Number of	Percentage
			Shares/	of issued
		Capacity/	underlying	share
Name	Note	nature of interest	Shares	capital
Asia Pacific Energy Fund	4	Interest in a controlled	900,000,000	88
Limited		corporation
Credit Suisse Trust	4	Trustee	900,000,000	88
Limited
Morgan Stanley	9	Interest in a controlled	616,000	0.06
		corporation

Notes:

(1) Upon Completion, new Shares will be issued to these entities as consideration under the Acquisition Agreements.
(2) The interests of Mr. Zhu are held by Highexcel Investments Limited and Happy Genius, which are wholly-owned by Golden Concord Group Limited, which in turn is wholly-owned by Asia Pacific Energy Holdings Limited. Asia Pacific Energy Holdings Limited is in turn wholly-owned by Asia Pacific Energy Fund Limited. Asia Pacific Energy Fund Limited is held under a discretionary trust by Credit Suisse Trust Limited for Mr. Zhu and his family.
(3) Highexcel Investments Limited holds 352,518,443 Shares.
(4) Upon Completion, Happy Genius will receive 4,713,109,884 Shares as consideration under the Acquisitions. Immediately after the Completion, 900,000,000 Shares will be transferred by Happy Genius to the Holders pursuant to the redemption of the Exchangeable Bonds. D. E. Shaw Composite Portfolios, L.L.C. is one of the Holders.
(5) Mr. David Elliot Shaw, who indirectly owns both the entire interest of D. E. Shaw Composite Investment Asia 5 (Cayman) Limited and D. E. Shaw Composite Portfolios, L.L.C., is deemed to be interested in 516,290,934 Shares.
(6) Excel Class Holdings Limited and Total Master Holdings Limited will hold these Shares on behalf of a total number of 128 employees, ex-employees and consultants of Target Group A under two share incentive plans adopted by GCL Solar pursuant to board resolutions of GCL Solar dated 15 August 2007 and 18 July 2008, respectively. The purpose of such share incentive plans was to attract, retain and motivate key employees and consultants of Target Group A. The adoption of such incentive plans was approved by resolutions of the shareholders of GCL Solar dated 21 February 2008 and 18 July 2008 respectively.
(7) Mr. Zhu is the legal and beneficial owner of the entire issued share capital of Get Famous. On 11 August 2008, a subsidiary of the Company and Get Famous entered into a sale and purchase agreement pursuant to which such subsidiary conditionally agreed to acquire and Get Famous agreed to

– VII-12 –

APPENDIX VII

GENERAL INFORMATION

sell the entire issued share capital, Joint Loyal Holdings Limited. The consideration for such acquisition is to be satisfied by the issuance of convertible notes by the Company to Get Famous in the principal amount of not exceeding RMB127,936,000. Get Famous or its nominee has the right to convert any part of the principal amount of the convertible notes into Shares at a conversion price of HK$1.230 (subject to adjustment). If Get Famous exercises all the principal amount of the convertible notes, a total of 118,395,719 Shares will be converted. As at the Latest Practicable Date, none of such convertible notes had been issued since the completion of such acquisition had yet to be completed.

(8) Mr. Zhang Songyi and Ms. Mui Bing How (being the wife of Mr. Zhang Songyi) both indirectly hold 50% interest each in Mandra Esop and Mandra Materials, and are deemed to be interested in 961,134,083 Shares.
(9) The interests of Morgan Stanley in the Company are held through:
(a) MS China 3 Limited which holds 160,080,000 Shares and is a wholly-owned subsidiary of Morgan Stanley Emerging Markets Inc. which in turn is wholly-owned by Morgan Stanley. Morgan Stanley is therefore deemed to be interested in the 160,080,000 Shares held by MS China 3; and
(b) Morgan Stanley & Co. Inc. which holds both a long and short position in 616,000 Shares, is a wholly-owned subsidiary of Morgan Stanley. Morgan Stanley is therefore deemed to be interested in the long and short position in 616,000 Shares held by Morgan Stanley & Co. Inc.

Mr. Tam Chor Kiu, a non-executive Director, is currently an employee of Morgan Stanley.

(10) The interests of Poly (Hong Kong) Investments Limited are held through its indirect wholly-owned subsidiary, Power Jade Holdings Limited.
(ii) As at the Latest Practicable Date, the following entities were interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of other members of the Enlarged Group:

Long position in the shares/registered capital of the members of the Enlarged Group

Name of		Capacity/	Contributed	Percentage of
member of the	Name of	nature of	registered	registered
Enlarged Group	Shareholder(s)	interest	capital	capital
			(RMB unless
			otherwise stated)
Fengxian Xinyuan	江蘇金馬房地產	Beneficial	66,000,000	49
Biological	有限公司	owner
Environmental	(Jiangsu Jinma
Protection	Property Co. Ltd.*)
Cogen-Power Co.,
Ltd.

– VII-13 –

APPENDIX VII

GENERAL INFORMATION

Name of		Capacity/	Contributed	Percentage of
member of the	Name of	nature of	registered	registered
Enlarged Group	Shareholder(s)	interest	capital	capital
			(RMB unless
			otherwise stated)
Funing Golden	江蘇省國神風	Beneficial	US$1,200,000	15
Concord	電成套設備有限公司	owner
Environmental	(Jiangsu Guoshen
Protection	Wind Power Facility
Co-generation	Co., Ltd.*)
Co., Ltd.
	博騰國際投資貿易	Beneficial	US$1,600,000	20
	有限公司	owner
	(Broadsino
	Investment Company
	Limited)
Haimen Xinyuan	江蘇電力發展股份	Beneficial	US$2,320,000	29
Environmental	有限公司	owner
Protection	(Jiangsu Electric
Co-Generation	Development Co.
Co., Ltd.	Ltd.*)
	江蘇通供集體資產	Beneficial	US$1,600,000	20
	有限公司	owner
	(Jiangsu Tong Gong
	Holding Asset Co.
	Ltd.*)
Kunshan Xinyuan	蘇州鑫圓資產投資	Beneficial	29,050,000	25
Environmental	有限公司	owner
Protection Cogen-	(Suzhou Xin Yuan
Power Co., Ltd.	Asset Investments
	Co. Ltd.*)
	昆出高科技有限公司	Beneficial	16,268,000	14
	(Kunshan	owner
	Technology Co.,
	Ltd.*)
Yangzhou Harbour	揚州廣源集團	Beneficial	US$3,094,960	22
Sludge Cogen-	有限公司	owner
Power Co., Ltd.	(Yangzhou
	Guangyuan
	Holdings Co. Ltd*)
	江蘇電力發展股份	Beneficial	US$3,094,960	22
	有限公司	owner
	(Jiangsu Electric
	Development Co.
	Ltd.*)

– VII-14 –

APPENDIX VII

GENERAL INFORMATION

Name of		Capacity/	Contributed	Percentage of
member of the	Name of	nature of	registered	registered
Enlarged Group	Shareholder(s)	interest	capital	capital
			(RMB unless
			otherwise stated)
Suzhou Industrial	中新蘇州工業園區	Beneficial	90,000,000	30
Park Blue Sky	市政公用發展集團	owner
Gas Cogen-	有限公司
Power Co., Ltd.	(Zhongxin Suzhou
	Industrial Park
	Municipal Public
	Utility Development
	Holding Co. Ltd.*)
	蘇州蘇鑫資產投資	Beneficial	57,000,000	19
	有限公司	owner
	(Suzhou Suxin Asset
	Investments Co. Ltd.*)
Xuzhou Baoxin	華潤天能徐州煤電	Beneficial	23,808,000	24
Sludge Power	有限公司	owner
Co., Ltd.	(China Resources
	Tianneng Xuzhou
	Coal & Power Co.,
	Ltd.*)
GCL Solar	Happy Genius	Beneficial	US$6,074	60.74
		owner
	Mandra Materials	Beneficial	US$1,000	10.00
		owner

* for identification purpose only

Save as aforesaid, so far as is known to any Director or chief executive of the Company, as at the Latest Practicable Date, no other person (who is not a Director or chief executive of the Company) had an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were recorded in the register kept by the Company under section 336 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 general meetings of any other member of the Enlarged Group or held any option in respect of such capital.

Save for Mr. Zhu and Mr. Tam Chor Kiu, as at the Latest Practicable Date, none of the Directors was a director or employee of a company (or its subsidiary) which has an interest or a short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

– VII-15 –

APPENDIX VII

GENERAL INFORMATION

5. ADDITIONAL DISCLOSURE OF SHAREHOLDING AND DEALINGS PURSUANT TO THE TAKEOVERS CODE

(a) The shareholdings of the members of the Combined Concert Group in the Company as at the Latest Practicable Date are set out in the letter from the Board and in the paragraph headed “Disclosure of Interests” above.
(b) None of the members of the Combined Concert Group had dealt for value in any relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) during the Relevant Period. As at the Latest Practicable Date, the Company had no shareholding interest or any relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) in any members of the Combined Concert Group, nor had the Company dealt for value in any shares or other relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) of the members of the Combined Concert Group.
(c) Save as set out in the letter of the Board and the paragraph headed “Disclosure of Interests” above, as at the Latest Practicable Date, none of the directors of the members of the Combined Concert Group was interested in any relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) of the Company, nor had the directors of the members of the Combined Concert Group dealt for value in any Shares or other relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) of the Company during the Relevant Period.
(d) Save as set out in the letter of the Board and the paragraph headed “Disclosure of Interests” above, as at the Latest Practicable Date, none of the members of the Combined Concert Group owned or controlled any Shares or other relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) of the Company. Save for the transactions contemplated in the Acquisition Agreements, none of the members of the Combined Concert Group had dealt for value in relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) during the Relevant Period.
(e) As at the Latest Practicable Date, save for the transactions contemplated in the Acquisition Agreements, none of the members of the Combined Concert Group or associate of any member of the Combined Concert Group had any arrangement of the kind described in Note 8 to Rule 22 of the Takeovers Code with any person.
(f) As at the Latest Practicable Date, save for the transactions contemplated in the Acquisition Agreements, there was no agreement, arrangement or understanding (including any compensation arrangement) between any member of the Combined Concert Group and any Director, recent Director, Shareholder or recent Shareholder which had any connection with or dependence upon the Acquisitions or the Whitewash Waiver.

– VII-16 –

APPENDIX VII

GENERAL INFORMATION

(g) As at the Latest Practicable Date, save as disclosed in the letter of the Board and the paragraph headed “Disclosure of Interests” above, none of the Directors was interested in any Shares or other relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) of the Company. During the Relevant Period, none of the Directors had dealt for value in any Shares or relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) of the Company. None of the Directors, save as disclosed in the paragraph headed “Disclosure of Interests” above and the letter of the Board, was interested in any shares, warrants and convertible notes of Vendors A and Vendor B or in any relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) in Vendors A and Vendor B.
(h) As at the Latest Practicable Date, The Hongkong and Shanghai Banking Corporation Limited (“HSBC”), being the joint financial adviser to the Company, and persons controlling, controlled by or under the same control as HSBC, owned or controlled an aggregate of 38,000 Shares. Save as aforesaid, no shareholding in the Company was owned or controlled by a subsidiary of the Company or by a pension fund of any member of the Group or by the Independent Financial Adviser and none of the advisers to the Company as specified in class (2) of the definition of associate in the Takeovers Code owned or had any interest in any Shares or other relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) of the Company.
(i) As at the Latest Practicable Date, save for the transactions contemplated in the Acquisition Agreements, no person had any arrangement of the kind as described in Note 8 to Rule 22 of the Takeovers Code with the Company or with any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of associate under the Takeovers Code.
(j) As at the Latest Practicable Date, no shareholding in the Company was managed on a discretionary basis by fund managers connected with the Company.
(k) As at the Latest Practicable Date, no benefit would be or have been given to any Director as compensation for loss of office or otherwise in connection with the Acquisitions or the Whitewash Waiver.
(l) As at the Latest Practicable Date, save for the transactions contemplated in the Acquisition Agreements, there was no agreement or arrangement between any Director and any other person which was conditional on or dependent upon the outcome of the Acquisitions, the Whitewash Waiver or otherwise connected with any of them.
(m) As at the Latest Practicable Date, save for the Acquisition Agreements, there were no material contracts entered into by the members of the Combined Concert Group in which any Director has any material personal interest.

– VII-17 –

APPENDIX VII

GENERAL INFORMATION

(n) Save for the transfer of 900,000,000 Shares by Happy Genius to the Holders immediately after Completion pursuant to the redemption of the Exchangeable Bonds, no Shares acquired by any member of the Combined Concert Group in pursuance of the Acquisitions will be transferred, charged or pledged to any other persons.
(o) As at the Latest Practicable Date, there was no shareholding in the Company which any member of the Combined Concert Group has borrowed or lent during the Relevant Period.
(p) As at the Latest Practicable Date, there was no shareholding in the Company which the Company or the Directors has/have borrowed or lent during the Relevant Period.
(q) Mr. Tong Yee Ming and Ms. Sun Wei have advised that they intend to vote in favour of the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver in respect of their own beneficial shareholdings in the Company. Mr. Zhu and his associates and any parties acting in concert with any of them and those who are involved or interested in the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver are required to abstain from voting on the resolutions approving the Acquisitions, the specific mandate for the New Issue and the Whitewash Waiver at the EGM. As at the Latest Practicable Date, the other Directors did not have any Shares and thus will not be entitled to vote on the resolution approving the Acquisitions, the specific mandate for the New Issue Whitewash Waiver at the EGM.
(r) As at the Latest Practicable Date, there was no shareholding in the Company owned or controlled by any persons who, prior to the posting of this circular, have irrevocably committed themselves to vote for or against the Whitewash Waiver.

6. SERVICE CONTRACTS

Details relating to service contracts of the Directors as at the Latest Practicable Date may be found in the table below (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

Save as disclosed below, as at the Latest Practicable Date, there were no service contracts with the Group or associated companies in force for Directors (i) which (including both continuous and fixed term contracts) have been entered into or amended within the Relevant Period; (ii) which are continuous contracts with a notice period of 12 months or more; or (iii) which are fixed term contracts with more than 12 months to run irrespective of the notice period.

– VII-18 –

APPENDIX VII

GENERAL INFORMATION

			Amount of	Amount of
			annual fixed	annual variable
			remuneration	remuneration	Aggregate
	Date of service	Service contract	under the	under the	annual fixed
Director	contract	expiry date	service contract	service contract	remuneration
			(HK$)	(HK$)	(HK$)
Mr. Zhu	22 October 2007	13 November 2010,	nil	nil	nil
		upon expiry,
		automatic renewal
		until termination
Sha Hong Qiu	22 October 2007	13 November 2010,	1,878,000	Discretionary bonus	1,878,000
		upon expiry,		with the amount to be
		automatic renewal		determined by the
		until termination		Board from time to
				time with reference to
				the performance of
				both the Group and
				the individual and
				allowance of 240,000
Ji Jun	22 October 2007	13 November 2010,	1,681,000	Discretionary bonus	1,681,000
		upon expiry,		with the amount to be
		automatic renewal		determined by the
		until termination		Board from time to
				time with reference to
				the performance of
				both the Group and
				the individual and
				allowance of 186,000
Shu Hua	22 October 2007	13 November 2010,	nil	Discretionary bonus	1,200,000
		upon expiry,		with the amount to be
		automatic renewal		determined by the
		until termination		Board from time to
				time with reference to
				the performance of
				both the Group and
				the individual

– VII-19 –

APPENDIX VII

GENERAL INFORMATION

			Amount of	Amount of
			annual fixed	annual variable
			remuneration	remuneration	Aggregate
	Date of service	Service contract	under the	under the	annual fixed
Director	contract	expiry date	service contract	service contract	remuneration
			(HK$)	(HK$)	(HK$)
Mr. Yu	22 October 2007	13 November 2010,	1,378,000	Discretionary bonus	1,378,000
		upon expiry,		with the amount to be
		automatic renewal		determined by the
		until termination		Board from time to
				time with reference to
				the performance of
				both the Group and
				the individual
Sun Wei	22 October 2007	13 November 2010,	nil	nil	nil
		upon expiry,
		automatic renewal
		until termination
Tam Chor Kiu	3 October 2008	3 October 2011	nil	nil	nil
Qian Zhi Xin	22 October 2007	13 November 2010	100,000	nil	100,000
Raymond Ho	22 October 2007	13 November 2010	300,000	nil	300,000
Chung Tai
Xue Zhong Su	22 October 2007	13 November 2010	100,000	nil	100,000
Yip Tai Him	31 March 2009	31 March 2012	200,000	nil	200,000

7. DIRECTORS’ INTERESTS IN THE ENLARGED GROUP’S ASSETS OR CONTRACTS

Mr. Zhu, being one of the Directors, is the legal and beneficial owner of the entire issued share capital of Get Famous, which entered into a sale and purchase agreement dated 11 August 2008 as vendor with a subsidiary of the Company as purchaser in relation to the acquisition of a 55% equity interest in Duolun Coal Mine and the increase in registered capital of the project company of Duolun Coal Mine. Upon the completion of such agreement, Get Famous or its nominee will receive the convertible notes to be issued by the Company in a total amount not more than RMB127,936,000. Get Famous or its nominee has the right to convert any part of the principal amount of the convertible notes into Shares at a conversion price of HK$1.230 (subject to adjustment). If Get Famous exercises all the principal amount of the convertible notes, a total of 118,395,719 Shares will be converted. Up to the date of this circular, the agreement has not been completed and no convertible notes have been issued by the Company.

– VII-20 –

APPENDIX VII

GENERAL INFORMATION

As at the Latest Practicable Date, save as disclosed herein, none of the Directors had any direct or indirect interest in any assets acquired or disposed of by or leased to, any member of the Group since the date up to which the latest published audited consolidated financial statements of the Group were made up.

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

8. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, the interests of the 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 in
	which the relevant		Interest of the relevant
Names of	Director is also	Principal activities of	Director in the competing
Director	a director	the competing company	company
(1) Mr. Zhu	Taicang Harbour	Operation of a cogeneration	Mr. Zhu and his associate
	Power Plant	plant in Taicang, Jiangsu,	own an aggregate interest
		PRC	of 37%
	Nanjing Cogeneration	Operation of a cogeneration	Mr. Zhu, through
	Plant	plant in Nanjing, PRC	companies controlled by
			him, holds 100% interest
	Longgu Cogeneration	Operation of a power plant	Mr. Zhu, through
	Plant	in Longgu, Peixian, PRC	companies controlled by
			him, holds 59% interest
	Guohua Taicang Power	Operation of a power plant	Mr. Zhu and his associate
	Plant	in Taicang, Jiangsu, PRC	own an effective interest
			of 18.5%
	Lanxi Cogeneration	Operation of a cogeneration	Mr. Zhu, through
	Plant	plant in Lanxi, Zhejiang,	companies controlled by
		PRC	him, holds 100% interest
	Guangzhou Yonghe	The cogeneration power	Mr. Zhu beneficially owns
	Project	plant is in the	100% interest
		pre-construction stage

– VII-21 –

APPENDIX VII

GENERAL INFORMATION

	Name of company in
	which the relevant		Interest of the relevant
Names of	Director is also	Principal activities of	Director in the competing
Director	a director	the competing company	company
	Lianyungang Baoxin	The cogeneration power	Mr. Zhu beneficially owns
	Biomass	plant is in the	100% interest
	Cogeneration Plant	pre-construction stage
	Dongwu Cogeneration	Operation of a cogeneration	Mr. Zhu, through a
	Plant	power plant in Suzhou,	company controlled by
		Jiangsu, PRC	him, holds 10% interest
	Xuzhou Incineration	Operation of an	Mr. Zhu, together with
	Power Plant	incineration power plant	his associate, holds
		in Xuzhou, PRC	an aggregate 100%
			interest
	Xuzhou Jinshanqiao	Operation of a cogeneration	Mr. Zhu, through his
	Cogeneration Power	plant in Xuzhou, Jiangsu,	associate, controls 100%
	Plant	PRC	interest
	Jiema Hydropower	Construction stage of a	Mr. Zhu through his
	Station	hydro-power station in	associate controls 70%
		Sichuan, PRC	equity interest
(2) Mr. Yu	China Sciences	Involved in waste	Mr. Yu is the non-executive
	Conservational	incineration power	director and owns no
	Power Limited	generation business in	equity interest
		the PRC

A non-competition deed was given by Mr. Zhu and his associates immediately prior to the initial public offering of the Shares.

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 the business of the Group.

9. MATERIAL CHANGE

The Directors confirm that there was no material change in the financial or trading position or outlook of the Group since 31 December 2008, being the date to which the latest published audited consolidated accounts of the Group were made up.

– VII-22 –

APPENDIX VII

GENERAL INFORMATION

10. LITIGATION

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

11. CONSENTS OF EXPERTS

(a) The following are the qualifications of the experts who have given opinions and advice which are included in this circular.

Name Qualification

First Shanghai Capital A licensed corporation under the SFO to carry Limited out type 6 (advising on corporate finance) regulated activity

Deloitte Touche Tohmatsu Certified public accountants Jones Lang LaSalle Chartered surveyors Sallmanns Limited

(b) None of First Shanghai Capital Limited, Deloitte Touche Tohmatsu or Jones Long LaSalle Sallmanns Limited has any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(c) Each of First Shanghai Capital Limited, Deloitte Touche Tohmatsu and Jones Long LaSalle Sallmanns Limited has given and has not withdrawn its written consent to the issue of this circular, with the inclusion of the references to its name and/or its opinion in the form and context in which it is included.
(d) None of First Shanghai Capital Limited, Deloitte Touche Tohmatsu or Jones Long LaSalle Sallmanns Limited had any direct or indirect interest in any assets which have been acquired, or disposed of by, or leased to any member of the Group, or were proposed to be acquired, or disposed of by, or leased to any member of the Enlarged Group since 31 December 2008, the date to which the latest published audited financial statements of the Group and the Target Group were made up.

12. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) entered into by the members of the Group within the two years immediately

– VII-23 –

APPENDIX VII

GENERAL INFORMATION

preceding the date of Announcement (i.e. 22 June 2009) and up to the Latest Practicable Date, which may be or are material:

(a) the Acquisition Agreements including the forms of the lock up agreements to be signed by each member of Vendors A and the Holders who will be transferred Shares by Happy Genius pursuant to the redemption of the Exchangeable Bonds;
(b) a placing agreement dated 14 May 2009 between the Company and CCB International Capital Limited in relation to the placing of up to 50,000,000 new Shares for a consideration of 2.5% of the placing price of HK$1.55 per placing share;
(c) a sale and purchase agreement dated 11 August 2008 between Get Famous and GCL Poly Coal Mining Limited in relation to the acquisition of the entire issued share capital of Joint Loyal Holdings Limited for a consideration of a sum not exceeding RMB127,936,000; and
(d) a sale and purchase agreement dated 12 November 2008 between the Company and Sinopro Enterprises Limited in relation to the sale of the entire issued share capital of Park Bright Investment Limited for a consideration of HK$25,000,000.

13. GENERAL

(a) The registered office of Happy Genius is at Offshore Incorporations Centre, P.O. Box 957, Road Town, Tortola, BVI. The ultimate beneficial owners of Happy Genius are Mr. Zhu and his family.
(b) The address of Mr. Zhu is Room 1115, Harbourview Horizon, 12 Hung Lok Road, Hung Hom, Kowloon, Hong Kong.
(c) The registered office of Mandra Esop is at Portcullis Trustnet (BVI) Limited, Portcullis Trustnet Chambers, P.O. Box 3444, Road Town, Tortola, BVI. The ultimate beneficial owners of Mandra Esop are Mr. Zhang Songyi and Ms. Mui Bing How (who is Mr. Zhang Songyi’s wife), through Beansprouts Limited. The director of Mandra Esop is Mr. Zhang Songyi.
(d) The address of Mr. Zhang Songyi is Flat 8A, 5-7 Magazine Gap Road, Hong Kong.
(e) The registered office of Mandra Materials is at Portcullis Trustnet (BVI) Limited, Portcullis Trustnet Chambers, P.O. Box 3444, Road Town, Tortola, BVI. The ultimate beneficial owners of Mandra Materials are Mr. Zhang Songyi and Ms. Mui Bing How (who is Mr. Zhang Songyi’s wife), through Beansprouts Limited. The director of Mandra Materials is Mr. Zhang Songyi.

– VII-24 –

APPENDIX VII

GENERAL INFORMATION

(f) The registered office of Mandra Silicon is at Portcullis Trustnet (BVI) Limited, Portcullis Trustnet Chambers, P.O. Box 3444, Road Town, Tortola, BVI. Mandra Silicon is wholly-owned by Woo Foong Hong Limited, a wholly-owned subsidiary of Moonchu Foundation for Culture & Education Limited (a tax exempt charity established by, but not beneficially owned by, Mr. Zhang Songyi, Ms. Mui Bing How (who is Mr. Zhang Songyi’s wife) and Mr. Chang Tsong Zung (who is Mr. Zhang Songyi’s brother)).
(g) The registered office of the Company is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands.
(h) The head office and principal place of business of the Company in Hong Kong is located at Suites 3601-4, Two Exchange Square, 8 Connaught Road Central, Hong Kong.
(i) The registered office of First Shanghai Capital Limited is located at 19th Floor, Wing On House, 71 Des Voeux Road Central, Hong Kong.
(j) The qualified accountant of the Company is Mr. Tong Yee Ming, who is an associate member of the Hong Kong Institute of Certified Public Accountants, the Chartered Institute of Cost and Management Accountants of the United Kingdom and Certified General Accountants of Canada.
(k) The company secretary of the Company is Ms. Chan Yuk Chun, who is an associate member of The Hong Kong Institute of Company Secretaries and Institute of Chartered Secretaries and Administrators, the United Kingdom.
(l) The Company’s branch share registrar and transfer office in Hong Kong is Tricor Investor Services Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(m) The address of ICBC International Capital Limited is Level 18, Three Pacific Place, 1 Queen’s Road East, Hong Kong. The address of HSBC is HSBC Main Building, 1 Queen’s Road Central, Hong Kong. ICBC International Capital Limited and HSBC are the joint financial advisers of the Company.
(n) For the purposes of this circular, unless otherwise specified, the following approximate exchange rates have been used for the conversion of (1) RMB into HK$ : RMB1.00 = HK$1.13 and (2) US$ into RMB$ : US$1.00 = RMB6.85. No representation is made that any amount in HK$, RMB or US$ could have been or could be converted at the above rate or at any other rates.
(o) The English text of this circular prevails over its Chinese translation in the case of discrepancy.

– VII-25 –

APPENDIX VII

GENERAL INFORMATION

14. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at (i) the principal place of business in Hong Kong of the Company 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) and (ii) on the website of the SFC (www.sfc.hk); and (iii) the Company’s website (www.gcl-poly.com.hk) from the date of this circular up to and including the date of the EGM:

(a) the Memorandum and Articles of Association;
(b) the memorandum and articles of association of GCL Solar, Greatest Joy and Sun Wave;
(c) the annual reports of the Company for the two years ended 31 December 2007 and 31 December 2008;
(d) the letter from the Independent Board Committee, the text of which is set out on page 45 of this circular;
(e) the letter from the Independent Financial Adviser, the text of which is set out on pages 46 to 84 of this circular;
(f) the accountants’ report of Target Group A, the text of which is set out in Appendix IIA;
(g) the accountants’ report of Greatest Joy Group, the text of which is set out in Appendix IIB;
(h) the accountants’ report of Sun Wave Group, the text of which is set out in Appendix IIC;
(i) the accountants’ report in respect of the unaudited proforma financial information of the Enlarged Group, the text of which is set out in Appendix V;
(j) the property valuation report relating to the property interests of the Group, the text of which is set out in Appendix VI;
(k) the service contracts of the Directors as set out in the paragraph headed “Service Contracts” in this Appendix VII;
(l) the material contracts referred to in the paragraph headed “Material Contracts” in this Appendix VII; and
(m) the written consents referred to in the paragraph headed “Consents of Experts” in this Appendix VII.

– VII-26 –

NOTICE OF EGM

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 Thursday, 16 July 2009 at 10:00 a.m. for the purpose of considering and, if thought fit, passing with or without modification the following resolutions of the Company:

ORDINARY RESOLUTIONS:

“ THAT
(a) the acquisition of the entire issued share capital of GCL Solar Energy Technology Holdings Inc. (“GCL Solar”) pursuant to Acquisition Agreement A (as defined in the circular of the Company dated 30 June 2009 (the “Circular”)), which has been entered into between the Company (as purchaser) and Happy Genius Holdings Limited (“Happy Genius”), Mandra Esop Limited, Mandra Materials Limited, Mandra Silicon Limited and all the Other Shareholders of GCL Solar (as defined in the Circular) (as vendors) (“Vendors A”), a copy of which has been produced to the meeting marked “A” and initialled by the chairman of the meeting for the purposes of identification, and all transactions contemplated thereby be and are hereby approved;
(b) the acquisition of the entire issued share capital of each of Greatest Joy International Limited and Sun Wave Group Limited, pursuant to Acquisition Agreement B (as defined in the Circular), entered into between the Company (as purchaser) and Happy Genius (as vendor) (“Vendor B”), a copy of which has been produced to the meeting marked “B” and initialled by the chairman of the meeting for the purposes of identification, and all transactions contemplated thereby be and are hereby approved;
(c) the directors of the Company (“Directors”) be and are hereby authorised, for and on behalf of the Company, to take all steps necessary or expedient in their opinion to implement and/or give effect to the terms of the Acquisition Agreements;

– EGM-1 –

NOTICE OF EGM

(d) the Directors be and are hereby authorised, for and on behalf of the Company, to execute all such other documents, instruments and agreements and to do all such acts or things deemed by them to be incidental to, ancillary to or in connection with the matters contemplated under the Acquisition Agreements and to agree to any amendment to any of the terms of the Acquisition Agreements which in the opinion of the Directors is not of a material nature and is in the interests of the Company;
(e) the increase of the authorised share capital of the Company from HK$1,000,000,000 to HK$2,000,000,000 by the creation of an additional 10,000,000,000 shares of HK$0.10 each of the Company, be and is hereby approved; and
(f) the allotment and issue of the Consideration Shares (as defined in the Circular) as set out in the Circular on and subject to the terms of the Acquisition Agreements (as defined in the Circular), be and are hereby approved.”
“ THAT subject to the Executive (as defined in the Circular) granting to Mr. Zhu and parties acting in concert with him the Whitewash Waiver (as defined in the Circular) and the satisfaction of any condition(s) attached to the Whitewash Waiver imposed by the Executive, the waiver pursuant to Note 1 on Dispensations from Rule 26 of the Hong Kong Code on Takeovers and Mergers (“Takeovers Code”) waiving any obligation on Mr. Zhu and parties acting in concert with him to make a mandatory general offer to the holders of securities of the Company to acquire securities in the Company other than those already owned by Mr. Zhu and parties acting in concert with him which would otherwise arise under Rule 26.1 of the Takeovers Code as a result of the allotment and issue of the Consideration Shares to Happy Genius (or its nominees) pursuant to the Acquisition Agreements be and is hereby approved.”
“ THAT the Directors be and are hereby authorised to allot and issue the Additional Shares (as defined in the Circular) subject to the following:
(a) the maximum number of Additional Shares which can be allotted and issued pursuant to the New Issue (as defined in the Circular) shall be 2,212,490,442 Shares;
(b) any allotment and issue of Additional Shares pursuant to this ordinary resolution shall be made on such terms and conditions as the Directors (or a duly authorised committee thereof) consider to be appropriate and in the best interests of the Company and subject to the other conditions, including size, timing and price, as mentioned in this ordinary resolution;

– EGM-2 –

NOTICE OF EGM

(c) the price at which any or all of the Additional Shares may be allotted and issued pursuant to this ordinary resolution shall be determined by reference to the prevailing market price of the Shares at the time of offering and all other relevant market considerations. Such price will in any event not represent a discount of 20% or more to the benchmarked price (as set out in Rule 13.36(5) of the Listing Rules) of the Shares;
(d) any Additional Shares which may be allotted and issued pursuant to this ordinary resolution shall be offered to investors who are independent of and not connected with the Company and the Directors, chief executive and substantial shareholder of the Company and its subsidiaries and/or any of their respective associates or any connected persons;
(e) the listing of, and permission to deal in, any Additional Shares to be allotted and issued pursuant to this ordinary resolution shall be granted by the Stock Exchange; and
(f) the authority to the Directors to allot and issue the Additional Shares pursuant to this ordinary resolution shall lapse on 15 January 2010, being the date falling six months following the passing of this ordinary resolution.”

By order of the Board GCL-Poly Energy Holdings Limited Zhu Gong Shan Chairman

Hong Kong, 30 June 2009

Notes:

(1) A member entitled to attend and vote at the Meeting may appoint a proxy to attend and, on a poll, vote on his behalf and such proxy need not be a member of the Company. A form of proxy for use at the Meeting is enclosed.
(2) In order to be valid, the form of proxy, together with any power of attorney or authority under which it is signed or a notarially certified copy of that power of attorney or authority, must be deposited with the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof.
(3) Completion and return of the form of proxy will not preclude a shareholder of the Company from attending and voting in person at the Meeting convened or any adjournment thereof and in such event, the authority of the proxy shall be deemed to be revoked.
(4) In the case of joint holders of a share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she/it were solely entitled thereto. If more than one of such joint holders are present at the Meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.
(5) As at the date of this notice, ZHU Gong Shan, SHA Hong Qiu, JI Jun, SHU Hua, YU Bao Dong, SUN Wei, TONG Yee Ming are executive directors of the Company; TAM Chor Kiu is a non-executive director of the Company; QIAN Zhi Xin, HO Chung Tai, Raymond, XUE Zhong Su and YIP Tai Him are independent non-executive directors of the Company.

– EGM-3 –

AI assistant

GCL Technology Holdings Limited — Proxy Solicitation & Information Statement 2009

50888_rns_2009-06-29_ee64a25d-887b-44fe-87f0-07fea7d14f43.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

ICBCI

First Shanghai Capital Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

(4) ALLOTMENT AND ISSUE OF THE CONSIDERATION SHARES AND ADDITIONAL SHARES;

AND

(5) SPECIFIC MANDATE FOR THE NEW ISSUE

INTRODUCTION

ACQUISITION AGREEMENTS

Acquisition Agreement A

Date

Parties

Assets acquired under Acquisition Agreement A

Consideration A

LETTER FROM THE BOARD

Consideration Shares A

Conditions precedent

Completion A

Acquisition Agreement B

Date

Parties

Assets acquired under Acquisition Agreement B

Consideration B

LETTER FROM THE BOARD

Consideration Shares B

LETTER FROM THE BOARD

Secured Notes

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Conditions precedent in respect of Acquisition B

Completion B

INCREASE IN AUTHORISED SHARE CAPITAL, ALLOTMENT AND ISSUE OF THE CONSIDERATION SHARES AND SPECIFIC MANDATE FOR THE NEW ISSUE

Terms of the New Issue

Issue of the Additional Shares pursuant to the New Issue

Approval of the Independent Shareholders

Other conditions

Lapse of the specific mandate for the New Issue

SHAREHOLDING STRUCTURE OF THE COMPANY BEFORE AND AFTER COMPLETION

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Lock up arrangements

LETTER FROM THE BOARD

INFORMATION ON THE VENDORS AND THE TARGET GROUP

Vendors

The Target Group

Risk factors

Continuous capital investment

Policies and regulations

Credit availability to solar companies in China

The structure of the Target Group before and after Completion

FINANCIAL INFORMATION OF THE TARGET GROUP

REASONS AND BENEFITS OF THE ACQUISITIONS TO THE GROUP

Solar market

LETTER FROM THE BOARD

Polysilicon market

Solar wafer industry

Strengths of the Target Group

Proven capability in constructing and ramping up polysilicon production capacity

Proven capability in reducing production costs

In-house research and development capabilities

Contracted long-term customers

Cost effective production process, facilities and operations

Experienced management team

LETTER FROM THE BOARD

FINANCIAL AND TRADING PROSPECTS

The Group

The Enlarged Group

FINANCIAL IMPACT OF THE ACQUISITIONS ON THE GROUP

LETTER FROM THE BOARD

IMPLICATIONS OF THE ACQUISITIONS UNDER THE LISTING RULES

IMPLICATIONS OF THE ACQUISITIONS UNDER THE TAKEOVERS CODE AND WHITEWASH WAIVER

GCL Technology Holdings Limited Proxy Solicitation & Information Statement 2009