GCL Technology Holdings Limited - Proxy Solicitation & Information Statement 2017

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 your stockbroker or other registered dealer in securities, bank manager, solicitor, certified public accountant or other professional adviser.

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

GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3800)

CONTINUING CONNECTED TRANSACTIONS

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

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

A letter from the Board is set out on pages 6 to 19 of this circular and the letter from the Independent Board Committee is set out on pages 20 to 21 of this circular.

The letter of advice from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders in relation to the Continuing Connected Transactions is set out on pages 22 to 44 of this circular.

A notice convening the EGM to be held at The Ballroom B, Level 2, The Langham, Hong Kong, 8 Peking Road, Tsim Sha Tsui, Kowloon, Hong Kong on Friday, 11 August 2017 at 10:00 a.m. is set out on pages 51 to 55 of this circular. Whether or not you are able to attend the EGM, 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 Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM should you so wish.

21 July 2017

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from	the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Letter from	the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
Appendix	– General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		51

– i –

DEFINITIONS

In this circular, the following expressions have the meanings set out below unless the context requires otherwise:

“associate”
has the meaning given to it under the Listing Rules
“Board”
the board of Directors of the Company
“Company”
GCL-Poly Energy Holdings Limited, a company incorporated in the Cayman Islands with limited liability whose shares are listed on the Main Board of the Stock Exchange
“connected person(s)”
has the meaning given to it under the Listing Rules
“Continuing Connected Transactions”
the transactions contemplated under the Steam Supply Agreements and the New Desalted Water Supply Agreement
“Desalted Water Annual Caps”
the maximum aggregate annual values for the transactions under the New Desalted Water Supply Agreement as set out in the section headed “The Previous Transactions and Future Annual Caps” in this circular
“Director(s)”
director(s) of the Company
“EGM”

an extraordinary general meeting of the Company to be convened for the Independent Shareholders to consider and, if thought fit, approve the Continuing Connected Transactions, the Steam Supply Annual Caps and the Desalted Water Annual Caps

“Existing Desalted Water Supply Agreement”

the desalted water supply agreement dated 29 September 2015 entered into between Jiangsu Zhongneng and Jinshanqiao Holdco in respect of the supply of desalted water by Jinshanqiao Cogeneration Plant to Jiangsu Zhongneng

“Existing GCL Steam Supply Agreement”

the steam supply agreement dated 29 September 2015 entered into between Jiangsu GCL and Jinshanqiao Holdco in respect of the supply of steam by Jinshanqiao Cogeneration Plant to Jiangsu GCL

– 1 –

DEFINITIONS

“Existing JZ Steam Supply Agreement”
“Existing Yangzhou Steam Supply Agreement”
“Group”
“HK$”
“Hong Kong”
“Independent Board Committee”
“Independent Financial Adviser” or “Frontier”
“Independent Shareholders”
“Jiangsu GCL”
the steam supply agreement dated 29 September 2015 entered into between Jiangsu Zhongneng and Jinshanqiao Holdco in respect of the supply of steam by Jinshanqiao Cogeneration Plant to Jiangsu Zhongneng
the steam supply agreement dated 2 June 2015 entered into between Yangzhou GCL and Yangzhou Power in respect of the supply of steam by Yangzhou Power to Yangzhou GCL
the Company and its subsidiaries
Hong Kong dollars, the lawful currency of Hong Kong

Hong Kong Special Administrative Region of the PRC

the independent committee of the Board, comprising all independent non-executive Directors, established for the purpose of considering the Continuing Connected Transactions, the Steam Supply Annual Caps and the Desalted Water Annual Caps thereunder
Frontier Capital Investment Limited (formerly known as China Frontier Capital Investment Limited), a licensed corporation to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong), being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the proposed Continuing Connected Transactions. Frontier Capital Investment Limited is a wholly-owned subsidiary of Frontier Financial Group Limited
the Shareholders other than Mr. Zhu, Mr. Zhu Yufeng, Ms. Sun Wei and their respective associates

Jiangsu GCL Silicon Material Technology Development Co., Ltd.* (江蘇協鑫硅材料科技發展有限公司), a company incorporated in the PRC and a wholly-owned subsidiary of the Company

– 2 –

DEFINITIONS

“Jiangsu Xinhua”
“Jiangsu Zhongneng”
“Jinshanqiao Cogeneration Plant”
“Jinshanqiao Holdco”
“JX Steam Supply Agreement”
“Latest Practicable Date”
“Listing Rules”
“Mpa”
“Mr. Zhu”
“New Desalted Water Supply Agreement”
“New GCL Steam Supply Agreement”
Jiangsu Xinhua Semiconductor Material Technology Limited (江蘇鑫華半導體材料科技有限公司), a company incorporated in the PRC with limited liability and owned as to 50.98% by the Company
Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd.* (江蘇中能硅業科技發展有限公司), a company incorporated in the PRC and a wholly-owned subsidiary of the Company
a cogeneration plant located in Jinshanqiao Development Zone, Xuzhou, the PRC and directly owned by Jinshanqiao Holdco
Xuzhou Jinshanqiao Cogeneration Co., Ltd.* (徐州金山橋熱電有限公司), a company incorporated in the PRC, which directly owns the Jinshanqiao Cogeneration Plant
the agreement dated 30 June 2017 entered into between Jinshanqiao Holdco as the supplier and Jiangsu Xinhua as the customer in relation to the supply of steam
18 July 2017, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
the Rules Governing the Listing of Securities on the Stock Exchange
Megapascal, a unit of pressure equal to one million pascals
Mr. Zhu Gongshan, the Chairman and an executive Director
the agreement dated 30 June 2017 entered into between Jinshanqiao Holdco as the supplier and Jiangsu Zhongneng as the customer in relation to the supply of desalted water
the agreement dated 30 June 2017 entered into between Jinshanqiao Holdco as the supplier and Jiangsu GCL as the customer in relation to the supply of steam

– 3 –

DEFINITIONS

“New JZ Steam Supply Agreement”
“New Yangzhou Steam Supply Agreement”
“PRC” or “China”
“RMB”
“SFO”
“Shareholders”
“Steam Supply Agreements”
“Steam Supply Annual Caps”
“Stock Exchange”
“subsidiaries”
“Taicang GCL”
“Taicang Power”
the agreement dated 30 June 2017 entered into between Jinshanqiao Holdco as the supplier and Jiangsu Zhongneng as the customer in relation to the supply of steam
the agreement dated 30 June 2017 entered into between Yangzhou Power as the supplier and Yangzhou GCL as the customer in relation to the supply of steam
the People’s Republic of China, for the purpose of this circular, excludes Hong Kong, Macau Special Administrative Region and Taiwan
Renminbi, the lawful currency of the PRC
Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong)
the shareholders of the Company
the New JZ Steam Supply Agreement, the New GCL Steam Supply Agreement, the New Yangzhou Steam Supply Agreement, the JX Steam Supply Agreement and the Taicang Steam Supply Agreement
the maximum aggregate annual values for the transactions under the Steam Supply Agreements as set out in the section headed “The Previous Transactions and Future Annual Caps” in this circular

The Stock Exchange of Hong Kong Limited

has the meaning given to it under the Listing Rules
Taicang GCL Photovoltaic Technology Co., Ltd* (太倉協鑫光伏科技有限公司), a company incorporated in the PRC and a wholly-owned subsidiary of the Company
Taicang GCL Power Generation Co., Ltd* (太倉港協鑫發電有限公司), a company incorporated in the PRC and a connected person of the Company

– 4 –

DEFINITIONS

“Taicang Steam Supply Agreement”
the agreement dated 30 June 2017 entered into between Taicang Power as the supplier and Taicang GCL as the customer in relation to the supply of steam
“Yangzhou GCL”
Yangzhou GCL Photovoltaic Technology Co., Ltd* (揚州協鑫光伏科技有限公司), a company incorporated in the PRC and a wholly-owned subsidiary of the Company
“Yangzhou Power”
Yangzhou Harbour Sludge Power Co., Ltd* (揚州港口污泥發電有限公司), a company incorporated in the PRC and a connected person of the Company
“Zhu Family Trust”
the discretionary trust known as the “Asia Pacific Energy Fund”, of which Mr. Zhu and his family (including Mr. Zhu Yufeng, an executive Director and son of Mr. Zhu) are beneficiaries

This circular contains translations between Renminbi and Hong Kong dollar amounts at RMB1 = HK$1.149, being the exchange rate prevailing on 29 June 2017. The translations should not be taken as a representation that the Renminbi could actually be converted into Hong Kong dollars at that rate or at all.

For identification purposes only

– 5 –

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: Mr. Zhu Gongshan (Chairman) Mr. Zhu Zhanjun (Chief Executive Officer) Mr. Ji Jun Mr. Zhu Yufeng Ms. Sun Wei Mr. Yeung Man Chung, Charles (Chief Financial Officer & Company Secretary) Mr. Jiang Wenwu Mr. Zheng Xiongjiu

Independent non-executive Directors: Ir. Dr. Ho Chung Tai, Raymond Mr. Yip Tai Him Dr. Shen Wenzhong Mr. Wong Man Chung, Francis

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

Principal place of business in Hong Kong: Units 1703B–1706, Level 17 International Commerce Centre 1 Austin Road West Kowloon, Hong Kong

21 July 2017

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

Reference is made to the announcement of the Company dated 30 June 2017 in relation to the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions.

The purpose of this circular is to provide you with, among other things:

(i) further information in relation to the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps;

– 6 –

LETTER FROM THE BOARD

(ii) the recommendations from the Independent Board Committee in respect of the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps;
(iii) the advice from Independent Financial Adviser to the Independent Board Committee and Independent Shareholders in respect of the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps; and
(iv) the notice to Shareholders convening the EGM to approve the Continuing Connected Transactions.

THE NEW JZ STEAM SUPPLY AGREEMENT

The principal terms and conditions of the New JZ Steam Supply Agreement are set out below.

(i) Date

30 June 2017

(ii) Parties

Supplier: Jinshanqiao Holdco Customer: Jiangsu Zhongneng

(iii) Subject Matter

Jinshanqiao Holdco agreed to supply, and Jiangsu Zhongneng agreed to purchase, steam with pressure of 0.8 and 3.8 Mpa and temperature at 220 and 380°C respectively for the period, commencing from 1 July 2017 and ending on 31 May 2020.

(iv) Consideration

The agreed steam supply price under the New JZ Steam Supply Agreement for steam with pressure of 0.8 Mpa is RMB165 (equivalent to approximately HK$189.59) per tonne and the steam with pressure of about 3.8 Mpa is RMB215 (equivalent to approximately HK$247.04) per tonne, and will be payable monthly in arrears based on the amount of steam utilised by Jiangsu Zhongneng in the relevant month.

– 7 –

LETTER FROM THE BOARD

Subject to the relevant Steam Supply Annual Caps, if (1) the reference price prescribed by Xuzhou Price Bureau is adjusted; or (2) otherwise agreed by the parties, the parties may adjust the steam supply price but in any event not exceeding the reference price prescribed by Xuzhou Price Bureau (after adjustment, if any).

(v) Basis of Consideration

The steam supply price was determined by arm’s length negotiations between the parties with reference to the reference price prescribed by Xuzhou Price Bureau. Xuzhou Price Bureau will publish reference steam price to the industry from time to time. The latest steam price notices published by Xuzhou Price Bureau on the reference prices for steam with pressure of 0.8 Mpa, and 3.8 Mpa, were on 18 December 2009, and 29 November 2010 (with a re-affirming notice dated 19 June 2017), respectively. The reference prices for steam with pressure of 0.8 Mpa and 3.8 Mpa are RMB195 per tonne and RMB240 per tonne, respectively.

(vi) Conditions precedent

The effectiveness of the New JZ Steam Supply Agreement shall be conditional upon the New JZ Steam Supply Agreement and the transactions contemplated thereunder having been approved by the Independent Shareholders at the EGM.

Upon the New JZ Steam Supply Agreement becoming effective, the Existing JZ Steam Supply Agreement will be terminated and superseded by the New JZ Steam Supply Agreement.

THE NEW GCL STEAM SUPPLY AGREEMENT

The principal terms and conditions of the New GCL Steam Supply Agreement are set out below.

(i) Date

30 June 2017

(ii) Parties

Supplier: Jinshanqiao Holdco Customer: Jiangsu GCL

– 8 –

LETTER FROM THE BOARD

(iii) Subject Matter

Jinshanqiao Holdco agreed to supply, and Jiangsu GCL agreed to purchase, steam with pressure of 0.6 to 0.8 Mpa and temperature at 200 to 260°C for the period, commencing from 1 July 2017 and ending on 31 May 2020.

(iv) Consideration

The agreed steam supply price under the New GCL Agreement for such steam is RMB180 (equivalent to approximately HK$206.82) per tonne and will be payable monthly in arrears based on the amount of steam utilised by Jiangsu GCL in the relevant month.

(v) Basis of Consideration

The steam supply price was determined by arm’s length negotiations between the parties with reference to the reference price prescribed by Xuzhou Price Bureau. Xuzhou Price Bureau will publish reference steam price to the industry from time to time. Xuzhou Price Bureau did not publish the reference price of steam with pressure of 0.6 Mpa to 0.8 Mpa, therefore, the industry generally made reference to the price of steam with pressure of 0.8 Mpa. The latest steam price notice published by Xuzhou Price Bureau on the reference prices for steam with pressure of 0.8 Mpa was on 18 December 2009. The reference price for steam with pressure of 0.8 Mpa was RMB195 per tonne.

(vi) Conditions precedent

The effectiveness of the New GCL Steam Supply Agreement shall be conditional upon the New GCL Steam Supply Agreement and the transactions contemplated thereunder having been approved by the Independent Shareholders at the EGM.

Upon the New GCL Steam Supply Agreement becoming effective, the Existing GCL Steam Supply Agreement will be terminated and superseded by the New GCL Steam Supply Agreement.

– 9 –

LETTER FROM THE BOARD

THE NEW YANGZHOU STEAM SUPPLY AGREEMENT

The principal terms and conditions of the New Yangzhou Steam Supply Agreement are set out below.

(i) Date

30 June 2017

(ii) Parties

Supplier: Yangzhou Power Customer: Yangzhou GCL

(iii) Subject Matter

Yangzhou Power agreed to supply, and Yangzhou GCL agreed to purchase, steam for industrial use with pressure of more than 0.6 Mpa and temperature at more than 150°C for the period commencing from 10 June 2017 and ending on 31 May 2020.

(iv) Consideration

The agreed steam supply price under the New Yangzhou Steam Supply Agreement is RMB178.2 (equivalent to approximately HK$204.75) per tonne and will be payable monthly in arrears based on the amount of steam supplied by Yangzhou Power in the relevant month.

Subject to the relevant Steam Supply Annual Caps, if (1) the reference price prescribed by Yangzhou Price Bureau is adjusted; or (2) otherwise agreed by the parties, the parties may adjust the steam supply price but in any event not exceeding the reference price prescribed by Yangzhou Price Bureau (after adjustment, if any).

(v) Basis of Consideration

The steam supply price was determined by arm’s length negotiations between the parties with reference to the price prescribed by Yangzhou Price Bureau. Yangzhou Price Bureau will publish reference steam price to the industry from time to time. The current reference steam price was published by Yangzhou Price Bureau on 13 February 2017, stating that the price of steam should not be higher than RMB198 per tonne.

(vi) Conditions precedent

The effectiveness of the New Yangzhou Steam Supply Agreement shall be conditional upon the New Yangzhou Steam Supply Agreement and the transactions contemplated thereunder having been approved by the Independent Shareholders at the EGM.

– 10 –

LETTER FROM THE BOARD

THE TAICANG STEAM SUPPLY AGREEMENT

The principal terms and conditions of the Taicang Steam Supply Agreement are set out below.

(i) Date

30 June 2017

(ii) Parties

Supplier: Taicang Power Customer: Taicang GCL

(iii) Subject Matter

Taicang Power agreed to supply, and Taicang GCL agreed to purchase, steam for industrial use with pressure of 0.6 to 0.8 Mpa and temperature at 160 to 200°C for the period commencing from 1 July 2017 and ending on 31 May 2020.

(iv) Consideration

The agreed steam supply price under the Taicang Steam Supply Agreement is RMB211 (equivalent to approximately HK$242.44) per tonne and will be payable monthly in arrears based on the amount of steam supplied by Taicang Power in the relevant month.

Subject to the relevant Steam Supply Annual Caps, if (1) the reference price prescribed by Taicang Price Bureau is adjusted; or (2) otherwise agreed by the parties, the parties may adjust the steam supply price but in any event not exceeding the reference price prescribed by Taicang Price Bureau (after adjustment, if any).

(v) Basis of Consideration

The steam supply price was determined by arm’s length negotiations between the parties with reference to the price prescribed by the Taicang Price Bureau. The Taicang Price Bureau will publish reference steam price to the industry from time to time. The current reference steam price was published by Taicang Price Bureau on 27 February 2017, stating that the price of steam with pressure of 1.0 Mpa should not be higher than RMB211 per tonne (inclusive of delivery cost). It is the industry practice to make reference to the price of steam with pressure of 1.0 Mpa per tonne in determining the price of steam with pressure of 0.6 Mpa to 0.8 Mpa.

(vi) Conditions precedent

The effectiveness of the Taicang Steam Supply Agreement shall be conditional upon the Taicang Steam Supply Agreement and the transactions contemplated thereunder having been approved by the Independent Shareholders at the EGM.

– 11 –

LETTER FROM THE BOARD

THE JX STEAM SUPPLY AGREEMENT

The principal terms and conditions of the JX Steam Supply Agreement are set out below.

(i) Date

30 June 2017

(ii) Parties

Supplier: Jinshanqiao Holdco Customer: Jiangsu Xinhua

(iii) Subject Matter

Jinshanqiao Holdco agreed to supply, and Jiangsu Xinhua agreed to purchase, steam with pressure of 0.8 Mpa and temperature at 180 to 200°C for the period, commencing from 1 July 2017 and ending on 31 May 2020.

(iv) Consideration

The agreed steam supply price under the JX Steam Supply Agreement is RMB165 (equivalent to approximately HK$189.59) per tonne, and will be payable monthly in arrears based on the amount of steam utilised by Jiangsu Xinhua in the relevant month.

(v) Basis of Consideration

The steam supply price was determined by arm’s length negotiations between the parties with reference to the reference price prescribed by Xuzhou Price Bureau. Xuzhou Price Bureau will publish reference steam price to the industry from time to time. The latest steam price notice published by Xuzhou Price Bureau on the reference price for steam with pressure of 0.8 Mpa was on 18 December 2009. The reference price for steam with pressure of 0.8 Mpa was RMB195 per tonne.

(vi) Conditions precedent

The effectiveness of the JX Steam Supply Agreement shall be conditional upon the JX Steam Supply Agreement and the transactions contemplated thereunder having been approved by the Independent Shareholders at the EGM.

– 12 –

LETTER FROM THE BOARD

THE NEW DESALTED WATER SUPPLY AGREEMENT

The principal terms and conditions of the New Desalted Water Supply Agreement are set out below.

(i) Date

30 June 2017

(ii) Parties

Supplier: Jinshanqiao Holdco Customer: Jiangsu Zhongneng

(iii) Subject Matter

Jinshanqiao Holdco agreed to supply, and Jiangsu Zhongneng agreed to purchase, desalted water for the period, commencing from 1 July 2017 and ending on 31 May 2020.

(iv) Consideration

The agreed desalted water supply price under the New Desalted Water Supply Agreement is RMB12 per tonne and will be payable monthly in arrears based on the amount of desalted water supplied by Jinshanqiao Holdco in the relevant month. If the raw material price or other costs increases or decreases, resulting in the cost for supplying the desalted water increasing or decreasing by 10% or above, the parties will adjust the price accordingly.

(v) Basis of Consideration

The desalted water supply price was determined by arm’s length negotiations between the parties with reference to the supplying and production costs of desalted water.

(vi) Conditions precedent

The effectiveness of the New Desalted Water Supply Agreement shall be conditional upon the New Desalted Water Supply Agreement and the transactions contemplated thereunder having been approved by the Independent Shareholders at the EGM.

Upon the New Desalted Water Supply Agreement becoming effective, the Existing Desalted Water Supply Agreement will be terminated and superseded by the New Desalted Water Supply Agreement.

– 13 –

LETTER FROM THE BOARD

THE PREVIOUS TRANSACTIONS AND FUTURE ANNUAL CAPS

The annual caps for the continuing connected transactions contemplated under the New JZ Steam Supply Agreement, the New GCL Steam Supply Agreement and the New Yangzhou Steam Supply Agreement and the amounts of previous transactions which form the basis of the cap are set out below:

		Previous Transactions	Previous Transactions		Proposed Caps
	1 January	1 January	1 July	1 January	1 January	1 January
	2016 to	2017 to	2017 to	2018 to	2019 to	2020 to
	31 December	31 May	31 December	31 December	31 December	31 May
	2016	2017	2017	2018	2019	2020
	RMB	RMB	RMB	RMB	RMB	RMB
New JZ Steam Supply
Agreement	679,292,000	286,462,000	366,000,000	777,000,000	859,000,000	358,000,000
New GCL Steam Supply
Agreement	3,244,000	1,569,000	2,196,000	5,076,000	5,076,000	2,556,000
	1 January	1 January	10 June	1 January	1 January	1 January
	2016 to	2017 to	2017 to	2018 to	2019 to	2020 to
	31 December	31 May	31 December	31 December	31 December	31 May
	2016	2017	2017	2018	2019	2020
	RMB	RMB	RMB	RMB	RMB	RMB
New Yangzhou Steam
Supply Agreement	928,000	612,000	2,080,000	3,740,000	3,930,000	1,720,000
Total	683,464,000	288,643,000	370,276,000	785,816,000	868,006,000	362,276,000
	(equivalent to	(equivalent to	(equivalent to	(equivalent to	(equivalent to	(equivalent to
	approximately	approximately	approximately	approximately	approximately	approximately
	HK$785,300,136)	HK$331,650,807)	HK$425,447,124)	HK$902,902,584)	HK$997,338,894)	HK$416,255,124)

– 14 –

LETTER FROM THE BOARD

The annual caps for the continuing connected transactions contemplated under the the Taicang Steam Supply Agreement and the JX Steam Supply Agreement are set out below:

Taicang Steam Supply Agreement JX Steam Supply Agreement Total	1 July 2017 to 31 December 2017 RMB 2,532,000 40,075,000 42,607,000 (equivalent to approximately HK$48,955,443)	Proposed Caps 1 January 2018 to 31 December 2018 1 January 2019 to 31 December 2019 RMB RMB 5,317,000 5,583,000 75,913,000 75,913,000 81,230,000 (equivalent to approximately HK$93,333,270) 81,496,000 (equivalent to approximately HK$93,638,904)	1 January 2020 to 31 May 2020 RMB 2,443,000
			30,096,000
			32,539,000 (equivalent to approximately HK$37,387,311)

The Steam Supply Annual Caps were calculated after primarily taking into account (i) the current agreed steam supply price, (ii) the potential steam supply price movements in the PRC, and (iii) the estimated consumption of steam by the respective customer. The Steam Supply Annual Caps are larger than the actual transaction amounts of previous transactions as the Company took into consideration (i) the expected increase in prices of coal, which is commonly used to generate steam, in the PRC in the future based on surge in coal price in late half of 2016; (ii) the fact that the current steam supply prices are at discount from the reference prices and, in the event the coal prices increase, there are likely consequential changes in the reference steam prices as some of the reference steam prices were published some years ago; and (iii) the expected increase in steam consumption for plant that has new projects.

– 15 –

LETTER FROM THE BOARD

The amounts of previous transactions and the Desalted Water Supply Annual Caps for the continuing connected transactions contemplated under the New Desalted Water Supply Agreement are set out below:

		Previous Transactions			Proposed Caps
	1 January	1 January	1 July	1 January	1 January	1 January
	2016 to	2017 to	2017 to	2018 to	2019 to	2020 to
	31 December	31 May	31 December	31 December	31 December	31 May
	2016	2017	2017	2018	2019	2020
	RMB	RMB	RMB	RMB	RMB	RMB
New Desalted Water
Supply Agreement	1,854,000	709,000	1,116,000	2,280,000	2,160,000	936,000
	(equivalent to	(equivalent to	(equivalent to	(equivalent to	(equivalent to	(equivalent to
	approximately	approximately	approximately	approximately	approximately	approximately
	HK$2,130,246)	HK$814,641)	HK$1,282,000)	HK$2,620,000)	HK$2,482,000)	HK$1,075,464)

The Desalted Water Annual Caps were calculated after primarily taking into account (i) the current agreed desalted water price and (ii) the estimated consumption of desalted water by Jiangsu Zhongneng. The Desalted Water Annual Caps are larger than the actual transaction amounts of previous transactions as the Company took into consideration the expected increase in desalted water consumption with certain buffer.

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS

The Steam Supply Agreements and the New Desalted Water Supply Agreement were entered into in the usual and ordinary course of the Group’s business.

Steam is required as energy by both Jiangsu GCL and Jiangsu Zhongneng (i) for their production of wafers and polysilicon respectively, and (ii) to provide heat for their factory plants and mortar plants during autumn and winter, and to provide heat to mortar plants during spring and summer. Steam is required by Jiangsu GCL, Yangzhou GCL and Taicang GCL for production of wafer products purpose. Steam is required by Jiangsu Xinhua for the production of semi-conductor grade polysilicon.

Desalted water is required for the generation of electricity by the captive power plant owned by Jiangsu Zhongneng, which was commissioned in July 2015.

The terms of the Steam Supply Agreements and the New Desalted Water Supply Agreement were negotiated based on normal commercial terms and the relevant prices were determined following arm’s length negotiations between the parties.

The Directors (excluding the independent non-executive Directors whose view is set out in the letter from the Independent Board Committee on pages 20 to 21) believe that the Continuing Connected Transactions are on normal commercial terms and have been entered into in the ordinary and usual course of business of the Company, and the terms of the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 16 –

LETTER FROM THE BOARD

INFORMATION ON THE PARTIES

The Group

The Company is an investment company and its subsidiaries are principally engaged in the manufacturing and sale of polysilicon and wafer products, and developing, owning and operating downstream solar farms.

Jinshanqiao Holdco

Jinshanqiao Holdco is a company incorporated in the PRC, which directly owns the Jinshanqiao Cogeneration Plant, the principal business of which is the sale and generation of electricity and steam. Jinshanqiao Holdco is ultimately held by Mr. Zhu, an executive Director, and Zhu Family Trust.

Yangzhou Power

Yangzhou Power is a company incorporated in the PRC, the principal business of which is the sale and generation of electricity and steam. Zhu Family Trust indirectly holds 51% equity interests in Yangzhou Power.

Taicang Power

Taicang Power is a company incorporated in the PRC, the principal business of which is the sale and generation of electricity and steam. Zhu Family Trust holds 72% equity interests in Taicang Power.

LISTING RULES IMPLICATION

Jinshanqiao Holdco is ultimately held by Mr. Zhu, an executive Director, and Zhu Family Trust. As Mr. Zhu is a connected person of the Company and Jinshanqiao Holdco is an associate of Mr. Zhu, Jinshanqiao Holdco is therefore a connected person of the Company. Accordingly, the transactions contemplated under the New JZ Steam Supply Agreement, the New GCL Steam Supply Agreement, the JX Steam Supply Agreement and the New Desalted Water Supply Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

Zhu Family Trust indirectly holds 51% equity interests in Yangzhou Power, therefore Yangzhou Power is an associate of Mr. Zhu and a connected person of the Company. Accordingly, the transaction contemplated under the New Yangzhou Steam Supply Agreement constitutes a continuing connected transaction for the Company under Chapter 14A of the Listing Rules.

Zhu Family Trust holds 72% equity interests in Taicang Power therefore Taicang Power is an associate of Mr. Zhu and a connected person of the Company. Accordingly, the transaction contemplated under the Taicang Steam Supply Agreement constitutes a continuing connected transaction for the Company under Chapter 14A of the Listing Rules.

– 17 –

LETTER FROM THE BOARD

As the highest applicable percentage ratio in respect of the Continuing Connected Transactions, in aggregate, is more than 5.0%, the Continuing Connected Transactions are subject to the disclosure, annual review and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee has been established to advise the Independent Shareholders in respect of the terms of the Continuing Connected Transactions (including the Steam Supply Annual Caps and the Desalted Water Annual Caps). The Company has appointed the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the fairness and reasonableness of the Continuing Connected Transactions, the Steam Supply Annual Caps and the Desalted Water Annual Caps.

As Mr. Zhu and Mr. Zhu Yufeng have a material interest in the Continuing Connected Transactions and Ms. Sun Wei is the vice chairman of Golden Concord Holdings Limited, a company controlled by Mr. Zhu, they have abstained from voting on the resolutions of the Board in respect of the approval of the Continuing Connected Transactions, the Steam Supply Annual Caps and the Desalted Water Annual Caps.

EGM

The EGM will be convened by the Company for the Independent Shareholders to consider and, if thought fit, approve the Continuing Connected Transactions, the Steam Supply Annual Caps and the Desalted Water Annual Caps. Pursuant to the Listing Rules, any Shareholder with a material interest in the Continuing Connected Transactions and its associates are required to abstain from voting in respect of the Continuing Connected Transactions. As such, Mr. Zhu, Mr. Zhu Yufeng, Ms. Sun Wei and their respective associates are required to abstain from voting in respect of the Continuing Connected Transactions.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISERS

The Independent Board Committee, comprising all the independent non-executive Directors, has been formed to consider and advise the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps. Your attention is drawn to the letter from the Independent Board Committee set out on pages 20 to 21 of this circular, which contains its recommendation to the Independent Shareholders as to the voting at the EGM.

Frontier Capital Investment Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps. Your attention is drawn to the Letter from the Independent Financial Adviser set out on pages 22 to 44 of this circular.

– 18 –

LETTER FROM THE BOARD

RECOMMENDATION

The Directors (excluding the independent non-executive Directors, whose views are set out in the letter from the Independent Board Committee on pages 20 to 21 of this circular) consider that the terms of the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps, are fair and reasonable, and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information contained in the appendix to this circular.

By order of the Board GCL-Poly Energy Holdings Limited Mr. Zhu Gongshan Chairman

– 19 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3800)

To the Independent Shareholders

21 July 2017

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to this circular dated 21 July 2017 issued by the Company to its Shareholders, of which this letter forms part. Unless the context otherwise requires, terms defined in this circular shall have the same meaning when used in this letter.

We have been appointed as the Independent Board Committee to advise the Independent Shareholders as to whether, in our opinion, the terms of the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Frontier Capital Investment Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the terms of the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps.

We wish to draw your attention to (i) the letter of advice from the Independent Financial Adviser as set out on pages 22 to 44 of this circular; and (ii) the letter from the Board as set out on pages 6 to 19 of this circular, which set out information relating to, and the reasons for and benefits of the Continuing Connected Transactions.

As the Company’s independent non-executive Directors, we have discussed with the management of the Company the reasons for and benefits of the Continuing Connected Transactions, and the basis upon which their terms have been determined. We have considered the factors and reasons considered by, and the opinions and recommendations of the Independent Financial Adviser, as set out on pages 22 to 44 of this circular.

– 20 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We are of the opinion that the terms of the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps, are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to approve the Steam Supply Agreements, the New Desalted Water Supply Agreement and the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps, to be proposed at the EGM.

Yours faithfully, For and on behalf of the Independent Board Committee Ho Chung Tai, Yip Tai Him Shen Wenzhong Wong Man Chung, Raymond Francis Independent non-executive Directors

– 21 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter of advice from Frontier to the Independent Board Committee and the Independent Shareholders in respect of the Continuing Connected Transactions, including the Steam Supply Annual Caps and the Desalted Water Annual Caps, for the purpose of incorporation in this circular.

FRONTIER CAPITAL INVESTMENT LIMITED

23/F, Three Exchange Square, Central, Hong Kong

21 July 2017

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS IN RELATION TO THE STEAM SUPPLY AGREEMENTS AND THE NEW DESALTED WATER SUPPLY AGREEMENT

INTRODUCTION

We refer to our engagement as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders with respect to the transactions contemplated under the Steam Supply Agreements and the New Desalted Water Supply Agreement (collectively, the “ Continuing Connected Transactions ”). Details of the Continuing Connected Transactions (including the Steam Supply Annual Caps and the Desalted Water Annual Caps) are set out in the “Letter from the Board” contained in the circular of the Company to the Shareholders dated 21 July 2017 (the “ Circular ”), of which this letter forms part. We, Frontier, have been appointed as the independent financial adviser to advise the Independent Board Committee and Independent Shareholders as to whether or not the terms of the Continuing Connected Transactions are fair and reasonable so far as the Independent Shareholders are concerned.

Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

As at the Latest Practicable Date, Jinshanqiao Holdco is ultimately held by Mr. Zhu, an executive Director, and Zhu Family Trust. As Mr. Zhu is a connected person of the Company and Jinshanqiao Holdco is an associate of Mr. Zhu, Jinshanqiao Holdco is therefore a connected person of the Company. Accordingly, the transactions contemplated under the New JZ Steam Supply Agreement, the New GCL Steam Supply Agreement, the JX Steam Supply Agreement and the New Desalted Water Supply Agreement constitute

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

continuing connected transactions for the Company under Chapter 14A of the Listing Rules. Zhu Family Trust indirectly holds 51% equity interests in Yangzhou Power, therefore Yangzhou Power is an associate of Mr. Zhu and a connected person of the Company. Accordingly, the transactions contemplated under the New Yangzhou Steam Supply Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules. Zhu Family Trust holds 72% equity interests in Taicang Power therefore Taicang Power is an associate of Mr. Zhu and a connected person of the Company. Accordingly, the transaction contemplated under the Taicang Steam Supply Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules. Jinshanqiao Holdco, Yangzhou Power and Taicang Power are collectively referred as the “ Connected Parties ” to the Group hereinafter.

An Independent Board Committee, comprising all independent non-executive Directors, namely Ir. Dr. Raymond Ho Chung Tai, Mr. Yip Tai Him, Dr. Shen Wenzhong and Mr. Wong Man Chung, Francis, has been established for the purpose to consider and to make recommendation to the Independent Shareholders on whether (i) the Continuing Connected Transactions are in the ordinary and usual course of business of the Group; (ii) the terms of the Steam Supply Agreements and the New Desalted Water Supply Agreement (including the Steam Supply Annual Caps and the Desalted Water Annual Caps, respectively) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (iii) the entering into the Steam Supply Agreements and the New Desalted Water Supply Agreement is in the interests of the Company and the Shareholders as a whole.

In formulating our opinion, we have reviewed, among other things, (i) the Steam Supply Agreements and the New Desalted Water Supply Agreement; (ii) the reference prices of steam published by government officials; (iii) steam contracts entered into between the Connected Parties of the Group, whom are the suppliers under the Steam Supply Agreements, to other independent third party steam users as further discussed below under the relevant sub-sections below in connection with the principal pricing and terms of the Steam Supply Agreements; (iv) the 2016 annual report of the Company (the “ 2016 Annual Report ”); and (v) the announcement of the Company dated 30 June 2017 in relation to the Continuing Connected Transactions. We have further relied on the information and facts supplied, and the opinions expressed, by the Directors and management of the Group (the “ Management ”) and have assumed that the information and facts provided and opinions expressed to us are true, accurate and complete in all material aspects at the time they were made and up to the date of the EGM. We have also sought and received confirmation from the Company that no material facts have been omitted from the information supplied and opinions expressed to us. We have relied on such information and consider that the information we have received is sufficient for us to reach our advice and recommendation as set out in this letter and to justify our reliance on such information. We have no reason to believe that any material information has been withheld, nor to doubt the truth or accuracy of the information provided. We have, however, not conducted any independent investigation into the business and affairs of the Group, nor have we carried out any independent verification of the information supplied.

– 23 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion and recommendation on the Continuing Connected Transactions (including the Steam Supply Annual Caps and the Desalted Water Annual Caps), we have taken into account the following principal factors and reasons:

1. BACKGROUND OF AND REASONS FOR THE CONTINUING CONNECTED TRANSACTIONS

Jinshanqiao Holdco, the company that entered into: (i) the New JZ Steam Supply Agreement and New Desalted Water Supply Agreement with Jiangsu Zhongneng; (ii) the New GCL Steam Supply Agreement with Jiangsu GCL; and (iii) the JX Steam Supply Agreement with Jiangsu Xinhua, is a company incorporated in the PRC, which directly owns the Jinshanqiao Cogeneration Plant, the principal business of which is the sale and generation of electricity and steam.

Yangzhou Power, the company that entered into the New Yangzhou Steam Supply Agreement with Yangzhou GCL, is a company incorporated in the PRC, the principal business of which is the sale and generation of electricity and steam.

Taicang Power, the company that entered into the Taicang Steam Supply Agreement with Taicang GCL, is a company incorporated in the PRC, the principal business of which is the sale and generation of electricity and steam.

As set out in the Letter from the Board to this Circular and as discussed with the Management, steam is used, together with many other raw materials, in the process of producing the Group’s polysilicon or is used to provide heat for the Group’s factories and plants. For Jiangsu Zhongneng, steam is used as energy to facilitate its polysilicon production processes. For Jiangsu GCL, steam is used to provide heat for its factory plants and production of wafer products. For both Yangzhou GCL and Taicang GCL, steam is used in their respective manufacturing process of wafer products. For Jiangsu Xinhua, steam is used in its production process of semiconductor grade polysilicon.

As for desalted water, it is required for the generation of electricity by the captive power plant owned by Jiangsu Zhongneng, which was commissioned in July 2015.

Furthermore, as discussed with the Management, the Continuing Connected Transactions could facilitate a stable and reliable supply of steam and desalted water to the Group. Notwithstanding steam and/or desalted water is provided by the Connected Parties, the Steam Supply Agreements and the New Desalted Water Supply Agreement do not prevent the Group from choosing other steam or desalted water suppliers as it thinks fit.

– 24 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In light of the above and having considered that, in particular, (i) the principal business of the Connected Parties are the sale and generation of electricity and steam; (ii) steam and/or desalted water (as the case maybe) is/are required energy or raw materials in the Group’s polysilicon and wafer manufacturing and production processes; (iii) steam is required to provide heat in certain factories and plants of the Group; (iv) the supply of steam and desalted water by the Connected Parties could facilitate a stable and reliable source of energy or raw materials to the Group; and (v) the Group retains its discretion to choose other steam or desalted water suppliers as it thinks fit, we consider that the Steam Supply Agreements and the New Desalted Water Agreement were entered into in the usual and ordinary course of the Group’s business and is in the interests of the Company and the Shareholders as a whole.

2. THE NEW JZ STEAM SUPPLY AGREEMENT

i. Principal pricing and terms of the New JZ Steam Supply Agreement

Pursuant to the New JZ Steam Supply Agreement, Jinshanqiao Holdco agreed to supply, and Jiangsu Zhongneng agreed to purchase, steam with pressure of 0.8 Mpa (220°C) and 3.8 Mpa (380°C) for the period, commencing from 1 July 2017 and ending on 31 May 2020.

Consideration

The agreed supply prices under the New JZ Steam Supply Agreement for steam with pressure of 0.8 Mpa and 3.8 Mpa are RMB165 (equivalent to approximately HK$189.59) per tonne and RMB215 (equivalent to approximately HK$247.04) per tonne respectively.

The steam supply prices under the New JZ Steam Supply Agreement were determined after arm’s length negotiations between the parties with reference to the reference prices prescribed by Xuzhou Price Bureau, which publishes reference steam prices to the industry from time to time. Subject to the relevant Steam Supply Annual Caps, if (i) the reference price prescribed by Xuzhou Price Bureau is adjusted; or (ii) otherwise agreed by the parties under the New JZ Steam Supply Agreement, the parties may adjust the steam supply price from time to time but in any event shall not exceed the reference price prescribed by Xuzhou Price Bureau (after adjustment, if any).

Based on the information available to us, the latest steam price notices published by Xuzhou Price Bureau on the reference prices for steam with pressure of 0.8 Mpa and 3.8 Mpa were on 18 December 2009 and 29 November 2010, respectively. For the reference price of steam with pressure of 3.8 Mpa, notwithstanding a further notice was made by Xuzhou Price Bureau dated 19 June 2017, which was merely reaffirmed the reference price published on 29 November 2010. We were advised that no changes have been made to such reference prices since and up to the Latest Practicable Date. The reference prices for steam with pressure of 0.8 Mpa and 3.8 Mpa were RMB195 per tonne and RMB240 per tonne, respectively.

– 25 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

To assess the fairness and reasonableness of the consideration for the New JZ Steam Supply Agreement, we have reviewed (i) the notices of the reference prices published by Xuzhou Price Bureau of the relevant steam with pressure of 0.8 Mpa and 3.8 Mpa dated 18 December 2009, 29 November 2010 and 19 June 2017, respectively; and (ii) certain executed contracts of Jinshanqiao Holdco for the supply of steam to other independent third party steam users. We noted that (a) the agreed prices of steam with pressure of 0.8 Mpa and 3.8 Mpa under the New JZ Steam Supply Agreement represent a discount to the relevant reference prices published by Xuzhou Price Bureau; and (b) the prices of relevant steam that offered by Jinshanqiao Holdco in its contracts with other independent third party steam users are not more favorable than that of the Group. We, therefore, consider that the steam supply prices and consideration under the New JZ Steam Supply Agreement are fair and reasonable.

Payment terms

With respect to the payment terms, the transactions in relation to the supply of steam under the New JZ Steam Supply Agreement will be payable monthly in arrears based on the amount of steam utilised by Jiangsu Zhongneng in the relevant month. We have reviewed the 2016 Annual Report and noted that the payment terms under the New JZ Steam Supply Agreement are in line with the normal commercial practice of the Group, where the Group was granted by its suppliers a credit period of normally between 0 to 90 days for its trade purchases.

Taking into account to the above, we are of the view that the payment terms of the New JZ Steam Supply Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

ii. Steam Supply Annual Caps in respect of the New JZ Steam Supply Agreement

The following table sets out the historical transaction amounts and the Steam Supply Annual Caps in respect of the New JZ Steam Supply Agreement: –

	Actual transaction	amounts		Steam Supply	Annual Caps
	1 January	1 January	1 July	1 January	1 January	1 January
	2016 –	2017 –	2017 –	2018 –	2019 –	2020 –
	31 December	31 May	31 December	31 December	31 December	31 May
	2016	2017	2017	2018	2019	2020
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
New JZ Steam Supply
Agreement	679,292	286,462	366,000	777,000	859,000	358,000
	(note 1)	(note 1)

– 26 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Note:

Historical actual transaction amount in relation to the Existing JZ Steam Supply Agreement.

As set out in the Letter from the Board to the Circular, the Steam Supply Annual Caps in respect of the New JZ Steam Supply Agreement (“ JZ Caps ”) were calculated based on inter alia, (i) the expected steam price; and (ii) the expected steam consumption volume. To assess the fairness and reasonableness of the JZ Caps, we have reviewed the expected steam price and the expected steam consumption volume of Jiangsu Zhongneng for the period from 1 July 2017 to 31 May 2020 as set out below:

	1 July	1 January	1 January	1 January	Steam price	Steam price
	2017 –	2018 –	2019 –	2020 –	published by
	31 December	31 December	31 December	31 May		Xuzhou
Steam	2017	2018	2019	2020	Price Bureau
*Pressure of 0.8 Mpa*
Price per tonne_(RMB)_	165	165	165	165		195
Volume_(tonne)_	214,940	456,330	456,330	190,040
*Pressure of 3.8 Mpa*
Price per tonne_(RMB)_	215	215	240	240		240
Volume_(tonne)_	1,537,800	3,264,800	3,264,800	1,359,600

JZ Caps price – 0.8 Mpa

We noted that the expected price of the steam with pressure of 0.8 Mpa for the period from 1 July 2017 to 31 May 2020 remains the same at RMB165 per tonne, which is below the reference price published by Xuzhou Price Bureau of RMB195 per tonne. The Management advised that Xuzhou Price Bureau has not adjusted the price of steam with pressure of 0.8 Mpa since 18 December 2009. We have reviewed the notice made by Xuzhou Price Bureau dated 18 December 2009 and noted that the reference price of steam with pressure of 0.8 Mpa was RMB195 per tonne. We are of the view that the expected prices of steam with pressure of 0.8 Mpa in determining the JZ Caps are reasonable.

JZ Caps price – 3.8 Mpa

We noted that the expected prices of steam with pressure of 3.8 Mpa for the periods from 1 July 2017 to 31 December 2018 and from 1 January 2019 to 31 May 2020 are RMB215 per tonne and RMB240 per tonne respectively, representing an increase of approximately 11.6%. We have also reviewed the 2016 Annual Report and noted that the price of steam with pressure of 3.8 Mpa offered under the Existing JZ Steam Supply Agreement was RMB180.7 per tonne. Hence, the price of RMB215 per tonne offered under the New JZ Steam Supply Agreement is higher than that of the Existing JZ Steam Supply

– 27 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Agreement. The Management explained that such increase in price was principally due to the increase in steam production costs, in particular, the coal prices. As coal is primarily used by Jinshanqiao Holdco to generate electricity and steam, and to produce higher pressure steam, more coal is required, the cost of production of Jinshanqiao Holdco has been inevitably affected.

Below set out the coal prices in the PRC from 5 January 2015 to the Latest Practicable Date:

==> picture [368 x 104] intentionally omitted <==

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

Coal Price in China for the period from 5 January 2015 to Latest Practicable Date
(RMB/tonne)
750
700
650
600
550
500
450
400
350
300
Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17
----- End of picture text -----

Source: Bloomberg

At the time of entering into the Existing JZ Steam Supply Agreement in September 2015, the PRC coal industry had been stagnant due to prior industrial production over-capacity, and the government’s restrictive measures in working days rule and pollution control. Nevertheless, coal prices surged in the late half of 2016 as the better than expected demand of coal and the government’s de-capacity campaign. We have reviewed a report published by the World Bank Group dated in April 2017, the coal prices in 2017 are expected to be higher than the average coal price in 2016 due to the continued efforts by the PRC government to reduce coal supply. As the supply of coal is expected to be reduced, the coal price is consequently expected to increase. Meanwhile, the PRC government is expected to prevent large price fluctuation by softening its restrictive production measures. For example, the PRC government temporarily rescinded the working days rule on 17 November 2016 given the coal prices spiked. Therefore, coal price is expected to increase or fluctuate at a relatively steady pace.

In light of the above and having considered: (a) more coal is required for the production of 3.8 Mpa pressure steam, the surge in coal price has added more pressure on Jinshanqiao Holdco to adjust the selling price of the 3.8 Mpa pressure steam; (b) the PRC government is expected to take a more cautious approach in regulating the coal industry to prevent large price fluctuation; large price surge like it happened in late half 2016 might be less likely; and (c) coal price in 2017 is expected to be higher than the average coal price in 2016, if that’s the case, a more progressive pace or mild fluctuation is expected; (d) the price of steam is reference to the prescribed prices adopted by the government authority and in any event the selling price of steam shall not exceed those reference prices; and (e) the Company has taken a more cautious

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

approach by using the currently highest reference price in calculating its annual cap for the period from 1 January 2019 to 31 May 2020, we consider that the expected prices of 3.8 Mpa pressure steam adopted by the Group in arriving at the JZ Caps are reasonable.

JZ Caps consumption volume – 0.8 Mpa

The expected consumption volume of the 0.8 Mpa pressure steam during the period from 1 July 2017 to 31 May 2020 are 214,940 tonnes (1 July to 31 December 2017), 456,330 tonnes (1 January to 31 December 2018), 456,330 tonnes (1 January to 31 December 2019), and 190,040 tonnes (1 January to 31 May 2020) respectively, which are lower than the actual annual consumption volume of 613,612 tonnes for the period from 1 January to 31 December 2016. As discussed with the Management, we understand that the decrease in the projected volume of 0.8 Mpa pressure steam as compared to the actual volume of the prior period as mentioned above is mainly due to the technological upgrade of the distillation system of Jiangsu Zhongneng, resulting in less steam is required in its polysilicon production processes. Upon the completion of technological upgrade, the consumption volume is expected to remain stable throughout the period from 1 July 2017 to 31 May 2020.

JZ Caps consumption volume – 3.8 Mpa

With respect to the expected steam consumption volume with pressure of 3.8 Mpa, as advised by the Management, the projected annual consumption volume with Jinshanqiao Holdco during 1 July 2017 to 31 May 2020 are expected to be similar to that of the actual annual consumption volume of 3,198,929 tonnes for the period from 1 January to 31 December 2016 under the Existing JZ Steam Supply Agreement. On this basis, we consider the expected consumption volume of the 3.8 Mpa pressure steam projected by the Group in arriving at the JZ Caps is reasonable.

Based on the above, we are of the view that the terms of the New JZ Steam Supply Agreement (including the JZ Caps) are fair and reasonable so far as the Independent Shareholders are concerned.

3. THE NEW GCL STEAM SUPPLY AGREEMENT

i. Principal pricing and terms of the New GCL Steam Supply Agreement

Pursuant to the New GCL Steam Supply Agreement, Jinshanqiao Holdco agreed to supply, and Jiangsu GCL agreed to purchase, steam with pressure of 0.6 Mpa to 0.8 Mpa and temperature at 200°C to 260°C for the period, commencing from 1 July 2017 and ending on 31 May 2020.

Consideration

The agreed supply price under the New GCL Steam Supply Agreement for such steam is RMB180 (equivalent to approximately HK$206.82) per tonne.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The steam supply price under the New GCL Steam Supply Agreement were determined after arm’s length negotiations between the parties with reference to the reference price prescribed by Xuzhou Price Bureau, which publishes reference steam prices to the industry from time to time. Subject to the relevant Steam Supply Annual Caps, if (i) the reference price prescribed by Xuzhou Price Bureau is adjusted; or (ii) otherwise agreed by the parties under the New GCL Steam Supply Agreement, the parties may adjust the steam supply price from time to time but in any event shall not exceed the reference price prescribed by Xuzhou Price Bureau (after adjustment, if any).

As advised by the Management, to the best of their knowledge, information and belief, for the price of steam with pressure of 0.6 Mpa to 0.8 Mpa, the industry generally made reference to the price of steam with pressure of 0.8 Mpa. Based on the information available to us, the latest steam price notice published by Xuzhou Price Bureau on the reference prices for steam with pressure of 0.8 Mpa was on 18 December 2009. We were advised that no changes have been made to such reference prices since and up to the Latest Practicable Date. The reference price for steam with pressure of 0.8 Mpa was RMB195 per tonne.

To assess the fairness and reasonableness of the consideration for the New GCL Steam Supply Agreement, we have reviewed (i) the notice of the reference price published by Xuzhou Price Bureau in relation to steam with pressure of 0.8 Mpa dated 18 December 2009; and (ii) certain executed contracts in relation to the supply of steam by Jinshanqiao Holdco to independent third party steam users. We noted that (a) the agreed price of steam with pressure of 0.6 – 0.8 Mpa under the New GCL Steam Supply Agreement represents a discount to the reference price of steam with pressure of 0.8 Mpa published by Xuzhou Price Bureau; and (b) the prices of relevant steam that offered by Jinshanqiao Holdco in its contracts with other independent third party steam users are not more favorable than that of the Group. We, therefore, consider that the steam supply price and consideration under the New GCL Steam Supply Agreement are fair and reasonable.

Payment terms

With respect to the payment terms, the transactions in relation to the supply of steam under the New GCL Steam Supply Agreement will be payable monthly in arrears based on the amount of steam utilised by Jiangsu GCL in the relevant month. We have reviewed the 2016 Annual Report and noted that the payment terms under the New GCL Steam Supply Agreement are in line with the normal commercial practice of the Group, where the Group was granted by its suppliers a credit period of normally between 0 to 90 days for its trade purchases.

Taking into account to the above, we are of the view that the payment terms of the New GCL Steam Supply Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

ii. Steam Supply Annual Caps in respect of the New GCL Steam Supply Agreement

The following table sets out the historical transaction amounts and the Steam Supply Annual Caps in respect of the New GCL Steam Supply Agreement: –

	Actual transaction	amounts		Steam Supply	Annual Caps
	1 January	1 January	1 July	1 January	1 January	1 January
	2016 –	2017 –	2017 –	2018 –	2019 –	2020 –
	31 December	31 May	31 December	31 December	31 December	31 May
	2016	2017	2017	2018	2019	2020
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
New GCL Steam Supply
Agreement	3,244	1,569	2,196	5,076	5,076	2,556
	(note 1)	(note 1)

Note:

Historical actual transaction amount in relation to the Existing GCL Steam Supply Agreement.

As set out in the Letter from the Board to the Circular, the Steam Supply Annual Caps in respect of the New GCL Steam Supply Agreement (“ GCL Caps ”) were calculated based on inter alia, (i) the expected steam price; and (ii) the expected steam consumption volume. To assess the fairness and reasonableness of the GCL Caps, we have reviewed the expected steam price and the expected steam consumption volume of Jiangsu GCL for the period from 1 July 2017 to 31 May 2020 as set out below:

	1 July	1 January	1 January	1 January	Steam Price
	2017 –	2018 –	2019 –	2020 –	published by
Steam with pressure	31 December	31 December	31 December	31 May	Xuzhou
of 0.6 – 0.8 Mpa	2017	2018	2019	2020	Price Bureau
Price per tonne_(RMB)_	180	180	180	180	195
Volume_(tonne)_	12,200	28,200	28,200	14,200

We noted that the expected price of steam with pressure of 0.6 – 0.8 Mpa from 1 July 2017 to 31 May 2020 remains the same at RMB180 per tonne, which is below the reference price published by Xuzhou Price Bureau. We have discussed with the Management and were advised that Xuzhou Price Bureau has not adjusted the price of steam with pressure of 0.8 Mpa since 18 December 2009. We have reviewed the notice made by Xuzhou Price Bureau dated 18 December 2009 and noted that the reference price of steam with pressure of 0.8 Mpa was RMB195 per tonne. We are of the view that the expected prices of in determining the JZ Caps are reasonable.

– 31 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

With respect to the expected steam consumption volume, the Management advised that (i) the expected monthly steam consumption volume fluctuates on a seasonal basis provided that Jiangsu GCL principally uses steam to provide heat for its plant in the autumn and winter seasons; and (ii) the annual production capacity of Jiangsu GCL is expected to be stable in the next few years and hence the expected annual steam consumption volume of steam shall remain stable. Additionally, we have also reviewed the historical monthly steam consumption schedule provided by the Management and noted that the monthly steam consumption volume from 1 January 2016 to 31 May 2017 showed the same seasonal changes as mentioned above. Therefore, we consider the expected steam consumption volume used by the Group in determining the GCL Caps is reasonable.

Based on the above, we are of the view that the terms of the New GCL Steam Supply Agreement (including the GCL Caps) are fair and reasonable so far as the Independent Shareholders are concerned.

4. THE NEW YANGZHOU STEAM SUPPLY AGREEMENT

i. Principal pricing and terms of the New Yangzhou Steam Supply Agreement

Pursuant to the New Yangzhou Steam Supply Agreement, Yangzhou Power agreed to supply, and Yangzhou GCL agreed to purchase, steam with pressure of more than 0.6 Mpa and temperature at more than 150°C for the period, commencing from 10 June 2017 and ending on 31 May 2020.

Consideration

The agreed supply price under the New Yangzhou Steam Supply Agreement for such steam is RMB178.2 (equivalent to approximately HK$204.75) per tonne.

The steam supply price under the New Yangzhou Steam Supply Agreement were determined after arm’s length negotiations between the parties with reference to the reference price prescribed by Yangzhou Price Bureau, which publishes reference steam prices to the industry from time to time. Subject to the relevant Steam Supply Annual Caps, if (i) the reference price prescribed by Yangzhou Price Bureau is adjusted; or (ii) otherwise agreed by the parties under the New Yangzhou Steam Supply Agreement, the parties may adjust the steam supply price from time to time but in any event shall not exceed the reference price prescribed by Yangzhou Price Bureau (after adjustment, if any).

We noted that reference steam prices prescribed by Yangzhou Price Bureau are classified into two categories, namely industrial steam and non-industrial steam respectively. As advised by the Management, the steam supplied by Yangzhou Power to Yangzhou GCL is industrial steam and hence the price of steam under New Yangzhou Steam Supply Agreement is made reference to the price of industrial steam. Based on the latest reference price of industrial steam as published by Yangzhou Price Bureau on 13 February 2017, the price of industrial steam should not be higher than RMB198 per tonne.

– 32 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

To assess the fairness and reasonableness of the consideration for the New Yangzhou Steam Supply Agreement, we have reviewed (i) the notice of the reference price published by Yangzhou Price Bureau in relation to industrial steam dated 13 February 2017; and (ii) certain executed contracts in relation to the supply of steam by Yangzhou Power to independent third party steam users. We noted that the (a) agreed price of steam with pressure of more than 0.6 Mpa under the New Yangzhou Steam Supply Agreement represents a discount to the reference price of industrial steam published by Yangzhou Price Bureau of RMB198 per tonne; and (b) the prices of relevant steam that offered by Yangzhou Power in its contracts with other independent third party steam users are not more favorable than that of the Group. We, therefore, consider that the steam supply price and consideration under the New Yangzhou Steam Supply Agreement are fair and reasonable.

Payment terms

With respect to the payment terms, the transactions in relation to the supply of steam under the New Yangzhou Steam Supply Agreement will be payable monthly in arrears based on the amount of steam supplied by Yangzhou Power in the relevant month. We have reviewed the 2016 Annual Report and noted that the payment terms under the New Yangzhou Steam Supply Agreement are in line with the normal commercial practice of the Group, where the Group was granted by its suppliers a credit period of normally between 0 to 90 days for its trade purchases.

Taking into account to the above, we are of the view that the payment terms of the New Yangzhou Steam Supply Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

ii. Steam Supply Annual Caps in respect of the New Yangzhou Steam Supply Agreement

The following table sets out the historical transaction amounts and the Steam Supply Annual Caps in respect of the New Yangzhou Steam Supply Agreement: –

	Actual transaction amounts	Actual transaction amounts			Steam Supply	Annual Caps
	1 January	1 January	10 June	1 January	1 January	1 January
	2016 –	2017 –	2017 –	2018 –	2019 –	2020 –
	31 December	31 May	31 December	31 December	31 December	31 May
	2016	2017	2017	2018	2019	2020
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
New Yangzhou Steam
Supply Agreement	928	612	2,080	3,740	3,930	1,720
	(note 1)	(note 1)

Notes:

Historical actual transaction amount in relation to the Existing Yangzhou Steam Supply Agreement.

– 33 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As set out in the Letter from the Board to the Circular, the Steam Supply Annual Caps in respect of the New Yangzhou Steam Supply Agreement (“ Yangzhou Caps ”) were calculated based on inter alia, (i) the expected steam price; and (ii) the expected steam consumption volume. To assess the fairness and reasonableness of the Yangzhou Caps, we have reviewed the expected steam price and the expected steam consumption volume of Yangzhou GCL for the period from 10 June 2017 to 31 May 2020 as set out below:

	10 June	1 January	1 January	1 January	Steam price
	2017 –	2018 –	2019 –	2020 –	published by
Steam with pressure	31 December	31 December	31 December	31 May	Yangzhou
more than 0.6 Mpa	2017	2018	2019	2020	Price Bureau
Price per tonne_(RMB)_	178.2	187.1	196.5	206.3	198
Volume_(tonne)_	11,670	20,000	20,000	8,340

As mentioned in the sub-section headed “ii. Steam Supply Annual Caps in respect of the New JZ Steam Supply Agreement” under the section headed “The New JZ Steam Supply Agreement” above, the PRC coal industry has experienced an upheaval in price in late 2016 after a long low and steady price trend in 2015. As it is expected that coal price in 2017 will be higher than the average of that in 2016, the Management has taken that into account when determining the Yangzhou Caps and expected that steam prices would indirectly affected by the increase in coal prices.

We notice that the steam prices used by the Group in each period determining the Yangzhou Caps represent an increase of approximately 5% as compared to each of the previous period. We also noted that the projected steam price for the period from 1 January 2020 – 31 May 2020 of RMB206.3 per tonne is higher than the current reference price prescribed by the Yangzhou Price Bureau of RMB198 per tonne. As discussed with the Management, we noted that the basis was made with reference to the historical reference price changes as prescribed by the Yangzhou Price Bureau and possible further adjustments in steam prices to be made by the Yangzhou Price Bureau in the near future. In connection with this, we have reviewed the notices published by Yangzhou Price Bureau on the reference steam prices since 2015 and up to the Latest Practicable Date, and noted that the percentage changes of steam prices during the period were ranging between approximately – 6.1% to +6.5%.

Having taken into account: (a) as mentioned in the sub-section headed “ii. Steam Supply Annual Caps in respect of the New JZ Steam Supply Agreement” under the section headed “The New JZ Steam Supply Agreement” above, the PRC government is expected to take a more cautious approach in regulating the coal industry to prevent large price fluctuation, the Management has therefore expected the price impact to steam might be to a smaller extent in the near future; (b) the historical percentage changes of steam prices as published by Yangzhou Price Bureau from 2015 and up to the Latest Practicable Date were ranging between approximately -6.1% to +6.5%; and (c) the steam price under the New Yangzhou Steam Supply Agreement is reference to the reference prices prescribed by the Yanzhou Price Bureau from time to time and, in any event, shall not be higher than the prescribed price, we therefore considered that the expected 5% increment in price applied by the Group in determining the Yangzhou Caps, which falls within the ambit of the historical percentage changes, is reasonable.

– 34 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In respect of the expected steam consumption volume, we noted that the expected annual steam consumptions from 10 June 2017 to 31 May 2020 are significantly higher than the actual annual steam consumption volume for the period from 1 January to 31 December 2016 of 5,414 tonnes. The Management explained that such increase has taken into account the new projects expected to be completed by the Group in September 2017 and it is expected that the consumption volume will remain at similar level thereafter. On this basis, we consider the expected steam consumption volume applied by the Group in arriving the Yangzhou Caps to be reasonable.

Based on the above, we are of the view that the terms of the New Yangzhou Steam Supply Agreement (including the Yangzhou Caps) are fair and reasonable so far as the Independent Shareholders are concerned.

5. THE TAICANG STEAM SUPPLY AGREEMENT

i. Principal pricing and terms of the Taicang Steam Supply Agreement

Pursuant to the Taicang Steam Supply Agreement, Taicang Power agreed to supply, and Taicang GCL agreed to purchase, steam with pressure of 0.6 Mpa to 0.8 Mpa and temperature at more than 160°C to 200°C for the period, commencing from 1 July 2017 and ending on 31 May 2020.

Consideration

The agreed supply price under the Taicang Steam Supply Agreement for such steam is RMB211 (equivalent to approximately HK$242.44) per tonne.

The steam supply price under the Taicang Steam Supply Agreement were determined after arm’s length negotiations between the parties with reference to the reference price prescribed by Taicang Price Bureau, which publishes reference steam prices to the industry from time to time. Subject to the relevant Steam Supply Annual Caps, if (i) the reference price prescribed by Taicang Price Bureau is adjusted; or (ii) otherwise agreed by the parties under the Taicang Steam Supply Agreement, the parties may adjust the steam supply price from time to time but in any event shall not exceed the reference price prescribed by Taicang Price Bureau (after adjustment, if any).

As advised by the Management, to the best of their knowledge, information and belief, for the price of steam with pressure of 0.6 Mpa to 0.8 Mpa, the industry generally made reference to the price of steam with pressure of 1.0 Mpa published by Taicang Price Bureau, as there is no reference price for steam with pressure of 0.6 Mpa to 0.8 Mpa published by Taicang Price Bureau. Furthermore, according to the notice of the reference price published by Taicang Bureau, we understand that a delivery cost of RMB5 per tonne can be charged by the steam supplier once the distance between the supplier and the buyer exceeds 8 km. We were advised that the delivery cost is included in the agreed supply price under the Taicang Steam Supply Agreement for the distance between Taicang Power and Taicang GCL exceeds 8 km. Based on the latest reference steam price as published by Taicang Price Bureau on 27 February 2017, the price of steam with pressure of 1.0 Mpa should not be higher than RMB211 per tonne (inclusive of delivery cost).

– 35 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

To assess the fairness and reasonableness of the consideration for the Taicang Steam Supply Agreement, we have reviewed (i) the notice of the reference price (inclusive of delivery) published by Taicang Bureau in relation to relevant steam with pressure of 1.0 Mpa dated 27 February 2017; and (ii) certain executed contracts in relation to the supply of steam by Taicang Power to independent third party steam users. We noted that (a) the agreed price of steam with pressure 0.6 Mpa to 0.8 Mpa under the Taicang Steam Supply Agreement is no less favourable than the reference price of steam (inclusive of delivery) with pressure of 1.0 Mpa published by Taicang Price Bureau; and (b) the prices of relevant steam that offered by Taicang Power in its contracts with other independent third party steam users are not more favorable than that of the Group. We, therefore, consider that the steam supply price and consideration under the Taicang Steam Supply Agreement are fair and reasonable.

Payment terms

With respect to the payment terms, the transactions in relation to the supply of steam under the Taicang Steam Supply Agreement will be payable monthly in arrears based on the amount of steam supplied by Taicang Power in the relevant month. We have reviewed the 2016 Annual Report and noted that the payment terms under the Taicang Steam Supply Agreement are in line with the normal commercial practice of the Group, where the Group was granted by its suppliers a credit period of normally between 0 to 90 days for its trade purchases.

Taking into account to the above, we are of the view that the payment terms of the Taicang Steam Supply Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

ii. Steam Supply Annual Caps in respect of the Taicang Steam Supply Agreement

The following table sets out the Steam Supply Annual Caps in respect of the Taicang Steam Supply Agreement: –

		Steam Supply	Annual Caps
	1 July	1 January	1 January	1 January
	2017 –	2018 –	2019 –	2020 –
	31 December	31 December	31 December	31 May
	2017	2018	2019	2020
	RMB’000	RMB’000	RMB’000	RMB’000
Taicang Steam Supply
Agreement	2,532	5,317	5,583	2,443

– 36 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As set out in the Letter from the Board to the Circular, the Steam Supply Annual Caps in respect of the Taicang Steam Supply Agreement (“ Taicang Caps ”) were calculated based on inter alia, (i) the expected steam price; and (ii) the expected steam consumption volume. To assess the fairness and reasonableness of the Taicang Caps, we have reviewed the expected steam price and the expected steam consumption volume of Taicang GCL for the period from 1 July 2017 to 31 May 2020 as set out below:

	1 July	1 January	1 January	1 January	Steam price
	2017 –	2018 –	2019 –	2020 –	published by
Steam with pressure of	31 December	31 December	31 December	31 May	Taicang
0.6 Mpa to 0.8 Mpa	2017	2018	2019	2020	Price Bureau
Price per tonne_(RMB)_	211.0	221.6	232.6	244.3	211.0
Volume_(tonne)_	12,000	24,000	24,000	10,000

When determining the Taicang Caps, we understand from the Management that similar basis and assumption were applied as per determining the Yangzhou Caps. As mentioned earlier in our letter, both Yangzhou GCL and Taicang GCL use steam to facilitate their respective manufacturing process of wafer products.

We notice that the steam prices used by the Group in each period determining the Taicang Caps represent an increase of approximately 5% as compared to each of the previous period. We also noted that the projected steam price for the periods from 1 January 2018 to 31 May 2020 are higher than the current reference price prescribed by the Taicang Price Bureau of RMB211 per tonne. As discussed with the Management, we noted that the basis was made with reference to the historical reference price changes as prescribed by the Taicang Price Bureau and possible further adjustments in steam prices to be made by the Taicang Price Bureau in the near future. In connection with this, we have reviewed the notices published by Taicang Price Bureau on the reference steam prices since 2015 and up to the Latest Practicable Date, we noted that the adjusted percentage changes of steam prices during the period were ranging around approximately -2.7% to +9.8%.

Having taken into account: (a) as mentioned in the sub-section headed “ii. Steam Supply Annual Caps in respect of the New JZ Steam Supply Agreement” under the section headed “The New JZ Steam Supply Agreement” above, the PRC government is expected to take a more cautious approach in regulating the coal industry to prevent large price fluctuation, the Management has therefore expected the price impact to steam might be to a smaller extent in the near future; (b) the adjusted historical percentage changes of steam prices as published by Taicang Price Bureau from 2015 and up to the Latest Practicable Date were ranging between approximately -2.7% to +9.8%; and (c) the steam price under the Taicang Steam Supply Agreement is reference to the reference prices prescribed by the Taicang Price Bureau from time to time and, in any event, shall not be higher than the prescribed price, we therefore considered that the expected 5% increment in price applied by the Group in determining the Taicang Caps, which falls within the ambit of the historical percentage changes, is acceptable.

– 37 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In respect of the expected steam consumption volume, we have discussed with the Management and were given to understand that the expected annual steam consumptions for the period from 1 July 2017 to 31 May 2020 are determined with reference to the current operation capacity and projects on hand of Taicang GCL, which is expected to be stable for the period up to 31 May 2020. Therefore, we consider the expected steam consumption volume applied by the Group in arriving the Taicang Cap to be reasonable.

Based on the above, we are of the view that the terms of the Taicang Steam Supply Agreement (including the Taicang Caps) are fair and reasonable so far as the Independent Shareholders are concerned.

6. THE JX STEAM SUPPLY AGREEMENT

i. Principal pricing and terms of the JX Steam Supply Agreement

Pursuant to the JX Steam Supply Agreement, Jinshanqiao Holdco agreed to supply, and Jiangsu Xinhua agreed to purchase, steam with pressure of 0.8 Mpa and temperature at 180°C to 200°C for the period, commencing from 1 July 2017 and ending on 31 May 2020.

Consideration

The agreed supply price under the JX Steam Supply Agreement for such steam is RMB165 (equivalent to approximately HK$189.59) per tonne.

The steam supply price under the JX Steam Supply Agreement were determined after arm’s length negotiations between the parties with reference to the reference price prescribed by Xuzhou Price Bureau, which publishes reference steam prices to the industry from time to time. Subject to the relevant Steam Supply Annual Caps, if (i) the reference price prescribed by Xuzhou Price Bureau is adjusted; or (ii) otherwise agreed by the parties under the JX Steam Supply Agreement, the parties may adjust the steam supply price from time to time but in any event shall not exceed the reference price prescribed by Xuzhou Price Bureau (after adjustment, if any).

Based on the information available to us, the latest steam price notices published by Xuzhou Price Bureau on the reference prices for steam with pressure of 0.8 Mpa was on 18 December 2009. We were advised that no changes have been made to such reference prices since and up to the Latest Practicable Date. The reference prices for steam with pressure of 0.8 Mpa was RMB195 per tonne.

– 38 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

To assess the fairness and reasonableness of the consideration for the JX Steam Supply Agreement, we have reviewed (i) the notice of the reference price published by Xuzhou Price Bureau in relation to relevant steam with 0.8 Mpa dated 18 December 2009; and (ii) certain executed contracts in relation to the supply of steam by Jinshanqiao Holdco to independent third party steam users. We noted that (a) the agreed price of steam with pressure of 0.8 Mpa under the JX Steam Supply Agreement represents a discount to the reference price of steam with pressure of 0.8 Mpa published by Xuzhou Price Bureau; and (b) the prices of relevant steam that offered by Jinshanqiao Holdco in its contracts with other independent third party steam users are not more favorable than that of the Group. We, therefore, consider that the steam supply price and consideration under the New JX Steam Supply Agreement are fair and reasonable.

Payment terms

With respect to the payment terms, the transactions in relation to the supply of steam under the JX Steam Supply Agreement will be payable monthly in arrears based on the amount of steam utilised by Jiangsu Xinhua in the relevant month. We have reviewed the 2016 Annual Report and noted that the payment terms under the JX Steam Supply Agreement are in line with the normal commercial practice of the Group, where the Group was granted by its suppliers a credit period of normally between 0 to 90 days for its trade purchases.

Taking into account to the above, we are of the view that the payment terms of the JX Steam Supply Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

ii. Steam Supply Annual Caps in respect of the JX Steam Supply Agreement

The following table sets out the Steam Supply Annual Caps in respect of the JX Steam Supply Agreement: –

		Steam Supply	Annual Caps
	1 July	1 January	1 January	1 January
	2017 –	2018 –	2019 –	2020 –
	31 December	31 December	31 December	31 May
	2017	2018	2019	2020
	RMB’000	RMB’000	RMB’000	RMB’000
JX Steam Supply
Agreement	40,075	75,913	75,913	30,096

– 39 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As set out in the Letter from the Board to the Circular, the Steam Supply Annual Caps in respect of the JX Steam Supply Agreement (“ JX Caps ”) were calculated based on inter alia, (i) the expected steam price; and (ii) the expected steam consumption volume. To assess the fairness and reasonableness of the JX Caps, we have reviewed the expected steam price and the expected steam consumption volume of Jiangsu Xinhua for the period from 1 July 2017 to 31 May 2020 as set out below:

	1 July	1 January	1 January	1 January	Steam price
	2017 –	2018 –	2019 –	2020 –	published by
Steam with pressure	31 December	31 December	31 December	31 May	Xuzhou
of 0.8 Mpa	2017	2018	2019	2020	Price Bureau
Price per tonne_(RMB)_	165	165	165	165	195
Volume_(tonne)_	242,880	460,080	460,080	182,400

With respect to the expected price of the steam, we noted that its expected price from 1 July 2017 to 31 May 2020 remains the same at RMB165 per tonne, which is below the reference price published by Xuzhou Price Bureau. We have discussed with the Management and were advised that Xuzhou Price Bureau has not adjusted the price of steam with pressure of 0.8 Mpa since 18 December 2009. We have reviewed the notice made by Xuzhou Price Bureau dated 18 December 2009 and noted that the reference price of steam with pressure of 0.8 Mpa was RMB195 per tonne. We are of the view that the expected price of steam with pressure of 0.8 Mpa in determining the JX Caps are reasonable.

With respect to the expected steam consumption volume, we understand from the Management that the expected monthly steam consumption volume fluctuates on a seasonal basis given that Jiangsu Xinhua requires higher cooling capacity in summer and hence requires more steam to provide more energy for its cooling systems. Based on the existing capacity and projects on hand of Jiangsu Xinhua, as advised by the Management, the expected annual steam consumption volume from 1 July 2017 to 31 May 2020 are expected to be stable. On this basis, we consider that the expected steam consumption volume applied by the Group in arriving the JX Caps to be reasonable.

Based on the above, we are of the view that the terms of the JX Steam Supply Agreement (including the JX Caps) are fair and reasonable so far as the Independent Shareholders are concerned.

– 40 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

7. THE NEW DESALTED WATER SUPPLY AGREEMENT

i. Principal pricing and terms of the New Desalted Water Supply Agreement

Pursuant to the New Desalted Water Supply Agreement, Jinshanqiao Holdco agreed to supply, and Jiangsu Zhongneng agreed to purchase, desalted water for the period, commencing from 1 July 2017 and ending on 31 May 2020.

Consideration

The agreed supply price under the New Desalted Water Supply Agreement for such steam is RMB12 (equivalent to approximately HK$13.79) per tonne.

The desalted water price under the New Desalted Water Supply Agreement were determined after arm’s length negotiations between the parties with reference to the supply and production costs of desalted water of Jinshanqiao Holdco. Pursuant to the terms of the New Desalted Water Supply Agreement, if the raw material prices or other costs increases or decreases, resulting in the cost for supplying the desalted water varies by 10% or above, the parties will adjust the price accordingly.

When assessing the fairness and reasonableness of the consideration for the New Desalted Water Supply Agreement, we noted that Jinshanqiao Holdco is the only desalted water provider in the area. As explained by the Management, (i) Jinshanqiao Holdco is the only cogeneration plant, i.e. the only plant that could generate electricity and useful heat or steam at the same time, within the heat supply radius; (ii) only cogeneration plant could produce desalted water; and (iii) the desalted water is used for the generation of electricity by the captive power plant owned by Jiangsu Zhongneng. We were also informed that Jiangsu Zhongneng is the only customer to purchase desalted water from Jinshanqiao Holdco as the power plant that it runs does not generate desalted water. Furthermore, we noticed that there is no public information on pricing or industry information on desalted water in the PRC and we were informed by the Management that there is no reference price of desalted water published by Xuzhou Price Bureau or any other government officials.

As discussed with the Management, we were advised that Taicang Power, one of the Connected Parties, also supplied desalted water to 國華太倉發電有限公司 (for illustration purpose only, Guohua Taicang Power Co., Ltd. , hereinafter “ Guohua Taicang Power* ”) which is 50% owned by Taicang Power, and two independent third parties. We noted the price of the desalted water supplied by Taicang Power to Guohua Taicang Power was RMB12.285 per tonne, and the prices to the other two independent third parties were RMB50 per tonne and RMB100 per tonne respectively, which are not more favourable than the desalted water price under the New Desalted Water Supply Agreement of RMB12 per tonne.

– 41 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

On the basis that: (a) desalted water is not a common commodity to sell, public information is not available; (b) Jiangsu Zhongneng is the only customer to purchase desalted water from Jinshanqiao Holdco; and (c) the prices of desalted water supplied by Taicang Power, one of the Connected Parties, to Guohua Taicang Power and independent third parties are not more favorable than that of Jinshanqiao Holdco to Jiangsu Zhongneng, we consider that the desalted water price and consideration under the New Desalted Water Supply Agreement to be fair and reasonable.

Payment terms

With respect to the payment terms, the transactions in relation to the supply of steam under the New Desalted Water Supply Agreement will be payable monthly in arrears based on the amount of desalted water supplied by Jinshanqiao Holdco in the relevant month. We have reviewed the 2016 Annual Report and noted that the payment terms under the New Desalted Water Supply Agreement are in line with the normal commercial practice of the Group, where the Group was granted by its suppliers a credit period of normally between 0 to 90 days for its trade purchases.

Taking into account to the above, we are of the view that the payment terms of the New Desalted Water Supply Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

ii. Desalted Water Annual Caps

The following table sets out the historical transaction amounts and the Desalted Water Annual Caps in respect of the New Desalted Water Supply – Agreement:

	Actual transaction	amounts		Desalted Water	Annual Caps
	1 January	1 January	1 July	1 January	1 January	1 January
	2016 –	2017 –	2017 –	2018 –	2019 –	2020 –
	31 December	31 May	31 December	31 December	31 December	31 May
	2016	2017	2017	2018	2019	2020
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
New Desalted Water
Supply Agreement	1,854	709	1,116	2,280	2,160	936
	(note 1)	(note 1)

Notes:

Historical actual transaction amount in relation to the Existing Desalted Water Supply Agreement.

– 42 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As set out in the Letter from the Board to the Circular, the Desalted Water Annual Caps were calculated based on inter alia, (i) the expected desalted water price; and (ii) the expected desalted water consumption volume. To assess the fairness and reasonableness of the Desalted Water Annual Caps, we have reviewed the expected desalted water price and the expected desalted water consumption volume of Jiangsu Zhongneng for the period from 1 July 2017 to 31 May 2020 as set out below:

	1 July	1 January	1 January	1 January
	2017 –	2018 –	2019 –	2020 –
	31 December	31 December	31 December	31 May
Desalted water	2017	2018	2019	2020
Price per tonne_(RMB)_	12	12	12	12
Volume_(tonne)_	93,000	190,000	180,000	78,000

As mentioned above, as no public industry information is available for desalted water, in assessing the price per tonne of desalted water, we have compared the price of desalted water supplied by Taicang Power, one of the Connected Parties, to its associate namely Guohua Taicang Power, which is not more favorable than that of provided by Jinshanqiao Holdco to Jiangsu Zhongneng. We also noted that the price of the desalted water is the same as it was offered under the Exiting Desalted Water Supply Agreement, we therefore consider that the price adopted by Jiangsu Zhongneng in determining the Desalted Water Annual Caps are consistent to that of the Existing Desalted Water Supply Agreement and is acceptable.

With respect to the expected desalted water consumption volume, the Management advised that, in determining the Desalted Water Annual Caps, it has taken into account: (a) the historical and current production capacity of electricity generated by the captive plant owned by Jiangsu Zhongneng; and (b) the future demand for desalted water by Jiangsu Zhongneng, which shall remain stable. In connection with this, we have reviewed the historical monthly desalted water consumption schedule provided by Jiangsu Zhongneng and noted that the monthly desalted water consumption volume from 1 January 2016 to 31 May 2017 were fairly stable and similar to that of the periods covering under the New Desalted Water Supply Agreement with certain buffer. On this basis, we consider that the expected desalted water consumption volume in determining the Desalted Water Annual Caps to be reasonable.

Based on the above, we are of the view that the terms of the New Desalted Water Supply Agreement (including the Desalted Water Annual Caps) are fair and reasonable so far as the Independent Shareholders are concerned.

– 43 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having taken into account the above principal factors, we are of the view that (i) the entering into of the Agreements is in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole; and (ii) the terms of the Continuing Connected Transactions are on normal commercial terms, together with the bases of the Steam Supply Annual Caps and the Desalted Water Annual Caps, are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves advise, the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Continuing Connected Transactions and the Steam Supply Annual Caps and the Desalted Water Annual Caps.

Yours faithfully, For and on behalf of Frontier Capital Investment Limited Jason Lin Letitia Yip Executive Director Director

For identification only

– 44 –

APPENDIX

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

Directors’ and chief executives’ interests and short positions in shares and underlying shares of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) 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 taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, were as follows:

Long position in the Shares:

Name of Director/ chief executive	Number of Shares held Number of underlying shares held Total Approximate percentage of issued share capital of the Company Beneficiary of a trust Corporate interests Personal interests
Zhu Gongshan Zhu Zhanjun Ji Jun Zhu Yufeng	6,197,054,822 (note 1) – – 173,333,334 (note 1) 6,370,388,156 34.27% – – 3,400,000 2,719,359 (note 2) 6,119,359 0.03% – – – 3,726,529 (note 2) 3,726,529 0.02% 6,197,054,822 (note 1) – – 175,851,259 (note 3) 6,372,906,081 34.29%

– 45 –

APPENDIX

GENERAL INFORMATION

Name of Director/ chief executive	Number of Shares held Number of underlying shares held Total Approximate percentage of issued share capital of the Company Beneficiary of a trust Corporate interests Personal interests
Sun Wei Yeung Man Chung, Charles Jiang Wenwu Zheng Xiongjiu Ho Chung Tai, Raymond Yip Tai Him	– – 5,723,000 4,733,699 (note 2) 10,456,699 0.06% – – – 1,700,000 (note 2) 1,700,000 0.01% – – 9,600,000 1,712,189 (note 2) 11,312,189 0.06% – – 250,000 2,719,358 (note 2) 2,969,358 0.02% – – – 1,007,170 (note 2) 1,007,170 0.01% – – – 1,007,170 (note 2) 1,007,170 0.01%

Notes:

(1) An aggregate of 6,197,054,822 Shares are collectively held by Highexcel Investments Limited, Happy Genius Holdings Limited and Get Famous Investments Limited, 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 with Credit Suisse Trust Limited as trustee for Mr. Zhu Gongshan and his family (including Mr. Zhu Yufeng, a Director and the son of Mr. Zhu Gongshan) as beneficiaries. Happy Genius Holdings Limited had lent 312,000,000 shares of the Company to the convertible bond investor’s associate under the shares lending agreement dated 23 November 2013 (as amended by an agreement dated 15 July 2015 and further amended by an agreement dated 25 January 2016), out of which 69,333,333 shares were returned on 29 April 2016 and 69,333,333 shares were returned on 7 April 2017. Happy Genius Holdings Limited was thus also interested in a long position of 173,333,334 Shares.
(2) 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 of the Company on 22 October 2007. Such granted share options can be exercised by the Directors at various intervals during the period from 1 April 2009 to 28 March 2026 at an exercise price of HK$4.071, HK$1.324, HK$1.160 or HK$0.586.
(3) The 175,851,259 underlying shares comprises the long position of 173,333,334 Shares held by Happy Genius Holdings Limited under Note (1) and 2,517,925 share options mentioned under Note (2) above.

Long position in the shares of the Company’s associated corporation, namely GCL New Energy Holdings Limited (“ GCL New Energy ”), in which the Company indirectly holds approximately 62.28% issued shares:

– 46 –

APPENDIX

GENERAL INFORMATION

Name of Director/ chief executive	Number of Shares of GCL New Energy held Number of underlying shares held Total Approximate percentage of issued share capital of GCL New Energy Beneficiary of a trust Corporate interests Personal interests
Zhu Yufeng Sun Wei Yeung Man Chung, Charles Zheng Xiongjiu	– – – 3,523,100 (Note) 3,523,100 0.02% – – – 27,178,200 (Note) 27,178,200 0.14% – – – 15,099,000 (Note) 15,099,000 0.08% – – 2,450,000 – 2,450,000 0.01%

Note: These are share options granted by the Company’s subsidiary, namely GCL New Energy Holdings Limited. Such granted share options can be exercised by Mr. Zhu Yufeng at the interval between 24 July 2015 and 23 July 2025 at an exercise price at HK$0.606 per share, and by Ms. Sun Wei and Mr. Yeung Man Chung, Charles at the interval between 24 November 2014 and 23 July 2025 at an exercise price of HK$1.1798 or HK$0.606 per share.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests and short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) 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 taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules.

3. DIRECTORS’ SERVICE CONTRACTS

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

4. DIRECTORS’ INTERESTS IN ASSETS OR CONTRACTS AND OTHER INTERESTS

Save for (i) the Continuing Connected Transactions contemplated hereunder; (ii) the entering into of the New Coal Purchase Framework Agreement and the Wafer Products Supply Framework Agreement by the Company between Jiangsu Zhongneng and Suzhou GCL Energy Technology Co., Ltd.* (蘇州協鑫能源科技有限公司), and between GCL-Poly

– 47 –

APPENDIX

GENERAL INFORMATION

(Suzhou) New Energy Co., Ltd. (保利協鑫（蘇州）新能源有限公司) and GCL System Integration Technology Co., Ltd. (協鑫集成科技股份有限公司), respectively, as disclosed in the announcement of the Company dated 6 January 2017; and (iii) the entering into a joint venture agreement between Suzhou GCL New Energy Development Company Limited ( 蘇州協鑫新能源發展有限公司) and GCL System Integration (Suzhou) Limited (協鑫集成科技（蘇州）有限公司) (“ GCL System Suzhou ”) to develop, design, produce and construct photovoltaic power station opportunities sourced by GCL System Suzhou as disclosed in the joint announcement of the Company dated 3 March 2017, as at the Latest Practicable Date, none of the Directors or proposed Directors had, or has had, any direct or indirect interest in any assets which have been acquired, disposed of by or leased to, or which are proposed to be acquired, disposed of by or leased to, any member of the Group since 31 December 2016, being the date to which the latest published and audited consolidated financial statements of the Company were made up.

Save for the Continuing Connected Transactions contemplated hereunder and transactions which were disclosed pursuant to the Listing Rules, there was no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date of which any Director is materially interested and which is significant in relation to the business of the Group.

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, save as disclosed below, so far as the Directors were aware, none of the Directors or their respective associates had interest in any business which competed or was likely to compete, either directly or indirectly, with the business of the Group.

	Name of company	Principal	Percentage
	in which the	activities of the	interest in
Name of	relevant Director	competing	competing
Director	has interest	company	company
Mr. Zhu Yufeng	Xilingol	Ingot Plant in the	Mr. Zhu Yufeng,
	Zhongneng	development	through
	Silicon Co.,	and construction	companies
	Ltd.* (錫林郭勒	stage	controlled by
	中能硅業有限公		him, holds 70%
	司) (Dormant		interest
	and inactive)

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APPENDIX

GENERAL INFORMATION

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial position or trading position of the Group since 31 December 2016, being the date to which the latest published and audited financial statements of the Group were made up.

7. EXPERT AND CONSENT

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

Name Qualification Frontier Capital A corporation licensed under the SFO to carry out Investment Limited Type 1, Type 4 and Type 6 regulated activities

As at the Latest Practicable Date, the above expert did not have any shareholding in any member of the Group nor did they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, the above expert did not have any interest, direct or indirect, in any assets which have been since 31 December 2016 (being the date to which the latest published audited consolidated accounts of the Group were made up) 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 Group.

8. GENERAL

The English text of this circular prevails over its Chinese translation in case of discrepancy.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at Unit 1703B-1706, Level 17, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong during normal business hours on any weekday (except public holidays) from the date of this circular up to and including 10 August 2017:

(a) the New JZ Steam Supply Agreement;
(b) the New GCL Steam Supply Agreement;
(c) the New Yangzhou Steam Supply Agreement;

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APPENDIX

GENERAL INFORMATION

(d) the Taicang Steam Supply Agreement;
(e) the JX Steam Supply Agreement;
(f) the New Desalted Water Supply Agreement;
(g) the letter from the Independent Board Committee, the text of which is set out on pages 20 to 21 of this circular;
(h) the letter from the Independent Financial Adviser, the text of which is set out on pages 22 to 44 of this circular; and
(i) the written consents referred to under the section headed “Expert and Consent” in this Appendix.

– 50 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3800)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “ EGM ”) of GCL-Poly Energy Holdings Limited (the “ Company ”) will be held at The Ballroom B, Level 2, The Langham, Hong Kong, 8 Peking Road, Tsim Sha Tsui, Kowloon, Hong Kong on Friday, 11 August 2017 at 10:00 a.m. for the purpose of considering and, if thought fit, passing with or without modification the following ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT
(a) the agreement (the “ New JZ Steam Supply Agreement ”) dated 30 June 2017 entered into between Xuzhou Jinshanqiao Cogeneration Co., Ltd. (徐州金山橋熱電有限公司) as the supplier and Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. (江蘇中能硅業科技發展有限公司) as the customer in relation to the supply of steam, a copy of which marked “A” has been tabled before the meeting and initiated by the chairman of the meeting for identification purpose, and the transactions contemplated thereunder and the execution of which be and are hereby approved, ratified and confirmed;
(b) the annual caps for the maximum aggregate annual value for the transactions under the New JZ Steam Supply Agreement as stated in the circular of the Company dated 21 July 2017 for the period from 1 July 2017 to 31 May 2020 be and are hereby approved, ratified and confirmed; and
(c) any one of the directors of the Company be and is hereby authorised to do all such acts and things and to execute all such documents for the purpose of, or in connection with, the implementation of and giving effect to the New JZ Steam Supply Agreement and the transactions ancillary thereto and of administrative nature which he/she considers necessary, desirable or expedient.”

– 51 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

“ THAT
(a) the agreement (the “ New GCL Steam Supply Agreement ”) dated 30 June 2017 entered into between Xuzhou Jinshanqiao Cogeneration Co., Ltd. (徐州金山橋熱電有限公司) as the supplier and Jiangsu GCL Silicon Material Technology Development Co., Ltd. (江蘇協鑫硅材料科技發展有限公司) as the customer in relation to the supply of steam, a copy of which marked “B” has been tabled before the meeting and initiated by the chairman of the meeting for identification purpose, and the transactions contemplated thereunder and the execution of which be and are hereby approved, ratified and confirmed;
(b) the annual caps for the maximum aggregate annual value for the transactions under the New GCL Steam Supply Agreement as stated in the circular of the Company dated 21 July 2017 for the period from 1 July 2017 to 31 May 2020 be and are hereby approved, ratified and confirmed; and
(c) any one of the directors of the Company be and is hereby authorised to do all such acts and things and to execute all such documents for the purpose of, or in connection with, the implementation of and giving effect to the New GCL Steam Supply Agreement and the transactions ancillary thereto and of administrative nature which he/she considers necessary, desirable or expedient.”
“ THAT
(a) the agreement (the “ New Yangzhou Steam Supply Agreement ”) dated 30 June 2017 entered into between Yangzhou Harbour Sludge Power Co., Ltd (揚州港口污泥發電有限公司) as the supplier and Yangzhou GCL Photovoltaic Technology Co., Ltd (揚州協鑫光伏科技有限公司) as the customer in relation to the supply of steam, a copy of which marked “C” has been tabled before the meeting and initiated by the chairman of the meeting for identification purpose, and the transactions contemplated thereunder and the execution of which be and are hereby approved, ratified and confirmed;
(b) the annual caps for the maximum aggregate annual value for the transactions under the New Yangzhou Steam Supply Agreement as stated in the circular of the Company dated 21 July 2017 for the period from 10 June 2017 to 31 May 2020 be and are hereby approved, ratified and confirmed; and

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NOTICE OF EXTRAORDINARY GENERAL MEETING

(c) any one of the directors of the Company be and is hereby authorised to do all such acts and things and to execute all such documents for the purpose of, or in connection with, the implementation of and giving effect to the New Yangzhou Steam Supply Agreement and the transactions ancillary thereto and of administrative nature which he/she considers necessary, desirable or expedient.”
“ THAT
(a) the agreement (the “ Taicang Steam Supply Agreement ”) dated 30 June 2017 entered into between Taicang GCL Power Generation Co., Ltd (太倉港協鑫發電有限公司) as the supplier and Taicang GCL Photovoltaic Technology Co., Ltd (太倉協鑫光伏科技有限公司) as the customer in relation to the supply of steam, a copy of which marked “D” has been tabled before the meeting and initiated by the chairman of the meeting for identification purpose, and the transactions contemplated thereunder and the execution of which be and are hereby approved, ratified and confirmed;
(b) the annual caps for the maximum aggregate annual value for the transactions under the Taicang Steam Supply Agreement as stated in the circular of the Company dated 21 July 2017 for the period from 1 July 2017 to 31 May 2020 be and are hereby approved, ratified and confirmed; and
(c) any one of the directors of the Company be and is hereby authorised to do all such acts and things and to execute all such documents for the purpose of, or in connection with, the implementation of and giving effect to the Taicang Steam Supply Agreement and the transactions ancillary thereto and of administrative nature which he/she considers necessary, desirable or expedient.”
“ THAT
(a) the agreement (the “ JX Steam Supply Agreement ”) dated 30 June 2017 entered into between Xuzhou Jinshanqiao Cogeneration Co., Ltd.* (徐州金山橋熱電有限公司) as the supplier and Jiangsu Xinhua Semiconductor Material Technology Limited (江蘇鑫華半導體材料科技有限公司) as the customer in relation to the supply of steam, a copy of which marked “E” has been tabled before the meeting and initiated by the chairman of the meeting for identification purpose, and the transactions contemplated thereunder and the execution of which be and are hereby approved, ratified and confirmed;

– 53 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

(b) the annual caps for the maximum aggregate annual value for the transactions under the JX Steam Supply Agreement as stated in the circular of the Company dated 21 July 2017 for the period from 1 July 2017 to 31 May 2020 be and are hereby approved, ratified and confirmed; and
(c) any one of the directors of the Company be and is hereby authorised to do all such acts and things and to execute all such documents for the purpose of, or in connection with, the implementation of and giving effect to the JX Steam Supply Agreement and the transactions ancillary thereto and of administrative nature which he/she considers necessary, desirable or expedient.”
“ THAT
(a) the agreement (the “ New Desalted Water Supply Agreement ”) dated 30 June 2017 entered into between Xuzhou Jinshanqiao Cogeneration Co., Ltd. (徐州金山橋熱電有限公司) as the supplier and Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. (江蘇中能硅業科技發展有限公司) as the customer in relation to the supply of desalted water;
(b) the annual caps for the maximum aggregate annual value for the transactions under the New Desalted Water Supply Agreement as stated in the circular of the Company dated 21 July 2017 for the period from 1 July 2017 to 31 May 2020 be and are hereby approved, ratified and confirmed; and
(c) any one of the directors of the Company be and is hereby authorised to do all such acts and things and to execute all such documents for the purpose of, or in connection with, the implementation of and giving effect to the New Desalted Water Supply Agreement and the transactions ancillary thereto and of administrative nature which he/she considers necessary, desirable or expedient.”

By order of the Board GCL-Poly Energy Holdings Limited Mr. Zhu Gongshan Chairman

Hong Kong, 21 July 2017

– 54 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

(1) Any shareholder of the Company entitled to attend and vote at the EGM is entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A shareholder of the Company who is the holder of two or more shares may appoint more than one proxy to attend on the same occasion. A proxy need not be a shareholder of the Company.
(2) In order to be valid, a form of proxy and the power of attorney (if any) or other authority (if any) under which it is signed, or a certified copy of such power or authority, must be deposited with the Company’s Hong Kong share registrar, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time fixed for holding the EGM or any adjournment thereof.
(3) Shareholder of the Company who are entitled to vote at the EGM are those whose names appear as shareholders on the register of members of the Company as at the close of business on Monday, 7 August 2017. In order to qualify for attending and voting at the EGM, all transfer documents accompanied by the relevant share certificates must be lodged for registration with the share registrar of the Company, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong by 4:30 p.m. on 7 August 2017.
(4) Delivery of the form of proxy will not preclude a shareholder of the Company from attending and voting in person at the EGM convened and in such event, the form of proxy shall be deemed to be revoked.
(5) In the case of joint registered holders of any share, any one of such joint registered holders may vote at the EGM, either in person or by proxy, in respect of such share as if he/she were solely entitled thereto, but if more than one of such joint registered holders be present at the EGM, the vote of the senior who tenders a vote either personally or by proxy shall be accepted to the exclusion of the votes of the other joint registered holders and, 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.

As at the date of this notice, the executive directors of the Company are Mr. Zhu Gongshan (Chairman), Mr. Zhu Zhanjun, Mr. Ji Jun, Mr. Zhu Yufeng, Ms. Sun Wei, Mr. Yeung Man Chung, Charles, Mr. Jiang Wenwu and Mr. Zheng Xiongjiu; and the independent non-executive directors of the Company are Ir. Dr. Ho Chung Tai, Raymond, Mr. Yip Tai Him, Dr. Shen Wenzhong and Mr. Wong Man Chung, Francis.

– 55 –

AI assistant

GCL Technology Holdings Limited — Proxy Solicitation & Information Statement 2017

50888_rns_2017-07-20_e02d64dd-89a6-4af1-9f43-3bc5d8f14126.pdf

GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

CONTINUING CONNECTED TRANSACTIONS

DEFINITIONS

GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

THE NEW JZ STEAM SUPPLY AGREEMENT

(i) Date

(ii) Parties

(iii) Subject Matter

(iv) Consideration

(v) Basis of Consideration

(vi) Conditions precedent

THE NEW GCL STEAM SUPPLY AGREEMENT

(i) Date

(ii) Parties

(iii) Subject Matter

(iv) Consideration

(v) Basis of Consideration

(vi) Conditions precedent

THE NEW YANGZHOU STEAM SUPPLY AGREEMENT

(i) Date

(ii) Parties

(iii) Subject Matter

(iv) Consideration

(v) Basis of Consideration

(vi) Conditions precedent

THE TAICANG STEAM SUPPLY AGREEMENT

(i) Date

(ii) Parties

(iii) Subject Matter

(iv) Consideration

(v) Basis of Consideration

(vi) Conditions precedent

THE JX STEAM SUPPLY AGREEMENT

(i) Date

(ii) Parties

(iii) Subject Matter

(iv) Consideration

(v) Basis of Consideration

(vi) Conditions precedent

THE NEW DESALTED WATER SUPPLY AGREEMENT

(i) Date

(ii) Parties

(iii) Subject Matter

(iv) Consideration

(v) Basis of Consideration

(vi) Conditions precedent

THE PREVIOUS TRANSACTIONS AND FUTURE ANNUAL CAPS

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS

INFORMATION ON THE PARTIES

The Group

Jinshanqiao Holdco

Yangzhou Power

Taicang Power

LISTING RULES IMPLICATION

EGM

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISERS

RECOMMENDATION

ADDITIONAL INFORMATION

GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

CONTINUING CONNECTED TRANSACTIONS

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

FRONTIER CAPITAL INVESTMENT LIMITED

CONTINUING CONNECTED TRANSACTIONS IN RELATION TO THE STEAM SUPPLY AGREEMENTS AND THE NEW DESALTED WATER SUPPLY AGREEMENT

INTRODUCTION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. BACKGROUND OF AND REASONS FOR THE CONTINUING CONNECTED TRANSACTIONS

2. THE NEW JZ STEAM SUPPLY AGREEMENT

i. Principal pricing and terms of the New JZ Steam Supply Agreement

Consideration

Payment terms

ii. Steam Supply Annual Caps in respect of the New JZ Steam Supply Agreement

JZ Caps price – 0.8 Mpa

JZ Caps price – 3.8 Mpa

JZ Caps consumption volume – 0.8 Mpa

JZ Caps consumption volume – 3.8 Mpa

GCL Technology Holdings Limited Proxy Solicitation & Information Statement 2017