Minmetals Land Limited — Proxy Solicitation & Information Statement 2013

Mar 28, 2013

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your Shares in Mascotte Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer, registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company 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.

This circular appears for information only and does not constitute an invitation or offer to shareholders or any other persons to acquire, purchase, or subscribe for securities of the Company.

(Incorporated in Bermuda with limited liability)

(Stock Code: 136)

PROPOSED RIGHTS ISSUE ON THE BASIS OF FOUR (4) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE AND NOTICE OF SPECIAL GENERAL MEETING

Financial Adviser to the Company Underwriter of the Rights Issue

KINGSTON CORPORATE FINANCE LTD. KINGSTON SECURITIES LTD.

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

A letter from the Board is set out on pages 15 to 58 of this circular.

A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on page 59 of this circular. A letter from United Simsen Securities Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, containing its advice in respect of the Rights Issue is set out on pages 60 to 97 of this circular.

A notice convening the SGM to be held at 30th Floor, China United Centre, 28 Marble Road, North Point, Hong Kong on Thursday, 18 April 2013 at 4:30 p.m. is set out on pages N-1 to N-3 of this circular. A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Secretaries Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as practicable but in any event not later than 48 hours before the time appointed for holding of the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish and in such case, the form of proxy shall be deemed to be revoked.

The Shares will be dealt in on an ex-rights basis from Monday, 22 April 2013. Dealings in the Rights Shares in their nil-paid form will take place from Thursday, 2 May 2013 to Thursday, 9 May 2013 (both dates inclusive). It is expected that the conditions referred to in the section headed “Conditions of the Underwriting Agreement” in this circular are to be fulfilled on or before 4:00 p.m. on Monday, 20 May 2013. If the conditions referred to in that section are not fulfilled, the Underwriting Agreement shall terminate and the Rights Issue will not proceed. Any person contemplating buying or selling Shares from the date of this circular and up to the date on which all the conditions of the Rights Issue are fulfilled, and any dealings in the Rights Shares in their nil-paid form from Thursday, 2 May 2013 to Thursday, 9 May 2013 (both dates inclusive) will accordingly bear the risk that the Rights Issue may not become unconditional and/or may not proceed. Any person contemplating dealing in the Shares and/or the Rights Shares in their nil-paid form are recommended to consult his/her/its/their own professional adviser.

It should be noted that the Underwriting Agreement contains provisions entitling the Underwriter by notice in writing to the Company at any time prior to 4:00 p.m. on the Latest Time for Termination to terminate its obligations under the Underwriting Agreement on the occurrence of certain events including force majeure. These events are set out under the section headed “Termination of the Underwriting Agreement” on pages 13 to 14 of this circular.

Upon the delivery of the notice of termination, all obligations of the Underwriter under the Underwriting Agreement shall cease and determine and neither party shall have any claim against the other party in respect of any matter or thing arising out of or in connection with the Underwriting Agreement provided that the Company shall remain liable to pay to the Underwriter the expenses in connection with the Rights Issue. If the Underwriter exercises such right, the Rights Issue will not proceed.

28 March 2013

CONTENTS

			Page
EXPECTED TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			4
TERMINATION	OF THE UNDERWRITING AGREEMENT. . . . . . . . . . . . . . . .		13
LETTER FROM	THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		15
LETTER FROM	THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . .		59
LETTER FROM	THE INDEPENDENT FINANCIAL ADVISER. . . . . . . . . . . . .		60
APPENDIX I	—	INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . . .	I-1
APPENDIX II	—	FINANCIAL INFORMATION OF THE GROUP. . . . . . .	II-1
APPENDIX III	—	UNAUDITED PRO FORMA STATEMENT
		OF ADJUSTED CONSOLIDATED NET TANGIBLE
		LIABILITIES OF THE GROUP. . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV	—	CALCULATION REPORT. . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
APPENDIX V	—	ACCOUNTANTS’ REPORT ON
		CALCULATION OF INDICATED BUSINESS
		ENTERPRISE VALUE OF SUN MATERIALS
		AS AT 30 SEPTEMBER 2012. . . . . . . . . . . . . . . . . . . . .	V-1
APPENDIX VI	—	FINANCIAL ADVISER’S REPORT ON THE
		CALCULATION REPORT. . . . . . . . . . . . . . . . . . . . . . . .	VI-1
APPENDIX VII	—	TECHNICAL REPORT ON SUN MATERIALS. . . . . . . .	VII-1
APPENDIX VIII	—	GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . .	VIII-1
NOTICE OF SPECIAL GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . .			N-1

— i —

EXPECTED TIMETABLE

Expected timetable for the Rights Issue is set out below:—

2013 (Hong Kong time) Date of despatch of the circular, notice of SGM and form of proxy of the SGM . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 28 March Latest time for return of proxy form of SGM (not less than 48 hours prior to the time of SGM) . . . . . 4:30 P.M. on Tuesday, 16 April Latest time for lodging transfers of Shares to qualify for attendance and voting at the SGM. . . . . . . . . . . . . 4:30 P.M. on Wednesday, 17 April Register of members closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 18 April Record date for attendance and voting at SGM . . . . . . . . . . . . . . . . . . . Thursday, 18 April SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 P.M. on Thursday, 18 April Announcement of results of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 18 April Last day of dealings in the Shares on a cum-rights basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Friday, 19 April First day of dealings in the Shares on an ex-rights basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 22 April Latest time for lodging transfer of the Shares in order to be qualified for the Rights Issue . . . . . . . . . . . . 4:30 P.M. on Tuesday, 23 April Register of members closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 24 April to Friday, 26 April (both dates inclusive) Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Friday, 26 April Register of members re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 29 April Despatch of the Prospectus Documents . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 29 April

— 1 —

EXPECTED TIMETABLE

First day of dealings in nil-paid

Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 2 May

Latest time for splitting nil-paid

Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 P.M. on Monday, 6 May

Last day of dealings in nil-paid

Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 9 May

Latest time for acceptance of and payment for the Rights

Shares and application and payment for excess

Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 P.M. on Tuesday, 14 May

Rights Issue expected to become unconditional . . . . . . . . . . 4:00 P.M. on Monday, 20 May

Announcement of results of the Rights Issue . . . . . . . . . . . . . . . . . . . . . . Tuesday, 21 May

Certificates for the Rights Shares expected to be

despatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 22 May

Refund cheques in respect of wholly or partially

• unsuccessful applications for excess Right Shares expected to be posted on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 22 May

Commencement of dealings in fully-paid Rights Shares . . . . . . . . . . . . . Thursday, 23 May

Dates or deadlines specified in this circular are indicative only and may be varied by agreement between the Company and the Underwriter. Any consequential changes to the expected timetable will be published or notified to Shareholders as and when appropriate.

• Note: The latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares will not take effect if there is a tropical cyclone warning signal number 8 or above, or a “black” rainstorm warning:

• (1) in force in Hong Kong at any local time before 12:00 noon but no longer in force after 12:00 noon on the latest date for acceptance of, and payment for, the Rights Shares and for application and payment for excess Rights Shares. Instead the latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares will be extended to 5:00 p.m. on the same Business Day; or

— 2 —

EXPECTED TIMETABLE

• (2) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the latest date for acceptance of, and payment for, the Rights Shares and for application and payment for excess Rights Shares. Instead the latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force at any time between 9:00 a.m. and 4:00 p.m.

If the latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares does not take effect on the Latest Time for Acceptance, the dates mentioned above may be affected. The Company will notify Shareholders by way of announcement(s) on any change to the expected timetable as soon as practicable.

— 3 —

DEFINITIONS

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

“1st VSA Circular” the Company’s circular dated 20 May 2011 “2nd VSA Circular” the Company’s circular dated 19 December 2011 “2011 Sale and on 12 September 2011, the Company entered into a Purchase Agreement” sale and purchase agreement with the non-controlling owner of Sun Mass in respect of the acquisition of the remaining 49.9% interest in Sun Mass by means of cash consideration of HK$750 million and issuance of consideration bonds with principal amount of HK$1,750 million; details of which are set out in the Company’s announcement dated 4 October 2011 and the Company’s circular dated 19 December 2011 respectively

• “acting in concert” has the meaning ascribed thereto under the Takeovers Code

• “Announcement” the announcement of the Company dated 4 February 2013 in relation to, among other things, the Rights Issue

• “associates” has the meaning ascribed thereto under the Listing Rules

• “Board” the board of Directors “Business Day” a day (other than a Saturday, Sunday or public holiday or a day on which typhoon signal 8 or above or black rainstorm is hoisted in Hong Kong at 9:00 a.m.) on which banks are generally open for business in Hong Kong

• “BVI” the British Virgin Islands “Bye-laws” the bye-laws of the Company from time to time “CCASS” the Central Clearing and Settlement System established and operated by HKSCC

— 4 —

DEFINITIONS

• “Companies Act” the Companies Act 1981 of Bermuda (as amended) “Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)

• “Company” MASCOTTE HOLDINGS LIMITED, a company incorporated in Bermuda with limited liability and the Shares are listed on the main board of the Stock Exchange

• “Conditional Agreement” the conditional agreement (including its schedules and exhibits) dated 19 November 2012 entered into between Mega Soar, the Company and Chung Nam Finance Limited in relation to, amongst other things, (i) the sale and purchase of the entire share capital in Smart Style and (ii) the assignment of the benefit of and the interests in the SD Loan to Chung Nam Finance Limited for a total consideration of HK$88,000,000 (subject to adjustment)

• “connected person” has the meaning ascribed thereto under the Listing Rules

• “Consideration Bonds” the 2.5% unsecured notes due 2014 in the aggregate principal amount of HK$1,750 million of which HK$885 million remains outstanding as at the Latest Practicable Date

• “controlling shareholders”

has the meaning ascribed to it under the Listing Rules

“Convertible Bonds” the 5% unsecured convertible bonds due 2014 in the aggregate principal amount of HK$1,450 million constituted and issued by the Company on 14 July 2011 pursuant to the Convertible Bonds Documents and the Deeds of Amendment, of which HK$1,200 million remains outstanding as at the Latest Practicable Date

• “Convertible Bonds Documents” the bond certificates and bond terms and conditions constituting the Convertible Bonds

— 5 —

DEFINITIONS

“Conversion Share(s)” new Shares to be allotted and issued upon exercise of the conversion rights attaching to the Convertible Bonds

• “Credit Line”

On 21 November 2012, the Group was granted a twoyear revolving loan facility of HK$500 million from Chung Nam Finance Limited and was secured by the shares of Sun Mass with a valuation of Sun Mass Group of not less than HK$750 million and bearing an interest of the prime rate as quoted by Chong Hing Bank Limited from time to time plus 5% per annum, an aggregate principal amount of HK$489 million was outstanding as at the Latest Practicable Date

“Debts” being the Company’s outstanding Convertible Bonds, outstanding Consideration Bonds, the Credit Line, outstanding unsecured loan from Dragonite Resources Limited, and bank borrowing with a Taiwanese bank secured by certain buildings in Taiwan. Details of which are set out in the paragraph headed “Reduction of financing costs and gearing” in the “Letter from the Board” and the paragraph headed “3. Indebtedness” in Appendix II of this circular

• “Deeds of Amendment”

the deeds of amendment dated 3 December 2012 entered into between the Company and each of the holders of the Convertible Bonds, details of which are disclosed to the Company’s announcement dated 3 December 2012 and the Company’s circular dated 31 December 2012, such deeds were subsequently approved by the Shareholders at the Company’s special general meeting held on 18 January 2013 and the Company obtained (i) listing approval for any Shares which may be issued on exercise of such conversion rights attached to the Convertible Bonds; and (ii) approval for the alternations pursuant to such deeds, from the Stock Exchange on 21 January 2013

— 6 —

DEFINITIONS

“Director(s)”	the director(s) of the Company
“Dr. Wu”	Dr. Wu Yi-Shuen, the chairman, director, chief
	executive officer and chief technology officer of Sun
	Materials
“EAF(s)”	the excess application form(s) issued to the Qualifying
	shareholders in respect of application for excess
	Rights Shares
“Excluded Shareholder(s)”	the Overseas Shareholder(s) where the Directors,
	after making enquiries, consider it necessary or
	expedient, after taking into account either of legal
	restrictions under the laws of the relevant place or the
	requirements of the relevant regulatory body or stock
	exchange in that place, not to offer the Rights Shares
	to such Shareholders
“Group”	the Company and its subsidiaries
“HKSCC”	Hong Kong Securities Clearing Company Limited
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“Independent Board Committee”	an independent committee of the Board comprising all
	independent non-executive Directors formed for the
	purpose of advising the Independent Shareholder(s) on
	the Rights Issue
“Independent Financial Adviser”	United Simsen Securities Limited, a licensed
	corporation to carry on business in Type 1, 2, 4
	and 6 regulated activities under the SFO, being the
	independent financial adviser to the Independent
	Board Committee and the Independent Shareholders in
	relation to the Rights Issue
“Independent Shareholder(s)”	Shareholders other than the Directors (excluding
	independent non-executive Directors) and chief
	executive of the Company and their respective
	associates

— 7 —

DEFINITIONS

• “Independent Third Party(ies)” a party (parties) independent of and not connected with the Company and its connected persons

“Irrevocable Undertaking” an irrevocable undertaking dated 4 February 2013 under which the respective holders of the outstanding Convertible Bonds provided irrevocable undertakings to the Company and the Underwriter as described under the section headed “Irrevocable Undertaking” in this circular

“Issue Mandate” an issue mandate approved by the Shareholders on 21 February 2013 to authorize the Directors to allot, issue and deal with new Shares not exceeding 20% of the issued share capital of the Company as at the date of the Issue Mandate SGM, details of which are set out in the circular of the Company dated 1 February 2013 and the announcement of the Company dated 21 February 2013

• “Issue Mandate SGM” the special general meeting of the Company convened and held on 21 February 2013 for the purposes of, among other things, approving the Issue Mandate

• “Last Trading Day” 4 February 2013, being the last trading day for the Shares on the Stock Exchange before the release of the Announcement

• “Latest Practicable Date” Monday, 25 March 2013, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

• “Latest Time for Acceptance”

• 4:00 p.m. on Tuesday, 14 May 2013, or such later time or date as may be agreed between the Underwriter and the Company, being the latest time for acceptance of, and payment for, the Rights Shares as described in the Prospectus Documents

• “Latest Time for Termination”

• 4:00 p.m. on Monday, 20 May 2013 being the third Business Day after the Latest Time for Acceptance or such later time or date as may be agreed between the Underwriter and the Company, being the latest time to terminate the Underwriting Agreement

— 8 —

DEFINITIONS

“Listing Committee”	the listing sub-committee of the board of the Stock
	Exchange
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Lution”	Lution International Holdings Co., Ltd, a company
	incorporated with limited liability in Taiwan and a
	wholly owned subsidiary of the Company
“Mega Soar”	Mega Soar Holdings Limited, a company incorporated
	in the BVI with limited liability and a wholly owned
	subsidiary of the Company
“Note Placing”	placing of 5% unsecured seven-year notes in the
	aggregate of up to HK$100 million, details of which
	are disclosed in the Company’s announcements dated
	28 December 2012 and 22 January 2013
“Option Deeds”	the option deeds dated 29 August 2011 entered into
	between the Company and each of the grantees as set
	out in the Company’s announcement dated 29 August
	2011
“Option Deeds Undertaking”	an irrevocable undertaking dated 4 February 2013
	pursuant to which the Option Deeds holders undertake
	not to exercise any subscription rights attached to
	the share options under the Option Deeds prior to
	completion of the Rights Issue as described under the
	section headed “Option Deeds Undertaking” in this
	circular
“Overseas Shareholder(s)”	the Shareholder(s) whose address(es) on the register
	of members of the Company on the Record Date are
	outside Hong Kong
“PAL(s)”	provisional allotment letter(s) issued to the Qualifying
	Shareholders in respect of their assured entitlements
	under the Rights Issue

— 9 —

DEFINITIONS

“PRC”	the People’s Republic of China, excluding for the
	purposes of this circular, Hong Kong, Taiwan and the
	Macau Special Administrative Region of the PRC
“Prospectus”	the prospectus to be despatched to the Shareholders
	on the Prospectus Posting Date in connection with the
	Rights Issue in such form as may be agreed between
	the Company and the Underwriter
“Prospectus Documents”	the Prospectus, the PAL(s) and the EAF(s)
“Prospectus Posting Date”	Monday, 29 April 2013, or such other day as may be
	agreed between the Company and the Underwriter,
	being the date of despatch of the Prospectus
	Documents
“Qualifying Shareholder(s)”	the Shareholder(s), whose names appear on the register
	of members of the Company on the Record Date, other
	than the Excluded Shareholders
“Quinella”	Quinella International Incorporated, a company
	incorporated under the laws of the BVI, and an
	independent third party
“Record Date”	4:30 p.m. on Friday, 26 April 2013, being the date and
	time by reference to which entitlements to the Rights
	Issue will be determined
“Registrar”	the Company’s branch share registrar and transfer
	office in Hong Kong, which is Tricor Secretaries
	Limited of 26th Floor, Tesbury Centre, 28 Queen’s
	Road East, Wanchai, Hong Kong
“Rights Issue”	the proposed issue of the Rights Shares by way
	of rights issue to the Qualifying Shareholders
	for subscription on the terms to be set out in the
	Prospectus Documents and summarised herein
“Rights Share(s)”	rights shares of HK$0.01 each in the share capital of
	the Company proposed to be offered to the Qualifying
	Shareholders for subscription on the basis of four (4)
	Rights Shares for every one (1) Share held on the
	Record Date pursuant to the Rights Issue

— 10 —

DEFINITIONS

“SD Loan”	the outstanding shareholder loan(s) advanced by the
	Company and its subsidiaries (excluding the Smart
	Style Group) to the Smart Style Group as at the date
	of the Conditional Agreement
“SFO”	the Securities and Futures Ordinance (Chapter 571) of
	the laws of Hong Kong
“SGM”	the special general meeting of the Company to be
	convened and held to consider and approve, among
	other things, the Rights Issue
“Share(s)”	the ordinary share(s) of HK$0.01 each in the share
	capital of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Share Options”	the share options to subscribe for Shares under the
	Share Option Scheme
“Share Option Scheme”	the share option scheme of the Company adopted on
	21 August 2003
“Smart Style”	Smart Style Investments Limited, a company
	incorporated in the BVI with limited liability and a
	wholly-owned subsidiary of the Mega Soar
“Smart Style Group”	Smart Style and Smart Direct Investments Limited
“Standby Line”	a standby line of credit of HK$500 million for a
	term of 12 months commencing from 4 January 2012
	provided by Quinella to the Group
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Price”	the subscription price of HK$0.07 per Rights Share
“Substantial Shareholder(s)”	has the meaning ascribed thereto under the Listing
	Rules
“Sun Mass”	Sun Mass Energy Limited, a company incorporated
	in the BVI with limited liability, a wholly owned
	subsidiary of the Company

— 11 —

DEFINITIONS

“Sun Mass Group”	Sun Mass and its subsidiaries
“Sun Materials”	Sun Materials Technology Co., Ltd, a company
	incorporated with limited liability in Taiwan and
	wholly owned by Lution
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“Underwriter”	Kingston Securities Limited, a licensed corporation to
	carry on business in type 1 regulated activity (dealing
	in securities) under the SFO
“Underwriting Agreement”	the underwriting agreement dated 4 February 2013
	entered into between the Company and the Underwriter
	in relation to the Rights Issue
“Underwritten Share(s)”	Not less than 6,138,200,416 Rights Shares and not
	more than 7,365,996,744 Rights Shares underwritten
	by the Underwriter pursuant to the Underwriting
	Agreement
“Untaken Share(s)”	the Rights Shares not taken up by the Qualifying
	Shareholders
“Valuer”	American Appraisal China Limited, an independent
	valuer
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“NT$”	New Taiwan dollar, the lawful currency of Taiwan
“US$” or “USD”	United States dollar, the lawful currency of the United
	States of America
“%”	per cent.

— 12 —

TERMINATION OF THE UNDERWRITING AGREEMENT

TERMINATION OF THE UNDERWRITING AGREEMENT

If, prior to the Latest Time for Termination:

• (i) in the absolute opinion of the Underwriter, the success of the Rights Issue would be materially and adversely affected by:

• (a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or is materially adverse in the context of the Rights Issue; or

• (b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date hereof) of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or materially and adversely prejudice the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or

• (ii) any adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction on trading in securities) occurs which in the absolute opinion of the Underwriter are likely to materially or adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or

• (iii) there is any change in the circumstances of the Company or any member of the Group which in the absolute opinion of the Underwriter will adversely affect the prospects of the Group, including without limiting the generality of the foregoing the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of any of member of the Group or the destruction of any material asset of the Group; or

— 13 —

TERMINATION OF THE UNDERWRITING AGREEMENT

• (iv) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out; or

• (v) any other material adverse change in relation to the business or the financial or trading position or prospects of the Group as a whole whether or not ejusdem generis with any of the foregoing; or

• (vi) any matter which, had it arisen or been discovered immediately before the date of the Prospectus and not having been disclosed in the Prospectus, would have constituted, in the absolute opinion of the Underwriter, a material omission in the context of the Rights Issue; or

• (vii) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than ten consecutive Business Days, excluding any suspension in connection with the clearance of the announcement or the circular in connection with the Rights Issue, or the Prospectus Documents,

the Underwriter shall be entitled by notice in writing to the Company, served prior to the Latest Time for Termination, to terminate the Underwriting Agreement.

Upon the giving of notice of termination, all obligations of the Underwriter under the Underwriting Agreement shall cease and neither it nor the Company shall have any claim against the other party in respect of any matter or thing arising out of or in connection with the Underwriting Agreement provided that the Company shall remain liable to pay to the Underwriter the fees and expenses (other than the underwriting commission) payable by the Company pursuant to the Underwriting Agreement. If the Underwriter exercises such right, the Rights Issue will not proceed.

— 14 —

LETTER FROM THE BOARD

(Incorporated in Bermuda with limited liability)

(Stock Code: 136)

Executive Directors:

Mr. Peter Temple Whitelam (Chairman) Mr. Lo Yuen Wa Peter (Managing Director) Mr. Eddie Woo Mr. Suen Yick Lun Philip Mr. Lau King Hang

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Independent Non-executive Directors:

Mr. Frank H. Miu Dr. Agustin V. Que Mr. Robert James Iaia II

Mr. Hung Cho Sing

Head office and principal place of business in Hong Kong:

1st Floor Po Chai Industrial Building 28 Wong Chuk Hang Road Aberdeen Hong Kong

Room 2902, 29th Floor China United Centre 28 Marble Road North Point Hong Kong

28 March 2013

To the Shareholders,

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF FOUR (4) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the Announcement.

On 4 February 2013, the Company announced that the Board proposes to raise gross proceeds of not less than approximately HK$429.67 million and not more than approximately HK$515.62 million by issuing not less than 6,138,200,416 Rights Shares

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LETTER FROM THE BOARD

and not more than 7,365,996,744 Rights Shares to the Qualifying Shareholders by way of the Rights Issue at the Subscription Price of HK$0.07 per Rights Share, on the basis of four (4) Rights Shares for every one (1) Share held on the Record Date.

The estimated net proceeds of the Rights Issue will be not less than approximately HK$408.67 million and not more than approximately HK$494.62 million and are intended to be used by the Company for the implementation of recycling plant and facilities to its polycrystalline silicon business and repayment of part of the Credit Line.

Subsequent to the Announcement, on 21 February 2013, Shareholders approved the Issue Mandate to authorize the Directors to allot, issue and deal with new Shares not exceeding 20% of the issued share capital of the Company as at the date of the Issue Mandate SGM. On 22 February 2013, the Company entered into a placing agreement with Freeman Securities Limited (as the placing agent), whereby the placing agent agreed to place, on a fully underwritten basis, 306,910,020 new Shares under the Issue Mandate. The net proceeds from the above placing was approximately HK$29.80 million and will be used for repayment of part of the Credit Line. Completion of the placing under Issue Mandate took place on 28 February 2013, 306,910,020 Shares were issued. As at the Latest Practicable Date, the number of Shares in issue was 1,841,460,124 Shares.

Having taken into account the new Shares issued pursuant to the placing under the Issue Mandate and assuming no further new Shares will be issued on or before the Record Date, the number of Rights Shares to be issued will be not less than 7,365,840,496 Rights Shares and not more than 7,365,996,744 Rights Shares. The estimated net proceeds of the Rights Issue will be not less than approximately HK$494.61 million and not more than approximately HK$494.62 million.

The Independent Board Committee comprising all the independent non-executive Directors has been established by the Company to advise the Independent Shareholders on as to whether the terms of the Rights Issue is fair and reasonable and whether the Rights Issue is in the interests of the Company and the Shareholders as a whole, and to advise the Independent Shareholders on how to vote, taking into account of the recommendations of the Independent Financial Adviser. United Simsen Securities Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

The purpose of this circular is to provide you with, among other things, (i) further details about the Rights Issue; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Rights Issue; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders on the Rights Issue; and (iv) a notice convening the SGM.

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LETTER FROM THE BOARD

PROPOSED RIGHTS ISSUE

Issue statistics

Basis of the Rights Issue :

Four (4) Rights Shares for every one (1) Share held on the Record Date and payable in full on acceptance

Subscription Price :

HK$0.07 per Rights Share

Number of Shares in issue : as at the Latest Practicable Date

1,841,460,124 Shares

Number of Rights Shares :

Not less than 7,365,840,496 Rights Shares (assuming no further issue of new Shares on or before the Record Date) and not more than 7,365,996,744 Rights Shares (assuming the outstanding Share Options are fully exercised and no further issue of new Shares on or before the Record Date)

Total number of issued : Shares immediately upon completion of the Rights Issue

not less than 9,207,300,620 Shares and not more than 9,207,495,930 Shares

Aggregate nominal value of : Rights Shares

not less than HK$73,658,404.96 and not more than HK$73,659,967.44

Underwriter :

Kingston Securities Limited, which is an Independent Third Party

As at the Latest Practicable Date:

• (1) There are outstanding Convertible Bonds in the aggregate principal amount of HK$1,200,000,000 convertible into new Shares at the conversion price of HK$0.2 per Conversion Share (subject to adjustments). Each Convertible Bonds holder shall have the right to convert the Convertible Bonds held by it into Shares in whole or in part at the conversion price on or before the date that is 7 Business Days prior to the earlier of (a) the maturity date, i.e. 14 July 2014, and (b) one month after the Company giving early redemption notice to the Convertible Bonds holder. Further details of, among other things, the Convertible Bonds and the conditions

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LETTER FROM THE BOARD

governing and the procedures for conversion of the Convertible Bonds, are set out in the Company’s circular dated 20 May 2011 and the announcements of the Company dated 15 July 2011, 25 April 2012 and 3 December 2012. As at the Latest Practicable Date, all the respective holders of the outstanding Convertible Bonds have given the Irrevocable Undertaking to the effect that each of them will not exercise any of the conversion rights attached to the outstanding Convertible Bonds prior to the completion of the Rights Issue.

• (2) There are outstanding Share Options under the Share Option Scheme to subscribe for an aggregate of 39,062 Shares convertible into new Shares at the exercise price of HK$6.336 per Share Option (subject to adjustments). The Share Options may be exercised in whole or in part by the respective grantee at any time during the option period, i.e. 3 March 2010 to 2 March 2020, and in each case, not later than 2 March 2020. Further details of, among other things, the conditions governing and the procedures for exercise of the Share Options, are set out in the Company’s announcement dated 3 March 2010 and the Company’s interim report for the period ended 30 September 2012. Assuming full exercise of the subscription rights attaching to the outstanding Share Options on or before the Record Date, an additional of 156,248 Rights Shares will be issued.

• (3) There are 40,937,500 outstanding share options under the Option Deeds dated 29 August 2011 and subsequent to the adjustments of the capital reorganisation became effective on 26 April 2012, to subscribe for an aggregate of 40,937,500 Shares at the exercise price of HK$6.40 per share option under the Option Deeds (subject to adjustments). Pursuant to the Option Deeds, 25% of the share options granted to the grantees should vest on the date which is 12 months after the grant of the share options, i.e. 12 months after 11 January 2012. As such, 10,234,375 share options under the Option Deeds were vested on 11 January 2013. The share options under the Options Deeds may be exercised during the exercise period, i.e. 11 January 2012 to 10 January 2016, by serving a share option exercise notice to the Company together with the exercise price payable. Further details of, among other things, the conditions governing and the procedures for conversion of the share options under the Option Deeds, are set out in the announcement of the Company dated 29 August 2011 and the Company’s interim report for the period ended 30 September 2012. All the Option Deeds holders have given the Option Deeds Undertaking pursuant to which each of them will not exercise any of the subscription rights attached to the outstanding share options under the Option Deeds prior to completion of the Rights Issue.

Adjustments to the conversion price or exercise price, the number of Conversion Shares or new Shares to be issued upon exercise of the Convertible Bonds, Share Options and the share options under the Option Deeds are triggered by, among others, subdivision or consolidation of Shares, capital distributions, bonus issues and rights issues.

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LETTER FROM THE BOARD

The Conversion Price shall be adjusted as a result of the Rights Issue in accordance with the following formula (such adjustment is subject to terms and conditions of the Convertible Bonds and the review and confirmation by the auditors to be appointed by the Company):

==> picture [134 x 27] intentionally omitted <==

where:

NCP = Conversion Price after such adjustment

• OCP = Conversion Price before such adjustment

• N = the number of Shares in issue on Record Date

• n = Rights Shares to be issued

• v = the number of Shares which the aggregate consideration received by the Company would purchase at the market price per Share on the last trading day before going ex-entitlement to the Rights Issue

Save as disclosed above, the Company has no other outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares as at the Latest Practicable Date.

As disclosed in the announcements of the Company dated 28 December 2012 and 22 January 2013, the Company has entered into a placing agreement in relation to the Note Placing. Save for the Note Placing, the Company has no discussion in respect of other equity or debt fund-raising activities up to the Latest Practicable Date.

Assuming no outstanding Share Options being exercised on or before the Record Date, the 7,365,840,496 Rights Shares proposed to be provisionally allotted represent 400% of the Company’s issued share capital as at the Latest Practicable Date and 80% of the Company’s issued share capital of 9,207,300,620 Shares as enlarged by the issue of 7,365,840,496 Rights Shares.

Assuming the outstanding Share Options are fully exercised and no further issue of new Shares on or before the Record Date, the 7,365,996,744 Rights Shares proposed to be provisionally allotted represent approximately 400% of the Company’s issued share capital as at the Latest Practicable Date and approximately 80% of the Company’s issued share capital of 9,207,495,930 Shares as enlarged by the issue of 7,365,996,744 Rights Shares.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the Board has not received any information from any substantial Shareholders of their intention to take up the Rights Shares to be provisionally allotted to them.

Subscription Price

The Subscription Price for the Rights Issue is HK$0.07 per Rights Share, payable in full on application.

The Subscription Price represents:

• (i) a discount of approximately 30.69% to the closing price of HK$0.101 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (ii) a discount of approximately 65.85% to the closing price of HK$0.2050 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (iii) a discount of approximately 65.65% to the average closing price of approximately HK$0.2038 as quoted on the Stock Exchange for the 5 consecutive trading days up to and including the Last Trading Day; and

• (iv) a discount of approximately 27.84% to the theoretical ex-entitlement price of approximately HK$0.0970 per Share after the Rights Issue, based on the closing price of HK$0.2050 per Share as quoted on the Stock Exchange on the Last Trading Day.

The Subscription Price was arrived at after arm’s length negotiation between the Company and the Underwriter with reference to the market price of the Shares, the financial conditions of the Company and the prevailing market conditions. Moreover, the Directors consider that the discount would encourage Shareholders to participate in the Rights Issue, maintain their shareholdings in the Company and participate in the future growth of the Group. In view of the prevailing market conditions of the capital market in Hong Kong and the benefits of the Rights Issue, the Directors (excluding the independent nonexecutive Directors whose opinion will be set forth in this circular in relation to, inter alia, the Rights Issue, after having been advised by an independent financial adviser) consider that the terms of the Rights Issue are fair and reasonable and in the best interests of the Group and the Shareholders as a whole. The estimated expenses in relation to the Rights Issue, including financial, legal and other professional advisory fees, underwriting commission, printing and translation expenses will be borne by the Company. The net price per Rights Share upon full acceptance of the relevant provisional allotment of the Rights Shares (assuming no further issue of new Shares on or before the Record Date) will be approximately HK$0.0671.

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LETTER FROM THE BOARD

Status of the Rights Shares

The Rights Shares (when allotted, fully paid or credited as fully paid and issued) will rank pari passu in all respects with the Shares in issue on the date of allotment and issue of the Rights Shares. Holders of the Rights Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Rights Shares. Dealings in the Rights Shares will be subject to payment of stamp duty in Hong Kong.

Closure of register of members

The register of members of the Company, in relation to the Rights Issue, will be closed from Wednesday, 24 April 2013 to Friday, 26 April 2013, both dates inclusive. No transfer of Shares will be registered during this period.

Qualifying Shareholders

To qualify for the Rights Issue, a Shareholder must be registered as members of the Company and not be a Excluded Shareholder at the close of business on the Record Date. However, Overseas Shareholders whose names appear on the register of members of the Company at the close of business on the Record Date whom the Board, based on legal opinions to be provided by legal advisers, considers necessary or expedient not to offer the Rights Shares on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place will not be regarded as Qualifying Shareholders.

The Company is in the process of considering the rights of the Overseas Shareholders and the arrangements in respect of the Rights Issue for them, including whether it is feasible to extend the Rights Issue to such Shareholders.

Further information in this connection will be set out in the Prospectus to be despatched to the Shareholders.

The Company retains the right, in its discretion, to make any arrangement to avoid any offer of Rights Shares to Shareholders (without compliance with registration or other legal requirements) outside Hong Kong.

In order to be registered as members of the Company at the close of business on the Record Date, beneficial owners must lodge any transfers of Shares (together with the relevant share certificates) with branch share registrar of the Company in Hong Kong, Tricor Secretaries Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong for registration no later than 4:30 p.m. on Tuesday, 23 April 2013.

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LETTER FROM THE BOARD

The Company will send the Prospectus Documents to the Qualifying Shareholders only.

Rights of the Excluded Shareholders

The Prospectus Documents will not be registered or filed under the applicable securities or equivalent legislation of any jurisdictions other than Hong Kong and Bermuda. If there are any Shareholders whose addresses as shown on the register of members of the Company are outside Hong Kong as at the Record Date, the Company will comply with all necessary requirements under Rule 13.36(2) of the Listing Rules and will only exclude the Shareholders from the Rights Issue after making enquiries regarding the legal restrictions under the laws of the relevant jurisdictions. If based on the legal opinions provided by legal advisers, the Directors consider that it is necessary or expedient not to offer the Rights Shares to any particular Shareholder because of either: (i) the legal restrictions under the laws of the place of his registered address, or (ii) the requirements of the relevant regulatory body or stock exchange in that place, the Rights Shares will not be offered to such Shareholder. The Company will send the Prospectus Documents to the Qualifying Shareholders and the Prospectus to the Excluded Shareholders (if any) for their information only. The Company will not send PAL(s) and EAF(s) to the Excluded Shareholders.

Arrangements will be made for the Rights Shares which would otherwise have been provisionally allotted to the Excluded Shareholders to be sold in the market in their nilpaid form as soon as practicable after dealings in the Rights Shares in their nil-paid form commence and before dealings in the Rights Shares in their nil-paid form end. If a premium (net of expenses) can be obtained, the proceeds of such sale, less expense, will be paid to the Excluded Shareholders pro-rata to their shareholdings held as at the Record Date. In light of the administrative costs, the Company will retain individual amounts of HK$100 or less for its own benefit. Any unsold entitlement of the Excluded Shareholders to the Rights Shares, together with any unsold Rights Shares created by adding together fractions of the Rights Shares and any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders or otherwise subscribed for by transferees of nil-paid Rights Shares, will be made available for excess applications by the Qualifying Shareholders.

Application for excess Rights Shares

Qualifying Shareholders are entitled to apply for any unsold entitlements of the Excluded Shareholders, any unsold Rights Shares created by adding together fractions of the Rights Shares and any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders. Application may be made by completing the EAF(s) and lodging the same with a separate remittance for the excess Rights Shares.

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LETTER FROM THE BOARD

The Directors will allocate the excess Rights Shares at their discretion on a fair and equitable basis on the following principles:

• (1) preference will be given to applications for less than a board lot of Rights Shares where they appear to the Directors that such applications are made to top up oddlot holdings to whole-lot holdings and that such applications are not made with the intention to abuse this mechanism; and

• (2) subject to availability of excess Rights Shares after allocation under principle (1) above, any further remaining excess Rights Shares will be allocated to the Qualifying Shareholders based on a sliding scale with reference to the number of the excess Rights Shares applied for by them (i.e. the Qualifying Shareholders applying for smaller numbers of Rights Shares are allocated with a higher percentage of successful application but will receive less number of Rights Shares; whereas the Qualifying Shareholders applying for larger numbers of Rights Shares are allocated with a smaller percentage of successful application but will receive higher number of Rights Shares).

The Rights Issue provides an opportunity for the Shareholders to subscribe for new Shares that allows them to maintain their respective shareholding interests in the Company. The allotment of excess Rights Shares to applicants with reference to their respective shareholdings in the Company as at the Record Date is a measure for the Shareholders who subscribe for excess Rights Shares to largely maintain their respective shareholdings after completion of the Rights Issue. In the event that the Company discovered certain applications may have been made with the intention to abuse the mechanism whereby preference would have been given to applications for topping up odd-lot holdings, the Company will change the allocation method for the excess Rights Shares on a fair and equitable basis.

Shareholders with their Shares held by a nominee company should note that the Board will regard the nominee as a single shareholder according to the register of members of the Company. Accordingly, Shareholders should note that the aforesaid arrangement in relation to the top-up of odd lots for allocation of excess Rights Shares will not be extended to beneficial owners individually. Shareholders with their Shares held by a nominee company are advised to consider whether they would like to arrange for the registration of the relevant Shares in their own name prior to the Record Date.

For Shareholders whose Shares are held by their nominee(s) (including HKSCC Nominees Limited) and who would like to have their names registered on the register of members of the Company, they must lodge all necessary documents with the Registrar, for completion of the relevant registration not later than 4:30 p.m. on Tuesday, 23 April 2013.

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LETTER FROM THE BOARD

Fractions of Rights Issue

On the basis of provisional allotment of four (4) Rights Shares for every one (1) Share held by the Qualifying Shareholders on the Record Date, no fractional entitlements to the Rights Shares will arise under the Rights Issue.

Share certificates and refund cheques for the Rights Shares

Subject to the fulfillment of the conditions of the Rights Issue, share certificates for all fully-paid Rights Shares are expected to be posted to the Qualifying Shareholders by ordinary post at their own risk on or before Wednesday, 22 May 2013. One share certificate will be issued for all the Rights Shares allotted to the applicant. Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are expected to be posted on or before Wednesday, 22 May 2013 by ordinary post to the applicants at their own risk.

The first day of dealing in the Rights Shares in their fully-paid form is expected to commence on Thursday, 23 May 2013.

Application for listing of the Rights Shares

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Rights Shares (in both nil-paid and fully-paid forms). No part of the securities of the Company is listed or dealt in or on which listing or permission to deal is being or is proposed to be sought on any other stock exchanges.

Dealings in the Rights Shares in both nil-paid and fully-paid forms which are registered with the Registrar will be subject to the payment of stamp duty, Stock Exchange trading fee, transaction levy, investor compensation levy or any other applicable fees and charges in Hong Kong.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both nil-paid and fully-paid forms on the Stock Exchange, the Rights Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Rights Shares (in both nil-paid and fully-paid forms) on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

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LETTER FROM THE BOARD

Irrevocable Undertaking

As at the Latest Practicable Date, the Company has outstanding Convertible Bonds in the aggregate principal amount of HK$1,200 million. All the holders of their respective outstanding Convertible Bonds, including SPARX Emerging Opportunities Fund SPC (formerly known as PMA Emerging Opportunities Fund SPC) (with an outstanding principal amount of HK$350 million), VMS Private Investment Partners II Limited (with an outstanding principal amount of HK$350 million), Mr. Andrew Liu (with an outstanding principal amount of HK$400 million), and two other holders (with an outstanding principal amount of HK$100 million) have given the Irrevocable Undertaking to the effect that each of them will not exercise any of the conversion rights attached to the outstanding Convertible Bonds prior to the completion of the Rights Issue.

Option Deeds Undertaking

As at the Latest Practicable Date, there are 40,937,500 outstanding share options under the Option Deeds. Pursuant to the Option Deeds, 25% of the share options granted to the grantees should vest on the date which is 12 months after the grant of the share options, i.e. 12 months after 11 January 2012. As such, 10,234,375 share options under the Option Deeds were vested on 11 January 2013. All the Option Deeds holders have given the Option Deeds Undertaking pursuant to which each of them will not exercise any of the subscription rights attached to the outstanding share options under the Option Deeds prior to the completion of the Rights Issue.

UNDERWRITING AGREEMENT

The Underwriting Agreement

Date	:	4 February 2013 (after trading hours)
Underwriter	:	Kingston Securities Limited. To the best of the
		knowledge, information and belief of the Directors having
		made all reasonable enquiries, the Underwriter and its
		ultimate beneficial owners are Independent Third Parties
Total number of Rights	:	The Underwriter has agreed to fully underwrite not
Shares being underwritten		less than 6,138,200,416 Rights Shares and not more
by the Underwriter		than 7,365,996,744 Rights Shares not taken up by the
		Qualifying Shareholders.
Commission	:	3% of the aggregate Subscription Price in respect of the
		maximum number of Underwritten Shares

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LETTER FROM THE BOARD

Pursuant to the Underwriting Agreement, the Underwriter will subscribe or procure subscribers to subscribe for such number of Untaken Shares under the Rights Issue. The Underwriter shall and shall cause the sub-underwriter(s) to procure independent placees to take up such number of Rights Shares as necessary to ensure that the public float requirements under Rule 8.08 of the Listing Rules are complied with upon completion of the Rights Issue.

Termination of the Underwriting Agreement

If, prior to the Latest Time for Termination:

• (i) in the absolute opinion of the Underwriter, the success of the Rights Issue would be materially and adversely affected by:

• (a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or is materially adverse in the context of the Rights Issue; or

• (b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date hereof) of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or materially and adversely prejudice the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or

• (ii) any adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction on trading in securities) occurs which in the absolute opinion of the Underwriter are likely to materially or adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or

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LETTER FROM THE BOARD

• (iii) there is any change in the circumstances of the Company or any member of the Group which in the absolute opinion of the Underwriter will adversely affect the prospects of the Group, including without limiting the generality of the foregoing the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of any of member of the Group or the destruction of any material asset of the Group; or

• (iv) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out; or

• (v) any other material adverse change in relation to the business or the financial or trading position or prospects of the Group as a whole whether or not ejusdem generis with any of the foregoing; or

• (vi) any matter which, had it arisen or been discovered immediately before the date of the Prospectus and not having been disclosed in the Prospectus, would have constituted, in the absolute opinion of the Underwriter, a material omission in the context of the Rights Issue; or

• (vii) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than ten consecutive business days, excluding any suspension in connection with the clearance of the announcement or the circular in connection with the Rights Issue, or the Prospectus Documents,

the Underwriter shall be entitled by notice in writing to the Company, served prior to the Latest Time for Termination, to terminate the Underwriting Agreement.

Upon the giving of notice of termination, all obligations of the Underwriter under the Underwriting Agreement shall cease and neither it nor the Company shall have any claim against the other party in respect of any matter or thing arising out of or in connection with the Underwriting Agreement provided that the Company shall remain liable to pay to the Underwriter the fees and expenses (other than the underwriting commission) payable by the Company pursuant to the Underwriting Agreement. If the Underwriter exercises such right, the Rights Issue will not proceed.

Conditions of the Rights Issue

The Rights Issue is conditional upon the following:

• (i) the delivery to the Stock Exchange for authorisation and the registration with the Registrar of Companies in Hong Kong respectively one copy of each of the

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LETTER FROM THE BOARD

Prospectus duly signed by two Directors (or by their agents duly authorised in writing) as having been approved by resolution of the Directors (and all other documents required to be attached thereto) and otherwise in compliance with the Listing Rules and the Companies Ordinance not later than the Prospectus Posting Date and the filing of the Prospectus Documents duly signed by one Director (for and on behalf of all the Directors) with the Registrar of Companies in Bermuda in compliance with the Companies Act on or as soon as reasonably practicable after publication of the Prospectus Documents;

• (ii) the posting of the Prospectus Documents to the Qualifying Shareholders and the posting of the Prospectus and a letter in the agreed form to the Excluded Shareholders, if any, for information purpose only explaining the circumstances in which they are not permitted to participate in the Rights Issue on or before the Prospectus Posting Date;

• (iii) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked listing of, and permission to deal in the Rights Shares (in both nil-paid and fully-paid forms) by no later than the first day of their dealings;

• (iv) the Underwriting Agreement not being terminated by the Underwriter pursuant to the terms thereof on or before the Latest Time of Termination;

• (v) the Independent Shareholders having approved the Rights Issue and the transactions contemplated thereunder at the SGM;

• (vi) compliance with and performance by the Company of all the undertakings and obligations under the terms of the Underwriting Agreement;

• (vii) if necessary, the obtaining of the consent or permission from the Bermuda Monetary Authority in respect of the issue of the Rights Shares; and

• (viii) in the event that the number of Untaken Shares exceeds 19.9% of the issued share capital of the Company immediately upon the completion of the Rights Issue, the Underwriter successfully procuring subscriber(s): (i) who are third parties independent of, not acting in concert (within the meaning of the Takeovers Code) with and not connected with the Directors or chief executive of the Company or substantial shareholders of the Company or their respective associates (as defined in the Listing Rules); and (ii) none of whom (together with their respective parties acting in concert (within the meaning of the Takeovers Code) with them) will hold 10.0% or more of the voting rights of the Company upon completion of the Rights Issue, so that all Untaken Shares are subscribed for.

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LETTER FROM THE BOARD

The conditions (other than condition (vi) above) are incapable of being waived. If any of the above conditions is not satisfied in whole or in part by the Latest Time for Termination, the Underwriting Agreement shall be terminated accordingly and no party shall have any claim against the other save that all such reasonable costs, fees and other out-of-pocket expenses (excluding sub-underwriting fees and related expenses) as have been properly incurred by the Underwriter in connection with the underwriting of the Underwritten Shares, shall to the extent agreed by the Company be borne by the Company, and the Rights Issue will not proceed.

CHANGES IN THE SHAREHOLDING STRUCTURE OF THE COMPANY ARISING FROM THE RIGHTS ISSUE

The changes in the shareholding structure of the Company arising from the Rights Issue are as follows:

Scenario 1: Assuming no new Shares are issued on or before the Record Date

As at the Latest Practicable Date Shares Approx. Substantial Shareholders/Directors Mr. Peter Temple Whitelam_(note 1) 78,125 0.00% Mr. Lo Yuen Wa Peter(note 1) 156,250 0.01% Dr. Wu Yi-Shuen(note 2) 17,797,250 0.97% SPARX Emerging Opportunities Fund SPC(note 4) 200,000,000 10.86% VMS Private Investment Partners II Limited(note 4) 200,000,000 10.86% Mr. Andrew Liu(note 4) 200,000,000 10.86% Public Shareholders The Underwriter — 0.00% Holder(s) of Shares issued under the Issue Mandate(note 5)_ 306,910,020 16.67% Others 916,518,479 49.77% Total 1,841,460,124 100.00%	Immediately after the completion of the Rights Issue Assuming all the Rights Shares are subscribed by the Qualifying Shareholders Assuming none of the Rights Shares are subscribed by the Qualifying Shareholders(note 3) Shares Approx. Shares Approx. 390,625 0.00% 78,125 0.00% 781,250 0.01% 156,250 0.00% 88,986,250 0.97% 17,797,250 0.19% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% — 0.00% 7,365,840,496 80.00% 1,534,550,100 16.67% 306,910,020 3.33% 4,582,592,395 49.77% 916,518,479 9.95% 9,207,300,620 100.00% 9,207,300,620 100.00%	Immediately after the completion of the Rights Issue Assuming all the Rights Shares are subscribed by the Qualifying Shareholders Assuming none of the Rights Shares are subscribed by the Qualifying Shareholders(note 3) Shares Approx. Shares Approx. 390,625 0.00% 78,125 0.00% 781,250 0.01% 156,250 0.00% 88,986,250 0.97% 17,797,250 0.19% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% — 0.00% 7,365,840,496 80.00% 1,534,550,100 16.67% 306,910,020 3.33% 4,582,592,395 49.77% 916,518,479 9.95% 9,207,300,620 100.00% 9,207,300,620 100.00%
		100.00%

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LETTER FROM THE BOARD

Scenario 2: Assuming the outstanding Share Options are fully exercised on or before the Record Date

Substantial Shareholders/ Directors Mr. Peter Temple Whitelam_(note 1) Mr. Lo Yuen Wa Peter(note 1) Dr. Wu Yi-Shuen(note 2) SPARX Emerging Opportunities Fund SPC(note 4) VMS Private Investment Partners II Limited(note 4) Mr. Andrew Liu(note 4) Public Shareholders The Underwriter Holder(s) of Shares issued under the Issue Mandate(note 5)_ Outstanding Share Options being fully exercised Others Total	As at the Latest Practicable Date Shares Approx. 78,125 0.00% 156,250 0.01% 17,797,250 0.97% 200,000,000 10.86% 200,000,000 10.86% 200,000,000 10.86% — 0.00% 306,910,020 16.67% — 0.00% 916,518,479 49.77% 1,841,460,124 100.00%	As at Record Date (Assuming the outstanding Share Options have been fully exercised Shares Approx. 78,125 0.00% 156,250 0.01% 17,797,250 0.97% 200,000,000 10.86% 200,000,000 10.86% 200,000,000 10.86% — 0.00% 306,910,020 16.67% 39,062 0.00% 916,518,479 49.77% 1,841,499,186 100.00%	Immediately after the completion of the Rights Issue Assuming all Rights Shares are subscribed by the Qualifying Shareholders Assuming none of the Rights Shares are subscribed by the Qualifying Shareholders (note 3) Shares Approx. Shares Approx. 390,625 0.00% 78,125 0.00% 781,250 0.01% 156,250 0.00% 88,986,250 0.97% 17,797,250 0.19% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% — 0.00% 7,365,996,744 80.00% 1,534,550,100 16.67% 306,910,020 3.33% 195,310 0.00% 39,062 0.00% 4,582,592,395 49.77% 916,518,479 9.95% 9,207,495,930 100.00% 9,207,495,930 100.00%	Immediately after the completion of the Rights Issue Assuming all Rights Shares are subscribed by the Qualifying Shareholders Assuming none of the Rights Shares are subscribed by the Qualifying Shareholders (note 3) Shares Approx. Shares Approx. 390,625 0.00% 78,125 0.00% 781,250 0.01% 156,250 0.00% 88,986,250 0.97% 17,797,250 0.19% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% — 0.00% 7,365,996,744 80.00% 1,534,550,100 16.67% 306,910,020 3.33% 195,310 0.00% 39,062 0.00% 4,582,592,395 49.77% 916,518,479 9.95% 9,207,495,930 100.00% 9,207,495,930 100.00%
				100.00%

Notes:

1. An executive Director of the Company.

2. Dr. Wu Yi-Shuen has resigned as an executive Director of the Company with effect from 31 December 2012. He remains as the chairman, director, chief executive officer and chief technology officer of Sun Materials as at the Latest Practicable Date.

3. This scenario is for illustrative purpose only and will never occur. Pursuant to the Underwriting Agreement, in the event of the Underwriter being called upon to subscribe for or procure subscribers of the Untaken Shares:

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LETTER FROM THE BOARD

• (i) the Underwriter shall not subscribe, for its own account, for such number of Untaken Shares which will result in the shareholding of it and parties acting in concert (within the meaning of the Takeovers Code) with it in the Company to exceed 19.9% of the voting rights of the Company upon the completion of the Rights Issue; and

• (ii) the Underwriter shall use its best endeavours to ensure that each of the subscribers of the Untaken Shares (which form part of the Underwritten Shares) procured by it (i) shall be third party independent of, not acting in concert (within the meaning of the Takeovers Code) with and not connected with the Directors or chief executive of the Company or substantial shareholders of the Company or their respective associates and concert parties; and (ii) any subscribers procured by the Underwriter shall not, together with any party acting in concert with it, hold 10.0% or more of the voting rights of the Company upon completion of the Rights Issue.

• A holder of the Convertible Bonds. As disclosed in the shareholding table above, each of the three holders of the Convertible Bonds, namely SPARX Emerging Opportunities Fund SPC, VMS Private Investment Partners II Limited and Mr. Andrew Liu is interested in 200,000,000 Shares, representing 10.86% of the issued share capital of the Company as at the Latest Practicable Date.

• As announced by the Company on 22 February 2013, Freeman Securities Limited (as the placing agent) has conditionally agreed with the Company to place 306,910,020 placing Shares on a fully underwritten basis under the Issue Mandate. The placing completed on 28 February 2013.

• The Company will ensure the compliance with the public float requirements under Rule 8.08 of the Listing Rules upon completion of the Rights Issue in accordance with the Underwriting Agreement. To this end, the Underwriter shall and shall cause the sub-underwriter(s) to procure independent placees to take up such number of Rights Shares as necessary to ensure that the public float requirements under Rule 8.08 of the Listing Rules are complied with.

• The approximate percentage of shareholding of respective shareholders is subject to rounding error.

As at the Latest Practicable Date, to the best knowledge, information and belief of the Directors, the Underwriter, holders of the Consideration Bonds and their respective associates do not hold any Shares.

REASONS FOR THE RIGHTS ISSUE AND USE OF PROCEEDS

The Group is principally engaged in the business of manufacturing solar grade polycrystalline silicon in Taiwan, investment and trading of securities, provision of finance, property investment and manufacture and sale of accessories for photographic and multimedia products. There has been no material change on each of the Group’s business segments since 30 September 2012.

As disclosed in the interim report of the Company for the period ended 30 September 2012, before completion of the Group’s acquisition of Sun Mass Group in 2011, the recycling facilities of the Group’s polycrystalline silicon business were planned to be constructed and implemented after the commencement of commercial production of polycrystalline silicon, and that the capital commitment for the recycling facilities would be financed

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LETTER FROM THE BOARD

by the cash flow generated from commercial production. In April 2012, after improving the thermal decomposition capabilities at the production plant, Sun Materials was able to produce samples of polycrystalline silicon using the commercial production line. The need to expedite the further enhancement of its production facilities before formal commercial production is prompted by, among other reasons, the accumulation of a high volume of hydrofluoric acid which poses environmental pollution risk in the peak typhoon season if the production is proceeded without enhancement of the production facilities. Therefore, the Group has to enhance its production facilities now before commencing formal largescale production.

The Group expects that once the enhancement work on the decomposition and recycling/ regeneration capabilities of its production facilities is completed and that production will commence as planned, the same model will be applied to the construction of the additional five production plants.

Further details of the business update on the Group’s polycrystalline silicon business are set out on pages 37 to 50 in the interim report of the Company for the period ended 30 September 2012. The Company has engaged PHOTON Consulting, LLC to conduct an evaluation of the Group’s polysilicon business. A technical report on Sun Materials prepared by PHOTON Consulting, LLC is set out in Appendix VII to this circular. The Company has no intention to change its business strategies, and the funding for each business segment will be based on its own development in future.

Currently, the Company has no negotiation, agreement, arrangement and undertaking about any acquisitions, business co-operations, or any disposal, scaling-down and/or termination of its existing businesses as at the Latest Practicable Date. However, the Company intends to take all necessary steps to sustain the Group’s operations including pursuing strategic investors and partners for its operation to reduce its debt level and enhance its working capital; and the Company will consider any opportunity that is in the interests of the Shareholders if and when it arises in the future.

Factors the Board has considered in arriving at the Rights Issue:

Current financial resources available to the Group

In arriving at the Rights Issue, the Company has taken into consideration the financial resources available to the Group. As of 31 December 2012, the unaudited cash balance of the Group was approximately HK$37.9 million. As at the Latest Practicable Date, the Group does not have any facilities available to be drawn down.

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LETTER FROM THE BOARD

Changes in the Group’s working capital requirements

As at the date of the 2nd VSA Circular, the Directors believed that the operations of the Group for the next twelve months (since the date of the 2nd VSA Circular) would rely on, among others, (i) the available internal financial resources, (ii) the then existing margin facilities, (iii) the Standby Line, and (iv) the cashflows expected to be generated from the operating activities of Sun Materials.

However, the working capital requirement is changed due to the following reasons:

• (a) The Standby Line has expired

The Standby Line expired on 3 January 2013 pursuant to the terms of the Standby Line agreement.

• (b) Delays in commercial production affected the Group’s cashflow forecast

As mentioned above, the commercial production cannot be commenced without the enhancement of the production and recycling plants and facilities.

As there have been delays in the commercial production of polysilicon, which has in turn affected the Group’s cashflow forecast, the Directors are of the view that there was an imminent need to speed up the enhancement of the recycling plant in the Group’s production facilities in order to cope with the large volumes of hydrofluoric acid discharge.

Save as disclosed above, there has been no other material change in the Group’s working capital requirements since 30 September 2012, being the end date of the latest published unaudited financial statements of the Group for the six months ended 30 September 2012.

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LETTER FROM THE BOARD

Set out below are the Company’s major cash inflow and outflow items since 30 September 2012 and up to 31 December 2012:

Unaudited cash and bank balances as at 30 September 2012 Add: Unsecured loan from Chung Nam Finance Limited_(Note 1) Proceeds from the exercise of Share Options under the Share Option Scheme(Note 2) Disposal of securities and investments Proceeds from the placing of 68,501,684 new Shares under general mandate(Note 3) Draw down of the Credit Line Sub-total Less: Redemption of Consideration Bonds(Note 4)_ Interests paid for Consideration Bonds Interests paid to secured loan from Chung Nam Finance Limited Document fee in relation to the Credit Line Unsecured loan repayment – Chung Nam Finance Limited Capital expenditure for the implementation of recycling plant Working capital for the Group’s polycrystalline silicon business Loan installment (principal plus interest) Professional fee Payroll – the Company Others Unaudited cash and bank balances as at 31 December 2012	Approx. HK$’ million 31.0 60.0 5.8 34.6 11.1 415.0
	557.5 399.0 9.5 0.6 3.1 35.0 50.0 8.5 1.8 6.6 4.1 1.4
	37.9

Notes:

1. An unsecured loan facility due to Chung Nam Finance Limited bearing an interest rate of 1% per month with an aggregate principal amount up to HK$100.0 million due in January 2013.

2. As disclosed in the announcement dated 5 October 2012, the Company offered to grant an aggregate of 28,540,000 Share Options to subscribe for the new ordinary shares of HK$0.01 each in the share capital of the Company under the Share Option Scheme to certain eligible participants, at an exercise price of HK$0.204 each. 28,540,000 Share Options were fully exercised on 9 October 2012.

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LETTER FROM THE BOARD

1. As disclosed in the announcement dated 8 November 2012, the Company entered into the placing agreement pursuant to which the placing agent has conditionally agreed to place a total of 68,501,684 new ordinary shares of HK$0.01 each on a fully underwritten basis, to not less than six placees, at a price of HK$0.17 per Share, under the Company’s general mandate. The net proceeds from the placing was approximately HK$11.1 million.

2. Since completion of the acquisition of Sun Materials on 4 January 2012, the trading price of the Shares has been on a continuous downward trend and has declined to levels significantly lower than expected. The downward spiral of the trading price in the Shares has reflected a decline of the market’s confidence in the future prospects of the Company. Quinella, the major creditor of the Company with an exposure far exceeding the total market capitalization of the Company, expressed its concern to the Company and made repeated requests to the Company since January 2012 to partially reduce the amount of the outstanding Consideration Bonds. Initially, the Company has declined Quinella’s requests for early repayment, given that it was well before the maturity of the Consideration Bonds and that the Company planned to continue to fulfil its payment obligations (including interest payments) as and when the Consideration Bonds fall due.

Quinella was dissatisfied and continued to exert pressure on the Company to make partial early repayment, claiming that this is the only way for the Company to demonstrate that it is still financially sound. Quinella also indicated to the Company that failure to repay early would further dampen its confidence in the Company and would jeopardise the business relationship between Quinella and the Company in the long run.

Nevertheless, Quinella, which is principally engaged in investment holding and is indirectly whollyowned by Ms. Hsieh Cheng Lu (“Ms. Hsieh”), is the former owner of the innovative technology which is believed to significantly reduce the production costs of polycrystalline silicon and has extensive business network in the industry. To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, Quinella and Ms. Hsieh are third parties independent of each of the Company and any of its connected persons. Despite the Company did not have (at the time of early redemption of the then outstanding Consideration Bonds) and still has no direct business relationship with Quinella as at the Latest Practicable Date, given that Ms. Hsieh has extensive business network, and Quinella is one of the major creditors of the Company, the Company wishes to maintain a good relationship with Quinella for the possible future business cooperation and, when necessary, opportunities for future financial support; falling which might jeopardize the business opportunity (i) between the Company and Quinella; and (ii) between the Company and other potential business partners, if arise in the future. Therefore, the Company has no alternative but to early redeem certain amount of the Consideration Bonds from Quinella in order to maintain amicable relationship with Quinella.

Having considered the future prospect of the Group and business relationship with creditors in the longrun, the Company has redeemed the aggregated principal amounted to approximately HK$865 million of the Consideration Bonds up to the Latest Practicable Date.

Further, the following sets out the major cash-flow items from 31 December 2012 to the Latest Practicable Date:

Approx.

		Approx.
		HK$’ million
(i)	Interest payments for the Convertible Bonds	(35.7)
(ii)	Interest payments for the Consideration Bonds	(5.8)
(iii)	Redemption of part of the Consideration Bonds	(34.0)
(iv)	Interest payments for the unsecured loan from Chung Nam Finance	(3.8)
	Limited
(v)	Interest payments for the Credit Line	(11.8)
(vi)	Repayment for the Credit Line	(26.0)

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LETTER FROM THE BOARD

		Approx.
		HK$’ million
(vii)	Capital expenditure for the implementation of recycling plant	(10.0)
(viii)	Draw down from the Credit Line	100.0
(ix)	Unsecured loan from Dragonite Resources Limited	10.0
(x)	Net proceeds from Note Placing	4.7
(xi)	Net proceeds from placing of new Shares under the Issue Mandate	29.8

Alternative forms of financing

The Group has tightened liquidity and the Company has been exploring various initiatives to seek new funding as demonstrated by various equity fund raisings, issuance of new notes and disposal of assets and securities investment portfolios. Meanwhile, the Company also announced to amend the terms of the Convertible Bonds. The Company first announced its intention of rights issue on 17 July 2012. Due to unexpected prolonged process in conducting the Rights Issue, the Company and the Underwriter finally entered into the Underwriting Agreement on 4 February 2013.

The Directors have considered bank financing and decided against it given the additional financing costs and the requirement of securities collateral by controlling shareholders. Most importantly, the Board is of the view that it is unrealistic and impracticable to seek bank borrowings in the amount required to satisfy the funding needs of the Company, in particular given the Company’s current financial position and that the borrowed fund would be utilised for a new business segment of the Company with no proven track record.

The Directors believe that it is prudent to finance the growth of the Company by long-term equity. The Rights Issue will offer all the Shareholders an equal opportunity to increase their interest in the Company’s prospects. In view of the current market environment and having weighed the pros and cons of the alternatives, the Directors conclude that the Rights Issue is the best method for the Company to raise funds.

Accordingly, the Directors consider that they have fulfilled their fiduciary duty and duty of skill, care and diligence in considering the fairness and reasonableness of the Rights Issue.

In view of the above, the Directors (excluding the independent non-executive Directors whose opinion is set out on page 59 of this circular, after having been advised by an independent financial adviser) consider that the Rights Issue are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

Reduction of financing costs and gearing

The Company’s debt-to-equity ratio after completion of the acquisition of Sun Mass and financing costs are higher than those in 2011 and it is keen to reduce both. The Company closely monitors its daily operations with an aim to improve its efficiency by cost savings and cash balance for daily operations.

Set out below is the information of the Debts and a comparison of the financing costs associated with the Debts, as at the Latest Practicable Date:

Description Identity of the lender Consideration Bonds (Note 2) Holders of the Consideration Bonds Convertible Bonds (Note 3) Holders of the Convertible Bonds Credit Line (Note 4) Chung Nam Finance Limited Bank borrowings (Note 5) Bank and financial institutions Borrowings Dragonite Resources Limited Note Placing Note holder(s) Total	Approximate outstanding principal as at Latest Practicable Date Terms Due date Approximate interest rate per annum HK$885.00 million 2 years 4 January 2014 2.5% HK$1,200.00 million 3 years 14 July 2014 5.0% HK$489.00 million 2 years 21 November 2014 10.25% equivalent to prime rate plus 5% HK$41.54 million (equivalent to new Taiwan dollar 158.67 million) (Note 6) 10 years 3 February 2023 1.8% HK$10.00 million 3 months 5 May 2013 12% HK$5.00 million 7 years 5 February 2020 5% HK$2,630.54 million	Approximate simple interest payable per annum based on the remaining principals (Note 1) Interest repayment schedule HK$22.13 million Quarterly HK$60.00 million Semi- annually HK$50.12 million Monthly HK$0.71 million (equivalent to new Taiwan dollar 2.72 million) (Note 6) Monthly HK$0.29 million Repaid on final repayment date HK$0.25 million Annually HK$133.50 million

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LETTER FROM THE BOARD

Notes:

1. Interest payable is estimated based on simple method as at the Latest Practicable Date and the outstanding principals and is subject to rounding error.

2. The maturity date of the Consideration Bonds shall be 2nd anniversary of the issue of the Consideration Bonds or, if the Company elects in its discretion to extend the term of the Consideration Bonds, the seventh (7th) anniversary of the issue date of the Consideration Bonds, the interest thereafter shall accrue daily on the principal amount of the outstanding Consideration Bonds at 12.5% per annum. Subsequent to the date of statement of indebtedness, being 28 February 2013, on 22 March 2013, the Company repaid HK$5.0 million of the Consideration Bonds.

3. On 3 December 2012, the Company entered into the Deeds of Amendment with each of the holders of the Convertible Bonds to alter the certain terms and conditions of the Convertible Bonds, which was approved by the Shareholders on 18 January 2013. Further details of the Deeds of Amendment have been set out in the circular of the Company dated 31 December 2012.

4. Subsequent to the date of statement of indebtedness, being 28 February 2013, on 1 March 2013, the Company repaid HK$26.0 million of the Credit Line. In addition, on 25 March 2013, the Company further drew down HK$15.0 million of the Credit Line.

5. Subsequent to the date of statement of indebtedness, being 28 February 2013, on 3 March 2013, the Company repaid NT$1.33 million of the bank borrowings.

6. Principal amounts of the liabilities in new Taiwan dollar have been converted into Hong Kong dollar at approximately HK$1 = new Taiwan dollar 3.82.

The total deficit of the Group as at 30 September 2012 was approximately HK$1,101.3 million (as at 31 March 2012: the total equity of the Group was approximately HK$1,231.2 million). Gearing ratio calculated on the basis of the Group’s total debts (interest-bearing bank and other borrowings plus Convertible Bonds and Consideration Bonds) over shareholders’ funds was approximately (211.2%) (as at 31 March 2012: approximately 193.7%). Given the high financing costs associated with the Credit Line, the Directors are of the view that although the Credit Line will not become due until 2014, it is in the interest of the Company to repay part of the Credit Line.

The Directors were aware of the interest burden and the worsened gearing at the time when the Company published the 2nd VSA Circular. At the time of publication of the 2nd VSA Circular, the Directors were satisfied that the impact of the interest burden and gearing was acceptable.

Nevertheless, combined with the Group’s net loss position for the period ended 30 September 2012 and the delay in the Company’s commercial production of polycrystalline silicon, the Directors consider that it is not desirable for the Company to continue to bear high financing costs associated with the Credit Line until they become due in 2014.

The Company originally planned to rely principally on the surplus cashflow to be generated from the polycrystalline silicon operation after commencement of commercial production to fund the repayment of the outstanding Debts.

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LETTER FROM THE BOARD

However, given that commercial production of polycrystalline silicon cannot commence until the necessary enhancement work and the construction of the recycling facility have been completed, the Company is currently not in the position to estimate a reliable amount of cash flow to be generated from the production of polycrystalline silicon. Moreover, the estimated cashflow has been prepared by Sun Materials for the impairment test which was carried by the Valuer for the 2012 interim results. Save as disclosed in the Company’s 2012 interim report, which was dispatched on 24 December 2012, the basis of the preparation has been disclosed. There has been no material change in respect of the information disclosed since the publication of the 2012 interim report to the Latest Practicable Date.

Even if commercial production will commence shortly, the Company estimates that the amount of surplus cashflow to be generated from the polycrystalline silicon operation may still fall short of the total amount required to fund the repayment of all the outstanding Debts before their maturity. This is because the Debts will mature soon and because of the delay in the commencement of commercial production, the Company would not be able to generate cashflow from the polycrystalline silicon operation. As at the Latest Practicable Date, the Company expects that the total amount of cash which could be generated from the polycrystalline silicon operation before the maturity of the Debts is zero. Accordingly, the Company believes that it is necessary to explore other means of financing, including further equity fund raising, to generate funds to finance the repayment of the Debts.

Application of use of net proceeds

Having taking into account the new Shares issued under the Issue Mandate and the resulting additional Rights Shares to be issued, the estimated net proceeds from the Rights Issue will be approximately HK$494.61 million (assuming no further issue of new Shares on or before the Record Date), of which approximately HK$137.12 million, representing approximately 27.72% of the net proceeds from the Rights Issue, will be applied to the implementation of recycling plant and facilities as disclosed in the 2nd VSA Circular, and the remaining of approximately HK$357.49 million, representing approximately 72.28% of the net proceeds from the Rights Issue, will be applied to the repayment of part of the Credit Line.

Assuming the outstanding Share Options are fully exercised and no further issue of new Shares on or before the Record Date, the estimated net proceeds from the Rights Issue will be approximately HK$494.62 million, of which approximately HK$137.12 million will be applied to the implementation of recycling plant and facilities, and the remaining of approximately HK$357.50 million will be applied to the repayment of part of the Credit Line, representing approximately 27.72% and 72.28% respectively of the net proceeds of the Rights Issue.

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LETTER FROM THE BOARD

The summary of the net proceeds from the Rights Issue will be applied as follows:

Assuming no further issue of new Shares on or before the Record Date HK$ million approximately (A) Capital expenditure — for implementation of recycling plant and facilities (Note 1) — apply to additional civil work, general utility/piping, the production/piping and building costs for the extension part (Note 2) 53.50 Less:_Progress payment (11.58) 41.92 — apply to the purchase of additional and/ or refined factory’s machineries/piping (Note 2)_ 95.20 (B) For repayment of the Credit Line 357.49 Total 494.61

Assuming the outstanding Share Options are fully exercised and no further issue of new Shares on or before the Record Date HK$ million approximately 53.50 (11.58) 41.92 95.20 357.50 494.62

Notes:

1. The costs are estimated on the basis of enhancing the plant to operate on its commercial designed capacity.

2. These relate to enhancing production facilities to address the risk as set out on pages 31-32 in the section headed “Reasons for the Rights Issue and use of proceeds”.

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LETTER FROM THE BOARD

With respect to the enhancement work in relation to the implementation of the recycling plant and facilities, the “additional civil work, general utility/piping, the production/piping and building costs for the extension part” covers the construction costs of new buildings to house new gas decomposing facilities and other ancillary facilities for the transfer of gas to and from the production unit to the recycling plant of the Group’s production facilities.

The “purchase of additional and/or refined factory’s machineries/piping” is needed to construct new recycling reactors to store and break down the hydrofluoric acid discharge and construct additional piping to cope with the increased processing power/storage capacity of the recycling plant.

Set out below is summary of the expected capital expenditure plan for the Group’s polycrystalline silicon business for the next 12 months from the Latest Practicable Date:

Items for the enhancement			Actual/
of the recycling facilities for	Approximate	Actual	Expected
the existing plant	amount	start date	finish date
	(HK$’ million)
Civil work	31.4	June 2012	March 2013
General utility and related piping work	10.5	July 2012	March 2013
Plant production machineries	95.2	Commence	By first
		upon	half of
		completion of	2013
		civil work and
		general utility
		and related
		piping work

Total 137.1

The timing for purchasing the office equipment and tools is dependent upon the progress of the piping work and the construction of a recycling plant. It is expected that the purchase of plant production machineries will be completed by first half of 2013. As a reference,

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LETTER FROM THE BOARD

set out below is the schedule with the milestone dates and percentage of completion of the civil work, general utility and piping:

		Estimated completion	Completion took
Percentage of completion		date	place in
1.	Civil Work
	10%	10 June 2012	June 2012
	35%	20 August 2012	August 2012
	60%	20 October 2012	October 2012
	75%	5 December 2012	December 2012
	90%	25 December 2012	February 2013
	100%	31 January 2013	March 2013
2.	General Utility
	10%	10 June 2012	July 2012
	35%	20 August 2012	December 2012
	60%	20 October 2012	January 2013
	75%	5 December 2012	January 2013
	90%	25 December 2012	February 2013
	100%	31 January 2013	March 2013
3.	Piping
	50%	18 January 2013	December 2012
	100%	22 February 2013	February 2013

As at the Latest Practicable Date, the Group has not commenced full production of its polycrystalline silicon business. The nature of the Group’s other principal businesses in trading in securities and money lending is such that they have no fixed business cycle and are dependent on market conditions. The business cycle of the Group’s manufacturing and trading business ranges from a few weeks to a few months depending on the product specifications. As such, the Group has no specific business cycle and it is impossible to give an exact estimate on such length accordingly. Despite there are delays in the enhancement work of the recycling facilities of the existing plant, to the best of knowledge, information and belief of the Directors, such delays shall not have any material adverse impact to the existing operation of the Group.

As set out in the Calculation Report, based on the information provided by the management of the Group to the Valuer, the sales volume of the existing plant was forecasted at 2,593 metric tons, which represents approximately 74% utilization of the designed production capacity of the existing plant of 3,500 metric tons.

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LETTER FROM THE BOARD

In order to achieve the above estimated sales volume, the operations team that led by Dr. Wu has been working on upgrading the factory processes to lower the cost structure in order to be competitive in the current pricing environment. The construction of the new building to house the recycling facility, gas decomposition facility and gas supply system has been completed and an operation permit dated 15 March 2013 issued by Yilan County was received by the Group on 21 March 2013. As at the Latest Practicable Date, the Company has three existing legally-binding offtake agreements which have not been terminated by the customers due to delays in production and changes in pricing environment. The customers are aware of the new technology aspect of the business which allows the production of polysilicon at a lower cost and are prepared to continue to support the Company going forward. However, due to the delays in production, the parties under the said offtake agreements have agreed that certain terms of the offtake agreement such as the price and quantities to be purchased may be subject to further revision, subject to when the commercial production of the polysilicon is commenced. Nevertheless, to the best of knowledge, information and belief of the Directors, assuming there is no material adverse change in the market, the scale of the aggregate annual consumption capacity of these three customers is large enough to take up the expected annual production of the polysilicon of the Group. On this basis, assuming the Rights Issue and the commercial production of polycrystalline silicon commences as planned, the Company is optimistic that the customers would continue to support the Company and the estimated annual sales target of polycrystalline silicon is achievable.

The capital expenditure of approximately HK$137.1 million (equivalent to approximately US$17.6 million) will mainly be used for the enhancement of the Company’s existing plant to enable it to reach full production capacity.

A review of the Group’s existing production capacity as well as floor plan has revealed that to reach full-scale production, prompt enhancement should be made to two major areas of the production cycle, namely decomposition and recycling/regeneration.

More decomposition reactors are essential to produce sufficient silicon tetraflouride to match the existing reactive combustion chambers whereas enhancement of the recycle/ regeneration functions of the plants is essential for the Group to comply with the relevant environmental laws and regulations.

Accordingly, a new gas production and recycling building with related piping facilities and equipment, such as material drying systems, gas compression systems and scrubbers, should be constructed to accommodate the increased production capacity.

Having weighed the costs and benefits associated with various financing options, the Directors have come to the view that the Rights Issue is the more acceptable option. As such, the Directors believe that it is in the best interest of the Company to raise funds by means of the Rights Issue and that it is currently an optimal time.

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LETTER FROM THE BOARD

Under the current market conditions, the Directors believe that it is difficult to secure an underwriter to commit to a rights issue. As such, the Directors are of view that the support from the Underwriter for the Rights Issue has presented an opportunity to increase the Company’s equity capital base and reduce the Company’s gearing while raising funds through alternative sources are not feasible or desirable as disclosed in this circular.

The Board is also aware of the dilution impact of the Rights Issue in the case of low participation, and acknowledges that this is a downside of the Rights Issue. For the reasons below, the Board is of the view that the Rights Issue is fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole:

• (i) As compared to other equity alternatives, the Shareholders are offered an equal opportunity to participate and can benefit from the nil-paid share trading if they choose not to take up their entitlements. The major terms of the Rights Issue are in line with those generally adopted in Hong Kong for rights issues conducted on a fully-underwritten basis.

• (ii) The dilution impact should not be considered in isolation and should be assessed against the potential benefits of the Rights Issue (which are set out under the section headed “Reasons for the Rights Issue and use of proceeds” in this circular) to the Company and its Shareholders as a whole.

• (iii) Other equity fund-raising alternatives such as a placing of Shares will equally have a material dilution impact on the shareholding of the Shareholders.

Having weighted the pros and cons of each of the alternatives, the Directors conclude that the Rights Issue is the best method for the Company to raise funds in view of the current market environment.

Apart from the Rights Issue and the Note Placing, the Company will continue to seek available financial resources including further fund-raising activities and/or pursuing strategic investors and partners for its operations to reduce its debt level and to enhance its working capital.

The intended uses of proceeds from the Rights Issue were arrived at after the Directors’ due and careful consideration. The Directors consider that the intended uses of proceeds are specific and well-defined with the flexibility to use as intended to the Company. The Rights Issue will give every Qualifying Shareholder an opportunity to subscribe for and maintain its pro-rata interests in the Company. Furthermore, the Company believes that the Rights Issue will enhance its capital base and financial position.

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LETTER FROM THE BOARD

WORKING CAPITAL NEEDS OF EACH OF THE GROUP’S BUSINESS SEGMENTS IN THE NEXT 12 MONTHS

The Group’s major business segments other than the polycrystalline silicon operation are mature and financial resources previously deployed in running their operations are sufficient to satisfy the working capital needs at their existing levels of activities for the next twelve months. Furthermore, there is no plan to expand the scale of activities of these business segments in the foreseeable future.

Set out below are the working capital requirements by business segments for the next 12 months:

Loan financing and investment segments

Activities in both the loan financing and investment segments are now less active than before. In fact, the Company commenced liquidation of its investments in securities and repayment of its loans receivable from the first quarter of 2012. The Company does not plan to inject additional working capital to its loan financing and investment segments and both segments are and will be financed by the working capital already deployed. As at the Latest Practicable Date, the Group has no outstanding loan receivable and investments.

Property investment segment

Income from property investment is secured by one tenancy agreement with third party for a term of five years. Currently, the operation of the property investment segment is financed by the rental income generated from its property investment portfolio.

Manufacturing and sale of accessories for photographic and multimedia products segment

The manufacturing and sale of accessories for photographic and multimedia products segment is able to generate sufficient cash to fund its own operation. Furthermore, this segment has maintained an average cash balance of approximately HK$10.0 million in the past two years. Therefore, the Company believes that there will be sufficient self-generated funds to support this operation in the next 12 months from the Latest Practicable Date.

With respect to capital expenditure, the manufacturing plants in respect of this segment are all located in China and are fully equipped for operation. Accordingly, no material capital expenditure is expected in the next 12 months from the Latest Practicable Date.

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LETTER FROM THE BOARD

Polycrystalline silicon segment

Based on the existing factory size and costs incurred on a monthly basis for the last 12 months, the working capital required for the normal operation (such as administrative expenses, including staff costs) of the polycrystalline silicon business was approximately HK$2.8 million per month. Based on the Company’s preliminary analysis (assuming there will be no further need for capital expenditure and no income will be generated), the Company will require additional working capital in the amount of approximately HK$33.6 million to maintain the daily operation of the polycrystalline silicon business for the next 12 months from the Latest Practicable Date. The additional working capital will be allocated from the Credit Line and/or proceeds from further fund raising exercises.

Other segments (including unallocated corporate expenses)

Based on the Company’s audited accounts for the year ended 31 March 2012, average operating costs (excluding the legal and professional expenses for the acquisition of Sun Mass and non-cash flow items such as changes in fair value of securities, depreciation, amortization of interest expenses of the Debts) amounted to approximately HK$2.5 million per month in which approximately HK$1.1 million was attributable to staff costs. Furthermore, the aggregate interest payment for the next 12 months from the Latest Practicable Date is approximately HK$133.50 million. The aggregate working capital required is approximately HK$163.50 million which will be covered by the Credit Line and/or proceeds from further fund raising exercises.

The existing internal sources of funds applied to these segments are allocated from the Group’s cash and bank balance and the Credit Line. As at the Latest Practicable Date, the cash balance of the Group is approximately HK$41.2 million.

In summary, the total working capital requirements not intended to be covered by proceeds from the Rights Issue amount to approximately HK$197.10 million for the next 12 months, which are to be satisfied from the Company’s existing financial resources and/or Credit Line and/or proceeds from further fund raising exercises.

SUMMARY OF KEY EVENTS — THE DELAY IN THE COMMERCIAL PRODUCTION OF POLYCRYSTALLINE SILICON

Set out below is a summary of the key events and developments leading to the delay in the commercial production of polycrystalline silicon by the Group for a period from the publication of the 1st VSA Circular to the publication of the 2nd VSA Circular:

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LETTER FROM THE BOARD

Date

20 May 2011

From late 1st quarter to the 3rd quarter of 2011

On-going through November 2011

December 2011

December 2011

19 December 2011

Event/Development

Publication of the 1st VSA Circular

On-going sodium fluorosilicate decomposition tests conducted on the new second-generation decomposition reactor delivered on 28 March 2011 revealed that the feeding system of the reactor did not allow thorough decomposition of the sodium fluorosilicate because of frequent blockages of the feeding channel during the process. The blockages resulted in a lower level of efficiency because of the frequent maintenance cycles, which the Company has been finding ways to resolve the problem during the 2nd and 3rd quarters of 2011.

The Group commenced on-going reassessment of the efficiency of the sodium fluorosilicate decomposition reactor, which generates silicon tetrafluoride. A decision was made to re-design the reactor and the new thirdgeneration reactor was delivered on 15 September 2011. The new design was radically different from the old system and eliminated the material feeding problem. The reactor was put into use in October 2011 and provided an improvement to the overall efficiency compared with the previous second-generation design. However, during testing, it was found that the reactor was not sufficiently robust to handle the new pressure level required to achieve a silicon tetrafluoride concentration of 80%.

Extensive improvement work to the reactor completed by the reactor vendor but the pressure related issues could not be resolved with the existing third generation reactor design. Dr. Wu and his team requested more time to proceed with a new fourth-generation design.

The Directors resolved to accept Dr. Wu’s recommendation and allow Dr. Wu more time to refine the decomposition process in order to achieve the targeted concentration level of 80% for silicon tetrafluoride.

Publication of the 2nd VSA Circular.

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LETTER FROM THE BOARD

PREVIOUS FUND-RAISING EXERCISE IN THE PRIOR 12-MONTH PERIOD

Save as disclosed below, the Company has not conducted any fund-raising activities in the past twelve months before the Latest Practicable Date:

Date of initial		Net proceeds	Intended use of net	Actual use of
announcement	Description	(approximately)	proceeds	net proceeds
		HK$		HK$
19 June 2012	Placing of 57,084,736	HK$12.7 million	Approximately HK$11.7	Used as intended.
	new Shares under		million would be used	Approximately
	general mandate at a		for the down payment	HK$11.7 million
	price of HK$0.24 per		for the construction	was used for down
	Share		of the new facility	payment for the
			building of the Group’s	construction of the
			polycrystalline silicon	new facility building
			business and the	and approximately
			remaining balance	HK$1 million for
			of approximately	electric works
			HK$1 million would	for the Group’s
			be utilised for the	polycrystalline silicon
			construction works,	business
			details of which were set
			out in the Company’s
			announcement dated 19
			June 2012
8 November 2012	Placing of 68,501,684	HK$11.10 million	General working capital	Used for the partial
	Shares under general			redemption of the
	mandate at a price of			Consideration Bonds
	HK$0.17 per Share
24 December 2012	Placing of 176,000,000	HK$27.62 million	To repay part of the	Terminated on
(Note)	Shares at a price of		indebtedness of the	30 January 2013
	HK$0.165 per Share		Group
28 December 2012	The Note Placing	Up to HK$94.8	To repay part of	Yet to be completed
		million	indebtedness of the
			Group

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LETTER FROM THE BOARD

Date of initial		Net proceeds	Intended use of net	Actual use of
announcement	Description	(approximately)	proceeds	net proceeds
		HK$		HK$
22 February 2013	Placing of 306,910,020	HK$29.44 million	To repay part of the	Used as intended
	Shares under the Issue		indebtedness of the
	Mandate at a price of		Group
	HK$0.10 per Share

Note: Such proposed placing was terminated on 30 January 2013. Details of which are set out in the announcement of the Company dated 30 January 2013.

ADJUSTMENTS IN RELATION TO THE CONVERTIBLE BONDS, SHARE OPTIONS AND SHARE OPTIONS UNDER THE OPTION DEEDS

The Rights Issue may lead to adjustments to (i) the conversion price and/or the number of Conversion Shares to be issued upon exercise of the conversion rights attached to the Convertible Bonds pursuant to the relevant terms of the instrument constituting the Convertible Bonds; and (ii) the exercises prices and/or the number of new Shares to be issued upon exercise of the Share Options and the share options under the Option Deeds pursuant to the relevant terms of the Share Option Scheme and the Option Deeds. The adjustments are subject to the review by the auditors appointed by the Company. Further announcement will be made by the Company in respect of such adjustments as and when appropriate.

BUSINESS REVIEW OF THE GROUP

For the six months ended 30 September 2012 (the “ Period ”), the loss attributable to shareholders for the Period recorded as approximately HK$2,392.2 million, which increased by approximately HK$2,046.4 million, as compared to a loss of approximately HK$345.8 million at the same period last year. The loss was mainly attributable to:

• (i) As at 30 September 2012, an impairment of approximately HK$1,921.0 million was made by the Company against the aggregated carrying value of the investment in Sun Mass Group. The basis of determination of the impairment is primarily based on the valuation report dated 28 November 2012 (the “ Report ”) in respect of the Group’s polycrystalline silicon business in Taiwan. The Report indicated that the value in use of business enterprise of the Group’s polycrystalline silicon business (on the existing plant scenario) is reasonably stated as approximately HK$780.0 million (USD100.0 million);

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• (ii) an increase in finance costs by approximately HK$177.7 million, from approximately HK$37.0 million to approximately HK$214.7 million in which approximately HK$2.1 million arising from interest expenses paid for bank and other borrowings, approximately HK$94.0 million arising from the amortisation of interest expenses for Convertible Bonds and approximately HK$118.6 million arising from the amortisation of interest expenses for Consideration Bonds during the Period;

• (iii) a change of fair value on derivative financial instrument of the Company’s Consideration Bonds which resulting of approximately HK$101.1 million loss as at 30 September 2012 (As at 30 September 2011: Nil);

• (iv) an aggregated loss on early redemptions of the Company’s Consideration Bonds during the Period of approximately HK$86.4 million (2011:Nil);

• (v) a decrease in investment income (investments in shares and provision of finance) by approximately HK$16.6 million, from approximately HK$17.2 million to approximately HK$0.6 million during the Period;

• (vi) the fair value losses of approximately HK$22.2 million in financial assets at fair value through profit or loss, which was decreased by approximately HK$273.5 million from approximately HK$295.7 million during the Period.

The basic and diluted loss per share was HK$7.59 for the Period. The basic and diluted loss per share was adjusted to reflect the impact of the share consolidation effected on 26 April 2012.

Solar grade polycrystalline silicon

Result

No turnover was generated from solar grade polycrystalline silicon segment with no commercial production was commenced during the Period and the same period last year. With the completion of acquisition of 50.1% and 49.9% interest in Sun Mass Group, which is engaged in solar grade polycrystalline silicon’s business, in July 2011 and January 2012 respectively, the segment loss increased by approximately 196.9 times, from approximately HK$9.9 million in the same period last year to approximately HK$1,949.4 million for the Period, in which approximately HK$1,921.0 million was arising from the impairment loss on the Group’s polycrystalline silicon’s business, which amount of approximately HK$1,732.0 million allocated to intangible asset and approximately HK$189.0 million allocated to the property, plant and equipment.

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LETTER FROM THE BOARD

Impairment

During the Period, as a result of severe and challenging market conditions in the solar industry in the year of 2012 which impacted the selling prices of the polysilicon in the industry, the Group carried out a review of the recoverable amount of related cash generating unit (“ CGU ”), during the period with the assistance from an independent valuation firm.

HKAS 36 set out that the recoverable amount of the CGU is estimated in order to determine the extent of the impairment loss. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of a CGU is estimated to be less than its carrying amount, the carrying amount of a CGU is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

In preparing the impairment test of Sun Mass Group as a CGU, the Group has observed HKAS 36 and has prepared recoverable amount analysis under both fair value less costs to sell and value in use premises. Since the results from the two premises are close, the management decided that it is reasonable to adopt the value in use premise, which was based on the discounted cashflow (“ DCF ”) analysis. Under relevant valuation guidelines, if there is no comparable intangible asset in the market when valuing an intangible asset for the purpose of impairment test and in order for allocating the impairment amount to different classes of assets, it is appropriate to adopt DCF under the income approach than market approach even though income approach involves more judgments or forward looking statements. The use of income approach can estimate not only free cash flows of a business unit but also incremental cash flows attributable to a specific intangible asset. Thus, in the Group’s interim report for the period ended 30 September 2012, income approach was used as it was more relevant from the context of impairment test.

The calculation was based on the future pre-tax cash flows expected to arise from the CGU for the next five years using a pre-tax discount rate of 22%. The pre-tax discount rate of 22% was derived by setting the same equity value results from a post-tax cashflow using a post-tax discount rate and a pre-tax cashflow using a pre-tax discount rate.

The post-tax discount rate was estimated based on the estimated weighted average cost of capital (“ WACC ”), which incorporated the cost of equity and debt, weighted by the proportionate amount of each source of capital in the capital structure. The cost of equity was developed through the application of the Capital Asset Pricing Model (“ CAPM ”), with

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reference to comparable companies’ historical beta. In addition, small size risk premium and company-specific risk premium were also added to the cost of equity derived by CAPM. Another component of WACC was after-tax cost of debt, which was based on the latest borrowing rate of the subject and the standard tax rate. Taking the industry’s capital structure as a proxy is the notion that the subject’s operation will converge to the industry level in the long run. The cash flows beyond the next five years are extrapolated using a nominal growth rate of 3%. Other key assumptions adopted in the DCF analysis under the value in use premise are set out below:

1. production facility was expected to commence operation in the first half of 2013 based on the management’s estimation;

2. Average selling price (“ ASP ”) was estimated at approximately US$23.7/kg in 2013 and was estimated to change in line market analysts forecast; and

3. Cash manufacturing costs, comprising raw materials, electricity and manufacturing overhead, which were estimated to be approximately US$14/kg by a technical consultant commissioned by the Company. In relying on the technical report, cash manufacturing costs were expected to remain constant throughout the projection period;

4. Operating expenses (“ OPEX ”) including selling, general and administrative expenses were estimated to be less than 10% of revenue throughout the projection period. Management estimated the OPEX based on the planned headcount, rental and miscellaneous expenses;

5. an estimated sales volume in the first full year of operation represents approximately 74% utilization of the designed production capacity of the existing plant and gradually increase to a long-run target of 86%. The planned utilization rate is in line with the industry practice; and

6. all polysilicon produced are sold.

Accordingly, an impairment loss of HK$1,921.0 million is recognised in the profit and loss. No impairment assessment was performed for the year ended 31 March 2012.

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LETTER FROM THE BOARD

In the circular of the Company dated 19 December 2011, a calculation report has been disclosed in relation to the calculated value of business enterprise of Sun Materials as of June 30, 2011, which was based on market approach – guideline company method. Certain key assumptions under the calculation report are different from the ones for impairment analysis and are stated below:

1. production facility was expected to commence operation in late December 2011;

2. ASP was estimated at approximately US$32.6/kg in the first full year production period; and

3. Cash manufacturing costs were estimated to be US$12.8/kg.

Based on the progress of the development, the technical report prepared by PHOTON Consulting, LLC and the impairment test report prepared by the Valuer in respect of the Group’s polycrystalline silicon business, the Company discussed and concluded to adopt the one plant scenario for the impairment test. It is mainly due to (i) the change of the market conditions, especially the change of the spot price of the polycrystalline silicon; (ii) the delay in respect of the inflow of the expected economic benefits generated from Sun Materials; (iii) the prolonged delay in the process of a proposed fund arising activity which has a significant impact on the Group’s short-term funding for its working capital; and (iv) an adoption of a prudent approach to estimate the impairment loss. Independent professional parties will continue be engaged to advise the Company in respect of the market conditions and the core technology. Furthermore, an impairment test will carry out at least on each future reporting date/period for the management to review and consider.

In order to give more information to the investors or shareholders of the Company in relation to Sun Materials, the Group has engaged the Valuer in the preparation of the Calculation Report, as set out in the Appendix IV. The Valuer has adopted and presented the market approach in the Calculation Report when assessing the enterprise value of Sun Materials. Market approach was adopted as an industry practice given the availability of comparable companies of the subject entity and that less judgment would be involved when compared to the income approach. Therefore, market approach has been consistently adopted in 1st VSA Circular, 2nd VSA Circular and this circular.

To the best of knowledge, information and belief of the Directors, between the period from 30 September 2012, being the measurement date of the Calculation Report (“ Measurement Date ”) and up to the Latest Practicable Date, there was no material change to the business plan of the Group. Having considered: (i) the up-to-date information of Sun Materials as per the said business plan; (ii) the impact of delay of commencement of commercial

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production due to implementation of recycling facilities from the 2nd VSA Circular to the Measurement Date; and (iii) among the ten comparable companies selected in the Calculation Report (source: Bloomberg), seven of them showed an increase in the market capitalization from 30 September 2012 to 28 February 2013, representing that there was no material adverse change in the manufacturing of polysilicon or other products for solar energy market, the Valuer advised that the calculated values of Sun Materials up to the end of February 2013 shall not be materially different from the Measurement Date.

Investments

During the Period, the dividend income on investments in shares decreased by 99.1% from approximately HK$4.6 million to approximately HK$0.04 million as compared with the same period last year. The net loss from investment in shares was approximately HK$22.2 million, 92.5% lower than approximately HK$295.7 million as compared with the same period last year. The proceeds from disposal of investments were utilised for the working capital of the Group.

Loan financing

During the Period, interest income from provision of finance significantly decreased by 21 times from approximately HK$12.6 million to approximately HK$0.6 million as compared with the same period last year, mainly due to decrease in number of customers. All loans and interest receivables were duly settled as at 30 September 2012 and no provision for loan receivable was made during the Period. The amounts received from loan receivables were utilised for the working capital of the Group.

Property investment

During the Period, with the utilisation of empty space and generating additional funding as working capital for the segment of property investment, the Group rent out a unit of Room 2501, China United Centre, 28 Marble Road, North Point, Hong Kong to an independent third party. With the utilisation of other investment properties remain unchanged, rental income from investment properties increased from approximately HK$0.7 million to approximately HK$1.5 million, representing an increase of 2.1 times as compared with the same period last year.

Manufacture and sale of accessories

The segment’s turnover slightly increased by approximately HK$3.4 million, from approximately HK$89.2 million to approximately HK$92.6 million, as compared with the same period last year. With the provision of the sales value added tax and the

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continuous increase in wages and salaries, gross profit margin slightly decreased from 28.7% to 27.1%. The segment’s result decreased by approximately HK$2.3 million, from approximately HK$7.0 million to approximately HK$4.7 million, as compared with the same period last year.

FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The economic outlook for 2013 remains to be uncertain. Sovereign debt problems in Europe, the fiscal cliff conundrum in the United States are amongst the main factors posing continual risks and uncertainties to the recovery and stability of major economies and financial markets around the world, despite the loose monetary measures taken by major central banks globally. At an industry specific level, the photovoltaic industry and particularly the polycrystalline silicon market continue to be under pressure from a combination of an oversupply issue from aggressive industry capacity expansion over the past few years and weakening feed-in-tariff support in Europe. The macro short term view is that the industry will continue its current shakeout of weaker players in the near term but with many polysilicon manufacturers without long-term contract support selling at a spot price below their cash costs, we should be nearing an inflection point and should see a capacity reduction in the coming months as weaker players continue the quicken the pace of shut down or exit the industry.

In respect of the Group’s polycrystalline silicon business, the Group is conservatively optimistic about the future development of Sun Materials in the green energy industry, and will be substantially engaged in manufacturing and trading of polycrystalline silicon and potential future expansion into downstream segments of the photovoltaic industry.

The Group’s future prospects would depend primarily on the commencement of commercial production of polycrystalline silicon by Sun Materials and the future success of this business operation in the light of prevailing market conditions in the solar energy and polysilicon industries. As earlier mentioned a recycling facility with additional enhanced production equipment is currently being constructed to enable cost effective and environmentally safe products can be produced upon the launch of commercial production. The progress of the construction of this facility is currently underway and is progressing in line with plan generally. The coming few months will be critical as far as completion of the construction of the recycling facility is concerned and the Group is continuously monitoring the ongoing progress closely such that commercial production can be successfully launched within our anticipated timing in the first half of 2013.

On the other hand, the Group’s available financial resources have been stretched to a less than satisfactory level. The Company has been exploring various initiatives to seek new funding as demonstrated by the recent placement of new shares. Efforts to explore new financing including a planned rights issue as well as debt restructuring are ongoing with a view to restore the Group’s financial position in due course.

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LETTER FROM THE BOARD

WARNING OF THE RISKS OF DEALINGS IN THE SHARES AND RIGHTS SHARES IN NIL-PAID FORM

The Rights Issue is conditional upon the fulfilment of the conditions set out in the section headed “Conditions of the Rights Issue” in this circular. In particular, the Rights Issue is conditional, among others, upon:

• (i) the Independent Shareholders having approved the Rights Issue and the transactions contemplated thereunder at the SGM;

• (ii) the Listing Committee granting or agreeing to grant (subject to allotment), and not having withdrawn or revoked, the listing of, and permission to deal in, the Rights Shares in nil-paid and fully-paid forms; and

• (iii) the obligations of the Underwriter under the Underwriting Agreement becoming unconditional and the Underwriting Agreement not being terminated in accordance with its terms (set out in the section headed “Termination of the Underwriting Agreement” in this circular).

If the conditions of the Rights Issue are not fulfilled or waived (as the case may be) or if the Underwriter exercises its right to terminate the Underwriting Agreement pursuant to the terms therein, the Rights Issue will not proceed.

Any persons contemplating buying or selling Shares and/or nil-paid Rights Shares (as the case may be) from the Latest Practicable Date up to the date on which all the conditions of the Rights Issue are fulfilled will bear the risk that the Rights Issue may not become unconditional or may not proceed. Shareholders and the public are reminded to exercise caution when dealing in the securities of the Company.

Any Shareholders or other persons contemplating dealing in the Shares and/or nilpaid Rights Shares are recommended to consult their own professional advisers.

GENERAL

The Rights Issue is subject to, among other things, the approval by the Independent Shareholders at the SGM. Pursuant to Rule 7.19(6)(a) of the Listing Rules, any controlling shareholder and their associates, or where there are no controlling shareholders, the Directors (excluding the independent non-executive Directors), the chief executive of the Company and their respective associates will abstain from voting in favour of the resolutions relating to the Rights Issue. As at the Latest Practicable Date, as the Company has no controlling shareholder within the meaning of the Listing Rules, the Directors (excluding the independent non-executive Directors), namely Mr. Peter Temple Whitelam

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and Mr. Lo Yuen Wa Peter and chief executive of Sun Materials, namely Dr. Wu Yi-Shuen and their respective associates will abstain from voting in favour of resolutions to approve the Rights Issue at the SGM. Save that Mr. Peter Temple Whitelam, Mr. Lo Yuen Wa Peter and Dr. Wu Yi-Shuen held 78,125 Shares (representing approximately 0.00% of the issued share capital of the Company), 156,250 Shares (representing approximately 0.01% of the issued share capital of the Company) and 17,797,250 shares (representing approximately 0.97% of the issued share capital of the Company) respectively, none of the Directors nor the chief executive of the Company held any Shares as at the Latest Practicable Date. Save as disclosed above, none of the Shareholders will be required to abstain from voting in favour of the resolutions to approve the Rights Issue at the SGM.

The Company will establish an independent board committee comprising the independent non-executive Directors to make recommendation to the Independent Shareholders. The Company has appointed an independent financial adviser to advise the independent board committee and the Independent Shareholders in this regard.

A SGM will be convened and held for the Independent Shareholders to consider and, if thought fit, to approve, among other things, the Rights Issue. There had been no voting trust or other agreement or arrangement or understanding entered into by or binding upon any such Shareholders, and no obligation or entitlement of any such Shareholders whereby any one of them has or may temporarily or permanently passed control over the exercise of the voting right in respect of their respective interest in the Company to a third parties either especially or on a case-by-case basis.

Upon the approval of the Rights Issue by the Independent Shareholders at the SGM, the Prospectus Documents setting out details of the Rights Issue will be despatched to the Qualifying Shareholders as soon as practicable and the Prospectus will be despatched to the Excluded Shareholders for information only.

NOTICE OF THE SGM

Set out on pages N-1 to N-3 of this circular is a notice of the SGM to be held at 30th Floor, China United Centre, 28 Marble Road, North Point, Hong Kong on Thursday, 18 April 2013 at 4:30 p.m. at which resolutions will be proposed to approve, among other things, the Rights Issue. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return to the Registrar as soon as practicable and in any event not later than 48 hours before the time appointed for the holding of the SGM, i.e. 4:30 p.m. on Tuesday, 16 April 2013, or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish and in such case, the form of proxy shall be deemed to be revoked.

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RECOMMENDATION

The Independent Board Committee has been established to advise the Independent Shareholders as to whether the terms of the Rights Issue are fair and reasonable and in the interest of the Company and the Shareholders as a whole and to make recommendations to the Independent Shareholders on how to vote at the SGM. United Simsen Securities Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

Your attention is drawn to the letter from the Independent Board Committee set out on page 59 of this circular which contains its recommendation to the Independent Shareholders in relation to the Rights Issue, and the letter from the Independent Financial Adviser set out on pages 60 to 97 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders. The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, considers that the terms of the Rights Issue is fair and reasonable and that the Rights Issue is in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolutions relating to the Rights Issue at the SGM.

The Directors (as for the Rights Issue, excluding members of the Independent Board Committee whose views are set out in the letter from the Independent Board Committee set out in page 59 of this circular) believe that the terms of the Rights Issue are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the relevant resolutions to be proposed at the SGM.

ADDITIONAL INFORMATION

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

Yours faithfully, By Order of the Board mascotte HoLDINGs LImIteD Lo Yuen Wa Peter Managing Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(Incorporated in Bermuda with limited liability)

(Stock Code: 136)

28 March 2013

To the Independent Shareholders,

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF FOUR (4) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE AND NOTICE OF SPECIAL GENERAL MEETING

We refer to the circular dated 28 March 2013 (the “ Circular ”) of the Company of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context requires otherwise.

We have been appointed as the Independent Board Committee to consider the Rights Issue and to advise the Independent Shareholders as to the fairness and reasonableness of the Rights Issue and to recommend whether or not the Independent Shareholders should vote for the resolution to be proposed at the SGM to approve the Rights Issue. United Simsen Securities Limited has been appointed as independent financial adviser (“ Independent Financial Adviser ”) to advise the Independent Board Committee and the Independent Shareholders in such regards.

We wish to draw your attention to the letter from the Board and the letter from the Independent Financial Adviser as set out in the Circular which contains, inter alia, its advice and recommendation to us and the Independent Shareholders regarding the terms and conditions of the Rights Issue with the principal factors and reasons for its advice and recommendation.

Having taken into account the advice and recommendation of the Independent Financial Adviser, we consider that the terms of the Rights Issue are fair and reasonable so far as the Independent Shareholders are concerned and the Rights Issue is 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 resolution to be proposed at the SGM to approve the Rights Issue and the Underwriting Agreement.

Yours faithfully, For and on behalf of the Independent Board Committee

Mr. Frank H. Miu Dr. Agustin V. Que Mr. Robert James Mr. Hung Cho Sing Iaia II

Independent Independent Independent Independent Non-executive Director Non-executive Director Non-executive Director Non-executive Director

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the text of a letter received from United Simsen Securities Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders regarding the Rights Issue for the purpose of inclusion in this circular.

==> picture [234 x 52] intentionally omitted <==

Suites 7001-02, 70/F. Two International Finance Centre No. 8 Finance Street Central Hong Kong

28 March 2013

To: The independent board committee and the independent shareholders of Mascotte Holdings Limited

Dear Sirs,

PROPOSED RIGHTS ISSUE ON THE BASIS OF FOUR (4) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE AT HK$0.07 PER RIGHTS SHARE

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in connection with the Rights Issue, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 28 March 2013 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 4 February 2013, the Company proposed to raise gross proceeds of not less than approximately HK$429.67 million and not more than approximately HK$515.62 million by issuing not less than 6,138,200,416 Rights Shares and not more than 7,365,996,744 Rights Shares to the Qualifying Shareholders by way of the Rights Issue at the Subscription Price of HK$0.07 per Rights Share, on the basis of four (4) Rights Shares for every one (1) Share held on the Record Date. The estimated net proceeds of the Rights Issue will be not less than approximately HK$408.67 million and not more than approximately HK$494.62 million and are intended to be used by the Company for the implementation of recycling plant and facilities to its polycrystalline silicon business and repayment of part of the Credit Line.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pursuant to Rule 7.19(6)(a) of the Listing Rules, the Rights Issue is subject to, among other things, the approval by the Independent Shareholders at the SGM and any controlling Shareholder and their associates, or where there are no controlling Shareholders, the Directors (excluding the independent non-executive Directors), the chief executive of the Company and their respective associates will abstain from voting in favour of the resolution(s) relating to the Rights Issue. As at the Latest Practicable Date, as the Company has no controlling Shareholder, the Directors (excluding the independent nonexecutive Directors), namely Mr. Peter Temple Whitelam and Mr. Lo Yuen Wa Peter and chief executives of Sun Materials, namely Dr. Wu Yi-Shuen and their respective associates (to the extent they hold any Shares at the time of the SGM) will abstain from voting in favour of the resolutions to approve the Rights Issue at the SGM. As at the Latest Practicable Date, other than Mr. Peter Temple Whitelam, Mr. Lo Yuen Wa Peter and Dr. Wu Yi-Shuen held 78,125 Shares, 156,250 Shares and 17,797,250 Shares respectively, none of the Directors nor the chief executive of the Company held any Shares. Save for the aforesaid, none of the Shareholders will be required to abstain from voting in favour of the resolutions to approve the Rights Issue at the SGM.

An Independent Board Committee comprising Mr. Frank H. Miu, Dr. Agustin V. Que, Mr. Robert James Iaia II and Mr. Hung Cho Sing (all being independent non-executive Directors) has been established to advise the Independent Shareholders in connection with the Rights Issue. We, United Simsen Securities Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

BASIS OF OUR OPINION

In formulating our advice and recommendation to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true, complete and accurate in all material respects at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiries and careful considerations. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our recommendation in compliance with Rule 13.80 of the Listing Rules.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, which to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in the Circular misleading.

We consider that we have been provided sufficient information to reach an informed view and to provide a reasonable basis for our recommendation. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, or its subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Rights Issue. In addition, we have no obligation to update this opinion to take into account events occurring after the issue of this letter. Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Rights Issue, we have taken into consideration the following principal factors and reasons:

1. Background of and reasons for the Rights Issue

The Company is an investment holding company and the Group is principally engaged in the business of manufacturing solar grade polycrystalline silicon in Taiwan, investment and trading of securities, provision of finance, property investment and manufacture and sale of accessories for photographic and multimedia products.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(a) Historical financial performance of the Group

Set out below is the summary of the audited financial information of the Group for the two years ended 31 March 2012 and the unaudited financial information of the Group for the six months ended 30 September 2011 and 30 September 2012 as extracted from the annual report of the Company for the year ended 31 March 2012 (the “ Annual Report ”) and interim report of the Company for the six months ended 30 September 2012 (the “ Interim Report ”):

			For the	For the
	For the year	For the year	six months	six months
	ended	ended	ended	ended
The Group	31 March	31 March	30 September	30 September
(HK$’000)	2011	2012	2011	2012
	Audited	Audited	Unaudited	Unaudited
Turnover	189,451	172,121	89,156	92,631
Finance costs	(401)	(192,130)	(37,033)	(214,721)
(Loss) before tax	(240,993)	(629,886)	(348,661)	(2,399,334)
(Loss) after tax	(244,313)	(620,790)	(350,723)	(2,392,014)
	As at	As at	As at	As at
	31 March	31 March	30 September	30 September
	2011	2012	2011	2012
	Audited	Audited	Unaudited	Unaudited
Bank balances and cash	16,805	208,181	702,538	31,000
Net current (liabilities)/asset	645,592	349,091	1,288,625	(42,897)
Net (liabilities)/asset	756,970	1,231,208	2,705,080	(1,101,290)

From the table above, it could be seen that the Group’s revenue had been stable for the two years ending 31 March 2012, but its loss after tax has increased significantly from approximately HK$244.31 million for the year ended 31 March 2011 to approximately HK$620.79 million for the year ended 31 March 2012. According to the Annual Report, such increase in loss after tax was primarily due to (i) increase in loss on change in fair value of financial assets at fair value through profit or loss derived from trading of securities; and (ii) increase in finance costs. We also noted that such losses persisted for the six months ended 30 September 2012 and recorded a net loss after taxation of approximately HK$2,392.01 million.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Furthermore, the financial position of the Group had deteriorated significantly during the six months ended 30 September 2012, the Group recorded net current liabilities of approximately HK$42.90 million as at 30 September 2012 as compared to net current assets of approximately HK$349.09 million as at 31 March 2012. In addition, the Group recorded net liabilities of approximately HK$1,101.29 million as at 30 September 2012. Accordingly, the condensed consolidated financial statements of the Company for the six months ended 30 September 2012 have been prepared on a going concern basis and the Company intended to proceed with some future funding plans, including but not limited to, rights issue, shares placement, debts restructuring and arranging new long-term debt finance, to improve the financial position of the Group when the market circumstances are considered to be appropriate.

In order to further assess the sufficiency of the financial resources of the Group from its business operation, we have reviewed the Interim Report and noted that the Group recorded a net cash inflow of approximately HK$105.36 million from the operating activities for the six months ended 30 September 2012, but there was a cash inflow item of approximately HK$131.88 million, being the decrease in financial assets at fair value through profit or loss, which is derived from the disposal of or change in the fair value of the financial assets. Such item is not sustainable and will be affected by the fluctuation of market prices of the financial assets and thus should be disregarded. Having disregarded such figure, the Group recorded a net cash outflow from its operating activities of approximately HK$26.52 million and it was not sufficient to cover the interest expenses on outstanding liabilities of approximately HK$56.94 million for the six months ended 30 September 2012. In light of the aforesaid, we are of the view that the Group could not solely rely on the cash generated from its operation to fulfill the financing needs of the Group.

(b) Business performance of the Group

During the year ended 31 March 2012 and the six months ended 30 September 2012, the major business segments of the Group comprise (i) the investment segment; (ii) the loan financing segment; (iii) the property investment segment; (iv) the manufacturing and sale of accessories for photographic and multimedia products segment; and (v) the polycrystalline silicon segment.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Investment segment

The Group’s securities portfolio had declined and recorded a net loss on change in fair value from trading of securities of approximately HK$306.8 million for the year ended 31 March 2012, representing an increase of 63.5% as compared to prior year due to the factors such as European debt crisis, slower global economic growth and credit tightening policy in the PRC market. During the six months ended 30 September 2012, the Group realized its investment in securities portfolio and applied them as working capital of the Group. The Directors planned not to inject additional working capital on this segment.

Loan financing segment

For the year ended 31 March 2012, the interest income from provision of finance increased by approximately 4.4 times to HK$26.4 million, which was due to increase in number of customers. During the six months ended 30 September 2012, as advised by the Directors, the Group reduced the number of customers as to reallocate its resources to satisfy the financing needs of the Group and accordingly, the interest income from the provision of finance decreased to approximately HK$0.6 million for the six months ended 30 September 2012. The Directors planned not to inject additional working capital on this segment.

Property investment segment

For the year ended 31 March 2012, the gross rental income from investment property increased slightly to HK$1.4 million. On 8 January 2013, the Group completed a disposal of a property investment at the consideration of HK$88.0 million. After such disposal and as at the Latest Practicable Date, the income from property investment is secured by one tenancy agreement with third parties for a term of five years.

Manufacturing and sale of accessories for photographic and multimedia products segment

The turnover from this segment decreased from approximately HK$189.5 million for the year ended 31 March 2011 to HK$172.1 million for the year ended 31 March 2012. As referred to in the Annual Report, with the continuous increase in material and labour costs and with the provision of sales value added tax, this segment’s result turned from profit of approximately HK$10.1

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

million to loss of approximately HK$9.0 million. For the six months ended 30 September 2012, the segment turnover increased by approximately HK$3.4 million to approximately HK$92.6 million and the segment result decreased by approximately HK$2.3 million to approximately HK$4.7 million. The Directors believe that there will be sufficient self-generated funds to support this operation.

Polycrystalline silicon segment

As disclosed in the Interim Report, no commercial production of solar grade polycrystalline silicon was commenced during the six months ended 30 September 2012 due to delay in large scale production. As referred to in the Interim Report, it is stated that during the week of 23 April 2012, after improving the thermal decomposition capabilities at the production plant, Sun Materials was able to produce samples of polycrystalline silicon using the commercial production line. The need to expedite the further enhancement of its production facilities before formal commercial production (the “ Enhancement Works ”) is prompted by the following reasons:

• (i) hydrofluoric acid, an industrial acid requiring special handling, is produced as a by-product of the silicon decomposition and production process;

• (ii) the Group is capable of commencing large-scale production now, but once it has commenced large scale production, the amount of hydrofluoric acid produced will increase exponentially and cannot be safely handled under its current storage method and facilities, especially during the typhoon season in Taiwan from May to November (with the peak season from June to September); and

• (iii) originally, the enhancement of production plants was intended to be carried out after the Group’s commencement of large-scale production in around the fourth quarter of 2011. That would avoid the accumulation of hydrofluoric acid during the peak typhoon season in Taiwan. However, since large scale production was delayed, if the Company proceeded with commercial production without enhancing its production facilities, a high volume of hydrofluoric acid would be accumulated during the peak typhoon season. Therefore, the Group has to enhance its production facilities now before commencing formal large-scale production.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have discussed with the Directors and understood that the capital expenditure for the Enhancement Works are inevitable as the initial hydrofluoric acid volume estimates were too conservative and the existing method of storing the hydrofluoric acid is insufficient to treat the discharged generated, in particular under the full scale production. The Directors expected that, under normal circumstances, the Enhancement Works (including the purchase of plant production machineries) will be completed by first half of 2013, and the formal commercial production will commence after the Enhancement Works are completed. Further details on the expected timeline for the Enhancement Works have been set out in the Board Letter.

We have enquired into the Directors regarding its capital expenditure procurement procedures/selection of constructors for the Group’s polycrystalline silicon business and as advised by the Directors, it is the standard practice of the Group to approach a number of potential contractors and to obtain the relevant quotations. Once the potential contractors submitted their quotations, the Company will then evaluate and shortlist out the potential contractors and further discuss the detailed specifications and requirements with them. Based on the detailed specification with quotation, the Company will confirm the engagement with the potential contractor. The Directors confirmed that the existing contractors were selected in accordance with the procedure as just mentioned and we did not notice any part of the procedure which is uncommon to normal market practice.

Set out below is the summary of the capital expenditure plan for the Group’s polycrystalline silicon business for the next 12 months from the Latest Practicable Date:

Items for the
enhancement of the			Actual/
recycling facilities for	Approximate	Actual	expected
the existing plant	amount	start date	finish date
	(HK$’ million)
Civil work	31.4	June 2012	March 2013
General utility and	10.5	July 2012	March 2013
related piping work
Plant production	95.2	Commence upon	By first
machineries		completion of	half of
		civil work and	2013
		general utility
		and related piping
		work

137.1

Total

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In view of the above, we noted that the Group is in the process of reallocating its internal resources by (i) scaling down the loan financing segment; (ii) realizing its securities investments; (iii) completion of a disposal of property investment at the consideration of HK$88 million to satisfy the financing needs of the Group, including but not limited to (i) the repayment of outstanding Debts and accrued interests; and (ii) the capital expenditures for the Enhancement Works such that the Group’s polycrystalline silicon business can commence commercial production as soon as practicable.

To further understand the rationale of the Rights Issue, we have reviewed the calculation report as contained in Appendix IV to the Circular (the “ Calculation Report ”) and the technical report (the “ Technical Report ”) as contained in Appendix VII to the Circular for the latest development schedule of Sun Materials for the commencement of commercial production and the latest business enterprise value of Sun Materials:

The Technical Report

As set out in the Technical Report, Sun Materials polycrystalline silicon process is designed to provide competitive quality, low cost polycrystalline silicon from small scale production facilities. To achieve the initial production of 3,500 tonnes per annum, certain enhancement works and ramp up of production have to be completed before commercial production. The Technical Report has highlighted the latest status of the factory and the production ramp up plan. When all the Enhancement Works are completed and commence start up and ramp up activities in April 2013, Sun Materials can ramp up to full capacity of 3,500 tonnes per annum by the end of 2013. According to the Technical Report, it is Sun Materials’ current plan to complete start-up and production ramp up in nine months from April 2013 to December 2013. As the polycrystalline silicon business of the Group has not yet commenced in commercial production and your attention is also drawn to the uncertainties and risks as highlighted in the Technical Report when considering the business prospect of Sun Materials. We further noted from the uncertainties and risks as highlighted in the Technical Report that these risks and uncertainties are characterized into four broad categories, namely, cost and quality, start up and production ramp up, future quality requirements and commercial risk. Especially for the risk regarding start up and production ramp up, it is possible that the current timeline may not be achieved as scheduled and it may take a longer time for the polycrystalline silicon business of the Group to commence in commercial production. We have enquired into the Directors

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

for the likelihood of such risk and as advised by the Directors, as at the Latest Practicable Date, they are not aware of any significant risks and uncertainties as highlighted in the Technical Report which may significantly affect the production schedule as planned by Sun Materials.

The Calculation Report

With regards to the business enterprise value of Sun Materials of US$107 million as at 30 September 2012 (the “ Calculation ”). We have reviewed and enquired into American Appraisal China Limited (the “ Valuer ”) regarding the methodology of, and bases and assumptions adopted for the Calculation. In the course of our enquiry, we noted that there are three classical appraisal approaches available for determining the value of companies, namely the cost approach, income approach and market approach. In arriving at the Calculation, the Valuer had adopted the guideline company method (the “ GCM Method ”) under the market approach and cross checked by the guideline transaction method (the “ GTM Method ”) under the market approach. The Valuer advised that the market approach is preferred to the cost approach and the income approach as the market approach may represent more objective view and more weight relatively under fair value measurement hierarchy but have the limitation in the case that those comparable companies or transactions may cover different regions in the world with different technology, scale of operation, market situation, growth potential, business or country risks and tax rate. The Valuer also explained that the income approach is not appropriate given the high uncertainty on a long-term forward-looking financial forecast and underlying assumptions. In addition, the innovation and uniqueness of the patented core technology owned by Sun Materials may not be necessarily replicated by other market players’ research and development activities and thus, the cost approach is also not preferred. However, we noted that the income approach has been adopted for the impairment assessment at the time of the Company’s interim results as at 30 September 2012. As explained by the Valuer, in light of the close results derived by using income approach and market approach, and under relevant valuation guidelines, if there is no comparable intangible asset in the market when valuing an intangible asset for the purpose of impairment test and in order for allocating the impairment amount to different class of assets, it is appropriate to adopt income approach than market approach even though income approach involves more judgments or forward looking statements. The use of the income approach can estimate not only the free cash flows of a business unit but also incremental cash flows attributable to a specific intangible asset. Thus, in the Group’s interim report for the period ended 30 September 2012, income approach was used as it was more relevant from the context of impairment test.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Under the GCM Method, the Valuer identified ten comparable companies which are operating in the polycrystalline silicon manufacturing industry and as advised by the Valuer, these comparable companies are (i) involved in manufacturing of polysilicon or other products for the solar energy market; (ii) operators in the solar industry and subject to similar operating environment in the value chain as Sun Materials; (iii) direct competitors to Sun Materials or manufacturer of polysilicon (despite the absence of pure player in the industry); and (iv) actively traded in a public, free and open market, either on an exchange or over-the-counter with earning forecasts. The ten comparable companies are selected out of sixteen potential comparable companies. Among the ten comparable companies selected, nine of them are listed as top fifteen polysilicon producers in 2011 in terms of polysilicon production volumes as set out in the Technical Report and only one comparable company (namely Daqo New Energy Corporation Limited) is engaged in similar size and business as Sun Materials as considered by the Valuer. Given the fact that the GCM Method requires more representative sample size to compute the Calculation, the Valuer have therefore extended their selection criteria to include additional comparable companies (as demonstrated above) to form a more representative sample size such that they can perform a more reasonable analysis. As advised by the Valuer, the list of comparable companies is considered to be exhaustive and representative samples for comparison purpose. Enterprise value to earnings before interest, tax, depreciation and amortization expenses multiples of these comparable companies were used for the Calculation purpose. The Calculation was calculated by using the expected first full year operation results of Sun Materials with one existing plant with the maximum capacity of 3,500 tonnes per annum. Based on the GCM Method, the calculated values before adjustments amounted to approximately US$119.85 million. The last step of the calculation process involved the making of an adjustment to the said value by applying a discount of 15% and a control premium of 5% to reflect (i) the non-liquidity of the privately held shares in Sun Materials as opposed to publicly traded corporations and the fact that Sun Materials was in an earlier stage of development and smaller size than the comparable companies; and (ii) the additional values inherent in the controlling interest, as contrasted to a minority interest that reflects the power of control.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Additionally, the GTM Method under market approach was adopted as a cross-checking method, the Valuer has identified eight transactions in the polycrystalline silicon manufacturing industry which were completed since January 2008 and as advised by the Valuer, these comparable transactions have been selected out of eight comparable transactions and such list of comparable transactions are considered to be exhaustive by the Valuer and therefore are representative samples for comparison purpose. The ratio of implied total equity value to its production capacity was calculated for each of the transactions (the “ Equity Value to Capacity Ratio ”). As advised by the Valuer, the Equity Value to Capacity Ratio was selected because (i) no historical financial result of Sun Materials was available; and (ii) given the growing demand for alternate energy in the world, it was reasonably assumed that the economic benefit of a polycrystalline silicon manufacturer is proportional to the scale of its operation, which is reflected by the production capacity.

Based on our discussion with the Valuer, we noted that the Calculation has largely complied with the reporting requirements recommended by International Valuation Standards, and we have not identified any major factors which would cause us to doubt the fairness and reasonableness of the basis and assumptions adopted for the Calculation. However, Shareholders should note that valuation of assets or companies usually involves various assumptions and therefore the Calculation may or may not effectively reflect the true value of Sun Materials. Your attention is also drawn to the sections which highlight the methodologies, basis and assumptions of the Calculation in the Calculation Report as set out in Appendix IV to the Circular.

In addition, we noted that the Calculation is based on the Technical Report where the industry data used are rough estimates and as advised by the Valuer, certain assumptions used in the Calculation were by reference to these rough estimates. As discussed with the Valuer, these rough estimates are based on years of developing and fine tuning the data gathering, data analysis and modelling methodology by Photon Consulting, LLC, the technical consultant, and these rough estimates are considered by the Valuer as a reliable source of information for the purpose of Calculation. As confirmed by the Directors, the assumptions used in the Calculation used in arriving at the Calculation were made after due and careful enquiry by the Directors.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We understood that the Calculation was made as at 30 September 2012, which is around five months from the Latest Practicable Date. We understand from the Directors that there is no change to the business plan since 30 September 2012 and as advised by the Valuer, the Calculation Report has taken into account up-to-date information as per the said business plan, including the impact of delay of commencement of commercial production due to the Enhancement Works. In addition, we noted from the Board Letter that, the Enhancement Works is expected to be completed by first half of 2013 and as advised by the Directors, despite the delay in the Enhancement Works, the new building currently being constructed, which will house the recycling facility, gas decomposition facility and gas supply system has been completed and an operation permit dated 15 March 2013 issued by Yilan County was received by the Group on 21 March 2013. There is no indicated change from Dr. Wu and his team on the facility’s ability to begin producing product in the first half of 2013. We have enquired into the Valuer whether the above delay in commercial production would cause any material adverse impact to the Calculation as at 30 September 2012 given the time lag between 30 September 2012 and the Latest Practicable Date and as advised by the Valuer, they have not observed material adverse trend on the market value of the comparable companies used in the Calculation Report and the fact that the Directors confirmed there is no change to the business plan since 30 September 2012, and accordingly, the Valuer expected that there would be no material adverse impact on the Calculation as of 30 September 2012. Moreover, we noted that the Calculation is prepared based on the expected operational statistics of one existing plant with maximum capacity of 3,500 tonnes per annum and therefore the Calculation and the future prospects of Sun Materials have not taking into account the future expansion of Sun Materials in long term by the construction of five additional production plants. The schedules for future expansion of the additional production plants will be based on the actual business performance of the existing plant and the then financial resources of the Group. In the event that the additional production plants are constructed in the future, it is possible that the Calculation will change correspondingly. Independent Shareholders should also take into account other aspects as explained and discussed in this letter when considering the Rights Issue.

Accordingly, in view of that there is no change to the business plan of Sun Materials since 30 September 2012 as confirmed by the Directors and the Calculation is prepared based on the expected operational statistics of one existing plant with maximum capacity of 3,500 tonnes per annum and therefore the Calculation and the future prospects of Sun Materials have not taking into account the future expansion of Sun Materials in long term by the construction of five additional production plants, we concur with the Directors that it is acceptable to assess and understand the latest status of the polycrystalline silicon business segment of the Group by reference to the Calculation made as at 30 September 2012, which is around five months from the Latest Practicable Date.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(c) Debts of the Group

Set out below are the information of the Debts and a comparison of the financing costs associated with the Debts as at the Latest Practicable Date:

Description Identity of the lender Consideration Bonds (Note 3) Holders of the Consideration Bonds Convertible Bonds (Note 4) Holders of the Convertible Bonds Credit Line Chung Nam Finance Limited Bank borrowings Bank and financial institutions Borrowings Dragonite Resources Limited Note Placing Note holders Total	Approximate outstanding principal as at the Last Practicable Date Terms Due date Approximate interest rate per annum HK$885.00 million 2 years 4 January 2014 2.5% HK$1,200.00 million 3 years 14 July 2014 5.0% HK$489.00 million 2 years 21 November 2014 10.25% equivalent to prime rate plus 5% HK$41.54 million (equivalent to new Taiwan dollar 158.67 million) (Note 1) 10 years 3 February 2023 1.8% HK$10.00 million 3 months 5 May 2013 12% HK$5.00 million 7 years 5 February 2020 5% HK2,630.54 million	Approximate simple interest payable per annum based on the remaining principals Interest repayment schedule (Note 2) HK$22.13 million Quarterly HK$60.00 million Semi-annually HK$50.12 million Monthly HK$0.71 million (equivalent to new Taiwan dollar 2.72 million) (Note 1) Monthly HK$0.29 million Repaid on final repayment date HK$0.25 million Annually HK$133.50 million

Notes:

1. Principal amounts of the liabilities in new Taiwan dollar have been converted into Hong Kong dollar at approximately HK$1 = new Taiwan dollar 3.82;

2. Interest payable is estimated based on the simple method as at the Latest Practicable Date and the principals outstanding and is subject to rounding error;

3. The maturity date of the Consideration Bonds shall be 2nd anniversary of the issue of the Consideration Bonds or, if the Company elects in its discretion to extend the term of the Consideration Bonds, the seventh (7th) anniversary of the issue date of the Consideration Bonds, the interest thereafter shall accrue daily on the principal amount of the outstanding Consideration Bonds at 12.5% per annum; and

4. On 3 December 2012, the Company entered into the Deeds of Amendment with each of the holders of the Convertible Bonds to alter the certain terms and conditions of the Convertible Bonds, which was approved by the Shareholders on 18 January 2013. Further details of the Deeds of Amendments have been set out in the circular of the Company dated 31 December 2012.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

From the table above, the Group is required to pay an aggregate of approximately HK$133.50 million for interests per annum based on the existing terms, interest repayment schedule and outstanding principals.

We noted that the Deeds of Amendment were approved by the Shareholders on 18 January 2013 and the Company could, at its sole and absolute discretion, to redeem each Convertible Bonds by cash or issuance of new Shares equivalent to the outstanding principals with accrued interests and divided by the conversion price of HK$0.2 per Share. In the event that all the outstanding Convertible Bonds are redeemed by issuance of new Shares, the Group’s total liabilities will be reduced and the Company’s equity base will be enlarged without cash outflow and the Group shall in turn enhance its financial position and improve its gearing ratio. Assuming all the Convertible Bonds are fully redeemed by the Company either in cash or issuance of new Shares, the Group is still obliged to pay an aggregate of approximately HK$73.50 million for interests per annum based on the existing terms, interest repayment schedule and outstanding principals.

When comparing the terms of the Debts outstanding as at the Latest Practicable Date, we noted that the interest expense of the Credit Line of approximately HK$48.59 million is relatively higher than the interest expenses of other outstanding Debts and as confirmed by the Directors, it is their intention to reduce the overall debts of the Group and in particular to reduce the amounts outstanding on the Credit Line such that the finance costs of the Group could be largely reduced in the future. In addition, given that the interest rate charged on the Credit Line is based on the prime rate, any subsequent changes to the prime rate in the future may led to increase or decrease in the Group’s finance costs. Recently, it is noted that governments around the world such as United States of America, United Kingdom and Japan have adopted quantitative easing policies to keep interest rate steady and lowest to vitalize the economic activities, however, such policies may end anytime in the future to control the inflation. If this being the case, it may led to an increase in interest rates in the future and thus the finance costs on the Credit Line will be increased simultaneously.

Moreover, the Directors expected that even if commercial production of the polycrystalline silicon commences shortly, the amount of surplus cash flow to be generated from the polycrystalline silicon operation may still fall short of the total amount required to fund the repayment of all the outstanding Debts before their maturity given that the surplus cashflow will be reserved for

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

working capital and future expansion of five additional plants. As such, the Company believes that it is necessary to explore other means of financing, including further equity fund raising, to generate funds to finance the repayment of the Debts.

(d) Existing financial resources available to the Group

Set out below are the Company’s major cash inflow and outflow items since 30 September 2012 and up to 31 December 2012:

Unaudited cash and bank balance as at 30 September 2012 Add: Unsecured loan from Chung Nam Finance Limited_(Note 1) Proceeds from the exercise of share option under the Company’s option scheme(Note 2) Disposal of securities and investments Proceeds from placing of 68,501,684 new shares under general mandate(Note 3) Draw down of the Credit Line Sub-total Less: Redemption of Consideration Bonds(Note 4)_ Interests paid for Consideration Bonds Interests paid to secured loan from Chung Nam Finance Limited Document fee in relation to the Credit Line Unsecured loan repayment — Chung Nam Finance Limited Capital expenditure for the implementation of recycling plant Working capital for the Group’s polycrystalline silicon business Loan instalment (principal plus interest) Professional fee Payroll — the Company Others Unaudited cash and bank balance as at 31 December 2012

Approximately HK$’ million 31.0 60.0 5.8 34.6 11.1 415.0 557.5 399.0 9.5 0.6 3.1 35.0 50.0 8.5 1.8 6.6 4.1 1.4 37.9

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

1. An unsecured loan facility due to Chung Nam Finance Limited bearing an interest rate of 1% per month with an aggregate principal amount up to HK$100.0 million due in January 2013.

2. As disclosed in the announcement dated 5 October 2012, the Company offered to grant an aggregate of 28,540,000 Share Options to subscribe for the new ordinary shares of HK$0.01 each in the share capital of the Company under the Share Option Scheme to certain eligible participants, at an exercise price of HK$0.204 each. 28,540,000 Share Options were fully exercised on 9 October 2012.

3. As disclosed in the announcement dated 8 November 2012, the Company entered into the placing agreement pursuant to which the placing agent has conditionally agreed to place a total of 68,501,684 new ordinary shares of HK$0.01 each on a fully underwritten basis, to not less than six placees, at a price of HK$0.17 per Share, under the Company’s general mandate. The net proceeds from the placing were approximately HK$11.1 million.

4. Since completion of the acquisition of Sun Materials on 4 January 2012, the trading price of the Shares has been on a continuous downward trend and has declined to levels significantly lower than expected. The downward spiral of the trading price in the Shares has reflected a decline of the market’s confidence in the future prospects of the Company. Quinella, the major creditor of the Company with an exposure far exceeding the total market capitalization of the Company, expressed its concern to the Company and made repeated requests to the Company since January 2012 to partially reduce the amount of the outstanding Consideration Bonds. Initially, the Company has declined Quinella’s requests for early repayment, given that it was well before the maturity of the Consideration Bonds and that the Company planned to continue to fulfil its payment obligations (including interest payments) as and when the Consideration Bonds fall due.

Quinella was dissatisfied and continued to exert pressure on the Company to make partial early repayment, claiming that this is the only way for the Company to demonstrate that it is still financially sound. Quinella also indicated to the Company that failure to repay early would further dampen its confidence in the Company and would jeopardise the business relationship between Quinella and the Company in the long run.

Nevertheless, Quinella is the former owner of the innovative technology which is believed to significantly reduce the production costs of polycrystalline silicon and has extensive business network in the industry. Despite the Company did not have (at the time of early redemption of the then outstanding Consideration Bonds) and still has no direct business relationship with Quinella as at the Latest Practicable Date, the Company is of the view that the Company is under the threat that Quinella may jeopardize the business opportunity (i) between the Company and Quinella; and (ii) between the Company and other potential business partners, if arise in the future. Therefore, the Company has no alternative but to early redeem certain amount of the Consideration Bonds from Quinella in order to maintain amicable relationship with Quinella. According to the information disclosed in the circulars of the Company dated 20 May 2011 and 19 December 2011, Quinella is indirect wholly-owned by Ms. Hsieh Cheng Lu (“ Ms. Hsieh ”). According to the available public information, Ms. Hsieh is a celebrity in Taiwan. She was a famous actor in Taiwan in 1970s and after that, she started her career with investments in various business areas such as property and high-technology with her well established business connections in Taiwan. During our discussion with the Directors, we understood that Quinella has continued to exert pressure on the Company as elaborated above and even

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

though it is not compulsory for the Company to early redeem the principal amount of the Consideration Bonds from Quinella, the Company intended to maintain an amicable relationship with Quinella by way of early redemption of the principal amounts of the Consideration Bonds partially such that the Company (i) may through the extensive connection of Quinella in Taiwan to expand the business networks of the Company to distribute its products or explore any other business areas to expand, in particular in the area of the polycrystalline silicon business; or (ii) unfortunately, in the case that the Company is unable to repay the outstanding interests of the Consideration Bonds in accordance with the original repayment schedule in the future (it should be noted that the Consideration Bonds will be due within one year on 4 January 2014 and the Company could elect in its discretion to extend the term of the Consideration Bonds, the seventh (7th) anniversary of the issue date of the Consideration Bonds, the interest thereafter shall accrue daily on the principal amount of the outstanding Consideration Bonds at 12.5% per annum) after the increment of the interests rate attached to the Consideration Bonds, the Company may be able to further discuss with Quinella with a revised repayment schedule to avoid any event of default. Having taking into account the above factors, we concur with the Directors that it is in the interests of the Company and the Shareholders as a whole to early redeem the Consideration Bonds partially to maintain an amicable relationship with Quinella (as Ms. Hsieh has well established business networks in Taiwan as elaborated above).

The Company has redeemed the aggregated principal amounted to approximately HK$865 million of the Consideration Bonds up to the Latest Practicable Date.

Further, the following sets out the major cash-flow items from 31 December 2012 to the Latest Practicable Date:

		Approximately
		HK$’ million
(i)	Interest payments for the Convertible Bonds	(35.7)
(ii)	Interest payments for the Consideration Bonds	(5.8)
(iii)	Redemption of part of the Consideration Bonds	(34.0)
(iv)	Interest payments for the unsecured loan from Chung
	Nam Finance Limited	(3.8)
(v)	Interest payments for the Credit Line	(11.8)
(vi)	Repayment for the Credit Line	(26.0)
(vii)	Capital expenditure for the implementation of
	recycling plant	(10.0)
(viii)	Draw down from the Credit Line	100.0
(ix)	Unsecured loan from Dragonite Resources Limited	10.0
(x)	Net proceeds from the Note Placing	4.7
(xi)	Net proceeds from the placing of new Shares under
	the Issue Mandate	29.8

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We noted that on 28 December 2012, the Company entered into a placing agreement (as supplemented by a supplemental agreement on 22 January 2013) with a placing agent in relation to the Note Placing, whereby the Company agreed to place, through the placing agent, on a best effort basis, a 5 per cent unsecured seven-year notes in the aggregate amount of up to HK$100 million. As confirmed by the Directors, the maximum net proceeds will be approximately HK$94.8 million and will be used for repayment of part of the Consideration Bonds. As at the Latest Practicable Date, the Note Placing has proceed but only a net proceed of approximately HK$4.7 million was raised.

Furthermore, on 21 February 2013, the Shareholders of the Company approved the Issue Mandate to authorize the Directors to allot, issue and deal with new Shares not exceeding 20% of the issued share capital of the Company as at the date of the Issue Mandate SGM. On 22 February 2013, the Company entered into a placing agreement with a placing agent, whereby the placing agent agreed to place, on a fully underwritten basis, 306,910,020 new Shares under the Issue Mandate. The placing completed on 28 February 2013. As confirmed by the Directors, the net proceeds was approximately HK$29.4 million and has been used for repayment of part of the Credit Line.

During the past few months, the Group have been actively exploring ways to further enhance its cash position such as to (i) conduct the Rights Issue; (ii) conduct the Note Placing; (iii) seek a renewal Issue Mandate from its Shareholders and conduct a placing of new Shares under the Issue Mandate; (iv) realize its securities investments; and (v) disposal of assets. Moreover, the Company entered into the Deeds such that the outstanding principals of the Convertible Bonds can be reduced in the event that the Convertible Bonds are redeemed by issuing of new Shares.

(e) Intended use of the proceeds

In light of the cash requirements, amounts of Debts outstanding and insufficient internal financial resources of the Group as elaborated in earlier sections of this letter, on 4 February 2013, the Company proposed the Rights Issue, which is subject to, among other things, the Independent Shareholders’ approval. The estimated net proceeds from the Rights Issue will be not less than approximately HK$494.61 million and not more than approximately HK$494.62 million and are intended to be used by the Company for the capital expenditure for the Enhancement Works and repayment of part of the Credit Line.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The summary of the net proceeds from the Rights Issue will be applied as follows:

Capital expenditure — for implementation of recycling plant and facilities (Note 1) Apply to additional civil work, general utility/piping, the production/piping and building costs for the extension part_(Note 2) _Less:_Progress payment Apply to the purchase of additional and/or refined factory’s machineries/piping (Note 2) For repayment of the Credit Line Total _Notes:	Assuming no further issue of new Shares on or before the Record Date Assuming the outstanding Share Options are fully exercised and no further issue of new Shares on or before the Record Date HK$ million HK$ million approximately approximately 53.50 53.50 (11.58) (11.58) 41.92 41.92 95.20 95.20 357.49 357.50 494.61 494.62

1. The costs are estimated on the basis of enhancing the plant to operate on its commercial designed capacity.

2. These relate to enhancing production facilities to address the risk as set out on pages 3132 in the section headed “Reasons for the Rights Issue and use of proceeds” in the Board Letter.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As elaborated in the earlier sections of this letter, the Company have significant amounts of Debts outstanding and the needs for capital expenditure for Enhancement Works such that the commercial production of solar grade polycrystalline silicon can be commenced, it is important to raise sufficient cash in a timely manner to improve the overall financial condition of the Group. Accordingly, we considered that the intended usage and allocation of the proceeds from the Rights Issue are in line with the Group’s specific requirements and objectives.

(f) Other financing alternatives available to the Group

As elaborated above, the Group have been actively exploring ways to further enhance its cash position such as to (i) conduct the Rights Issue; (ii) conduct the Note Placing; and (iii) seek a renewal Issue Mandate from its Shareholders and conduct a placing of new Shares under the Issue Mandate. As confirmed by the Directors, as compared with equity financing, the Group had also considered bank financing and decided against it, given the additional financing costs and the requirement of securities collateral by controlling shareholders. Most importantly, the Board is of the view that it is unrealistic and impracticable to seek bank borrowings in the amount required to satisfy the funding needs of the Group, in particular given the Group’s current financial position and that the borrowed fund would be utilised for a new business segment of the Group with no proven track record.

For the rights issue exercise, it is usually in larger scale as compared to other equity fund raising methods and also offers all the Shareholders an equal opportunity to increase their interest in the Company’s prospects. Apart from the Note Placing and the placing under the Issue Mandate, the Company has no discussion in respect of other equity or debt fund raising activities up to the Latest Practicable Date. Having considered that the financing needs of the Group are relatively large and the costs incurred for the Rights Issue (i.e. the underwriting fees) is lower than the interests charged on the Credit Line in long run, we are of the view that the Rights Issue is fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Terms of the Rights Issue

(a) Major terms of the Rights Issue

The table below summarizes the major terms of the Rights Issue:

Basis of the Rights Issue: Four (4) Rights Shares for every (1) Share held on the Record date and payable in full on acceptance

Subscription Price: HK$0.07 per Rights Share

Number of Shares in issue 1,841,460,124 Shares as at the Latest Practicable Date: Number of Rights Shares: Not less than 7,365,840,496 Rights Shares (assuming no further issue of new Shares on or before the Record Date) and not more than 7,365,996,744 Rights Shares (assuming the outstanding Share Options are fully exercised and no further issue of new Shares on or before the Record Date)

Total number of issued not less than 9,207,300,620 Shares and not more Shares immediately upon than 9,207,495,930 Shares completion of the Rights Issue

Underwriter:

Kingston Securities Limited

Underwriting commission: 3% of the aggregate Subscription Price in respect of the maximum number of Underwritten Shares

As at the Latest Practicable Date:

• (i) There are outstanding Convertible Bonds in the aggregate principal amount of HK$1,200,000,000 convertible into new Shares at the conversion price of HK$0.2 per Conversion Share (subject to adjustments). As at the Latest Practicable Date, all the respective holders of the outstanding Convertible Bonds have given the Irrevocable Undertaking.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• (ii) There are outstanding Share Options under the Share Option Scheme to subscribe for an aggregate of 39,062 Shares. Assuming full exercise of the subscription rights attaching to the outstanding Share Options on or before the Record Date, an additional of 156,248 Rights Shares will be issued.

• (iii) There are 40,937,500 outstanding share options under the Option Deeds dated 29 August 2011 and subsequent to the adjustments of the capital reorganisation became effective on 26 April 2012, to subscribe for an aggregate of 40,937,500 Shares. Pursuant to the Option Deeds, 25% of the share options granted to the grantees should vest on the date which is 12 months after the grant of the share options, i.e. 12 months after 11 January 2012. As such, 10,234,375 share options under the Option Deeds were vested on 11 January 2013. All the Option Deeds holders have given the Option Deeds Undertaking pursuant to which each of them will not exercise any of the subscription rights attached to the outstanding share options under the Option Deeds prior to completion of the Rights Issue.

Save as disclosed above, the Company has no other outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares as at the Latest Practicable Date.

Assuming no outstanding Share Options being exercised on or before the Record Date, the 7,365,840,496 Rights Shares proposed to be provisionally allotted represent 400% of the Company’s issued share capital as at the Latest Practicable Date and 80% of the Company’s issued share capital of 9,207,300,620 Shares as enlarged by the issue of 7,365,840,496 Rights Shares.

Assuming the outstanding Share Options are fully exercised and no further issue of new Shares on or before the Record Date, the 7,365,996,744 Rights Shares proposed to be provisionally allotted represent approximately 400% of the Company’s issued share capital as at the Latest Practicable Date and approximately 80% of the Company’s issued share capital of 9,207,495,930 Shares as enlarged by the issue of 7,365,996,744 Rights Shares.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) Analysis on the Subscription Price

The Subscription Price for the Rights Issue is HK$0.07 per Rights Share, payable in full on application.

The Subscription Price represents:

• (i) a discount of approximately 30.69% to the closing price of HK$0.101 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (ii) a discount of approximately 65.85% to the closing price of HK$0.2050 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (iii) a discount of approximately 65.65% to the average closing price of approximately HK$0.2038 as quoted on the Stock Exchange for the 5 consecutive trading days up to and including the Last Trading Day; and

• (iv) a discount of approximately 27.84% to the theoretical ex-entitlement price of approximately HK$0.0970 per Share after the Rights Issue, based on the closing price of HK$0.2050 per Share as quoted on the Stock Exchange on the Last Trading Day.

The Directors confirmed that the Subscription Price was arrived at after arm’s length negotiation between the Company and the Underwriter with reference to the market price of the Shares under the prevailing market conditions and the general market practice of issuing rights shares at a discount to the market price of the shares. The Directors considered that the discount of the Subscription Price would encourage the Shareholders to participate in the Rights Issue and accordingly maintain their shareholdings in the Company and participate in the possible future growth of the Group.

In order to assess the fairness and reasonableness of the Subscription Price, we set out the following informative analyses for illustrative purpose:

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Review on historical price of the Shares

The following table sets out the highest and lowest closing prices and the average daily closing price of the Shares as quoted on the Stock Exchange in each month during the twelve months immediately before the Last Trading Day (the “ Review Period ”) and we consider that the time interval of twelve months is a reasonable timeframe and is sufficient for analysis purpose:

	Highest	Lowest	Average
Month	closing price	closing price	daily close
	HK$	HK$	HK$
2012
February	3.504	1.568	2.96
March	1.472	0.528	0.75
April	0.592	0.480	0.53
May	0.530	0.350	0.42
June	0.325	0.232	0.26
July	0.285	0.209	0.23
August	0.219	0.204	0.21
September	0.280	0.200	0.24
October	0.205	0.200	0.20
November_(Note)_	0.205	0.171	0.19
December	0.194	0.157	0.17
2013
January	0.242	0.187	0.20
February_(Up to the_
Last Trading Day)	0.205	0.184	0.19

Source: the website of the Stock Exchange

Note: the Shares were suspended from 20 November 2012 to 22 November 2012.

During the Review Period, the average daily closing price of the Shares ranged from HK$2.96 to HK$0.17 per Share and the Shares had been traded above the Subscription Price. The highest and lowest closing prices of the Shares as quoted on the Stock Exchange were HK$3.504 per Share and HK$0.157 per Share respectively. We noted that the closing price of the Shares had also demonstrated a continuous sliding trend during the Review Period.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Review on trading liquidities of the Shares

Moreover, we have reviewed the historical trading liquidities of the Shares. The following table sets out the average daily trading volume (the “ Average Volume ”) and the percentage of the Average Volume to total number of issued Shares on the Last Trading Day as quoted on the Stock Exchange in each month during the Review Period:

		% of the
		Average
		Volume to total
		number of
		issued Shares
	Average	on the Last
Month	Volume	Trading Day
2012
February	97,706,071	6.37%
March	148,635,352	9.69%
April	53,463,972	3.48%
May	5,680,028	0.37%
June	12,354,431	0.81%
July	26,669,464	1.74%
August	13,135,134	0.86%
September	31,081,741	2.03%
October	11,157,284	0.73%
November_(Note)_	11,342,193	0.74%
December	24,238,389	1.58%
2013
January	34,093,429	2.22%
February_(Up to the Last Trading Day)_	86,944,000	5.67%

Source: the website of the Stock Exchange

Note: the Shares were suspended from 20 November 2012 to 22 November 2012. Please be noted that the above figures are based on the number of the Shares as at the Last Trading Day and for illustrative purpose only and have not taking into account the number of new Shares issued and capital reorganization during the Review Period.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The above table illustrated that the average daily trading volume of the Shares per month was ranged from a maximum of approximately 9.69% to a minimum of approximately 0.37% to the total number of issued Shares as at the Last Trading Day respectively. We noted that trading in the Shares had been historically active, in particular for the period beginning from February 2012 to April 2012 and from December 2012 to February 2013 under the Review Period.

As the trading of the Shares were relatively active during the most of the months under the Review Period as compared with other companies listed on the Main Board of the Stock Exchange. (Note: According to the monthly market highlights issued by the Stock Exchange, the average daily turnover divided by the total market capitalization of the Main Board of the Stock Exchange was around 0.24% for the year 2012) and in the case that the trading in the Shares remain active after the beginning of the trading in the nil-paid Rights Shares on 2 May 2013, the Qualifying Shareholders may also consider to realize their nil-paid rights to subscribe for the Rights Shares in the market (subject to the availability).

We noted that it is a common market practice to set the subscription price of a rights issue at a discount to the prevailing market prices of the relevant shares, in order to enhance the attractiveness of a rights issue exercise and to encourage the existing shareholders to participate in the rights issue. Having also considered with the continuous sliding trend of the price of the Shares during the Review Period, we concur with the Directors that it would be difficult to attract the Qualifying Shareholders to reinvest in the Company through the Rights Issue if the Subscription Price was not set at a relatively substantial discount to the historical closing prices of the Shares.

We noted from the Directors that the Subscription Price and the basis of entitlement were determined between the Company and the Underwriter with reference to the market price of the Shares, the financial conditions of the Company and the prevailing market conditions. We further noted from the Directors that the subscription rate of the Rights Issue is determined by the Qualifying Shareholders based on several factors, including but not limited to (i) the future prospects of the Group; (ii) the intended use of proceeds from the Rights Issue; and (iii) the comparison on the difference between the price of the Shares and the Subscription Price by the Qualifying Shareholders, in particular the price performance of the Shares for the period prior to the latest time for acceptance of and payment for the Rights Shares and application

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

and payment for excess Rights Shares. To increase the attractiveness of the right issue exercise and the subscription rate, it is a common practice for underwriter(s) to require a higher level of discount of the subscription price to the historical closing prices of the shares such that it is more likely the price of the shares may represent a premium over the subscription price per rights share at the time when the investors or shareholders are deciding whether or not to participate the rights issue exercise and if this being the case, the subscription rate will be higher and thus reduce the risk exposure to a rights issue exercise of the underwriter(s) on a fully underwritten basis.

In view that the Subscription Price could enhance the attractiveness of the Rights Issue as aforementioned, we consider that the Subscription Price being set as lower than the prevailing market prices of the Shares is in line with general practice and the current market trend, and we consider such arrangement is justifiable.

Comparison with other rights issue transactions

To further evaluate the fairness and reasonableness of the terms of the Rights Issue, we have identified, to the best of our knowledge and as far as we are aware of 21 rights issue transactions announced by the companies listed on the Stock Exchange and duly approved by their respective shareholders at the general meeting(s) (if required) during the six months immediately before the Last Trading Day (the “ Comparables ”). We are of the opinion that the Comparables are fair, sufficient and representative samples to illustrate the recent trend and terms of the rights issue transactions under the common market practice, even though the Shareholders should note that the businesses, operations and prospects of the Company are not the same as the Comparables and we have not conducted any in-depth investigation into their businesses and operations. The Comparables are hence only used to provide a general reference for the common market practice in rights issue transactions of companies listed on the the Stock Exchange.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The table below summarises our relevant finding:

					Premium/
					(discount)
					of the
					subscription	Premium/
					price over/	(discount) of
					(to) the closing	the subscription
					price on the	price over/(to)
		Date of	Basis of	Underwriting	respective last	the theoretical	Maximum
Company name	Stock code	announcement	entitlement	commission	trading day	ex-rights price	dilution
				(%)	(%)	(%)	(%)
Forefront Group	885	28-Jan-13	1 for 2	3.00	(36.71)	(27.88)	33.33
Limited
A8 Digital Music	800	6-Jan-13	2 for 1	2.00	(52.00)	(26.53)	66.67
Holdings Limited
Capital VC Limited	2324	3-Jan-13	1 for 2	3.00	(25.29)	(18.41)	33.33
Hong Kong Resources	2882	12-Dec-12	2 for 5	1.70	(50.00)	(41.63)	28.57
Holdings Company
Limited
Freeman Financial	279	4-Dec-12	2 for 1	3.00	(51.43)	(26.09)	66.67
Corporation Limited
Asia Commercial	104	27-Nov-12	3 for 1	2.00	(87.50)	(63.60)	75.00
Holdings Limited
Willie International	273	21-Nov-12	1 for 2	2.50	(41.34)	(31.97)	33.33
Holdings Limited
Dragonite International	329	20-Nov-12	1 for 1	2.50	(48.98)	(32.43)	50.00
Limited
China Agri-Industries	606	5-Nov-12	3 for 10	0.00	(31.38)	(25.98)	23.08
Holdings Limited
Tack Fiori International	928	2-Nov-12	1 for 2	2.50	(40.48)	(31.13)	33.33
Group Limited
Qin Jia Yuan Media	2366	2-Nov-12	1 for 1	2.50	(55.70)	(38.60)	50.00
Services Company
Limited
Esprit Holdings Limited	330	22-Oct-12	1 for 2	2.25	(35.70)	(27.00)	33.33
National Arts Holdings	8228	18-Oct-12	4 for 1	3.75	(81.13)	(46.24)	80.00
Limited

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

					Premium/
					(discount)
					of the
					subscription	Premium/
					price over/	(discount) of
					(to) the closing	the subscription
					price on the	price over/(to)
		Date of	Basis of	Underwriting	respective last	the theoretical	Maximum
Company name	Stock code	announcement	entitlement	commission	trading day	ex-rights price	dilution
				(%)	(%)	(%)	(%)
Easyknit Enterprises	616	11-Oct-12	5 for 1	1.00	(75.61)	(34.07)	83.33
Holdings Limited
SIM Technology Group	2000	5-Oct-12	1 for 2	2.00	(55.56)	(45.50)	33.33
Limited
Goldin Financial	530	27-Sep-12	11 for 10	2.50	37.18	14.81	52.38
Holdings Limited
Pou Sheng International	3813	21-Sep-12	1 for 4	0.00	3.40	2.70	20.00
(Holdings) Limited
Daiwa Associate	1037	17-Aug-12	1 for 4	0.00	(52.38)	(46.81)	20.00
Holdings Limited
Easyknit Enterprises	616	15-Aug-12	1 for 2	1.00	0.00	0.00	33.33
Holdings Limited
Pacific Plywood	767	10-Aug-12	2 for 1	1.95, 2.5	(83.39)	(28.02)	66.67
Holdings Limited
UDL Holdings Limited	620	6-Aug-12	1 for 3	2.50	(57.60)	(50.40)	25.00
			Max.	4.00	37.18	14.81	83.33
			Min.	0.00	(87.50)	(63.60)	20.00

Source: the website of the Stock Exchange

As shown by the above table, the subscription prices of the Comparables ranged from premium/(discounts) of approximately 37.18% to (87.50)% over/ to the respective closing prices of their shares on the last trading days prior to the release of the rights issue announcements (the “ LTD Market Range ”). The Subscription Price, which represents a discount of approximately 65.83% to the closing price of the Shares on the Last Trading Day (the “ LTD Discount ”), falls within the LTD Market Range.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Moreover, the subscription prices of the Comparables ranged from premium/ (discounts) of approximately 14.81% to (63.60)% over/ to the respective theoretical ex-rights prices of their shares on the last trading days prior to the release of the rights issue announcements (the “ TERP Market Range ”). The Subscription Price, which represents a discount of approximately 27.84% to the theoretical ex-rights price of the Shares on the Last Trading Day (the “ TERP Discount ”), falls within the TERP Market Range.

In view of that (i) the LTD Discount falls within the LTD Market Range; (ii) the TERP Discount falls within the TERP Market Range; and (iii) compared with a premium, the discount of the Subscription Price would encourage the Shareholders to participate in the Rights Issue and accordingly maintain their shareholding interests in the Company and participate in the future growth of the Group, we concur with the Directors that the Subscription Price is fair and reasonable so far as the Independent Shareholders are concerned.

3. Underwriting arrangements

(a) Underwriting commission

From the Comparables as detailed in the table under the previous section, we noted that the Underwriting Commission falls within the range of commissions of 0.00% to 4.00% received by underwriters in other rights issue transactions. Given the above, we are of the opinion that the commission rate of 3.00% for the Rights Issue is in line with common market practice.

(b) Application for excess Rights Shares

Pursuant to the terms of the Rights Issue, Qualifying Shareholders are entitled to apply for any unsold entitlements of the Excluded Shareholders, any unsold Rights Shares created by adding together fractions of the Rights Shares and any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders. Application may be made by completing the EAF(s) and lodging the same with a separate remittance for the excess Rights Shares.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Directors will allocate the excess Rights Shares at their discretion on a fair and equitable basis on the following principles:

• (i) preference will be given to applications for less than a board lot of Rights Shares where they appear to the Directors that such applications are made to top up odd-lot holdings to whole-lot holdings and that such applications are not made with the intention to abuse this mechanism; and

• (ii) subject to availability of excess Rights Shares after allocation under principle (i) above, any further remaining excess Rights Shares will be allocated to the Qualifying Shareholders based on a sliding scale with reference to the number of the excess Rights Shares applied for by them (i.e. the Qualifying Shareholders applying for smaller numbers of Rights Shares are allocated with a higher percentage of successful application but will receive less number of Rights Shares; whereas the Qualifying Shareholders applying for larger numbers of Rights Shares are allocated with a smaller percentage of successful application but will receive higher number of Rights Shares).

We have also reviewed the other terms of the Rights Issue and the Underwriting Agreement and are not aware of any terms which are uncommon to normal market practice. Accordingly, we consider that the terms of the Rights Issue and the Underwriting 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

4. Potential dilution to shareholding of the public Shareholders

Set out below are the changes in the shareholding structure of the Company as a result of the Rights Issue:

Scenario 1: Assuming no new Shares are issued on or before the Record Date

Substantial Shareholders/Directors Mr. Peter Temple Whitelam_(note 1) Mr. Lo Yuen Wa Peter(note 1) Dr. Wu Yi-Shuen(note 2) SPARX Emerging Opportunities Fund SPC(note 4) VMS Private Investment Partners II Limited(note 4) Mr. Andrew Liu(note 4) Public Shareholders The Underwriter Holder(s) of Shares issued under the Issue Mandate(note 5)_ Others Total	As at the Latest Practicable Date Shares Approx. 78,125 0.00% 156,250 0.01% 17,797,250 0.97% 200,000,000 10.86% 200,000,000 10.86% 200,000,000 10.86% — — 306,910,020 16.67% 916,518,479 49.77% 1,841,460,124 100.00%	Immediately after the completion of the Rights issue Assuming all Rights Shares are subscribed by the Qualifying Shareholders Assuming none of the Rights Shares are subscribed by the Qualifying Shareholders(Note 3) Shares Approx. Shares Approx. 390,625 0.00% 78,125 0.00% 781,250 0.01% 156,250 0.00% 88,986,250 0.97% 17,797,250 0.19% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% — — 7,365,840,496 80.00% 1,534,550,100 16.67% 306,910,020 3.33% 4,582,592,395 49.77% 916,518,479 9.95% 9,207,300,620 100.00% 9,207,300,620 100.00%	Immediately after the completion of the Rights issue Assuming all Rights Shares are subscribed by the Qualifying Shareholders Assuming none of the Rights Shares are subscribed by the Qualifying Shareholders(Note 3) Shares Approx. Shares Approx. 390,625 0.00% 78,125 0.00% 781,250 0.01% 156,250 0.00% 88,986,250 0.97% 17,797,250 0.19% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% — — 7,365,840,496 80.00% 1,534,550,100 16.67% 306,910,020 3.33% 4,582,592,395 49.77% 916,518,479 9.95% 9,207,300,620 100.00% 9,207,300,620 100.00%
			100.00%

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Scenario 2: Assuming the outstanding Share Options are fully exercised on or before the Record Date

Substantial Shareholders/ Directors Mr. Peter Temple Whitelam_(Note 1) Mr. Lo Yuen Wa Peter (Note 1) Dr. Wu Yi-Shuen(Note 2) SPARX Emerging Opportunities Fund SPC(Note 4) VMS Private Investment Partners II Limited (Note 4) Mr. Andrew Liu(Note 4) Public Shareholders The Underwriter Holder(s) of Shares issued under the Issue Mandate(Note 5)_ Outstanding Share Options being fully exercised Others Total	As at the Latest Practicable Date As at the Record Date (Assuming the outstanding Share Options have been fully exercised) Shares Approx. Shares Approx. 78,125 0.00% 78,125 0.00% 156,250 0.01% 156,250 0.01% 17,797,250 0.97% 17,797,250 0.97% 200,000,000 10.86% 200,000,000 10.86% 200,000,000 10.86% 200,000,000 10.86% 200,000,000 10.86% 200,000,000 10.86% — — — — 306,910,020 16.67% 306,910,020 16.67% — 0.00% 39,062 0.00% 916,518,479 49.77% 916,518,479 49.77% 1,841,460,124 100.00% 1,841,499,186 100.00%	Immediately after the completion of the Rights issue Assuming all Rights Shares are subscribed by the Qualifying Shareholders Assuming none of the Rights Shares are subscribed by the Qualifying Shareholders(Note 3) Shares Approx. Shares Approx. 390,625 0.00% 78,125 0.00% 781,250 0.01% 156,250 0.00% 88,986,250 0.97% 17,797,250 0.19% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% — — 7,365,996,744 80.00% 1,534,550,100 16.67% 306,910,020 3.33% 195,310 0.00% 39,062 0.00% 4,582,592,395 49.77% 916,518,479 9.95% 9,207,495,930 100.00% 9,207,495,930 100.00%	Immediately after the completion of the Rights issue Assuming all Rights Shares are subscribed by the Qualifying Shareholders Assuming none of the Rights Shares are subscribed by the Qualifying Shareholders(Note 3) Shares Approx. Shares Approx. 390,625 0.00% 78,125 0.00% 781,250 0.01% 156,250 0.00% 88,986,250 0.97% 17,797,250 0.19% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% 1,000,000,000 10.86% 200,000,000 2.17% — — 7,365,996,744 80.00% 1,534,550,100 16.67% 306,910,020 3.33% 195,310 0.00% 39,062 0.00% 4,582,592,395 49.77% 916,518,479 9.95% 9,207,495,930 100.00% 9,207,495,930 100.00%
			100.00%

— 93 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

1. Mr. Peter Temple Whitelam and Mr. Lo Yuen Wa Peter are both executive Directors.

2. Dr. Wu Yi-Shuen has resigned as an executive Director with effect from 31 December 2012. He remains as the chairman, chief executive officer and chief technology officer of Sun Materials as at the Latest Practicable Date.

3. This scenario is for illustrative purpose only and will never occur. Pursuant to the Underwriting Agreement, in the event of the Underwriter being called upon to subscribe for or procure subscribers of the Untaken Shares :

4. (i) the Underwriter shall not subscribe, for its own account, for such number of Untaken Shares which will result in the shareholding of it and parties acting in concert (within the meaning of the Takeovers Code) with it in the Company to exceed 19.9% of the voting rights of the Company upon completion of the Rights Issue;

5. (ii) the Underwriter shall use its best endeavours to ensure that each of the subscribers of the Untaken Shares (which form part of the Underwritten Shares) procured by it (i) shall be third party independent of, not acting in concert (within the meaning of the Takeovers Code) with and not connected with the Directors or chief executive of the Company or substantial Shareholders or their respective associates and concert parties; and (ii) any subscribers procured by the Underwriter shall not, together with any party acting in concert with it, hold 10.0% or more of the voting rights of the Company upon completion of the Rights Issue.

6. A holder of the Convertible Bonds. As disclosed in the shareholding above, each of the three holders of the Convertible Bonds, namely SPARX Emerging Opportunities Fund SPC, VMS Private Investment Partners II Limited and Mr. Andrew Liu is interested in 200,000,000 Shares, representing 10.86% of the issued share capital of the Company as at the Latest Practicable Date.

7. As announced by the Company on 22 February 2013. Freeman Securities Limited (as the placing agent) has conditionally agreed with the Company to place 306,910,020 placing Shares on a fully underwritten basis under the Issue Mandate. The placing completed on 28 February 2013.

8. The Company will ensure the compliance with the public float requirements under Rule 8.08 of the Listing Rules upon completion of the Rights Issue in accordance with the Underwriting Agreement. To this end, the Underwriter shall and shall cause sub-underwriter(s) to procure independent placees to take up such number of Rights Shares as necessary to ensure that the public float requirements under Rule 8.08 of the Listing Rules are complied with.

9. The approximate percentage of shareholding of respective shareholders is subject to rounding error.

All Qualifying Shareholders are entitled to subscribe for the Rights Shares. For those Qualifying Shareholders who take up their entitlements in full under the Rights Issue, their shareholding interests in the Company will remain unchanged after the completion of the Rights Issue.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Qualifying Shareholders who do not accept the Rights Issue can, subject to the then prevailing market conditions, consider selling their nil-paid rights to subscribe for the Rights Shares in the market. In such case, where all Qualifying Shareholders do not accept the Rights Issue and thus the Underwriter is obligated to take up the unsubscribed Right Shares, the maximum dilution effect on the Qualifying Shareholders’ shareholding interests will be 80.0%. Details of such dilution effect are presented in the above table.

Meanwhile, Qualifying Shareholders who wish to increase their shareholding interests in the Company through the Rights Issue may (i) subject to availability, acquire additional nil-paid rights in the market; and (ii) apply for the excess Rights Shares since the Rights Issue also allows for excess application of the Rights Shares.

We are aware of the aforementioned potential dilution to the Independent Shareholders’ shareholding interests in the Company. Nonetheless, we consider that the foregoing should be balanced against by the following factors:

• the Independent Shareholders are offered a chance to express their view on the terms of the Rights Issue and the Underwriting Agreement through their votes at the SGM;

• the Qualifying Shareholders have their choice whether to accept the Rights Issue or not;

• the Qualifying Shareholders have the opportunity to realize their nil-paid rights to subscribe for the Rights Shares in the market (subject to availability);

• the Rights Issue offers the Qualifying Shareholders a chance to subscribe for their pro-rata Rights Shares for the purpose of maintaining their respective existing shareholding interests in the Company at a relatively low price as compared to the historical and prevailing market price of the Shares; and

• those Qualifying Shareholders who choose to accept the Rights Issue in full can maintain their respective existing shareholding interests in the Company after the Rights Issue.

In addition, we note from the Comparables as detailed in the table under the previous section of this letter that the maximum dilution to the existing Shareholders as a result of the rights issue transactions ranged from a maximum of 83.33% to a minimum of 20.00%, the maximum dilution of 80% to the existing Shareholders as a result of the Rights Issue falls within the said market range.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered all the above, we consider the potential dilution effect on the shareholding interests of the Independent Shareholders, which may only happen when the Qualifying Shareholders do not subscribe for their pro-rata Rights Shares, to be acceptable.

5. POSSIBLE FINANCIAL EFFECTS OF THE RIGHTS ISSUE

(a) Effect on NTAV

A statement of unaudited pro forma adjusted consolidated net tangible liabilities (“ NTL ”) of the Group based on the unaudited consolidated NTL of the Group as at 30 September 2012 as if the Rights Issue had taken place on 30 September 2012 is set out in Appendix III to the Circular (the “ Statement ”).

The unaudited pro forma adjusted consolidated NTL and the unaudited pro forma adjusted consolidated NTL per Share of the Group were approximately HK$1,839 million and HK$5.37 respectively as at 30 September 2012 according to the Statement and based on 342,508,420 Shares in issue as at 30 September 2012, which takes no account of any Shares being issued and to be issued upon exercise of the Convertible Bonds, the Share Options, share options under the Option Deeds, the Issue Mandate outstanding or unutilised subsequent to 30 September 2012. Upon completion of the Rights Issue and based on the minimum number of Rights Shares to be issued, the unaudited pro forma adjusted consolidated NTL and the unaudited pro forma adjusted consolidated NTL per Share of the Group would decrease by approximately 26.9% to approximately HK$1,344 million and decrease by approximately 96.8% to approximately HK$0.17 per Share respectively according to the Statement. Upon completion of the Rights Issue and based on the maximum number of Rights Shares to be issued, the unaudited pro forma adjusted consolidated NTL and the unaudited pro forma adjusted consolidated NTL per Share of the Group would decrease by approximately 26.9% to approximately HK$1,344 million and decrease by approximately 96.8% to approximately HK$0.17 per Share respectively according to the Statement.

In light of that the Rights Issue would enlarge the total capital base of the Group, we consider that the Rights Issue is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) Effect on gearing position

The gearing level of the Group (calculated on the basis of the Group’s total debts (interest-bearing bank and other borrowings plus Convertible Bonds and Consideration Bonds) over Shareholders’ funds) was approximately (211.2%) as at 30 September 2012. As just mentioned, the total capital base of the Group would be enlarged upon completion of the Rights Issue and the total borrowings of the Group are expected to decrease as the proceeds from the Rights Issue will be used to repay part of the Credit Line. Consequently, the gearing position of the Group would be relieved and the Directors expect that the Group would enjoy more financial flexibility afterwards and hence we consider that the Rights Issue is in the interests of the Company and the Shareholders as a whole.

(c) Effect on liquidity

As part of the net proceeds from the Rights Issue will be used to repay part of the Credit Line and the related finance costs will be reduced. Accordingly, the Group’s liquidity position would be improved upon completion of the Rights Issue. We considered that such possible improvement in liquidity to be in the interests of the Company and the Shareholders as a whole.

It should be noted that the aforementioned analyses are for illustrative purpose only and does not purport to represent how the financial position of the Group will be upon completion of the Rights Issue.

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that the Rights Issue and the Underwriting Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Rights Issue and the Underwriting Agreement and we recommend the Independent Shareholders to vote in favour of the relevant ordinary resolutions to approve the Rights Issue and the Underwriting Agreement at the SGM.

Yours faithfully, For and on behalf of

United Simsen Securities Limited

Chiu Ka Him Louis Lam

Responsible Officer Responsible Officer

— 97 —

INFORMATION OF THE GROUP

APPENDIX I

1. DIRECTORS AND SENIOR MANAGEMENT

Particulars of Directors and senior management

Name	Address
Executive Directors
Mr. Peter Temple Whitelam_(Chairman)_	Room 2902, 29th Floor
	China United Centre
	28 Marble Road
	North Point
	Hong Kong
Mr. Lo Yuen Wa Peter_(Managing Director)_	Room 2902, 29th Floor
	China United Centre
	28 Marble Road
	North Point
	Hong Kong
Mr. Eddie Woo	Room 2902, 29th Floor
	China United Centre
	28 Marble Road
	North Point
	Hong Kong
Mr. Suen Yick Lun Philip	Room 2902, 29th Floor
	China United Centre
	28 Marble Road
	North Point
	Hong Kong
Mr. Lau King Hang	Room 2902, 29th Floor
	China United Centre
	28 Marble Road
	North Point
	Hong Kong

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INFORMATION OF THE GROUP

APPENDIX I

Name	Address
Independent Non-executive Directors
Mr. Frank H. Miu	Flat B, 15th Floor, Tower 8
	Phase 1, Resident Bel-Air
	28 Bel-Air Avenue
	Island South
	Hong Kong
Dr. Agustin V. Que	Unit 14A South Wing
	Fairways Tower 5th Ave
	Bonifacio Global City
	Metro Manila
	Philippines
Mr. Robert James Iaia II	Room G, 8th Floor
	Odeon Building
	28 Shu Kuk Street
	North Point
	Hong Kong
Mr. Hung Cho Sing	Flat C, 21/F., Block T8
	Island Resort
	28 Siu Sai Wan Road
	Siu Sai Wan
	Hong Kong
Senior management
Ms. Chan Oi Ling, Maria Olimpia	1st Floor
	Po Chai Industrial Building
	28 Wong Chuk Hang Road
	Aberdeen
	Hong Kong

Executive Directors

Mr. Peter Temple Whitelam , aged 83, was appointed as an executive Director in August 2007 and the Chairman of the Board in April 2008. He is a specialist consultant in global branding and international communications. After graduating from Pembroke College, Oxford University, he joined British Broadcasting Corporation before winning a Fulbright Scholarship to study educational radio and

— I-2 —

INFORMATION OF THE GROUP

APPENDIX I

television in the United States of America. Following four years at NBC-TV in New York, he began a long career in advertising, creating national and international campaigns for such clients as British Airways, Unilever, Nabisco, ESPN, Colgate, Cadbury, General Motors, American Express, Nomura Securities, and the Bank of Montreal. He has worked as a creative strategist in Boston, New York, London, Montreal, Toronto, Tokyo and Taiwan and has received international awards. Recently he has been developing brand strategies both for companies and government agencies. This is combined with his knowledge and interest in documentary film. He has a long-time acquaintance with Asia, having visited and worked in eight different countries in the Asia Pacific region. He is currently an independent non-executive director of Freeman Financial Corporation Limited (Stock Code: 279), a company listed on the main board of the Stock Exchange.

Mr. Lo Yuen Wa Peter , aged 51, joined the Group as Financial Controller and Company Secretary in May 2008. He was appointed as an executive Director and acting Chief Executive Officer in July 2008, and he was re-designated as Managing Director in July 2011. He studied and obtained his professional qualification in Accountancy in the United Kingdom. He is a member of the Institute of Chartered Accountants in England and Wales and of the Hong Kong Institute of Certified Public Accountants. He has 28 years, experience in auditing, accounting, investment, financial and corporate management.

Mr. Eddie Woo , aged 41, was appointed as an executive Director in March 2010 and also serves as President of our Sun Materials Technology Co., Ltd. subsidiary. He was previously an executive director in the Asia investment banking group of Oppenheimer & Co. Inc., a North American investment bank with extensive operations and experience in the Greater China region, and its predecessor, CIBC World Markets. His responsibilities included significant financing activities for Chinese companies including initial public offerings, mergers and acquisitions, private placements and other related advisory work. He joined CIBC World Markets in 2000 as a research analyst. In 2003, he helped start Mekong Airlines in Cambodia, serving as a board director and chief financial officer before returning to CIBC World Markets during early 2004 as a director within the equity research group. He received his Master’s degree in Business Administration from the University of San Francisco and his Bachelor’s degree from the University of California, Santa Cruz.

Mr. Suen Yick Lun Philip , age 44, was appointed as an executive Director and the Company Secretary in April 2011. He is a fellow member of the Hong Kong Institute of Certified Public Accountants and is a member of the CPA Australia and holds a Bachelor’s degree in Accountancy from Queensland University of Technology and a

— I-3 —

INFORMATION OF THE GROUP

APPENDIX I

Master’s degree in Corporate Finance from The Hong Kong Polytechnic University. He has over 15 years of experience in finance and accounting. Prior to joining the Company, he was responsible for accounting and finance matters for several listed companies in Hong Kong. During the period from 2 September 2010 to 14 March 2011, he was an executive director of Freeman Financial Corporation Limited (Stock code: 279), a company listed on the main board of the Stock Exchange.

Mr. Lau King Hang , aged 41, a resident of Hong Kong with Taiwan Passport, joined the Company as an assistant Director in March 2010. He was appointed as an executive Director in June 2011. He graduated from National Taiwan University with a Bachelor degree in Chemistry. He is a member of The Hong Kong Institute of Director and is a member of The Hong Kong Management Association and obtained the title of Professional Manager. He is responsible for assisting operations of Sun Materials Technology Co., Ltd. and is report to the Board. He has over 10 years of extensive management experience in sales and marketing in high technology, chemical industry, packaging and printing services, food and beverage operations.

Independent Non-executive Directors

Mr. Frank H. Miu , aged 63, was appointed as an independent non-executive Director in December 2009. He is also the chairman of the audit committee and the remuneration committee of the Board and a member of the nomination committee of the Board. He holds a Juris Doctor degree from Harvard Law School and a Bachelor of Arts degree in Economics and Accounting from St. John’s University of Minnesota in the United States of America. He is a member of the American Bar Association and the American Institute of Certified Public Accountants. He is also a fellow of The Hong Kong Institute of Directors. Aside from about 15 years of professional experience in accounting and law, he has extensive management experience in financial services, publishing and printing, food and chain restaurants, cold storage as well as property-related businesses. He was formerly an executive director of Radford Capital Investment Limited (Stock Code: 901) from March 2009 to December 2009 and a managing director from June 2011 to August 2011, and executive director of Dragonite International Limited (Stock Code: 329) from April 2010 to May 2010 and a non-executive director from May 2010 to July 2011. He is currently also an independent non-executive director of Willie International Holdings Limited (Stock Code: 273), an independent non-executive director of Freeman Financial Corporation Limited (Stock Code: 279) and an independent nonexecutive director of Tack Fiori International Group Limited (Stock Code: 928), all of which are companies listed on the main board of the Stock Exchange. He is also an independent non-executive director of Duoyuan Global Water Inc., a company listed on New York Stock Exchange.

— I-4 —

INFORMATION OF THE GROUP

APPENDIX I

Dr. Agustin V. Que , aged 66, was appointed as an independent non-executive Director in January 2010. He is also a member of the audit committee, the remuneration committee and the nomination committee of the Board. He holds Doctor of Philosophy and Master degree in Business Administration, both majoring in Finance, from the Wharton School of the University of Pennsylvania in Philadelphia, Pennsylvania, United States of America. He has been involved in the field of finance for more than 35 years as a private equity investor, merchant banking, corporate and development finance professional in Jakarta, Hong Kong, Singapore, Boston and Washington, District of Columbia. He recently returned to Manila after 15 years in Jakarta where he was corporate finance adviser to an Indonesian holding company with diversified interests in agribusiness, property and financial services. In this position, he was responsible for mergers and acquisitions, new investments, business development and investment banking activities. Prior to Jakarta, he worked in the financial sector in Hong Kong for 12 years. He started his career in finance in Washington, District of Columbia, United States of America with The World Bank, over a period of 10 years. His last posting was senior investment officer in the capital markets department of the International Finance Corporation, The World Bank’s private investment arm. He is currently an independent nonexecutive director of Freeman Financial Corporation Limited (Stock Code: 279), a company listed on the main board of the Stock Exchange.

Mr. Robert James Iaia II , aged 44, was appointed as an independent non-executive Director in June 2010. He is the chairman of the nomination committee of the Board and a member of the audit committee and the remuneration committee of the Board. He holds a Bachelor of Arts from Central Connecticut State University in the United States of America and a Master degree in Real Estate from the University of Hong Kong. He has over 11 years’ experience in the real estate and equities market and lived and worked in Asia for over 20 years, primarily in Seoul and Hong Kong. In addition to extensive experience in private equity real estate, he also traded Asian equities at Samsung Securities in Seoul and Societe Generale in New York. He is currently an independent non-executive director of Tack Fiori International Group Limited (Stock Code: 928), a company listed on the main board of the Stock Exchange.

Mr. Hung Cho Sing , aged 72, has over 30 years of experience in the film distribution industry and founded Delon International Film Corporation in 1970. He has been the chairman of Hong Kong, Kowloon and New Territories Motion Picture Industry Association Limited since 1991 and was the chairman of Hong Kong Film Awards Association Limited from 1993 to 1995. He was appointed by the HKSAR Government as a member of the Hong Kong Film Development Council since 2007.

— I-5 —

INFORMATION OF THE GROUP

APPENDIX I

He was also appointed as a director of the China Film Association since 2009. He is also a member of HKSAR Election Committee and a vice-chairman of the Cultural Profession Committee of the Guangdong, Hong Kong and Macau Cooperation Promotion Council. He was awarded the Bronze Bauhinia Star (BBS) by the HKSAR Government in 2005 in recognition of his contribution to the Hong Kong Film industry. Recently, he has been appointed by the HKSAR as member of the Working Group on Manufacturing Industries, Innovative Technology, and Cultural and Creative Industries under the Economic Development Commission on an ad personam basis for a term of two years with effect from 17 January 2013. Currently, he is an independent non-executive director of China Star Entertainment Limited (stock code: 326), non-executive director of Capital VC Limited (stock code: 2324) and an independent non-executive director of Freeman Financial Corporation Limited (stock code: 279), which are companies listed on the main board of the Stock Exchange.

Ms. Chan Oi Ling, Maria Olimpia , aged 68, is the founder of the Group. Ms. Chan was the chairman of the Company up to 7 April 2008. After resignation from the Board, Ms. Chan remains a director of certain subsidiaries of the Company so as to facilitate her to give advice and pass on her valuable experience in the manufacturing and sales of goods operations. Ms. Chan has over 40 years’ experience in the industry of manufacturing and sale of accessories for photographic products.

2. CORPORATE INFORMATION

Registered office Clarendon House 2 Church Street Hamilton HM 11 Bermuda Head office and principal place 1st Floor of business Po Chai Industrial Building 28 Wong Chuk Hang Road Aberdeen Hong Kong Room 2902, 29th Floor China United Centre 28 Marble Road North Point Hong Kong

— I-6 —

INFORMATION OF THE GROUP

APPENDIX I

Company secretary	Mr. Suen Yick Lun Philip
Authorised representatives	Mr. Lo Yuen Wa Peter
	Mr. Suen Yick Lun Philip
Legal advisers to the Company	As to Hong Kong law:
	Sidley Austin
	39/F., Two International Finance Centre
	Central, Hong Kong
	As to Bermuda law:
	Conyers Dill & Pearman
	2901 One Exchange Square
	8 Connaught Place, Central
	Hong Kong
Auditor	Deloitte Touche Tohmatsu
	Certified Public Accountants
	35th Floor, One Pacific Place
	88 Queensway
	Hong Kong
Branch share registrar and	Tricor Secretaries Limited
transfer office in Hong Kong	26th Floor, Tesbury Centre
	28 Queen’s Road East
	Wanchai
	Hong Kong
Principal share registrar and	Butterfield Fulcrum Group (Bermuda) Limited
transfer office in Bermuda	26 Burnaby Street
	Hamilton HM 11
	Bermuda
Principal banker	The Hongkong and Shanghai Banking
	Corporation Limited
	1 Queen’s Road
	Central
	Hong Kong

— I-7 —

INFORMATION OF THE GROUP

APPENDIX I

3. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date and immediately following the Rights Issue are expected to be as follows:

Authorised:
200,000,000,000	Shares	HK$2,000,000,000.00
Issued and fully-paid:
1,841,460,124	Shares in issue as at the Latest Practicable	HK$18,414,601.24
	Date
Scenario 1: Assuming no new Shares are issued on or before the Record Date
7,365,840,496	Rights Shares to be issued pursuant to the	HK$73,658,404.96
	Rights Issue
9,207,300,620	Shares in issue immediately following the	HK$92,073,006.20
	Rights Issue
Scenario 2: Assuming the outstanding Share Options are		fully exercised on or
before the Record Date
7,365,996,744	Rights Shares to be issued pursuant to the	HK$73,659,967.44
	Rights Issue
9,207,495,930	Shares in issue immediately following the	HK$92,074,959.30
	Rights Issue

Each of the Shares in issue ranks pari passu with all other Shares in all respects including as to rights to dividends, voting and return of capital. The Rights Shares (when allotted, fully paid or credited as fully paid and issued) will rank pari passu in all respects with the Shares in issue on the date of allotment and issue of the Rights Shares. Holders of the Rights Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Rights Shares.

No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares or Rights Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

— I-8 —

INFORMATION OF THE GROUP

APPENDIX I

Save as disclosed herein, no share or loan capital of the Company or any of its subsidiaries has been put under option or agreed conditionally or unconditionally to be put under option as at the Latest Practicable Date.

Saved as disclosed on pages 17-19 of this Circular, the Company has no outstanding warrants, share options or other securities which are convertible into or giving rights to subscribe for Shares as at the Latest Practicable Date.

— I-9 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. FINANCIAL SUMMARY OF THE GROUP

The published audited consolidated financial statements of the Group for the years ended 31 March 2010, 2011 and 2012 are disclosed in the annual reports of the Company for the years ended 31 March 2010 (pages 26-102), 2011 (pages 30-110) and 2012 (pages 28-111). They can be accessed on the website of the Company (http://www.irasia.com/listco/hk/mascotte/index.htm) and the website of the Stock Exchange (www.hkexnews.hk).

2. WORKING CAPITAL

Provided that the Company will be able to raise sufficient additional funds through the issue of new Shares as and when required to meet the liquidity requirements of the Group, the Directors confirm that, after taking into account its internally generated funds, its currently available facilities, financial resources and the estimated net proceeds from the Rights Issue, the Group has sufficient working capital for its requirements in the next 12 months commencing from the date of this circular.

3. INDEBTEDNESS

As at the close of business on 28 February 2013, being the latest practicable date for the purpose of this indebtedness statement prior to the publication of this circular, the Group has outstanding debts mainly in the form of (i) unsecured consideration bonds bearing interest of 2.5% per annum with aggregate outstanding amounts of HK$890.0 million due on 4 January 2014; (ii) unsecured convertible bonds bearing interest of 5.0% per annum and convertible into new shares at a conversion price of HK$0.20 per share (adjusted), with aggregate outstanding amounts of HK$1,200.0 million; (iii) an unsecured note bearing interest of 5.0% per annum with an outstanding amounts of HK$5.0 million due on 5 February 2020; (iv) a credit line with an outstanding amount of HK$500.0 million; (v) an unsecured loan of HK$10.0 million from Dragonite Resources Limited bearing interest of 12.0% per annum due on 5 May 2013; and (vi) an outstanding bank borrowing of approximately HK$41.9 million (NT$160.0 million) which is secured by buildings in Taiwan with a aggregated carrying value of approximately HK$78.1 million (NT$298.2 million).

— II-1 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Apart from as disclosed above and intra-group liabilities, the Group did not have at the close of business on 28 February 2013 any debt securities authorised or created but unissued, issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, finance leases, hire purchase commitments, guarantees or other material contingent liabilities.

• Note: Subsequent to the close of business on 28 February 2013, the Company has repaid an aggregate of approximately HK$31.35 million of the Debts and further drawn down HK$15.0 million of the Credit Line, details of which are set out on pages 37-38 of this circular.

— II-2 —

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES OF THE GROUP

APPENDIX III

A. ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

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ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

TO THE DIRECTORS OF MASCOTTE HOLDINGS LIMITED

We report on the unaudited pro forma financial information of Mascotte Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), which has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the proposed Rights Issue (as defined in the circular dated 28 March 2013 (the “Circular”) issued by the Company) might have affected the financial information presented, for inclusion in Section B of Appendix III to the Circular. The basis of preparation of the unaudited pro forma financial information is set out in Section B of Appendix III to the Circular.

Respective responsibilities of directors of the Company and reporting accountants

It is the responsibility solely of the directors of the Company to prepare the unaudited pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

It is our responsibility to form an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

— III-1 —

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES OF THE GROUP

APPENDIX III

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with source documents, considering the evidence supporting the adjustments and discussing the unaudited pro forma financial information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purpose of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

The unaudited pro forma financial information is for illustrative purpose only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in future and may not be indicative of the financial position of the Group as at 30 September 2012 or any future date.

Opinion

In our opinion:

• a) the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated;

• b) such basis is consistent with the accounting policies of the Group; and

• c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong 28 March 2013

— III-2 —

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES OF THE GROUP

APPENDIX III

B. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES OF THE GROUP

The unaudited pro forma statement of adjusted consolidated net liabilities of the Group (the “Unaudited Pro Forma Financial Information”) has been prepared by the directors of the Company in accordance with Paragraph 4.29 of the Listing Rules to illustrate the effect of the proposed Rights Issue on the basis of four Rights Share for every one existing Share held on the Record Date at HK$0.07 per Rights Share on the consolidated net tangible liabilities of the Group as if the Rights Issue had taken place on 30 September 2012 assuming that either the maximum number of Rights Shares or minimum number of Rights Shares have been achieved. For determination of the minimum and maximum Rights Shares to be issued, please refer to the introduction section of this circular.

The Unaudited Pro Forma Financial Information is prepared for illustrative purposes only, and because of its hypothetical nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of the financial position of the Group as at 30 September 2012 and any future date.

The Unaudited Pro Forma Financial Information is prepared based on the unaudited consolidated net tangible liabilities of the Group attributable to owners of the Company derived from the unaudited consolidated statement of financial position of the Group as at 30 September 2012 as extracted from the interim report of the Company for the six months ended 30 September 2012, after incorporating the unaudited pro forma adjustments described in the accompanying notes.

— III-3 —

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES OF THE GROUP

APPENDIX III

					Unaudited pro forma
					adjusted consolidated
		Unaudited adjusted			net tangible liabilities
		consolidated net			of the Group
		tangible liabilities of			attributable to owners
	the Group attributable			Estimated	of the Company
		to owners of the		net proceeds	immediately after
		Company as at		from the	the completion
		30 September 2012		Rights Issue	of the Rights Issue
		HK$’000		HK$’000	HK$’000
		(Note 1)		(Note 2)
Minimum number of
7,365,840,496 Rights
Shares		(1,838,828)		494,609	(1,344,219)
Maximum number of
7,365,996,744 Rights
Shares		(1,838,828)		494,620	(1,344,208)
Unaudited adjusted consolidated net tangible liabilities of the Group per Share
attributable to owners of the		Company as at 30 September 2012 before Rights
Issue_(Note 3)_					HK$5.37
Unaudited pro forma adjusted consolidated net tangible liabilities of the Group
attributable to owners of the		Company immediately	after the completion of
the Rights Issue per Share (based on minimum number				of Rights Shares to be
issued)(Note 4)					HK$0.17
Unaudited pro forma adjusted consolidated net tangible liabilities of the Group
attributable to owners of the		Company immediately	after the completion of
the Rights Issue per Share (based on maximum number				of Rights Shares to
be issued)(Note 5)					HK$0.17

Notes:

1. The amount of approximately HK$1,838,828,000 is determined based on the consolidated net liabilities of the Group attributable to owners of the Company of approximately HK$1,106,372,000 as at 30 September 2012, which is extracted from the unaudited condensed consolidated statement of financial position of the Group as at 30 September 2012 set out in the interim report of the Company dated on 29 November 2012, with adjustment of intangible asset of approximately HK$732,456,000 as at 30 September 2012.

— III-4 —

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES OF THE GROUP

APPENDIX III

1. The estimated net proceeds from the Rights Issue of approximately HK$494,609,000 and HK$494,620,000 are based on the minimum number of 7,365,840,496 Rights Shares and maximum number of 7,365,996,744 Rights Shares to be issued respectively, at the subscription price of HK$0.07 per Rights Share and after the deduction of the estimated related expenses, including among others, underwriting commission, financial advisory fee and other professional fees, which are directly attributable to the Rights Issue, of approximately HK$21,000,000.

2. The number of Shares used for the calculation of the unaudited adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company per Share as at 30 September 2012 is based on 342,508,420 Shares of the Company in issue as at 30 September 2012, which takes no account of any shares being issued and to be issued upon exercise of Convertible Bonds, Share Options, share options under the Option Deeds, Issue Mandate outstanding or unutilised subsequent to 30 September 2012.

3. The number of Shares used for the calculation of the unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company immediately after the completion of the Rights Issue per Share (based on minimum number of 7,365,840,496 Rights Shares to be issued) is based on 7,708,348,916 Shares comprising 342,508,420 Shares in issue as at 30 September 2012 as discussed above in note 3 and 7,365,840,496 minimum Rights Shares to be issued.

4. The number of Shares used for the calculation of the unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company immediately after the completion of the Rights Issue per Share (based on the maximum number of 7,365,996,744 Rights Shares to be issued) is based on 7,708,505,164 Shares, comprising 342,508,420 Shares in issue as at 30 September 2012 and 7,365,996,744 maximum Rights Shares to be issued.

5. No adjustment has been made to reflect any trading result or other transaction of the Group entered into subsequent to 30 September 2012.

— III-5 —

CALCULATION REPORT

APPENDIX IV

American Appraisal China Limited 1506 Dah Sing Financial Centre 108 Gloucester Road / Wanchai / Hong Kong 美國評值有限公司 香港灣仔告士打道108號大新金融中心1506室 Tel +852 2511 5200 / Fax +852 2511 9626 Leading / Thinking / Performing

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March 28, 2013

The Directors

Mascotte Holdings Limited

Our Ref.: 12/1892

Dear Sirs,

CALCULATION OF INDICATED BUSINESS ENTERPRISE VALUE OF SUN MATERIALS TECHNOLOGY CO., LTD.

Pursuant to the terms, conditions and purpose of an engagement agreement dated August 30, 2012 (“Engagement Agreement”) between Mascotte Holdings Limited (“Mascotte” or “Client”) and American Appraisal China Limited (“American Appraisal”), we have assisted the Client to perform scenario analysis of the calculated value (“Calculation”) of the business enterprise of Sun Materials Technology Co., Ltd. (“Sun Materials” or “Company”). The Calculation is prepared as of September 30, 2012 (“Measurement Date”) based on the agreed procedures/scope of works, by adopting market data and projection assumptions provided by the management of the Company (“Management”).

We understand that the Company, with our consent, discloses this letter to The Stock Exchange of Hong Kong Limited. However, the results of our analysis should not be constructed as a fairness opinion, a solvency opinion, or an investment recommendation. Our letter report is prepared solely for the directors of the Client for the purpose stated herein and should not be relied upon for any other purpose or provided for use by third parties. Any third party should conduct their own investigation and independent assessment of the prospective financial information and underlying assumptions. In no event, regardless of whether consent has been provided, shall we assume any responsibility to third party to whom this report is disclosed or otherwise made available.

This letter identifies the asset appraised, describes the scope of work, states the basis of calculated value, specifies key inputs and assumptions, explains the calculation methodology utilized, and presents our conclusion of calculated value. In preparing this letter, we aim to largely comply with the reporting requirements recommended by the International Valuation Standards. This letter is intended to present only a summary discussion of the data, reasoning, major assumptions and analyses that were used by American Appraisal to develop the opinion of calculated value. Supporting documentation concerning these matters has been retained in our work papers.

— IV-1 —

CALCULATION REPORT

APPENDIX IV

PURPOSE OF THE CALCULATION

The Client has completed an acquisition of 50.1% of the issued shares of Sun Mass Energy Limited (“Sun Mass”), the ultimate holding company of Sun Materials (“1st VSA Circular”) in July 2011. On January 4, 2012, the Client acquired the remaining 49.9% of Sun Mass (“2nd VSA Circular”) and Sun Mass became a wholly-owned subsidiary of Mascotte. Based on the Client’s announcement dated February 4, 2012, the Client is contemplating the rights issue (“Rights Issue”) to finance the capital requirement of Sun Material for the enhancement of the Company’s production facilities in respect of its polysilicon business and for other financing purpose. For the purpose of Rights Issue, the Client engaged American Appraisal to perform the Calculation and scenario analysis on the business enterprise value of Sun Materials.

Prospective financial information of Sun Materials was prepared by the Management. With the Client’s approval and as stipulated by the Engagement Agreement in developing the calculated value of the business enterprise of Sun Materials, we relied upon completeness and accuracy of operational and financial information provided by the Company and certain pricing, cost and industry data from an independent technical study (“Technical Report”) on Sun Materials issued in March 2013 conducted by PHOTON Consulting, LLC (“Photon”).

Since the Company is still in the early stages of preparation for commercial production and has no historical track records, the Calculation is subject to numerous assumptions adopted in the business plan and the projected financial information. To the extent that any of these assumptions or facts changed, the result of our Calculation should be different. With respect to financial forecasts regarding that the Company provided to or otherwise reviewed by or discussed with American Appraisal, it has been represented by the Management and was assumed for the purposes of this conclusion that such analyses and forecasts were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments of the Management as to the expected future results of operations and financial conditions of the Company to which such analyses or forecasts relate. American Appraisal can give no assurances, however, that such financial analyses and forecasts can be realized or that actual results will not vary materially from those projected.

The intended use of the Calculation is to serve as an internal reference for the Client’s corporate planning purpose. The Calculation only form part of the information for the Client to consider. The responsibility for determining the fair value of the business enterprise of the Company rests solely with the Client.

— IV-2 —

CALCULATION REPORT

APPENDIX IV

STANDARD AND PREMISE OF VALUE

The Calculation is based on the calculated value defined under the Statement on Standards for Valuation Services No. 1 issued by the American Institute of Certified Public Accountants as “an estimate as to the value of a business, business ownership, security, or intangible assets, arrived at by applying valuation procedures agreed upon with the client and using professional judgment as to the value or range of values based on those procedures”.

The Calculation shall be the indicated value of the Business Enterprise using financial projection assumptions provided by the Management and market data on pricing and industry practice on production utilization. American Appraisal has not been asked to and will not provide any opinion, analysis or consideration of the relative reasonableness, accuracy or appropriateness of the financial projections provided by the Management.

The Calculation is for illustrative purpose only, based on the judgements and assumptions of the Management, and because of its hypothetical nature, does not provide any assurance or indication that any event will take place in future and may not be indicative of any future financial results or performance or cash flow of any future period.

Business Enterprise is defined as the combination of all tangible assets (buildings, machinery and equipment), long-term investment, net working capital and intangible assets of a continuing business. Alternatively, the business enterprise is equivalent to the invested capital of the business, that is, the combination of the value of shareholders’ equity, shareholders’ loans and interest-bearing debt.

DESCRIPTION OF SUN MATERIALS

Sun Materials is a limited liability company incorporated in Taiwan in 2007. Its principal business is the manufacture of solar grade polysilicon. Sun Materials deploys a new and innovative technology (“Core Technology”) developed by Dr Wu Yi-Shuen (“Dr. Wu”) and it was patented in the USA, Europe, Japan, Taiwan and China the key production equipment for such technology, with a view to significantly reducing the plant development costs, production costs, production hazards and adverse environmental effects of manufacturing solar grade polysilicon. The patented production equipment is designed to enable the commercial production of solar grade polysilicon using such technology.

As far as the Management is aware, the technologies for manufacturing solar grade polysilicon in the market are the “Siemens” process, the FBR process, and the modified “Siemens” process, and these processes do not involve any technology that is similar

— IV-3 —

CALCULATION REPORT

APPENDIX IV

to that Sun Materials will deploy in an industrial scale. The patented key production equipment is a crucial component of the production process for deploying this technology to manufacture solar grade polysilicon in an industrial scale. The Management is not aware of other means to deploy this technology for the same application in an industrial scale.

Sun Materials completed the construction of its first production plant in Yi-Lan County, Taiwan in October 2010 which has a design production capacity of up to 3,500 metric tons per annum (“Existing Plant”). In November 2010, Sun Materials commenced trial production at the plant for the purposes of fulfilling the qualification requirements of its customers. In the circular of the 1st VSA Circular, the Company expected to commence commercial production with its first production plant in late December 2011 and planned to commence construction of five additional production plants in 2012. However, the expansion plan and the commercial production of the first plant have been delayed due to certain operational issues unforeseen by the Company.

Since the trial production in 2010, the Company has encountered several delays due to fine-tuning of equipment and production process. After the achievement of the 80% silicon tetrafluoride concentration during the decomposition process, Dr. Wu completed the first two sample production runs which confirmed the feasibility of operating every key component for commercial production in April 2012. However, the production data of the sample runs revealed that the initial hydrofluoric acid production volume estimate was too conservative and the existing method of storing the hydrofluoric acid is insufficient to treat the discharge generated, in particular under the full scale operation. As a result, recycling facilities are essential to handle the waste especially during the peak typhoon season starting in June of each year. In addition, it is expected that the ability to recycle the hydrofluoric acid and related discharge also lower the Company’s production cost of polysilicon by reducing the cost of sodium fluorosilicate. With the enhancement of the production plants being implemented, Sun Materials expects to commence commercial production of the Existing Plant in the first half of 2013.

INDUSTRY OVERVIEW

According to the “Global Market Outlook for Photovoltaics until 2016” issued by the European Photovoltaic Industry Association (“EPIA”) in May 2012, Europe has dominated PV market for years but the rest of the world clearly has the biggest potential for growth. New PV installations in the rest of the world accounted for 7.7 GW in 2011, compared to 3GW in 2010. China took first place among these countries with 2.2 GW, followed by the USA with 1.9 GW and Japan with 1.3 GW. All are expected to continue growing in 2012.

— IV-4 —

CALCULATION REPORT

APPENDIX IV

In terms of global cumulative installed capacity, Europe still leads the way with more than 51 GW installed as of 2011. This represents about 75% of the world’s total PV cumulative capacity. Next in the ranking are Japan (5 GW) and the USA (4.4 GW), followed by China (3.1 GW) which reached its first GW in 2011. Many of the markets outside Europe, in particular China, the USA and Japan, but also Australia (1.3 GW) and India (0.46 GW), have addressed only a very small part of their enormous potential; several countries from large sunbelt regions like Africa, the Middle East, South East Asia and Latin America are on the brink of starting their development. Even so, the cumulative installed capacity outside Europe almost doubled between 2010 and 2011, demonstrating the ongoing rebalancing between Europe and the rest of the world and reflecting more closely the patterns in electricity consumption.

The cumulative global installed capacity was forecasted to grow at a CAGR of 24% in the moderate scenario which assumes rather pessimistic market behavior with no major reinforcement of existing support mechanisms and reasonable continuation of current feedin-tariffs aligned with PV systems prices:

	2012	2013	2014	2015	2016
Global cumulative installed
capacity forecast (MW)	89,900	110,400	137,200	169,100	207,900
Growth (%)	29%	23%	24%	23%	23%

Source: EPIA “Global Market Outlook for Photovoltaics until 2016”

According to the “PV Status Report 2012” issued by the Joint Research Centre of the European Commission in September 2012, the existing over-capacity in the solar industry has led to a continuous price pressure along the value chain and resulted in a reduction of spot market prices for polysilicon material, solar wafers and cells, as well as solar modules of 50% over the last two years. These rapid price reductions are putting all solar companies under enormous pressure and the access to fresh capital is key to survival. It is believed that this situation will continue for at least the next few years and put further pressure on the reduction of the average selling price (“ASP”), even if the overall reductions will not be as large as in the last years.

The rapid growth of the PV industry since 2000 led to the situation where, between 2004 and early 2008, the demand for polysilicon outstripped the supply from the semiconductor industry. Prices for purified silicon started to rise sharply in 2007 and in 2008 prices for polysilicon peaked around 500 USD/kg and consequently resulted in higher prices for PV modules. This extreme price hike triggered a massive capacity expansion, not only of established companies, but many new entrants as well. The top 10 silicon manufacturers produced about two-thirds of the 2011 total production.

— IV-5 —

CALCULATION REPORT

APPENDIX IV

The massive production expansions, as well as the difficult economic situation, led to a price decrease throughout 2009, reaching about 50 – 55 USD/kg at the end of 2009, with a slight upwards tendency, throughout 2010 and early 2011, before prices dropped significantly and in August 2012 were trading in the 30 USD/kg (23 EUR/kg) range for contracted silicon and 20 USD/kg (15 EUR/kg) on the spot market. For 2011, about 288,000 metric tons of solar grade silicon production, or double the 2010 volume were reported, sufficient for around 41 GW, under the assumption of an average materials need of 7g/Wp. China produced about 80,000 metric tons (sufficient to supply about 60 to 65 % of the domestic demand), and imported about 64,600 metric tons in 2011. In 2011, China increased its production capacity to about 120,000 metric tons, but over half of the Chinese polysilicon manufacturers are small enterprises, and the annual production capacity is generally 1,000 – 3,000 metric tons. In January 2011, the Chinese Ministry of Industry and Information Technology tightened the rules for polysilicon factories. New factories must be able to produce more than 3,000 metric tons of polysilicon a year and meet certain efficiency, environmental and financing standards. The total energy consumption must be less than 200 kWh/kg and China is aiming for large companies with at least 50,000 metric tons annual capacity by 2015. These two framing conditions, in addition to the enormous price pressure, are the reasons why a significant number of Chinese manufacturers have closed down their production in the first half of 2012. This is also the reason why China already imported 48,000 metric tons of silicon during the first seven months of 2012, 35% more than during the same period last year.

Projected silicon production capacities available for solar in 2012 vary between 328,000 metric tons and 410,330 metric tons. The possible solar cell production will, in addition, depend on the material used per Wp. The current world-wide average is about 6g/Wp.

SCOPE OF WORK AND KEY ASSUMPTIONS

Our investigation included discussions with the Management with regard to the history, operations and prospects of the Sun Materials, on-site visits and inspection on August 27, 2012 and November 30, 2012, an overview of certain financial data, an analysis of the industry and competitive environment, an analysis of comparable companies, and a review of transactions, operating statistics and other relevant documents.

We made reference to or reviewed the following major documents and data:

• Audited financial statements of Sun Materials for the three years ended December 31, 2009, 2010 and 2011;

• Unaudited financial information of Sun Materials for the nine months period ended September 30, 2012;

— IV-6 —

CALCULATION REPORT

APPENDIX IV

• Prospective financial information of Sun Materials prepared by the Management for the period from October 2012 to August 2015;

• Technical Report prepared by Photon;

• Announcement in relation to proposed Rights Issue dated February 4, 2013;

• Two construction contracts regarding the enhancement work of the recycling facilities;

• Industry reports (including Global Market Outlook for Photovoltaics until 2016 issued by EPIA and PV status Report 2012 by European Commission and Institute for Energy and certain analysts reports covering solar industry); and

• Other relevant information.

We assumed that the data we obtained in the course of the Calculation, along with the opinions and representations provided to us by the Client are true and accurate and accepted them without independent verification except as expressly described herein. We have no reason to suspect that any material facts have been omitted, nor are we aware of any facts or circumstances, which would render the information, opinion and representations made to us to be untrue, inaccurate or misleading. In arriving at our opinion of the calculated value, we have considered the following principal factors:

• the early stage of development of the Sun Materials;

• the current financial condition, production costs estimation and prospective financial projections of the Sun Materials;

• the economic outlook in general and specific competitive environments affecting the polysilicon and solar energy industry;

• the legal and regulatory issues in general and other specific legal opinions relevant to the Sun Materials;

• the transaction prices of the best comparable assets;

• the risks of Sun Materials; and

• the experience of Sun Materials’ management team.

— IV-7 —

CALCULATION REPORT

APPENDIX IV

Due to the changing environments in which Sun Materials is operating, a number of assumptions have to be made in arriving at our calculated value conclusion. The key assumptions adopted in the Calculation:

• no major changes are expected in political, legal and economic conditions in Taiwan;

• industry trend and market conditions for polysilicon manufacturing industry will be developing according to prevailing market expectations;

• there will be no major changes in the current taxation law in Taiwan;

• Sun Materials will not be constrained by the availability of finance;

• the future movement of exchange rates and interest rates will not differ materially from prevailing market expectations;

• cash manufacturing cost of polysilicon employing Sun Materials’ Core Technology would be kept at approximately 13.6 USD/kg under Existing Plant scenario, which was referenced to the Technical Report;

• Sun Materials will retain competent management, key personnel and technical staff to support their ongoing operations;

• Sun Materials will adopt proper measures to improve product quality and maintain production efficiency; and

• Sun Materials can secure revenue by entering into long-term contracts with key PV industry players.

METHODOLOGY OVERVIEW

In the appraisal of the equity, or the net assets, of a business, regardless of their diversity, location, or technological complexity, there are three basic approaches to value. The descriptive titles typically attached to these approaches are cost, income, and market. In normal circumstances, the appraiser is obliged to consider all three approaches, as any, or perhaps all, may provide reliable measures of value.

Cost approach established value based on the cost of reproducing or replacing the property less depreciation from physical deterioration and functional and economic obsolescence, if present and measurable. This approach might be considered the most consistently reliable indication of value for assets without a known used market or separately identifiable cash flows attributable to assets appraised.

— IV-8 —

CALCULATION REPORT

APPENDIX IV

Income approach is the conversion of expected periodic benefits of ownership into an indication of value. It is based on the principle that an informed buyer would pay no more for the property than an amount equal to the present worth of anticipated future benefits (income) from the same or equivalent property with similar risk.

Market approach considers prices recently paid for similar assets, with adjustments made to the indicated market prices to reflect condition and utility of the appraised assets relative to the market comparable. Assets for which there is an established used market may be appraised by this approach.

In view of the early stage of development of Sun Materials, the income approach is not appropriate given the high uncertainty on a long-term forward-looking financial forecast and underlying assumptions. Also, the innovation and uniqueness of the patented Core Technology owned by Sun Materials may not be necessarily replicated by other market players’ research and development activities and, thus, the cost approach is not considered in the Calculation. The market approach is adopted as the primary calculation method. The market approach may represent more objective view and more weight relatively under fair value measurement hierarchy but have the limitation in the case that those comparable companies or transactions may cover different regions in the world with different technology, scale of operation, market situation, growth potential, business or country risks and tax rate.

MARKET APPROACH

The Calculation was conducted primarily by the Guideline Company Method (“GCM”) and also cross checked by the Guideline Transaction Method (“GTM”), both known as forms of the market approach. GCM and GTM provided a range of values by relating the market values of publicly-traded comparable companies and transaction price to measures of their operating results and other value drivers. Such multiples were applied to the relevant parameters of the subject business being appraised. It is understood that Sun Materials’ technology, production process and geographic location are different from the comparable companies and target companies/assets in comparable transactions. Despite such differences, the end product, namely polysilicon, is a commodity commonly used in the photovoltaic industry as a key component for the production of solar cells. In other words, polysilicon prices are likely to be driven by demand and supply by the industry players. On the other hand, it is also acknowledged that differences in technology applied and geographic location may affect the product’s quality and manufacturing process efficiencies and hence manufacturing costs of business enterprises. However, these variances among business enterprises would eventually be reflected in the trading prices and economic measures such as earnings before interest, tax, depreciation and amortization expenses (“EBITDA”) in the guideline companies. As such, enterprise value (“EV”) to EBITDA multiples were adopted under the GCM without adjustment. We have also reviewed several research analyst reports on the solar industry covering, among others,

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APPENDIX IV

CALCULATION REPORT

the polysilicon segment and industry players issued by reputable research firms (“Analyst Reports”). These research firms are leading investment banks in their respective countries with strong research capability. In their analysis, we did not notice any major discrepancies in using market approach. Therefore, we considered the Analyst Reports we reviewed are sufficient for the purpose of the Calculation. Despite subjects under analysis have different business mix, the Analyst Reports also include EV to EBITDA ratio as one of the valuation metrics with no adjustment. Thus, the direct adoption of trading multiple without adjustment is in line with market practice in analyzing companies with their end products which are commodities, such as polysilicon.

Guideline Company Method

Under the GCM, the financial ratios of comparable companies are analyzed to determine a value for the subject property. This method employs market price data of stocks of corporations engaged in the same or a similar line of business as that of the subject property. Stocks of these corporations are actively traded in a public, free, and open market, either on an exchange or over-the-counter. In selecting comparable companies for the purpose of the Calculation, we have reviewed information from the Technical Report, Bloomberg and the Analyst Reports, etc. We have identified and described below ten public traded comparable companies which are operating in the polysilicon manufacturing industry with earning forecasts (“Selected Comparable Companies”):

1. Wacker Chemie AG manufactures various chemical products, including silicon wafers for semiconductor manufacturers.

2. Renewable Energy Corporation ASA develops a wide range of products for the solar energy market. The Company produces silicon materials for photovoltaic (PV) applications and multicrystalline wafers, as well as solar cells and modules.

3. Tokuyama Corporation produces inorganic and organic industrial chemicals, synthetic resins, cement, and construction materials. The Company’s product lines include Portland cement, soda chemicals, and polycrystalline silicon.

4. Mitsubishi Materials Corporation manufactures and processes non-ferrous metals such as copper, zinc, lead, gold, and silver. The Company also produces other products such as cement, aluminum cans, silicon, fine chemicals, and electronic materials.

5. GCL-Poly Energy Holdings Limited is a Chinese power company that produces solar grade polycrystalline silicon and operates cogeneration plants and in China.

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CALCULATION REPORT

APPENDIX IV

1. MEMC Electronic Materials, Inc. produces silicon wafers. The Company’s products are used in computers, telecommunications equipment, automobiles, consumer electronics products, industrial automation and control systems, and analytical and defense systems.

2. Globe Specialty Metals, Inc. produces silicon metal and silicon-based alloys. The Company’s products are used for the manufacture of a wide range of industrial products, including silicone compounds, aluminium, ductile iron, automotive parts, steel, photovoltaic solar cells and electronic semiconductors.

3. OCI Company Ltd. operates its business under three segments: basic chemical, chemical compound and other segments. Its basic chemical segment produces polycrystalline silicon, hydrogen peroxide and others used in semiconductor, paper manufacturing and textile industries. Its chemical compound segment produces carbon blacks used for tires and tubes, and toluene diisocyanate (TDI) products used in automobile, shoes and furniture industries. Its other segment produces zirconium silicate and chemical reagents used for analysis.

4. Daqo New Energy Corp. manufactures polycrystalline silicon. It markets its polycrystalline silicon to photovoltaic product manufacturers who process it into ingots, wafers, cells and modules for solar power products.

5. ReneSola Ltd. manufactures solar wafers for integration into photovoltaic cells. The company has developed proprietary technology for processing different types of scrap wafer and other silicon materials for use as feedstock for its solar wafer production.

The Selected Comparable Companies are all involved in manufacturing of polysilicon or other products for the solar energy market. Despite the absence of pure player in the industry, they are direct competitors to Sun Materials or one of their businesses is the manufacture of polysilicon. The Selected Comparable Companies are all operating in the solar industry and are subject to similar operating environment in the value chain as Sun Materials. Among the Selected Comparable Companies, nine of them are listed among the top 15 polysilicon producers in terms of 2011 polysilicon production volume by the Technical Report. The other six companies mentioned in the Technical Report as top 15 polysilicon producers but not included in the Selected Comparable Companies are either private companies or with no earnings forecast. Besides, nine companies out of the Selected Comparable Companies were also selected and analyzed in the Analyst Reports. Based on the selection criteria set out above and the information we reviewed, the Selected Comparable Companies are considered comparable, exhaustive and representative to the best of our knowledge.

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CALCULATION REPORT

APPENDIX IV

We collected the EV of the Selected Comparable Companies as of the Measurement Date from Bloomberg and the estimated 2013 EBITDA of the Selected Comparable Companies based on the market consensus from Bloomberg. EV is defined as market capitalization plus interest-bearing debt less cash plus non-controlling interest plus preferred stock. EV to EBITDA multiple is not affected by capital structure and is often chosen for calculation of capital intensive companies such as Sun Materials as EBITDA is not affected by different depreciation policies adopted by Selected Comparable Companies. As such, EBITDA is often regarded as an economic measure showing price discount and cost advantages or disadvantages due to different product or business mix engaged by business enterprise.

We have prepared the calculated business enterprise value using the first full year operation results of Sun Materials under the Existing Plant scenario.

Key Assumptions adopted under Existing Plant scenario

Based on the existing development status of Sun Materials, the first full year result based on the Existing Plant (“First Full Year EBITDA (Existing Plant)”) that was furnished to us by the Management, was adopted to arrive at the indicated calculated values of business enterprise of Sun Materials. The sales volume was forecasted at 2,593 metric tons based on Management’s production plan and cash manufacturing production cost was estimated to be 13.6 USD/kg (excluding depreciation) with reference to the Technical Report, i.e. total manufacturing cost of 16.1 USD/kg less depreciation of 2.5 USD/kg. The estimated sales volume of 2,593 metric tons in the first full year operation represents approximately 74% utilization of the designed production capacity of the Existing Plant which is 3,500 metric tons. The unit selling price adopted in the derivation of First Full Year EBITDA of 23.7 USD/kg (“Base Selling Price”) is in line with the spot ASP forecast disclosed in the Technical Report. Annual operating expenses were assumed to be USD3.7 million based on average January to April 2012 operating statistics of the Company and then projected that there will be increase in corporate expenses including administrative, selling and marketing expenses when commercial operation starts, which include expenses related to:

1. expected increase in number of staffs in support function, such as logistics, IT, warehouse, safety as well as administration; and

2. certain sales, marketing, public & investor relation headcount; and

3. rental expense increases.

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CALCULATION REPORT

APPENDIX IV

EBITDA under the Existing Plant scenario was USD22.6 million. Calculation of First Full Year EBITDA is illustrated below:

		First Full Year
		EBITDA
		Under Existing
		Plant scenario
Base Selling Price	USD/kg	23.7
_Less:_unit cash manufacturing cost	USD/kg	(13.6)
Unit contribution	USD/kg	10.2
Multiplied by: sales volume	Mt	2,593
Total contribution	USD million	26.4
_Less:_annual operating expenses	USD million	(3.7)
First Full Year EBITDA	USD million	22.6

• The minor difference from casting or arithmetic result is due to the decimal numbers were not shown

Changes in manufacturing cost assumptions

According to the Technical Report, the unit manufacturing cost (excluding depreciation) is approximately 13.6 USD/kg which is slightly higher than the Management’s estimated unit cash manufacturing cost of 12.8 USD/kg in the 2nd VSA Circluar. The slight increase of unit cash manufacturing cost by 6% is mainly due to increase in estimation of human resources expenses. Details of cost components under the three scenarios are shown as follows:

Cash Manufacturing Cost Breakdown for Production of 1 kg Polysilicon (USD/kg) Timing of estimation Raw materials and waste treatment Electricity Human resources All others Total	Photon Current 5.7 3.6 2.3 2.0 13.6	Sun Materials 2nd VSA Circular 5.8 3.5 1.3 2.2 12.8	ARUP 1st VSA Circular 5.8 5.2 1.3 4.8 17.1

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APPENDIX IV

According to the Management’s estimation, the enhancement work in relation to the recycling facilities will be completed in the first half of 2013, and commercial production will commence in the first half of 2013.

Based on the procedures in the “Scope of Work and Major Assumptions” above and those described below, it was considered that the cash manufacturing costs and First Full Year EBITDA under the Existing Plant scenario were prepared with due care and consideration:

• Reviewed and relied on the Technical Report where unit manufacturing costs and ASP forecast were assessed by Photon;

• Reviewed analyst reports on competitors and industry research reports to ensure the costs and ASP forecasts made by Photon are in line with market consensus; and

• Held on-site inspections on August 27, 2012 and November 30, 2012 and noted that all 28 reactors under the existing scale are in place and a new building where the recycling facilities will be located is under construction.

Ratios of EV to EBITDA of the Selected Comparable Companies are calculated and summarized below:

		EV to
		Estimated
Selected Comparable Companies		2013 EBITDA
Wacker Chemie AG		3.33
Renewable Energy Corporation ASA		6.49
Tokuyama Corporation		3.33
Mitsubishi Materials Corporation		7.97
GCL-Poly Energy Holdings Limited		8.58
Memc Electronic Materials, Inc.		6.17
Globe Specialty Metals, Inc.		7.36
OCI Company Ltd.		5.41
Daqo New Energy Corp. (“Daqo”)		12.29
ReneSola Ltd.(“ReneSola”)		13.97
	Average	Median
Selected Comparable Companies	7.49	6.93
Selected Comparable Companies
(excludingDaqo and ReneSola as outliers)	6.08	6.33
Selected		6.50

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CALCULATION REPORT

APPENDIX IV

Given the fact that the average and the median did not vary significantly from each other, and the high end and low end of the range of the multiples excluding outliers falls into a reasonable variance, the rounded average EV to EBITDA multiple of 6.50 times was selected for the Existing Plant scenario. Daqo and ReneSola were regarded as outliers because of their extraordinary high gearing ratios comparing to other comparable companies and thus, their EV are subject to potential fair value adjustment on debt amount. Excluding Daqo and ReneSola, the guideline companies selected above are considered fair and representative.

The selected EV to EBITDA multiple of 6.50 times has collectively considered the above median results, where median results were also selected in the 1st VSA Circular and the 2nd VSA Circular.

The selected multiple was then multiplied by the First Full Year EBITDA (Existing Plant) of approximately USD 22.6 million. According to the Management, the remaining capital expenditure of USD 27.3 million is required for the enhancement work of the recycling facilities. The above capital expenditures were subtracted from the multiplication products of market multiples and the EBITDAs. Result of calculated value under GCM is presented below:

First Full Year EBITDA Applicable Ratio Multiplication product _Less:_required capital expenditure based on the full year capacity to meet forecast sales volume Calculated Value before adjustments	Existing Plant (USD million) 22.6 6.50 147.2 (27.3) 119.8

• The minor difference from casting or arithmetic result is due to the decimal numbers were not shown

ADDITIONAL ADJUSTMENTS

Discount for Lack of Marketability (“DLOM”)

To reflect the relative non-liquidity of the privately held shares in Sun Materials as opposed to publicly traded corporation, and the fact that the Company was in an earlier stage of development and smaller size than the comparable companies, a discount of lack of marketability was applied to the shares in Sun Materials. Marketability varies from situation to situation. A number of studies were conducted in the U.S. in an attempt to determine average levels of discounts for lack of marketability. A discount in the range of 10% to 30% is generally used in practice, depending upon the particular circumstances. On

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CALCULATION REPORT

APPENDIX IV

the 1st VSA Circular, 30% DLOM was adopted in view of its early stage of development. On the 2nd VSA Circular, 10% DLOM was selected in view of the recognition status changed after becoming a subsidiary of a listed co. For this Calculation, a DLOM of 15% was adopted, which is higher than 10% adopted in the 2nd VSA Circular due to the following:

1. The economic environment and solar energy industry conditions were worse than those on the 2nd VSA Circular, leading to a decrease in liquidity;

2. Sun Materials is now an indirectly wholly owned subsidiary of the Client, which is a public company, and thus, the liquidity of its shares is higher than a pure private company.

3. Under option-pricing method, the cost of put option, which can hedge the price change before the private held share can be sold, can also be considered as a basis to determine the DLOM. This option-pricing method is also one of the methods used in estimating DLOM as it can take into consideration factors like timing of liquidity event (such as sale) and estimated volatility of the underlying shares. The farther the valuation date is from an expected liquidity event and the higher the volatility, the higher the put option value is and thus the higher the implied DLOM. It is noticed that the one-year historical share price volatility of the comparable companies prior to the Measurement Date is much higher than the same time horizon in the measurement date of the 2nd VSA Circular. Therefore, we have also cross reference the DLOM result using the option-pricing method. Based on the put option model, the backward deduced timing of liquidity event is approximately 1 year, which is considered a reasonable time frame.

Premium for control

Premium for control is the additional value inherent in the controlling interest, as contrasted to a minority interest that reflects the power of control. The thousands of daily transaction on stock exchanges are, of course, minority interest transactions. Each year, a controlling interest in a few hundred of these public companies is purchased at a price that is substantially higher than the published market price of the securities. The public markets provide information on control premiums through acquisition transactions. When a controlling interest in a publicly traded firm is acquired and taken private, the purchaser normally pays a premium above the freely traded, minority interest share price. The difference between the published price of the shares before their acquisition and the purchase price of the controlling interest is referred to as the control premium.

When valuing the Company based on guideline companies’ multiples, the level of value is presented on freely traded and non-controlling basis. A premium for control reflects the degree of control associated with a 100% interest in the shares of the Company. To estimate the control premium applicable to the Company, we relied on indications of

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CALCULATION REPORT

APPENDIX IV

control premiums from data on acquisition transactions in the world. As indicated by bid premia over share price one day prior to the offer of acquisition transactions in the alternate energy industry completed within 3 years prior to the Measurement Date as disclosed by the Mergermarket Group, a 5% control premium was selected and applied on enterprise value level. This level of control premium was considered to be appropriate in light of the current industry conditions.

After considering the discount for lack of marketability and premium for control, the calculated value of business enterprise of Sun Materials using the GCM was approximately USD 107 million under the assumptions of Existing Plant scenario.

Sensitivity analysis

As part of our analysis, sensitivity analysis of calculated value arrived at using the GCM was performed. The sensitivity analysis provides guidance as to the corresponding change in calculated value given a change in parameter. We have tested the sensitivity of the calculated value on business enterprise of Sun Materials to changes of the parameters of unit selling price and unit cash manufacturing cost. Both parameters under the sensitivity test are key factors that affect the calculated value conclusion. The inputs to the sensitivity analysis were set out below:

• Unit selling price – With reference to the historical spot market price fluctuations of polysilicon from October 2011 to September 2012, that ranged between USD21/kg and USD45/kg, sensitivity analysis was performed on the following unit selling prices, USD40/kg, USD30/kg, USD20/kg and USD18/kg, where USD18/kg was the best practice unit manufacturing cost of those using traditional method according to the Technical Report; and

• Unit cash manufacturing cost – three degree of inputs were adopted, being USD17.1/kg as mentioned by the 1st VSA Circular, USD13.6/kg as adopted in the Existing Plant scenario and USD12.8/kg as adopted in the 2nd VSA Circular.

Result of sensitivity analysis based on Existing Plant scenario is presented below:

100% calculated value of business enterprise using GCM (USD million)	100% calculated value of business enterprise using GCM (USD million)	Unit cash manufacturing cost (USD/kg)	Unit cash manufacturing cost (USD/kg)	Unit cash manufacturing cost (USD/kg)
		17.1	13.6	12.8
Average selling price (USD/kg)	40	298	351	363
	30	148	201	213
	BSP	54	107	119
	20	Not meaningful	51	62
	18		21	32

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CALCULATION REPORT

APPENDIX IV

Under the Existing Plant scenario, the concluded calculated value of business enterprise of Sun Materials from GCM of USD107 million represented a discount of 239% to the high end of the range of the sensitivity analysis result above and the worst case scenario presented by the table above would be a negative result when the average selling price is too low that it cannot cover the manufacturing cost and operating expenses.

The above illustrations are intended for reference only and any variation could exceed the ranges given.

Guideline Transaction Method

The guideline transaction method (“GTM”) under the market approach was adopted as a cross-checking method. We identified eight transactions in the polysilicon manufacturing industry with disclosed information on transaction price and production capacity by the searching of public filing and announcements of relevant companies, which were completed since January 2008, i.e. approximately 5 years prior to the Measurement Date. Relevant transaction data was collected, presented and analyzed for the historical period since January 1, 2008 in order to present a full picture since the 1st VSA Circular.

The ratio of implied total equity value to its production capacity (“Equity Value to Capacity Ratio”) was calculated for each of the transactions. The Equity Value to Capacity Ratio was selected because (i) no historical financial result of the Company was available and (ii) given the growing demand for alternate energy in the world, it was reasonably assumed that the economic benefit of a polysilicon manufacturer is proportional to the scale of its operation, which is reflected by the production capacity. For transactions in which the percentage sought were less than 50%, a control premium of 5% is added to arrive at the implied total equity value of the target companies. Since the dates of the comparable transactions were different from the Measurement Date, the price in the commodity market fluctuated significantly. In order to account for the changes in market condition and market prices of polysilicon and hence gross margins over the period from the date of comparable transactions to the Measurement Date, an adjustment is applied to the Equity Value to Capacity Ratio (“Index Adjustment”). It was reasonably assumed that the economic benefit of a typical industry player is proportional to its gross margin. The Index Adjustment is made based on the difference of historical silicon price minus unit production cost (i.e. gross margin) between the transaction completion date and the Measurement Date. The historical silicon price was referenced to those published by Bloomberg, source from Photon. Average unit production cost of polysilicon of tier 1 industry player including suppliers like Hemlock Semiconductor Group, Wacker Chemie AG and MEMC Electronic Materials, Inc. was assumed to range from 18 USD/kg to 35 USD/kg during the past few years. According to the Technical Report, Sun Materials’ cash manufacturing costs was believed to be approximately 13.6 USD/kg by using its Core Technology under the Existing Plant scenario. After taking into account the Index Adjustment, the median of Adjusted Equity Value to Capacity Ratios was approximately 85% lower than the median of unadjusted Equity Value to Capacity Ratios.

— IV-18 —

CALCULATION REPORT

APPENDIX IV

Key information of comparable transactions is summarized below:

		Completion						Adjusted
		Date/calculated						Equity Value
		gross profit				Equity Value		to Capacity
		(i.e. polysilicon				to Capacity		Ratio
		contract/spot	Transaction			Ratio		(USD/kg
		price less the then	amount	Implied total	Capacity	(USD/kg	Index	per annum)
		production cost)	(USD Mn)/%	equity value	(tons per	per annum)	Adjustment	(times)
No.	Target Company	(USD/kg)	sought	(USD Mn)	annum)	(times)	(note 8)	(note 8) Development stage
1	Solsil Inc.	Mar 3, 2008	72	89	360	246	-90%	25 Reached annual capacity
		(USD 65/kg)	(81%)					one year before
								completion_(note 1)_
2	Nitol Solar	Aug 18, 2008	100	750	3,800	197	-85%	30 Produced its first industrial
		(USD 35/kg)	(14%)					batch of polysilicon
								before completion
3	Hankook	May 28, 2009	24	130	3,200	40	-80%	8 Not yet started commercial
	Silicon	(USD 23/kg)	(19%)					operation_(note 2)_
4	Woogjin Polysilicon	Jul 17, 2009	84	255	5,000	51	-75%	13 Commenced construction of
		(USD 19/kg)	(35%)					plant_(note 3)_
5	Jiangsu Zhongneng	Jul 31, 2009	3,400	3,400	18,000	189	-75%	47 In operation_(note 4)_
		(USD 19/kg)	(100%)
6	Plant of LDK Solar	Nov 20, 2009	220	1,538	10,000	154	-75%	38 Completed the first
		(USD 19/kg)	(15%)					production run and
								initiated production
								ramp-up_(note 5)_
7	Polysilicon	Jun 7, 2011	240	1,365	12,000	114	-75%	28 In operation_(note 6)_
	subsidiaries	(USD 21/kg)	(18%)
	of LDK Solar Co
	Ltd.
8	Hankook Silicon Co	Jun 30, 2011	243	763	3,500	218	-75%	55 In operation_(note 7)_
	Ltd	(USD 21/kg)	(33%)
				Range of selected		114-246		25-55
				transactions #1,2,5,7,8

Notes:

1. Solsil Inc. had announced an annual production capacity of 360 tons approximately one year before the transaction; however, it has yet to produce materials for commercial sale and its production capacity was only one-tenth of that of Sun Materials.

— IV-19 —

CALCULATION REPORT

APPENDIX IV

1. Based on available public information, it was not clear about the construction status of production plant of Hankook Silicon Co., Ltd. (“Hankook Silicon”).

2. Woogjin Polysilicon Co., Ltd. (“Woogjin Polysilicon”), was established in mid-2008 and it had commenced construction of plant approximately 6 months before the completion date of the transaction.

3. Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. (“Jiangsu Zhongneng”) was in operation at time of the transaction.

4. The target was the same as transaction no. 7 and was therefore excluded.

5. LDK has two polysilicon plants in the PRC and they were in operation at time of transaction.

6. Hankook Silicon started production in 2010 and has production capacity of 3,500 metric tons at the completion date of the transaction.

7. Calculated as the Equity Value to Capacity Ratio multiplied by the Index Adjustment which is the change in gross margin as of the Measurement Date comparing to that of the transaction completion date. The gross margin was arrived at by the contract or spot silicon price quoted by Photon less the then unit production cost, referenced to the previous technical reports. Take transaction no. one as an example, with the contract selling price as of the Measurement Date of USD 23/kg, the Index Adjustment was calculated as USD 5/kg, being the gross margin as of the Measurement Date (i.e. USD 23/kg minus the current unit production cost of USD 18/kg for major industry players as disclosed in the Technical Report) divided by the gross margin of that transaction as of the completion date (USD 65/ kg). Respective gross margin of the particular transaction was set out in the table next to the completion date.

In terms of stage of development and size, as of the Measurement Date, Sun Materials is expected to commence commercial production in the first half of 2013 after the enhancement work of recycling facilities is complete. At the same time, as advised by the Management, the Company’s key customers remain committed to the project and accept the possibility of delivery delays which enables the Company to progress towards commercializing. Hence, in the GTM analysis, target companies of transactions no. 1,2,5,7 and 8 were close to operation or in operation and thus formed a range of multiples for our analysis purpose. These selected transactions are in similar stage of development as Sun Materials and thus, they are considered as fair and representative.

The calculated equity value derived by deducting the net debt of USD 5.5 million from the calculated value of business enterprise using GCM under the assumption of Existing Plant scenario was USD 102 million, which is equivalent to a Equity Value to Capacity Ratio for Sun Materials of 29 times. The equivalent ratio is within the range of selected transactions. Hence, the Calculation conclusion derived by the GCM is considered fairly supportable by the above comparable transactions.

— IV-20 —

CALCULATION REPORT

APPENDIX IV

CONCLUSION OF VALUES

Based upon the investigation and analysis outlined above, it is our opinion that the calculated value of business enterprise of Sun Materials as of the Measurement Date under the Existing Plant scenario is reasonably represented by the amount of UNITED STATES DOLLAR ONE HUNDRED AND SEVEN MILLION (USD 107,000,000).

This conclusion of values was based on generally accepted valuation procedures and practices that rely extensively on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained.

We do not provide assurance on the achievability of any financial results estimated by the Company because events and circumstances frequently do not occur as expected; differences between actual and expected results may be material; and achievement of the forecasted results is dependent on actions, plans, and assumptions of Management.

We have not investigated the title to or any liabilities against the property appraised.

We hereby certify that we have neither present nor prospective interests in the Company or the value reported.

Respectfully submitted, For and on behalf of AMERICAN APPRAISAL CHINA LIMITED

Ricky Lee

Senior Vice President and Director

Note: Mr. Lee has been involved in business enterprise and intangible asset valuation services for the purposes of joint venture, merger & acquisition and public listing for over fifteen years and is a fellow member of the Association of Chartered Certified Accountants, accredited senior appraiser of the American Society of Appraisers and charter holder of the Chartered Financial Analyst.

— IV-21 —

APPENDIX V ACCOUNTANTS’ REPORT ON CALCULATION OF INDICATED BUSINESS ENTERPRISE VALUE OF SUN MATERIALS AS AT 30 SEPTEMBER 2012

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ACCOUNTANTS’ REPORT ON CALCULATION OF INDICATED BUSINESS ENTERPRISE VALUE OF SUN MATERIALS TECHNOLOGY CO., LTD (“SUN MATERIALS”) AS AT 30 SEPTEMBER 2012

TO THE DIRECTORS OF MASCOTTE HOLDINGS LIMITED

We have examined the calculations of the business enterprise value of Sun Materials as at 30 September 2012, on which the calculation by American Appraisal China Limited dated 28 March 2013 (“Calculation Report”) has been prepared, based on the first full year estimated result of the existing plant of Sun Materials (the “Calculated Value”). Sun Materials is a company incorporated in Taiwan whose principal assets are production plant and technology for manufacture of solar grade polycrystalline silicon. The Calculated Value is regarded as a profit forecast under paragraph 29(2) of Appendix 1B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and will be included in a circular dated 28 March 2013 issued by Mascotte Holdings Limited (the “Company”) in connection with the proposed Rights Issue (as defined in the circular dated 28 March 2013 (the “Circular”).

Directors’ responsibility for the Calculated Value

The directors of the Company are responsible for the preparation of the Calculated Value in accordance with the bases and assumptions determined by the directors and set out in the Calculation Report under the sub-heading “Scope of work and Key assumptions” with reference to the technical report on Sun Materials prepared by Photon Consulting, LLC issued in March 2013 (the “Assumptions”). This responsibility includes carrying out appropriate procedures relevant to the preparation of the Calculated Value and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

Reporting accountants’ responsibility

It is our responsibility to form an opinion on the arithmetical accuracy of the calculations of the Calculated Value and to report solely to you, as a body, as required by paragraph 29(2) of Appendix 1B of the Listing Rules, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

— V-1 —

ACCOUNTANTS’ REPORT ON CALCULATION OF INDICATED BUSINESS ENTERPRISE VALUE OF SUN MATERIALS AS AT 30 SEPTEMBER 2012

APPENDIX V

Our engagement was conducted in accordance with Hong Kong Standard on Assurance Engagements 3000 “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” issued by the Hong Kong Institute of Certified Public Accountants. This standard requires that we comply with ethical requirements and plan and perform the assurance engagement to obtain reasonable assurance on whether the Calculated Value, so far as the calculations are concerned, have been properly compiled in accordance with the Assumptions. Our work does not constitute any valuation of Sun Materials.

Because the Calculated Value relates to future estimated cash flows, accounting policies are not relevant in its preparation. The Assumptions include hypothetical assumptions about future events and management actions which cannot be confirmed and verified in the same way as past results and these may or may not occur. Even if the events and actions anticipated do occur, actual results are still likely to be different from the Calculated Value and the variation may be material. Accordingly, we have not reviewed, considered or conducted any work on the reasonableness and the validity of the Assumptions and do not express any opinion whatsoever thereon.

Opinion

Based on the foregoing, in our opinion, the Calculated Value, so far as the calculations are concerned, has been properly compiled, in all material respects, in accordance with the Assumptions.

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong 28 March 2013

— V-2 —

APPENDIX VI FINANCIAL ADVISER’S REPORT ON THE CALCULATION REPORT

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The Board of Directors Mascotte Holdings Limited Room 2902, 29th Floor China United Centre 28 Marble Road North Point, Hong Kong

28 March 2013

Dear Sirs,

We refer to the circular of Mascotte Holdings Limited (the “ Company ”) dated 28 March 2013 in relation to the Rights Issue (the “ Circular ”). Unless otherwise defined or if the context otherwise requires, all terms defined in the Circular shall have the same meaning when used in this letter.

Fortune Financial Capital Limited (“ FFC ”) hereby confirms that it has reviewed and discussed with the Company, the bases and assumptions adopted in the calculation of business enterprise value of Sun Materials prepared by American Appraisal China Limited, the independent valuer of the Company (the “ Independent Valuer ”) which constitute profit forecast (the “ Profit Forecast ”) in the course of their work, and has satisfied itself that the bases and assumptions have been made with due care and objectivity, and on a reasonable basis and that the Profit Forecast has been made by the Directors after due and careful enquiry.

We have not independently verified the computations leading to the Independent Valuer’s determination of the calculated value of business enterprise of Sun Materials (the “ Calculated Value ”). We have had no role or involvement and have not provided and will not provide any assessment of the Calculated Value. Accordingly, save as expressly stated in this letter, we take no responsibility for and express no views, whether expressly or implicitly, on the Calculated Value as determined by the Independent Valuer and set out in the calculation report issued by the Independent Valuer or otherwise.

FFC further confirms that the assessment, review and discussion carried out by it as described above are primarily based on financial, economic, market and other conditions in effect, and the information made available to us as of the date of this letter and that

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APPENDIX VI FINANCIAL ADVISER’S REPORT ON THE CALCULATION REPORT

it has, in arriving at its views, relied on information and materials supplied to it by the Independent Valuer, the Group and Sun Materials and opinions expressed by, and representations of, the employees and/or management of the Independent Valuer, the Group and Sun Materials . We have assumed that all information, materials and representations so supplied, including all information, materials and representations referred to or contained in the Circular, for which the Directors are wholly responsible, were true, accurate, complete and not misleading at the time they were supplied or made, and remained so up to the date of the Circular and that no material fact or information has been omitted from the information and materials supplied. No representation or warranty, expressed or implied, is made by FFC on the accuracy, truth or completeness of such information, materials, opinions and/or representations. Circumstances could have developed or could develop in the future that, if known to FFC at the time of this letter, would have altered our respective assessment and review. Further, while the qualifications, bases and assumptions adopted by the Independent Valuer are considered by us to be reasonable, they are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and the Independent Valuer.

FFC is acting as financial adviser to the Company in reviewing the Profit Forecast and will receive fees for such advice. FFC and its directors and affiliates will, neither jointly or severally, be responsible to anyone other than the Company for providing advice in connection with the review of the Profit Forecast, nor will FFC, its directors or affiliates, whether jointly or severally, owe any responsibility to anyone other than the Company.

Nothing in this letter should be construed as an opinion or view as to the Calculated Value or any other value of Sun Materials or as an opinion or recommendation to any person as to whether they should acquire Shares or as to how to vote on the Rights Issue or other incidental or ancillary documents. Shareholders are recommended to read the Circular with care.

A copy of this letter in its entirety may be reproduced in the Circular on the basis that none of the Company, the Independent Valuer or any other person may reproduce, disseminate or quote this letter (or any part thereof) for any other purpose at any time and in any manner without our prior written consent. In the event of inconsistency, the English text of this letter shall prevail over the Chinese translation of this letter.

Yours faithfully,

Fortune Financial Capital Limited

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APPENDIX VII

March 2013

PHOTON Consulting, LLC (“PHOTON”) has prepared this report for the sole use of Mascotte Holdings Limited (the “Client”). The report may not be relied upon by any other party without the express written agreement of PHOTON.

PHOTON has not, unless specifically stated, independently verified information provided by others. PHOTON makes no warranty, expressed or implied, nor assumes any legal liability or responsibility for the accuracy, completeness, or usefulness, of any information in this report or that its use will not infringe privately owned rights. Therefore, PHOTON assumes no liability for any loss resulting from errors, omissions or misrepresentations made in this report. This report has been prepared at the request of the Client. The use of this report by third parties shall be at their own risk, and PHOTON accepts no duty of care to any such third party.

Any recommendations, opinions or findings stated in this report are based on circumstances and facts as they existed at the time PHOTON performed the work. Any changes in such circumstances and facts upon which this report is based may adversely affect any recommendations, opinions or findings contained in this report.

No part of this report may be copied or duplicated without the express written permission of PHOTON.

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APPENDIX VII

ExECuTivE SummARy

PHOTON Consulting has carried out an evaluation of the polysilicon production process and polysilicon factory being developed by Sun Materials, a subsidiary of Mascotte Holdings Limited, in Yilan, Taiwan. The evaluation is based on information gathered during a visit to the factory in May, 2012 including observations and interviews performed during that visit and documentation provided in connection with the visit. In addition, input to the report came in the form of additional documentation and information provided by Sun Materials through October, 2012. The evaluation was carried out in the broader context of the global solar sector and polysilicon market.

Sun Materials polysilicon process description:

The Sun Materials polysilicon production process features a unique combination of process technology, equipment design and feed stocks:

• Process technology: The Sun Materials polysilicon process is based on decomposition of sodium hexafluorosilicate (Na2SiF6) to produce high purity silicon tetrafluoride (SiF4), deposition of high purity polysilicon from silicon tetrafluoride (SiF4) in a reductive combustion/silicon receiving step, and closed loop recycling of byproduct hydrofluoric acid (HF) and sodium fluoride (NaF)

• Equipment design: The Sun Materials polysilicon process depends on key pieces of equipment designed and developed by Sun Materials specifically for this process, including a decomposition reactor, a reductive combustion reactor to produce high purity elemental silicon (Si), a silicon receiver that produces high purity granular polysilicon, and a feed drier

• Feedstock: The Sun Materials polysilicon process uses a unique feedstock mix consisting of diatomite (commonly used as water filtration aid as well as a range of other applications) and sodium hexafluorosilicate (a byproduct of phosphate fertilizer manufacturing)

The Sun Materials process is markedly different from the dominant incumbent polysilicon production process, typically referred to as “TCS/Siemens”. This process consists of the production of trichlorosilane (TCS) gas from metallurgical grade silicon, the purification of the TCS by distillation and other means, and the deposition of high purity polysilicon from the TCS in a “Siemens” reactor, so named because the design was originally developed by Siemens in the 1950s. The TCS/Siemens process has a long history of commercial operation over multiple decades, and was the primary source of high purity polysilicon used in the electronics sector over its history. It remains the dominant polysilicon production process in use today.

Sun Materials Process and Factory Status:

The Sun Materials polysilicon production process is in the early stages of commercialization. Limited-duration production tests have been carried out for a portion of the process, comprising the feed drying, decomposition, reductive decomposition, silicon receiver and associated off-gas scrubbing process steps. The facilities required for the process steps associated with the recycling of byproduct hydrofluoric acid (HF) and sodium fluoride (NaF) are not yet in place, and hence the fully integrated closed-loop operation of the Sun Materials process has not yet been tested or demonstrated at commercial scale.

Sun Materials’ first polysilicon factory in Yilan, with an intended production capacity of 3,500 metric tons per year, is partially complete. Physical assets that are in place include

A factory building

• A single silicon tetrafluoride production cluster comprising a feed dryer, a decomposition reactor

• and associated gas handling facilities

Four reductive combustion/silicon receiver reactors and associated off-gas scrubbing facilities

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APPENDIX VII

• 24 additional reductive combustion/silicon receiver reactors lacking the auxiliary systems such as input and output gas piping, control facilities and other required auxiliary systems

• Support and administrative facilities including feedstock receiving facilities, product handling facilities, a quality assurance laboratory, administrative offices, etc.

Additional facilities are required to complete the first factory, and are in varying stages of development, design and construction. These additional facilities include

• A second factory building

• Three silicon tetrafluoride production clusters each comprising a feed dryer, a decomposition reactor and associated gas handling facilities

• Auxiliary systems for the 24 reductive combustion/silicon receiver reactors that are not yet so equipped

• Off-gas scrubbing facilities associated with the 24 reductive combustion/silicon receiver reactors that are not operationally equipped

• All by-product recycling facilities for the factory, which will consist of a range of equipment including aqueous phase mixing vessels, filters, dryers and associated auxiliary equipment including process piping, control and required waste handling facilities

Product quality and production cost:

Given the status of the Sun Materials polysilicon process and factory, limited data on product quality from commercial scale operation are available, and production costs can only be estimated based on current design estimates and the partial operation data currently available.

Third party quality analyses of polysilicon produced from trial production runs at the Yilan factory have been provided to PHOTON Consulting by Sun Materials. The analyses indicate product quality that would meet the requirements for the majority of current crystalline-silicon PV manufacturers. Consistent with these analyses, Sun Materials has indicated to PHOTON Consulting that prospective customers of Sun Materials have carried out manufacturing tests using polysilicon produced from trial production runs at the Yilan factory, with encouraging results regarding the usability of Sun Materials’ polysilicon.

Based on data provided by Sun Materials, PHOTON Consulting estimates that a production cost of ~$16/kg may be achieved at Sun Materials’ Yilan factory once the plant is fully operational. Such a cost would be competitive with current best practice costs for polysilicon producers, and below current sector-average production costs. Given that Sun Materials’ process has not yet been tested at commercial scale in full-recycle operation, and its first commercial factory is not yet complete and operational, significant uncertainty remains as to the actual polysilicon production costs that will be achieved by Sun Materials in commercial operation.

Solar sector and polysilicon market context

Sun Materials’ entry into polysilicon production is taking place in a challenging market context. After more than five years of >50% CAGR volume growth in solar system installations from 2005 to 2011, the growth rate for solar installations is slowing. This slowdown has taken place at the same time that large increments of new production capacity have come on line. As a result, aggregate capacity utilization at each step of the solar manufacturing supply chain is down to roughly 50% in 2012. This low capacity utilization has led to declining prices throughout the solar manufacturing supply chain. Starting in late 2011, prices have been set by the cash production costs of marginal producers at each step of the supply chain, and the large majority of solar manufacturers are experiencing negative operating profit margins in 2012.

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APPENDIX VII

This solar sector market dynamic has had a significant impact on the polysilicon market. Significant polysilicon capacity additions have taken place since 2005, both by “incumbent” producers that were producing polysilicon in 2005 and by multiple new entrants that completed their first production facilities and initiated production in the last ~five years. Polysilicon prices are down significantly, polysilicon producers are in general operating at well below capacity, and many small-scale, high-cost new entrant producers, particularly but not exclusively in China have ceased operation. At the same time, incumbent producers are reducing their production costs by a variety of means including building larger scale plants, applying technology and new equipment design to reduce operating cost, and building new production facilities in lower cost locations.

Risks and uncertainties

As with any new process in the early stages of commercialization, there are risks and uncertainties regarding the ultimate commercial success of the Sun Materials polysilicon process. These risks can be grouped into four primary categories

• Cost and quality: Polysilicon product quality and production cost achievable from commercial scale operation of the Sun Materials process in full closed-loop mode may prove to be different from current expectations/design estimates.

• Start up and production ramp up: Actual start up and production ramp up timelines may prove to be significantly longer than currently envisioned.

• Future quality requirements: It is possible that future polysilicon purity requirements that are achievable be the leading producers using TCS/Siemens technology may not be achievable by the Sun Materials process at competitive cost.

• Commercial risk: Given the current solar manufacturing sector dynamics, there are significant challenges for small scale, new technology entrants at every step of the supply chain, including polysilicon manufacturing.

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TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

BACkGROunD AnD PROJECT OvERviEw

Mascotte Holdings Limited’s subsidiary Sun Materials is in the process of developing and commercializing a new polysilicon production process. This production process is to be initially commercialized at a factory complex currently under development in Yilan, Taiwan. The first factory is intended to have a capacity of 3,500 metric tons of solar grade polysilicon per year. Sun Materials intends to add production facilities at the Yilan site once the first factory is operating successfully, with a goal of reaching ~20,000 metric tons per year production capacity at the Yilan site. Mascotte Holdings has requested PHOTON Consulting to carry out an evaluation of Sun Materials’ process and production facilities, the potential competitiveness of the Sun Materials process and factory in the global polysilicon market, and the risks and uncertainties that Sun Materials faces. This report summarizes that evaluation.

PHOTON Consulting’s report is based on information provided to PHOTON Consulting by Sun Materials in the form of documents, interviews with key Sun Materials personnel and general impressions formed by PHOTON Consulting during a plant visit on May 10/11, 2012. Sun Materials has provided additional information to PHOTON Consulting during subsequent telephone conversation and in the form of additional documentation in response to PHOTON Consulting questions. The evaluation was conducted in the context of PHOTON Consulting’s proprietary analysis of the global solar sector, including PHOTON Consulting’s independent analysis of solar sector supply/demand conditions, polysilicon supply and demand, and the cost structures of competing polysilicon production processes.

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APPENDIX VII

POlySiliCOn SECTOR OvERviEw

The PV sector and polysilicon demand

The photovoltaic (PV) effect was first observed by French physicist Edmund Bequerel in 1839, but found no practical application until the second half of the twentieth century. The first silicon-based solar cell was developed at Bell Laboratories in 1954 and found its first practical applications in the nascent space sector in the late 1950s and 1960s, providing electric power for early spacecraft. However the cost of PV power remained prohibitive for most terrestrial applications throughout the second half of the twentieth century, and hence the primary segment of consumption for ultra high purity poly crystalline silicon, commonly referred to as polysilicon, remained the electronics sector through the year 2000.

The groundwork for the emergence of a large scale PV sector was laid in the 1990s. A number of factors, including periods of higher energy prices, concerns about energy security and the emerging science of global climate change led governments in countries as diverse as Germany, Japan and the United States (among others) to increase support for PV research and development and market development. However actual PV production volume remained very small until into the 2000s, and polysilicon demand by the PV sector remained largely an afterthought for polysilicon market until the mid-2000s.

PV sector overview

The global PV sector experienced rapid growth from 2005-2011, with global system installations growing more than 17X from 1.6GW in 2005 to 27.4GW in 2011. Policies favorable to the installation of PV systems in a wide range of markets including California, the Czech Republic, France, Germany, Italy and Spain provided important support to this growth.

Global Pv installations

(GW/yr)

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

30
27.4
25
20 19.2
15
10 8.5
6.0
5 3.4
1.6 2.2
0
2005 2006 2007 2008 2009 2010 2011
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

During this period of rapid volume growth, crystalline silicon (c-Si) PV cell/module technology remained dominant despite significant efforts to commercialize competitive thin film PV technologies. With the decline in the price and cost of c-Si modules over the last 12-18 months and the outlook for continued reductions in c-Si module cost going forward, it is highly likely that c-Si will remain the dominant PV technology for at least the next five years and likely beyond.

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APPENDIX VII

Annual Pv installations by technology

(GW/yr)

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

30
c-Si 27.4
TF
25
20 19.2
23.9
15
17.2
10 8.5
6.0
5 3.4 7.0
2.2 5.0
0 2.0 2.9 1.0 1.5 1.9 3.5
2006 2007 2008 2009 2010 2011
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Source: PHOTON Consulting LLC. Note: All data are rough estimates.

Since 2005, the rapid scaling of the solar sector and of solar manufacturing companies, a shift in manufacturing to lower cost regions and evolutionary developments in technology and processing equipment together led to rapidly falling manufacturing costs. The average all-in cost of producing crystalline silicon (c-Si) modules fell from $2.06/W in 2007 to $1.41/W in 2011. In addition, balance of system costs for c-Si systems have also fallen, from roughly $3.03/W in 2007 to $1.78/W in 2011.

c-Si module cost

($/W, global weighted average)

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

$2.5
$2.06
$2.0 $1.91
$1.83
$1.54
$1.5 $1.41
$1.0
$0.5
$0.0
2007 2008 2009 2010 2011
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Source: PHOTON Consulting LLC. Note: All data are rough estimates.

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APPENDIX VII

c-Si system cost

($/W, global weighted average)

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

$3.5
$3.03
$3.0
$2.54
$2.5
$1.98
$2.0 $1.86 $1.78
$1.5
$1.0
$0.5
$0.0
2007 2008 2009 2010 2011
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Source: PHOTON Consulting LLC. Note: All data are rough estimates.

With the decline in costs, solar power from PV systems is becoming competitive with grid prices in a rapidly growing number of markets and segments. The outlook for continued reductions in PV system costs underlies PHOTON Consulting’s outlook for continued significant growth in PV sector volume over the next five years and beyond.

Pv system installation volume outlook (GW/yr)

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70
59.3
60 55.8
50 46.0
40
33.6 35.0
30 27.4
20
10
0
2011 2012 2013 2014 2015 2016
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Source: PHOTON Consulting LLC. Note: All data are rough estimates.

Polysilicon demand

The emergence of the solar PV sector has been the key driver of growth in polysilicon demand since 2005. Polysilicon is the primary feedstock for the c-Si manufacturing supply chain, and polysilicon consumption by the PV sector grew more than 11X 2005-2011. Polysilicon use by the solar sector overtook usage in the electronics sector in 2006 and by 2011 represented more than 85% of total polysilicon consumption. The solar sector is expected to remain the dominant user of polysilicon through 2016 and beyond.

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APPENDIX VII

Polysilicon use by sector

(Thousand tons/yr)

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400
Electronics
350 Solar 347 355
38
310 37
300 35
250 226 230 237
30 32 33
200 180
317
27 310
150 275
100
100 70 19 153 196 198 203
50 36 4520 5021 22 81
19 48
0 17 25 29
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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Source: PHOTON Consulting LLC. Note: All data are rough estimates.

Polysilicon product quality

Prior to the emergence of the solar sector as a major consumer of polysilicon, polysilicon product quality requirements were set by the electronics sector. With the emergence of large volume solar demand for polysilicon, a range of product quality specification has emerged:

• Electronics grade: This is the highest purity grade, typically 11N (99.999999999%) pure, and with morphology specifications that relate to the materials usability in electronics applications

• High purity solar grade: This is typically ~9N-10N purity and is used in more specialized solar applications such as high efficiency mono-crystalline n-type cells

• Standard purity solar grade: This is typically 7N-8N purity and is used primarily for production of standard p-type solar cells

There is no single trend in the quality of polysilicon used for solar manufacturing. Some solar manufacturers are focusing on technology to produces cells/modules with significantly higher efficiency. This typically depends on high purity solar grade polysilicon and more complex cell processing. Other manufacturers are focused on reducing manufacturing costs and using potentially lower cost standard purity solar grade polysilicon and simpler midstream manufacturing processes. There is no clear winner in sight between these competing approaches to lowering the cost of PV electricity, and it is likely that over the next five years there will be successful companies following both of these approaches to the market. We do anticipate that the market developments described above will increase the importance for manufacturers of polysilicon, particularly lower purity polysilicon, to develop strong relationships with their customers that lead to deeper mutual understanding of how to optimize product quality and usability in the manufacturing process.

Polysilicon supply

Polysilicon supply responded to the growth in demand from the PV sector. A number of “incumbent” polysilicon producers (those supplying commercial volumes of polysilicon prior to 2005) became aware of the potential of PV and began adding significantly to their production capacity. In addition, a range of other companies decided to enter the polysilicon market. Over time, market entry for the new producers was facilitated by the increasing availability of competitive polysilicon process technology and equipment from third party vendors such as Centrotherm, GT Advanced Technologies, PPP and many others. The number of companies producing significant commercial volumes of polysilicon rose

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APPENDIX VII

from seven in 2005 to more than 30 in 2011. The top fifteen polysilicon producers in 2011 ranked by estimated 2011 production volume are listed below.

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Top fifteen polysilion producers
Company 2011 polysilicon production (thousand tons)
Hemlock 35.4
Wacker 32.0
OCI 31.2
GCL 29.4
REC 18.7
MEMC 12.6
LDK Solar 10.2
Tokuyama 8.5
Luoyang Zhonggui 5.7
Daqo 3.9
Elkem 3.8
ReneSola 3.4
Mitsubishi 3.3
HK Silicon 3.2
Taiwan Polysilicon Corp 3.0
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Source: PHOTON Consulting LLC. Note: All data are rough estimates.

PHOTON Consulting’s analysis indicates that capacity expansions and additions led to growth in polysilicon production capacity from 32,000 tons/yr in 2005 to 264,000 tons/yr in 2011, a more than 8X increase. Given the strength of PV installation demand, from 2005 through the first half of 2011 this capacity operated essentially at 100% utilization. However by the second half of 2011 it was clear that capacity additions were overtaking slowing installation growth, driving prices down sharply in 4Q11 as described in more detail below. This price reduction led to the cessation of production by smaller, higher cost and weakly capitalized new entrant polysilicon producers, because prices had fallen below their production cost. The large majority of these producers are unlikely to resume production. However the overall impact of this capacity rationalization on the polysilicon market has been limited given the relatively small capacities affected, and the ongoing capacity additions by many of the stronger, lower cost incumbent and new entrant producers.

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APPENDIX VII

Polysilicon capacity and production volume (Thousand tons/yr)

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500
Capacity 451 460
450 Production
410
400
360 356 347 355
350
310
300
264
250 226 230 237
200 182 180
150
100 100
100
70 70
50 50
50
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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Source: PHOTON Consulting LLC. Note: All data are rough estimates.

Polysilicon production technology

The large majority of polysilicon production capacity is based on process technology that has been in operation for many decades. This technology is typically referred to as “TCS/Siemens”. “TCS” refers to tricholosilane (SiCl3H), the silicon based gas that is used in the process. “Siemens” refers to the design of the “bell jar” chemical vapor deposition (CVD) reactor invented by Siemens in the 1950s. Many innovations have taken place in the TCS/Siemens process over the years, but the essentials of the process are unchanged

• Synthesis of TCS from chemical purity metallurgical grade silicon (MG-Si) and chloridecontaining species

• Purification of the TCS to very high levels using distillation and (in many cases) additional processes to remove contaminants, particularly those containing boron (B) and phosphorous (P)

• Deposition of polysilicon from the TCS in “Siemens” CVD reactors

• Recycling of the unconverted TCS and by-product chlorosilanes such as silicon tetrachloride (SiCl4) or “STC”

The “Siemens” design CVD reactor uses electricity to heat polysilicon rods in the reactor, enabling the deposition of polysilicon. In early generations of CVD reactors electricity use was high, and as a result electricity represented a significant share of polysilicon production cost. The high electricity cost of the TCS/Siemens process and the lower purity requirements for solar grade polysilicon were seen as an opportunity for the development of new, lower cost processes. Examples include

• Fluidized bed reactor (FBR) deposition technology “does not have the high electricity consumption of “Siemens” design CVD reactors. Many companies have invested significant resources in developing and commercializing FBR deposition technology, but only two producers, MEMC and REC Group, are current applying this technology on significant commercial scale. After some significant challenges in construction, start up and ramp up, REC Group is achieving stable operation and very competitive costs for polysilicon production from its FBR-based plant in Moses Lake, WA.

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APPENDIX VII

Upgraded metallurgical silicon or “UMG-Si” MG-Si refers to a range of process approaches based on metallurgical refining methods. The goal of this approach is to produce “high enough purity” polysilicon at much lower cost than the TCS/Siemens. The challenge for UMG-Si producers has been to achieve high enough purity at low enough cost. As of October 2012 Elkem was the only producer with significant commercial scale production experience, and weak market demand has led to two periods of publically announced production stoppage in the last ~twelve months. A number of other companies including Becancour Silicon, Dow Corning, Globe, JACO, ProPower and Silicor have also made significant efforts to develop and commercialize UMG-Si production technology.

However TCS/Siemens remains the dominant polysilicon production process. Given the strong ecosystem of established TCS/Siemens producers, technology and know-how providers and equipment providers and the growing imperative for all these participants to participate in further improving the TCS/Siemens process, PHOTON Consulting expects this technology will remain the dominant polysilicon production process for at least the next five years.

Polysilicon production share by technology

(Thousand tons/yr)

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2008 2009 2010 2011 2012 2013 2014 2015 2016
350
300
250
200
150
100
50
0
Siemens FBR UMG-Si
318 326
282
202 208 214
152
93
55
20 19 19 20 25 25 26
5 4 10 3 8 4 4 3 4 4 4
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Source: PHOTON Consulting LLC. Note: All data are rough estimates.

Polysilicon production cost

The rise of the PV sector as the key source of polysilicon demand growth has brought a new dynamic to the drive for cost reduction in polysilicon manufacturing. In contrast to the electronics sector, where polysilicon represents a negligible share of the total manufacturing cost of finished products and hence does not significantly influence polysilicon demand, polysilicon represents a meaningful share of total manufacturing cost in the c-Si PV supply chain. Once the levelized price of PV electricity becomes competitive with grid prices, the price elasticity of demand for PV electricity is very high. Accordingly polysilicon cost reduction is important in that it can contribute meaningfully to the cost competitiveness of PV electricity, and hence to the size of the market for PV systems (and hence for polysilicon).

The drive to reduce polysilicon cost for the TCS/Siemens process has led to important progress on several fronts, including

• Scale: New TCS/Siemens polysilicon plants now typically have a planned capacity of 10,000 tons/yr or more, which has been a contributor to lower cost in the form of lower unit CapEx and labor/maintenance costs.

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• Process technology: Increased focus on energy and yield optimization in the process design of polysilicon plants, and the growing use of hydrochlorination in TCS synthesis, which eliminates STC converters and the associated electricity consumption, result in reduced energy use and feedstock consumption.

• Equipment design. The design of polysilicon plant equipment such as CVD deposition reactors and STC converters have seen major reductions in unit energy consumption, resulting in significantly lower electricity use.

• Energy integration. New process designs take advantage of the potential to reuse waste heat generated from the cooling load of CVD reactors in the TCS distillation section of the plant, resulting in lower energy use.

In addition, after a challenging start up and production ramp up period, REC Solar is achieving stable operation of its FBR-based based polysilicon plant in Moses Lake, WA.

As a result, best practice plant-level polysilicon production cost for both TCS/Siemens and FBR processes is now less than $20/kg, and best practice cash cost is now in the $12.50/kg-$15/kg range. With these reductions in best practice cost, smaller scale plants using previous-generation process technology and plant equipment have higher production costs than leading producers.

Best practice plant level cost vs. typical cost vs. “high cost” producers ($/kg)

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$40 $35-$40
$35
$30
$25-$30
$25
$20 $19.0 $18.2
$15
$10
$5
$0
Best practice FBR Best practice TCS/Siemens Typical 2012 TCS/Siemens High cost 2012 TCS/Siemens
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates. Plant level cost excludes overhead costs such as SG&A and R&D.

At the company level, PHOTON Consulting estimates that most polysilicon production leaders have 2012 all-in polysilicon production costs (including overheads such as SG&A and R&D) in the $25/kg$30/kg range. These estimated costs are higher than best practice plant level costs because 1) the all-in costs include overheads, 2) the company average costs are based on estimated 2012 utilization rates which are less 100%, resulting in higher unit costs, 3) because the company level estimates include production from the full range of company assets, which may include older assets with higher underlying cost structures, and 4) because some producers are in higher cost locations with higher prices for key inputs such as labor, electricity, etc..

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-13 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

2012 all-in production cost for leading polysilicon producers

($/kg)

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

$45
$40
$40
$35
$30 $30 $30
$30 $28 $29
$25 $23
$20
$15
$10
$5
$0
GCL REC Wacker Hemlock MEMC OCI Tokuyama
Source: PHOTON Consulting LLC. Note: All data are rough estimates All-in production cost includes corporate overheads such as SG&A. .
and R&D. REC cost includes both FBR and Siemens-based production.
----- End of picture text -----

Polysilicon price

The demand and supply dynamics described above have led to significant volatility in polysilicon price since 2005. From 2005-2011, solar incentives in a range of primarily European markets including the Czech Republic, France, Germany, Italy, Spain and the UK enabled system developers to pay high prices for modules and still achieve attractive financial returns. The resulting high module prices meant midstream manufacturers had a high willingness-to-pay for polysilicon. With all polysilicon producers operating essentially at full capacity, this led to spot polysilicon prices rising to well above $450/kg in 2008. Spot polysilicon process declined from this peak through 2011 as solar incentives became less generous and module prices declined, but strong installation demand kept polysilicon capacity utilization rates high and prices remained above $50/kg until the third quarter of 2011. In the fourth quarter of 2011, polysilicon prices fell sharply towards a cost-based price floor, reaching ~$25/kg at the end of 4Q12, and have remained in a relatively narrow range through 2012. By late 3Q12/early 4Q12 reached and then fell below $20/kg.

Spot polysilicon price history ($/kg)

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

$500
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
May-07 Aug-07 Nov-07 Feb-08 May-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12
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Source: PHOTON Consulting LLC. Note: All data are rough estimates.

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-14 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

Direct solar polysilicon ASP history

($/kg)

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

450
Direct contract ASP
$396
400 Direct spot ASP
350
300
$258
250
200
150
100
$55 $60 $67 $74 $55 $61 $51 $56
50 $30 $23
0
2007 2008 2009 2010 2011 2012
Source: PHOTON Consulting LLC. Note: All data are rough estimates.
Direct solar polysilicon ASP outlook
($/kg)
$40
Direct contract ASP
$35 Direct spot ASP
$30
$30 $29 $28 $29 $29 $29
$27 $27
$25 $23 $24
$20
$15
$10
$5
$0
2012 2013 2014 2015 2016
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Source: PHOTON Consulting LLC. Note: All data are rough estimates.

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-15 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

FinDinGS

The Sun Materials polysilicon process features a unique new approach to producing high purity polysilicon for use in the solar sector at low cost. The Sun Materials process is unlike the established TCS/ Siemens process in almost every way, using different feedstock, chemical processing routes and equipment. That said, the Sun Materials process is still in the early stages of commercialization, with the fully-integrated process not yet proven at commercial scale and the first factory not yet complete. Many challenges lie ahead before the potential of this unique, new polysilicon production promise may be fulfilled.

Description of Sun Materials polysilicon process

The Sun Materials polysilicon process is designed to provide competitive quality, low cost polysilicon from small scale production facilities. Sun Materials’ initial 3,500 tons/yr factory in Yilan is designed to produce solar grade polysilicon at a cost that is competitive with the largest scale, lowest cost TCS/Siemens polysilicon plants. From the outside, the factory buildings housing the process equipment for the first Sun Materials factory will have the external appearance of light industrial manufacturing facilities, with none of the large process vessels, furnaces, rotating equipment and process piping of a TCS/Siemens plant. In contrast, polysilicon plants based on the TCS/Siemens process have the external appearance consistent with that of a chemical process plant, featuring reactors, distillation columns and other process vessels, fired process furnaces, rotating equipment such as pumps and compressors, and many miles of process piping.

Consistent with this difference in exterior appearance compared to TCS/Siemens plants, the Sun Materials polysilicon production process is based on a different and unique combination of process technology, equipment design and feed stocks.

The Sun Materials polysilicon process technology is based on the following core process steps

• Decomposition of sodium hexafluorosilicate (Na2SiF6) to produce high purity silicon tetrafluoride (SiF4)

• Receiving high purity polysilicon from silicon tetrafluoride (SiF4) in a reductive combustion step

• Recycling of byproduct hydrofluoric acid (HF) and sodium fluoride (NaF) from the reductive combustion and decomposition steps, respectively, in a series of steps designed to enable closed loop operation and hence minimize production of waste and byproducts

Sm process block flow diagram (Overview)

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

Hydrogen
Reductive
Na2SiF6 Feed Dryer Decomposition Combustion Silicon
Feed Product
Recycle Dryer Agitated Vessel #1 Scrubber
Filter #1 Agitated Vessel #2
SiO2
Feed
Filter #2
Waste
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-16 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

The Sun Materials polysilicon process is based on the following key pieces of equipment designed and developed by Sun Materials specifically for this process

• Decomposition reactor to produce high purity silicon tetrafluoride (SiF4) from the decomposition of sodium hexafluorosilicate (Na2SiF6)

• Reductive combustion reactor to produce high purity elemental silicon (Si) from high purity silicon tetrafluoride (SiF4)

• Silicon receiver that produces high purity granular polysilicon from the output of the reductive combustion reactor and associated off-gas scrubber

• Sodium hexafluorosilicate (Na2SiF6) drier to prepare feedstock to enable safe operation of the decomposition reactor

Sm process unique features (Overview)

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

Hydrogen
Reductive
Na2SiF6 Feed Dryer Decomposition Combustion Silicon
Feed Product
Recycle Dryer Agitated Vessel #1 Scrubber
Filter #1 Agitated Vessel #2
SiO2
Feed
Process steps that are based on unique Sun Materials Filter #2
technology, equipment design and process know-how Waste
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

Finally, the Sun Materials polysilicon process is based on a unique feedstock mix

• The primary feedstock is diatomite (SiO2), which provides the large majority of silicon input for the production of polysilicon

• The process also uses small volumes of a secondary feedstock, sodium hexafluorosilicate (Na2SiF6), primarily as a source of make-up fluoride to the process

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-17 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

Sm process feedstock mix

(Overview)

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

Hydrogen
Reductive
Na2SiF6 Feed Dryer Decomposition Combustion Silicon
Feed Product
Recycle Dryer Agitated Vessel #1 Scrubber
Filter #1 Agitated Vessel #2
SiO2
Feed
Filter #2
Waste
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

This combination of process technology, process equipment and feedstock mix is at the core of Sun Materials’ ambition to produce solar grade polysilicon at highly competitive cost.

Process status

The Sun Materials polysilicon production process is in the early stages of commercialization. In summary:

• Combined operation of the key process steps of sodium hexafluorosilicate drying, sodium hexafluorosilicate decomposition, reductive decomposition of silicon terafluoride, silicon receiving and associated off-gas scrubbing has been demonstrated in limited production runs of up to roughly one week duration

• Based on these production tests and other ongoing process development work, some modifications to the design of key equipment elements used in the feedstock drying and decomposition process steps are underway and are intended to be in place for full commercial operation of factory 1

• Development work is ongoing to enable continuous (as opposed to batch) operation of the reductive combustion/silicon receiving reactors, but this development work is not expected to be complete in time for initial start up of factory 1

• The process steps associated with the recycling of byproduct hydrofluoric acid (HF) and sodium fluoride (NaF) from the reductive combustion and decomposition steps have been tested at the bench scale only

• Commercial scale equipment for the recycling steps of the process is not yet complete, in place and operational, and hence has not yet been tested or proven in commercial scale operation integrated with the currently existing facilities the bench scale only

Process testing to date has taken place using purchased sodium hexafluorosilicate (Na2SiF6) as the primary feedstock. No plant testing has yet taken place using the planned primary feedstock, diatomite (SiO2), since this feedstock is introduced into the process in the recycling facilities, which as noted above are not yet complete and operational.

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-18 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

Factory status

A portion of the assets required for commercial operation of Sun Materials’ first commercial production factory in Yilan with an intended production capacity of 3,500 metric tons per year are in place, comprising:

• A first factory building

• A silicon tetrafluoride production cluster comprising a feed dryer, a decomposition reactor and associated gas handling facilities

• Four operational reductive combustion/silicon receiver reactors including the necessary input and output gas piping, control facilities and other auxiliary systems

• 24 reductive combustion/silicon receiver reactors that lack auxiliary systems and are currently not operational

• Four off-gas scrubbing facilities associated with the reductive combustion/silicon receiver reactors (out of a total of 14 such scrubbers envisioned for the first factory)

Additional facilities are currently in process and must be completed before all the planned elements of the first 3,500 metric tons per year capacity factory are in place. These planned facilities include:

• A second factory building

• Three additional feed driers

• Five additional decomposition reactors

• Two additional gas handling facilities

• The auxiliary systems required for the 24 reductive combustion/silicon receiver reactors that are not yet so-equipped

• Ten off-gas scrubbing facilities associated with the reductive combustion/silicon receiver reactors

• All sodium fluoride (NaF) and hydrofluoric acid (HF) recycling facilities which primarily consist of aqueous phase mixing vessels, filters, dryers and associated auxiliary equipment including process piping and control facilities

As of mid-October 2012, the status of these additional facilities was as follows;

Construction of the factory building was proceeding ahead of schedule

• Additional feed driers, decomposition reactors, gas handling facilities, auxiliary systems for reductive combustion/silicon receiver reactors, off-gas scrubbing facilities and other associated facilities were in process and equipment installation was intended to commence in January 2013

• Process design and engineering of the recycling facilities was complete and the plan was to issue the relevant purchase orders in December, 2012 with installation expected to take place in 1Q13.

Production ramp up plan

The ramp up of production at a new production facility typically follows the following steps

• Mechanical completion: This involves installation of all the physical elements of the factory and confirmation by the operations department that these elements conform to the plant design.

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— VII-19 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

• Commissioning: This involves testing and confirmation that all the individual pieces of process equipment as well as all the supporting systems (for example, utilities, gas supply systems, control systems, safety systems, etc.) are operating as designed.

• Start up: This involves starting processing operations of each of the individual process steps in the factory, and then moving to fully integrated operation of these individual process steps, with ongoing testing and confirmation that equipment performance, individual process step performance and integrated process performance matches design.

• Ramp up: This involves increasing the production rates of each individual production step to bring total factory production up to design production rates with on-specification product.

Sun Materials’ plan for factory 1 is to reach mechanical completion and commissioning in March 2013, and to commence start up and ramp up activities in April 2013, with a goal of ramping up to full capacity of 3,500 tons/yr by year end 2013.

Production cost and product quality

Since Sun Materials’ factory 1 is not yet complete and operational, PHOTON Consulting can only estimate the factory’s potential polysilicon production cost based on the available design estimates, and assuming that the factory operates in accordance with design once it is fully operational and ramped up. Likewise, PHOTON Consulting’s evaluation of Sun Materials polysilicon product quality is based on the sample analysis of polysilicon from trial production tests carried out earlier in 2012 and provided to PHOTON Consulting by Sun Materials.

PHOTON Consulting’s analysis indicates that if the Sun Materials process operates according to design, a plantlevel production cost of roughly $16/kg is achievable. These cost estimates are based on the overall process material balance as reviewed with Sun Materials, estimated purchase prices for key process inputs and utilities, interviews with Sun Materials staff during and subsequent to PHOTON Consulting’s visit to the plant site, and PHOTON Consulting’s analysis of these inputs. The cost estimates assume an on-spec silicon production rate of 3,000 tons/yr. This is equivalent to on-spec production volume representing 86% of the factory’s 3,500 tons/yr nominal capacity, and takes into account the impacts of scheduled and unscheduled factory downtime, production of off-spec product, periods of operation at less than 100% of capacity, etc. Given the limited operational experience with the Sun Materials process and the fact that factory 1 is not yet complete, in PHOTON Consulting’s opinion there is a risk that actual utilization could be lower than this level, and hence that actual production cost once factory start-up and production ramp up to full capacity operation are complete (i.e. in the first full year of operation after completion of start-up and production ramp-up) may be higher than the analysis presented in this report.

Sun Materials’ current plan is to complete start-up and production ramp-up in the nine months from April 2013 through December 2013. As discussed elsewhere in this report in more detail, in PHOTON Consulting’s opinion there are meaningful risks that this timeline may not be achieved. To the degree that the actual start-up and production ramp-up activities take longer than planned, this would delay the achievement of the production cost estimated in this report.

It is important to highlight that the cost estimates in this report are based on the assumption that the Sun Materials process, including the byproduct recycling steps, successfully operates in the “fully closed loop mode” as described elsewhere in this report. It is PHOTON Consulting’s view that the byproduct recycling steps in the Sun Materials process are integral to the process as a whole. In the event that the not-yet-commercially-proven byproduct recycling steps do not function as anticipated and reflected in the current process design, the actual production costs will be different from the analysis presented in the report.

The breakdown of this estimated cost structure is provided next.

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-20 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

Sun materials estimated polysilicon production cost ($/kg)

($/kg)

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

$18
$2.00 $16.10
$16
$2.51
$14
$12 $2.33
$10 $3.64
$8
$6 $5.15
$4
$2
$0.46
$0
Feed stocks Purchased gases Electricity Total staff Depreciation All others Total
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

==> picture [402 x 122] intentionally omitted <==

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

Feed stocks cost
Feed stock use (tons/yr) Purchase price ($/ton) Feedstock cost
Sodium Hexafluorosilicate (Na2SiF6) 455 $400 $0.18
Diatomite (SiO2) 8,083 $150 $1.21
Total ($mn/year) $1.39
Silicon production (tons/yr) 3,000
Feedstock cost ($/kg) $0.46
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

==> picture [402 x 122] intentionally omitted <==

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

Purchased gases cost
nitrogen use Argon use Hydrogen use Total
Gas purchased (tons/yr) 265 1,290 949
Purchase price ($/ton) $257 $727 $15,209
Total cost ($mn/yr) $0.07 $0.94 $14.43
Silicon production (tons/yr) 3,000 3,000 3,000
Purchased gases cost ($/kg) $0.02 $0.31 $4.81 $5.15
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-21 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

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

Electricity cost
Electricity use
Feed dryer (mn kWh/year) 3.1
Decomposition (mn kWh/year) 46.5
Reactive combustion (mn kWh/year) 62
Scrubber (mn kWh/year) 0.25
Agitated vessel #1 (mn kWh/year) 0.29
Filter #1 (mn kWh/year) 0.13
Agitated vessl #2 (mn kWh/year) 0.29
Filter #2 (mn kWh/year)
Recycle dryer (mn kWh/year) 24
Total electricity use (mn kwh/year) 136.6
Electricity price ($/kWh) $0.08
Total cost ($mn/yr) $10.9
Silicon production (tons/yr) 3,000
Electricity cost ($/kg) $3.64
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

==> picture [402 x 149] intentionally omitted <==

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

Staff cost
Annual all-in compensation
number of staff (number) Total staff cost ($mn/yr)
(uS$/yr)
Operations/maintenance/QC 150 $20,000 $3.0
Professional and supervisor staff 50 $60,000 $3.0
Management/executives 10 $100,000 $1.0
Total 210 $7.0
Silicon production (tons/year) 3,000
Staff cost ($/kg) $2.33
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-22 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

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

Depreciation cost
CapEx Estimate ($mn)
Building $24.7
Equipment $32.0
Piping/electrical/other $3.0
Other $5.9
Contingency (15%) $9.8
Total $75.4
Assumed asset life (years) 10
Annual depreciation ($mn/yr) $7.54
Silicon production (tons/yr) 3,000
Depreciation ($/kg) $2.51
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

If Sun Materials is able to produce polysilicon with a quality equal to or better than that of the sample analysis provided by Sun Materials from factory 1, that quality will be acceptable to the large majority of PV sector polysilicon users in 2013.

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

Table showing key polysilicon impurity levels reported by Sun materials
impurity Detected level
Phosphorous 2 ppba
Boron 2 ppba
Carbon 2 ppmw
Oxygen 3 ppmw
Iron .05 ppmw
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

Capacity expansion plan

Sun Material’s plan is to commence construction of factory 2 with a design capacity of 3,500 tons/yr in 2H13. Mechanical completion and commissioning is planned to be complete in 1Q14 with production start-up and ramp up planned to commence In 2Q14. Sun Materials estimates the CapEx for factory 2 will be $55mn. This would represent a somewhat lower unit CapEx than unit CapEx currently estimated for the completion of factory 1. This is possible since some of the facilities constructed as part of factory 1 may not have to be fully replicated in factory 2, for example general site infrastructure, quality control facilities, administrative facilities, etc. The actual CapEx for factory 2 may also be influenced by potential changes in process design that may result from learnings during the start-up and production ramp-up of factory 1.

The actual construction, commissioning, start up and production ramp up timeline will almost certainly be influenced by the actual timeline achieved for these same activities on factory 1.

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-23 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

Uncertainties and risks

Sun Materials faces the uncertainties and risks inherent in the development and commercialization of all new technologies and production processes. PHOTON Consulting has characterized these risks as falling into four broad categories

• Cost and quality: Polysilicon product quality and production cost achievable from commercial scale operation of the Sun Materials process in full closed-loop mode may prove to be different from current expectations/design estimates.

• Start up and production ramp up: Actual start up and production ramp up timelines may prove to be significantly longer than currently envisioned.

• Future quality requirements: It is possible that future polysilicon purity requirements that are achievable be the leading producers using TCS/Siemens technology may not be achievable by the Sun Materials process at competitive cost.

• Commercial risk: Given the current solar manufacturing sector dynamics, there are to significant challenges for small scale, new technology entrants at every step of the supply chain, including polysilicon manufacturing.

Cost and quality

There are several sources of potential uncertainty with respect to polysilicon production cost and product quality from Sun Materials’ factory 1.

• First and foremost, given the absence of operational experience with the fully integrated Sun Materials process, there is underlying uncertainty as to the actual performance of the process, and hence the associated polysilicon production cost and product quality

• Second, given the limited duration of production testing to date there is uncertainty regarding the operation of individual equipment elements over extended periods of continuing commercial operation

• Third, there is uncertainty regarding the by-product recycling process steps that have not yet been constructed and hence have not undergone commercial scale production testing

• Fourth, all production testing to date has been conducted using purchased sodium hexafluorosilicate, whereas in commercial operation the primary feedstock is intended to be diatomite, which will be introduced into the process in the byproduct recycling part of the process

Start up and production ramp up

There are underlying risks in the start up and ramp up of any new production process, as evidenced by the experience of several new polysilicon production facilities over the last 4-5 years described below. There are significant differences across the three examples, but each of these examples highlight the risks associated with the start up of large new production facilities, including

• Construction may take longer to complete and cost more than planned

• Start up may reveal mechanical problems with key equipment

• Start up may reveal operations problems with new process steps

• Integrated operation of multiple process steps may prove to be more complex than anticipated

• Yields may be different than design despite significant development experience

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-24 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

Examples:

REC Group - New polysilicon plant in Moses Lake, WA

• In August 2006, REC Group broke ground on a new polysilicon production plant (Silicon III) at its existing production site in Moses Lake, WA

• This plant was to be based on REC’s proprietary design including fluid bed reactor (FBR) polysilicon deposition, developed after many years of process development and five years of demonstration reactor experience

• Operation of the new plant was scheduled to commence in 2H08

• In February 2008, REC announced a 2 month project delay and a 20% project CapEx overrun

• In 4Q08, REC announced a delay of start up to end 1Q09 and a further CapEx overrun of 10%

• After initial start up in 1Q09, problems with reactor vessel nozzles led to a production halt to enable mechanical repairs

• Production was restarted in 3Q09

• A variety of operational problems from 4Q09 to 3Q10resulted in production well below design and solar grade silicon yields of 64%-77%, well below the design of ~85%

• Production and cost performance did not achieve design levels until ~2H11, some three years after the initially announced plant start-up date

Elkem Solar - UMG-Si plant in Kristiansand, Norway

• In 2006 Elkem started construction if its first plant based on its proprietary upgraded metallurgical silicon (UMG-Si) process

• In March 2008, Elkem announced that it intended to make first commercial shipments from its plant by YE08

• In March 2009, Elkem announced a 20% increase in plant CapEx and a 20% increase in plant design capacity to 6,000 tons/yr

• In March 2009, Elkem indicated it would slowly ramp of production over the course of 2009 with a total planned annual production of 1,500 tons-2,000 tons

• In March 2011, Elkem communicated the following actual production levels

• Total production of 500 tons in 2009

• Total production of 2,200 tons in 2010

• Operation at 70% of design capacity in 2011

• In late October 2011 and again in September 2012, Elkem announced temporary suspension of production due to market conditions

LDK Solar - TCS/Siemens polysilicon plant in Xinyu City, China

• In January 2008 LDK indicated that it planned to achieve mechanical completion of its 15,000 tons/yr, 3-production line polysilicon plant by YE08

• In March 2008, LDK indicated that construction would not be complete until 3Q09

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-25 —

TECHNICAL REPORT ON SUN MATERIALS

APPENDIX VII

• In March 2009, a public LDK presentation indicated completion of one of the three production lines in 1Q09, with no update on the other two production lines

• In an April 2010 presentation, LDK indicated that its first production line started operation in 4Q09, with operations for the second and third lines to commence in 2H10 and 1H11, respectively

• In April 2012, a public LDK presentation by LDK indicated that the second line started operation in 1H11 and the third line was scheduled to start operation in 1H12

• In its 2Q12 earnings announcement, LDK indicated that it had produced less than 550 tons of polysilicon in 2Q12

Sun Materials’ plan to complete the commissioning of factory 1 in March 2013 and then complete start up and production ramp up to full capacity by YE013 sets challenging targets that may prove to be achievable. In the context of the examples listed above and given the process uncertainties described earlier in this report, in PHOTON Consulting’s opinion there are meaningful risk that this timeline may not be achieved.

Future quality requirements

As described above, some solar manufacturing companies are moving towards the use of higher purity polysilicon to enable the production of higher efficiency cells/modules. If this were to become an industry-wide trend and standard polysilicon quality requirements for solar sector use were to become much more stringent that today’s “high purity solar grade” described above, Sun Materials may face future product quality challenges. In particular, best practice impurity levels for TCS/Siemens are lower than the detected levels for the Sun Materials sample for three key impurities as described below.

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

impurity Sun materials detected level TCS/Siemens best practice
Carbon 2 ppmw <1 ppmw
Oxygen 3 ppmw <1 ppmw
Iron 50 ppb 5 ppb
----- End of picture text -----

Source: PHOTON Consulting LLC. Note: All data are rough estimates.

There is no current evidence that such an evolution in solar grade polysilicon quality requirements is imminent.

Commercial risk

The current solar sector and polysilicon market context of production capacity being significantly in excess of production increases the commercial risk facing new entrant suppliers. With abundant availability of high purity polysilicon from many suppliers, polysilicon consumers are less likely to be receptive to supply from a relatively small scale new entrant producer that is based on a new production process with no commercial production track record. The development of strong relationships with its polysilicon customers will be an important component of success, and the absence of such relationships will constitute a risk to commercial success for Sun Materials.

CONFIDENTIAL – PRELIMINARY – ALL DATA ARE ROUGH ESTIMATES

— VII-26 —

GENERAL INFORMATION

APPENDIX VIII

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 misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ interests in Shares

As at the Latest Practicable Date, the Directors and the chief executive of the Company had the following 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 to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Director or, chief executive of the Company was taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange:

					Approximate
					percentage
					of issued
			Deemed		share
			interests		capital of
		Number of	in number		the
Name of director	Capacity	shares held	of shares	Total	Company
Mr. Peter Temple	Beneficial Owner	78,125	—	78,125	0.00%
Whitelam
Mr. Lo Yuen Wa Peter	Beneficial Owner	156,250	625,000	781,250	0.04%
Mr. Eddie Woo	Beneficial Owner	—	7,187,500	7,187,500	0.39%

— VIII-1 —

APPENDIX VIII

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company had any interests or short positions in the Shares, underlying Shares and/or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Director or chief executive of the Company was taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

(b) As at the Latest Practicable Date:

• (i) none of the Directors had any direct or indirect interest in any assets which have been, since the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to the Company or any of its subsidiaries, or are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries; and

• (ii) none of the Directors is materially interested in any contract or arrangement entered into by the Company or any of its subsidiaries which contract or arrangement is subsisting at the date of this circular and which is significant in relation to the business of the Group.

(c) Directors’ interests in competing business

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

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APPENDIX VIII

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, the persons (“Substantial Shareholders”) (other than the Directors or the chief executive of the Company) who had an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company under the provision of Divisions 2 and 3 of Part XV of the SFO or who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any options in respect of such capital are set out below:

					Approximate
		Deemed			percentage of
	Number of	interests in			issued share
	ordinary Shares	number of			capital of the
Name of Shareholder	held	shares	Total	Capacity	Company
Mr. Andrew Liu	200,000,000	2,000,000,000	2,200,000,000	Beneficial owner	119.47%
SPARX Asia Capital	200,000,000	1,750,000,000	1,950,000,000	Investment manager	105.89%
Management Limited
SPARX Emerging	200,000,000	1,750,000,000	1,950,000,000	Beneficial owner	105.89%
Opportunities Fund SPC
Mr. Tung Sun Tat Clement	200,000,000	1,750,000,000	1,950,000,000	Interest of a controlled	105.89%
				corporation
Ms. Mak Siu Hang Viola	200,000,000	1,750,000,000	1,950,000,000	Trustee	105.89%
STI Wealth Management	200,000,000	1,750,000,000	1,950,000,000	Interest of a controlled	105.89%
(Cayman) Limited				corporation
VMS Private Investment	200,000,000	1,750,000,000	1,950,000,000	Beneficial owner	105.89%
Partners II Limited
Mr. Hu Liang Ming Raymond	—	500,000,000	500,000,000	Beneficial owner	27.15%
Cititrust (Cayman) Limited	—	250,000,000	250,000,000	Interest of a controlled	13.58%
				corporation
Mrs. Chu Yuet Wah	—	7,365,996,744	7,365,996,744	Interest of a controlled	400.01%
(Note 1)				corporation

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APPENDIX VIII

Notes:

• (i) Kingston Securities Limited is wholly-owned by Galaxy Sky Investment Limited which in turn is wholly-owned by Kingston Capital Asia Limited. Kingston Capital Asia Limited is 100% owned by Kingston Financial Group Limited which is 40.24% owned by Active Dynamic Limited which in turn is wholly-owned by Mrs. Chu Yuet Wah.

Save as disclosed above, as at the Latest Practicable Date, the Directors and chief executive of the Company were not aware of any other persons who had an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any options in respect of such capital.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing and proposed service contract with any members of the Group other than contracts expiring or determinable by the relevant member of the Group within one year without payment of compensation (other than statutory compensation).

5. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

As at the Latest Practicable Date, there was no contract or arrangement subsisting in which any Director was materially interested and which was significant in relation to the business of the Group.

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been, since 31 March 2012 (being the date to which the latest published audited accounts of the Group were made up), (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to, any member of the Group.

6. EXPENSES

The estimated expenses in connection with the Rights Issue (including but not limited to the underwriting commission, printing, registration, financial advisory, legal, professional and accounting charges) are approximately HK$21 million and are payable by the Company.

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APPENDIX VIII

7. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries have been engaged in any litigation or claims of material importance and, so far as the Directors are aware, there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

8. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change to the financial or trading position of the Group since 31 March 2012, being the date to which the latest published audited financial statements of the Company were made up.

9. MATERIAL CONTRACTS

The following contracts, not being contracts in the ordinary course of business of the Group, were entered into by the Group within two years immediately preceding the date of this circular which are or may be material:

• (i) On 7 March 2011, the Company entered into a facility agreement with Sun Mass whereby the Company agreed to lend to Sun Mass a loan facility of principal amount of up to but not exceeding US$50 million at the interest rate of 12% per annum.

• (ii) On 30 June 2011, the Company entered into a provisional sale and purchase agreement with Sinoace Limited in relation to the acquisition of the property in consideration of HK$75,000,000.

• (iii) On 15 July 2011, the Company, Quinella, Ms Hsieh Cheng Lu and Sun Mass entered into a shareholders’ agreement with Sun Mass in respect of Sun Mass.

• (iv) On 1 August 2011, the Company entered into a service agreement with Dr. Wu in relation to the appointment of Dr. Wu as executive Director of the Company.

• (v) On 29 August 2011, the Company entered into the Option Deeds with each of Dr. Wu, Mr. Eddie Woo, Dr. Chuang, Henry Yueheng, Mr. William Eui Won Pak, Mr. Lo Yuen Wa Peter, Mr. Cheng Lien Huang, Mr. Hsieh Yung-Ming and Mr. Shen Gi-Chou (collectively the “Grantees”) in relation to the grant of share options by the Company. Pursuant to the Option Deeds, the Company agreed to grant share options for up to 730,000,000 shares of the Company.

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GENERAL INFORMATION

APPENDIX VIII

• (vi) the 2011 Sale and Purchase Agreement.

• (vii) On 19 June 2012, the Company entered into a placing agreement with Freeman Securities Limited in relation to the placing of 57,084,736 new shares at the placing price of HK$0.24 per placing share. The net proceeds were approximately HK$12.7 million.

• (viii) On 4 July 2012, the Company entered into a loan facility agreement with Chung Nam Finance Limited in relation to a loan facility up to HK$100,000,000 for a term of 6 months at the interest rate of 1% per month.

• (ix) On 8 November 2012, the Company entered into a placing agreement with Freeman Securities Limited in relation to the placing of 68,501,684 new shares at the placing price of HK$0.17 per placing share. The net proceeds were approximately HK$11.1 million.

• (x) The Conditional Agreement.

• (xi) On 21 November 2012, the Company entered into a loan facility agreement and share charge agreement with CW Finance Limited and Sun Mass in relation to a revolving loan facility up to HK$500.0 million for a term of 2 years at the interest rate of prime rate as quoted by Chong Hing Bank Limited from time to time plus 5.0% per annum. On 14 December 2012, the Company entered into a deed of assignment with Chung Nam Finance Limited, CW Finance Limited and Sun Mass in relation to assignment of the revolving loan facility.

• (xii) On 3 December 2012, the Company entered into a deed of amendment with convertible bondholders of the Company in relation to the alteration of terms and conditions of the convertible bonds which was issued on 14 July 2011.

• (xiii) On 28 December 2012, the Company entered into a placing agreement with Beijing Securities Limited in relation to the placing of 7 years HK$100.0 million notes bearing interest of 3.5% per annum to individuals on a best effort basis. (As at 22 January 2013, under the supplemental agreement, the interest increased from 3.5% per annum to 5% per annum.)

• (xiv) The Underwritting Agreement.

• (xv) On 6 February 2013, the Company entered into a loan agreement with Dragonite Resources Limited in relation to a loan facility up to HK$10.0 million for a term of 3 months at the interest rate of 12% per annum.

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GENERAL INFORMATION

APPENDIX VIII

• (xvi) On 22 February 2013, the Company entered into a placing agreement with Freeman Securities Limited (as the placing agent) in relation to the placing of 306,910,020 new Shares at the placing price of HK$0.10 per placing Share. The net proceeds were approximately HK$29.44 million.

10. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have been named in this circular or have given their opinion or advice which are contained in this circular:

Name Qualification Deloitte Touche Tohmatsu Certified Public Accountants United Simsen Securities Limited a licensed corporation to carry on business in Type 1, 2, 4 and 6 regulated activities under the SFO Fortune Financial Capital Limited a licensed corporation to carry on business in Type 6 regulated activity under the SFO

PHOTON Consulting

Photon Consulting LLC is a research and consultancy firm focused on fast growing global photovoltaic market within the solar power sector. It provides consulting services, data, research and analysis to global clientele

American Appraisal China Limited Independent Valuer

As at the Latest Practicable Date, the above experts did not have:

• (a) any direct or indirect interest in any assets which have been, since 31 March 2012 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group; and

• (b) any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

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GENERAL INFORMATION

APPENDIX VIII

The above experts have given and have not withdrawn their written consents to the issue of this circular with the inclusion of their letters and the references to their names in the form and context in which they appear.

11. GENERAL

• (a) The company secretary of the Company is Mr. Suen Yick Lun Philip, a fellow member of the Hong Kong Institute of Certified Public Accountants and a member of the CPA Australia. He holds a Bachelor’s degree in Accountancy from Queensland University of Technology and a Master’s degree in Corporate Finance from The Hong Kong Polytechnic University. He has over 15 years of experience in finance and accounting. He has been an executive Director and the company secretary of the Company since April 2011;

• (b) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda and the head office and principal place of business of the Company in Hong Kong are at 1st Floor, Po Chai Industrial Building 28 Wong Chuk Hang Road, Aberdeen, Hong Kong and Room 2902, 29th Floor, China United Centre, 28 Marble Road, North Point, Hong Kong, respectively;

• (c) The Hong Kong branch share registrar and transfer office of the Company is Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong; and

• (d) The English text of this circular prevails over the Chinese text.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the Company’s principal place of business in Hong Kong at Room 2902, 29th Floor, China United Centre, 28 Marble Road, North Point, Hong Kong for a period of 14 days from the date of this circular:

• (a) the memorandum and Bye-laws;

• (b) the letters of consent referred to in the paragraph headed “Experts and consents” above;

• (c) the material contracts referred to in the paragraph headed “Material Contracts” above;

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GENERAL INFORMATION

APPENDIX VIII

• (d) the letter from the Independent Financial Adviser as set out in the section “Letter from the Independent Financial Adviser” in this circular;

• (e) the report from Deloitte Touche Tohmatsu in respect of the unaudited pro forma statement of adjusted consolidated net tangible liabilities of the Group as set out in Appendix III to this circular;

• (f) the annual reports of the Company for each of the two financial years ended 31 March 2011 and 31 March 2012;

• (g) the circular of the Company dated 18 December 2012 in respect of a very substantial disposal involving the sale of the entire share capital in an indirect wholly-owned subsidiary and the assignment of the benefit of and the interests in the shareholder loans for a total consideration of HK$88.0 million (subject to adjustments);

• (h) the Calculation Report from the Valuer as set out in Appendix IV to this circular;

• (i) the Accountants’ Report on calculation of indicated business enterprise value of Sun Materials as at 30 September 2012 from Deloitte Touche Tohmatsu as set out in Appendix V to this circular;

• (j) the report from Fortune Capital Limited on the Calculation Report as set out in Appendix VI to this circular;

• (k) the technical report on Sun Materials from PHOTON Consulting, LLC as set out in Appendix VII to this circular; and

• (l) this circular.

— VIII-9 —

NOTICE OF SPECIAL GENERAL MEETING

(Incorporated in Bermuda with limited liability)

(Stock Code: 136)

NOTICE IS HEREBY GIVEN that the special general meeting of Mascotte Holdings Limited (the “ Company ”) will be held at 30th Floor, China United Centre, 28 Marble Road, North Point, Hong Kong, on Thursday, 18 April 2013, at 4:30 p.m. (the “ Meeting ”) for the purpose of considering and, if thought fit, passing the following resolution, with or without amendments, as ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT

• (a) subject to and conditional upon fulfilment of the conditions of the Underwriting Agreement (as defined below), the Rights Issue (as defined below) and the transactions contemplated thereunder be and are hereby approved;

For the purpose of this resolution, “Rights Issue” means the proposed issue by way of rights issue of not less than 6,138,200,416 Shares and not more than 7,365,996,744 Shares (the “ Rights Shares ”) at a subscription price of HK$0.07 per Rights Share to the qualifying shareholders (the “ Qualifying Shareholders ”) of the Company whose names appear on the register of members of the Company on Friday, 26 April 2013 (Hong Kong time) (the “ Record Date ”) (other than those shareholders (the “ Excluded Shareholders ”) whose addresses on the register of members of the Company are outside Hong Kong on the Record Date and whom the Directors, after making the relevant enquiries, consider their exclusion from the Rights Issue to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place) on the basis of four (4) Rights Shares for every one (1) Share then held and otherwise pursuant to and subject to the fulfillment of the conditions set out in the underwriting agreement (the “ Underwriting Agreement ” including all supplemental agreements relating thereto) (a copy of which has been produced to this Meeting marked “A” and initialled by the chairman of this Meeting for the purpose of identification) dated 4 February 2013 and made between the Company, and Kingston Securities Limited as underwriter (the “ Underwriter ”);

— N-1 —

NOTICE OF SPECIAL GENERAL MEETING

• (b) any Director of the Company be and is hereby authorised to allot and issue the Rights Shares pursuant to and in connection with the Rights Issue notwithstanding that (a) the Rights Shares may be offered, allotted or issued otherwise than pro rata to the Qualifying Shareholders and, in particular, the Directors be and are hereby authorised to make such exclusions or other arrangements in relation to fractional entitlements and/or Excluded Shareholders as they deem necessary, desirable or expedient having regard to any restrictions or obligations under the Bye-laws or the laws of, or the rules and regulations of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong (including but not limited to the arrangements set out in the circular dated 28 March 2013 of the Company); and (b) Rights Shares which would otherwise have been made available for application by the Qualifying Shareholders or the Excluded Shareholders (as the case may be) will be made available for subscription under forms of application for excess Rights Shares;

• (c) the entering into the Underwriting Agreement by the Company be and is hereby approved, confirmed and ratified and the performance of the transactions contemplated thereunder by the Company (including but not limited to the arrangements for taking up of the underwritten Rights Shares, if any, by the Underwriter) be and are hereby approved; and

• (d) any Director be and is hereby authorised to sign and execute such documents and do all such acts and things incidental to the Rights Issue or as he/she considers necessary, desirable or expedient in connection with the implementation of or giving effect to the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder.”

By Order of the Board mascotte HoLDINGs LImIteD Lo Yuen Wa Peter Managing Director

Hong Kong, 28 March 2013

— N-2 —

NOTICE OF SPECIAL GENERAL MEETING

Notes:

1. A form of proxy for use at the Meeting is enclosed herewith.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of any officer or attorney duly authorised.

3. Any shareholder of the Company entitled to attend and vote at the Meeting convened by the above notice shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a shareholder of the Company.

4. In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power of attorney or authority, must be deposited at the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding of the above Meeting or any adjournment thereof (as the case may be).

5. Completion and return of the form of proxy will not preclude a shareholder of the Company from attending and voting in person at the Meeting convened or at any adjourned meeting (as the case may be) and in such event, the form of proxy will be deemed to be revoked.

6. Where there are joint holders of any share of the Company, any one of such joint holders may vote, 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 holders are present at the Meeting, whether in person or by proxy, the most senior shall alone be entitled to vote. For this purpose, seniority shall be determined by the order in which the names stand on the register of members of the Company in respect of the joint holding.

As at the date of this notice, the Board comprises the following Directors:

Executive Directors: Independent Non-executive Directors: Mr. Peter Temple Whitelam (Chairman) Mr. Frank H. Miu Mr. Lo Yuen Wa Peter (Managing Director) Dr. Agustin V. Que Mr. Eddie Woo Mr. Robert James Iaia II Mr. Suen Yick Lun Philip Mr. Hung Cho Sing Mr. Lau King Hang

— N-3 —