Novautek Technologies Group Limited — Proxy Solicitation & Information Statement 2015

Dec 29, 2015

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 you should take, 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 Kong Sun Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank manager, licensed securities dealer or registered institution in securities or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

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

KONG SUN HOLDINGS LIMITED 江山控股有限公司

(Incorporated in Hong Kong with limited liability) (Stock Code: 295)

MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF 44.587% EQUITY INTEREST IN ZHONGKE HENGYUAN TECHNOLOGY CO., LTD. AND NOTICE OF EXTRAORDINARY GENERAL MEETING

A letter from the Board is set out on pages 5 to 28 of this circular.

A notice convening the extraordinary general meeting of the Company to be held at 9/F., Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong on 15 January 2016 at 11:00 a.m. (the “EGM”) is set out on pages EGM-1 to EGM-2 of this circular. Whether or not you intend to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time fixed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM should you so wish.

30 December 2015

CONTENTS

			Pages
Definitions . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			5
Appendix I	–	Financial Information of the Group . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Financial Information of the Target Group . . . . . . . . . . . . .	II-1
Appendix III	–	Management Discussion and Analysis
		on the Target Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV	–	Unaudited Pro-forma Financial Information of
		the Enlarged Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V	–	Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Appendix VI	–	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-1
Notice of EGM .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

DEFINITIONS

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

• “Acquisition”

• the acquisition by the Purchaser of the 44.587% equity interest in the Target Company

• “Acquisition Agreement” the acquisition agreement dated 4 December 2015 entered into, among others, the Purchaser and the Vendors in relation to the Acquisition

• “Announcement” the announcement of the Company dated 4 December 2015 in relation to the Acquisition

• “Board” the board of Directors

• “Business Day” any day, except a day as required and authorised by law on which banks in the PRC are not open for business

• “Company”

• Kong Sun Holdings Limited, a company incorporated in Hong Kong, the shares of which are listed on the Main Board of the Stock Exchange

• “Completion” completion of the Acquisition Agreement

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

• “Consideration”

the consideration of the Acquisition

• “controlling shareholder”

has the meaning ascribed thereto under the Listing Rules

• “Directors”

the directors of the Company

• “EGM”

• the extraordinary general meeting of the Company to be convened for the purpose of considering and, if thought fit, approving the Acquisition and the transactions contemplated thereunder

• “Enlarged Group” the Group and the Target Group upon Completion

• “Group”

• the Company and its subsidiaries

• “HK$”

• Hong Kong dollar, the lawful currency of Hong Kong

– 1 –

DEFINITIONS

• “Hong Kong”

• the Hong Kong Special Administrative Region of the People’s Republic of China

• “Independent Shareholders”

• the Shareholders other than those who are required to abstain from voting at the EGM under the Listing Rules in relation to the resolution approving the Acquisition and the transactions contemplated thereunder and their respective associates

• “Independent Third Party(ies)”

• person(s) or company(ies) who/which is/are not connected with (within the meaning under the Listing Rules) the Company, any of the director, chief executive or substantial shareholders (as defined under the Listing Rules)

• “Kong Sun Yongtai”

• 江山永泰投資控股有限公司 (Kong Sun Yongtai Investment Holdings Co., Ltd.*), a wholly-owned subsidiary of the Company and a company established under the laws of the PRC

• “Latest Practicable Date” 24 December 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Long Stop Date” 90 days from the date of the Acquisition Agreement, or such other later date as shall be agreed by the Purchaser and the Vendors in writing

• “Material Adverse Effect(s)” means effect(s) that may result in a deterioration of the Group’s assets, liabilities, operations, business or financial conditions, lower or result in the loss of a member of the Group’s productivity. For the avoidance of doubt, if an effect will result in the actual loss of more than RMB10 million by a member(s) of the Group individually or collectively, then the effect shall constitute a material adverse effect

– 2 –

DEFINITIONS

“Mr. Xiang” Mr. Xiang Jun, who is interested in 676,020,000 Shares (representing approximately 6.9% of the issued share capital of the Company as at the Latest Practicable Date) and 60,000,000 share options of the Company as at the Latest Practicable Date, who is also interested in 35.331% equity interest of the Target Company as at the date of the Acquisition Agreement

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

• “Properties” Land and properties held by the Target Group

• “Properties Valuation” the valuation of the Properties by an independent professional valuer

• “Purchaser” Kong Sun Yongtai

• “RMB” Renminbi, the lawful currency of the PRC

• “SFO” the Securities and Futures Ordinance (CAP. 571 of the Laws of Hong Kong)

• “Share(s)” ordinary share(s) of the Company

• “Shareholder(s)” holders of the Share(s)

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Subsidiary” or “subsidiaries” has the meaning ascribed thereto under the Listing Rules

• “Target Company” 中科恒源科技股份有限公司 (Zhongke Hengyuan Technology Co., Ltd.*), a company established under the laws of the PRC

• “Target Group” the Target Company and its subsidiaries

– 3 –

DEFINITIONS

“Vendors” shareholders of the Target Company comprising 37 individuals and 10 investment holding companies, which together own 44.587% of the equity interest in the Target Company “Vendors Nominee” 長沙德展投資管理合夥企業 (Zhangsha Dezhuan Investment Management Limited Partnership*), a partnership established under the laws of the PRC “%” per cent

• For identification purposes only

– 4 –

LETTER FROM THE BOARD

KONG SUN HOLDINGS LIMITED 江山控股有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 295)

Executive Directors: Mr. Liu Wen Ping Mr. Chang Hoi Nam

Non-Executive Directors: Dr. Ma Ji (Chairman) Mr. Chang Tat Joel

Registered Office and Principal Place of Business: Unit 3601, 36/F China Resources Building 26 Harbour Road, Wanchai Hong Kong

Independent Non-Executive Directors: Mr. Miu Hon Kit Mr. Wang Haisheng Mr. Lu Hongda

30 December 2015

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION IN RELATION TO

THE ACQUISITION OF 44.587% EQUITY INTEREST IN ZHONGKE HENGYUAN TECHNOLOGY CO., LTD. AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

The Company announced on 4 December 2015 that the Purchaser entered into the Acquisition Agreement with, among others, the Vendors, pursuant to which the Purchaser conditionally agreed to acquire and the Vendors conditionally agreed to sell an aggregate of 44.587% equity interest in the Target Company.

The purpose of this circular is to provide you with, among other things, (i) further details of the Acquisition; (ii) financial information of the Target Group; (iii) unaudited pro-forma financial information of the Enlarged Group as a result of the Acquisition; (iv) valuation report of the Properties; and (v) a notice of the EGM.

– 5 –

LETTER FROM THE BOARD

PRINCIPAL TERMS OF THE ACQUISITION AGREEMENT

Date

4 December 2015

Parties

• (1) Purchaser:

Kong Sun Yongtai, a wholly-owned subsidiary of the Company.

• (2) Vendors:

Shareholders of the Target Company comprising 37 individuals and 10 investment holding companies, which together own 44.587% equity interest of the Target Company.

• (3) Vendors Nominee, a limited partnership established in the PRC on 6 May 2014, the scope of operations of which are advisory and investment management, nominated by the Vendors to receive any payment of the Consideration on behalf of the Vendors; and

• (4) the Target Company.

To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, each of the Target Company, the Vendors Nominee, the Vendors, and their respective ultimate beneficial owners is an Independent Third Party.

Assets to be acquired

The Purchaser conditionally agreed to acquire from the Vendors an aggregate of 44.587% equity interest in the Target Company.

Further information about the Target Company is set out in the paragraph headed “Information on the Target Company” below.

– 6 –

LETTER FROM THE BOARD

Consideration

The consideration for the Acquisition is RMB347,800,000.

The deposit (“Deposit”) in the amount of RMB10 million had been paid in cash to the Vendors and/or their representatives.

The remaining balance of the Consideration in the aggregate amount of RMB337,800,000 shall be settled in cash by the Purchaser in the following manner:

• (i) within three Business Days upon updating the register of members of the Target Company, the first instalment in the aggregate amount of RMB173,900,000 shall be paid by the Purchaser; and

• (ii) within ten Business Days upon completion of the registrations with relevant industrial and commercial registration authorities for (i) releasing the share charge created by the Vendors in relation to the equity interests of the Target Company; and (ii) updating the register of members and articles of association of the Target Company (if required to effect the transactions contemplated under the Acquisition Agreement), the remaining balance of the Consideration, less any amount of duties payable by the natural persons of the Vendors which shall be paid by the Purchaser on their behalf, shall be paid by the Purchaser.

All payments of the Consideration shall be paid to the Vendors Nominee, which has been irrevocably appointed by the Vendors to receive any payment of the Consideration. The Purchaser’s obligation to pay the Consideration shall be fulfilled upon payment of the Consideration to the Vendors Nominee.

The Deposit was settled by internal resources of the Group. The Group intends to settle the remaining balance of the Consideration by internal resources and/or any future fund raising activities.

The Consideration was determined after arm’s length negotiations between the Purchaser and the Vendors. It was determined with reference to: (i) the net asset value of the Target Company, as extracted from the audited consolidated financial statements of the Target Group as at 30 June 2015; (ii) revaluation of the Properties based on the Valuation Report included in Appendix V of this circular; and (iii) other investments

– 7 –

LETTER FROM THE BOARD

acquired by the Target Group from 1 July 2015 to the Latest Practicable Date (details of which are included under the heading “Other investments and material acquisitions after 30 June 2015 of the Target Group” below); as follows:

Attributable equity interests to the Target Group for the purpose of assessing the Consideration Attributable equity interests to the Group under the Acquisition RMB’000 % (i) Net asset value of the Target Group as at 30 June 2015 544,527 44.587% (ii) Fair value adjustment on revaluation of the Properties 95,212 44.587% (iii) Premium on acquisition of additional 85% equity interests of Zhongke Hengyuan Jiuquan by the Target Group (Note 1) (14,425) 44.587% (as below) Adjusted net asset value of the Target Group on the Acquisition Consideration Premium on the Acquisition Net asset value of Zhongke Hengyuan Jiuquan as at 31 December 2014 (Note 2) 85% equity interests acquired in October 2015 Attributable interests in relation to the additional 85% equity interests acquired by the Target Group Cost of 85% equity interests acquired Premium on acquisition of additional 85% equity interests in Zhongke Hengyuan Jiuquan	Attributable equity interests to the Group under the Acquisition RMB’000 242,788 42,452 (6,432)
	278,808 347,800
	68,992
	RMB’000 50,840 85% 43,214 57,639
	(14,425)

(as above)

Note 1: Zhongke Hengyuan Jiuquan would be accounted for as a wholly-owned subsidiary of the Target Group for the financial year ending 31 December 2015, after the acquisition of the additional 85% equity interests.

Note 2: As extracted from the latest PRC audited financial statements.

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LETTER FROM THE BOARD

The Directors have also considered the investments in Hami and Anhua (details of which are included under the heading “Other investments and material acquisitions after 30 June 2015 of the Target Group” below) in assessing the Consideration. The Directors consider, for the purpose of assessing the Consideration, no adjustment in relation to these investments to the net asset value of the Target Group above is required as:

• 1) these investments would be accounted for as “Available-for-sale investments” and initially stated at their fair values, which are the consideration paid for the investments. Thus, these investments would not have any impact on the net asset value of the Target Group at the transaction dates.

• 2) the above transactions are close to the date of Acquisition and there are no significant change in the fair values of these investments from the transaction dates to the date of Acquisition which would affect the Consideration.

The Consideration represents a premium of RMB68,992,000 and approximately 24.7% of the net asset value of the Target Group (as adjusted above). The Directors, having considered that (i) the Target Company is engaged in multiple business segments as disclosed under the section “Principal businesses of the Target Company” in the Letter from the Board of this circular; (ii) the acquisitions of target companies engaged in the manufacture and sale of wind-solar hybrid street lights (or other street lights) are not very common; and (iii) the Acquisition does not involve the entire, but only partial, equity interest of the Target Company, the Directors noted that precedents of acquisitions by listed companies engaged in the solar power plant business of target companies of similar business nature to the Target Company were not readily available. Recent acquisitions by other listed companies engaged in the solar power plant business did not offer useful or meaningful precedential values as the background, relative size of the targets and nature of the precedents were different from the proposed Acquisition.

From 1 July 2015 to 30 November 2015, the Target Group (as shown in the unaudited management accounts of the Target Group) recorded a revenue of RMB523,305,000 and the total revenue for the eleven months ended 30 November 2015 of the Target Group (as shown in the unaudited management accounts of the Target Group) amounted to RMB643,958,000. The significant increase in the revenue from 1 July 2015 to 30 November 2015, as compared to the six months ended 30 June 2015, was mainly due to the increase in the revenue from engineering, procurement and construction (EPC) of PV power plants amounted to RMB455,701,000. According to the unaudited management accounts of the Target Group, the Target Group recorded a profit after taxation of RMB3,162,000 for the eleven months ended 30 November 2015. Saved as disclosed under the heading “Other investments and material acquisitions after 30 June 2015”, the Target Group did not have other material acquisitions or disposals after 30 June 2015.

In view of the potential synergies generated upon Completion, the technological know-how and experience of the Target Group in the engineering, procurement and construction (EPC) of photovoltaic power plants, details of which are further explained under the section headed “REASONS FOR THE ACQUISITION” below, the Directors are of the view that the Consideration is fair and reasonable.

– 9 –

LETTER FROM THE BOARD

Conditions precedent

Completion is conditional upon the following conditions having been fulfilled or waived by the Purchaser (as the case may be, except that condition (iii) below cannot be waived) on or before the Long Stop Date:

• i. completion of due diligence on the business, financial, legal, accounting and other matters on the Target Group by the Purchaser;

• ii. any major issues discovered during the due diligence exercise are resolved to the satisfaction of the Purchaser;

• iii. the Company having obtained approval from the Independent Shareholders on the Acquisition Agreement and the transactions contemplated under the Acquisition in accordance with the requirement of the Listing Rules;

• iv. the Company having obtained funding to settle the Consideration;

• v. the Purchaser having obtained the written consents and waivers from the shareholders of the Target Company consenting to the Acquisition and waiving any rights of first offer or pre-emption rights (if any) arising from the relevant laws and regulations or any other documents that may affect Completion;

• vi. the Vendors and Target Company having obtained all necessary consents and approvals, including but not limited to consents and approvals from the relevant authorities and other third parties, in relation to the Acquisition and the passing of all documentary proofs of such consents and approval to the Purchaser;

• vii. the representations, warranties and undertakings given by the Vendors being true and accurate in all material respects on the date of the Acquisition Agreement and remaining true and accurate in all material respects on any date of payment of the Consideration;

• viii. no promulgations or implementations of any laws, regulations, injunctions, decisions or policies by the government that will restrict or prohibit the Acquisition or make the Acquisition illegal;

• ix. no litigation, arbitration or administrative sanctions against or pending against any member of the Target Group that, if decided adversely, would inhibit or otherwise materially affect the consummation of the transactions contemplated under the Acquisition, or in the reasonable opinion of the Purchaser, would have a Material Adverse Effect on the Target Group; and

• x. nothing having occurred which has or, in the reasonable opinion of the Purchaser, is expected to have a Material Adverse Effect.

– 10 –

LETTER FROM THE BOARD

The Vendors and Target Company have agreed to effect the update and registration of the register of members of the Target Company within ten Business Days from the date of the Completion.

If the above conditions are not fulfilled on or before the Long Stop Date, then the Acquisition Agreement shall terminate.

As at the Latest Practicable Date, none of the above conditions has been satisfied and the Purchaser has no intention to waive any of the above conditions.

INFORMATION ON THE VENDORS

The Vendors comprise 37 individuals and 10 investment holding companies:

			Percentage
			holding of the
			Target Company
			as at the Latest
			Practicable Date
	Company		(per cent.)
1.	Xi Zang Shan Nan Shi Ji Jin Yuan Investment		7.500%
	Management Company Limited* (西藏山南世紀金源投資
	管理有限公司), a company ultimately owned by:
	– Huang Shi Ying (黃世熒)	40.000%
	– Huang Tao (黃濤)	60.000%
	100.000%

2.	Beijing He Zhan Tai Bao Investment Company Limited*	Beijing He Zhan Tai Bao Investment Company Limited*	6.667%
	(北京合展泰寶投資有限公司), a company ultimately
	owned by:
	– Tian Ping (田萍)	5.000%
	– Tian Gong Chang (田功昌)	28.500%
	– Tian Xue (田雪)	3.325%
	– Tian Cui Xia (田翠霞)	63.175%
		100.000%

– 11 –

LETTER FROM THE BOARD

					Percentage
					holding of the
					Target Company
					as at the Latest
					Practicable Date
	Company (continued)				(per cent.)
3.	Beijing De Run He Investment Company Limited* (北京				4.783%
	德潤禾投資有限公司), a company ultimately		owned by:
	– Tan Xiao Ting (譚曉婷)			90.909%
	– Li Ming (李明)			5.455%
	– Ling Yun (淩雲)			3.636%
			100.000%
4.	Hunan Bai Fu Zhi Investment Advisory	Company			2.640%
	Limited* (湖南百富智投資諮詢有限公司), a company
	ultimately owned by:
	– Luo Jing Song (羅勁松)			70.000%
	– Luo Jing Hu (羅勁虎)			30.000%
			100.000%
5.	Hunan Jing Sheng Trading Company Limited* (湖南景				2.500%
	盛經貿有限公司), a company ultimately	owned by Xu
	Ren Sui (徐人燧).
6.	Bao Tou Heng Tong (Group) Company Limited*			(包頭市	1.875%
	恒通（集團）有限責任公司), a company ultimately			owned
	by:
	– Zhang Xiu Gen (張秀根)			78.892%
	– Miao Yu Li (苗玉莉)			21.108%
			100.000%
7.	Hunan Shi Jia Investment Company Limited* (湖南世嘉				1.667%
	投資有限公司), a company ultimately owned by:
	– Xu Ying Feng (徐穎豐)			60.000%
	– Liu Yun Liang (劉運良)			20.000%
	– Yi Si Lai (易思來)			20.000%
			100.000%

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LETTER FROM THE BOARD

Percentage holding of the Target Company as at the Latest Practicable Date (per cent.)

			Percentage holding of the Target Company as at the Latest Practicable Date
	Company (continued)		(per cent.)
8.	Beijing Bo Guan Fu Yuan Founding Investment		1.667%
	(Limited Partnership)* (北京博觀福遠創業投資中心（有限
	合夥）), the partners of which are:
	– Zhang Hua Yu (張華玉)	60.000%
	– Zhao Yong Xia (趙永霞)	5.142%
	– Huang Jie (黃潔)	1.020%
	– Zou Jian Long (鄒劍龍)	12.250%
	– Zhou Hong Li (周洪麗)	10.200%
	– Li Ming (李明)	4.080%
	– Dan Sheng Yuan (單升元)	2.040%
	– Zhang Kai (張凱)	0.168%
	– Cai Kai Jian (蔡開堅)	1.543%
	– Cai Bing (蔡冰)	3.557%
	100.000%
9.	Beijing Jiu Zhou Du Chun Yu Investment Company		0.833%
	Limited* (北京九州島春雨投資有限公司), a company
	ultimately owned by:
	– Fang Hai Tao (方海濤)	96.533%
	– Zhang Liu Qun (張柳群)	3.467%
	100.000%
10.	Ning Bo Yang Hua Corporate Management Advisory		0.833%
	Corporate Partnership (Limited Partnership)* (寧波仰華
	企業管理諮詢合夥企業（有限合夥）), the partners	of
	which are:
	– Sun Kai (孫凱)	99.000%
	– Sun Peng (孫鵬)	1.000%
	100.000%

– 13 –

LETTER FROM THE BOARD

Percentage holding of the Target Company as at the Latest Practicable Date (per cent.)

	Percentage holding of the Target Company as at the Latest Practicable Date
Individuals 1. Cai You Liang (蔡友良) 2. Wang Wen Ming (王文明) 3. Xu Zhong Ci (許忠慈) 4. Yao Tu Sheng (姚土生) 5. Deng Kai (鄧凱) 6. Luo Xi Cun (羅心村) 7. Ceng Zhi Yong (曾智勇) 8. Liu Hui (劉暉) 9. Zhang Hai Yan (張海燕) 10. Liu Jian Hui (劉建輝) 11. Tan Ying Qiu (譚應球) 12. Jiang Chong Jun (蔣崇軍) 13. Zhang Yan Xia (張豔霞) 14. Zhou Wen (周文) 15. Li Rong Da (李榮達) 16. Chen Mu Lin (陳木林) 17. Zhang Zhen Sheng (章真勝) 18. Luo Han Jun (駱漢軍) 19. Lu Wei (盧偉) 20. Liang Lan (梁嵐) 21. Fu Xiang (傅湘) 22. Li Ke (李珂) 23. Hui Hong Wei (惠宏偉) 24. Lou Li Zheng (婁力爭) 25. Liu Qing (劉清) 26. Liu Peng Fei (劉鵬飛) 27. Zhao Qiang (趙強) 28. Zhu Shi Kui (朱士魁) 29. Cao Zhi Wei (曹志偉) 30. Wang Zhen (王震) 31. Deng Hong (鄧紅) 32. Ou Yang Ni Ying (歐陽嶷英) 33. Wang Hai Feng (汪海峰) 34. Li Su Mei (李素梅) 35. Deng Xiao Xi (鄧小希) 36. Cai Xia Ming (蔡夏明) 37. Xiong Meng (熊猛)	(per cent.) 3.304% 1.250% 1.242% 1.056% 0.833% 0.533% 0.528% 0.458% 0.417% 0.417% 0.275% 0.267% 0.250% 0.208% 0.183% 0.167% 0.167% 0.167% 0.167% 0.167% 0.167% 0.167% 0.167% 0.125% 0.125% 0.108% 0.091% 0.083% 0.083% 0.083% 0.083% 0.058% 0.058% 0.042% 0.042% 0.042% 0.042%
	44.587%

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LETTER FROM THE BOARD

As at the date of the Acquisition Agreement, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, none of the Vendors (and in the case of the Vendors who are corporate entities, their respective ultimate beneficial owner(s)):

• (i) except for entering into the Acquisition Agreement, has entered into any agreement, arrangement, understanding and undertaking (whether formal or informal and whether express or implied) with a connected person of the Company in relation to the Acquisition;

• (ii) except for their respective equity interests in the Target Company, has any relationship (in business, shareholding or otherwise) with Mr. Xiang and his associates;

• (iii) has been financed directly or indirectly by a connected person of the Company or Mr. Xiang in their respective original investment in the Target Company; nor

• (iv) is accustomed to take instructions from a connected person of the Company and/or Mr. Xiang in relation to the acquisition, disposal, voting or other disposition of interest in the Target Company registered in the relevant Vendor’s name or otherwise held by the relevant Vendor.

INFORMATION ON THE TARGET COMPANY

The Target Company was established in Guangzhou, the PRC on 25 August 2005, as a limited liability company under the Company Law of the PRC (中華人民共和國公司法) and was converted into a joint stock limited liability company on 29 December 2006. The Target Group is principally engaged in the construction and development of photovoltaic power station projects and manufacture and sale of wind-solar hybrid street lights in the PRC.

Historical transactions of the Group with the Target Company

As disclosed in the 2014 annual report and 2015 interim report of the Company, the Company entered into several memoranda of understanding, cooperation agreements and framework agreements on proposed acquisition of or investments in photovoltaic power plants in the PRC since 2014, of which the Company acquired various project companies, including the acquisitions of the entire equity interests of the following three project companies:

• (i) Hami Chaoxiang New Energy Technology Co., Ltd. (哈密朝翔新能源科技有限 公司), from Beijing Hengyuan Tiantai Energy Technology Co., Ltd. (北京恒源 天泰能源科技有限公司) (“Beijing Hengyuan”) and Xinjiang Zhongke Hengyuan New Energy Technology Co., Ltd.* (新疆中科恒源新能源科技有限公 司), both of the vendors were companies ultimately wholly-owned by the Target Company, immediately before completion of the acquisition, details of the acquisition are disclosed in the announcement of the Company dated 30 October 2014;

– 15 –

LETTER FROM THE BOARD

• (ii) Yumen Yonglian Technology New Energy Co., Ltd. (玉門市永聯科技新能源有 限公司), 19% equity interest of which was acquired from Beijing Hengyuan and the remaining 81% equity interest of which was acquired from Shenzhen Intercontinental Trading Investment Co., Ltd. (深圳市洲際通商投資有限公司), a party independent of each and all the shareholders of the Target Company, details of the acquisition are disclosed in the announcement of the Company dated 4 November 2014; and

• (iii) Gansu Hongyuan Solar Electric Co., Ltd. (甘肅宏遠光電有限責任公司), from the Target Company and Gansu Zhongke Hengyuan New Energy Technology Co., Ltd. (甘肅中科恒源新能源科技有限公司), both of the vendors were companies ultimately wholly-owned by the Target Company immediately before completion of the acquisition, details of the acquisition are disclosed in the announcement of the Company dated 7 November 2014.

Principal businesses of the Target Company

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Target Group’s principal business consists of three major principal business segments, namely:

• (i) (a) self development of photovoltaic (“PV”) power plants, including the following projects under constructions as at the Latest Practicable Date:

Location Estimated capacity Type of PV Commencement date Total estimated cost to completion Expected date of completion (RMB) Datong City, Shanxi Province 20 MW Ground mounted PV power plant May 2014 160,000,000 January 2016 Jiayuguan City, Gansu Province 50 MW Ground mounted PV power plant September 2014 400,000,000 August 2016 Baiyin City, Gansu Province 1.2 MW Solar panels on telecommunication stations September 2014 27,837,000 January 2016 Yiyang City, Hunan Province 1.8 MW Rooftop PV system March 2015 37,580,000 March 2016 Chenzhou City, Hunan Province 1.4 MW Rooftop PV system October 2014 32,458,000 January 2016 Yumen City, Gansu Province 30 MW Ground mounted PV power plant May 2015 230,000,000 March 2016 Chifeng City, Inner Mongolia 50 MW Ground mounted PV power plant February 2015 380,000,000 March 2016 Total

Book value as at 30 June 2015(Note 1) (RMB) 50,593,000 31,205,000 14,380,000 14,365,000 21,853,000 8,982,000 4,982,000

146,360,000

The ground mounted PV power plants are built on land parcels which are remotely located. The land parcels where the solar power plants situated are of low economic value and hence the Target Group, follows the similar practices of other solar power plants operators, would only rent the land from the local government.

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LETTER FROM THE BOARD

Leases were entered into with local governments in relation to land parcels used for the construction of ground mounted PV power plants. Below is a summary of the land leases in respect of the above-mentioned ground mounted PV power plants:

Location	Lease period	Lease fee
Datong City, Shanxi	May 2014 to April	First 5 years:
Province	2034 (20 years)	RMB193,416 per year
		Second 5 years:
		RMB209,534 per year
		Third 5 years:
		RMB225,652 per year
		Fourth 5 years:
		RMB241,770 per year
Jiayuguan City, Gansu Province	N/A_(Note)_	N/A_(Note)_
Yumen City, Gansu	N/A_(Note)_	N/A_(Note)_
Province
Chifeng City, Inner	February 2015 to	RMB248,000 per year
Mongolia	January 2041
	(26 years)

Note: Local government granted rent-free period to these projects during the construction stage. Upon completion of the construction of the solar power plants, the project companies have to pay lease fees to the local government, amounts of which have to be negotiated with the local government by then.

Typical economic useful lives of solar power plants are 20 years or more.

It is a usual practice in the development of solar power plants that the EPC contractor and/or suppliers of components will grant credit period to the project companies and hence the settlement of the above-mentioned development costs would be by stages. The Target Group intended to settle the above-mentioned development costs by internal resources and available facilities.

• (b) Self-developed PV power plants completed as at the Latest Practicable Date:

Location Estimated capacity Kilowatt (“KW”) Type of PV Beijing 300 KW Rooftop PV system Changsha City 300 KW Rooftop PV system Kunming City 883 KW Rooftop PV system Total	Book value as at 30 June 2015(Note 2) (RMB) 3,296,000 4,129,000 5,773,000
	13,198,000

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LETTER FROM THE BOARD

• Note 1: Amount recognized as solar power plants under development in note 11 to the audited financial statements of the Target Group in Appendix II to this circular.

• Note 2: Amount recognized as solar power plants in note 11 to the audited financial statements of the Target Group in Appendix II to this circular.

• (ii) engineering, procurement and construction (EPC) of PV power plants for customers, in which the Target Group will receive a EPC revenue on providing the EPC services, including the following major projects as at the Latest Practicable Date:

	Estimated		Contract	Expected date of
Location	capacity	Current status	sum	completion
			(RMB)
Lankao County, Henan Province	30 MW	Completed	85,532,000	Completed
Shilin City, Yunnan Province	56 MW	Under construction	121,542,000	March 2016
Puyang City, Henan Province	60 MW	Under construction	192,000,000	March 2016
Yuli County, Xinjiang Province	20 MW	Under construction	71,280,000	March 2016
Qianyang City, Shaanxi Province	20 MW	Under construction	70,685,000	End of December
				2015
Hebi City, Henan Province	50 MW	Under construction	158,058,000	January 2016

The customers of all the above EPC contracts are private enterprises engaged in the investment in and development of PV power plants in the PRC.

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LETTER FROM THE BOARD

• (iii) the manufacture and sale of wind-solar hybrid street lights, including the following major projects as at the Latest Practicable Date:

		Total
Customer	Contract sum		Progress
		RMB’000
Lanzhou New Area City		12,000	Fully completed
Development Investment
Co. Ltd.*
蘭州新區城市發展投資有限公司
Chengzhou Hi-Tech Investment		79,800	Under construction;
Holding Co. Ltd.*			expected to be partially
郴州高科投資控股有限公司			completed in 2nd half of
			2015; majority of project
			expected to be
			completed in 2016
Hohhot City Engineering		33,340	Under construction;
Management Co. Ltd.*			partially completed;
呼和浩特市政工程管理公司			project expected to be
			fully completed in 2016
Fushan Industrial Park Community		8,000	Under construction and
Management Committee*			expected to be
富山工業園管委會建管中心			completed in 2nd half of
			2015
Total		133,140

Majority of the Target Group’s customers in relation to sale of wind-solar hybrid street lights are local government bodies or companies related to state-owned enterprise in the PRC. Typically, the local government body would initiate a tender to invite operators such as the Target Group and/or its competitors to construct street lights. In addition, the marketing team of the Target Group would actively visit its potential and/or existing customers to see if there are potential opportunities to gain businesses.

On getting a sales contract signed, the Target Group would, in accordance with the specifications as stated in the sales contract, manufacture certain of the components, such as wind turbine and controllers; and purchases the remaining materials and components, such as solar panels, inverters, PV modules, batteries and refrigerators, from its suppliers. The Target Group would then assemble the components together and deliver the street lights to its customers according to the terms of the sales contract. The duration of the sales contract could vary from months to more than a year, depending on the complexity of the specifications and the number of street lights to be provided.

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LETTER FROM THE BOARD

Other investments and material acquisitions after 30 June 2015 of the Target Group

(a) Acquisition of a subsidiary

On 16 October 2015, the Target Group acquired 85% equity interest in Zhongke Hengyuan (Jiuquan) New Energy Science and Technology Co., Ltd.* (“Zhongke Hengyuan Jiuquan”) (中科恒源（酒泉）新能源科技有限公司) for a consideration of RMB57,638,805. After the acquisition, Zhongke Hengyuan Jiuquan became a wholly-owned subsidiary of the Target Group. Zhongke Hengyuan Jiuquan is a company established in the PRC, which is principally engaged in the development of and investment in a 9MW photovoltaic power plant in Jiuquan, Gansu Province, the PRC. The solar power plant owned by Zhongke Hengyuan Jiuquan has been connected to the power grid in 2013.

Brief summary of the financial information of Zhongke Hengyuan Jiuquan, as extracted from the PRC audited financial statements, are as follows:

RMB’000

For the year ended 31 December 2014 Revenue Profit before taxation Profit after taxation As at 31 December 2014 Total asset value Net asset value	11,406
	2,061
	2,061
	153,085
	50,840

• (b) Acquisition of available-for-sale investments

• (i) On 9 November 2015, the Target Group acquired 7.62% equity interest in Hami Commercial Bank Co., Ltd. (“Hami”) from an independent third party for a consideration of RMB79,949,000. After the completion of such acquisition, Hami would be accounted for as “Available-for-sale investments” in the consolidated statement of financial position of the Target Group.

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LETTER FROM THE BOARD

Brief summary of the financial information of Hami, as extracted from the PRC audited financial statements, are as follows:

For the year ended 31 December 2014 Revenue Profit before taxation Profit after taxation As at 31 December 2014 Total asset value Net asset value	RMB’000 257,105
	128,974
	91,358
	5,154,498
	798,697

• (ii) Pursuant to a shareholders’ resolution of the Target Company, the Target Company entered into a series of transactions (the “Transactions”) in November 2015 in respect of the shares in Huatian Hotel Co., Ltd. 華天酒店集 團股份有限公司 (“Huatian”):

• 1) The Target Company signed a loan agreement of RMB1,010,828,200 with Nanjing Kaen Industrial Trading Co., Ltd. 南京卡恩工貿有限公司 (“Nanjing Kaen”), to finance the acquisition of shares in Huatian.

• 2) The Target Company effectively acquired 181,820,100 shares in Huatian through Hunan Huaxin Hengyuan Investment (limited partnership) 湖 南華信恒源股權投資企業（有限合夥） (“Huaxin Hengyuan”), a limited partnership set up for the sole purpose of investment in Huatian for a consideration of RMB1,001,828,200. As at the Latest Practicable Date, 60.61% and 15% of the shares of Huaxin Hengyuan is beneficially owned by the Target Company and Mr. Xiang Jun, respectively.

• 3) Pursuant to an agreement signed between the Target Company and Nanjing Kaen, the Target Company transferred its rights of returns in Huaxin Hengyuan to Nanjing Kaen for a consideration of RMB1,010,828,200.

• 4) Pursuant to a supplemental agreement signed between the Target Company and Nanjing Kaen, the Target Company agreed to offset the consideration receivable from Nanjing Kaen against its loan from Nanjing Kaen resulting from the above transactions.

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LETTER FROM THE BOARD

Huatian is a company established in the PRC principally engaged in the business of operation of hotels and other tourism businesses in the PRC. The headquarters of Huatian is located at Changsha, the same location where the Target Company is headquartered.

To raise capital for its business, Huatian invited the Target Company to invest in it in 2014. The Target Company signed an agreement for the subscription of new shares in Huatian in December 2014. The reason at that time was that there would be business co-operation opportunities with Huatian and in particular, the business opportunity to install distributed PV systems at the hotels operated by Huatian.

Having considered that the volatile market conditions in 2015, the Target Company decided to minimize the economic risk associated with the investment. Accordingly the Target Company entered into the Transactions as set out above. With the Transactions in place, the Directors consider that the Target Group would not have any economic interests of its equity position in Huatian upon completion of the Acquisition.

• (iii) During the period from July 2015 to the Latest Practicable Date, the Target Group entered into several agreements to acquire 14.56% equity interests in Anhua Agricultural Insurance Co., Ltd. (“Anhua”) from independent third parties for an aggregate consideration of RMB255,510,000 and rights to acquire 268,250,000 shares through rights issue exercise (the “Rights Issue”) in Anhua for an aggregate consideration of RMB51,612,500. In addition, the Target Group subscribed 357,900,000 shares through the Rights Issue at a consideration of RMB486,744,000. Assuming the Target Group participates in the Rights Issue and exercised its rights in full, the Target Group would hold 4,681,200,000 shares in Anhua, representing approximately 16.67% equity interests in Anhua. The subscription of the shares have to be registered and approved by the China Insurance Regulatory Commission (“CIRC”). As at the Latest Practicable Date, 97,000,000 shares in respect of the shares transfer of above-mentioned investments in Anhua has been completed and registered under the name of the Target Group. After the completion of such agreements, Anhua would be accounted for as “Available-for-sale investments” in the consolidated statement of financial position of the Target Group.

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LETTER FROM THE BOARD

Brief summary of the financial information of Anhua, as extracted from the PRC audited financial statements, are as follows:

For the year ended 31 December 2014 Revenue Profit before taxation Profit after taxation As at 31 December 2014 Total asset value Net asset value	RMB’000 2,674,523
	50,661
	50,656
	4,173,992
	1,171,573

Anhua is an insurance company approved by the CIRC and is specialized in the provision of insurance services relating to the agricultural sector in the PRC. During the process of assessment on the development of agricultural-solar hybrid projects, the Target Company get to know that Anhua wants to diversify its shareholders base. As insurance products require steady future income stream to support the distribution of the compensation of insurance policies, the steady income stream provided by solar power businesses would be very suitable for insurance company. As such, the Target Company participated in the investment of the equity interests in Anhua, with a view to have further co-operation with Anhua on sourcing of fundings from Anhua in the future.

Reconciliation of Valuation of Properties

Grant Sherman Appraisal Limited, an independent valuer, has valued the Properties as of 31 October 2015. Texts of its letter, summary of valuation and valuation certificates issued by Grant Sherman Appraisal Limited are included in Appendix V to this circular.

The table below sets forth the reconciliation of the net book value of the Properties held by the Target Group as of 30 June 2015, as set out in Appendix II to this circular, to the market value of the Properties held by the Target Group as at 31 October 2015, as included in the valuation report, in Appendix V to this circular.

– 23 –

LETTER FROM THE BOARD

RMB (’000)

Net book value of the Properties held by the Target Group
as of 30 June 2015 (audited), as set out in Appendix II to
this circular	84,288
Fair value adjustment (valuation surplus)	95,212
Market value of the Properties as of 31 October 2015, as set out
in the valuation report in Appendix V to this circular	179,500

REASONS FOR THE ACQUISITION

As disclosed under the section “INFORMATION ON THE TARGET COMPANY”, the Company had previously acquired three project companies from the Target Group in 2014 which held three completed PV power plants. From the previous experiences of the acquisitions from the Target Group, the Directors had considered further acquisitions of PV power plants, including completed projects and projects under construction.

The Company is principally engaged in properties investment, manufacturing and sale of life-like plants and investment in photovoltaic power plants in the PRC. The Company has, since late April 2014, entered into a number of memoranda of understanding and agreements for the development of photovoltaic power plants across the PRC. The Acquisition signifies the furtherance of the Group’s initiative into the photovoltaic power sector in the PRC and presents a good opportunity for the Group’s long-term development.

In considering the potential integration of the Target Group’s business with the Group’s existing business upon Completion, the Board considered that the Target Group’s principal businesses include:

(a) the manufacture and sale of wind-solar hybrid street lights:

The Target Company has many years of experience in the manufacture and sale of wind-solar hybrid street lights business. The manufacture and sale of wind-solar hybrid street lights involves the using of the production technology in both wind and solar power generation. In particular, it involves the purchasing of solar panels from reliable suppliers, which is an important material to be used in solar power plants.

The Group, in the process of developing its own solar power plants, needs to source high quality solar panels from reliable suppliers. Upon completion of the Acquisition, the Enlarged Group will benefit from the synergies of shared resources relating to the sourcing of reliable solar panel suppliers;

– 24 –

LETTER FROM THE BOARD

(b) engineering, procurement and construction (EPC) of PV power plants:

The Target Company has many years of experience in the EPC of PV power plants. The Target Group has a team of experienced staff which involves in the whole process of the designing, sourcing of materials, building and engineering of a PV power plant and successfully delivered a lot of solar power plants to its customers in the past years.

The Group currently engages independent EPC contractors to build solar plants for the Group. Upon completion of the Acquisition, the Group can benefit from the shared experiences in the EPC business from the Target Group, in particular, on the screening of the hiring of independent EPC contractors and the monitoring of the EPC work during the construction stages;

(c) the sale of solar energy-related products:

Both the Target Group and the Group are engaged in the trading of solar energy-related products. Upon completion of the Acquisition, the Enlarged Group could share the experience and information between each other, in particular, the market information related, but not limited, to the trend in the market prices, demand and supply of products, and market research on the products. Accordingly, the Enlarged Group could benefit from obtaining additional market information in making its business decisions; and

(d) the sale of electricity:

Both the Target Group and the Group are involved in sale of electricity. Upon completion of the Acquisition, the Enlarged Group could share the experience and information between each other, in particular, the market information related, but not limited, to the market information related to the electricity reform in the PRC, the demand and supply of electricity in different areas in the PRC, and market research on utilization hours in different areas in the PRC. Accordingly, the Enlarged Group could benefit from obtaining additional market information in making the decisions on investing in solar power plants.

Given that the experience of the Target Company in the development of photovoltaic power stations could complement and enhance the Group’s initiative in developing photovoltaic power stations in the PRC and the wind-solar hybrid street lights could be an income stream for the Group, and that the Acquisition is being carried out after arm’s length negotiations on normal commercial terms, the Directors are of the view that the terms of the Acquisition are fair and reasonable and that the Acquisition is in the best interests of the Company and the Shareholders as a whole.

– 25 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, (i) there is no agreement or arrangement between the Vendors and the Company in relation to the appointment of any individuals of the Vendors to become Directors; and (ii) the Company has no intention to acquire the remaining interest of the Target Company on or before August 2016. The Directors will continue to monitor and review the Group’s business and operations from time to time, and may take steps that they deem necessary or appropriate to optimise the value of the Group. The Stock Exchange has indicated that if the Company acquires further interest in the Target Group after August 2016, the Stock Exchange will aggregate these further acquisition(s) with the Acquisition and assess whether these further acquisition(s) would constitute a reverse takeover under Rule 14.06(6) of the Listing Rules.

As at the Latest Practicable Date, Pohua JT Private Equity Fund L.P. (“Pohua”) is the controlling shareholder of the Company which holds 5,855,820,000 Shares, representing approximately 59.83% of the issued share capital of the Company. The general partner of Pohua is Pohua JT Capital Partners Limited, which is ultimately held as to 15% by Mr. Zhang Fengwu (through his wholly-owned company, Fortune Financial Holdings (LP) Limited), 16% by Mr. Chang Tat Joel, a non-executive Director of the Company (through his wholly-owned companies, Infinity Gain Enterprises Limited and Cheer Full Management Limited), 49% by Ms. He Sensen (through her wholly-owned company, Golden Port Holdings Limited) and 20% by Mr. Li Haifeng (through his wholly-owned companies, Triumph Alliance Holdings Limited and JT Capital Investments Limited).

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios in respect of the Acquisition are 25% or more and all of the applicable percentage ratios are less than 100%, the Acquisition constitutes a major transaction of the Company under Chapter 14 of the Listing Rules and is subject to the notification, announcement and Shareholders’ approval requirements under the Listing Rules.

The EGM will be convened and held at which ordinary resolution(s) will be proposed for the Independent Shareholders to consider, and, if thought fit, to approve the Acquisition Agreement and transactions contemplated thereunder.

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, (i) the Vendors are independent of the Company and connected persons of the Company; and (ii) Mr. Xiang, who is interested in 676,020,000 Shares (representing approximately 6.9% of the issued share capital of the Company as at the Latest Practicable Date) and 60,000,000 share options of the Company as at the Latest Practicable Date, is also interested in 35.331% equity interest of the Target Company as at the Latest Practicable Date. Accordingly, Mr. Xiang’s interest in the ordinary resolution(s) to be proposed at the EGM may be different from the other Shareholders of the Company, Mr. Xiang and his associates shall abstain from voting in the relevant resolutions approving the Acquisition Agreement and the transactions contemplated thereunder. Save as disclosed above, as at the Latest Practicable Date, to the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, no Shareholders or any of their respective associates have any material interest in the Acquisition Agreement and the transactions contemplated thereunder. As such, no Shareholder (other than Mr. Xiang) is required to abstain from voting at the EGM.

– 26 –

LETTER FROM THE BOARD

THE EGM

Set out on pages EGM-1 to EGM-2 of this circular is a notice of the EGM to be held at 9/F., Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong on 15 January 2016 at 11:00 a.m., at which an ordinary resolution will be proposed to approve the Acquisition Agreement and the transactions contemplated therein. Shareholders and their associates with a material interest in the Acquisition Agreement and transactions contemplated thereunder shall abstain from voting on the resolution approving same. Whether or not you propose to attend the meeting, you are requested to read the notice of EGM and form of proxy, which are enclosed in this circular in accordance with the instructions printed thereon and return the same to the Company’s share registrar and transfer office, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Center, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding of the meeting or any adjournment thereof. Completion and return of the proxy form shall not preclude you from attending and voting at the meeting should you so wish.

FINANCIAL IMPACT OF THE ACQUISITION

Upon Completion, the Target Group would be accounted for using the equity method as “Interest in an associate” in the consolidated financial statements of the Group.

Based on the unaudited pro-forma financial information of the Enlarged Group set out in Appendix IV to this circular and the bases and assumptions taken into account in preparing such unaudited pro-forma financial information, the Group’s total assets would be decreased by approximately RMB2.1 million and the Group’s total liabilities would be unchanged as a result of the Acquisition. The details of the financial effect of the Acquisition on the financial position and results of the Group together with the bases and assumptions taken into account in preparing the unaudited pro-forma financial information are set out, for illustration purpose only, in Appendix IV to this circular.

According to the annual report of the Group for the year ended 31 December 2014, the Group recorded an audited consolidated profit attributable to Shareholders of the Company of approximately RMB11,667,000. According to the accountants’ reports of the Target Group as set out in Appendix II to this circular, the Target Group recorded an audited consolidated profit attributable to shareholders of the Target Company of approximately RMB9,202,000 for the year ended 31 December 2014. The Directors consider that the Acquisition will bring positive contribution to the earnings of the Enlarged Group but the quantification of such contribution will depend on the future performance of the Target Group.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that the terms of the Acquisition Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and the Acquisition is in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the relevant resolution to be proposed at the EGM.

ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board Kong Sun Holdings Limited Liu Wen Ping

Executive Director

– 28 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. SUMMARY OF THE FINANCIAL INFORMATION OF THE GROUP

Financial information on the Group for (i) each of the three years ended 31 December 2012, 2013 and 2014; and (ii) the six months ended 30 June 2015 are set out in the (a) annual reports of the Group for the years ended 31 December 2012 (pages 22 to 101), 2013 (pages 22 to 101) and 2014 (pages 41 to 113); and (b) the interim report of the Company for the six months ended 30 June 2015 (pages 35-62), respectively, which are published on both the website of the Stock Exchange (http://www.hkex.com.hk) and the website of the Company (www.kongsun-hldgs.com) respectively.

2. MANAGEMENT DISCUSSION AND ANALYSIS

Set out below is the management discussion and analysis of the performance of the Group for the years ended 31 December 2012, 2013 and 2014 and for the six months ended 30 June 2015 based on the Company’s annual reports for the years ended 31 December 2012, 2013 and 2014 and the interim report for the six months ended 30 June 2015. Capitalised terms in this section follow the definitions as set out in the respective annual reports and interim report.

For the period ended 30 June 2015

BUSINESS REVIEW

Photovoltaic Power Plants Business

From 2014 onwards, the Group entered into several memoranda of understanding, cooperation agreements and framework agreements on proposed acquisition of or investments in photovoltaic (“PV”) power plants in the PRC, as follows:

	Name and	Capacity and
Date	location of project	type of power plants	Status as at 30 June 2015
29 April 2014	Lincheng County,	50 MW; Ground mounted PV	Under negotiations and no
	Hebei Province	power plants	formal agreement has been
			entered into by the Group
30 April 2014	Anhui and Yunnan Provinces	261 MW; Ground mounted PV	Project suspended and no
		power plants	further negotiation will be
			continued by the Group
4 September 2014	Across PRC	Total 800 MW to 1,000 MW	Project suspended and no
		from 2014 to 2016; Ground	further negotiation will be
		mounted PV power plants	continued by the Group

– I-1 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

	Name and	Capacity and
Date	location of project	type of power plants	Status as at 30 June 2015
24 October 2014	Across PRC	N/A	Set up of investment fund,
			which is still under
			negotiations and no formal
			agreement has been entered
			into by the Group
28 November 2014	Across PRC	Total 800 MW from 2015 to	Under negotiations and no
		2017; Distributed PV power	formal agreement has been
		plants	entered into by the Group
3 December 2014	Across PRC	Total 600 MW from 2015 to	Under negotiations and no
		2017; Distributed PV power	formal agreement has been
		plants	entered into by the Group
18 December 2014	Across PRC	Not less than 300 MW for three	Under negotiations and no
		years up to 2017; Distributed	formal agreement has been
		PV power plants	entered into by the Group
26 May 2015	Across PRC	Total 324 MW; Ground	Under negotiations and no
		mounted PV power plants	formal agreement has been
			entered into by the Group

As at 30 June 2015, the Group had the following ground mounted PV power plants under development:

		Capacity of
Name of project*	Location of project	power plants	Status as at 30 June 2015
Enfei New Energy (Shuozhou) Limited	Shaanxi Province	70 MW	Major construction work not
Company (恩菲新能源（朔州）有限公司)			yet started; expected to be
			completed by early 2016
Dunhuang Wanfa New Energy Limited	Gansu Province	60 MW	Majority of construction work
Company (敦煌萬發新能源有限公司)			is completed; expected to
			connect to power grid by end
			of September 2015
Yulin BYD New Energy Limited Company	Shaanxi Province	300 MW	Major construction work not
(榆林市比亞迪新能源有限公司)			yet started; 50 MW is
			expected to be completed by
			end of 2015

– I-2 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

		Capacity of
Name of project*	Location of project	power plants	Status as at 30 June 2015
Qiangmao Energy Eerduosi Limited Company	Inner Mongolia	10 MW	Major construction work is
(強茂能源鄂爾多斯市有限責任公司)			completed; expected to
			connect to power grid by end
			of September 2015
Shandong Xintailou Dejiayang Solar Power	Shandong Province	20 MW	Major construction work is
Generation Limited Company			completed; expected to
(山東新泰樓德佳陽光伏發電有限公司)			connect to power grid by end
			of September 2015
Haidong Ledu District Rui Qida Photovoltaic	Qinghai Province	20 MW	Major construction work not
Power Company Limited			yet started
(海東市樂都區瑞啟達光伏發電有限公司)
Keping Tianhua New Energy Electricity	Xinjiang Province	20 MW	Major construction work not
Limited Company			yet started
(柯坪天華新能源電力有限公司)
Total		500 MW

As at 30 June 2015, the Group had the following ground mounted PV power plants completed:

		Capacity of
Name of project*	Location of project	power plants
Gansu Hongyuan Photovoltaic Limited Company	Gansu Province	30 MW
(甘肅宏遠光電有限責任公司)
Yumen Yonglian Technology New Energy Limited Company	Gansu Province	20 MW
(玉門市永聯科技新能源有限公司)
Hami Zhaoxiang New Energy Technology Limited Company	Xinjiang Province	20 MW
(哈密朝翔新能源科技有限公司)
Yingjisha Tianhuaweiye Solar Technology Limited Company	Xinjiang Province	20 MW
(英吉沙縣天華偉業太陽能科技有限公司)
Wushi Huayangweiye Solar Technology Limited Company	Xinjiang Province	20 MW
(烏什縣華陽偉業太陽能科技有限公司)
Kuche Tianhua New Energy Electric Power Limited Company	Xinjiang Province	20 MW
(庫車天華新能源電力有限公司)

– I-3 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

		Capacity of
Name of project*	Location of project	power plants
Maigaiti Linuo Solar Power Limited Company	Xinjiang Province	20 MW
(麥蓋提力諾太陽能電力有限公司)
Hejing Xushuang Photovoltaic Technology Limited Company	Xinjiang Province	20 MW
(和靜旭雙太陽能科技有限公司)
Langzhou Taike Photovoltaic Power Limited Company	Gansu Province	49.5 MW
(蘭州太科光伏電力有限公司)
Total		219.5 MW

• The English translation of these companies’ names is for reference only. The official names of these companies are in Chinese.

Properties Investment

The Group continued to generate rental income from its properties investment in Hong Kong. During the six months ended 30 June 2015, the Group disposed one of its investment properties located in Hong Kong through disposing all the issued shares of a wholly owned subsidiary of the Company and recorded a gain on disposal of a subsidiary.

Life-Like Plants Business

During the six months ended 30 June 2015, the Group continued to generate revenue from the sales of life-like plants. The turnover from life-like plants business increased by 14.4% from approximately RMB1,613,000 for the six months ended 30 June 2014 to approximately RMB1,846,000 for the six months ended 30 June 2015. The life-like plants business continues to be loss making, but the loss has been reduced from approximately RMB1,804,000 for the six months ended 30 June 2014 to approximately RMB1,622,000 for the six months ended 30 June 2015.

Securities Investment

For the six months ended 30 June 2014, the Group recorded a gain of approximately RMB6,735,000 on disposal of available-for-sale financial assets. During the six months ended 30 June 2015, the Group did not invest in any securities.

– I-4 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

RESULTS OF OPERATIONS

Turnover

The turnover of the Group increased by 166.2 times from approximately RMB2,476,000 for the six months ended 30 June 2014 to approximately RMB413,954,000 for the six months ended 30 June 2015. The increase was primarily due to an increase in the turnover from the sales of electricity and sales of solar energy related products.

Revenue from sales of electricity and sales of solar energy related products

For the six months ended 30 June 2015, the Group recorded a total amount of approximately RMB45,468,000 (2014: Nil) from the sales of electricity (includes tariff adjustment). In addition, the Group had gained revenue of approximately RMB365,670,000 (2014: Nil) from the sales of solar energy related products during the six months ended 30 June 2015.

Revenue from sales of life-like plants

The Group’s revenue from sales of life-like plants increased by approximately 14.4% from approximately RMB1,613,000 for the six months ended 30 June 2014 to approximately RMB1,846,000 for the six months ended 30 June 2015.

Rental income

The Group’s rental income increased by approximately 12.4% from approximately RMB863,000 for the six months ended 30 June 2014 to approximately RMB970,000 for the six months ended 30 June 2015.

Gross profit

The gross profit of the Group increased by 118.8 times from approximately RMB612,000 for the six months ended 30 June 2014 to approximately RMB73,311,000 for the six months ended 30 June 2015, mainly because of an increased gross profit due to increase in revenue from sales of electricity and sales of solar energy related products.

Valuation gains on investment properties

The Group holds certain properties for rental income and/or capital appreciation purposes in Hong Kong. The Group’s investment properties are revaluated at the end of the respective period end on an open market value or existing use basis by an independent property valuer. For the six months ended 30 June 2015, the Group recorded increase in fair value of investment properties of RMB5,138,000 (2014: Nil). The increase in fair value of the Group’s investment properties during the six months ended 30 June 2015 reflected a rise in the property price in Hong Kong over the period under review.

– I-5 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Other revenue

Other revenue of the Group increased by approximately 190.8% from approximately RMB1,301,000 for the six months ended 30 June 2014 to approximately RMB3,783,000 for the six months ended 30 June 2015. The increase was mainly due to the increase in interest income of approximately RMB2,539,000 as a result of the increase in bank deposits with the banks.

Other net income

The Group recorded a net income of approximately RMB19,648,000 for the six months ended 30 June 2015 (30 June 2014: RMB5,817,000). The significant increase was mainly due to the net gain on disposal of a subsidiary amounting to approximately RMB17,737,000 (2014: Nil) during the six months ended 30 June 2015.

Administrative expenses

Administrative expenses of the Group increased by approximately 615.5% from approximately RMB9,415,000 for the six months ended 30 June 2014 to approximately RMB67,369,000 for the six months ended 30 June 2015. The significant increase in the Group’s administrative expenses during the period under review was attributable to (i) increase in legal and other professional fees amounted to approximately RMB3,466,000 in relation to, including but not limited to, the issue of new shares by the Company during the six months ended 30 June 2015; (ii) increase in office rental expenses of approximately RMB7,026,000; (iii) increase in salaries and wages amounted to approximately RMB13,495,000 due to increase in head count to support the increasing business demand in operation; (iv) equity-settled based payment expenses in relation to staff and consultants of the Group amounted to approximately RMB30,585,000; and (v) increase in travelling and transportation expenses amounted to approximately RMB1,623,000.

Solar power plants

As at 30 June 2015, the Group had a net book value of approximately RMB1,265,395,000 (31 December 2014: RMB533,903,000) and approximately RMB1,148,519,000 (31 December 2014: RMB1,034,247,000) in completed solar power plants and solar power plants under development, respectively.

Investment properties

The Group continues to hold certain investment properties in Hong Kong for rental purposes. As at 30 June 2015, the total investment properties held by the Group, at valuation, amounted to approximately RMB46,133,000 (31 December 2014: RMB77,943,000).

– I-6 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Goodwill

During the six months ended 30 June 2015, the Group had acquired one solar power plant with operations and as at 30 June 2015, the Group had a total amount of approximately RMB36,543,000 (31 December 2014: RMB35,050,000) in respect of goodwill on acquisitions.

Liquidity and Capital Resources

As at 30 June 2015, the total amount of cash and cash equivalents and pledged bank deposits was approximately RMB1,391,034,000 (31 December 2014: approximately RMB1,160,535,000). As at 30 June 2015, cash and cash equivalents of the Group was approximately RMB1,154,061,000 (31 December 2014: approximately RMB1,008,312,000), which included an amount of bank deposits of approximately RMB555,732,000 (31 December 2014: approximately RMB827,828,000), denominated in RMB. The remaining balance of the Group’s cash and cash equivalents consisted primarily of cash on hand and bank balances which were primarily held in HK$ denominated accounts with banks in Hong Kong and the PRC.

As at 30 June 2015, the Group’s debt ratio, which was calculated by the total liabilities over the total equity, decreased from the ratio of 0.66 as at 31 December 2014 to 0.58 as at 30 June 2015.

Capital Expenditure

During the six months ended 30 June 2015, the Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB4,170,000 (2014: RMB1,072,000) and RMB861,510,000 (2014: Nil), respectively.

Loans and Borrowings

As at 30 June 2015, the Group’s total loans and borrowings was approximately RMB676,217,000, representing an increase of approximately RMB53,714,000 over an amount of approximately RMB622,503,000 as at 31 December 2014. All the loans and borrowings of the Group, except for an equivalent amount of approximately RMB232,155,000 (31 December 2014: approximately RMB5,720,000) which were denominated in HKD, were denominated in RMB, the functional currency of the Company’s major subsidiaries in the PRC.

Foreign Exchange Risk

The Group primarily operates its business in the PRC and during the six months ended 30 June 2015, the Group’s revenue were primarily denominated in RMB, being the functional currency of the Group’s major operating subsidiaries. Accordingly, the Company did not use any financial instruments for hedging purposes. The Directors expect any future exchange rate fluctuation may not have any material effect on the Group’s business but will continue to monitor its foreign exchange exposures and enter into hedging arrangement as and when appropriate.

– I-7 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Charge on Assets and Contingent Liabilities

As at 30 June 2015, the Group has pledged bank deposits of approximately RMB236,973,000 (31 December 2014: approximately RMB152,050,000), and land and buildings and solar power plants with net book value of approximately RMB4,693,000 (31 December 2014: approximately RMB3,630,000) and approximately RMB528,239,000 (31 December 2014: approximately RMB533,903,000), respectively, to secure general banking and other loans facilities granted to the Group.

As at 31 December 2014, the Group’s bank deposits in the amount of approximately RMB173,000 had been pledged to a bank for the requirement of the customs authorities of the PRC.

As at 30 June 2015, the Group had no significant contingent liabilities (31 December 2014: Nil).

Employees and Remuneration Policy

As at 30 June 2015, the Group had approximately 178 employees (31 December 2014: 174) located in Hong Kong and the PRC. Compensation for the employees includes basic wages, variable wages, bonuses and other staff benefits. For the six months ended 30 June 2015, the total employees compensation expenses, excluding equity-settled share-based payment expenses, were approximately RMB15,458,000 (2014: approximately RMB1,963,000). The remuneration policy of the Group is to provide remuneration packages, including basic salary, short term bonuses and long term rewards such as options, so as to attract and retain top quality staff. The remuneration committee of the Company reviews such packages annually, or when occasion requires.

The Company has also adopted a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations.

MATERIAL ACQUISITION AND DISPOSAL

• (a) The Group entered into a sale and purchase agreement on 15 June 2015 with Marvel Star Group Limited in relation to the sale of the 100,000 shares in Coast Holdings Limited to Marvel Star Group Limited at a consideration of HK$70,000,000;

• (b) On 5 June 2015, the Group acquired a 49.5 MW PV project located in Lanzhou, Gansu Province, at a consideration of RMB495 million; and

• (c) On 5 May 2015, the Group acquired a 20 MW PV project located in Hejing County, Xinjiang Province, at a consideration of RMB193.6 million.

– I-8 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

PROSPECT

Environmental protection remains one of the areas of concern in the National People’s Congress and Chinese People’s Political Consultative Conference and related policies have been adopted. Premier Li Keqiang has indicated in the Government Work Report 2015 that great efforts should be devoted to the development of the clean energy sector, including photovoltaic power generation. From January to June 2015, China added 7.73 gigawatts of photovoltaic installed capacity, which was 134% more than the added capacity for the corresponding period of 2014. This shows that the photovoltaic power generation sector is experiencing rapid growth in the PRC.

During the first half of 2015, the Group continued to invest in photovoltaic power plants and recorded significant increase in revenue during the period under review. Leveraging on the strong financial position due to the successful fund raising transactions during the six months ended 30 June 2015, the Group has a competitive edge in executing its strategic plans to acquire and develop photovoltaic power plants in the PRC. In particular, the Group is presently in various stages of discussion with various stakeholders of photovoltaic power plants over potential acquisitions in the PRC. The Board is confident that, with the Group’s solid and experienced management, the Group will be able to continue to grasp investment opportunities with excellent returns.

In the upcoming future, the Company will continue to review its investment portfolio from time to time and, in particular, strive to increase its investment in photovoltaic power plants with the aim of becoming a leading photovoltaic plant operator in China and eventually a leading photovoltaic plant operator in Asia Pacific with economies of scale that will be well received by the public markets.

For the year ended 31 December 2014

BUSINESS REVIEW

Photovoltaic Power Plants Business

In 2014, the Company entered into several memoranda of understanding, cooperation agreements and framework agreements on proposed acquisition of or investments in PV power plants in the PRC, as follows:

		Capacity and
Date	Name and location of project	type of power plants	Status as at 31 December 2014
22 April 2014	Gansu Province	30 MW; Ground mounted PV	Project suspended and no
		power plants	further negotiation will be
			continued by the Group
29 April 2014	Lincheng County,	50 MW; Ground mounted PV	Under negotiations and no
	Hebei Province	power plants	formal agreement has been
			entered into by the Group

– I-9 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

		Capacity and
Date	Name and location of project	type of power plants	Status as at 31 December 2014
30 April 2014	Anhui and Yunnan Provinces	261 MW; Ground mounted PV	Under negotiations and no
		power plants	formal agreement has been
			entered into by the Group
4 September 2014	Across PRC	Total 800 MW to 1,000 MW	Under negotiations and no
		from 2014 to 2016; Ground	formal agreement has been
		mounted PV power plants	entered into by the Group
24 October 2014	Across PRC	N/A	Set up of investment fund still
			under negotiations and no
			formal agreement has been
			entered into by the Group
28 November 2014	Across PRC	Total 800 MW from 2015 to	Under negotiations and no
		2017; Distributed PV power	formal agreement has been
		plants	entered into by the Group
3 December 2014	Across PRC	Total 600 MW from 2015 to	Under negotiations and no
		2017; Distributed PV power	formal agreement has been
		plants	entered into by the Group
18 December 2014	Across PRC	Not less than 300 MW for three	Under negotiations and no
		years up to 2017; Distributed	formal agreement has been
		PV power plants	entered into by the Group

As at 31 December 2014, the Group had the following ground mounted PV power plants under development:

		Capacity of
Name of project*	Location of project	power plants	Status as at 31 December 2014
Enfei New Energy (Shuozhou) Limited	Shaanxi Province	70 MW	Major construction not yet
Company (恩菲新能源（朔州）有限公司)			started; expected to be
			completed by end of
			September 2015
Dunhuang Wanfa New Energy Limited	Gansu Province	60 MW	Majority of construction work
Company (敦煌萬發新能源有限公司)			is completed; expected to
			connect to grid by end of
			April 2015

– I-10 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

		Capacity of
Name of project*	Location of project	power plants	Status as at 31 December 2014
Maigaiti Linuo Solar Power Limited Company	Xinjiang Province	20 MW	Majority of construction work
(麥蓋提力諾太陽能電力有限公司)			is completed; expected to
			connect to grid by end of
			April 2015
Kuche Tianhua New Energy Electric Power	Xinjiang Province	20 MW	Majority of construction work
Limited Company (庫車天華新能源電力			is completed; expected to
有限公司)			connect to grid by end of
			March 2015
Wushi Huayangweiye Solar Technology	Xinjiang Province	20 MW	Majority of construction work
Limited Company (烏什縣華陽偉業太陽能科			is completed; expected to
技有限公司)			connect to grid by end of
			March 2015
Yingjisha Tianhuaweiye Solar Technology	Xinjiang Province	20 MW	Connected to grid on 9 March
Limited Company (英吉沙縣天華偉業太陽能			2015
科技有限公司)
Yulin BYD New Energy Limited Company	Shaanxi Province	300 MW	Major construction not yet
(榆林市比亞迪新能源有限公司)			started; 150 MW is expected
			to be completed by end of
			2015

During the year ended 31 December 2014, the Group had acquired the following ground mounted PV power plants, which had already been connected to grid and generated electricity revenue for the Group:

			Capacity of
Date of acquisition	Name of project*	Location of project	power plants
7 November 2014	Gansu Hongyuan Photovoltaic	Gansu Province	30 MW
	Limited Company
	(甘肅宏遠光電有限責任公司)
4 November 2014	Yumen Yonglian Technology New Energy	Gansu Province	20 MW
	Limited Company
	(玉門市永聯科技新能源有限公司)
30 October 2014	Hami Zhaoxiang New Energy Technology	Xinjiang Province	20 MW
	Limited Company
	(哈密朝翔新能源科技有限公司)

• The English translation of the companies’ names is for reference only. The official names of these companies are in Chinese.

– I-11 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Properties investment

The total rental income of the Group from its properties investment increased by approximately 69.5% from approximately RMB994,000 for the year ended 31 December 2013 to approximately RMB1,685,000 for the year ended 31 December 2014, driven by an increase in units of the Group’s investment properties were being rented out during the year under review.

Life-like plants business

The turnover from life-like plants business decreased by approximately 25.3% from approximately RMB6,370,000 for the year ended 31 December 2013 to approximately RMB4,760,000 for the year ended 31 December 2014.

Securities investment

For the year ended 31 December 2014, the Group had recorded a net gain on available-for-sale securities amounted to approximately RMB6,735,000 (2013: loss of approximately RMB3,472,000). During the year ended 31 December 2014, the Group had disposed of all of its securities investments and the Group did not hold any investment in securities as at 31 December 2014.

RESULTS OF OPERATIONS

Turnover

The turnover of the Group increased by 71.2 times from approximately RMB7,364,000 for the year ended 31 December 2013 to approximately RMB524,283,000 for the year ended 31 December 2014. The increase was primarily due to increase in revenue from the sales of electricity (including tariff adjustment) and increase in sales of solar energy related products.

Revenue from sales of electricity and sales of solar energy related products

The Group had the first time generated revenue from sales of electricity in the second half of 2014 from its PV power plants. For the year ended 31 December 2014, the Group recorded a total amount of approximately RMB9,547,000 (2013: Nil) from the sales of electricity (includes tariff adjustment). In addition, the Group had gained revenue of approximately RMB508,291,000 (2013: Nil) from the sales of solar energy related products during the year ended 31 December 2014.

– I-12 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Revenue from sales of life-like plants

The Group’s revenue from sales of life-like plants decreased by approximately 25.3% from approximately RMB6,370,000 for the year ended 31 December 2013 to approximately RMB4,760,000 for the year ended 31 December 2014.

Rental income

The Group’s rental income increased by approximately 69.5% from approximately RMB994,000 for the year ended 31 December 2013 to approximately RMB1,685,000 for the year ended 31 December 2014.

Gross profit

The gross profit of the Group increased by 32.6 times from approximately RMB1,510,000 for the year ended 31 December 2013 to RMB49,153,000 for the year ended 31 December 2014, mainly due to the increase in revenue from sales of electricity and sales of solar energy related products during the year under review.

Valuation gains on investment properties

The Group holds certain properties for rental income and/or capital appreciation purposes in Hong Kong. The Group’s investment properties are revaluated at the end of the respective year end on an open market value or existing use basis by an independent property valuer. For the year ended 31 December 2014, the Group recorded increases in fair value of investment properties of RMB2,298,000 (2013: RMB2,473,000). The increase in fair value of the Group’s investment properties during the years ended 31 December 2014 and 2013 reflected a rise in the property price in Hong Kong over the period under review.

Other revenue

Other revenue of the Group increased by approximately 399.7% from approximately RMB1,888,000 for the year ended 31 December 2013 to approximately RMB9,434,000 for the year ended 31 December 2014. The increase is mainly due to the increase in interest income of approximately RMB4,531,000 as a result of the increase in bank deposits with the banks.

Other net income/(loss)

The Group recorded a net income of approximately RMB7,958,000 for the year ended 31 December 2014 (2013: net loss of approximately RMB637,000). The significant improvement was mainly due to the net gain on disposal of property, plant and equipment and disposal of available-for-sale securities of approximately RMB2,698,000 and RMB6,735,000, (2013: RMB105,000 and RMB Nil), respectively, during the year ended 31 December 2014.

– I-13 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Administrative expenses

Administrative expenses of the Group increased by approximately 255.7% from approximately RMB11,310,000 for the year ended 31 December 2013 to approximately RMB40,225,000 for the year ended 31 December 2014. The increase was attributable to (i) increase in legal and other professional fees amounted to approximately RMB880,000 in relation to, including but not limited to, the issue of new Shares by the Company during the year 2014; (ii) increase in office rental expenses of approximately RMB591,000; (iii) increase in salaries and wages amounted to approximately RMB5,466,000 due to increase in head count; (iv) equity-settled based payment expenses in relation to staff and consultants of the Group amounted to approximately RMB15,448,000; (v) increase in auditors’ remuneration amounted to approximately RMB1,184,000; and (vi) increase in travelling and transportation expenses amounted to approximately RMB1,191,000.

Solar power plants

As at 31 December 2014, the Group had a net book value of approximately RMB533,903,000 (2013: Nil) and approximately RMB1,034,247,000 (2013: Nil) in completed solar power plants and solar power plants under development, respectively.

Investment properties

The Group continues to hold certain investment properties in Hong Kong for rental purposes. As at 31 December 2014, the total investment properties, at valuation, amounted to approximately RMB77,943,000 (2013: RMB75,399,000).

Goodwill

During the year ended 31 December 2014, the Group had acquired three solar power plants with operations and recorded a total amount of approximately RMB35,050,000 (2013: Nil) in respect of goodwill on the acquisitions.

Liquidity and Capital Resources

As at 31 December 2014, the total amount of cash and cash equivalents and pledged bank deposits was approximately RMB1,160,535,000 (2013: approximately RMB88,039,000). As at 31 December 2014, cash and cash equivalents of the Group was approximately RMB1,008,312,000 (2013: approximately RMB87,933,000), which included an amount of bank deposits of approximately RMB827,828,000 (2013: approximately RMB37,349,000), denominated in RMB. The remaining balance of the Group’s cash and cash equivalents consisted primarily of cash on hand and bank balances which were primarily held in HK$ denominated accounts with banks in Hong Kong.

As at 31 December 2014, the Group’s debt ratio, which was calculated by the total liabilities over the total equity, increased from the ratio of 0.11 as at 31 December 2013 to 0.66 as at 31 December 2014.

– I-14 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Capital Expenditure

During the year ended 31 December 2014, the Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB1,762,000 (2013: RMB2,118,000) and RMB624,847,000 (2013: Nil), respectively.

Loans and Borrowings

As at 31 December 2014, the Group’s total loans and borrowings was approximately RMB622,503,000, representing an increase of approximately RMB615,068,000 over an amount of approximately RMB7,435,000 as at 31 December 2013. All the loans and borrowings of the Group, except for an equivalent amount of approximately RMB5,720,000 (2013: approximately RMB6,227,000) which were denominated in HK$, were denominated in RMB, the functional currency of the Company’s major subsidiaries in the PRC.

Foreign Exchange Risk

The Group primarily operates its business in the PRC and during the year ended 31 December 2014, the Group’s revenue were primarily denominated in RMB, being the functional currency of the Group’s major operating subsidiaries. Accordingly, the Directors expect any future exchange rate fluctuation will not have any material effect on the Group’s business. The Group did not use any financial instruments for hedging purpose.

Charge on Assets and Contingent Liabilities

As at 31 December 2014, the Group has pledged bank deposits of approximately RMB152,223,000 (2013: approximately RMB106,000), and land and buildings and solar power plants with net book value of approximately RMB3,630,000 (2013: approximately RMB10,407,000) and approximately RMB533,903,000 (2013: Nil), respectively, to secure general banking and other loans facilities granted to the Group.

As at 31 December 2014, the Group’s bank deposits in the amount of approximately RMB173,000 (2013: approximately RMB106,000) had been pledged to a bank for the requirement of the customs authorities of the PRC.

As at 31 December 2014, the Group had no significant contingent liabilities (2013: Nil).

– I-15 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Employees and Remuneration Policy

As at 31 December 2014, the Group had approximately 174 (2013: 125) employees located in Hong Kong and the PRC. Compensation for the employees includes basic wages, variable wages, bonuses and other staff benefits. For the year ended 31 December 2014, the total employees compensation expenses were approximately RMB9,775,000 (2013: approximately RMB6,859,000). The remuneration policy of the Group is to provide remuneration packages, including basic salary, short term bonuses and long term rewards such as options, so as to attract and retain top quality staff. The remuneration committee of the Company reviews such packages annually, or when occasion requires.

The Company has also adopted a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations.

MATERIAL ACQUISITIONS AND DISPOSALS

• (a) On 7 November 2014, the Group acquired a 30 MW PV project located in Jiuquan City, Gansu Province, at a consideration of RMB99,570,000;

• (b) On 4 November 2014, the Group acquired a 20 MW PV project located in Yumen City, Gansu Province, at a total consideration of RMB62,087,400;

• (c) On 30 October 2014, the Group acquired a 20 MW PV project located in Hami City, Xinjiang Province, at a total consideration of RMB41,070,000;

• (d) On 7 July 2014, the Company, 江山新能源投資（揚州）有限公司 (Kong Sun New Energy Investment (Yangzhou) Co., Ltd.), a wholly-owned subsidiary of the Company, BYD Auto Industry Co., Ltd. and 榆林市比亞迪新能源有限公司 (Yulin City BYD New Energy Co., Ltd.), entered into an agreement, pursuant to which Kong Sun New Energy Investment (Yangzhou) Co., Ltd. agreed to acquire from BYD Auto Industry Co., Ltd. the entire equity interest in Yulin City BYD New Energy Co., Ltd., a project company engaged in the development of a 300 MW photovoltaic power station in Shaanxi Province, the PRC, for RMB204,000,000.

PROSPECT

To diversify the revenue stream of the Group, the Board has started to evaluate different kinds of investments in both Hong Kong and the PRC during the first half of 2014. In particular, the Group had for the first time invested in certain photovoltaic power plants during the year under review. In light of the increasing attention on the clean energy sector worldwide, the Board is of the opinion that its investments in the photovoltaic power plants would create high investment returns for the Group in the long run.

– I-16 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Strategic Action Plan for Energy Development (2014-2020) issued by the State Council in November 2014 stated that clean and low-carbon energy shall increase as a percentage of energy consumption. It envisioned that the share of renewable energies such as solar and wind energy in electricity consumption shall increase significantly going forward. The government document also stated a goal of having the country’s installed PV capacity increase to 100 gigawatts (GW) by 2020. Environmental protection related policies remain one of the most concerned issues in the National People’s Congress (“NPC”) and Chinese People’s Political Consultative Conference (“CPPCC”). Premier Li Keqiang said in the Government Work Report 2015 that great efforts should be devoted to develop clean energy sectors, including photovoltaic power generation sector.

As the leader of the global solar PV market, PRC has the most advanced solar technology. Answering the call to combat pollution, the Group has been investing in photovoltaic power plants. The Board is confident about the prospect of such investments and their potential for creating a significant growth in business in the coming decades. The PRC central government had reiterated its support to the clean energy sector under the “Twelfth Five-year Plan”. This will further benefit the Group’s development.

Looking forward, the Group will continue to review its investment portfolio from time to time and in particular, grasp the opportunities in investing in photovoltaic power stations to pursue a strong and rapid growth, with an aim to maximizing the investment returns for its shareholders.

For the year ended 31 December 2013

REVIEW OF OPERATIONS

For the year ended 31 December 2013, the turnover of the Group amounted to approximately HK$9,229,000. Loss attributable to shareholders has decreased to approximately HK$7,786,000 from approximately HK$10,901,000 recorded in last year. The decrease of loss for the year was mainly contributed by (i) an absence of the loss on written off of property, plant and equipment and inventories made in last year; (ii) an absence of the impairment loss recognised in respect of goodwill and property, plant and equipment made in last year; (iii) a reduction of gain on disposal of available-for-sale financial assets; and (iv) a reduction of gain on fair value changes of investment properties.

– I-17 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Properties Investment

The Group’s properties investment business had contributed approximately HK$1,246,000 to the total revenue of the Group for the year ended 31 December 2013. The turnover has reduced by about HK$474,000 due to investment properties not fully occupied during the year. The imposition of stamp duties charges by HKSAR Government, such as buyers’ stamp duty, special stamp duty and double stamp duty, during the year to curb speculation, the property market has started to cool down and show signs of stabilisation. The Group’s investment properties were valued at approximately HK$95,900,000 as at 31 December 2013, which represented an increment of approximately HK$3,100,000 as compared to last year. It is expected that the revenue from the properties investment business would have a steady growth in the coming future.

Life-like Plants Business

The life-like plants business had contributed approximately HK$7,983,000 to the total revenue of the Group for the year ended 31 December 2013. The turnover of the segment increased by approximately HK$1,143,000 when compared with last year. Uncertainties of the United States economy and the relapse of the European debt crisis have generated concerns over the global economies which are likely to influence the life-like plants business. It will be challenging in the forthcoming year for the Group’s export to these regions. The Group will continue to closely monitor our business operations and enhance its product differentiation to maintain its competitiveness in the industry.

Securities Investment

As at 31 December 2013, the Group managed a portfolio of investments in capital market with fair value of approximately HK$43,178,000. The Group will be watchful on market developments and will continue to be prudent in managing its investment portfolio with a continuing focus on improving overall asset quality.

Prospects

The challenging market conditions will continue to affect the business environment, it is expected that the global market remains volatile in the forthcoming year. Therefore, it is important for the Group to carry on the businesses in a cautious pace.

The Group has undertaken a placing of shares during the year which further solid the working capital and financial position of the Group. The Group is also actively looking for new investment and business opportunities to deliver the greatest return to shareholders.

– I-18 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Capital Structure

As at 31 December 2013, the Group has shareholders’ equity of approximately HK$289,449,000 and the share capital of the Company had the following changes:

On 3 October 2013, 293,700,000 ordinary shares of par value HK$0.01 each were issued at the placing price of HK$0.086 per placing share.

Investment Position and Planning

During the year ended 31 December 2013, the Group spent approximately HK$2,611,000 for acquisition of fixed assets.

The Group has invested in shares of certain companies that are traded over The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). During the year ended 31 December 2013, the Group has acquired and disposed of equity securities of a company listed on the Stock Exchange. As at 31 December 2013, the Group held long-term and short-term investments with fair value of approximately HK$42,105,000 and HK$1,073,000 respectively.

Saved as disclosed above, the Group did not have any other significant investment and there is no other material acquisition or disposal of subsidiaries and associated company during the year.

Charge on the Group’s Assets and Contingent Liabilities

As at 31 December 2013, the Group’s bank deposits in the amount of approximately HK$136,000 (31 December 2012: approximately HK$1,161,000) had been pledged to banks for the requirement of the customs authorities of the PRC.

As at 31 December 2013, the Group has pledged land and buildings with net book value of approximately HK$13,237,000 (31 December 2012: approximately HK$13,752,000) to secure general banking facilities granted to the Group.

Employees and Remuneration Policies

As at 31 December 2013, the Group has approximately 125 employees located in Hong Kong and the PRC. They are remunerated according to the nature of the job market trends, with build-in-merit components incorporated in annual review to reward and motivate individual performance.

Liquidity and Financial Resources

As at 31 December 2013, the total shareholders fund of the Group amounted to approximately HK$289,449,000 (2012: HK$259,093,000), total assets of approximately HK$320,647,000 (2012: HK$289,020,000), current liabilities of approximately HK$22,741,000 (2012: HK$22,182,000) and non-current liabilities of approximately HK$8,457,000 (2012: HK$7,745,000).

– I-19 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The debt ratio (based on the total liabilities over the equity) of the Group decreased from the ratio of 0.12 as at 31 December 2012 to 0.11 as at 31 December 2013.

As at 31 December 2013, the Group has bank borrowing of approximately HK$7,920,000 which bears interest ranging from 1.375% to 2% per annum below prime rate or 2.5% per annum over 1 month Hong Kong Interbank Offered Rate, whichever is lower, and is repayable on demand. The Group also has a short-term interest-free loan of RMB1,200,000 (approximately HK$1,537,000) borrowed from an independent third party. The cash and bank balances of the Group at the end of the reporting period amounted to approximately HK$111,841,000. The gearing ratio, as a ratio of total borrowings over total assets was 0.03.

Foreign exchange exposure and treasury policies

The Group’s business operation and investments are in Hong Kong and the PRC, most of the assets, liabilities and transactions of the Group are denominated in Hong Kong dollars and Renminbi. The Group does not enter into any instruments on the foreign exchange exposure. The Group will closely monitor exchange rate movement and will take appropriate activities to reduce the exchange risk.

For the year ended 31 December 2012

REVIEW OF OPERATIONS

For the year ended 31 December 2012, the turnover of the Group amounted to approximately HK$8,560,000. Loss attributable to shareholders has decreased to approximately HK$10,901,000 from approximately HK$43,416,000 recorded in last year. The decrease of loss for the year was mainly contributed by the absence of the loss arising from fair value changes of convertible bonds made in last year, gain on fair value changes of investment properties and gain on disposal of available-for-sale financial assets.

Properties Investment

The Group’s properties investment business had contributed approximately HK$1,720,000 to the total revenue of the Group for the year ended 31 December 2012. The turnover has reduced by about HK$538,000 due to investment properties not fully occupied during the year. In general, the property prices in Hong Kong have risen to record high levels due to the strong market demand and the inflow of capital, as the global money supply and liquidity have increased substantially. The Group’s investment properties were valued at approximately HK$92,800,000 as at 31 December 2012, which represented an increment of approximately HK$15,550,000 as compared to last year. It is expected that the revenue from the properties investment business would have a steady growth in the coming future.

– I-20 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Life-like Plants Business

The life-like plants business had contributed approximately HK$6,840,000 to the total revenue of the Group for the year ended 31 December 2012. The turnover of the segment reduced by approximately HK$62,331,000 when compared with last year. The significant decrease was mainly caused by the termination of production line of Christmas trees, where the impact have reflected in the Interim Report in 2012. Due to the increase in the cost of materials and labour cost in the PRC and keen competition of the market, the business of Christmas trees declined significantly.

For the business of artificial flowers, it was affected by adverse business environment brought by the European sovereign debt crisis and the uncertain United States economy, less sale orders were received. The Group will enhance its product differentiation and closely monitor the production costs without deteriorating the product quality to maintain its competitiveness in the industry.

Securities Investment

As at 31 December 2012, the Group managed a portfolio of investments in capital market with fair value of approximately HK$23,465,000. The Group will be watchful on market developments and will continue to be prudent in managing its investment portfolio with a continuing focus on improving overall asset quality.

Prospects

Despite of the competitiveness in life-like plants business, the Group would continue to enhance its product differentiation and cost control initiatives so as to remain competitive in the industry. The Group has undertaken a placing of shares during the year which further solid the working capital and financial position of the Group. The Group is committed to explore new investment and business opportunities to deliver the greatest return to shareholders.

Capital Structure

As at 31 December 2012, the Group has shareholders’ equity of approximately HK$14,690,000 and the share capital of the Company had the following changes:

On 31 July 2012, there was a capital reduction of the Company by cancelling share capital paid up or credited as paid up to the extent of HK$0.19 per share upon each of the shares in issue and by reducing the nominal value of all the issued and unissued shares in the share capital of the Company from HK$0.20 to HK$0.01 per share.

On 31 July 2012, there was a change in board lot size for trading in the shares of the Company from 5,000 shares to 25,000 shares.

– I-21 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

On 31 July 2012, there was an increase in authorised share capital from HK$20,000,000 (divided into 2,000,000,000 shares) to HK$200,000,000 (divided into 20,000,000,000 shares) by the creation of an additional 18,000,000,000 shares of par value HK$0.01 each.

On 12 October 2012, 750,000,000 ordinary shares of par value HK$0.01 each were issued at the placing price of HK$0.07 per placing share.

Investment Position and Planning

During the year ended 31 December 2012, the Group spent approximately HK$9,990,000 for acquisition of fixed assets, which included the property acquired through the property swap agreement at deemed cost of HK$8,980,000 as at the completion date of this agreement on 25 May 2012. Details of the property swap agreement were set out in announcement of the Company dated 24 February 2012.

The Group has invested in shares of certain companies that are traded over the Stock Exchange. During the year ended 31 December 2012, the Group has acquired and disposed of equity securities of a company listed on the Stock Exchange. As at 31 December 2012, the Group held long-term and short-term investments with fair value of approximately HK$22,332,000 and HK$1,133,000, respectively.

Saved as disclosed above, the Group did not have any other significant investment and there is no other material acquisition or disposal of subsidiaries and associated company during the year.

Charge on the Group’s Assets and Contingent Liabilities

As at 31 December 2012, the Group’s bank deposits in the amount of approximately HK$1,161,000 (31 December 2011: approximately HK$1,158,000) had been pledged to banks for the requirement of the customs authorities of the PRC.

As at 31 December 2012, the Group has pledged land and buildings with net book value of approximately HK$13,752,000 (31 December 2011: approximately HK$10,824,000) to secure general banking facilities granted to the Group.

Employees and Remuneration Policies

As at 31 December 2012, the Group has approximately 115 employees located in Hong Kong and the PRC. They are remunerated according to the nature of the job market trends, with build-in-merit components incorporated in annual review to reward and motivate individual performance.

– I-22 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Liquidity and Financial Resources

As at 31 December 2012, the total shareholders fund of the Group amounted to approximately HK$259,093,000 (2011: HK$217,682,000), total assets of approximately HK$289,020,000 (2011: HK$252,200,000), current liabilities of approximately HK$22,182,000 (2011: HK$24,550,000) and non-current liabilities of approximately HK$7,745,000 (2011: HK$9,968,000). The debt ratio (based on the total liabilities over the equity) of the Group decreased from the ratio of 0.16 as at 31 December 2011 to 0.12 as at 31 December 2012.

The Group’s business operation and investments are in Hong Kong and the PRC, most of the assets, liabilities and transactions of the Group are denominated in Hong Kong dollars and Renminbi. The Group does not enter into any instruments on the foreign exchange exposure. The Group will closely monitor exchange rate movement and will take appropriate activities to reduce the exchange risk.

3. WORKING CAPITAL

The Directors, after due and careful consideration and taking into account the proposed Acquisition, internal resources, banking and other facilities available to the Enlarged Group, are of the opinion that the Enlarged Group would have sufficient working capital for at least 12 months from the date of publication of this circular.

4. INDEBTEDNESS STATEMENT

As at the close of business on 31 October 2015, being the latest practicable date for the purpose of this indebtedness statement, the Group had unsecured bank overdrafts of RMB239,000, unsecured corporate bonds payable of RMB285,419,000 and secured mortgage of RMB1,860,000 and secured other borrowings of RMB537,543,000, respectively. The mortgage was secured by property, plant and equipment and the other borrowings were secured by solar power plants and lease prepayments.

The Directors confirm that, as of 31 October 2015, being the latest practicable date for the purpose of this indebtedness statement, save as aforesaid, the Group did not have any debt securities, borrowings, indebtedness, mortgages and charges, contingent liabilities and guarantees. Apart from the loan from Pohua JT Private Equity Fund L.P. (details of which is disclosed in the announcement of the Company dated 19 November 2015), of which a total amount of RMB1,226,829,000 (equivalent to approximately HK$1,500,000,000) has been withdrawn as at the Latest Practicable Date, the Directors confirm that there have been no material changes in the indebtedness or contingent liabilities of the Group since 31 October 2015.

– I-23 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

5. FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

As set out in the Announcement of the Company, the Acquisition signifies the furtherance of the Group’s initiative into the photovoltaic power sector in the PRC and presents a good opportunity for the Group’s long-term development. The Directors consider, via the Company’s investment in the Target Company, the income stream of the Group would be diversified. In particular, the Group can benefit from the experience and expertise of the Target Group in addition to having its own EPC business in solar plants. Certain business segments of the Target Group are the same as the Group’s existing businesses, such as sale of solar energy-related products and sale of electricity. As such, the Enlarged Group could benefit from the synergies of having co-operations between the Group and the Target Group in the areas of personnel and resources.

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2014, being the date to which the latest published audited consolidated financial statements of the Company were made up.

7. ACQUISITION AFTER 31 DECEMBER 2014 BEING THE DATE ON WHICH THE LATEST PUBLISHED AUDITED CONSOLIDATED ACCOUNTS OF THE GROUP WERE MADE UP

From 1 January 2015 to the Latest Practicable Date, the Group acquired the following companies:

				Aggregate
				consideration of
		Nature of business	Equity	the acquisitions
Date of	Name of acquired	of the acquired	interests	and settlement of
Agreement	companies	companies	acquired	consideration
5 May 2015	和靜旭雙太陽能科技	Development of 20 MW	100%	RMB193,600,000;
	有限公司(Hejing	photovoltaic project		settled in cash
	Xushuang	in Hejing County,
	Photovoltaic	Xinjiang Province
	Technology Co.,	(新疆和靜縣)
	Ltd.*)
5 June 2015	蘭州太科光伏電力	Development of 49.5	100%	RMB495,000,000;
	有限公司(Lanzhou	MW photovoltaic		settled in cash
	Taike Photovoltaic	project in Yong Deng
	Power Co., Ltd.*)	County (永登縣) in
		Lanzhou, Gansu
		Province

– I-24 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

				Aggregate
				consideration of
		Nature of business	Equity	the acquisitions
Date of	Name of acquired	of the acquired	interests	and settlement of
Agreement	companies	companies	acquired	consideration
22 July 2015	深圳雄韜融資租賃	Provision of finance	55%	USD16,500,000;
	有限公司(Shenzhen	leases business in the		settled in cash
	XiongTao RongZi	PRC
	ZuLin Co., Ltd.*)
2 October 2015	阿圖什市華光能源	Development of	100% of	RMB534,000,000;
	有限公司(Artux	two 30 MW	each of the	settled in cash
	Huaguang Energy	photovoltaic project	companies
	Co., Ltd.*) and 阿圖	in Artux City,
	什市興光能源有限公司	Xinjiang Province (新
	(Artux Xingguang	彊省阿圖什市)
	Energy Co., Ltd.*)
9 October 2015	威縣天海光伏發電	Development of 30 MW	100%	RMB255,000,000;
	有限公司(Weixian	photovoltaic project		to be settled
	Tihein Photovoltaic	in Weixian County,		in cash
	Energy Co., Ltd.*)	Hebei Province
		(河北省威縣)
15 December 2015	貴溪市中元太陽能電力	Development of a 50	100%	RMB425,000,000;
	有限公司(Guixi City	MW photovoltaic		to be settled
	Zhongyuan Solar	project in Guixi City,		in cash
	Power Company	Jiangxi Provine (江西
	Limited*)	省貴溪市)
15 December 2015	湖洲祥暉光伏發電有限	Development of a 100	100%	RMB860,000,000;
	公司(Huzhou	MW photovoltaic		to be settled
	Xianghui	project in Huzhou		in cash
	Photovoltaic Power	City, Zhejiang
	Generation Company	Province (浙江省湖
	Limited*)	州市)
23 December 2015	合肥流遠光伏發電投資	Development of a	100%	RMB217,100,000;
	有限公司(Hefei	40 MW photovoltaic		to be settled
	Liuyuan Photovoltaic	project in Heifei City,		in cash
	Power Generation	Anhui Province (安徽
	Investment Company	省合肥市)
	Limited*)
23 December 2015	六安旭強新能源工程	Development of a 40	100%	RMB113,600,000;
	有限公司(Luan	MW photovoltaic		to be settled
	Xuqiang New Energy	project in Luan City,		in cash
	Engineering	Anhui Province (安徽
	Company Limited*)	省六安市)
23 December 2015	宿州旭強新能源工程	Development of a 20	100%	RMB149,800,000;
	有限公司(Suzhou	MW photovoltaic		to be settled
	Xuqiang New Energy	project in Suzhou		in cash
	Engineering	City, Anhui Province
	Company Limited*)	(安徽省宿州市)

The aggregate of the remuneration payable to and benefits in kind receivable by the directors of the acquiring companies for each of the above acquisitions will not be varied in consequence of the above acquisitions.

– I-25 –

APPENDIX II FINANCIAL INFORMATION OF THE TARGET GROUP

The following is the text of a report, prepared for the purpose of incorporation in this circular, received from the reporting accountants, KPMG, Certified Public Accountants, Hong Kong.

8th Floor Prince’s Building 10 Chater Road Central Hong Kong

30 December 2015

The Directors Kong Sun Holdings Limited

Dear Sirs,

INTRODUCTION

We set out below our report on the consolidated financial information relating to Zhongke Hengyuan Technology Co., Ltd. (the “Target Company”) and its subsidiaries (together the “Target Group”) which comprise the consolidated statements of financial position of the Target Group and the statement of financial position of the Target Company as at 31 December 2012, 2013 and 2014 and 30 June 2015 and the consolidated statements of profit or loss, the consolidated statements of profit or loss and other comprehensive income, the consolidated statements of changes in equity and the consolidated cash flow statements of the Target Group, for each of the years ended 31 December 2012, 2013 and 2014 and the six months ended 30 June 2015 (the “Relevant Periods”), and a summary of significant accounting policies and other explanatory information (the “Financial Information”), for inclusion in the circular issued by Kong Sun Holdings Limited (the “Company”) dated 30 December 2015 (the “Circular”) in connection with the proposed acquisition of 44.587% equity interest in the Target Company by the Company.

The Target Company was incorporated in Guangzhou, the People’s Republic of China (the “PRC”) on 25 August 2005 as a limited liability company under the Company Law of the PRC (中華人民共和國公司法) and was converted into a joint stock limited liability company on 29 December 2006.

All companies comprising the Target Group have adopted 31 December as their financial year end date. Details of the companies comprising the Target Group that are subject to audit during the Relevant Periods and the names of the respective auditors are set out in note 36 of Section B. The statutory financial statements of these companies were prepared in accordance with the Accounting Standards for Business Enterprises (the “PRC GAAP”) issued by the Ministry of Finance of the PRC. The directors of the Company confirmed that the remaining companies of the Target Group are not subject to audit during the Relevant Periods.

– II-1 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

The directors of the Target Company have prepared the consolidated financial statements of the Target Group for the Relevant Periods (the “Underlying Financial Statements”) in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). The Underlying Financial Statements for each of the years ended 31 December 2012, 2013 and 2014 and the six months ended 30 June 2015 were audited by KPMG Huazhen LLP (畢馬威 華振會計師事務所（特殊普通合夥）) in accordance with Hong Kong Standards on Auditing issued by the HKICPA.

The Financial Information has been prepared by the directors of the Company for inclusion in the Circular based on the Underlying Financial Statements, with no adjustments made thereon and in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL INFORMATION

The directors of the Company are responsible for the preparation of the Financial Information that gives a true and fair view in accordance with HKFRSs issued by the HKICPA and the applicable disclosure provisions of the Listing Rules, and for such internal control as the directors of the Company determine is necessary to enable the preparation of Financial Information that are free from material misstatement, whether due to fraud or error.

REPORTING ACCOUNTANTS’ RESPONSIBILITY

Our responsibility is to form an opinion on the Financial Information based on our procedures performed in accordance with Auditing Guideline “Prospectuses and the Reporting Accountant” (Statement 3.340) issued by the HKICPA. We have not audited any financial statements of the Target Company, its subsidiaries or the Target Group in respect of any period subsequent to 30 June 2015.

OPINION

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the financial position of the Target Group and the Target Company as at 31 December 2012, 2013 and 2014 and 30 June 2015 and the Target Group’s financial performance and cash flows for the Relevant Periods then ended.

CORRESPONDING FINANCIAL INFORMATION

For the purpose of this report, we have also reviewed the unaudited corresponding interim financial information of the Target Group comprising the consolidated statement of profit or loss, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the six months ended 30 June 2014, together with the notes thereon (the “Corresponding Financial Information”), for which the directors of the Company are responsible, in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA.

– II-2 –

APPENDIX II FINANCIAL INFORMATION OF THE TARGET GROUP

The directors of the Company are responsible for the preparation of the Corresponding Financial Information in accordance with the same basis adopted in respect of the Financial Information. Our responsibility is to express a conclusion on the Corresponding Financial Information based on our review.

A review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the Corresponding Financial Information.

Based on our review, for the purpose of this report, nothing has come to our attention that causes us to believe that the Corresponding Financial Information is not prepared, in all material respects, in accordance with the same basis adopted in respect of the Financial Information.

– II-3 –

APPENDIX II FINANCIAL INFORMATION OF THE TARGET GROUP

A. FINANCIAL INFORMATION

1 CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

Section B Note Revenue 3 Cost of sales Gross profit Other revenue 4 Other net income 4 Distribution costs Administrative and other operating expenses Profit/(loss) from operations Finance costs 5(a) Share of profit/(loss) of a joint venture Profit/(loss) before taxation 5 Income tax (expense)/credit 6(a) Profit/(loss) for the year/period Attributable to: Equity shareholders of the Target Company 9 Non-controlling interests Profit/(loss) for the year/period	Year ended 31 December Six months ended 30 June 2012 2013 2014 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) 535,423 1,021,521 615,928 73,013 120,653 (374,322) (791,032) (443,312) (44,659) (86,258) 161,101 230,489 172,616 28,354 34,395 11,053 16,295 54,976 27,897 3,780 17,970 21,297 55,926 – 13 (42,223) (43,904) (48,388) (17,329) (28,523) (108,552) (95,971) (136,794) (51,626) (79,439) 39,349 128,206 98,336 (12,704) (69,774) (11,000) (26,549) (81,830) (40,713) (14,076) – 145 (1,810) – (90) 28,349 101,802 14,696 (53,417) (83,940) (5,192) (20,101) (5,673) 6,499 11,551 23,157 81,701 9,023 (46,918) (72,389) 23,341 80,331 9,202 (46,708) (71,397) (184) 1,370 (179) (210) (992) 23,157 81,701 9,023 (46,918) (72,389)	Year ended 31 December Six months ended 30 June 2012 2013 2014 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) 535,423 1,021,521 615,928 73,013 120,653 (374,322) (791,032) (443,312) (44,659) (86,258) 161,101 230,489 172,616 28,354 34,395 11,053 16,295 54,976 27,897 3,780 17,970 21,297 55,926 – 13 (42,223) (43,904) (48,388) (17,329) (28,523) (108,552) (95,971) (136,794) (51,626) (79,439) 39,349 128,206 98,336 (12,704) (69,774) (11,000) (26,549) (81,830) (40,713) (14,076) – 145 (1,810) – (90) 28,349 101,802 14,696 (53,417) (83,940) (5,192) (20,101) (5,673) 6,499 11,551 23,157 81,701 9,023 (46,918) (72,389) 23,341 80,331 9,202 (46,708) (71,397) (184) 1,370 (179) (210) (992) 23,157 81,701 9,023 (46,918) (72,389)
		34,395 3,780 13 (28,523) (79,439)
		(69,774) (14,076) (90)
		(83,940) 11,551
		(72,389)
		(71,397) (992)
		(72,389)

The accompanying notes form part of the Financial Information.

– II-4 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

2 CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Section B Note Profit/(loss) for the year/period Other comprehensive income Total comprehensive income for the year/period Attributable to: Equity shareholders of the Target Company 9 Non-controlling interests Total comprehensive income for the year/period	Year ended 31 December Six months ended 30 June 2012 2013 2014 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) 23,157 81,701 9,023 (46,918) (72,389) – – – – – 23,157 81,701 9,023 (46,918) (72,389) 23,341 80,331 9,202 (46,708) (71,397) (184) 1,370 (179) (210) (992) 23,157 81,701 9,023 (46,918) (72,389)	Year ended 31 December Six months ended 30 June 2012 2013 2014 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) 23,157 81,701 9,023 (46,918) (72,389) – – – – – 23,157 81,701 9,023 (46,918) (72,389) 23,341 80,331 9,202 (46,708) (71,397) (184) 1,370 (179) (210) (992) 23,157 81,701 9,023 (46,918) (72,389)
		(72,389)
		(71,397) (992)
		(72,389)

The accompanying notes form part of the Financial Information.

– II-5 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

3 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Section B Note Non-current assets Property, plant and equipment 10 Solar power plants 11 Intangible assets 12 Goodwill 13 Lease prepayments 14 Interest in a joint venture 16 Deferred tax assets 17(b) Available-for-sale equity securities 18 Trade and other receivables 20 Current assets Inventories 19 Tax recoverable 17(a) Trade and other receivables 20 Pledged bank deposits 21 Cash and cash equivalents 23 Current liabilities Trade and other payables 26 Bank loans and other borrowings 24 Deferred income 27 Corporate bond payable 25 Current tax payable 17(a) Net current assets Total assets less current liabilities Non-current liabilities Bank loans and other borrowings 24 Deferred income 27 Corporate bond payable 25 NET ASSETS	At 31 December 2012 2013 RMB’000 RMB’000 52,287 50,511 50,468 342,926 3,781 3,728 – – 12,289 76,622 19,389 19,534 11,397 12,110 9,990 19,984 98,180 80,572 257,781 605,987 - - - - - - - - - - - - - - 92,395 92,966 5,383 6,146 644,615 1,615,388 49,331 22,583 305,051 350,342 1,096,775 2,087,425 - - - - - - - - - - - - - - 619,170 1,590,257 108,000 251,170 2,290 683 – 99,218 11,524 20,138 740,984 1,961,466 - - - - - - - - - - - - - - 355,791 125,959 - - - - - - - - - - - - - - 613,572 731,946 - - - - - - - - - - - - - - – 135,336 10,777 10,094 97,980 – 108,757 145,430 - - - - - - - - - - - - - - 504,815 586,516	2014 RMB’000 47,986 112,251 3,917 1,312 73,879 17,724 10,163 9,990 53,437 330,659 - - - - - - - 155,951 6,526 1,072,418 29,994 243,669 1,508,558 - - - - - - - 1,000,855 210,425 683 – 1,927 1,213,890 - - - - - - - 294,668 - - - - - - - 625,327 - - - - - - - – 9,411 – 9,411 - - - - - - - 615,916	At 30 June 2015 RMB’000 46,636 159,558 3,635 1,312 73,108 17,634 21,855 9,990 40,430
			374,158 - - - - - - - 200,005 11,963 1,027,884 87,483 43,150
			1,370,485 - - - - - - - 1,101,081 84,138 843 – 1,374
			1,187,436 - - - - - - -
			183,049 - - - - - - -
			557,207 - - - - - - - – 12,680 –
			12,680 - - - - - - -
			544,527

– II-6 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Section B Note CAPITAL AND RESERVES 29 Share capital Reserves Total equity attributable to equity shareholders of the Target Company Non-controlling interests TOTAL EQUITY	At 31 December 2012 2013 RMB’000 RMB’000 120,000 120,000 384,076 464,407 504,076 584,407 739 2,109 504,815 586,516	2014 RMB’000 120,000 473,609 593,609 22,307 615,916	At 30 June 2015 RMB’000 120,000 402,212
			522,212 22,315
			544,527

The accompanying notes form part of the Financial Information.

– II-7 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

4 STATEMENTS OF FINANCIAL POSITION

Section B Note Non-current assets Property, plant and equipment 10 Solar power plants 11 Intangible assets 12 Lease prepayments 14 Investments in subsidiaries 15 Deferred tax assets 17(b) Available-for-sale equity securities 18 Trade and other receivables 20 Current assets Inventories 19 Trade and other receivables 20 Pledged bank deposits 21 Cash and cash equivalents 23 Current liabilities Trade and other payables 26 Bank loans and other borrowings 24 Corporate bond payable 25 Current tax payable 17(a) Net current assets Total assets less current liabilities Non-current liabilities Corporate bond payable 25 NET ASSETS CAPITAL AND RESERVES 29 Share capital Reserves TOTAL EQUITY	At 31 December 2012 2013 RMB’000 RMB’000 11,828 7,161 39,997 59,833 3,776 3,724 – 63,386 144,202 167,802 6,755 7,450 9,990 9,990 91,141 75,049 307,689 394,395 - - - - - - - - - - - - - - 59,290 73,064 574,671 1,247,147 29,191 21,826 271,859 321,791 935,011 1,663,828 - - - - - - - - - - - - - - 537,502 1,180,825 105,000 198,000 – 99,218 10,689 13,313 653,191 1,491,356 - - - - - - - - - - - - - - 281,820 172,472 - - - - - - - - - - - - - - 589,509 566,867 - - - - - - - - - - - - - - 97,980 – 97,980 – - - - - - - - - - - - - - - 491,529 566,867 120,000 120,000 371,529 446,867 491,529 566,867	2014 RMB’000 6,100 58,107 3,753 62,099 249,602 7,062 – 52,245 438,968 - - - - - - - 101,360 1,019,643 27,811 182,126 1,330,940 - - - - - - - 1,077,326 100,000 – 1,423 1,178,749 - - - - - - - 152,191 - - - - - - - 591,159 - - - - - - - – – - - - - - - - 591,159 120,000 471,159 591,159	At 30 June 2015 RMB’000 6,076 58,365 3,466 61,455 256,002 13,838 – 39,237
			438,439 - - - - - - - 137,931 1,033,922 84,990 14,496
			1,271,339 - - - - - - - 1,085,301 70,000 – –
			1,155,301 - - - - - - -
			116,038 - - - - - - -
			554,477 - - - - - - - –
			– - - - - - - -
			554,477
			120,000 434,477
			554,477

The accompanying notes form part of the Financial Information.

– II-8 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

5 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Section B Note At 1 January 2012 Changes in equity for 2012: Profit/(loss) for the year Other comprehensive income Total comprehensive income Appropriation to PRC statutory reserves 29(d)(ii) Dividends to shareholders 29(b) At 31 December 2012 and 1 January 2013 Changes in equity for 2013: Profit for the year Other comprehensive income Total comprehensive income Appropriation to PRC statutory reserves 29(d)(ii) At 31 December 2013 and 1 January 2014	Attributable to the equity shareholders of the Target Company Share capital Share premium PRC statutory reserve Retained profits Total note 29(c) note 29(d)(i) note 29(d)(ii) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 120,000 300,544 5,786 62,805 489,135 – – – 23,341 23,341 – – – – – – – – 23,341 23,341 – – 3,652 (3,652) – – – – (8,400) (8,400) 120,000 300,544 9,438 74,094 504,076 – – – 80,331 80,331 – – – – – – – – 80,331 80,331 – – 7,590 (7,590) – 120,000 300,544 17,028 146,835 584,407	Attributable to the equity shareholders of the Target Company Share capital Share premium PRC statutory reserve Retained profits Total note 29(c) note 29(d)(i) note 29(d)(ii) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 120,000 300,544 5,786 62,805 489,135 – – – 23,341 23,341 – – – – – – – – 23,341 23,341 – – 3,652 (3,652) – – – – (8,400) (8,400) 120,000 300,544 9,438 74,094 504,076 – – – 80,331 80,331 – – – – – – – – 80,331 80,331 – – 7,590 (7,590) – 120,000 300,544 17,028 146,835 584,407	Attributable to the equity shareholders of the Target Company Share capital Share premium PRC statutory reserve Retained profits Total note 29(c) note 29(d)(i) note 29(d)(ii) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 120,000 300,544 5,786 62,805 489,135 – – – 23,341 23,341 – – – – – – – – 23,341 23,341 – – 3,652 (3,652) – – – – (8,400) (8,400) 120,000 300,544 9,438 74,094 504,076 – – – 80,331 80,331 – – – – – – – – 80,331 80,331 – – 7,590 (7,590) – 120,000 300,544 17,028 146,835 584,407	Attributable to the equity shareholders of the Target Company Share capital Share premium PRC statutory reserve Retained profits Total note 29(c) note 29(d)(i) note 29(d)(ii) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 120,000 300,544 5,786 62,805 489,135 – – – 23,341 23,341 – – – – – – – – 23,341 23,341 – – 3,652 (3,652) – – – – (8,400) (8,400) 120,000 300,544 9,438 74,094 504,076 – – – 80,331 80,331 – – – – – – – – 80,331 80,331 – – 7,590 (7,590) – 120,000 300,544 17,028 146,835 584,407	Non- controlling interests RMB’000 923 (184) – (184) – – 739 1,370 – 1,370 – 2,109	Total equity RMB’000 490,058 23,157 –
	Share capital note 29(c) RMB’000 120,000 – – – – – 120,000 – – – – 120,000	Share premium note 29(d)(i) RMB’000 300,544 – – – – – 300,544 – – – – 300,544	PRC statutory reserve note 29(d)(ii) RMB’000 5,786 – – – 3,652 – 9,438 – – – 7,590 17,028	Retained profits RMB’000 62,805 23,341 – 23,341 (3,652) (8,400) 74,094 80,331 – 80,331 (7,590) 146,835
						23,157 – (8,400)
						504,815 81,701 –
						81,701 –
						586,516

– II-9 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Section B Note At 1 January 2014 Changes in equity for 2014: Profit/(loss) for the year Other comprehensive income Total comprehensive income Acquisition of subsidiaries 33 Appropriation to PRC statutory reserves 29(d)(ii) At 31 December 2014 and 1 January 2015 Changes in equity for the six months ended 30 June 2015: Loss for the period Other comprehensive income Total comprehensive income Capital injection from non-controlling interest At 30 June 2015 (Unaudited) At 1 January 2014 Change in equity for the six months ended 30 June 2014: Loss for the period Other comprehensive income Total comprehensive income At 30 June 2014	Attributable to the equity shareholders of the Target Company Share capital Share premium PRC statutory reserve Retained profits Total note 29(c) note 29(d)(i) note 29(d)(ii) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 120,000 300,544 17,028 146,835 584,407 – – – 9,202 9,202 – – – – – – – – 9,202 9,202 – – – – – – – 2,917 (2,917) – 120,000 300,544 19,945 153,120 593,609 – – – (71,397) (71,397) – – – – – – – – (71,397) (71,397) – – – – – 120,000 300,544 19,945 81,723 522,212 120,000 300,544 17,028 146,835 584,407 – – – (46,708) (46,708) – – – – – – – – (46,708) (46,708) 120,000 300,544 17,028 100,127 537,699	Attributable to the equity shareholders of the Target Company Share capital Share premium PRC statutory reserve Retained profits Total note 29(c) note 29(d)(i) note 29(d)(ii) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 120,000 300,544 17,028 146,835 584,407 – – – 9,202 9,202 – – – – – – – – 9,202 9,202 – – – – – – – 2,917 (2,917) – 120,000 300,544 19,945 153,120 593,609 – – – (71,397) (71,397) – – – – – – – – (71,397) (71,397) – – – – – 120,000 300,544 19,945 81,723 522,212 120,000 300,544 17,028 146,835 584,407 – – – (46,708) (46,708) – – – – – – – – (46,708) (46,708) 120,000 300,544 17,028 100,127 537,699	Attributable to the equity shareholders of the Target Company Share capital Share premium PRC statutory reserve Retained profits Total note 29(c) note 29(d)(i) note 29(d)(ii) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 120,000 300,544 17,028 146,835 584,407 – – – 9,202 9,202 – – – – – – – – 9,202 9,202 – – – – – – – 2,917 (2,917) – 120,000 300,544 19,945 153,120 593,609 – – – (71,397) (71,397) – – – – – – – – (71,397) (71,397) – – – – – 120,000 300,544 19,945 81,723 522,212 120,000 300,544 17,028 146,835 584,407 – – – (46,708) (46,708) – – – – – – – – (46,708) (46,708) 120,000 300,544 17,028 100,127 537,699	Attributable to the equity shareholders of the Target Company Share capital Share premium PRC statutory reserve Retained profits Total note 29(c) note 29(d)(i) note 29(d)(ii) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 120,000 300,544 17,028 146,835 584,407 – – – 9,202 9,202 – – – – – – – – 9,202 9,202 – – – – – – – 2,917 (2,917) – 120,000 300,544 19,945 153,120 593,609 – – – (71,397) (71,397) – – – – – – – – (71,397) (71,397) – – – – – 120,000 300,544 19,945 81,723 522,212 120,000 300,544 17,028 146,835 584,407 – – – (46,708) (46,708) – – – – – – – – (46,708) (46,708) 120,000 300,544 17,028 100,127 537,699	Non- controlling interests RMB’000 2,109 (179) – (179) 20,377 – 22,307 (992) – (992) 1,000 22,315 2,109 (210) – (210) 1,899	Total equity RMB’000 586,516 9,023 –
	Share capital note 29(c) RMB’000 120,000 – – – – – 120,000 – – – – 120,000 120,000 – – – 120,000	Share premium note 29(d)(i) RMB’000 300,544 – – – – – 300,544 – – – – 300,544 300,544 – – – 300,544	PRC statutory reserve note 29(d)(ii) RMB’000 17,028 – – – – 2,917 19,945 – – – – 19,945 17,028 – – – 17,028	Retained profits RMB’000 146,835 9,202 – 9,202 – (2,917) 153,120 (71,397) – (71,397) – 81,723 146,835 (46,708) – (46,708) 100,127
						9,023 20,377 –
						615,916 (72,389) –
						(72,389) 1,000
						544,527
						586,516 (46,918) –
						(46,918) 539,598

The accompanying notes form part of the Financial Information.

– II-10 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

6 CONSOLIDATED CASH FLOW STATEMENTS

Section B Note Operating activities Cash (used in)/generated from operations 23(b) Tax paid Net cash (used in)/generated from operating activities Investing activities Payment for the purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Proceeds from sale of intangible assets Payment for purchase of intangible assets Payment for construction cost in respect of solar power plants Proceeds from sale of available-for-sale equity securities Interest received (Increase)/decrease in pledged bank deposits Payment for lease prepayments Proceeds from disposal of subsidiaries Acquisition of subsidiaries Net cash used in investing activities Financing activities Proceeds from new bank loans and other borrowings Net proceeds from corporate bond Proceeds from loan granted by the immediate controlling party Repayment of bank loans and other borrowings Repayment of corporate bond Repayment of loan granted by the immediate controlling party Interest paid Dividends paid to equity shareholders of the Target Company Capital injection from non-controlling interest Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 January 23(a) Cash and cash equivalents at 31 December/30 June 23(a)	For the year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 (45,414) (77,216) 122,146 (10,089) (12,963) (22,317) (55,503) (90,179) 99,829 - - - - - - - - - - - - - - - - - - (13,946) (14,194) (5,344) – – 1,057 137 – 3 (1,816) (642) (827) (50,428) (292,753) (140,562) – – 16,594 3,485 5,744 44,203 (49,331) 26,748 (7,411) (10,243) (65,017) – 56,610 42,490 137,098 – (100) (44,835) (65,532) (297,724) (24) - - - - - - - - - - - - - - - - - - 133,000 412,743 460,425 97,500 – – – 180,000 – (78,500) (133,000) (304,592) – – (100,000) – – (180,000) (6,562) (26,549) (82,311) (8,400) – – – – – 137,038 433,194 (206,478) - - - - - - - - - - - - - - - - - - 16,003 45,291 (106,673) 289,048 305,051 350,342 305,051 350,342 243,669	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) (210,770) 8,641 (21,309) (6,132) (232,079) 2,509 - - - - - - - - - - - - (1,619) (2,786) – 19 – – (321) (158) (79,446) (2,575) – – 21,136 769 (23,258) (57,489) – – – – – – (83,508) (62,220) - - - - - - - - - - - - 403,375 60,138 – – – – (140,170) (186,425) (67,500) – – – (42,010) (15,521) – – – 1,000 153,695 (140,808) - - - - - - - - - - - - (161,892) (200,519) 350,342 243,669 188,450 43,150	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) (210,770) 8,641 (21,309) (6,132) (232,079) 2,509 - - - - - - - - - - - - (1,619) (2,786) – 19 – – (321) (158) (79,446) (2,575) – – 21,136 769 (23,258) (57,489) – – – – – – (83,508) (62,220) - - - - - - - - - - - - 403,375 60,138 – – – – (140,170) (186,425) (67,500) – – – (42,010) (15,521) – – – 1,000 153,695 (140,808) - - - - - - - - - - - - (161,892) (200,519) 350,342 243,669 188,450 43,150
			2,509 - - - - - - (2,786) 19 – (158) (2,575) – 769 (57,489) – – –
			(62,220) - - - - - - 60,138 – – (186,425) – – (15,521) – 1,000
			(140,808) - - - - - -
			(200,519) 243,669
			43,150

The accompanying notes form part of the Financial Information.

– II-11 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

B. NOTES TO CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

1 SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

The Financial Information set out in this report has been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). Further details of the significant accounting policies adopted are set out in the remainder of this Section B.

The HKICPA has issued a number of new and revised HKFRSs. For the purpose of preparing this Financial Information, the Target Group has adopted all applicable new and revised HKFRSs applicable to the Relevant Periods, except for any new standards or interpretations that are not yet effective for the accounting period beginning on 1 January 2015. The revised and new accounting standards and interpretations issued but not yet effective for the accounting period beginning on 1 January 2015 are set out in note 37.

The Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The accounting policies set out below have been applied consistently to all periods presented in the Financial Information.

The Corresponding Financial Information for the six months ended 30 June 2014 has been prepared in accordance with the same basis and accounting policies adopted in respect of the Financial Information.

(b) Basis of presentation

The Financial Information comprises the Target Company and its subsidiaries (together the “Target Group”). During the Relevant Periods, the Target Company has direct or indirect interests in the following subsidiaries, which are set out below:

	Place and date of	Particulars of
	establishment/	issued/paid up	Proportion of equity		interest		At the date of
Name of company	incorporation	capital	attributable to the Target Group				this report	Principal activities
				At 31 December		At 30 June
			2012	2013	2014	2015
Inner Mongolia Zhongke Hengyuan	The PRC/	RMB20,000,000	100%	100%	100%	100%	100%	Manufacturing and
New Energy Science and	16 January 2008							sales of street lights
Technology Co., Ltd*
(“Inner Mongolia
Zhongke Hengyuan”)
內蒙古中科恒源能源科技有限公司
Wuhan Zhongke Lingyun New	The PRC/	RMB20,000,000	100%	100%	100%	100%	100%	Manufacturing and
Energy Science and Technology	14 November 2008							sales of street lights
Co., Ltd * (“Wuhan Zhongke”)
武漢中科凌雲新能源科技
有限責任公司

– II-12 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

	Place and date of	Particulars of
	establishment/	issued/paid up	Proportion of equity		interest		At the date of
Name of company	incorporation	capital	attributable to the Target Group				this report	Principal activities
				At 31 December		At 30 June
			2012	2013	2014	2015
Xinjiang Zhongke Hengyuan New	The PRC/	RMB10,000,000	90%	90%	90%	90%	90%	Manufacturing and
Energy Technology Co., Ltd.	9 September 2011							sales of street lights
(“Xinjiang Zhongke Hengyuan”)
新疆中科恒源新能源科技有限公司
Yunnan Zhongke Hengyuan New	The PRC/	RMB50,000,000	100%	100%	100%	100%	100%	Manufacturing and
Energy Science and Technology	18 January 2011							sales of street lights
Co., Ltd* (“Yunnan Zhongke
Hengyuan”)
雲南中科恒源新能源科技有限公司
Gansu Zhongke Hengyuan New	The PRC/	RMB2,000,000	–	100%	100%	100%	100%	Manufacturing and
Energy Technology Co., Ltd.	12 March 2013							sales of street lights
(“Gansu Zhongke Hengyuan”)
甘肅中科恒源新能源科技有限公司
Zhongke Hengyuan (Hunan) New	The PRC/	RMB2,000,000	100%	100%	100%	100%	100%	Manufacturing and
Energy Science and Technology	18 December 2012							sales of street lights
Co., Ltd* (“Zhongke Hengyuan
Hunan”)
中科恒源（湖南）新能源科技有限公司
Zhongke Hengyuan (Yiyang) New	The PRC/	RMB24,000,000	100%	100%	100%	100%	100%	Manufacturing and
Energy Science and Technology	5 June 2006							sales of street lights
Co., Ltd* (“Zhongke Hengyuan								and construction of
Yiyang”)								solar power plants
中科恒源（益陽）新能源科技有限公司
Beijing Henyuan Tiantai Energy	The PRC/	RMB100,000,000	100%	100%	100%	100%	100%	Solar power generation
Technology Co., Ltd. (“Beijing	8 June 2011
Hengyuan”)
北京恒源天泰能源科技有限公司
Zhongke Hengyuan (Yumen) New	The PRC/	RMB295,000,000	100%	100%	100%	100%	100%	Solar power generation
Energy Science and Technology	26 December 2012
Co., Ltd* (“Zhongke Hengyuan
Yumen”)
中科恒源（玉門）新能源科技有限公司
Chifeng Hengtian Energy Science	The PRC/	RMB20,000,000/	–	–	100%	100%	100%	Solar power generation
and Technology Co., Ltd.*	20 May 2014	RMB1,000,000
(“Chifeng Hengtian”)
赤峰市恒天能源科技有限公司
Shufu Zhongke Hengyuan New	The PRC/	RMB40,000,000	–	–	75%	75%	75%	Solar power generation
Energy Science and Technology	27 August 2014
Co., Ltd* (“Shufu Zhongke
Hengyuan”)
疏附縣中科恒源能源科技有限公司

– II-13 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

	Place and date of	Particulars of
	establishment/	issued/paid up	Proportion of equity		interest		At the date of
Name of company	incorporation	capital	attributable to the Target Group				this report	Principal activities
				At 31 December	At	30 June
			2012	2013	2014	2015
Dunhuang Tianheng New Energy	The PRC/	RMB1,000,000/	–	–	100%	100%	100%	Solar power generation
Co., Ltd * (“Dunhuang Tianheng”)	12 November 2014	RMB50,000
敦煌天恒新能源有限公司
Datong Wantong New Energy	The PRC/	RMB10,000,000/	–	–	95%	95%	95%	Solar power generation
Co., Ltd * (“Datong Wantong”)	25 November 2013	RMB2,830,000
大同市皖銅新能源有限公司
Jiayuguan Xiehe New Energy	The PRC/	RMB2,000,000	–	–	95%	95%	95%	Solar power generation
Co., Ltd * (“Jiayuguan Xiehe”)	14 May 2013
嘉峪關協合新能源有限公司
Zhongke Huaxun Technology	The PRC/	RMB50,000,000/	–	–	51%	51%	51%	Manufacturing and
Development Co., Ltd. *	19 January 2000	RMB45,000,000						sales of monitoring
(“Zhongke Huaxun”)								equipment
中科華訊科技開發有限公司
Gansu Hongyuan Solar Electric Co.,	The PRC/	RMB60,000,000	–	100%	–	–	–	Solar power generation
Ltd. (“Gansu Hongyuan”)	16 July 2013
甘肅宏遠光電有限責任公司
Hami Chaoxiang New Energy	The PRC/	RMB30,000,000	100%	100%	–	–	–	Solar power generation
Technology Co., Ltd.	10 September 2012
(“Hami Chaoxiang”)
哈密朝翔新能源科技有限公司
Huaihua Zhongke Hengyuan New	The PRC/	RMB5,000,000	100%	100%	–	–	–	Manufacturing and
Energy Science and Technology	17 July 2008							sales of street lights
Co., Ltd. * (“Huaihua Zhongke								and construction of
Hengyuan”)								solar power plant
懷化中科恒源能源科技有限公司
Yumen Yonglian Technology New	The PRC/	RMB40,000,000	–	19%	–	–	–	Solar power generation
Energy Co., Ltd. (“Yumen	29 July 2013
Yonglian”)
玉門市永聯科技新能源有限公司
Zhongke Hengyuan (Jiuquan) New	The PRC/	RMB48,600,000	15%	15%	15%	15%	100%	Solar power generation
Energy Science and Technology	27 February 2012
Co., Ltd. /**
(“Zhongke Hengyuan Jiuquan”)
中科恒源（酒泉）新能源科技有限公司
Xinjiang Huaxun Technology	The PRC/	RMB10,000,000/	–	–	–	41.4%	41.4%	Auto-equipment
Development Co., Ltd. /***	29 May 2014	RMB5,300,000						installation
(“Xinjiang Huaxun”)
新疆華訊科技開發有限公司/***

– II-14 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

• These entities are all PRC limited liability companies. The English translation of the company’s name is for reference only. The official names of the companies are in Chinese.

• ** Yumen Yonglian was a wholly-owned subsidiary of the Target Group during the period from 10 September 2013 to 18 December 2013. On 18 December 2013 and 25 October 2014, the Target Group disposed 81% and 19% equity interest in Yumen Yonglian, respectively.

• *** Zhongke Hengyuan Jiuquan was a wholly-owned subsidiary of the Target Group during the period from 27 February 2012 (date of incorporation) to 21 December 2012. On 21 December 2012, the Target Group disposed 85% equity interest in Zhongke Hengyuan Jiuquan.

• **** Xinjiang Huaxun Yunshang Information and Technology Company Limited (新疆華訊雲尚 信息技術有限公司, “Xinjiang Huaxun Yunshang”) was incorporated in the PRC on 29 May 2014. On 5 May 2015, Zhongke Huaxun had injected RMB4,300,000 capital in cash to Xinjiang Huaxun Yunshang, representing 81.1% of its equity interest. Xinjiang Huaxun Yunshang became a subsidiary of the Target Group since then. As at 30 June 2015, the Target Group had an equity interest of 51% in Zhongke Huaxun and an effective interest of 41.4% in Xinjiang Huaxun Yunshang. On 16 July 2015, Xinjiang Huaxun Yunshang changed its official name to Xinjiang Huaxun.

(c) Basis of measurement

The Financial Information is presented in Renminbi (“RMB”), rounded to the nearest thousand expect for per share data. It is prepared on the historical cost basis.

(d) Use of estimates and judgments

The preparation of Financial Information in conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of HKFRSs that have significant effect on the Financial Information and major sources of estimation uncertainty are discussed in note 2.

(e) Subsidiaries and non-controlling interests

Subsidiaries are entities controlled by the Target Group. The Target Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Target Group has power, only substantive rights (held by the Target Group and other parties) are considered.

– II-15 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

An investment in a subsidiary is consolidated into Financial Information from the date that control commences until the date that control ceases. Intra-group balances, transactions and cash flows and any unrealised profits arising from intra-group transactions are eliminated in full in preparing the Financial Information. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Target Company, and in respect of which the Target Group has not agreed any additional terms with the holders of those interests which would result in the Target Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. For each business combination, the Target Group can elect to measure any non-controlling interests either at fair value or at the non-controlling interests’ proportionate share of the subsidiary’s net identifiable assets.

Non-controlling interests are presented in the consolidated statement of financial position within equity, separately from equity attributable to the equity shareholders of the Target Company. Non-controlling interests in the results of the Target Group are presented on the face of the consolidated statement of profit or loss and the consolidated statement of profit or loss and other comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year/period between non-controlling interests and the equity shareholders of the Target Company.

Changes in the Target Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.

When the Target Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial asset (see note 1(h)) or, when appropriate, the cost on initial recognition of an investment in joint venture (see note 1(f)).

In the Target Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment losses (see note 1(l)).

(f) Joint ventures

A joint venture is an arrangement whereby the Target Group or the Target Company and other parties contractually agree to share control of the arrangement, and have rights to the net assets of the arrangement.

An investment in a joint venture is accounted for in the Financial Information under the equity method. Under the equity method, the investment is initially recorded at cost, adjusted for any excess of the Target Group’s share of the acquisition-date fair values of the investee’s identifiable net assets over the cost of the investment (if any). Thereafter, the investment is adjusted for the post acquisition change in the Target Group’s share of the investee’s net assets and any impairment loss relating to the investment (see notes 1(g) and 1(l)). Any acquisition-date excess over cost, the Target Group’s share of the post-acquisition, post-tax results of the investees and any impairment losses for the year/period are recognised in the consolidated statement of profit or loss, whereas the Target Group’s share of the post-acquisition post-tax items of the investees’ other comprehensive income is recognised in the consolidated statement of profit or loss and other comprehensive income.

– II-16 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

When the Target Group’s share of losses exceeds its interest in the joint venture, the Target Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Target Group has incurred legal or constructive obligations or made payments on behalf of the investee. For this purpose, the Target Group’s interest is the carrying amount of the investment under the equity method together with the Target Group’s long-term interests that in substance form part of the Target Group’s net investment in the joint venture.

Unrealised profits and losses resulting from transactions between the Target Group and and joint venture are eliminated to the extent of the Target Group’s interest in the investee, except where unrealised losses provide evidence of an impairment of the asset transferred, in which case they are recognised immediately in profit or loss.

If an investment in a joint venture becomes an investment in an associate or vice versa, the investment continues to be accounted for using the equity method.

In all other cases, when the Target Group ceases to have joint control over a joint venture, it is accounted for as a disposal of the entire interest in that investee, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former investee at the date when joint control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial asset (see note 1(h)).

In the Target Company’s statement of financial position, investments in joint venture are stated at cost less impairment losses (see note 1(l)).

(g) Goodwill

Goodwill represents the excess of

• (i) the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the Target Group’s previously held equity interest in the acquiree; over

• (ii) the net fair value of the acquiree’s identifiable assets and liabilities measured as at the acquisition date.

When (ii) is greater than (i), then this excess is recognised immediately in profit or loss as a gain on a bargain purchase.

Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating unit, or groups of cash generating units, that is expected to benefit from the synergies of the combination and is tested annually for impairment (see note 1(l)).

On disposal of a cash generating unit during the year/period, any attributable amount of purchased goodwill is included in the calculation of the profit or loss on disposal.

(h) Other investments in equity securities

The Target Group’s and the Target Company’s policies for investments in equity securities, other than investments in subsidiaries, are as follows:

Investments in equity securities are initially stated at fair value, which is their transaction price unless it is determined that the fair value at initial recognition differs from the transaction price and that fair value is evidenced by a quoted price in an active market for an identical asset or liability or based on a valuation technique that uses only data from observable markets. Cost includes attributable transaction costs, except where indicated otherwise below. These investments are subsequently accounted for as follows, depending on their classification:

– II-17 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Investments in securities held for trading are classified as current assets. Any attributable transaction costs are recognised in profit or loss as incurred. At the end of each reporting period the fair value is remeasured, with any resultant gain or loss being recognised in profit or loss. The net gain or loss recognised in profit or loss does not include any dividends earned on these investments as these are recognised in accordance with the policies set out in note 1(v)(iv).

Investments in equity securities which do not fall into the above category are classified as available-for-sale equity securities. At the end of each reporting period the fair value is remeasured, with any resultant gain or loss being recognised in other comprehensive income and accumulated separately in equity in the fair value reserve. As an exception to this, investments in equity securities that do not have a quoted price in an active market for an identical instrument and whose fair value cannot otherwise be reliably measured are recognised in the statement of financial position at cost less impairment losses (see note 1(l)). Dividend income from equity securities calculated using the effective interest method are recognised in the profit or loss in accordance with the policies set out in note 1(v)(iv).

When the investments are derecognised or impaired (see note 1(l)), the cumulative gain or loss recognised in equity is reclassified to profit or loss. Investments are recognised/derecognised on the date the Target Group commits to purchase/sell the investments or they expire.

(i) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (see note 1(l)). Construction in progress represents property, plant and equipment under construction and is stated at cost less impairment losses (see note 1(l)).

The cost of self-constructed items of property, plant and equipment includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads and borrowing costs (see note 1(w)).

Construction in progress is transferred to property, plant and equipment when it is ready for its intended use.

No depreciation is provided against construction in progress.

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal.

Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight line method over their estimated useful lives as follows:

–	Buildings situated on leasehold land are depreciated over the shorter of the unexpired	Buildings situated on leasehold land are depreciated over the shorter of the unexpired
	term of lease and their estimated useful lives, being no more than 50 years after the date of
	completion
–	Solar power plants	10 – 25 years
–	Plant and machinery	5 – 10 years
–	Motor vehicles	5 – 10 years
–	Furniture, fixtures and equipment	5 years

Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reviewed annually.

– II-18 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(j) Intangible assets (other than goodwill)

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Target Group has sufficient resources and the intention to complete development. The expenditure capitalised includes the costs of materials, direct labour, and an appropriate proportion of overheads and borrowing costs, where applicable (see note 1(w)). Capitalised development costs are stated at cost less accumulated amortisation and impairment losses (see note 1(l)). Other development expenditure is recognised as an expense in the period in which it is incurred.

Other intangible assets that are acquired by the Target Group are stated at cost less accumulated amortisation (where the estimated useful life is finite) and impairment losses (see note 1(l)).

Amortisation of intangible assets with finite useful lives is charged to profit or loss on a straight-line basis over the assets’ estimated useful lives. The following intangible assets with finite useful lives are amortised from the date they are available for use and their estimated useful lives are as follows:

– Patent 5 – 10 years – Software 5 – 10 years

Both the period and method of amortisation are reviewed annually.

During the Relevant Periods, the Target Group did not have any intangible assets with indefinite useful lives.

(k) Operating lease charges

Leases which do not transfer substantially all the risks and rewards of ownership to the Target Group are classified as operating leases.

Where the Target Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

The cost of acquiring land held under an operating lease is amortised on a straight-line basis over the period of the lease term.

(l) Impairment of assets

• (i) Impairment of investments in equity securities and other receivables

Investments in equity securities and other current and non-current receivables that are stated at cost or amortised cost or are classified as available-for-sale equity securities are reviewed at the end of each reporting period to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to the attention of the Target Group about one or more of the following loss events:

• significant financial difficulty of the debtor;

• a breach of contract, such as a default or delinquency in interest or principal payments;

• it becoming probable that the debtor will enter bankruptcy or other financial reorganisation;

– II-19 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

• significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; and

• a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

If any such evidence exists, any impairment loss is determined and recognised as follows:

• For investments in joint ventures accounted for under the equity method in the Financial Information (see note 1(f)), the impairment loss is measured by comparing the recoverable amount of the investment with its carrying amount in accordance with note 1(l)(ii). The impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount in accordance with note 1(l)(ii).

• For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for equity securities carried at cost are not reversed.

– For trade and other current receivables and other financial assets carried at amortised cost, the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where these financial assets share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group.

If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognised, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognised in prior years/periods.

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognised in respect of trade debtors and bills receivable included within trade and other receivables, whose recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Target Group is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade debtors and bills receivable directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognised in profit or loss.

(ii) Impairment of other assets

Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognised no longer exists or may have decreased:

• property, plant and equipment;

• solar power plants;

– II-20 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

• intangible assets;

• lease prepayments;

• interest in a joint venture;

• goodwill; and

• investments in subsidiaries in the Target Company’s statement of financial position.

If any such indication exists, the asset’s recoverable amount is estimated. In addition, for goodwill, the recoverable amount is estimated annually whether or not there is any indication of impairment.

–

Calculation of recoverable amount

The recoverable amount of an asset is the greater of its fair value less costs of disposal 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. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

• Recognition of impairment losses

An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).

• Reversals of impairment losses

In respect of assets other than goodwill, an impairment loss is reversed if there has been a favorable change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed.

A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior years/periods. Reversals of impairment losses are credited to profit or loss in the year/period in which the reversals are recognised.

(m) Inventories

Inventories are carried at the lower of cost and net realisable value.

Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

– II-21 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any writedown of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

(n) Construction contracts

Construction contracts are contracts specifically negotiated with a customer for the construction of an asset or a group of assets, where the customer is able to specify the major structural elements of the design. The accounting policy for contract revenue is set out in note 1(v)(iii). When the outcome of a construction contract can be estimated reliably, contract costs are recognised as an expense by reference to the stage of completion of the contract at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When the outcome of a construction contract cannot be estimated reliably, contract costs are recognised as an expense in the period in which they are incurred.

Construction contracts in progress at the end of the reporting period are recorded at the net amount of costs incurred plus recognised profit less recognised losses and progress billings, and are presented in the statement of financial position as the “Gross amount due from customers for contract work” (as an asset) or the “Gross amount due to customers for contract work” (as a liability), as applicable. Progress billings not yet paid by the customer are included under “Trade and other receivables”. Amounts received before the related work is performed are presented as “Receipts in advance” under “Trade and other payables”.

(o) Trade and other receivables

Trade and other receivables are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method, less allowance for impairment of doubtful debts (see note 1(l)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.

(p) Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between the amount initially recognised and redemption value being recognised in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.

(q) Trade and other payables

Trade and other payables are initially recognised at fair value. Trade and other payables are subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

(r) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.

– II-22 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(s) Employee benefits

• (i) Short term employee benefits and contributions to defined contribution retirement plans

Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year/period in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

(ii) Termination benefits

Termination benefits are recognised at the earlier of when the Target Group can no longer withdraw the offer of those benefits and when it recognises restructuring costs involving the payment of termination benefits.

(t) Income tax

Income tax for the year/period comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year/period, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years/periods.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Target Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period. Deferred tax assets and liabilities are not discounted.

– II-23 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Target Company or the Target Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:

• in the case of current tax assets and liabilities, the Target Company or the Target Group intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously; or

• in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:

• the same taxable entity; or

• different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the current tax liabilities on a net basis or realise and settle simultaneously.

(u) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Target Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(v) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Target Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as follows:

(i) Sales of electricity

Revenue arising from the sale of electricity is recognised in the accounting period when electricity is generated and supplied to the customers. Revenue excludes value added tax (“VAT”) or other sales taxes.

(ii) Sales of goods

Revenue is recognised when the significant risks and rewards of ownership of the goods have been transferred to customers. Revenue excludes VAT or other sales taxes and is after deduction of any trade discounts.

– II-24 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(iii) Contract revenue

When the outcome of a construction contract can be estimated reliably, revenue is recognised using the percentage of completion method, measured by reference to the percentage of contract costs incurred to date to estimated total contract costs for the contract.

When the outcome of a construction contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs incurred that it is probable will be recoverable.

(iv) Dividends

Dividend income from unlisted investments is recognised when the shareholder’s right to receive payment is established.

• (v) Interest income

Interest income is recognised as it accrues using the effective interest method.

• (vi) Government grants

Government grants are recognised in the statement of financial position initially when there is reasonable assurance that they will be received and that the Target Group will comply with the conditions attaching to them. Grants that compensate the Target Group for expenses incurred are recognised as income in profit or loss on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Target Group for the cost of an asset are recognised by setting up the grant as deferred income that is recognised in profit or loss on a systematic basis over the useful life of the asset.

(w) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

(x) Related parties

• (a) A person, or a close member of that person’s family, is related to the Target Group if that person:

• (i) has control or joint control over the Target Group;

• (ii) has significant influence over the Target Group; or

• (iii) is a member of the key management personnel of the Target Group or the Target Group’s parent.

– II-25 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

• (b) An entity is related to the Target Group if any of the following conditions applies:

• (i) The entity and the Target Group are members of the same Group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

• (ii) One entity is an associate or joint venture of the other entity (or joint venture of a member of a group of which the other entity is a member).

• (iii) Both entities are joint ventures of the same third party.

• (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

• (v) The entity is a post-employment benefit plan for the benefit of employees of either the Target Group or an entity related to the Target Group.

• (vi) The entity is controlled or jointly controlled by a person identified in (a).

• (vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

• (viii) The entity, or any member of the Target Group of which it is a part, provides key management personnel services to the Target Group or to the Target Group’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(y) Segment reporting

Operating segments, and the amounts of each segment item reported in the Financial Information, are identified from the financial information provided regularly to the Target Group’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Target Group’s various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

During the Relevant Periods, the Target Group’s revenue and contribution to profit were mainly derived from sales of street lights and monitoring equipment, construction of solar power plants and sales of electricity, which is regarded as a single reportable segment in a manner consistent with the way in which information is reported internally to the Target Group’s senior management for the purpose of resources allocation and performance assessment. In addition, the principal assets employed by the Target Group are located in the Mainland China. Accordingly, no segment analysis is presented other than entity-wide disclosures.

– II-26 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

2 SOURCE OF ESTIMATION UNCERTAINTY

The Target Group believes that the key sources of estimation uncertainty are as follows:

(a) Business combination and asset acquisition

Accounting for acquisitions require the Target Group to allocate the cost of acquisition to specific assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Judgments made in identifying all acquired assets, determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset’s useful lives, could materially impact the calculation of goodwill and depreciation and charges in subsequent periods. Estimated fair values are based on information available near the acquisition date and on expectations and assumptions that have been deemed reasonable by management. Determining the estimated useful lives of tangible assets acquired also requires judgement.

(b) Impairment losses for bad and doubtful debts

The Target Group estimates impairment losses for bad and doubtful debts resulting from the inability of the customers and other debtors to make the required payments. The Target Group bases the estimates on the aging of the receivable balance, debtors’ creditworthiness and historical write-off experience. If the financial condition of the customers and debtors were to deteriorate, actual write-offs would be higher than estimated.

(c) Impairment losses of non-current assets

In considering the impairment losses that may be required for certain of the Target Group’s assets which include property, plant and equipment, solar power plants and lease prepayments, recoverable amount of the asset needs to be determined. The recoverable amount is the greater of the fair value less costs to sell and the value in use. It is difficult to precisely estimate selling price because quoted market prices for these assets are not be readily available. In determining the value in use, expected cash flow generated by the asset are discounted to their present value, which requires significant judgment relating to items such as level of electricity generated, unit selling price and amount of operating costs. The Target Group uses all readily available information in determining an amount that is reasonable approximation of recoverable amount, including estimates based on reasonable and supportable assumptions and projections of items such as level of electricity generated, unit selling price and amount of operating costs.

(d) Recognition of deferred tax

Deferred tax assets in respect of unused tax losses and tax credit carried forward and deductible temporary differences are recognised and measured based on the expected manner of realisation or settlement of the carrying amount of the assets, using tax rates enacted or substantively enacted at the end of the reporting period. In determining the carrying amounts of deferred assets, expected taxable profits are estimated which involves a number of assumptions relating to the operating environment of the Target Group and require a significant level of judgment exercised by the directors. Any change in such assumptions and judgment would affect the carrying amounts of deferred tax assets to be recognised and hence the net profit in future year/period.

(e) Depreciation

Property, plant and equipment and solar power plants are depreciated amounted on a straight-line basis over the estimated useful lives of the assets, after taking into account the estimated residual value. The Target Group reviews the estimated useful lives of the assets regularly. The useful lives are based on the Target Group’s historical experience with similar assets and taking into account anticipated technological changes. The depreciation expense for future periods is adjusted if there are significant changes from previous estimates.

– II-27 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(f) Warranty provisions

The Target Group makes provisions under the warranties it gives on sale of its products taking into account the Target Group’s recent claim experience. As the Target Group is continually upgrading its product designs and launching new models it is possible that the recent claim experience is not indicative of future claims that it will receive in respect of past sales. Any increase or decrease in the provision would affect profit or loss in future years/periods.

(g) Construction contracts

As explained in policy notes 1(n) and 1(v)(iii) revenue and profit recognition on an uncompleted project is dependent on estimating the total outcome of the construction contract, as well as the work done to date. Based on the Target Group’s recent experience and the nature of the construction activity undertaken by the Target Group, the Target Group makes estimates of the point at which it considers the work is sufficiently advanced such that the costs to complete and revenue can be reliably estimated. As a result, until this point is reached the amounts due from customers for contract work as disclosed in note 22 will not include profit which the Target Group may eventually realise from the work done to date. In addition, actual outcomes in terms of total cost or revenue may be higher or lower than estimated at the end of the reporting period, which would affect the revenue and profit recognised in future years/periods as an adjustment to the amounts recorded to date.

3 REVENUE

The principal activities of the Target Group are manufacturing and sales of street lights and monitoring equipment, construction of solar power plants and sales of electricity.

Sales of street lights Construction of solar power plants Sales of monitoring equipment Sales of electricity_(note)_ Sales of solar energy-related products Others	For the year ended 31 December 2012 2013 RMB’000 RMB’000 265,899 599,219 267,648 420,761 – – – 330 – – 1,876 1,211 535,423 1,021,521	2014 RMB’000 171,546 275,888 15,247 49,451 88,025 15,771 615,928	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 18,954 30,364 31,798 68,621 – 12,755 20,663 1,125 – – 1,598 7,788 73,013 120,653	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 18,954 30,364 31,798 68,621 – 12,755 20,663 1,125 – – 1,598 7,788 73,013 120,653
				120,653

Note: Sales of electricity includes tariff adjustment amounted to RMB nil, RMB nil, RMB35,235,000, RMB14,833,000 and RMB nil for the years ended 31 December 2012, 2013 and 2014 and the six months ended 30 June 2014 and 2015, respectively.

The Target Group had 3, 3, 3, 3 and 2 customers with whom transactions have exceeded 10% of the Target Group’s revenue for the years ended 31 December 2012, 2013 and 2014 and the six months ended 30 June 2014 and 2015, respectively. Revenues from sales to these customers amounted to approximately RMB202,806,000, RMB788,891,000, RMB414,740,000, RMB14,588,000 and RMB21,413,000 for the years ended 31 December 2012, 2013 and 2014 and the six months ended 30 June 2014 and 2015, respectively. Details of concentrations of credit risk arising from these customers are set out in note 30(a).

The Target Group’s business is subject to seasonal fluctuation. In general, solar power plants are located primarily in the northern part of China where, due to weather conditions, the construction work tend to commence during the second quarter of a calendar year after the approval of project funding of the customers from government authorities and the majority of the construction work normally occur during the third and fourth quarters of a calendar year. Consequently, revenue in the third and fourth quarters are generally greater than in the first and second quarters of the year.

– II-28 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

4 OTHER REVENUE AND OTHER NET INCOME

Other revenue Interest income Government grants_(note)_ Others Other net income Net (loss)/gain on sale of property, plant and equipment Net gain on disposal of subsidiaries Net gain on disposal of available-for-sale equity securities	For the year ended 31 December 2012 2013 RMB’000 RMB’000 4,409 12,125 6,597 4,051 47 119 11,053 16,295 (6) (27) 17,976 21,324 – – 17,970 21,297	2014 RMB’000 48,854 5,978 144 54,976 – 49,326 6,600 55,926	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 23,545 2,928 4,344 753 8 99 27,897 3,780 – 13 – – – – – 13	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 23,545 2,928 4,344 753 8 99 27,897 3,780 – 13 – – – – – 13
				3,780
				13 – –
				13

Note: Government grants represented cash subsidies received from various local government authorities, which are recognised in the profit or loss when the Target Group fulfilled the conditions attached to the grants.

5 PROFIT/(LOSS) BEFORE TAXATION

Profit/(loss) before taxation is arrived at after charging:

(a) Finance costs

Interest on bank loans and other borrowings Interest on corporate bond payable Other interest expense	For the year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 4,236 13,418 70,109 4,438 10,737 3,118 2,326 2,394 8,603 11,000 26,549 81,830	For the year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 4,236 13,418 70,109 4,438 10,737 3,118 2,326 2,394 8,603 11,000 26,549 81,830	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 30,477 3,771 3,118 – 7,118 10,305 40,713 14,076	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 30,477 3,771 3,118 – 7,118 10,305 40,713 14,076
		81,830		14,076

– II-29 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(b) Staff costs

Salaries, wages and other benefits Contributions to defined contribution retirement plan	For the year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 41,144 58,440 71,133 3,944 4,558 6,490 45,088 62,998 77,623	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 35,603 53,894 2,777 5,137 38,380 59,031	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 35,603 53,894 2,777 5,137 38,380 59,031
			59,031

(c) Other items

	For the year ended	For the year ended		For the six months	For the six months
		31 December		ended 30 June
	2012	2013	2014	2014	2015
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
				(unaudited)
Amortisation
– lease prepayments_(note 14)_	237	684	1,541	771	771
– intangible assets_(note 12)_	427	695	635	383	440
Depreciation
– Property, plant and equipment
(note 10)	6,373	9,582	8,462	3,573	4,123
– Solar power plants_(note 11)_	–	295	22,158	3,680	419
Impairment losses in respect of trade and
other receivables
(note 20)	45,977	3,143	5,824	–	315
Auditors’ remuneration	494	2,396	461	28	160
Operating lease charges in respect of
properties	1,719	1,735	15,756	4,867	12,605
Research and development costs	20,589	32,826	26,783	10,776	11,463
Cost of inventories_(note 19)_	185,391	439,964	135,547	16,311	34,106

Note: Cost of inventories includes RMB4,755,000, RMB5,637,000, RMB8,678,000, RMB2,931,000 and RMB5,379,000 for the years ended 31 December 2012, 2013 and 2014 and the six months ended 30 June 2014 and 2015, respectively relating to staff costs and depreciation, which amounts are also included in the respective total amounts disclosed separately above or in note 5(b) for each of these types of expenses.

– II-30 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

6 INCOME TAX IN THE CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

• (a) Taxation in the consolidated statements of profit or loss represents:

Current tax PRC Corporate Income Tax (“CIT”) Deferred tax Origination and reversal of temporary differences (note 17(b))	For the year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 14,054 20,814 3,726 (8,862) (713) 1,947 5,192 20,101 5,673	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 704 141 (7,203) (11,692) (6,499) (11,551)	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 704 141 (7,203) (11,692) (6,499) (11,551)
			(11,551)

Notes:

• (i) The Target Company and its subsidiaries are incorporated in the PRC and subject to CIT at the statutory rate of 25%, unless otherwise specified.

• (ii) During the Relevant Periods, the Target Company and certain subsidiaries of the Target Group were qualified as High and New Technology Enterprise (“HNTE”) and were entitled to a preferential CIT rate of 15%.

• (iii) Income derived by an enterprise from the investment in, and the operation of, public infrastructure projects eligible for key support from the PRC Government, are eligible for a tax exemption for the first year to the third year generating operating income and a 50% deduction in CIT for the fourth year to the sixth year (the “3+3 tax holiday”). During the year ended 31 December 2014, Gansu Hongyuan and Hami Chaoxiang started to generate operating income and enjoyed tax exemption pursuant to the 3+3 tax holiday.

(b) Reconciliation between tax expense/(credit) and accounting profit/(loss) at applicable tax rates:

Profit/(loss) before taxation Notional tax on profit/(loss) before taxation, calculated at the rates applicable to the tax jurisdiction concerned Tax effect of non-deductible expenses Net effect of tax losses not recognised/unused tax losses utilised Tax effect of research & development super-deduction Actual tax expense/(credit)	For the year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 28,349 101,802 14,696 2,406 19,999 (770) 590 763 1,270 2,759 904 6,620 (563) (1,565) (1,447) 5,192 20,101 5,673	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) (53,417) (83,940) (10,439) (15,749) 640 1,231 3,973 3,618 (673) (651) (6,499) (11,551)	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) (53,417) (83,940) (10,439) (15,749) 640 1,231 3,973 3,618 (673) (651) (6,499) (11,551)
			(11,551)

– II-31 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

7 DIRECTORS’ AND SUPERVISORS’ REMUNERATION

Directors’ and supervisors’ remuneration during the Relevant Periods is as follows:

Year ended 31 December 2012

Executive directors Mr. Xiang Jun Mr. Yang Nan Mr. Zuo Xianghong Mr. Deng Chengli Non-executive director Mr. Lu Jianzhi Independent non-executive directors Mrs. Dai Xiaofeng Mr. Du Yuanming Supervisors Mr. Fang Liang Mr. Jiang Kaifa Total	Directors’ fees RMB’000 – – – – – – – – – –	Salaries, allowances and other benefits in kind RMB’000 228 293 211 197 176 60 60 78 132 1,435	Retirement scheme contributions RMB’000 45 59 42 39 35 12 12 16 26 286	Discretionary bonuses RMB’000 – – – – – – – – – –	Total RMB’000 273 352 253 236 211 72 72 94 158
					1,721

Year ended 31 December 2013

Executive directors Mr. Xiang Jun Mr. Yang Nan Mr. Zuo Xianghong Mr. Deng Chengli Independent non-executive directors Mrs. Dai Xiaofeng Mr. Du Yuanming Supervisors Mr. Fang Liang Mr. Jiang Kaifa Total	Directors’ fees RMB’000 – – – – – – – – –	Salaries, allowances and other benefits in kind RMB’000 266 269 267 260 60 60 98 156 1,436	Retirement scheme contributions RMB’000 53 54 53 52 12 12 20 31 287	Discretionary bonuses RMB’000 – – – – – – – – –	Total RMB’000 319 323 320 312 72 72 118 187
					1,723

– II-32 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Year ended 31 December 2014

Executive directors Mr. Xiang Jun Mr. Yang Nan Mr. Zuo Xianghong Mr. Deng Chengli Independent non-executive directors Mrs. Dai Xiaofeng Mr. Du Yuanming Mr. Hu Xiaolong Supervisors Mr. Fang Liang Mr. Jiang Kaifa Total	Directors’ fees RMB’000 – – – – – – – – – –	Salaries, allowances and other benefits in kind RMB’000 267 266 274 190 60 60 60 138 154 1,469	Retirement scheme contributions RMB’000 53 52 55 38 12 12 12 28 31 293	Discretionary bonuses RMB’000 – – – – – – – – – –	Total RMB’000 320 318 329 228 72 72 72 166 185
					1,762

Six months ended 30 June 2014 (unaudited)

Executive directors Mr. Xiang Jun Mr. Yang Nan Mr. Zuo Xianghong Mr. Deng Chengli Independent non-executive directors Mrs. Dai Xiaofeng Mr. Du Yuanming Mr. Hu Xiaolong Supervisors Mr. Fang Liang Mr. Jiang Kaifa Total	Directors’ fees RMB’000 – – – – – – – – – –	Salaries, allowances and other benefits in kind RMB’000 133 130 137 96 30 30 30 73 76 735	Retirement scheme contributions RMB’000 27 26 27 19 6 6 6 15 15 147	Discretionary bonuses RMB’000 – – – – – – – – – –	Total RMB’000 160 156 164 115 36 36 36 88 91
					882

– II-33 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Six months ended 30 June 2015

Executive directors Mr. Xiang Jun Mr. Yang Nan Mr. Zuo Xianghong Mr. Deng Chengli Independent non-executive directors Mrs. Dai Xiaofeng Mr. Du Yuanming Mr. Hu Xiaolong Supervisors Mr. Fang Liang Mr. Jiang Kaifa Total	Directors’ fees RMB’000 – – – – – – – – – –	Salaries, allowances and other benefits in kind RMB’000 134 133 137 92 30 30 20 64 80 720	Retirement scheme contributions RMB’000 27 27 27 18 6 6 6 13 16 146	Discretionary bonuses RMB’000 – – – – – – – – – –	Total RMB’000 161 160 164 110 36 36 26 77 96
					866

During the Relevant Periods, there were no amounts paid or payable by the Target Group to the directors or any of the highest paid individual set out in note 8 below as an inducement to join or upon joining the Target Group or as a compensation for loss of office. There was no arrangement under which a director waived or agreed to waive any remuneration during the Relevant Periods.

8 INDIVIDUAL WITH HIGHEST EMOLUMENTS

Of the five individuals with the highest emoluments, 4, 3, 3, 3 and 3 are directors of the Target Company for the years ended 31 December 2012, 2013 and 2014 and the six months ended 30 June 2014 and 2015, respectively whose emoluments are disclosed in note 7 above. The aggregate of the emoluments in respect of the remaining 1, 2, 2, 2 and 2 individuals are as follows:

Salaries, bonuses and other emoluments Retirement scheme contributions	For the year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 407 697 669 81 139 134 488 836 803	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 335 336 67 67 402 403	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 335 336 67 67 402 403
			403

The emoluments of the 1, 2, 2, 2 and 2 individuals with the highest emoluments for the years ended 31 December 2012, 2013 and 2014 and the six months ended 30 June 2014 and 2015, respectively are within the following bands:

	For the year ended	For the year ended		For the six months	For the six months
	31	December		ended 30 June
	2012	2013	2014	2014		2015
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
				(unaudited)
Nil to HK$1,000,000	1	2	2	2		2

– II-34 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

9 PROFIT/(LOSS) ATTRIBUTABLE TO EQUITY HOLDERS OF THE TARGET COMPANY

The consolidated profit/(loss) attributable to equity holders of the Target Company which have been dealt with in the financial statements of the Target Company are as follow:

For the year ended 31 December For the six months ended 30 June 2012 2013 2014 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) Amount of consolidated profit/(loss) attributable to equity holders of the Target Company dealt with in the Target Company’s financial statements (Note 29(a)) 39,223 75,338 24,292 (50,130) (36,682) 10 PROPERTY, PLANT AND EQUIPMENT (a) The Target Group Buildings Plant and machinery Motor vehicles Furniture fixtures and equipment Sub-total Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Cost: At 1 January 2012 24,621 8,477 4,694 4,945 42,737 10,089 52,826 Additions – 1,771 4,462 6,225 12,458 1,488 13,946 Transfers 3,305 6,572 – 72 9,949 (9,949) – Disposals – (464) – – (464) – (464) At 31 December 2012 and 1 January 2013 27,926 16,356 9,156 11,242 64,680 1,628 66,308 Additions 74 2,546 8,050 382 11,052 – 11,052 Disposals – (403) (4,609) (190) (5,202) – (5,202) At 31 December 2013 and 1 January 2014 28,000 18,499 12,597 11,434 70,530 1,628 72,158 Additions – 1,657 1,397 1,963 5,017 327 5,344 Transfers – 1,812 – – 1,812 (1,812) – Acquisition from business combination 964 412 1,065 64 2,505 – 2,505 Disposals – (3,037) (242) (148) (3,427) – (3,427) At 31 December 2014 and 1 January 2015 28,964 19,343 14,817 13,313 76,437 143 76,580 Additions – 1,070 520 30 1,620 1,166 2,786 Transfers 999 – – – 999 (999) – Disposals – (6) (217) – (223) – (223) At 30 June 2015 29,963 20,407 15,120 13,343 78,833 310 79,143 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	For the year ended 31 December For the six months ended 30 June 2012 2013 2014 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) Amount of consolidated profit/(loss) attributable to equity holders of the Target Company dealt with in the Target Company’s financial statements (Note 29(a)) 39,223 75,338 24,292 (50,130) (36,682) 10 PROPERTY, PLANT AND EQUIPMENT (a) The Target Group Buildings Plant and machinery Motor vehicles Furniture fixtures and equipment Sub-total Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Cost: At 1 January 2012 24,621 8,477 4,694 4,945 42,737 10,089 52,826 Additions – 1,771 4,462 6,225 12,458 1,488 13,946 Transfers 3,305 6,572 – 72 9,949 (9,949) – Disposals – (464) – – (464) – (464) At 31 December 2012 and 1 January 2013 27,926 16,356 9,156 11,242 64,680 1,628 66,308 Additions 74 2,546 8,050 382 11,052 – 11,052 Disposals – (403) (4,609) (190) (5,202) – (5,202) At 31 December 2013 and 1 January 2014 28,000 18,499 12,597 11,434 70,530 1,628 72,158 Additions – 1,657 1,397 1,963 5,017 327 5,344 Transfers – 1,812 – – 1,812 (1,812) – Acquisition from business combination 964 412 1,065 64 2,505 – 2,505 Disposals – (3,037) (242) (148) (3,427) – (3,427) At 31 December 2014 and 1 January 2015 28,964 19,343 14,817 13,313 76,437 143 76,580 Additions – 1,070 520 30 1,620 1,166 2,786 Transfers 999 – – – 999 (999) – Disposals – (6) (217) – (223) – (223) At 30 June 2015 29,963 20,407 15,120 13,343 78,833 310 79,143 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	For the year ended 31 December For the six months ended 30 June 2012 2013 2014 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) Amount of consolidated profit/(loss) attributable to equity holders of the Target Company dealt with in the Target Company’s financial statements (Note 29(a)) 39,223 75,338 24,292 (50,130) (36,682) 10 PROPERTY, PLANT AND EQUIPMENT (a) The Target Group Buildings Plant and machinery Motor vehicles Furniture fixtures and equipment Sub-total Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Cost: At 1 January 2012 24,621 8,477 4,694 4,945 42,737 10,089 52,826 Additions – 1,771 4,462 6,225 12,458 1,488 13,946 Transfers 3,305 6,572 – 72 9,949 (9,949) – Disposals – (464) – – (464) – (464) At 31 December 2012 and 1 January 2013 27,926 16,356 9,156 11,242 64,680 1,628 66,308 Additions 74 2,546 8,050 382 11,052 – 11,052 Disposals – (403) (4,609) (190) (5,202) – (5,202) At 31 December 2013 and 1 January 2014 28,000 18,499 12,597 11,434 70,530 1,628 72,158 Additions – 1,657 1,397 1,963 5,017 327 5,344 Transfers – 1,812 – – 1,812 (1,812) – Acquisition from business combination 964 412 1,065 64 2,505 – 2,505 Disposals – (3,037) (242) (148) (3,427) – (3,427) At 31 December 2014 and 1 January 2015 28,964 19,343 14,817 13,313 76,437 143 76,580 Additions – 1,070 520 30 1,620 1,166 2,786 Transfers 999 – – – 999 (999) – Disposals – (6) (217) – (223) – (223) At 30 June 2015 29,963 20,407 15,120 13,343 78,833 310 79,143 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
		Total RMB’000 52,826 13,946 – (464)
		66,308 11,052 (5,202)
		72,158 5,344 – 2,505 (3,427)
		76,580 2,786 – (223)
		79,143 - - - - -

– II-35 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Accumulated depreciation: At 1 January 2012 Charge for the year Written back on disposals At 31 December 2012 and 1 January 2013 Charge for the year Written back on disposals At 31 December 2013 and 1 January 2014 Acquisition from business combination Charge for the year Written back on disposals At 31 December 2014 and 1 January 2015 Charge for the period Written back on disposals At 30 June 2015 Net book value: At 31 December 2012 At 31 December 2013 At 31 December 2014 At 30 June 2015	Buildings RMB’000 2,137 1,306 – 3,443 1,326 – 4,769 60 1,347 – 6,176 710 – 6,886 - - - - - 24,483 23,231 22,788 23,077	Plant and machinery RMB’000 3,175 1,329 (142) 4,362 2,216 (185) 6,393 266 2,123 (2,224) 6,558 1,332 (4) 7,886 - - - - - 11,994 12,106 12,785 12,521	Motor vehicles RMB’000 833 1,421 – 2,254 3,858 (1,680) 4,432 526 2,174 (56) 7,076 1,280 (206) 8,150 - - - - - 6,902 8,165 7,741 6,970	Furniture fixtures and equipment RMB’000 1,645 2,317 – 3,962 2,182 (91) 6,053 3 2,818 (90) 8,784 801 – 9,585 - - - - - 7,280 5,381 4,529 3,758	Sub-total RMB’000 7,790 6,373 (142) 14,021 9,582 (1,956) 21,647 855 8,462 (2,370) 28,594 4,123 (210) 32,507 - - - - - 50,659 48,883 47,843 46,326	Construction in progress RMB’000 – – – – – – – – – – – – – – - - - - - 1,628 1,628 143 310	Total RMB’000 7,790 6,373 (142)
							14,021 9,582 (1,956)
							21,647 855 8,462 (2,370)
							28,594 4,123 (210)
							32,507 - - - - -
							52,287
							50,511
							47,986
							46,636

– II-36 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(b) The Target Company

Cost: At 1 January 2012 Additions At 31 December 2012 and 1 January 2013 Additions Disposals At 31 December 2013 and 1 January 2014 Additions Disposals At 31 December 2014 and 1 January 2015 Additions At 30 June 2015 Accumulated depreciation: At 1 January 2012 Charge for the year At 31 December 2012 and 1 January 2013 Charge for the year Written back on disposals At 31 December 2013 and 1 January 2014 Charge for the year Written back on disposals At 31 December 2014 and 1 January 2015 Charge for the period At 30 June 2015 Net Book Value: At 31 December 2012 At 31 December 2013 At 31 December 2014 At 30 June 2015	Plant and machinery RMB’000 1,910 317 2,227 1,355 (379) 3,203 901 (3) 4,101 649 4,750 - - - - - - 609 164 773 498 (178) 1,093 579 (1) 1,671 373 2,044 - - - - - - 1,454 2,110 2,430 2,706	Motor vehicles RMB’000 2,027 2,803 4,830 – (4,598) 232 – – 232 386 618 - - - - - - 504 700 1,204 538 (1,680) 62 46 – 108 33 141 - - - - - - 3,626 170 124 477	Furniture fixtures and equipment RMB’000 4,147 5,957 10,104 107 (31) 10,180 1,233 – 11,413 4 11,417 - - - - - - 1,489 1,867 3,356 1,958 (15) 5,299 2,568 – 7,867 657 8,524 - - - - - - 6,748 4,881 3,546 2,893	Sub-total RMB’000 8,084 9,077 17,161 1,462 (5,008) 13,615 2,134 (3) 15,746 1,039 16,785 - - - - - - 2,602 2,731 5,333 2,994 (1,873) 6,454 3,193 (1) 9,646 1,063 10,709 - - - - - - 11,828 7,161 6,100 6,076	Construction in progress RMB’000 – – – – – – – – – – – - - - - - - – – – – – – – – – – – - - - - - - – – – –	Total RMB’000 8,084 9,077
						17,161 1,462 (5,008)
						13,615 2,134 (3)
						15,746 1,039
						16,785 - - - - - - 2,602 2,731
						5,333 2,994 (1,873)
						6,454 3,193 (1)
						9,646 1,063
						10,709 - - - - - -
						11,828
						7,161
						6,100
						6,076

– II-37 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

The buildings held for own use are located in PRC under medium-term leases.

For the Target Group, certain bank loans and other borrowings were secured by property, plant and equipment with carrying amounts of RMB nil, RMB25,733,000, RMB9,646,000 and RMB nil at 31 December 2012, 2013 and 2014 and 30 June 2015, respectively (note 24).

11 SOLAR POWER PLANTS

(a) The Target Group

Cost: At 1 January 2012 Additions At 31 December 2012 and 1 January 2013 Additions Transfers At 31 December 2013 and 1 January 2014 Additions Transfers Disposals At 31 December 2014 and 1 January 2015 Additions At 30 June 2015	Solar power plants RMB’000 – – – – 8,609 8,609 – 413,720 (407,825) 14,504 – 14,504 - - - - - - - -	Solar power plants under development RMB’000 40 50,428 50,468 292,753 (8,609) 334,612 179,293 (413,720) (1,551) 98,634 47,726 146,360 - - - - - - - -	Total RMB’000 40 50,428
			50,468 292,753 –
			343,221 179,293 – (409,376)
			113,138 47,726
			160,864 - - - - - - - -

– II-38 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Accumulated depreciation: At 1 January 2012 and 31 December 2012 and 1 January 2013 Charge for the year At 31 December 2013 and 1 January 2014 Charge for the year Written back on disposals At 31 December 2014 and 1 January 2015 Charge for the period At 30 June 2015 Net book value: At 31 December 2012 At 31 December 2013 At 31 December 2014 At 30 June 2015	Solar power plants RMB’000 – 295 295 22,158 (21,566) 887 419 1,306 - - - - - - - - – 8,314 13,617 13,198	Solar power plants under development RMB’000 – – – – – – – – - - - - - - - - 50,468 334,612 98,634 146,360	Total RMB’000 – 295
			295 22,158 (21,566)
			887 419
			1,306 - - - - - - - -
			50,468
			342,926
			112,251
			159,558

– II-39 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(b) The Target Company

Cost: At 1 January 2012 Additions At 31 December 2012 and 1 January 2013 Additions Transfers At 31 December 2013 and 1 January 2014 Additions Disposals At 31 December 2014 and 1 January 2015 Additions At 30 June 2015 Accumulated depreciation: At 1 January 2012 and 31 December 2012 and 1 January 2013 Charge for the year At 31 December 2013 and 1 January 2014 Charge for the year At 31 December 2014 and 1 January 2015 Charge for the period At 30 June 2015 Net book value: At 31 December 2012 At 31 December 2013 At 31 December 2014 At 30 June 2015	Solar power plants RMB’000 – – – – 8,609 8,609 – – 8,609 – 8,609 - - - - - - - - – 295 295 592 887 296 1,183 - - - - - - - - – 8,314 7,722 7,426	Solar power plants under development RMB’000 40 39,957 39,997 20,131 (8,609) 51,519 417 (1,551) 50,385 554 50,939 - - - - - - - - – – – – – – – - - - - - - - - 39,997 51,519 50,385 50,939	Total RMB’000 40 39,957
			39,997 20,131 –
			60,128 417 (1,551)
			58,994 554
			59,548 - - - - - - - - – 295
			295 592
			887 296
			1,183 - - - - - - - -
			39,997
			59,833
			58,107
			58,365

– II-40 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

For the Target Group, solar power plants with carrying values of approximately RMB169,965,000 were pledged as security bank loans and borrowings (see note 24) as at 31 December 2013. No solar power plants were pledged as security bank loans and other borrowings at 31 December 2012 and 2014 and 30 June 2015.

12 INTANGIBLE ASSETS

(a) The Target Group

Cost: At 1 January 2012 Additions Disposals At 31 December 2012 and 1 January 2013 Additions At 31 December 2013 and 1 January 2014 Additions Disposals At 31 December 2014 and 1 January 2015 Additions At 30 June 2015 Accumulated amortisation: At 1 January 2012 Charge for the year Written back on disposals At 31 December 2012 and 1 January 2013 Charge for the year Balance at 31 December 2013 and 1 January 2014 Charge for the year Written back on disposals At 31 December 2014 and 1 January 2015 Charge for the period At 30 June 2015	Software RMB’000 – 1,696 (47) 1,649 642 2,291 827 (7) 3,111 158 3,269 - - - - - - - - – 130 (18) 112 398 510 503 (4) 1,009 291 1,300 - - - - - - - -	Patent RMB’000 2,876 120 (120) 2,876 – 2,876 – – 2,876 – 2,876 - - - - - - - - 347 297 (12) 632 297 929 132 – 1,061 149 1,210 - - - - - - - -	Total RMB’000 2,876 1,816 (167)
			4,525 642
			5,167 827 (7)
			5,987 158
			6,145 - - - - - - - - 347 427 (30)
			744 695
			1,439 635 (4)
			2,070 440
			2,510 - - - - - - - -

– II-41 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Net book value: At 31 December 2012 At 31 December 2013 At 31 December 2014 At 30 June 2015 (b) The Target Company Cost: At 1 January 2012 Additions Disposals At 31 December 2012 and 1 January 2013 Additions At 31 December 2013 and 1 January 2014 Additions At 31 December 2014 and 1 January 2015 Additions At 30 June 2015	Software RMB’000 1,537 1,781 2,102 1,969 Software RMB’000 – 1,647 (4) 1,643 642 2,285 658 2,943 140 3,083 - - - - - - - -	Patent RMB’000 2,244 1,947 1,815 1,666 Patent RMB’000 2,876 120 (120) 2,876 – 2,876 – 2,876 – 2,876 - - - - - - - -	Total RMB’000 3,781
			3,728
			3,917
			3,635
			Total RMB’000 2,876 1,767 (124)
			4,519 642
			5,161 658
			5,819 140
			5,959 - - - - - - - -

– II-42 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Accumulated amortisation: At 1 January 2012 Charge for the year Written back on disposals At 31 December 2012 and 1 January 2013 Charge for the year At 31 December 2013 and 1 January 2014 Charge for the year At 31 December 2014 and 1 January 2015 Charge for the period At 30 June 2015 Net book value: At 31 December 2012 At 31 December 2013 At 31 December 2014 At 30 June 2015	Software RMB’000 – 128 (17) 111 397 508 497 1,005 278 1,283 - - - - - - - - 1,532 1,777 1,938 1,800	Patent RMB’000 347 297 (12) 632 297 929 132 1,061 149 1,210 - - - - - - - - 2,244 1,947 1,815 1,666	Total RMB’000 347 425 (29)
			743 694
			1,437 629
			2,066 427
			2,493 - - - - - - - -
			3,776
			3,724
			3,753
			3,466

13 GOODWILL

Goodwill is allocated to the Target Group’s monitoring system cash-generating units (CGU), which was acquired in June 2014.

The recoverable amount of the CGU at 31 December 2014 is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using an estimated weighted average growth rate of 3%. The growth rates used do not exceed the long-term average growth rates for the business in which the CGU operates. The cash flows are discounted using a discount rate of 11.5%. The discount rates used are pre-tax and reflect specific risks relating to the relevant business.

No impairment loss on goodwill has been recognised during the year ended 31 December 2014 in respect of the Target Group’s monitoring system business.

– II-43 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

14 LEASE PREPAYMENTS

(a) The Target Group

Cost: At 1 January 2012 Additions At 31 December 2012 and 1 January 2013 Additions At 31 December 2013 and 1 January 2014 Disposals At 31 December 2014 and 1 January 2015 and 30 June 2015 Accumulated amortisation: At 1 January 2012 Amortisation for the year At 31 December 2012 and 1 January 2013 Amortisation for the year At 31 December 2013 and 1 January 2014 Amortisation for the year Written back on disposals At 31 December 2014 and 1 January 2015 Amortisation for the period At 30 June 2015 Net book value: At 31 December 2012 At 31 December 2013 At 31 December 2014 At 30 June 2015	RMB’000 2,482 10,243
	12,725 65,017
	77,742 (1,262)
	76,480 - - - - - - - - - 199 237
	436 684
	1,120 1,541 (60)
	2,601 771
	3,372 - - - - - - - - -
	12,289
	76,622
	73,879
	73,108

– II-44 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(b) The Target Company

Cost: At 1 January 2012 and 31 December 2012 and 1 January 2013 Additions At 31 December 2013 and 1 January 2014 and 1 January 2015 and 30 June 2015 Accumulated amortisation: At 1 January 2012 and 31 December 2012 and 1 January 2013 Amortisation for the year At 31 December 2013 and 1 January 2014 Amortisation for the year At 31 December 2014 and 1 January 2015 Amortisation for the period At 30 June 2015 Net book value: At 31 December 2012 At 31 December 2013 At 31 December 2014 At 30 June 2015	RMB’000 – 63,815
	63,815 - - - - - - - - - – 429
	429 1,287
	1,716 644
	2,360 - - - - - - - - -
	–
	63,386
	62,099
	61,455

Interests in leasehold land represent prepayments of land use rights premium to the PRC authorities. The leasehold land is located in PRC and the Target Group/Target Company is granted land use rights for a period of 50 years.

For the Target Group, the above carrying amounts include current portion of the lease prepayments of RMB254,000, RMB1,541,000, RMB1,541,000 and RMB1,541,000 at 31 December 2012, 2013 and 2014 and 30 June 2015, respectively.

For the Target Company, the above carrying amounts include current portion of the lease prepayments of RMB nil, RMB1,287,000, RMB1,287,000 and RMB1,541,000 at 31 December 2012, 2013 and 2014 and 30 June 2015, respectively.

For the Target Group, certain bank loans and other borrowings were secured by lease prepayments with carrying amounts of RMB nil, RMB12,034,000, RMB62,099,000 and RMB nil at 31 December 2012, 2013 and 2014 and 30 June 2015, respectively (note 24).

– II-45 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

15 INVESTMENTS IN SUBSIDIARIES

The list in note 1(b) contains the particulars of subsidiaries of the Target Group at the end of the Relevant Periods. The class of shares held is ordinary unless otherwise stated.

The following tables list out the information relating to the subsidiaries of the Target Group which have material non-controlling interests (NCI). The summarised financial information presented below represents the amounts before any inter-company elimination.

31 December 2012:

NCI percentage Current assets Non-current assets Current liabilities Non-current liabilities Net assets Carrying amount of NCI Revenue Loss for the year Other comprehensive income Total comprehensive income Loss allocated to NCI Other comprehensive income allocated to NCI Cash flows used in operating activities Cash flows used in financing activities Net decrease in cash and cash equivalents	Xinjiang Zhongke Hengyuan 2012 RMB’000 10%
	11,572 1,337 (5,519) –
	7,390
	739
	941 (1,837) –
	(1,837)
	(184) – (2,210) (835)
	(3,045)

– II-46 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

31 December 2013:

NCI percentage Current assets Non-current assets Current liabilities Non-current liabilities Net assets Carrying amount of NCI Revenue Profit for the year Other comprehensive income Total comprehensive income Profit allocated to NCI Other comprehensive income allocated to NCI Cash flows generated from operating activities Cash flows used in financing activities Net decrease in cash and cash equivalents	Xinjiang Zhongke Hengyuan 2013 RMB’000 10%
	33,629 7,636 (20,174) –
	21,091
	2,109
	56,631 13,701 –
	13,701
	1,370 – 1,320 (4,960)
	(3,640)

– II-47 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

31 December 2014:

NCI percentage Current assets Non-current assets Current liabilities Non-current liabilities Net assets Carrying amount of NCI Revenue Loss for the year Other comprehensive income Total comprehensive income Loss allocated to NCI Dividend paid to NCI Other comprehensive income allocated to NCI Cash flows generated from operating activities Cash flows used in investing activities Cash flows generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents	Shufu Zhongke Hengyuan 25% 5 17 (42) – (20) (5) – (20) – (20) (5) – – 5 – – 5	Datong Wantong 5% 821 7,560 (5,608) – 2,773 139 – (60) – (60) (3) – – 5,232 (7,562) 2,330 –	Jiayuguan Xiehe 5% 11 31,191 (13,852) – 17,350 868 – – – – – – – 8,038 (8,118) – (80)	Zhongke Huaxun 49% 61,737 3,197 (25,485) – 39,449 19,330 15,068 (75) – (75) (37) – – 3,245 (37) – 3,208	Xinjiang Zhongke Hengyuan 10% 43,083 5,500 (28,835) – 19,748 1,975 7,130 (1,343) – (1,343) (134) – – 2,592 (227) (877) 1,488	Total 105,657 47,465 (73,822) –
						79,300
						22,307
						22,198 (1,498) –
						(1,498)
						(179) – – 19,112 (15,944) 1,453
						4,621

– II-48 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

30 June 2015:

NCI percentage Current assets Non-current assets Current liabilities Non-current liabilities Net assets Carrying amount of NCI Revenue (Loss)/profit for the period Other comprehensive income Total comprehensive income Profit/(Loss) allocated to NCI Dividend paid to NCI Other comprehensive income allocated to NCI Cash flows generated from/(used in) operating activities Cash flows (used in)/generated from investing activities Cash flows generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents INTEREST IN A JOINT VENTURE Share of net assets	Shufu Zhongke Hengyuan 25% 5 17 (42) – (20) (5) – – – – – – – – – – –	Datong Wantong Jiayuguan Xiehe Zhongke Huaxun Xinjiang Zhongke Hengyuan Xinjiang Huaxun Total 5% 5% 49% 10% 58.6% 892 2,317 55,940 25,173 12,112 96,439 50,613 31,205 6,123 1,894 157 90,009 (48,733) (16,172) (21,832) (18,251) (11,044) (116,074) – – – – – – 2,772 17,350 40,231 8,816 1,225 70,374 139 868 19,713 882 718 22,315 – – 12,750 3,867 – 16,617 (1) – 782 (10,932) (482) (10,633) – – – – – – (1) – 782 (10,932) (482) (10,633) – – 383 (1,093) (282) (992) – – – – – – – – – – – – 146 2,303 (4,727) 12,916 1,884 12,522 (60) – (4,300) 9 4,275 (76) – – 8,000 (12,824) – (4,824) 86 2,303 (1,027) 101 6,159 7,622 At 31 December At 30 June 2012 2013 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 19,389 19,534 17,724 17,634	Total 96,439 90,009 (116,074) –
			70,374
			22,315
			16,617 (10,633) –
			(10,633)
			(992) – – 12,522 (76) (4,824)
			7,622

16 INTEREST IN A JOINT VENTURE

– II-49 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Details of the Target Group’s interest in a joint venture, which is accounted for using equity method in the Financial Information, are as follows:

				Proportion of ownership	Proportion of ownership	interest
				Target
	Form of	Place of	Particulars of	Group’s	Held by
	business	incorporation	issued and	effective	the Target	Held by a
Name of joint venture	structure	and business	paid up capital	interest	Company	subsidiary	Principal activities
Yunnan Electric Investment Zhongke	Incorporated	The PRC	RMB 45,000,000	49%	–	49%	Research &
Photovoltaic Technology Co. Ltd.*							development and
(“Yunnan Electric Investment							consulting
Zhongke Photovoltaic”)
(“雲南電投中科光伏科技有限公司”)

• The English translation of the company’s name is for reference only. The official name of the company is in Chinese.

Yunan Electric Investment Zhongke Photovoltaic, the only joint venture in which the Target Group participates, is an unlisted corporate entity whose quoted market price is not available.

Summarised financial information of Yunnan Electric Investment Zhongke Photovoltaic adjusted for any differences in accounting policies, and a reconciliation to the carrying amount in the Financial Information, are disclosed below:

		At 31 December		At 30 June
	2012	2013	2014	2015
	RMB’000	RMB’000	RMB’000	RMB’000
Gross amounts of Yunnan Electric
Investment Zhongke Photovoltaic
Current assets	41,482	26,889	27,855	28,106
Non-current assets	13,998	28,888	24,228	23,793
Current liabilities	(666)	(666)	(666)	(666)
Non-current liabilities	(9,814)	(9,814)	(9,814)	(9,814)
Equity	45,000	45,297	41,603	41,419
Included in the above assets and liabilities:
Cash and cash equivalents	39,486	24,893	25,859	26,109
Current financial liabilities (excluding trade
and other payables and provisions)	–	–	–	–
Non-current financial liabilities (excluding
trade and other payables and provisions)	(9,814)	(9,814)	(9,814)	(9,814)
Revenue	–	–	–	–
Profit/(loss) from continuing operations	–	297	(3,694)	(184)
Total comprehensive income	–	297	(3,694)	(184)

– II-50 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Included in the above profit: Depreciation and amortisation Interest income Interest expense Income tax expense Reconciled to the Target Group’s interest in Yunnan Electric Investment Zhongke Photovoltaic Gross amounts of net assets of Yunnan Electric Investment Zhongke Photovoltaic Less: Unrealised profit on transactions with the Target Group Target Group’s effective interest Target Group’s share of net assets of Yunnan Electric Investment Zhongke Photovoltaic Carrying amount in the Financial Information	At 31 December 2012 2013 RMB’000 RMB’000 – – – – – – – – 45,000 45,297 (5,431) (5,431) 39,569 39,866 49% 49% 19,389 19,534 19,389 19,534	2014 RMB’000 – – – – 41,603 (5,431) 36,172 49% 17,724 17,724	At 30 June 2015 RMB’000 – 250 – – 41,419 (5,431)
			35,988 49% 17,634
			17,634

17 INCOME TAX IN THE STATEMENTS OF FINANCIAL POSITION

(a) Current taxation in the statements of financial position represents:

PRC CIT Representing: Tax recoverable Tax payable PRC CIT	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 (6,141) (13,992) 4,599 5,383 6,146 6,526 (11,524) (20,138) (1,927) (6,141) (13,992) 4,599 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 (10,689) (13,313) (1,423)	At 30 June 2015 RMB’000 10,589
		11,963 (1,374)
		10,589
		At 30 June 2015 RMB’000 –

– II-51 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(b) Deferred tax assets recognised:

The components of deferred tax assets recognised in the consolidated statements of financial position and the movements during the Relevant Periods are as follows:

Deferred tax arising from:

(i) The Target Group:

At 1 January 2012 Credited to profit or loss At 31 December 2012 and 1 January 2013 Credited/(charged) to profit or loss At 31 December 2013 and 1 January 2014 Credited/(charged) to profit or loss At 31 December 2014 and 1 January 2015 (Charged)/credited to profit or loss At 30 June 2015	Provision for trade and other receivables RMB’000 1,271 7,161 8,432 431 8,863 50 8,913 (296) 8,617	Deferred income RMB’000 825 1,545 2,370 (116) 2,254 (1,676) 578 (42) 536	Provision for product warranties RMB’000 351 151 502 362 864 (192) 672 32 704	Unrealised profit arising from intra-group transactions RMB’000 88 5 93 36 129 (129) – – –	Tax losses RMB’000 – – – – – – – 11,998 11,998	Total RMB’000 2,535 8,862
						11,397 713
						12,110 (1,947)
						10,163 11,692
						21,855

– II-52 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(ii) The Target Company:

At 1 January 2012 Credited to profit or loss At 31 December 2012 and 1 January 2013 Credited to profit or loss At 31 December 2013 and 1 January 2014 Charged to profit or loss At 31 December 2014 and 1 January 2015 (Charged)/credited to profit or loss At 30 June 2015	Provision for trade and other receivables RMB’000 629 5,790 6,419 389 6,808 (303) 6,505 (12) 6,493	Provision for product warranties RMB’000 182 154 336 306 642 (85) 557 15 572	Tax losses RMB’000 – – – – – – – 6,773 6,773	Total RMB’000 811 5,944
				6,755 695
				7,450 (388)
				7,062 6,776
				13,838

(c) Deferred tax assets not recognised:

In accordance with the accounting policy set out in note 1(t), the Target Group has not recognised deferred tax assets in respect of cumulative tax losses of RMB12,902,000, RMB17,037,000, RMB39,672,000 and RMB56,502,000 at 31 December 2012, 2013 and 2014 and 30 June 2015, respectively as it is not probable that future taxable profits against which the losses can be utilised will be available in the relevant tax jurisdiction and entity. The unrecognised tax losses are losses that can be carried forward for 5 years from the year in which the respective loss arose.

18 AVAILABLE-FOR-SALE EQUITY SECURITIES

Available-for-sale equity securities: – unlisted Available-for-sale equity securities: – unlisted	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 9,990 19,984 9,990 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 9,990 9,990 –	At 30 June 2015 RMB’000 9,990
		At 30 June 2015 RMB’000 –

– II-53 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

19 INVENTORIES

Inventories in the consolidated statements of financial position comprise:

Raw materials Work in progress Finished goods Raw materials Finished goods	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 28,445 24,292 57,877 489 32 401 63,461 68,642 97,673 92,395 92,966 155,951 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 15,166 15,992 46,884 44,124 57,072 54,476 59,290 73,064 101,360	At 30 June 2015 RMB’000 33,549 1,177 165,279
		200,005
		At 30 June 2015 RMB’000 23,306 114,625
		137,931

The analysis of the amount of inventories recognised as an expense and included in profit or loss is as follows:

					For the year ended	For the year ended	For the year ended	For the six months	For the six months
						31 December		ended 30 June
					2012	2013	2014	2014	2015
					RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
								(unaudited)
Carrying	amount	of	inventories	sold	185,391	439,964	135,547	16,311	34,106

– II-54 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

20 TRADE AND OTHER RECEIVABLES

Trade debtors – third parties – related parties (note 32(d)) Bills receivable Trade debtors and bills receivable Less: allowance for doubtful debts Other deposits and prepayments and receivables Amounts due from related parties (note 32(d)) Gross amount due from customers for contract work (note 22) Less: Non-current trade and other receivables	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 629,103 1,122,750 550,564 636 636 636 – 244,500 42,868 629,739 1,367,886 594,068 (53,582) (56,725) (62,549) 576,157 1,311,161 531,519 95,069 345,992 415,334 1,100 1,100 1,100 70,469 37,707 177,902 (98,180) (80,572) (53,437) 644,615 1,615,388 1,072,418	At 30 June 2015 RMB’000 484,028 636 7,953
		492,617 (62,864)
		429,753 427,761 6,100 204,700 (40,430)
		1,027,884

– II-55 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Trade debtors – third parties – subsidiaries – other related parties Bills receivable Trade debtors and bills receivable Less: allowance for doubtful debts Other deposits and prepayments and receivables Amounts due from subsidiaries Amounts due from other related parties Gross amount due from customers for contract work (note 22) Less: Non-current trade and other receivables	The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 482,982 914,940 402,230 69,253 73,804 6,354 636 636 636 – 100 25,300 552,871 989,480 434,520 (42,170) (45,313) (51,064) 510,701 944,167 383,456 72,187 247,302 322,477 16,825 125,117 222,522 1,100 1,100 1,100 64,999 4,510 142,333 (91,141) (75,049) (52,245) 574,671 1,247,147 1,019,643	At 30 June 2015 RMB’000 380,580 5,803 636 6,000
		393,019 (51,064)
		341,955 342,591 243,283 6,100 139,230 (39,237)
		1,033,922

For the Target Group and the Target Company, certain bank loans and other borrowings were secured by trade and other receivables with carrying amounts of RMB nil, RMB245,523,000, RMB71,058,000 and RMB71,058,000 at 31 December 2012, 2013 and 2014 and 30 June 2015, respectively (note 24).

(a) Ageing analysis

As of the end of the reporting period, the ageing analysis of trade debtors and bills receivable (which are included in trade and other receivables), based on the invoice date (or date of revenue recognition, if earlier) and net of allowance for doubtful debts, is as follows:

Within 1 year 1 to 2 years 2 to 3 years Over 3 years	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 452,585 1,209,762 453,875 95,346 61,583 52,291 25,872 27,416 9,309 2,354 12,400 16,044 576,157 1,311,161 531,519	At 30 June 2015 RMB’000 349,888 14,925 41,224 23,716
		429,753

– II-56 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Within 1 year 1 to 2 years 2 to 3 years Over 3 years	The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 437,501 874,701 330,141 47,839 43,369 30,536 23,326 14,391 7,313 2,035 11,706 15,466 510,701 944,167 383,456	At 30 June 2015 RMB’000 276,976 14,819 28,622 21,538
		341,955

(b) Impairment of trade debtors and bills receivable

Impairment losses in respect of trade debtors and bills receivable are recorded using an allowance account unless the Target Group is satisfied that the recovery of the amount is remote, in which case the impairment loss is written off against trade debtors and bills receivable directly (see note 1(l)(i)).

The movement in the allowance for doubtful debts during the Relevant Periods is as follows:

At 1 January Impairment loss recognised (note 5) At 31 December/30 June At 1 January Impairment loss recognised At 31 December/30 June	2012 RMB’000 7,605 45,977 53,582 2012 RMB’000 3,823 38,347 42,170	The Target Group 2013 2014 RMB’000 RMB’000 53,582 56,725 3,143 5,824 56,725 62,549 The Target Company 2013 2014 RMB’000 RMB’000 42,170 45,313 3,143 5,751 45,313 51,064	2015 RMB’000 62,549 315
			62,864
			2015 RMB’000 51,064 –
			51,064

At 31 December 2012, 2013 and 2014 and 30 June 2015, the Target Group’s trade debtors and bills receivable of RMB53,582,000, RMB56,725,000, RMB62,549,000 and RMB62,864,000 were individually determined to be impaired.

At 31 December 2012, 2013 and 2014 and 30 June 2015, the Target Company’s trade debtors and bills receivable of RMB42,170,000, RMB45,313,000, RMB51,064,000 and RMB51,064,000 were individually determined to be impaired.

The individually impaired receivables related to customers that were in financial difficulties and management assessed that the receivables are not probable to be recovered. Consequently, specific allowances for doubtful debts were recognised in full. The Target Group does not hold any collateral over these balances.

– II-57 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(c) Trade debtors and bills receivable that are not impaired

The ageing analysis of trade debtors and bills receivable that are neither individually nor collectively considered to be impaired at 31 December 2012, 2013 and 2014 and 30 June 2015 are as follows:

Neither past due nor impaired Less than 3 month past due Over 3 less than 6 months past due Over 6 months less than 1 year past due Over 1 less than 2 years past due More than 2 years past due Neither past due nor impaired Less than 3 month past due Over 3 less than 6 months past due Over 6 months less than 1 year past due Over 1 less than 2 years past due More than 2 years past due	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 374,684 1,114,285 377,554 64,740 71,467 32,978 40,697 48,973 13,196 59,303 40,462 48,000 16,404 21,503 39,451 20,329 14,471 20,340 576,157 1,311,161 531,519 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 312,389 826,668 304,649 63,681 29,071 24,780 40,317 22,050 10,859 59,278 40,161 11,384 15,038 15,602 13,933 19,998 10,615 17,851 510,701 944,167 383,456	At 30 June 2015 RMB’000 306,462 7,974 29,578 10,735 34,293 40,711
		429,753
		At 30 June 2015 RMB’000 279,909 6,485 25,825 8,309 9,844 11,583
		341,955

Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default.

At 31 December 2012, 2013, 2014 and 30 June 2015, receivables that were past due but not impaired relate to customers that have good track records with the Target Group and the Target Company. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable.

– II-58 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

21 PLEDGED BANK DEPOSITS

Pledged for – bank loans – issuance of bank acceptance bills Pledged bank deposits Pledged for – bank loans – issuance of bank acceptance bills Pledged bank deposits	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 25,000 – 1,500 24,331 22,583 28,494 49,331 22,583 29,994 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 25,000 – – 4,191 21,826 27,811 29,191 21,826 27,811	At 30 June 2015 RMB’000 2,250 85,233
		87,483
		At 30 June 2015 RMB’000 – 84,990
		84,990

At the end of reporting period, bank deposits have been mainly pledged as security for bank loans (see note 24) and issuance of bank acceptance bills. The pledged bank deposits will be released upon the settlement of relevant bank loans and bills payable.

22 CONSTRUCTION CONTRACTS

(a) The Target Group

The aggregate amount of costs incurred plus recognised profits less recognised losses to date, included in the gross amount due from customers for contract work at 31 December 2012, 2013 and 2014 and 30 June 2015 are RMB224,765,000, RMB176,250,000, RMB 346,125,000 and RMB341,221,000, respectively.

The gross amount due from customers for contract work at 31 December 2012, 2013 and 2014 and 30 June 2015 that are expected to be recovered within one year.

In respect of construction contracts in progress at the end of the reporting period, the amount of retentions from customers, recorded with “Trade debtors and bills receivable” at 31 December 2012, 2013 and 2014 and 30 June 2015 are RMB15,726,000, RMB10,236,000, RMB19,312,000 and RMB19,837,000, respectively. The amount of those retentions at 31 December 2012, 2013 and 2014 and 30 June 2015 that are expected to be recovered after more than one year are RMB15,726,000, RMB10,236,000, RMB19,312,000 and RMB19,837,000, respectively.

– II-59 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(b) The Target Company

The aggregate amount of costs incurred plus recognised profits less recognised losses to date, included in the gross amount due from customers for contract work at 31 December 2012, 2013 and 2014 and 30 June 2015 are RMB64,999,000, RMB4,510,000, RMB142,333,000 and RMB139,148,000, respectively.

The gross amount due from customers for contract work at 31 December 2012, 2013 and 2014 and 30 June 2015 that are expected to be recovered within one year.

In respect of construction contracts in progress at the end of the reporting period, the amount of retentions from customers, recorded with “Trade debtors and bills receivable” at 31 December 2012, 2013 and 2014 and 30 June 2015 are RMB12,581,000, RMB7,882,000, RMB13,132,000 and RMB12,505,000, respectively. The amount of those retentions at 31 December 2012, 2013 and 2014 and 30 June 2015 that are expected to be recovered after more than one year are RMB12,581,000, RMB7,882,000, RMB13,132,000 and RMB12,505,000, respectively.

23 CASH AND CASH EQUIVALENTS

(a) Cash and cash equivalents comprise:

Cash at bank and on hand Cash at bank and on hand	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 305,051 350,342 243,669 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 271,859 321,791 182,126	At 30 June 2015 RMB’000 43,150
		At 30 June 2015 RMB’000 14,496

As at 31 December 2012, 2013 and 2014 and 30 June 2015, all the cash and cash equivalents were placed with banks in the mainland China. Remittance of funds out of the mainland China is subject to the relevant rules and regulations of foreign exchange control promulgated by the PRC government.

– II-60 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(b) Reconciliation of profit/(loss) before taxation to cash (used in)/generated from operations:

Section B Note Profit/(loss) before taxation Adjustments for: Depreciation of property, plant and equipment 5(c) Depreciation of solar power plants 5(c) Amortisation of intangible assets 5(c) Amortisation of lease prepayments 5(c) Impairment of trade and other receivables 5(c) Finance costs 5(a) Interest income 4 Net loss/(gain) on sale of property, plant and equipment 4 Net gain on disposal of available-for-sale equity securities 4 Net gain on disposal of subsidiaries 4 Share of (profit)/loss of a joint venture 16 Changes in working capital: Decrease/(increase) in inventories (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables Increase/(decrease) in deferred income Cash (used in)/generated from operations	For the year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 28,349 101,802 14,696 6,373 9,582 8,462 – 295 22,158 427 695 635 237 684 1,541 45,977 3,143 5,824 11,000 26,549 81,830 (4,409) (12,125) (48,854) 6 27 – – – (6,600) (17,976) (21,324) (49,326) – (145) 1,810 59,041 10,877 (61,089) (363,686) (1,014,149) 472,897 183,580 813,231 (321,155) 5,667 3,642 (683) (45,414) (77,216) 122,146	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) (53,417) (83,940) 3,573 4,123 3,680 419 383 440 771 771 – 315 40,713 14,076 (23,545) (2,928) – (13) – – – – – 90 (32,926) (34,902) 156,638 48,301 (306,206) 58,460 (434) 3,429 (210,770) 8,641	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) (53,417) (83,940) 3,573 4,123 3,680 419 383 440 771 771 – 315 40,713 14,076 (23,545) (2,928) – (13) – – – – – 90 (32,926) (34,902) 156,638 48,301 (306,206) 58,460 (434) 3,429 (210,770) 8,641
			8,641

– II-61 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

24 BANK LOANS AND OTHER BORROWINGS

As of the end of each reporting period, the analysis of bank loans and other borrowings was as follows:

Current Secured – bank loans – current portion of other long-term borrowings Unsecured – bank loans Non-current Secured – other borrowings Less: Current portion of other long-term borrowings Current Secured – bank loans Unsecured – bank loans	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 80,000 198,000 101,425 – 16,000 – 28,000 37,170 109,000 108,000 251,170 210,425 – 151,336 – – (16,000) – – 135,336 – The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 80,000 198,000 100,000 25,000 – – 105,000 198,000 100,000	At 30 June 2015 RMB’000 72,138 – 12,000
		84,138
		– –
		–
		At 30 June 2015 RMB’000 70,000 –
		70,000

– II-62 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

At the end of each reporting period, bank loans and other borrowings were repayable as follows:

Within 1 year or on demand After 1 year but within 2 years After 2 year but within 5 years Over 5 years Within 1 year or on demand	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 108,000 251,170 210,425 – 14,839 – – 45,943 – – 74,554 – 108,000 386,506 210,425 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 105,000 198,000 100,000	At 30 June 2015 RMB’000 84,138 – – –
		84,138
		At 30 June 2015 RMB’000 70,000

For the Target Group, bank loans bear interest ranging from 6.0% to 7.8%, 6.0% to 7.2%, 5.6% to 7.8%, 6% to 7.2% and 5.6% to 7.8% per annum for the years ended 31 December 2012, 2013 and 2014 and six months ended 30 June 2014 and 2015, respectively. Other borrowings bear interest at 7.6% per annum for the year ended 31 December 2013.

For the Target Company, bank loans bear interest ranging from 6.0% to 7.8%, 6.0% to 7.2%, 5.6% to 7.8%, 6.9% and 6.9% to 7.8% per annum for the years ended 31 December 2012, 2013 and 2014 and six months ended 30 June 2014 and 2015, respectively.

The bank loans and other borrowings were secured by the following assets:

Section B Note Property, plant and equipment 10 Solar power plants 11 Lease prepayments 14 Trade and other receivables 20 Pledged bank deposits 21 Section B Note Trade and other receivables 20 Pledged bank deposits 21	2012 RMB’000 – – – – 25,000 25,000 2012 RMB’000 – 25,000 25,000	The Target Group At 31 December 2013 2014 RMB’000 RMB’000 25,733 9,646 169,965 – 12,034 62,099 245,523 71,058 – 1,500 453,255 144,303 The Target Company At 31 December 2013 2014 RMB’000 RMB’000 245,523 71,058 – – 245,523 71,058	At 30 June 2015 RMB’000 – – – 71,058 2,250
			73,308
			At 30 June 2015 RMB’000 71,058 –
			71,058

– II-63 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

25 CORPORATE BOND PAYABLE

On 26 July 2012, the Target Company issued a corporate bond amounting to RMB100,000,000, which is secured by certain of the Target Group’s trade receivables, bears interest at 9.5% per annum and is repayable on 26 July 2014. The corporate bond is, at the option of the bondholder, redeemable at its par value on 26 January 2014. The net proceed from the issuance of corporate bond was RMB97,500,000, after deducting transaction costs of RMB2,500,000.

On 26 January 2014, certain bondholders exercised the early redemption right to redeem corporate bond of RMB67,500,000 at its par value. The remaining balance of RMB 32,500,000 was repaid on 26 July 2014.

26 TRADE AND OTHER PAYABLES

Trade payables Bills payable Trade and bills payable Receipts in advance Other payables and accruals Amounts due to related parties (note 32(b)) Trade payables Bills payable Trade and bills payable Receipts in advance Other payables and accruals Amounts due to subsidiaries Amounts due to related parties	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 320,396 808,537 466,392 96,790 312,077 363,343 417,186 1,120,614 829,735 173,577 204,197 104,642 28,407 81,863 65,033 – 183,583 1,445 619,170 1,590,257 1,000,855 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 248,117 429,435 405,936 43,052 189,367 303,343 291,169 618,802 709,279 170,538 198,833 85,654 24,023 57,732 42,015 51,772 121,875 238,933 – 183,583 1,445 537,502 1,180,825 1,077,326	At 30 June 2015 RMB’000 304,836 466,082
		770,918 211,816 118,347 –
		1,101,081
		At 30 June 2015 RMB’000 271,435 466,082
		737,517 192,809 83,575 71,400 –
		1,085,301

– II-64 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

All of the trade and other payables at 31 December 2012, 2013 and 2014 and 30 June 2015 are expected to be settled or recognised as income within one year or are repayable on demand.

At 31 December 2012, 2013 and 2014 and 30 June 2015, amounts due to related parties were unsecured, interest-free and have no fixed terms of repayment, except for the loan from Beijing Modasi Investment Co., Ltd. (“Beijing Modasi”), the immediate controlling party of the Target Company, of RMB180,000,000 which is unsecured, bears interest at 10.75% per annum and is repayable within 1 year. The loan was repaid in 2014 and the related interest payable was repaid in February 2015.

An ageing analysis of the trade and bills payables (which are included in trade and other payables) based on the invoice date is as follows:

Within 1 year More than 1 year but within 2 years More than 2 years but within 3 years More than 3 years Within 1 year More than 1 year but within 2 years More than 2 years but within 3 years More than 3 years	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 404,989 1,081,588 764,887 9,898 34,404 49,140 2,253 3,717 12,715 46 905 2,993 417,186 1,120,614 829,735 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 287,064 585,291 647,652 3,886 31,213 48,276 219 2,079 11,525 – 219 1,826 291,169 618,802 709,279	At 30 June 2015 RMB’000 731,040 37,936 1,924 18
		770,918
		At 30 June 2015 RMB’000 708,577 27,124 1,816 –
		737,517

– II-65 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

27 DEFERRED INCOME

At 1 January 2012 Additions during the year Amortisation credited to profit or loss At 31 December 2012 and 1 January 2013 Amortisation credited to profit or loss At 31 December 2013 and 1 January 2014 Amortisation credited to profit or loss At 31 December 2014 and 1 January 2015 Additions during the period Amortisation credited to profit or loss At 30 June 2015	The Target Group Government grant RMB’000 7,400 6,631 (964)
	13,067 (2,290)
	10,777 (683)
	10,094 3,850 (421)
	13,523

The deferred income at 31 December 2012, 2013, 2014 and 30 June 2015 represented unamortised government grants. There is no deferred income recognised by the Target Company during the Relevant Periods.

28 EMPLOYEE RETIREMENT BENEFITS

As stipulated by the rules and regulations in the PRC, the Target Group contributes to the retirement funds scheme managed by local social security bureau in the PRC. The Target Group contributes a certain percentage of the basic salaries of its employees to the retirement plan to fund the benefits.

The only obligation of the Target Group with respect to the retirement benefit plan is to make the specified contributions.

During the years ended 31 December 2012, 2013 and 2014 and six months ended 30 June 2014 and 2015, the total retirement benefit cost charged to the consolidated statements of profit or loss amounted to approximately RMB3,944,000, RMB4,558,000, RMB6,490,000, RMB2,777,000 and RMB5,137,000, respectively.

– II-66 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

29 CAPITAL, RESERVES AND DIVIDENDS

(a) Movements in components of equity

The reconciliation between the opening and closing balances of each component of the Target Group’s consolidated equity is set out in the consolidated statements of changes in equity. Details of the changes in the Target Company’s individual components of equity between the beginning and the end of the year/period during the Relevant Periods are set out below:

At 1 January 2012 Changes in equity for 2012: Profit for the year Other comprehensive income Total comprehensive income Appropriation to PRC statutory reserves Dividends to shareholders At 31 December 2012 and 1 January 2013 Changes in equity for 2013: Profit for the year Other comprehensive income Total comprehensive income Appropriation to PRC statutory reserves At 31 December 2013 and 1 January 2014 Changes in equity for 2014: Profit for the year Other comprehensive income Total comprehensive income Appropriation to PRC statutory reserves At 31 December 2014 and 1 January 2015	Share capital RMB’000 120,000 – – – – – 120,000 – – – – 120,000 – – – – 120,000	Share Premium RMB’000 300,544 – – – – – 300,544 – – – – 300,544 – – – – 300,544	PRC statutory reserve RMB’000 5,786 – – – 3,652 – 9,438 – – – 7,590 17,028 – – – 2,917 19,945	Retained profits RMB’000 34,376 39,223 – 39,223 (3,652) (8,400) 61,547 75,338 – 75,338 (7,590) 129,295 24,292 – 24,292 (2,917) 150,670	Total equity RMB’000 460,706 39,223 –
					39,223 – (8,400)
					491,529 75,338 –
					75,338 –
					566,867 24,292 –
					24,292 –
					591,159

– II-67 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

At 31 December 2014 and 1 January 2015 Changes in equity for the six months ended 30 June 2015: Loss for the period Other comprehensive income Total comprehensive income Appropriation to PRC statutory reserves At 30 June 2015 At 31 December 2013 and 1 January 2014 Changes in equity for the six months ended 30 June 2014: Loss for the period (unaudited) Other comprehensive income (unaudited) Total comprehensive income (unaudited) Appropriation to PRC statutory reserves (unaudited) At 30 June 2014 (unaudited)	Share capital RMB’000 120,000 – – – – 120,000 120,000 – – – – 120,000	Share Premium RMB’000 300,544 – – – – 300,544 300,544 – – – – 300,544	PRC statutory reserve RMB’000 19,945 – – – – 19,945 17,028 – – – – 17,028	Retained profits RMB’000 150,670 (36,682) – (36,682) – 113,988 129,295 (50,130) – (50,130) – 79,165	Total equity RMB’000 591,159 (36,682) –
					(36,682) –
					554,477
					566,867 (50,130) –
					(50,130) –
					516,737

(b) Dividends

During the year ended 31 December 2012, the Target Company has approved and paid dividend of RMB8,400,000 to its equity shareholders. During the years ended 31 December 2013 and 2014 and six months ended 30 June 2014 and 2015, the Target Company did not declared any dividends to its equity shareholders.

(c) Share capital

Authorised and issued share capital

==> picture [370 x 99] intentionally omitted <==

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

At 31 December At 30 June
2012 2013 2014 2015
No. of Shares No. of Shares No. of Shares No. of Shares
(’000) RMB’000 (’000) RMB’000 (’000) RMB’000 (’000) RMB’000
Authorised, issued and
fully paid
Ordinary shares of RMB1 each 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000
----- End of picture text -----

– II-68 –

APPENDIX II FINANCIAL INFORMATION OF THE TARGET GROUP

(d) Nature and purpose of reserves

• (i) Share premium

The application of the share premium account of the Target Company is governed by the PRC Company Law.

• (ii) PRC Statutory reserve

As stipulated by regulations in the PRC, the Target Company’s subsidiaries established and operated in the mainland China are required to appropriate 10% of their after-tax-profit (after offsetting prior year losses) as determined in accordance with the PRC accounting rules and regulations, to the statutory surplus reserve until the reserve balance reaches 50% of the registered capital. The transfer to this reserve must be made before distribution of profits to parent companies.

The statutory reserve can be utilised, upon approval by the relevant authorities, to offset accumulated losses or to increase capital of the subsidiary, provided that the balance after such issue is not less than 25% of its registered capital.

(e) Distributability of reserves

At 31 December 2012, 2013, 2014 and 30 June 2015, the aggregate amount of reserves available for distribution to equity shareholder of the Target Company were RMB61,547,000, RMB129,295,000, RMB150,670,000 and RMB113,988,000, respectively.

(f) Capital management

The Target Group’s primary objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost.

The Target Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholders returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.

The Target Group monitors its capital structure with reference to its debt position. The Target Group’s strategy is to maintain the equity and debt in a balanced position and ensure there are adequate working capital to service its debt obligations.

– II-69 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

The Target Group’s debt to asset ratio, being the Target Group’s total liabilities over its total assets were 63%, 78%, 67% and 69% at 31 December 2012, 2013 and 2014 and 30 June 2015. The Target Company’s debt to asset ratio, being the Target Company’s total liabilities over its total assets were 60%, 72%, 67% and 68% at 31 December 2012, 2013 and 2014 and 30 June 2015.

Neither the Target Company nor any of its subsidiaries are subject to externally imposed capital requirements.

30 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the Target Group’s business. The Target Group’s exposure to these risks and the financial risk management policies and practices used by the Target Group to manage these risks are described below.

(a) Credit risk

The Target Group’s credit risk is primarily attributable to cash and cash equivalents, pledged bank deposits and trade and other receivables. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis.

Cash and cash equivalents and pledged bank deposits held by the Target Group are mainly deposited or placed on financial institutions such as commercial banks with sound reputation. The credit risk is considered low.

In respect of trade and other receivables, individual credit evaluations are performed on all customers requiring credit over a certain amount. These evaluations focus on the customer’s past history of making payments when due and current ability to pay, and take into account information specific to the customer as well as pertaining to the economic environment in which the customer operates. Trade receivables are monitored on an ongoing basis and the Target Group’s credit risk is not significant. Normally, the Target Group does not obtain collateral from customers.

As of the end of the reporting period, the Target Group’s maximum exposure to credit risk which will cause a financial loss to the Target Group due to failure to discharge an obligation by the counterparties is arising from the carrying amount of the respective recognised financial assets as stated in the Target Group’s consolidated statements of financial position.

Further quantitative disclosures in respect of the Target Group’s exposure to credit risk arising from trade and other receivables are set out in note 20.

(b) Liquidity risk

Individual operating entities within the Target Group are responsible for their own cash management, including the short term investment of cash surpluses and the raising of loans to cover expected cash demands, subject to approval by the Target Company’s board when the borrowings exceed certain predetermined levels of authority. The Target Group’s policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and readily realisable marketable securities and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.

The following tables show the remaining contractual maturities at the end of each reporting period during the Relevant Periods of the Target Group and the Target Company’s financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the end of the reporting period) and the earliest date the Target Group and the Target Company can be required to pay:

– II-70 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(i) The Target Group

At 31 December 2012: Trade and other payables (excluding receipts in advance) Corporate bond payable Bank loans and other borrowings At 31 December 2013: Trade and other payables (excluding receipts in advance) Corporate bond payable Bank loans and other borrowings At 31 December 2014: Trade and other payables (excluding receipts in advance) Bank loans and other borrowings At 30 June 2015: Trade and other payables (excluding receipts in advance) Bank loans and other borrowings	Contractual undiscounted cash outflow Within 1 year or on demand More than 1 year but less than 2 years More than 2 years Total RMB’000 RMB’000 RMB’000 RMB’000 445,593 – – 445,593 9,500 106,294 – 115,794 115,686 – – 115,686 570,779 106,294 – 677,073 1,401,379 – – 1,401,379 106,294 – – 106,294 268,543 15,865 128,831 413,239 1,776,216 15,865 128,831 1,920,912 896,213 – – 896,213 225,120 – – 225,120 1,121,333 – – 1,121,333 889,265 – – 889,265 86,620 – – 86,620 975,885 – – 975,885	Carrying amount RMB’000 445,593 97,980 108,000
		651,573
		1,386,060 99,218 386,506
		1,871,784
		896,213 210,425
		1,106,638
		889,265 84,138
		973,403

– II-71 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(ii) The Target Company

At 31 December 2012: Trade and other payables (excluding receipts in advance) Corporate bond payable Bank loans and other borrowings At 31 December 2013: Trade and other payables (excluding receipts in advance) Corporate bond payable Bank loans and other borrowings At 31 December 2014: Trade and other payables (excluding receipts in advance) Bank loans and other borrowings At 30 June 2015: Trade and other payables (excluding receipts in advance) Bank loans and other borrowings	Contractual undiscounted cash outflow Within 1 year or on demand More than 1 year but less than 2 years More than 2 years Total RMB’000 RMB’000 RMB’000 RMB’000 366,964 – – 366,964 9,500 106,294 – 115,794 109,263 – – 109,263 485,727 106,294 – 592,021 997,311 – – 997,311 106,294 – – 106,294 205,792 – – 205,792 1,309,397 – – 1,309,397 991,672 – – 991,672 101,980 – – 101,980 1,093,652 – – 1,093,652 892,492 – – 892,492 71,949 – – 71,949 964,441 – – 964,441	Carrying amount RMB’000 366,964 97,980 105,000
		569,944
		981,992 99,218 198,000
		1,279,210
		991,672 100,000
		1,091,672
		892,492 70,000
		962,492

The amount included above for variable interest rate instruments for non-derivative financial liabilities are subject to change if changes in variable interest rates differ to those interest rates determined at the end of each reporting period during the Relevant Periods.

– II-72 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(c) Interest rate risk

The Target Group’s interest rate risk arises primarily from bank loans and other borrowings, corporate bond payable and loan from immediate controlling party issued at variable rates and fixed rates expose the Target Group to cash flow interest rate risk and fair value interest rate risk respectively. The Target Group adopts a policy of ensuring at least 40% of its net borrowings are effectively on a fixed rate basis, either through the contractual terms of the interest-bearing financial assets and liabilities or through the use of interest rate swaps. For this purpose the Target Group defines “net borrowings” as being interest-bearing financial liabilities less interest-bearing investments (excluding cash held for short-term working capital purposes). The Target Group’s interest rate profile as monitored by management is set out in (i) below.

(i) Interest rate profile

The following table details the interest rate profile of the Target Group and the Target Company’s net borrowings (as defined above) at the end of each reporting period during the Relevant Periods.

• (a) The Target Group

				At 31 December	At 31 December					At 30	June	June
	2012			2013		2014				2015
	Effective			Effective		Effective				Effective
	interest		rate	interest rate		interest		rate		interest		rate
	_% _	RMB’000		_% _	RMB’000	_% _	RMB’000			_% _	RMB’000
Net fixed rate borrowings:
Bank loans and other borrowings	6.86%		3,000	6.57%	306,506	6.82%	150,425			6.91%		84,138
Corporate bond payable	9.50%		97,980	9.50%	99,218				–				–
Amount due to a related party			–	10.75%	180,000				–				–
		100,980			585,724		150,425					84,138
Variable rate borrowings:
Bank loans and other borrowings	6.40%	105,000		6.84%	80,000	7.07%		60,000					–
Total net borrowings		205,980			665,724		210,425					84,138
Net fixed rate borrowings as a percentage of
total net borrowings	49%			88%		71%				100%

– II-73 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(b) The Target Company

					At 31 December	At 31 December					At 30	June	June
	2012				2013		2014				2015
	Effective				Effective		Effective				Effective
	interest		rate		interest rate		interest		rate		interest		rate
	_% _	RMB’000			_% _	RMB’000	_% _	RMB’000			_% _	RMB’000
Net fixed rate borrowings:
Bank loans and other borrowings				–	6.57%	118,000	6.84%		40,000		7.16%		70,000
Corporate bond payable	9.50%		97,980		9.50%	99,218				–				–
Amount due to a related party				–	10.75%	180,000				–				–
			97,980			397,218			40,000				70,000
Variable rate borrowings:
Bank loans and other borrowings	6.40%	105,000			6.84%	80,000	7.07%		60,000					–
Total net borrowings		202,980				477,218		100,000					70,000
Net fixed rate borrowings as a percentage of
total net borrowings	48%				83%		40%				100%

(ii) Sensitivity analysis

At 31 December 2012, 2013 and 2014 and 30 June 2015, it is estimated that a general increase/decrease of 50 basis points in interest rates, with all other variables held constant, would have decreased/increased the Target Group’s profit after tax and retained profits by approximately RMB446,250, RMB340,000, RMB255,000 and RMB nil respectively.

Other components of consolidated equity would not be affected by the changes in interest rates.

The sensitivity analysis above indicates the instantaneous change in the Target Group’s profit after tax (and retained profits) and other components of consolidated equity that would arise assuming that the change in interest rates had occurred at the end of each reporting period during the Relevant Periods and had been applied to re-measure those financial instruments held by the Target Group which expose the Target Group to fair value interest rate risk at the end of each reporting period during the Relevant Periods. In respect of the exposure to cash flow interest rate risk arising from floating rate non-derivative instruments held by the Target Group at the end of the reporting period, the impact on Target Group’s profit after tax (and retained profits) and other components of consolidated equity is estimated as an annualised impact on interest expense or income of such a change in interest rates. The analysis is performed on the same basis for the years ended 31 December 2012, 2013 and 2014 and six month ended 30 June 2015.

– II-74 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(d) Currency risk

As the Target Group’s principal activities are carried out in the PRC, the Target Group’s transactions are mainly denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions involving RMB must take place through the People’s Bank of China or other institutions authorised to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the People’s Bank of China that are determined largely by supply and demand.

The Target Group currently does not have a policy on foreign currency risk as it had minimal transactions denominated in foreign currencies during the Relevant Periods and the impact of foreign currency risk on the Target Group’s operation is minimal.

(e) Fair value measurement

The carrying amount of the Target Group and the Target Company’s financial instruments carried at cost or amortised cost are not materially different from their fair value as at 31 December 2012, 2013 and 2014 and 30 June 2015.

31 COMMITMENTS

(a) Capital commitments

Capital commitments outstanding at the end of each reporting period not provided for in the Financial Information were as follows:

Contracted for Authorised but not contracted for Contracted for Authorised but not contracted for	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 32,016 12,309 192,743 177,870 164,009 974,628 209,886 176,318 1,167,371 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 32,016 12,309 13,670 – – 974,628 32,016 12,309 988,298	At 30 June 2015 RMB’000 188,016 973,628
		1,161,644
		At 30 June 2015 RMB’000 13,457 973,628
		987,085

– II-75 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(b) At the end of each reporting period, the Target Group and the Target Company’s total future minimum lease payments under non-cancellable operating leases were payable as follows:

Within 1 year After 1 year but within 5 years After 5 years Within 1 year After 1 year but within 5 years After 5 years	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 2,279 2,467 27,393 5,631 5,616 105,449 3,870 2,580 196,662 11,780 10,663 329,504 The Target Company At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 2,005 1,719 15,148 5,589 5,160 57,045 3,870 2,580 140,190 11,464 9,459 212,383	At 30 June 2015 RMB’000 6,843 60,741 50,422
		118,006
		At 30 June 2015 RMB’000 1,079 12,336 –
		13,415

The Target Group is the lessee in respect of a number of properties under operating leases. The leases typically run for an initial period of 1 to 16 years, at the end of which period all terms are renegotiated. None of the leases includes contingent rentals.

– II-76 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

32 MATERIAL RELATED PARTY TRANSACTIONS

(a) Key management personnel remuneration

Remuneration for key management personnel of the Target Group, including amounts paid to the Target Company’s directors as disclosed in note 7, and certain of the highest paid employees as disclosed in note 8, is as follows:

Short term employee benefits Post-employment benefits Equity compensation benefits	2012 RMB’000 1,470 – – 1,470	The Target Group Years ended 31 December 2013 2014 RMB’000 RMB’000 1,898 1,949 – – – – 1,898 1,949	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 987 1,263 – – – – 987 1,263	For the six months ended 30 June 2014 2015 RMB’000 RMB’000 (unaudited) 987 1,263 – – – – 987 1,263
				1,263

Total remuneration is included in “staff costs” (see note 5(b)).

(b) Financing arrangements

Amount owed by the Target Group to related parties

Balance with the immediate controlling party – Beijing Modasi – Loan payable – Interest payable Related interest expense Loan from the immediate controlling party – Beijing Modasi	The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 – 180,000 – – 3,583 1,445 – 183,583 1,445 The Target Group At 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 – 3,650 9,312	At 30 June 2015 RMB’000 – –
		–
		At 30 June 2015 RMB’000 –

– II-77 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(c) Transactions with related parties

During the Relevant Periods, the Target Group entered into the following material related party transactions:

Construction services to – Yunnan Electric investment Zhongke Photovoltaic Loan received from: Beijing Modasi Repayment of loan to: Beijing Modasi Rental expenses to – Beijing Zhongchenghe Investment Consulting Co., Ltd. (“Beijing Zhongchenghe”) Balances with related parties Due from related parties Trade-related Trade receivables – Yunnan Electric Investment Zhongke Photovoltaic Non-trade related Other receivables – Beijing Zhongchenghe – Beijing Modasi	The Target Group Years ended 31 December For the six months ended 30 June 2012 2013 2014 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) 7,142 – – – – – 180,000 – – – – – 180,000 – – 1,290 1,290 1,290 645 645 The Target Group At 31 December At 30 June 2012 2013 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 636 636 636 636 The Target Group At 31 December At 30 June 2012 2013 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 1,100 1,100 1,100 1,100 – – – 5,000 1,100 1,100 1,100 6,100	The Target Group Years ended 31 December For the six months ended 30 June 2012 2013 2014 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) 7,142 – – – – – 180,000 – – – – – 180,000 – – 1,290 1,290 1,290 645 645 The Target Group At 31 December At 30 June 2012 2013 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 636 636 636 636 The Target Group At 31 December At 30 June 2012 2013 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 1,100 1,100 1,100 1,100 – – – 5,000 1,100 1,100 1,100 6,100
		–
		–
		645
		At 30 June 2015 RMB’000 636
		At 30 June 2015 RMB’000 1,100 5,000
		6,100

(d) Balances with related parties

– II-78 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

33 ACQUISITION OF SUBSIDIARIES

During the Relevant Periods, the Target Group entered into equity transfer agreements with independent third parties to acquire equity interests in four entities for a total cash consideration of RMB66,400,000. One of the entities are engaged in manufacturing and sale of monitoring equipment and the other three entities are solar power plants at development stage.

(a) Monitoring equipment business

During the year ended 31 December 2014, the Target Group entered into an equity transfer agreement with an independent third party to acquire 51% equity interests in Zhongke Huaxun, a PRC incorporated company principally engaged in the manufacturing and sales of monitoring equipment, at a total cash consideration of RMB22,950,000. The above mentioned acquisition was completed on 31 August 2014 (the “Acquisition Date”), through which the Target Group obtains control of Zhongke Huaxun.

The identifiable assets acquired and liabilities assumed at the Acquisition Date are as follows:

Net assets acquired: Property, plants and equipment Inventories Trade and other receivables Trade and other payables Bank loans and other borrowings Net identifiable assets Less: Non-controlling interests Net identifiable assets attributable to the Target Group Total consideration Less: Net identifiable assets Goodwill on the acquisition Consideration, satisfied in cash Less: Cash and cash equivalents acquired Other payables Payment for acquisition of subsidiaries, net of cash acquired	RMB’000 1,650 520 64,722 (17,045) (10,000)
	39,847 (18,209)
	21,638
	22,950 (21,638)
	1,312
	22,950 – (2,295)
	20,655

RMB20,655,000 out of the total consideration was paid in 2014 with the remaining balance of RMB2,295,000 being paid in 2015.

The goodwill is attributable mainly to the synergies expected to be achieved from integrating the acquirees into the Target Group’s existing business. None of the goodwill recognised is expected to be deductible for tax purposes.

During the period from the Acquisition Date to 31 December 2014, Zhongke Huaxun contributed revenue of RMB15,247,000 and profit of RMB405,000 to the Target Group.

– II-79 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

(b) Solar power plants under development

During the year ended 31 December 2013, the Target Group acquired 100% equity interests in Yumen Yonglian from an independent third party at a cash consideration of RMB100,000. The entity principally engaged in generating and sales of electricity. At the date of acquisition, the entity was at development stage with net identifiable assets of RMB100,000.

During the year ended 31 December 2014, the Target Group acquired equity interests in two entities, details as per below from independent third parties at an aggregate cash considerations of RMB43,350,000. The entities principally engaged in generating and sales of electricity. At the dates of acquisitions, the entities were at development stage.

	Equity
	interests
Name of entity	acquired
Datong Wantong	95%
Jiayuguan Xiehe	95%

The combined identifiable assets acquired and liabilities assumed are as follows:

Net assets acquired: Solar power plants under development Trade and other receivables Trade and other payables Net identifiable assets Less: Non-controlling interests Consideration, satisfied in cash Less: Cash and cash equivalents acquired Other payables Payment for acquisition of subsidiaries, net of cash acquired	RMB’000 60,069 846 (15,397)
	45,518 (2,168)
	43,350 – (19,170)
	24,180

– II-80 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

34 NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD

(a) Acquisition of a subsidiary

On 16 October 2015, the Target Group acquired 85% equity interest in Zhongke Hengyuan Jiuquan for a consideration of RMB57,638,805. After the acquisition, Zhongke Hengyuan Jiuquan became a wholly-owned subsidiary of the Target Group.

(b) Acquisition of available-for-sale investments

• (i) On 9 November 2015, the Target Group acquired 7.62% equity interest in Hami Commercial Bank Co., Ltd. from an independent third party for a consideration of RMB79,949,000.

• (ii) Pursuant to a shareholders’ resolution of the Target Company, the Target Company entered into a series of transactions (the “Transactions”) in November 2015 in respect of the shares in Huatian Hotel Co., Ltd. 華天酒店集團股份有限公司 (“Huatian”):

• 1) The Target Company signed a loan agreement of RMB1,010,828,200 with Nanjing Kaen Industrial Trading Co., Ltd. 南京卡恩工貿有限公司 (“Nanjing Kaen”), to finance the acquisition of shares in Huatian.

• 2) The Target Company effectively acquired 181,820,100 shares in Huatian through Hunan Huaxin Hengyuan Investment (limited partnership) 湖南華信恒源股權投資 企業（有限合夥）(“Huaxin Hengyuan”), a limited partnership set up for the sole purpose of investment in Huatian, for a consideration of RMB1,001,828,200. As of the date of this report, 60.61% and 15% of the shares of Huaxin Hengyuan is owned by the Target Company and Mr. Xiang Jun (through Beijing Modasi), respectively.

• 3) Pursuant to an agreement signed between the Target Company and Nanjing Kaen, the Target Company transferred its rights of returns in Huaxin Hengyuan to Nanjing Kaen for a consideration of RMB1,010,828,200.

• 4) Pursuant to a supplemental agreement signed between the Target Company and Nanjing Kaen, the Target Company agreed to offset the consideration receivable from Nanjing Kaen against its loan from Nanjing Kaen resulting from the above transactions.

• (iii) During the period from July 2015 to the date of this report, the Target Group entered into several agreements to acquire 14.56% equity interests in Anhua Agricultural Insurance Co., Ltd. (“Anhua”) from independent third parties for an aggregate consideration of RMB255,510,000 and rights to acquire 268,250,000 shares through rights issue exercise (the “Rights Issue”) in Anhua for an aggregate consideration of RMB51,612,500. In addition, the Target Group subscribed 357,900,000 shares through the Rights Issue at a consideration of RMB486,744,000. Assuming the Target Group participates in the Rights Issue and exercised its rights in full, the Target Group would hold 16.67% equity interests in Anhua. As at the date of this report, only 97,000,000 shares in respect of the shares transfer of above-mentioned investments in Anhua has been completed and registered under the name of the Target Group.

– II-81 –

APPENDIX II FINANCIAL INFORMATION OF THE TARGET GROUP

35 IMMEDIATE AND ULTIMATE CONTROLLING PARTY

As at 30 June 2015, the directors consider the immediate controlling party of the Target Company to be Beijing Modasi, and the ultimate controlling party of the Target Company to be Mr. Xiang Jun.

36 LIST OF AUDITORS OF THE SUBSIDIARIES

The financial statements of the companies comprising the Target Group which are subject to audit during the Relevant Periods were audited by the following auditors:

Name of company	Financial year	Statutory auditors (Note)
The Target Company	For the years ended	BDO China Shu Lun Pan Certified
	31 December 2012,	Public Accountants LLP
	2013 and 2014	立信會計師事務所（特殊普通合夥）
Zhongke Hengyuan Yiyang	For the years ended	Yiyan Fangzheng Certified Public
	31 December 2012,	Accountants
	2013 and 2014	益陽方正會計師事務所有限公司
Wuhan Zhongke*	For the year ended	Hubei Mingjun Certified Public
	31 December 2012	Accountants
		湖北明君會計師事務所有限公司
Xinjiang Zhongke	For the year ended	Xinjiang Xinneng Certified Public
Hengyuan*	31 December 2012	Accountants
		新疆新能有限責任會計師事務所
Xinjiang Huaxun**	For the year ended	Xinjiang Guoxin Certified Public
	31 December 2014	Accountants
		新疆國信有限責任會計師事務所

Note: The English translation of the names are for reference only. The official names of these entities are in Chinese.

• As at the date of this report, no audit report has been issued in connection with Wuhan Zhongke and Xinjiang Zhongke Hengyuan’s statutory financial statements for the years ended 31 December 2013 and 2014.

• ** As at the date of this report, no audit report has been issued in connection with Xinjiang Huaxun’s statutory financial statements for the years ended 31 December 2012 and 2013.

– II-82 –

APPENDIX II FINANCIAL INFORMATION OF THE TARGET GROUP

37 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR BEGINNING 1 JANUARY 2015

Up to the date of issue of the Financial Information, the HKICPA has issued a few amendments and new standards which are not yet effective for the year beginning 1 January 2015 and which have not been adopted in the Financial Information. These include the following which may be relevant to the Target Group.

	Effective for
	accounting periods
	beginning on or after
Annual improvements to HKFRSs 2012-2014 cycle	1 January 2016
Amendments to HKFRS 10 and HKAS 28, Sale or contribution of assets	1 January 2016
between an investor and its associate or joint venture
Amendments to HKFRS 11, Accounting for acquisitions of interests in joint	1 January 2016
operations
Amendments to HKAS 1, Disclosure initiative	1 January 2016
Amendments to HKAS 16 and HKAS 38, Clarification of acceptable methods	1 January 2016
of depreciation and amortisation
HKFRS 15, Revenue from contracts with customers	1 January 2018
HKFRS 9, Financial instruments	1 January 2018

The Target Group is in the process of making an assessment of what the impact of these amendments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Financial Information of the Target Group.

C. SUBSEQUENT FINANCIAL STATEMENTS AND DIVIDENDS

No audited financial statements have been prepared by the Target Company and its subsidiaries in respect of any period subsequent to 30 June 2015. No dividend or distribution has been declared or made by any companies comprising the Target Group in respect of any period subsequent to 30 June 2015.

Yours faithfully, KPMG

Certified Public Accountants Hong Kong

– II-83 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

A. MANAGEMENT DISCUSSION AND ANALYSIS

Set out below is the management discussion and analysis of the Target Group for each of the years ended 31 December 2012, 2013 and 2014 and the six months ended 30 June 2015.

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

The Target Group is principally engaged in the construction and development of photovoltaic power station projects and manufacture and sale of wind-solar hybrid street lights in the PRC.

BUSINESS REVIEW AND FINANCIAL HIGHLIGHTS

For the six months ended 30 June 2015

Revenue

For the six months ended 30 June 2015, the total revenue of the Target Group increased by RMB47,640,000 from approximately RMB73,013,000 for the six months ended 30 June 2014 to approximately RMB120,653,000 for the six months ended 30 June 2015. The increase in the revenue was mainly due to: (i) increase of RMB11,410,000 in the sales of the street lights; and (ii) increase in revenue from the construction of solar power plants of RMB36,823,000.

Other revenue

For the six months ended 30 June 2015, other revenue of the Target Group decreased by RMB24,117,000 from approximately RMB27,897,000 for the six months ended 30 June 2014 to approximately RMB3,780,000 for the six months ended 30 June 2015. The decrease was mainly due to the decrease in interest income of RMB20,617,000 for the period, as a result of the decrease in bank and cash balances over the period.

Distribution costs

For the six months ended 30 June 2015, the distribution costs of the Target Group increased by RMB11,194,000 from approximately RMB17,329,000 for the six months ended 30 June 2014 to approximately RMB28,523,000 for the six months ended 30 June 2015. The increase was mainly due to: (i) increase of RMB4,031,000 in salaries, wages and other benefits; (ii) increase of RMB1,900,000 in travelling expenses; and (iii) increase of RMB1,400,000 in promotional expenses.

– III-1 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

Administrative and other operating expenses

For the six months ended 30 June 2015, the administrative and other operating expenses of the Target Group increased by RMB27,813,000 from approximately RMB51,626,000 for the six months ended 30 June 2014 to approximately RMB79,439,000 for the six months ended 30 June 2015. The increase was mainly due to: (i) increase of RMB16,240,000 in salaries, wages and other benefits; (ii) increase of RMB8,336,000 in office related expenses; and (iii) increase of RMB361,000 in depreciation, amortization and repairs expenses.

Finance costs

For the six months ended 30 June 2015, finance costs of the Target Group decreased by RMB26,637,000 from approximately RMB40,713,000 for the six months ended 30 June 2014 to approximately RMB14,076,000 for the six months ended 30 June 2015. The decrease was mainly due to the decrease in the interest on bank loans and other borrowings of RMB26,706,000 for the period, as a result of the decrease in bank loans and other borrowings over the period.

Solar power plants

As at 30 June 2015, the Target Group had a net book value of approximately RMB13,198,000 (31 December 2014: RMB13,617,000) and RMB146,360,000 (31 December 2014: RMB98,634,000) in completed solar power plants and solar power plants under development.

Inventories

As at 30 June 2015, the Target Group had approximately RMB200,005,000 (31 December 2014: RMB155,951,000) of inventories. The increase was mainly due to increased number of projects on hand in respect of the construction of solar power plants and manufacture and sale of street lights over the period.

Trade and other receivables

As at 30 June 2015, the Target Group had approximately RMB1,068,314,000 (31 December 2014: RMB1,125,855,000) of trade and other receivables. As at 30 June 2015, it mainly consisted of (i) trade debtors (net of allowance for doubtful debts) of RMB429,753,000 (31 December 2014: RMB531,519,000); (ii) other deposits and prepayments and receivables of RMB427,761,000 (31 December 2014: RMB415,334,000); and (iii) gross amount due from customers for contract work of RMB204,700,000 (31 December 2014: RMB177,902,000).

– III-2 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

Trade and other payables

As at 30 June 2015, the Target Group had approximately RMB1,101,081,000 (31 December 2014: RMB1,000,855,000) of trade and other payables. As at 30 June 2015, it mainly consisted of (i) trade payables of RMB304,836,000 (31 December 2014: RMB466,392,000); (ii) bills payable of RMB466,082,000 (31 December 2014: RMB363,343,000); (iii) receipts in advance of RMB211,816,000 (31 December 2014: RMB104,642,000); and (iv) other payables and accruals of RMB118,347,000 (31 December 2014: RMB65,033,000).

Bank loans and other borrowings

As at 30 June 2015, the Target Group had approximately RMB84,138,000 (31 December 2014: RMB210,425,000) of bank loans and other borrowings.

Liquidity and Capital Resources

As at 30 June 2015, the total amount of cash and cash equivalents and pledged bank deposits of the Target Group was approximately RMB130,633,000 (31 December 2014: RMB273,663,000). All the cash and cash equivalents and pledged bank deposits were denominated in RMB and placed with banks in the PRC.

As at 30 June 2015, the Target Group’s debt ratio, which was calculated by the total interest-bearing borrowings over the total equity, decreased from ratio of 0.34 as at 31 December 2014 to 0.15 as at 30 June 2015.

Capital Expenditure

During the six months ended 30 June 2015, the Target Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB2,786,000 (twelve months ended 31 December 2014: RMB5,344,000) and RMB47,726,000 (twelve months ended 31 December 2014: RMB179,293,000) respectively.

Foreign Exchange Risk

The Target Group primarily operates its business in the PRC and the Target Group’s revenue were primarily denominated in RMB, being the functional currency of the Target Group’s major operating subsidiaries. Accordingly, any future exchange rate fluctuation will not have any material effect on the Target Group’s business. The Target Group did not use any financial instruments for hedging purpose.

Charge on Assets and Contingent Liabilities

As at 30 June 2015, the Target Group has pledged bank deposits of approximately RMB2,250,000 (31 December 2014: RMB1,500,000) and trade and other receivables of approximately RMB71,058,000 (31 December 2014: RMB71,058,000) to secure general banking and other loans facilities granted to the Target Group.

– III-3 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

As at 30 June 2015, the Target Group had no significant contingent liabilities (31 December 2014: Nil).

Employee and Remuneration Policy

As at 30 June 2015, the Target Group had approximately 699 (31 December 2014: 669) employees located in the PRC. Compensation for the employees includes basic wages, variable wages, bonuses and other staff benefits. The remuneration policy of the Target Group is to provide remuneration packages, including basic salary, short term bonuses and long term rewards such as options, so as to attract and retain top quality staff.

Material Acquisition and Disposal

Saved as disclosed under the section “Financial Information of the Target Group”, the Group did not have any other material acquisition or disposal during the six months ended 30 June 2015.

For the year ended 31 December 2014

Revenue

For the year ended 31 December 2014, the total revenue of the Target Group decreased by RMB405,593,000 from approximately RMB1,021,521,000 for the year ended 31 December 2013 to approximately RMB615,928,000 for the year ended 31 December 2014. The decrease in the revenue was mainly due to the decrease in the sales of the street lights of RMB427,673,000 for the year.

Other revenue

For the year ended 31 December 2014, other revenue of the Target Group increased by RMB38,681,000 from approximately RMB16,295,000 for the year ended 31 December 2013 to approximately RMB54,976,000 for the year ended 31 December 2014. The increase was mainly due to the increase in other interest income of RMB36,729,000 for the year.

Other net income

For the year ended 31 December 2014, other net income of the Target Group was approximately RMB55,926,000 (2013: RMB21,297,000), mainly represented (i) the net gain on disposal of subsidiaries of RMB49,326,000 (2013: RMB21,324,000); and (ii) the net gain on disposal of available-for-sale equity securities of RMB6,600,000 (2013: Nil).

– III-4 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

Distribution costs

For the year ended 31 December 2014, the distribution costs of the Target Group increased by RMB4,484,000 from approximately RMB43,904,000 for the year ended 31 December 2013 to approximately RMB48,388,000 for the year ended 31 December 2014. The increase was mainly due to the increase in salaries, wages and other benefits of RMB5,867,000 and partly off-set by the decrease in office related expenses and entertainment expenses of RMB667,000 in total.

Administrative and other operating expenses

For the year ended 31 December 2014, the administrative and other operating expenses of the Target Group increased by RMB40,823,000 from approximately RMB95,971,000 for the year ended 31 December 2013 to approximately RMB136,794,000 for the year ended 31 December 2014. The increase was mainly due to: (i) increase of RMB8,610,000 in salaries, wages and other benefits; (ii) increase of RMB18,785,000 in office related expenses; (iii) increase of RMB1,742,000 in consultancy fees; and (iv) increase of RMB1,686,000 in depreciation, amortization and repairs expenses.

Finance costs

For the year ended 31 December 2014, finance costs of the Target Group increased by RMB55,281,000 from approximately RMB26,549,000 for the year ended 31 December 2013 to approximately RMB81,830,000 for the year ended 31 December 2014. The increase was mainly due to the increase of RMB56,691,000 in interest on bank loans and other borrowings.

Solar power plants

As at 31 December 2014, the Target Group had a net book value of approximately RMB13,617,000 (2013: RMB8,314,000) and RMB98,634,000 (2013: RMB334,612,000) in completed solar power plants and solar power plants under development.

Inventories

As at 31 December 2014, the Target Group had approximately RMB155,951,000 (2013: RMB92,966,000) of inventories. The increase was mainly due to increased number of projects on hand in respect of the construction of solar power plants and manufacture and sale of street lights over the year.

– III-5 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

Trade and other receivables

As at 31 December 2014, the Target Group had approximately RMB1,125,855,000 (2013: RMB1,695,960,000) of trade and other receivables. As at 31 December 2014, it mainly consisted of (i) trade debtors (net of allowance for doubtful debts) of RMB531,519,000 (2013: RMB1,311,161,000); (ii) other deposits and prepayments and receivables of RMB415,334,000 (2013: RMB345,992,000); and (iii) gross amount due from customers for contract work of RMB177,902,000 (2013: RMB37,707,000).

Trade and other payables

As at 31 December 2014, the Target Group had approximately RMB1,000,855,000 (2013: RMB1,590,257,000) of trade and other payables. As at 31 December 2014, it mainly consisted of (i) trade payables of RMB466,392,000 (2013: RMB808,537,000); (ii) bills payable of RMB363,343,000 (2013: RMB312,077,000); (iii) receipts in advance of RMB104,642,000 (2013: RMB204,197,000); and (iv) other payables and accruals of RMB65,033,000 (2013: RMB81,863,000).

Bank loans and other borrowings

As at 31 December 2014, the Target Group had approximately RMB210,425,000 (2013: RMB386,506,000) of bank loans and other borrowings.

Corporate bond payable

As at 31 December 2014, the Target Group had no corporate bond payable (2013: RMB99,218,000). On 26 January 2014, certain bondholders exercised the early redemption right to redeem corporate bond of RMB67,500,000 at its par value. The remaining balance of RMB32,500,000 was repaid on 26 July 2014.

Liquidity and Capital Resources

As at 31 December 2014, the total amount of cash and cash equivalents and pledged bank deposits of the Target Group was approximately RMB273,663,000 (2013: RMB372,925,000). All the cash and cash equivalents and pledged bank deposits were denominated in RMB and placed with banks in the PRC.

As at 31 December 2014, the Target Group’s debt ratio, which was calculated by the total interest-bearing borrowings over the total equity, decreased from ratio of 0.83 as at 31 December 2013 to 0.34 as at 31 December 2014.

Capital Expenditure

During the year ended 31 December 2014, the Target Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB5,344,000 (2013: RMB11,052,000) and RMB179,293,000 (2013: RMB292,753,000) respectively.

– III-6 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

Foreign Exchange Risk

The Target Group primarily operates its business in the PRC and the Target Group’s revenue were primarily denominated in RMB, being the functional currency of the Target Group’s major operating subsidiaries. Accordingly, any future exchange rate fluctuation will not have any material effect on the Target Group’s business. The Target Group did not use any financial instruments for hedging purpose.

Charge on Assets and Contingent Liabilities

As at 31 December 2014, the Target Group has pledged bank deposits of approximately RMB1,500,000 (2013: Nil), trade and other receivables of approximately RMB71,058,000 (2013: RMB245,523,000), lease prepayments of approximately RMB62,099,000 (2013: RMB12,034,000) and property, plant and equipment of approximately RMB9,646,000 (2013: RMB25,733,000) to secure general banking and other loans facilities granted to the Target Group.

As at 31 December 2014, the Target Group had no significant contingent liabilities (2013: Nil).

Employee and Remuneration Policy

As at 31 December 2014, the Target Group had approximately 669 (2013: 635) employees located in the PRC. Compensation for the employees includes basic wages, variable wages, bonuses and other staff benefits. The remuneration policy of the Target Group is to provide remuneration packages, including basic salary, short term bonuses and long term rewards such as options, so as to attract and retain top quality staff.

Material Acquisition and Disposal

Saved as disclosed under the section “Financial Information of the Target Group”, the Group did not have any other material acquisition during the year ended 31 December 2014.

During the year ended 31 December 2014, the Target Group disposed 100% equity interests in Hami Zhaoxiang and Gansu Hongyuan, which contributed net income of RMB49,326,000.

For the year ended 31 December 2013

Revenue

For the year ended 31 December 2013, the total revenue of the Target Group increased by RMB486,098,000 from approximately RMB535,423,000 for the year ended 31 December 2012 to approximately RMB1,021,521,000 for the year ended 31 December 2013. The increase in the revenue was mainly due to: (i) increase of RMB333,320,000 in the sales of the street lights; and (ii) increase in revenue from the construction of solar power plants of RMB153,113,000.

– III-7 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

Other revenue

For the year ended 31 December 2013, other revenue of the Target Group increased by RMB5,242,000 from approximately RMB11,053,000 for the year ended 31 December 2012 to approximately RMB16,295,000 for the year ended 31 December 2013. The increase was mainly due to the increase in interest income of RMB7,716,000, and partially off-set by the decrease in government grants of RMB2,546,000.

Other net income

For the year ended 31 December 2013, other net income of the Target Group was approximately RMB21,297,000 (2012: RMB17,970,000), mainly represented the net gain on disposal of subsidiaries of RMB21,324,000 (2012: RMB17,976,000).

Distribution costs

For the year ended 31 December 2013, the distribution costs of the Target Group increased by RMB1,681,000 from approximately RMB42,223,000 for the year ended 31 December 2012 to approximately RMB43,904,000 for the year ended 31 December 2013. The increase was mainly due to the increase in warranty provisions of RMB1,519,000.

Administrative and other operating expenses

For the year ended 31 December 2013, the administrative and other operating expenses of the Target Group decreased by RMB12,581,000 from approximately RMB108,552,000 for the year ended 31 December 2012 to approximately RMB95,971,000 for the year ended 31 December 2013. The decrease was mainly due to the decrease in impairment losses in respect of trade and other receivables of RMB42,834,000; which was partially off-set by (i) the increase in salaries, wages and other benefits of RMB10,763,000; and (ii) the increase in research and development costs of RMB12,237,000.

Finance costs

For the year ended 31 December 2013, finance costs of the Target Group increased by RMB15,549,000 from approximately RMB11,000,000 for the year ended 31 December 2012 to approximately RMB26,549,000 for the year ended 31 December 2013. The increase was mainly due to: (i) increase of RMB9,182,000 in the interest on bank loans and other borrowings; and (ii) increase of RMB6,299,000 in interest on corporate bond payable.

Solar power plants

As at 31 December 2013, the Target Group had a net book value of approximately RMB8,314,000 (2012: Nil) and RMB334,612,000 (2012: RMB50,468,000) in completed solar power plants and solar power plants under development.

– III-8 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

Inventories

As at 31 December 2013, the Target Group had approximately RMB92,966,000 (2012: RMB92,395,000) of inventories. Same level of projects on hand in respect of the construction of solar power plants and manufacture and sale of street light as 2012.

Trade and other receivables

As at 31 December 2013, the Target Group had approximately RMB1,695,960,000 (2012: RMB742,795,000) of trade and other receivables. As at 31 December 2013, it mainly consisted of (i) trade debtors (net of allowance for doubtful debts) of RMB1,311,161,000 (2012: RMB576,157,000); (ii) other deposits and prepayments and receivables of RMB345,992,000 (2012: RMB95,069,000); and (iii) gross amount due from customers for contract work of RMB37,707,000 (2012: RMB70,469,000).

Trade and other payables

As at 31 December 2013, the Target Group had approximately RMB1,590,257,000 (2012: RMB619,170,000) of trade and other payables. As at 31 December 2013, it mainly consisted of (i) trade payables of RMB808,537,000 (2012: RMB320,396,000); (ii) bills payable of RMB312,077,000 (2012: RMB96,790,000); (iii) receipts in advance of RMB204,197,000 (2012: RMB173,577,000); (iv) other payables and accruals of RMB81,863,000 (2012: RMB28,407,000); and (v) amounts due to a related party of RMB183,583,000 (2012: Nil).

Bank loans and other borrowings

As at 31 December 2013, the Target Group had approximately RMB386,506,000 (2012: RMB108,000,000) of bank loans and other borrowings.

Corporate bond payable

As at 31 December 2013, the Target Group had approximately RMB99,218,000 (2012: RMB97,980,000) of corporate bond payable, which was repayable on 26 July 2014.

Liquidity and Capital Resources

As at 31 December 2013, the total amount of cash and cash equivalents and pledged bank deposits of the Target Group was approximately RMB372,925,000 (2012: RMB354,382,000). All the cash and cash equivalents and pledged bank deposits were denominated in RMB and placed with banks in the PRC.

As at 31 December 2013, the Target Group’s debt ratio, which was calculated by the total interest-bearing borrowings over the total equity, increased from ratio of 0.41 as at 31 December 2012 to 0.83 as at 31 December 2013.

– III-9 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

Capital Expenditure

During the year ended 31 December 2013, the Target Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB11,052,000 (2012: RMB13,946,000) and RMB292,753,000 (2012: RMB50,428,000) respectively.

Foreign Exchange Risk

The Target Group primarily operates its business in the PRC and the Target Group’s revenue were primarily denominated in RMB, being the functional currency of the Target Group’s major operating subsidiaries. Accordingly, any future exchange rate fluctuation will not have any material effect on the Target Group’s business. The Target Group did not use any financial instruments for hedging purpose.

Charge on Assets and Contingent Liabilities

As at 31 December 2013, the Target Group has trade and other receivables of approximately RMB245,523,000 (2012: Nil), lease prepayments of approximately RMB12,034,000 (2012: Nil), solar power plants of approximately RMB169,965,000 (2012: Nil) and property, plant and equipment of approximately RMB25,733,000 (2012: Nil) to secure general banking and other loans facilities granted to the Target Group.

As at 31 December 2013, the Target Group had no significant contingent liabilities (2012: Nil).

Employee and Remuneration Policy

As at 31 December 2013, the Target Group had approximately 635 (2012: 598) employees located in the PRC. Compensation for the employees includes basic wages, variable wages, bonuses and other staff benefits. The remuneration policy of the Target Group is to provide remuneration packages, including basic salary, short term bonuses and long term rewards such as options, so as to attract and retain top quality staff.

Material Acquisition and Disposal

Saved as disclosed under the section “Financial Information of the Target Group”, the Group did not have any other material acquisition during the year ended 31 December 2013. During the year ended 31 December 2013, the Target Group disposed 81% equity interests, in Yumen Yonglian which contributed net income of RMB21,324,000.

– III-10 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

For the year ended 31 December 2012

Revenue

For the year ended 31 December 2012, the total revenue of the Target Group was approximately RMB535,423,000, of which, (i) approximately RMB265,899,000 was generated from the sales of street lights; and (ii) approximately RMB267,648,000 was generated from the construction of solar power plants.

Other revenue

For the year ended 31 December 2012, other revenue of the Target Group was approximately RMB11,053,000, mainly consisted of (i) RMB4,409,000 in interest income; and (ii) RMB6,597,000 in government grants.

Other net income

For the year ended 31 December 2012, other net income of the Target Group was approximately RMB17,970,000, mainly represented the net gain on disposal of subsidiaries of RMB17,976,000.

Distribution costs

For the year ended 31 December 2012, the distribution costs of the Target Group was approximately RMB42,223,000, mainly consisted of (i) RMB16,467,000 in salaries, wages and other benefits; (ii) RMB4,702,000 in office related expenses; (iii) RMB4,283,000 in travelling and transportation expenses; and (iv) RMB4,163,000 in entertainment expenses.

Administrative and other operating expenses

For the year ended 31 December 2012, the administrative and other operating expenses of the Target Group was approximately RMB108,552,000, mainly consisted of (i) RMB45,977,000 in impairment losses in respect of trade and other receivables; and (ii) RMB20,589,000 in research and development costs.

Finance costs

For the year ended 31 December 2012, finance costs of the Target Group was approximately RMB11,000,000, mainly consisted of (i) RMB4,236,000 in the interest on bank loans and other borrowings; and (ii) RMB4,438,000 in interest on corporate bond payable.

Solar power plants

As at 31 December 2012, the Target Group had a net book value of approximately RMB50,468,000 in solar power plants under development.

– III-11 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

Inventories

As at 31 December 2012, the Target Group had approximately RMB92,395,000 of inventories for projects on hand in respect of the construction of solar power plants and manufacture and sale of street light.

Trade and other receivables

As at 31 December 2012, the Target Group had approximately RMB742,795,000 of trade and other receivables. It mainly consisted of (i) trade debtors (net of allowance for doubtful debts) of RMB576,157,000; (ii) other deposits and prepayments and receivables of RMB95,069,000; and (iii) gross amount due from customers for contract work of RMB70,469,000.

Trade and other payables

As at 31 December 2012, the Target Group had approximately RMB619,170,000 of trade and other payables. It mainly consisted of (i) trade payables of RMB320,396,000; (ii) bills payable of RMB96,790,000; (iii) receipts in advance of RMB173,577,000; and (iv) other payables and accruals of RMB28,407,000.

Bank loans and other borrowings

As at 31 December 2012, the Target Group had approximately RMB108,000,000 of bank loans and other borrowings.

Corporate bond payable

As at 31 December 2012, the Target Group had approximately RMB97,980,000 of corporate bond payable. On 26 July 2012, the Target Group had issued a corporate bond amounting to RMB100,000,000, which was secured by certain trade receivables, bearing interest at 9.5% per annum and was repayable on 26 July 2014.

Liquidity and Capital Resources

As at 31 December 2012, the total amount of cash and cash equivalents and pledged bank deposits of the Target Group was approximately RMB354,382,000. All the cash and cash equivalents and pledged bank deposits were denominated in RMB and placed with banks in the PRC.

As at 31 December 2012, the Target Group’s debt ratio was 0.41, which was calculated by the total interest-bearing borrowings over the total equity.

– III-12 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP

Capital Expenditure

During the year ended 31 December 2012, the Target Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB13,946,000 and RMB50,428,000 respectively.

Foreign Exchange Risk

The Target Group primarily operates its business in the PRC and the Target Group’s revenue were primarily denominated in RMB, being the functional currency of the Target Group’s major operating subsidiaries. Accordingly, any future exchange rate fluctuation will not have any material effect on the Target Group’s business. The Target Group did not use any financial instruments for hedging purpose.

Charge on Assets and Contingent Liabilities

As at 31 December 2012, the Target Group has pledged bank deposits of approximately RMB25,000,000 to secure general banking and other loans facilities granted to the Target Group.

As at 31 December 2012, the Target Group had no significant contingent liabilities.

Employee and Remuneration Policy

As at 31 December 2012, the Target Group had approximately 598 employees located in the PRC. Compensation for the employees includes basic wages, variable wages, bonuses and other staff benefits. The remuneration policy of the Target Group is to provide remuneration packages, including basic salary, short term bonuses and long term rewards such as options, so as to attract and retain top quality staff.

Material Acquisition and Disposal

Saved as disclosed under the section “Financial Information of the Target Group”, the Group did not have any other material acquisition during the year ended 31 December 2012.

During the year ended 31 December 2012, the Target Group disposed 85% equity interests, in Zhongke Hengyuan Jiuquan which contributed net income of RMB17,976,000.

– III-13 –

APPENDIX IV

UNAUDITED PRO-FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the text of the report, prepared for the purpose of inclusion in this circular, received from the reporting accountants, KPMG, Certified Public Accountants, Hong Kong.

• A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

1. Introduction

The following is the unaudited pro forma financial information of the Enlarged Group, being the Kong Sun Holdings Limited (the “Company”) and its subsidiaries (collectively the “Group”) together with Zhongke Hengyuan Technology Co., Ltd. (the “Target Company”) and its subsidiaries (collectively the “Target Group”), as if the proposed acquisition of 44.587% equity interest in the Target Group (the “Proposed Acquisition”) had been completed on 30 June 2015 for the unaudited pro forma consolidated statement of assets and liabilities. Details of the Proposed Acquisition are set out in the section headed “Letter from the Board” contained in this circular.

The unaudited pro forma financial information of the Enlarged Group has been prepared by the directors of the Company in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) for the purpose of illustrating the effect of the Proposed Acquisition pursuant to the terms of the purchase agreement by and between the Company and Vendors (the “Purchase Agreement”). Because of its hypothetical nature, the unaudited pro forma financial information may not give a true picture of the financial position of the Enlarged Group had the Proposed Acquisition been completed as of the specified dates or any future date.

The unaudited pro forma financial information is based upon the unaudited consolidated interim financial information of the Group as at 30 June 2015, which has been extracted from the Company’s interim financial report for the six months ended 30 June 2015 and adjusted on a pro forma basis to reflect the effect of the Proposed Acquisition. These pro forma adjustments are (i) directly attributable to the Proposed Acquisition and not relating to other future events and decisions; and (ii) factually supported based on the terms of the Purchase Agreement.

The unaudited pro forma financial information of the Enlarged Group should be read in conjunction with the historical financial information of the Group as set out in the published interim financial report of the Group for the six months ended 30 June 2015 and other financial information included elsewhere in this circular.

– IV-1 –

APPENDIX IV

UNAUDITED PRO-FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

2. Unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group

Non-current assets Property, plant and equipment Solar power plants Investment properties Goodwill Lease prepayments Deferred tax assets Interest in an associate Current assets Inventories Trade and other receivables Pledged bank deposits Cash and cash equivalents Total assets Current liabilities Trade and other payables Loans and borrowings Obligation under finance leases Current taxation Net current assets	The Group as at 30 June 2015 RMB’000 (Note (1)) 26,819 2,413,914 46,133 36,543 21,521 – – 2,544,930 4,137 1,555,012 236,973 1,154,061 2,950,183 - - - - - - - - - 5,495,113 1,179,671 278,931 221 11,853 1,470,676 1,479,507 - - - - - - - - -	Pro forma adjustments RMB’000 RMB’000 (Note (2)) (Note (3)) (2,627) 539 347,800 347,800 (2,088) (347,800) (347,800) - - - - - - - - - - - - - - - - - - – (2,088) (347,800) – - - - - - - - - - - - - - - - - - -	The Enlarged Group RMB’000 26,819 2,411,287 46,133 36,543 21,521 539 347,800
			2,890,642 4,137 1,555,012 236,973 806,261
			2,602,383 - - - - - - - - -
			5,493,025
			1,179,671 278,931 221 11,853
			1,470,676
			1,131,707 - - - - - - - - -

– IV-2 –

APPENDIX IV

UNAUDITED PRO-FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Total assets less current liabilities Non-current liabilities Other payables Obligation under finance leases Loans and borrowings Corporate bonds payable Deferred tax liabilities Net assets Equity Share capital Reserves Total equity	The Group as at 30 June 2015 RMB’000 (Note (1)) 4,024,437 - - - - - - - - - 18,360 684 397,286 113,633 5,656 535,619 - - - - - - - - - 3,488,818 3,608,604 (119,786) 3,488,818	Pro forma adjustments RMB’000 RMB’000 (Note (2)) (Note (3)) – (2,088) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - – (2,088) (2,088) – (2,088)	The Enlarged Group RMB’000 4,022,349 - - - - - - - - - 18,360 684 397,286 113,633 5,656
			535,619 - - - - - - - - -
			3,486,730
			3,608,604 (121,874)
			3,486,730

3 Notes to the unaudited pro forma financial information of the Enlarged Group

• (1) The amounts are extracted from the unaudited consolidated financial information of the Group for the six months ended 30 June 2015, as set out in the published 2015 interim financial report of the Company.

• (2) The adjustments represent the payment of the consideration for the Proposed Acquisition, which amounts to RMB347,800,000 to be satisfied in cash, pursuant to the Purchase Agreement.

According to the Purchase Agreement, the Group proposed to acquire 44.587% equity interest in the Target Company and will have significant influence over the Target Company upon completion of the Proposed Acquisition. The Acquisition is accounted for as acquisition of an associate in accordance with Hong Kong Accounting Standard (“HKAS”) 28, Investments in Associates and Joint Ventures .

– IV-3 –

APPENDIX IV

UNAUDITED PRO-FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

		Notes	Notes	RMB’000
Consideration to be satisfied in cash				347,800
Less:	The Group’s 44.587% share of the fair value
	of identified assets acquired and
	liabilities assumed		(i)	268,720
Goodwill arising from the Proposed Acquisition			(ii)	79,080
(i)	The Group’s 44.587% share of the fair value of identifiable net assets of
	the Target Group represents:
				RMB’000
	Net assets value of the Target Group before the
	Proposed Acquisition			544,527
	Fair value adjustment on the Target Group’s net
	assets			95,212
	Effect of deferred tax liabilities estimated at
	corporate income tax rate applicable to the
	respective entities			(14,737)
	Total fair value of identifiable net assets of the	Target
	Group			625,002
	Non-controlling interests in the Target Group			(22,315)
	Total fair value of identifiable net assets of the	Target
	Group attributable to the equity shareholders		of
	the Target Company			602,687
	The Group’s 44.587% share of the fair value of
	identified assets acquired and liabilities assumed			268,720

The Group’s 44.587% share of the fair value of identifiable net assets of the Target Group as at the acquisition date is estimated by reference to the valuation reports issued by Grant Sherman Appraisal Limited.

The fair value adjustment on the Target Group’s net assets of RMB95,212,000 refers to the assets valuation appreciation on the land parcels located in the PRC owned by the Target Group (detailed in Appendix V) and the office buildings, manufacturing plants and other structures situated on these land parcels, which is determined based on the valuation of these assets of RMB179,500,000 as estimated by Grant Sherman Appraisal Limited over their carrying amounts of RMB84,288,000.

– IV-4 –

APPENDIX IV

UNAUDITED PRO-FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The amounts of fair values of the identifiable assets and liabilities of the Target Group are subject to change upon the completion of the valuation of the fair values of the identifiable assets and liabilities of the Target Group on the date of completion of the Proposed Acquisition. Consequently, the carrying amount of the interest in an associate and the share of profit or loss of the associate for subsequent periods, will likely result in different amounts than those stated in this unaudited pro forma financial information.

• (ii) According to HKAS 28, on acquisition of the interest in an associate, goodwill relating to an associate, being the excess of the purchase consideration over the fair value of the net identifiable assets of the Target Group, is included in the carrying amount of the interest in an associate.

According to HKAS 28, HKAS 39, Financial Instruments: Recognition and Measurement , and HKAS 36, Impairment of Assets , after initial recognition, the entire carrying amount of the interest in an associate is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount, whenever there is indicator that the interest in an associate may be impaired.

For the purpose of the unaudited pro forma financial information, the Company has ensured the steps taken on the assessment of impairment performed in accordance with HKAS 36. The Directors have assessed the impairment of the interest in an associate by considering whether the carrying amount of the interest in an associate will exceed its recoverable amount, being higher of value in use and fair value less costs to sell, as at 30 June 2015 for the unaudited pro forma consolidated statement of assets and liabilities as if the Proposed Acquisition had been completed on 30 June 2015. The Directors concludes there is no impairment on the interest in an associate.

The Company will adopt consistent accounting policies, valuation method and principal assumptions as used in the unaudited pro forma financial information to assess the impairment of the investment in the Target Company in the future financial period ends.

• (3) The adjustment reflects the elimination of the transactions between the Group and the Target Group upon the completion of the Proposed Acquisition.

• (4) No adjustment has been made to the unaudited pro forma financial information for acquisition-related costs (including fees to legal advisers, financial adviser, reporting accountants, valuer, printer and other expenses) as the directors determined that such costs are insignificant.

• (5) No adjustment has been made to the unaudited pro forma financial information to reflect any trading results or other transactions of the Enlarged Group entered into subsequent to 30 June 2015.

– IV-5 –

APPENDIX IV

UNAUDITED PRO-FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

B. REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report received from the reporting accountants, KPMG, Certified Public Accountants, Hong Kong, in respect of the Group’s pro forma financial information for the purpose in this circular.

8th Floor Prince’s Building 10 Chater Road Central Hong Kong

30 December 2015

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

TO THE DIRECTORS OF KONG SUN HOLDINGS LIMITED

We have completed our assurance engagement to report on the compilation of pro forma financial information of Kong Sun Holdings Limited (the “Company”) and its subsidiaries (collectively the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities as at 30 June 2015 and related notes as set out in Part A of Appendix IV to the circular dated 30 December 2015 (the “Circular”) issued by the Company. The applicable criteria on the basis of which the Directors have compiled the pro forma financial information are described in Part A of Appendix IV to the Circular.

The pro forma financial information has been compiled by the Directors to illustrate the impact of the proposed acquisition of 44.587% equity interest in Zhongke Hengyuan Technology Co., Ltd. (the “Proposed Acquisition”) on the Group’s assets and liabilities as at 30 June 2015 as if the Proposed Acquisition had taken place at 30 June 2015. As part of this process, information about the Group’s assets and liabilities as at 30 June 2015 has been extracted by the Directors from the interim report of the Group for the six months ended 30 June 2015, on which no review report has been published.

Directors’ Responsibilities for the Pro Forma Financial Information

The Directors are responsible for compiling the pro forma financial information in accordance with paragraph 4.29 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” (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

– IV-6 –

APPENDIX IV

UNAUDITED PRO-FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the 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 pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements (“HKSAE”) 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires that the reporting accountants comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the pro forma financial information in accordance with paragraph 4.29 of the Listing Rules, and with reference to AG 7 issued by the HKICPA.

For purpose of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma financial information.

The purpose of pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on the unadjusted financial information of the Group as if the event had occurred or the transactions had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the events or transactions at 30 June 2015 would have been as presented.

– IV-7 –

APPENDIX IV

UNAUDITED PRO-FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Reporting Accountants’ Responsibilities (continued)

A reasonable assurance engagement to report on whether the pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

• the related pro forma adjustments give appropriate effect to those criteria; and

• the pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgement, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

• a) the pro forma financial information has been properly compiled 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 pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

KPMG

Certified Public Accountants Hong Kong

– IV-8 –

APPENDIX V

VALUATION REPORT

The following is the text of letter, summary of valuation and valuation certificates, prepared for the purpose of incorporation in this circular, received from Grant Sherman Appraisal Limited, an independent property valuer, in connection with their valuation as at 31 October 2015 of the property interests to be held by the Group in the People’s Republic of China.

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Unit 1005, 10/F., AXA Centre, 151 Gloucester Road, Wanchai, Hong Kong

30 December 2015

The Directors Kong Sun Holdings Limited Unit 3601, 36/F, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong

Dear Sirs,

In accordance with your instructions for us to value the property interests to be held by Kong Sun Holdings Limited (the “Company”) and its subsidiaries (together referred to as the “Group”) in the People’s Republic of China (“the PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of such property interests as at the 31 October 2015 (“date of valuation”) for the purpose of incorporation into the circular issued by the Company on the date hereof.

Our valuation is our opinion of the market value of the property interests where we would define market value as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

Market Value is understood as the value of a property estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

In valuing the property interests in Group I which are to be held by the Group for further development and Group III which are to be held by the Group for investment purpose in the PRC, we have adopted the direct comparison approach and made reference to the recent transaction evidences for similar premises in the proximity. Adjustments have been made for the differences between the comparable properties and the subject properties.

– V-1 –

APPENDIX V

VALUATION REPORT

In valuing the property interests in Group II which are to be held by the Group for self-occupation in the PRC, we have adopted a combination of the market and depreciated replacement cost approach in assessing the land portion of the property and the buildings and structures standing on the land respectively. Hence, the sum of the two results represents the market value of the property as a whole. In the valuation of the land portion, reference has been made to the standard land prices in Yiyang and Baotou Cities and the sales evidence as available to us in the localities. As the nature of the buildings and structures cannot be valued on the basis of market value, they have therefore been valued on the basis of their depreciated replacement costs. The depreciated replacement cost approach considers the current cost of replacement (reproduction) of the buildings and improvements less deductions for physical deterioration and all relevant forms of obsolescence and optimisation. The depreciated replacement cost approach generally furnishes the most reliable indication of value for properties in the absence of a known market based on comparables sales. The approach is subject to adequate potential profitability of the business.

Our valuation has been made on the assumption that the owner sells the property interests on the open market in its existing state without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the values of the property interests. In addition, no forced sale situation in any manner is assumed in our valuation.

We have been provided with copies of extracts of title documents relating to the properties in the PRC. However, we have not caused title searches to be made for the property interests at the relevant government bureaus in the PRC and we have not inspected the original documents to verify the ownership, encumbrances or the existence of any subsequent amendments which may not appear on the copies handed to us. In undertaking our valuation for the property interests in the PRC, we have relied on the legal opinion (“the PRC legal opinion”) provided by the Group’s PRC legal adviser, Jun He Law Offices.

We have relied to a considerable extent on information provided by the Group and have accepted advice given to us by the Group on such matters as planning approvals or statutory notices, easements, tenure, occupancy, lettings, site and floor areas and in the identification of the properties and other relevant matter. We have no reason to doubt the truth and accuracy of the information provided to us by the Company which is material to the valuation. We have also been advised by the Group that no material facts had been concealed or omitted in the information provided to us and have no reason to suspect that any material information has been withheld. All documents have been used for reference only. We consider that we have been provided with sufficient information to reach an informed view.

All dimensions, measurements and areas included in the valuation certificates are based on information contained in the documents provided to us by the Group and are approximations only. No on-site measurement has been taken.

– V-2 –

APPENDIX V

VALUATION REPORT

We have inspected the exteriors, and where possible, the interiors of the properties, in the course of our inspection, we did not note any serious defects. However, we have not carried out a structural survey nor have we inspected woodwork or other parts of the structures which are covered, unexposed or inaccessible and we are therefore unable to report that any such parts of the property are free from defect though in the course of our inspections we did not note any serious defects. No tests were carried out on any of the services.

We have not carried out investigation to determine the suitability of the ground conditions or the services for any property developments to be erected thereon. Our valuation is on the basis that these aspects are satisfactory and that no extraordinary expense or delay will be incurred during the construction period. Moreover, it is assumed that the utilization of the land and improvements will be within the boundaries of the sites held by the owner or permitted to be occupied by the owner. In addition, we assumed that no encroachment or trespass exits, unless noted in the valuation certificates.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

In valuing the property interests, we have fully complied with the HKIS Valuation Standards (2012 Edition) published by The Hong Kong Institute of Surveyors (HKIS) and the requirements set out in Chapter 5 of and Practice Note 12 to the Rule Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited.

Unless otherwise stated, all money amounts stated are in Renminbi (RMB). The exchange rate adopted in valuing the property interest in the PRC as at 31 October 2015 was HK$1 : RMB0.8149. There has been no significant fluctuation in the exchange rate for this currency against Hong Kong Dollars between that date and the date of this letter.

We enclose herewith our summary of valuation together with the valuation certificates.

Respectfully submitted, For and on behalf of

GRANT SHERMAN APPRAISAL LIMTIED

Lawrence Chan Ka Wah

MRICS MHKIS RPS (GP) MHIREA Director Real Estate Group

Note: Mr. Lawrence Chan Ka Wah is a member of the Royal Institution of Chartered Surveyors, a member of the Hong Kong institute of Surveyors and Registered Professional Surveyors in the General Practice Section, who has over 12 years’ experience in the valuation of properties in Hong Kong, Macau, the PRC and the Asian Rim.

– V-3 –

APPENDIX V

VALUATION REPORT

SUMMARY OF VALUATION

Market Value in existing state to be attributable to the Market Value in Interest to be Group after existing state as at attributable Completion as at Property 31 October 2015 to the Group 31 October 2015

Group I – Property interest to be held by the Group in the PRC for future development purpose

1. A land parcel located on the eastern side of Xitong Road, Yunxi Economic Development Centre, Miyun Economic Development Zone, Beijing City, the PRC Group II – Property interests to be held by 2. A land parcel, buildings and structures located at No. 5 Qingshan Road, Baotou Manufacturing Zone, Baotou City, Inner Mongolia Autonomous Region, the PRC 3. A land parcel, buildings and structures located at Nanmutang Village, Xielingang Town, Chaoyang District, Yiyang City, Hunan Province, the PRC Sub-Total	RMB130,400,000 (equivalent to approximately HK$160,000,000) 44.587% RMB58,100,000 (equivalent to approximately HK$71,300,000) the Group in the PRC for self-occupation purpose RMB14,100,000 (equivalent to approximately HK$17,300,000) 44.587% RMB6,300,000 (equivalent to approximately HK$7,700,000) RMB35,000,000 (equivalent to approximately HK$43,000,000) 44.587% RMB15,600,000 (equivalent to approximately HK$19,200,000) RMB49,100,000 (equivalent to approximately HK$60,300,000) RMB21,900,000 (equivalent to approximately HK$26,900,000)	RMB58,100,000 (equivalent to approximately HK$71,300,000)
		RMB21,900,000 (equivalent to approximately HK$26,900,000)

– V-4 –

APPENDIX V

VALUATION REPORT

Market Value in existing state to be attributable to the Market Value in Interest to be Group after existing state as at attributable Completion as at Property 31 October 2015 to the Group 31 October 2015

Group III – Property interest to be held by the Group in the PRC for investment purpose

1. Unit 1511, Level 15, Chengshi No commercial 44.587% No commercial Dongli, No. 57 Shaoshan Road, Value Value Yuhua District, Changsha City, Hunan Province, the PRC

Grand Total RMB179,500,000 (equivalent to approximately HK$220,300,000)

RMB80,000,000 (equivalent to approximately HK$98,200,000)

– V-5 –

APPENDIX V

VALUATION REPORT

VALUATION CERTIFICATE

Group I – Property interest to be held by the Group in the PRC for further development purpose

Market Value in existing state as at Property Description and Tenure Particulars of Occupancy 31 October 2015 1. A land parcel located The property comprises a The property was a clear RMB130,400,000 on the eastern side of parcel of vacant land site as at the date of (equivalent to Xitong Road, Yunxi with a site area of valuation. approximately Economic approximately HK$160,000,000) Development Centre, 127,208.431 sq.m. Miyun Economic Interest to be Development Zone, The land use rights of the attributable to Beijing City, the PRC property were granted the Group for a term expiring on 13 May 2063 for industrial 44.587% use. Market Value in existing state to be attributable to the Group after Completion as at 31 October 2015

RMB58,100,000 (equivalent to approximately HK$71,300,000)

Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract (Document No.: 110228013B0046) entered into between the State-owned Land Resources Bureau of Miyun County of Beijing City (Party A) and Zhongke Hengyuan Technology Co., Ltd. (Party B) dated 14 May 2013, the land use rights of the property with a site area of approximately 127,208.431 sq.m. were granted from Party A to Party B for a term of 50 years commencing on the date of the contract at a consideration of RMB61,750,000 for industrial use. The relevant development limitations of the land parcel of the property are summarized as below:

Permitted Land Use : Industrial Plot Ratio : Less than or equal to 1.3 Height Restriction : Less than or equal to 24 m Total Gross Floor Area : Less than or equal to 165,371 sq.m. Site Coverage : Less than or equal to 40% Greenery Ratio : Not less than 15%

1. Pursuant to a State-owned Land Use Certificate (Document No.: Jingmi Guo Yong (2013 Chu) No. 00100), the land use rights of the property with a site area of approximately 127,208.431 sq.m. were granted to Zhongke Hengyuan Technology Co., Ltd. for a term expiring on 13 May 2063 for industrial use.

– V-6 –

APPENDIX V

VALUATION REPORT

1. The Property was inspected by our Mr. Cris Chan Kwan Lok (BSc) on 16 November 2015.

2. According to the information provided by the Company, Zhongke Hengyuan Technology Co., Ltd. is a company established under the laws of the PRC.

3. The property is situated in the Miyun Economic Development Zone, buildings in the locality are low to medium rise industrial complexes mainly occupied for light manufacturing businesses. It takes about 15-minute driving distance to the downtown of Miyun County and takes about an hour driving distance to Beijing downtown. Taxis and buses are accessible to the property.

4. The average unit price of similar industrial land parcel in the locality as at the date of valuation is in the range of RMB400 per sq.m. to RMB750 per sq.m.

5. We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Jun He Law Offices, which contains, inter alia, the following information:

6. (a) The land use rights of the property were granted to Zhongke Hengyuan Technology Co., Ltd., who is entitled to occupy, transfer, lease and mortgage the property; and

7. (b) The property is subject to a mortgage in favour of Bank of Beijing Co., Ltd. (Miyun Branch) for a maximum loan amount of RMB90,000,000.

– V-7 –

APPENDIX V

VALUATION REPORT

VALUATION CERTIFICATE

Group II – Property interests to be held by the Group in the PRC for self-occupation purpose

Market Value in existing state as at Property Description and Tenure Particulars of Occupancy 31 October 2015 2. A land parcel, The property comprises a The property was RMB14,100,000 buildings and parcel of land together owner-occupied for (equivalent to structures located at with 2 single to 3-storey industrial and ancillary approximately No. 5 Qingshan Road, buildings completed in uses as at the date of HK$17,300,000) Baotou about 2009 erected valuation. Manufacturing Zone, thereon. Interest to be Baotou City, Inner attributable to Mongolia The site area and total the Group Autonomous Region, gross floor area of the the PRC property are 44.587% approximately 36,012.27 sq.m. and 5,082.14 sq.m. Market Value in respectively. existing state to be attributable to The land use rights of the the Group after property were granted Completion as at for a term expiring on 22 31 October 2015 February 2062 for industrial use. RMB6,300,000 (equivalent to approximately HK$7,700,000)

Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract (Document No.: (Meng) 0008370) entered into between the State-owned Land Resources Bureau of Baotou City (Party A) and Inner Mongolia Zhongke Hengyuan New Energy Science and Technology Co., Ltd. (Party B) dated 22 February 2012, the land use rights of the property with a site area of approximately 36,012.27 sq.m. were granted from Party A to Party B for a term of 50 years commencing on the date of the handover of the land parcel of the property at a consideration of RMB9,368,231.92 for industrial use. The relevant development limitations of the land parcel of the property are summarized as below:

Permitted Land Use : Industrial Plot Ratio : Less than or equal to 1 Height Restriction : Less than or equal to 24 m Site Coverage : Less than or equal to 42% Greenery Ratio : Not less than 20%

1. Pursuant to a State-owned Land Use Certificate (Document No.: Bao Guo Yong (2012) No. 400008), the land use rights of the property with a site area of approximately 36,012.27 sq.m. were granted to Inner Mongolia Zhongke Hengyuan New Energy Science and Technology Co., Ltd. for a term expiring on 22 February 2062 for industrial use.

– V-8 –

APPENDIX V

VALUATION REPORT

1. According to the information provided by the Company, the property comprises 2 single to 3-storey buildings completed in about 2009 with a total gross floor area of approximately 5,082.14 sq.m. without Building Ownership Certificates.

2. In the course of our valuation, we have ascribed no commercial value to the buildings stated in Note 3 due to the absence of the Building Ownership Certificates, hence they are not entitled to be transferred, leased and mortgaged.

However, for indicative purpose, the depreciated replacement costs of the buildings of the property as at the date of valuation is RMB6,700,000 (equivalent to approximately HK$8,200,000) by assuming that the buildings have obtained the relevant title documents and are legal transferrable in the market.

1. The Property was inspected by our Mr. Cris Chan Kwan Lok (BSc) on 17 November 2015, the external and internal conditions of the buildings of the property were reasonable.

2. According to the information provided by the Company, Inner Mongolia Zhongke Hengyuan New Energy Science and Technology Co., Ltd. is a company established in the PRC which is a wholly-owned subsidiary of Zhongke Hengyuan Technology Co., Ltd.

3. The property is situated along Qingshan Road, buildings in the locality are low to medium rise industrial complexes mainly occupied for light and heavy manufacturing businesses. It takes about 15-minute driving distance to Baotou downtown. Taxis and buses are accessible to the property.

4. The average unit price of similar industrial land parcel in the locality as at the date of valuation is in the range of RMB350 per sq.m. to RMB400 per sq.m..

5. We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Jun He Law Offices, which contains, inter alia, the following information:

6. (a) the land use rights of the property were granted to Inner Mongolia Zhongke Hengyuan New Energy Science and Technology Co., Ltd., who is entitled to occupy, transfer, lease and mortgage the land portion of the property;

7. (b) The buildings stated in Note 3 is entitled to be transferred, leased and mortgaged once the relevant Building Ownership Certificates were obtained; and

8. (c) The property is free from any mortgages, charges and legal encumbrances which may cause adverse effects on the ownership of the property.

– V-9 –

APPENDIX V

VALUATION REPORT

VALUATION CERTIFICATE

Property

Market Value in existing state as at Description and Tenure Particulars of Occupancy 31 October 2015

1. A land parcel, The property comprises a The property was RMB35,000,000 buildings and parcel of land together owner-occupied for (equivalent to structures located at with 8 single to 3-storey industrial and ancillary approximately Nanmutang Village, buildings completed in uses as at the date of HK$43,000,000) Xielingang Town, between 2008 and 2014 valuation. Chaoyang District, erected thereon. Interest to be Yiyang City, Hunan attributable to Province, the The site area and total the Group PRC gross floor area of the property are 44.587% approximately 64,725.44 sq.m. and 12,684.20 sq.m. Market Value in respectively. existing state to be attributable to

The land use rights of the Group after the property were Completion as at granted for a term 31 October 2015 expiring on 27 December 2057 for RMB15,600,000 industrial use. (equivalent to approximately

HK$19,200,000)

Notes:

1. Pursuant to a Transaction Confirmation Contract (Document No.:Gua Zhen Zi (2007) No.48) entered into between the State-owned Land Resources Bureau of Yiyang City (Party A) and Hunan Zhongke Hengyuan Wind Power Industry Technology Co., Ltd. (now known as Zhongke Hengyuan (Yiyang) New Energy Science and Technology Co., Ltd. (Party B) dated 27 December 2007, the land use rights of the property with a site area of approximately 64,725.44 sq.m. were granted from Party A to Party B for a term of 50 years commencing on the date of the handover of the land parcel of the property at a consideration of RMB13,500,000.00 for industrial use. The relevant development limitations of the land parcel of the property are summarized as below:

Permitted Land Use : Industrial Plot Ratio : Less than or equal to 1.2 Site Coverage : Less than or equal to 40% Greenery Ratio : Not less than 30%

1. Pursuant to a State-owned Land Use Certificate (Document No.: Yi Guo Yong (2013) No. D01975), the land use rights of the property with a site area of approximately 64,725.44 sq.m. were granted to Zhongke Hengyuan (Yiyang) New Energy Science and Technology Co., Ltd. for a term expiring on 27 December 2057 for industrial use.

– V-10 –

APPENDIX V

VALUATION REPORT

1. According to 3 Building Ownership Certificates, the ownerships of 3 buildings of the property with a total gross floor area of approximately 9,097.49 sq.m. are vested in Zhongke Hengyuan (Yiyang) New Energy Science and Technology Co., Ltd.. The particulars are as follows:

Building Ownership Certificates Designed Use (Documents Nos.) Yi Fang Quan Zheng Chao Yang Zi No. 713008492 Composite Building Yi Fang Quan Zheng Chao Yang Zi No. 713008493 Workshop Yi Fang Quan Zheng Chao Yang Zi No. 713008490 Office Total	Approximate Gross Floor Area Year of Completeion (sq.m.) 1,637.15 2008 5,800.38 2008 1,659.96 2010 9,097.49

1. According to the information provided by the Company, the property comprises 5 single to 3-storey buildings completed in between 2010 and 2014 with a total gross floor area of approximately 3,591.71 sq.m. without Building Ownership Certificates.

2. In the course of our valuation, we have ascribed no commercial value to the buildings stated in Note 4 due to the absence of the Building Ownership Certificates, hence they are not entitled to be transferred, leased and mortgaged.

However, for indicative purpose, the depreciated replacement costs of these buildings of the property as at the date of valuation is RMB2,600,000 (equivalent to approximately HK$3,200,000) by assuming that the buildings have obtained the relevant title documents and are legal transferrable in the market.

1. The property was inspected by Mr Lawrence Chan Ka Wah (MRICS MHKIS RPS (GP) MHIREA) and Mr Lee Tung Sing (MSc) on 19 November 2015, the external and internal conditions of the property were reasonable.

2. According to the information provided by the Company, Zhongke Hengyuan (Yiyang) New Energy Science and Technology Co., Ltd. is a company established in the PRC and is wholly-owned by Zhongke Hengyuan Technology Co., Ltd.

3. The property is situated at the junction between Gaoxin Road and Nanzhu Road, buildings in the locality are low to medium rise industrial complexes mainly occupied for light manufacturing businesses. It takes about 10-minute driving distance to Yiyang downtown. Taxis and buses are accessible to the property.

4. The average unit price of similar industrial land parcel in the locality as at the date of valuation is in the range of RMB300 per sq.m. to RMB400 per sq.m..

5. We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Jun He Law Offices, which contains, inter alia, the following information:

6. (a) The land use rights of the property were granted to Zhongke Hengyuan (Yiyang) New Energy Science and Technology Co., Ltd. and its subsidiaries, who is entitled to occupy,, transfer, lease and mortgage the land use rights of the property;

7. (b) The current registered owner of the buildings stated in Note 3 of the property is Zhongke Hengyuan (Yiyang) NewEnergy Science and Technology Co., Ltd., who is entitled to occupy, transfer, lease and mortgage these buildings of the property;

8. (c) The buildings stated in Note 4 are entitled to be transferred, leased and mortgaged once the relevant Building Ownership Certificates were obtained; and

9. (d) The property is free from any mortgages, charges and legal encumbrances which may cause adverse effects on the ownership of the property.

– V-11 –

APPENDIX V

VALUATION REPORT

VALUATION CERTIFICATE

Group III – Property interest to be held by the Group in the PRC for investment purpose

Market Value in existing state as at Property Description and Tenure Particulars of Occupancy 31 October 2015 4. Unit 1511, Level 15 The property comprises a The property was vacant No Commercial Floor, Chengshi unit on Level 15 of a as at the date of Value Dongli No. 57 26-storey (including a valuation. Shaoshan Road, single-storey basement) Interest to be Changsha City, residential/commercial attributable to Yuhua District, uses building completed the Group Hunan Province, the in about 2006. PRC 44.587% The property has a gross floor area of Market Value in approximately 114.64 existing state to sq.m.. be attributable to the Group after The land use rights of the Completion as at property were granted 31 October 2015 for a term expiring on 19 No Commercial May 2055 for Value commercial/ residential uses.

Notes:

1. Pursuant to a Commodity House Sales and Purchase Agreement entered into by and between Qinlong (Hunan) Real Estate Development Co., Ltd. (Party A) and Hunan Zhongke Hengyuan Technology Co., Ltd. (now known as Zhongke Hengyuan Technology Co., Ltd.) (Party B) dated 21 October 2008. the property with a gross floor area of approximately 114.64 sq.m., was transferred from Party A to Party B at a consideration of RMB678,000.

2. In the course of our valuation, we have ascribed no commercial value to the property due to the absence of the Building Ownership Certificate. For indicative purpose, the market value of the property is RMB 660,000 (equivalent to approximately HK$810,000) as at the date of valuation by assuming it has obtained the relevant legal title documents and is freely transferable in the market.

3. The property was inspected by Mr Lawrence Chan Ka Wah (MRICS MHKIS RPS (GP) MHIREA) and Mr Lee Tung Sing (MSc) on 19 November 2015, the external and internal conditions of the property were reasonable.

4. According to the information provided by the Company, Zhongke Hengyuan Technology Co., Ltd. is a company established under the laws of the PRC.

5. The property is situated along Shaoshan Road, buildings in the locality are medium to high-rise commercial buildings and residential buildings. It takes about 10-minute driving distance to Changsha Station. Taxis and buses are accessible to the property.

6. The average unit price of similar residential/commercial premises in the locality as at the date of valuation is in the range from RMB4,900 per sq.m. to RMB6,500 per sq.m. in gross floor area. The average monthly unit rent in gross floor area of similar residential/commercial premises in the locality as at the date of valuation is in the range from RMB18 per sq.m. to RMB20 per sq.m. (exclusive of management fee and other operating outgoings).

– V-12 –

APPENDIX V

VALUATION REPORT

1. We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Jun He Law Offices, which contains, inter alia, the following information:

2. (a) The property is entitled to be transferred, leased and mortgaged once the relevant Building Ownership Certificate was obtained; and

3. (b) The property is free from any mortgages, charges and legal encumbrances which may cause adverse effects on the ownership of the property.

– V-13 –

APPENDIX VI

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(a) Directors’ and Chief Executive’s Interests and Short Positions

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive in the Shares, underlying Shares and debentures of the Company or 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 and short positions which he is taken or deemed to have under such provisions of SFO), or as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) in the Listing Rules were as follows:

(i) Interests in underlying Shares

				Approximate
				percentage of
				shareholding
			Number of	upon fully
			share options	exercise of
			outstanding as at	share options as
		Date of share	the Latest	at the Latest
Name of Director	Nature of interest	options granted	Practicable Date	Practicable Date
		(Note 1)
Liu Wen Ping	Beneficial owner	8 October 2014	60,000,000	0.61%
Chang Hoi Nam	Beneficial owner	8 October 2014	2,000,000	0.02%
Ma Ji	Beneficial owner	18 June 2015	4,000,000	0.04%
Chang Tat Joel	Beneficial owner	11 November 2014	2,000,000	0.02%
Miu Hon Kit	Beneficial owner	8 October 2014	1,000,000	0.01%
Wang Haisheng	Beneficial owner	8 October 2014	1,000,000	0.01%
Lu Hongda	Beneficial owner	11 November 2014	1,000,000	0.01%

– VI-1 –

APPENDIX VI

GENERAL INFORMATION

Note 1:

The share options were granted pursuant to the share option scheme (the “Share Option Scheme”) adopted by the Company pursuant to a shareholders’ resolution of the Company passed on 22 July 2009. The periods and the manner in which the granted share options could be exercised under the Share Option Scheme are as follows:

Exercise period	Number of options exercisable
from 1st anniversary of the date of grant to	Up to 25% of the total number of
2nd anniversary of the date of grant	granted options
from 2nd anniversary of the date of grant to	Up to 25% of the total number of
3rd anniversary of the date of grant	granted options
from 3rd anniversary of the date of grant to	Up to 25% of the total number of
4th anniversary of the date of grant	granted options
from 4th anniversary of the date of grant to	Up to 25% of the total number of
5th anniversary of the date of grant	granted options

As at the Latest Practicable Date, save as disclosed above, none of the Directors and the chief executive of the Company had registered an interest or a short position in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of 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 and short positions which he is taken or deemed to have under such provisions of SFO), or, as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

(b) Substantial Shareholders’ Interest

As at the Latest Practicable Date, so far as is known to any Directors or the chief executive of the Company, the following persons (other than the Directors or the chief executive of the Company) had interests or short positions in the Shares or underlying Shares of the Company as recorded in the register kept by the Company pursuant to section 336 of the SFO 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 any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

– VI-2 –

APPENDIX VI

GENERAL INFORMATION

		Number of
		Shares or
		underlying	Percentage of
Name	Nature of interest	Shares held	Shareholding(3)
Golden Port Holdings Limited	Deemed interest in	5,855,820,000	59.83%
	controlled corporation(1)
Pohua JT Capital Partners Limited	Deemed interest in	5,855,820,000	59.83%
	controlled corporation(1)
Pohua JT Private Equity Fund L.P.	Beneficial owner(1)	5,855,820,000	59.83%
Zhejiang Province Finance	Deemed interest in	1,125,000,000	11.49%
Development Company*	controlled corporation(2)
浙江省財務開發公司
Zhejiang Province Financial	Deemed interest in	1,125,000,000	11.49%
Holding Company Limited*	Controlled corporation(2)
浙江省金融控股公司
Caitong Securities Co., Limited	Deemed interest in	1,125,000,000	11.49%
	Controlled corporation(2)
Caitong Securities (Hong Kong)	Deemed interest in	1,125,000,000	11.49%
Co., Limited	Controlled corporation(2)
Caitong International Asset	Deemed interest in	1,125,000,000	11.49%
Management Co., Limited	controlled corporation(2)
Caitong International Capital	Beneficial owner(2)	1,125,000,000	11.49%
Management Limited

• The English translation of these companies’ names is for reference only. The official names of these companies are in Chinese.

Notes:

• (1) Pohua JT Capital Partners Limited is the general partner of Pohua JT Private Equity Fund L.P.. Pohua JT Capital Partners Limited is owned as to 49% by Golden Port Holdings Limited. Accordingly, each of Golden Port Holdings Limited and Pohua JT Capital Partners Limited is deemed to be interested in an aggregate of 5,855,820,000 shares held by Pohua JT Private Equity Fund L.P..

• (2) Caitong International Capital Management Limited is wholly-owned by Caitong International Asset Management Co., Limited which in turn is wholly-owned by Caitong Securities (Hong Kong) Co., Limited. Caitong Securities Co., Limited owned 100% equity interests of Caitong Securities (Hong Kong) Co., Limited, which in turn is owned as to 36.6% by Zhejiang Province Financial Holding Company Limited. Zhejiang Province Financial Holding Company Limited is wholly-owned by Zhejiang Province Finance Development Company. Accordingly, each of Zhejiang Province Finance Development Company, Zhejiang Province Financial Holding Company Limited, Caitong Securities Co., Limited, Caitong Securities (Hong Kong) Co., Limited and Caitong International Asset Management Co., Limited is deemed to be interested in an aggregate of 1,125,000,000 shares held by Caitong International Capital Management Limited.

• (3) The percentage represents the number of ordinary shares interested divided by the number of the Company’s issued shares as at the Latest Practicable Date.

– VI-3 –

APPENDIX VI

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, so far as known to any Director or the chief executive of the Company, no other person (other than the Directors or the chief executive of the Company) had an interest or short position in the Shares or underlying Shares of the Company which were recorded in the register kept by the Company pursuant to section 336 of the SFO 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 was directly or indirectly, interested in 10% or more of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

Save as disclosed above, the Company has not been notified of any other relevant interests or short positions in the issued share capital of the Company as at the Latest Practicable Date.

3. DIRECTORS’ SERVICE CONTRACTS

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

4. DIRECTORS’ INTEREST IN ASSETS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors had any interest, either directly or indirectly, in any asset which has since 31 December 2014 (being the date to which the latest published audited consolidated financial statements of the Group were made up), up to the Latest Practicable Date, been 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.

5. DIRECTORS’ INTEREST IN CONTRACT OR ARRANGEMENT OF SIGNIFICANCE

As at the Latest Practicable Date, no Director and/or his/her respective close associates had a material interest, either directly or indirectly, in any subsisting contract or arrangement of significance to the business of the Group to which the Company or any of its subsidiaries was a party.

6. COMPETING INTERESTS

As at the Latest Practicable Date, as far as the Directors are aware, none of the Directors nor their respective close associates is and was interested in any business which competes or may compete, either directly or indirectly, with the business of the Group.

7. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was involved in any litigation or arbitration of material importance and 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.

– VI-4 –

APPENDIX VI

GENERAL INFORMATION

8. EXPERTS AND CONSENTS

The following is the qualification of the experts who have given opinion or advice which is contained in this circular:

Name Qualifications Grant Sherman Appraisal Limited Professional Valuers

KPMG Certified Public Accountants

As at the Latest Practicable Date, each of the experts named above (i) had no shareholding in any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group; (ii) had no direct or indirect interest in any assets which had been, since 31 December 2014 (the date to which the latest published audited consolidated financial statements of the Group were made up), acquired, disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of by, or leased to any member of the Group; and (iii) has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter or report and the reference to its name included herein in the form and context in which it appears.

9. MATERIAL CONTRACTS

The following material contracts (not being contracts in the ordinary course of business) have been entered into by members of the Group within the two years preceding the date of this circular and up to the Latest Practicable Date and are or may be material:

• (a) the Acquisition Agreement;

• (b) the acquisition agreements dated 23 December 2015 between Kong Sun Yongtai, as purchaser, 江蘇超先電力有限公司 (Jiangsu Chaoxian Power Company Limited) and its subsidiaries as vendors, pursuant to which Kong Sun Yongtai agreed to acquire the 100% equity interests of 合肥流遠光伏發電投資有限公司 (Hefei Liuyuan Photovoltaic Power Generation Investment Company Limited), 六安旭強新能源工程有限公司 (Luan Xuqiang New Energy Engineering Company Limited) and 宿州旭強新能源工程有限公司 (Suzhou Xuqiang New Energy Engineering Company Limited), at a total consideration of RMB480,500,000;

• (c) the acquisition agreements dated 15 December 2015 between Kong Sun Yongtai, as purchaser, 中利科技集團股份有限公司 (Zhongli Sci-Tech Group Company Limited) and its subsidiaries as vendors, pursuant to which Kong Sun Yongtai agreed to acquire the 100% equity interests of 貴溪市中元太陽能電 力有限公司 (Guixi City Zhongyuan Solar Power Company Limited) and 湖州 祥暉光伏發電有限公司 (Huzhou Xianghui Photovoltaic Power Generation Company Limited*), at a total consideration of RMB1,285,000,000;

– VI-5 –

APPENDIX VI

GENERAL INFORMATION

• (d) the strategic co-operation agreement dated 20 November 2015 with 華夏金融 租賃有限公司 (Huaxia Financial Leasing Co., Ltd.*) (“Huaxia”) pursuant to which Huaxia has in principle agreed to provide financing, of up to an aggregate amount of RMB3 billion, to the Group for the development of and future acquisitions of photovoltaic power system projects by the Group, subject to signing definitive agreements with respect to the specific projects. On 12 November 2015 and 20 November 2015, the Group had entered into three finance lease agreements with Huaxia in an aggregate finance lease amount of RMB480 million under the strategic co-operation agreement;

• (e) the loan agreement dated 19 November 2015 between the Company and Pohua, pursuant to which Pohua agreed to grant the a 3 year term loan in the aggregate principal amount of HK$1,500,000,000 to the Company at an interest rate of 5.8% per annum;

• (f) the referral agreement dated 28 April 2015 between the Company and China Times Securities Limited (the “Referral Agent”) pursuant to which the Referral Agent agreed to act as a referral agent for the purposes of referring subscribers to the Company, on a best effort basis, for the issue of the Bonds in an aggregate principal amount of up to HK$400,000,000. A supplemental referral agreement (the “Supplemental Referral Agreement”) dated 30 October 2015 between the Company and the Referral Agent pursuant to which the parties agreed to extend the agreement for another three months and increase the aggregate principal amount to HK$550,000,000);

• (g) the cooperative framework agreement dated 9 October 2015 between Kong Sun Yongtai (the “Purchaser”), 無錫聯盛合衆新能源有限公司 (Wuxi Unisun Energy Co., Ltd.) (“Wuxi Unisun”) and 江蘇天海光電科技有限公司 (Jiangsu Tihein Photovoltaic Technology Co., Ltd) (“Jiangsu Tihein”, together with Wuxi Unisun, the “Vendors”), pursuant to which the Purchaser agreed to acquire from the Vendors the entire equity interests in 威縣天海光伏發電有限 公司 (Weixian Tihein Photovoltaic Energy Co., Ltd.) at the consideration of RMB255,000,000;

• (h) the cooperation agreement dated 2 October 2015 between Kong Sun Yongtai, 新疆中興能源有限公司 (Xinjiang Zhongxing Energy Co., Ltd.) and 江天新能源 貿易（揚州）有限公司 (Kong Sun New Energy Trading (Yangzhou) Co., Ltd.) pursuant to which Kong Sun Yongtai will acquire the entire registered capital and assume the debts of 阿圖什市華光能源有限公司 (Artux Huaguang Energy Co., Ltd.) and 阿圖什市興光能源有限公司 (Artux Xingguang Energy Co., Ltd.) from 新疆中興能源有限公司 (Xinjiang Zhongxing Energy Co., Ltd.); and 江天新能源貿易（揚州）有限公司 (Kong Sun New Energy Trading (Yangzhou) Co., Ltd.), a wholly-owned subsidiary of the Company, would takeover the purchase and transfer of the materials and equipment required for the two 30 MW photovoltaic power stations being developed by the 阿圖什 市華光能源有限公司 (Artux Huaguang Energy Co., Ltd.) and 阿圖什市興光能 源有限公司 (Artux Xingguang Energy Co., Ltd.) in Artux, Xinjiang Province;

– VI-6 –

APPENDIX VI

GENERAL INFORMATION

• (i) the memorandum of understanding dated 30 September 2015 between the Company and 中建投信託有限責任公司 (JIC Trust Co., Ltd.*) pursuant to which the parties agreed to identify certain photovoltaic power system projects of the Group located in Gansu, Xinjiang and Shaanxi provinces, the PRC as the target projects (collectively, the “Target PV Projects”) and to cooperate with each other for the development of the Target PV Projects, and establish one or more trust(s) for the purpose of providing financing, up to an amount of RMB1 billion, to the Company for the purpose of the development of the Target PV Projects;

• (j) the cooperation agreement dated 22 July 2015 by and among Kong Sun New Energy (Hong Kong) Limited (江山新能源（香港）有限公司), 湖北京山輕工機械 股份有限公司 (J.S. Corrugating Machinery Co., Ltd), 深圳市雄韜電源科技股份 有限公司 (Shenzhen Centre Power Tech Co., Ltd.), BD Technology Limited and 深圳雄韜融資租賃有限公司 (Shenzhen XiongTao RongZi ZuLin Co., Ltd.) in relation to the cooperation of the development for 深圳雄韜融資租賃有限公司 (Shenzhen XiongTao RongZi ZuLin Co., Ltd.);

• (k) the equity transfer agreement dated 22 July 2015 by and among Kong Sun New Energy (Hong Kong) Limited (江山新能源（香港）有限公司) and 深圳市雄 韜電源科技股份有限公司 (Shenzhen Centre Power Tech Co., Ltd.) in relation to the acquisition of 30% equity interests in 深圳雄韜融資租賃有限公司 (Shenzhen XiongTao RongZi ZuLin Co., Ltd.*) from 深圳市雄韜電源科技股份 有限公司 (Shenzhen Centre Power Tech Co., Ltd.) by Kong Sun New Energy (Hong Kong) Limited (江山新能源（香港）有限公司);

• (l) the equity transfer agreement dated 22 July 2015 by and among Kong Sun New Energy (Hong Kong) Limited (江山新能源（香港）有限公司) and BD Technology Limited in relation to the acquisition of 25% equity interests in 深 圳雄韜融資租賃有限公司 (Shenzhen XiongTao RongZi ZuLin Co., Ltd.*) from BD Technology Limited by Kong Sun New Energy (Hong Kong) Limited (江山 新能源（香港）有限公司);

• (m) the legally binding memorandum of understanding dated 12 July 2015 entered into between the Company and all of the shareholders of the Target Company in relation to the Acquisition;

• (n) the sale and purchase agreement dated 15 June 2015 between Lead Power Investments Limited and Marvel Star Group Limited in relation to the sale of the 100,000 shares in Coast Holdings Limited to Marvel Star Group Limited, completion took place on 30 June 2015;

• (o) the strategic cooperation agreement dated 7 June 2015 between the Company, 江蘇綠能寶融資租賃有限公司 (Jiangsu Solarbao Finance Lease Co., Ltd.*) (“Solarbao”) pursuant to which Solarbao agreed to provide finance lease services to the photovoltaic power system projects of the Group in the People’s Republic of China;

– VI-7 –

APPENDIX VI

GENERAL INFORMATION

• (p) the contract for equity transaction (產權交易合同) dated 5 June 2015 in respect of the acquisition of the 蘭州太科光伏電力有限公司 (Lanzhou Taike Photovoltaic Power Co., Ltd.) from 上海航天汽車機電股份有限公司 (Shanghai Aerospace Automobile Electromechanical Co., Ltd.), under the bid (listing-for-sale) process entered into between 上海航天汽車機電股份有限公司 (Shanghai Aerospace Automobile Electromechanical Co., Ltd.*) and Kong Sun Yongtai;

• (q) the memorandum of understanding dated 26 May 2015 between Kong Sun Yongtai and 正信光伏有限公司 (Zhengxin Photovoltaic Company Limited*) (“Zhengxin”) pursuant to which Kong Sun Yongtai will acquire the photovoltaic power projects being developed and/or owned by Zhengxin in Xinjiang, Inner Mongolia, Hubei, Shanxi, Shandong, Henan, Liaoning and Anhui provinces in the PRC with an aggregated installed capacity of 324 mega-watts. Kong Sun Yongtai will conduct due diligence on the relevant power projects upon their completion of development and connection to the power grid;

• (r) the acquisition agreement dated 5 May 2015 between Kong Sun Yongtai, as purchaser, 江蘇億晶光電能源有限公司 (Jiangsu Yijing Solar Energy Resources Co., Ltd.), as vendor, pursuant to which Kong Sun Yongtai agreed to acquire from 江蘇億晶光電能源有限公司 (Jiangsu Yijing Solar Energy Resources Co., Ltd.) the entire equity interest in 和靜旭雙太陽能科技有限公司 (Hejing Xushuang Photovoltaic Technology Co., Ltd.*) at the consideration of RMB193,600,000;

• (s) the memorandum of understanding dated 28 April 2015 between the Company and Smart Capital Investment Co., Ltd. (北京新興嘉本投資管理有限 公司) under which Smart Capital Investment Co., Ltd. (北京新興嘉本投資管理 有限公司) proposed to, through a private fund managed by it, subscribe for convertible bonds of the Company with an aggregate amount of RMB400 million;

• (t) the placing agreement dated 28 April 2015 between the Company as issuer, China International Capital Corporation Hong Kong Securities Limited, First Shanghai Securities Limited, Kingston Securities Limited and UOB Kay Hian (Hong Kong) Limited as placing agents, completion took place on 11 June 2015;

• (u) the placing agreement dated 23 March 2015 between the Company, Kingston Securities Limited, Haitong International Securities Company Limited and UOB Kay Hian (Hong Kong) Limited as the placing agents in relation to the placing of 352,000,000 new Shares to not less than six placees at the placing price of HK$1.07 per placing share (the “2015 March Placing”). The 2015 March Placing was completed on 10 April 2015;

– VI-8 –

APPENDIX VI

GENERAL INFORMATION

• (v) the framework agreement dated 18 December 2014 between Kong Sun Yongtai and 世紀金源集團公司 (Century Golden Resources Ltd.) pursuant to which the parties agreed to cooperate on the development of distributed photovoltaic power system projects in the PRC;

• (w) the framework agreement dated 3 December 2014 between 禹城航禹太陽能科 技有限公司 (Yucheng Hangyu Solar Technology Co., Ltd.*) pursuant to which the parties agreed to cooperate in the development of distributed photovoltaic power system projects in the PRC;

• (x) the framework agreement dated 28 November 2014 between the Company and 無錫聯盛合衆新能源有限公司 (Wuxi Liansheng Hezhong New Energy Co., Ltd.*) pursuant to which the parties agreed to cooperate in the development of distributed photovoltaic power system projects in the PRC;

• (y) the agreement dated 7 November 2014 between the Company, 中科恒源科技股 份有限公司(Zhongke Hengyuan Technology Co., Ltd.) and 甘肅宏遠光電有限 責任公司 (Gansu Hongyuan Solar Electric Co., Ltd.) in relation to the acquisition of the entire equity interest in 甘肅宏遠光電有限責任公司(Gansu Hongyuan Solar Electric Co., Ltd.*);

• (z) the agreement dated 4 November 2014 between the Company, 深圳市洲際通商 投資有限公司 (Shenzhen Intercontinental Trading Investment Co., Ltd.) and 玉門市永聯科技新能源有限公司 (Yumen Yonglian Technology New Energy Co., Ltd.) in relation to the acquisition of 81% in the registered capital of 玉門市永 聯科技新能源有限公司 (Yumen Yonglian Technology New Energy Co., Ltd.*);

• (aa) the agreement dated 4 November 2014 between the Company, 北京恒源天泰能 源科技有限公司 (Beijing Hengyuan Tiantai Energy Technology Co., Ltd.) and 玉門市永聯科技新能源有限公司 (Yumen Yonglian Technology New Energy Co., Ltd.) in relation to the acquisition of 19% in the registered capital of 玉門市永 聯科技新能源有限公司 (Yumen Yonglian Technology New Energy Co., Ltd.*);

• (bb) the agreement dated 30 October 2014 between the Company, 北京恒源天泰能源 科技有限公司 (Beijing Hengyuan Tiantai Energy Technology Co., Ltd.), 新疆 中科恒源新能源科技有限公司 (Xinjiang Zhongke Hengyuan New Energy Technology Co., Ltd.) and 哈密朝翔新能源科技有限公司 (Hami Chaoxiang New Energy Technology Co., Ltd.) in relation to the acquisition of the entire equity interest in 哈密朝翔新能源科技有限公司 (Hami Chaoxiang New Energy Technology Co., Ltd.);

• (cc) the framework agreement dated 24 October 2014 between the Company, Kong Sun Yongtai and 北京龍晋海峰投資管理有限公司 (Beijing Longjin Haifeng Investment Management Co., Ltd.*) (“Longjin Haifeng”) pursuant to which the parties agreed to cooperate in the establishment of an investment fund to invest in the photovoltaic power stations projects of the Group in the PRC;

– VI-9 –

APPENDIX VI

GENERAL INFORMATION

• (dd) the framework agreement dated 4 September 2014 between Kong Sun Yongtai and 海潤光伏科技股份有限公司 (Hareon Solar Technology Co., Ltd.*) (“Hareon”) pursuant to which the parties agreed to cooperate in the development of photovoltaic power stations in the PRC;

• (ee) the agreement dated 7 July 2014 entered into between the Company, 江山新能 源投資（揚州）有限公司 (Kong Sun New Energy Investment (Yangzhou) Co., Ltd.), a wholly-owned subsidiary of the Company, BYD Auto Industry Co., Ltd. and 榆林市比亞迪新能源有限公司 (Yulin City BYD New Energy Co., Ltd.), pursuant to which Kong Sun New Energy Investment (Yangzhou) Co., Ltd. agreed to acquire from BYD Auto Industry Co., Ltd. the entire equity interest in Yulin City BYD New Energy Co., Ltd., a project company engaged in the development of a 300 MW photovoltaic power station in Shaanxi Province, the PRC, for RMB204,000,000;

• (ff) the subscription agreement dated 28 May 2014 between the Company, Pohua JT Private Equity Fund L.P. pursuant to which Pohua JT Private Equity Fund L.P. agreed to subscribe in cash for 6,528,080,000 new Shares (the “Pohua Subscription”). The Pohua Subscription was completed on 8 August 2014;

• (gg) the agreement dated 30 April 2014 entered into between, among others, the Company, and the existing shareholders of a project company (the “Project Company”) which are independent third parties, whereby the Company agreed to acquire the entire equity interests in the Project Company from the existing shareholders of the Project Company for RMB570,000;

• (hh) the framework agreement dated 30 April 2014 entered into between the Company and 合肥聚能新能源科技有限公司 (Hefei Juneng New Energy Technology Co., Ltd.*), whereby the parties agreed to cooperate in the joint development of photovoltaic power stations in Anhui and Yunnan provinces with aggregate capacity of 261 MW;

• (ii) the cooperation agreement dated 29 April 2014 entered into between the Company, 張淑蘭 (Zhang Shu Lan) (the “Shareholder”), and 石家莊萬迪能源科 技有限公司 (Shijiazhuang Wandi Energy Technology Co Ltd*), and an intermediary agreement with the Shareholder, in relation a proposed acquisition of 50 MW photovoltaic power station in 臨城縣 (Lincheng county) in Hebei province;

• (jj) the non-binding memorandum of understanding dated 22 April 2014 entered into between the Company, the sellers which are independent third parties (the “Sellers”), and 埃菲生（玉門）太陽能發電有限責任公司 (Aifeisheng (Yumen) Solar Power Co., Ltd.*) (the “Target Company”), whereby the Company agreed to acquire from the Sellers all the equity interests in the Target Company;

– VI-10 –

APPENDIX VI

GENERAL INFORMATION

• (kk) the memorandum of understanding dated 29 March 2014 (the “MOU”) entered into between the Company and Pohua JT Private Equity Fund L.P., as investor (the “Investor”), whereby the Investor proposed to subscribe such number of Shares and/or convertible securities of the Company representing not less than 25% of the issued share capital of the Company as enlarged by the issue and/or conversion at a price of not more than HK$0.36 per Share; and

• (ll) the loan agreement dated 28 March 2014 entered into between Kong Sun Finance Limited, an indirect wholly-owned subsidiary of the Company, as lender (the “Kong Sun”) and a borrower who is an independent third party (the “Borrower”), whereby Kong Sun agreed to lend to the Borrower a loan in the principal amount of HK$20,000,000 for a period of three months from the date of drawdown at an interest rate of 9% per annum.

10. MISCELLANEOUS

• (a) The company secretary of the Company is Mr. Fung Che Wai, Anthony, who is a fellow member of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants;

• (b) The registered office and the principal place of business of the Company is at Unit 3601, 36/F China Resources Building, 26 Harbour Road, Wanchai, Hong Kong;

• (c) The share registrar of the Company is Computershare Hong Kong Investor Services Limited; and

• (d) This circular and the accompanying proxy form have been prepared in both English and Chinese. In the case of any discrepancies, the English texts shall prevail over their respective Chinese texts.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection (i) during normal business hours on any weekday (except for public holidays) at Unit 3601, 36/F China Resources Building, 26 Harbour Road, Wanchai, Hong Kong, from the date of this circular up to and including the date of the EGM:

• (a) the articles of associations of the Company;

• (b) the annual reports of the Company for the three years ended 31 December 2012, 2013 and 2014 and the interim report of the Company for the six months ended 30 June 2015;

• (c) the letter from the Board, the text of which is set out in page 5 to page 28 of this circular;

– VI-11 –

APPENDIX VI

GENERAL INFORMATION

• (d) the valuation report;

• (e) the report issued by KPMG relating to the financial information of the Target Group, the text of which is set out in Appendix II to this circular;

• (f) the report issued by KPMG relating to the unaudited pro-forma financial information of the Enlarged Group, the text of which is set out in Appendix IV to this circular;

• (g) the material contracts as referred to in the paragraph headed “Material contracts” in this appendix;

• (h) the written consents referred to in the paragraph headed “Experts and consents” in this appendix; and

• (i) a copy of each of the circulars issued pursuant to the requirements set out in Chapter 14 and/or Chapter 14A of the Listing Rules which have been issued by the Company since 31 December 2014 (the date to which the latest published audited consolidated financial statements of the Group were made up).

– VI-12 –

NOTICE OF EGM

KONG SUN HOLDINGS LIMITED 江山控股有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 295)

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “EGM”) of Kong Sun Holdings Limited (the “Company”) will be held at 9/F., Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong on 15 January 2016 at 11:00 a.m. for the purposes of considering and, if thought fit, passing, with or without amendments, the following resolution as the ordinary resolution of the Company:

ORDINARY RESOLUTION

Words and expressions that are not expressly defined in this notice shall bear the same meaning as that defined in the circular dated 30 December 2015 published by the Company (the “Circular”).

“ THAT ,

• i. the Acquisition Agreement (a copy of which has been tabled at the meeting marked “A” and signed by the chairman of the meeting for identification purpose) and all transactions contemplated thereunder, be and are hereby approved, ratified and confirmed; and

• ii. and any one Director be and is authorised to do all such things and take all such actions as he may consider necessary or desirable to implement and/or give effect to the Acquisition Agreement and all transactions contemplated thereunder.”

By order of the Board Kong Sun Holdings Limited Liu Wen Ping Executive Director

Hong Kong, 30 December 2015

– EGM-1 –

NOTICE OF EGM

Notes:

1. Any member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies (who must be an individual) to attend and, on a poll, vote in his stead. A proxy need not be a member of the Company.

2. 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 thereof must be lodged with the Company’s share registrar, Computershare Hong Kong Investors Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude a member from attending and voting in person at the meeting.

3. Where there are joint registered holders of any share, any one of such persons may vote at any meeting, either personally 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 any meeting personally or by proxy, that one of the said persons so present being the most or, as the case may be, the more senior shall alone be entitled to vote in respect of the relevant joint holding and, for this purpose, seniority shall be determined by reference to the order in which the names of the joint holders stand on the register of members in respect of the relevant joint holding.

As at the date of this notice, the Board comprises two executive Directors, Mr. Liu Wen Ping and Mr. Chang Hoi Nam, two non-executive Directors, Dr. Ma Ji and Mr. Chang Tat Joel, and three independent non-executive Directors, Mr. Miu Hon Kit, Mr. Wang Haisheng and Mr. Lu Hongda.

– EGM-2 –