Novautek Technologies Group Limited - Proxy Solicitation & Information Statement 2020

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 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.

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KONG SUN HOLDINGS LIMITED 江山控股有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 295)

(1) VERY SUBSTANTIAL DISPOSALS AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

A letter from the Board is set out on pages 11 to 64 of this circular.

A notice convening the extraordinary general meeting of the Company to be held at Unit 803–4, 8/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong on Tuesday, 21 January 2020 at 9:30 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 17M 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(s) of proxy will not preclude you from attending and voting in person at the EGM should you so wish.

6 January 2020

CONTENTS

		Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		11
Appendix I	— Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II-A	— Financial Information of Taike . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-A-1
Appendix II-B	— Financial Information of Huaguang . . . . . . . . . . . . . . . . . . . . . . . . . .	II-B-1
Appendix II-C	— Financial Information of Xingguang . . . . . . . . . . . . . . . . . . . . . . . . .	II-C-1
Appendix II-D	— Financial Information of Zhaoxiang . . . . . . . . . . . . . . . . . . . . . . . . . .	II-D-1
Appendix II-E	— Financial Information of Xushuang . . . . . . . . . . . . . . . . . . . . . . . . . .	II-E-1
Appendix II-F	— Financial Information of Minghui . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-F-1
Appendix II-G	— Financial Information of Xinhui . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-G-1
Appendix II-H	— Financial Information of Baoyuan . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-H-1
Appendix II-I	— Financial Information of Yunyang . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-I-1
Appendix II-J	— Financial Information of Angli . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-J-1
Appendix III	— Unaudited Pro Forma Financial Information of
	the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV	— Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V	— General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		EGM-1

– i –

DEFINITIONS

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

‘‘Angli’’ 定邊縣昂立光伏科技有限公司 (Dingbian Angli Solar Power Technology Co., Ltd.)*, a company established in the PRC and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date
‘‘Angli Agreement’’
the equity transfer agreement dated 5 December 2019 entered into by and among Guotou, the Vendor and Angli in relation to the Angli Disposal
‘‘Angli Completion Date’’
the date of issuing the new business license of Angli recording the transfer of the entire equity interest of Angli from the Vendor to Guotou
‘‘Angli Debt Consideration’’
the consideration payable by Guotou for the assignment of the Angli Shareholder’s Loan
‘‘Angli Disposal’’ the sale and transfer of the entire equity interest in Angli by the Vendor to Guotou
‘‘Angli Equity Consideration’’ the consideration payable by Guotou for the entire equity interest of Angli
‘‘Angli Project’’ a 100 MW solar power plant owned by Angli in Yulin City, Shanxi Province, PRC
‘‘Angli Shareholder’s Loan’’ the outstanding shareholder’s loan provided by the Vendor to Angli
‘‘Angli Transition Period Audit’’ an audit to be performed by an independent auditor with respect to the Angli Disposal from 31 July 2019 to the Angli Completion Date
‘‘Artux Huaguang Project’’
a 30 MW solar power plant owned by Huaguang in Artux, Xinjiang Uygur Autonomous Region, PRC
‘‘Artux Xingguang Project’’
a 30 MW solar power plant owned by Xingguang in Artux, Xinjiang Uygur Autonomous Region, PRC
‘‘Baoyuan’’
千陽縣寶源光伏電力開發有限公司 (Qianyang Baoyuan Photovoltaic Power Development Limited*), a company established in the PRC and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date
‘‘Baoyuan Agreement’’

the equity transfer agreement dated 15 November 2019 entered into by and among CNNP Shandong, Kong Sun Yongtai and Baoyuan in relation to the Baoyuan Disposal

– 1 –

DEFINITIONS

‘‘Baoyuan Disposal’’
the sale and transfer of the entire equity interest in Baoyuan by the Vendor and to CNNP Shandong
‘‘Board’’ the board of Directors
‘‘CDB Leasing’’ 國銀金融租賃股份有限公司 (China Development Bank Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability, the H-shares of which are listed on the Stock Exchange (stock code: 1606)
‘‘CITIC Finance’’
中信金融租賃有限公司 (CITIC Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability
‘‘CITIC Finance Lease’’
the finance lease agreement dated 3 March 2016 entered into by and among Angli, the Vendor and CITIC Finance
‘‘CNNP’’
中國核能電力股份有限公司 (China National Nuclear Power Co., Ltd.*), a company established in the PRC with limited liability, the shares of which are listed on the Shanghai Stock Exchange (stock code: 601985)
‘‘CNNP Disposal(s)’’
the Taike Disposal, the Huaguang Disposal, the Xingguang Disposal, the Zhaoxiang Disposal, the Xushuang Disposal, the Minghui Disposal, the Xinhui Disposal, the Baoyuan Disposal and/or the Yunyang Disposal (as the case may be)
‘‘CNNP Disposal Agreement(s)’’ the Taike Agreement, the Huaguang Agreement, the Xingguang Agreement, the Zhaoxiang Agreement, the Xushuang Agreement, the Minghui Agreement, the Xinhui Agreement, the Baoyuan Agreement and/or the Yunyang Agreement
‘‘CNNP Equity Consideration’’
‘‘CNNP Shandong’’
the Taike Equity Consideration, the Huaguang Equity Consideration, the Xingguang Equity Consideration, the Zhaoxiang Equity Consideration, the Xushuang Equity Consideration, the Minghui Equity Consideration, the Xinhui Equity Consideration, the Baoyuan Equity Consideration and the Yunyang Equity Consideration 中核山東能源有限公司 (CNNP Shandong Energy Co., Ltd.*), a company established in the PRC with limited liability
‘‘Company’’
Kong Sun Holdings Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange

– 2 –

DEFINITIONS

‘‘Conditions Precedent of Angli the conditions precedent to completion of the Angli Disposal’’ Disposal
‘‘connected person(s)’’
has the meaning ascribed to it under the Listing Rules
‘‘Deposit’’
the Taike Deposit, the Huaguang Deposit, the Xingguang Deposit, the Zhaoxiang Deposit, the Xushuang Deposit, the Minghui Deposit, the Xinhui Deposit, the Baoyuan Deposit and/or the Yunyang Deposit (as the case may be)
‘‘Designated Account’’
in respect of each CNNP Disposal Agreement, the bank account as may be designated by Kong Sun Yongtai or Junsheng Jingshi (as the case may be) to receive payment under such CNNP Disposal Agreement
‘‘Director(s)’’ the director(s) of the Company
‘‘EGM’’
the extraordinary general meeting of the Company to be convened and held for the purpose of considering and, if thought fit, approving the CNNP Disposal Agreements, the Angli Agreement and transactions contemplated thereunder
‘‘Escrow Account’’ in respect of each CNNP Disposal Agreement, the bank account to be jointly established and operated by Kong Sun Yongtai (or Junsheng Jingshi, as the case may be) and CNNP Shandong for holding the relevant Deposit pursuant to the terms of such CNNP Disposal Agreement
‘‘Feed-in-Tariff’’
the feed-in-tariff regime currently implemented by the PRC government in relation to the provision of subsidy to the solar power plant operators in the PRC by way of renewable energy subsidies

– 3 –

DEFINITIONS

‘‘First Payment Conditions’’
with respect to each CNNP Disposal, (i) where applicable, the relevant financing party (being CDB Leasing, Hayin Finance, Hebei Finance, Huaxia Finance or Sino Lease, as the case may be) having agreed to release the existing share pledge over the relevant Sale Equity Interest in respect of the relevant Project Company; (ii) the relevant Project Company having entered into written agreement(s) with the relevant contractors to settle outstanding amounts; (iii) the shareholder(s) of the relevant Project Company having passed the relevant resolution(s) for declaration of dividend in respect of the accumulated distributable profits up to the Reference Date; (iv) Kong Sun Yongtai and/or Junsheng Jingshi (as the case may be) having confirmed with the relevant Project Company in writing that there is no outstanding amount due by such Project Company to Kong Sun Yongtai, Junsheng Jingshi and/or their respective affiliates (as the case may be); and/or (v) the relevant CNNP Disposal Agreement becoming effective upon satisfaction of the conditions set forth under ‘‘Conditions Precedent of the CNNP Disposals’’ in the ‘‘Letter from the Board’’ in this circular
‘‘Group’’ the Company and its subsidiaries
‘‘Guotou’’
國投電力控股股份有限公司 (Guotou Electric Holding Co., Ltd.*), a company established in the PRC with limited liability, the shares of which were listed on Shanghai Stock Exchange (stock code: 600086)
‘‘Hami Zhaoxiang Project’’
a 20 MW solar power plant owned by Zhaoxiang in Hami, Xinjiang Uygur Autonomous Region, PRC
‘‘Hayin Finance’’
哈銀金融租賃有限責任公司 (Harbin Bank Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability
‘‘Hebei Finance’’
河北省金融租賃有限公司 (Hebei Finance Lease Co., Ltd.*), a company established in the PRC with limited liability
‘‘Hejing Xushuang Project’’
a 20 MW solar power plant owned by Xushuang in Hejing, Xinjiang Uygur Autonomous Region, PRC
‘‘Hong Kong’’
the Hong Kong Special Administrative Region of the People’s Republic of China

– 4 –

DEFINITIONS

‘‘Huaguang’’
‘‘Huaguang Agreement’’
‘‘Huaguang Disposal’’
‘‘Huaxia Finance’’
‘‘Huzhou Xianghui Disposal’’
‘‘Julu Minghui Project’’
‘‘Junsheng Jingshi’’
‘‘Kong Sun Yongtai’’ or ‘‘Vendor’’
‘‘Lanzhou Taike Project’’
‘‘Latest Practicable Date’’
‘‘Listing Rules’’
‘‘Liyang Xinhui Project’’
阿圖什市華光能源有限公司 (Artux Huaguang Energy Limited*), a company established in the PRC and an indirect subsidiary of the Company as at the Latest Practicable Date
the equity transfer agreement dated 15 November 2019 entered into by and among CNNP Shandong, Kong Sun Yongtai, Junsheng Jingshi and Huaguang in relation to the Huaguang Disposal
the sale and transfer of the entire equity interest in Huaguang by the Vendor and Junsheng Jingshi to CNNP Shandong
華夏金融租賃有限公司 (Huaxia Financial Leasing Co., Ltd.*), a company incorporated in the PRC with limited liability
the disposal of the entire equity interest in 湖州祥暉光伏發電有限公司 (Huzhou Xianghui Solar Power Co., Ltd.*), a company established in the PRC, by the Vendor, details of which are set out in the circular of the Company dated 18 July 2019
a 21 MW solar power plant owned by Minghui in Julu, Hebei Province, PRC
蘇州君盛晶石股權投資合夥企業 ( 有限合夥 ) (Suzhou Junsheng Jingshi Equity Investment Partnership (Limited Partnership)*), a limited partnership established in the PRC
江山永泰投資控股有限公司 (Kong Sun Yongtai Investment Holdings Limited*), a company established in the PRC and an indirect wholly-owned subsidiary of the Company
a 49.5 MW solar power plant owned by Taike in Lanzhou, Gansu Province, PRC
3 January 2020, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular
The Rules Governing the Listing of Securities on the Stock Exchange
a 20 MW solar power plant owned by Xinhui in Liyang, Jiangsu Province, PRC

– 5 –

DEFINITIONS

‘‘Minghui’’
巨鹿縣明暉太陽能發電有限公司 ( J u l u M i n g h u i Photovoltaic Power Limited*), a company established in the PRC and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date
‘‘Minghui Agreement’’ the equity transfer agreement dated 15 November 2019 entered into by and among CNNP Shandong, Kong Sun Yongtai and Minghui in relation to the Minghui Disposal
‘‘Minghui Disposal’’
the sale and transfer of the entire equity interest in Minghui by Kong Sun Yongtai to CNNP Shandong
‘‘Ministry of Finance’’ 中華人民共和國財政部 (Ministry of Finance of the PRC*)
‘‘MW’’
mega watts
‘‘NDRC’’

中華人民共和國國家發展和改革委員會 ( N a t i o n a l Development and Reform Commission of the PRC*)

‘‘NEA’’ 國家能源局 (National Energy Administration*)
‘‘PRC’’ the People’s Republic of China
‘‘Previous Disposals’’ the disposals of (i) 貴溪市中元太陽能電力有限公司 (Guixi City Zhongyuan Solar Power Co., Ltd.) as disclosed in the announcement of the Company dated 24 December 2018, which was completed on 28 December 2018; (ii) 霍林郭勒競日能源有限公司 (Huolin Guole Jingri Energy Co., Ltd.) as disclosed in the announcement of the Company dated 21 March 2019, which was completed on 29 March 2019; and (iii) 樟樹市中利騰暉光伏有限公司 (Zhangshu Zhongli Tenghui Solar Co., Ltd.*) as disclosed in the announcement of the Company dated 28 March 2019, which was completed on 17 April 2019; and (iv) the Huzhou Xianghui Disposal
‘‘Project Company(ies)’’ Taike, Huaguang, Xingguang, Zhaoxiang, Xushuang, Minghui, Xinhui, Baoyuan and/or Yunyang
‘‘Qianyang Baoyuan Project’’ a 20 MW solar power plant owned by Baoyuan in Qianyang, Shaanxi Province, PRC
‘‘Reference Date’’ 30 June 2019

– 6 –

DEFINITIONS

‘‘Related Party Debts’’
the Taike Related Party Debts, the Huaguang Related Party Debts, the Xingguang Related Party Debts, the Zhaoxiang Related Party Debts, the Xushuang Related Party Debts, the Minghui Related Party Debts, the Xinhui Related Party Debts, the Baoyuan Related Party Debts and the Yunyang Related Party Debts
‘‘Remaining Group’’
the Group after completion of the Angli Disposal, the CNNP Disposals and the Previous Disposals
‘‘Renewable Energy Fund’’
中國再生能源發展基金 (China Renewable Energy Development Fund*), a fund established by the Ministry of Finance for the provision of subsidy to renewable energy investments by way of renewable energy subsidies
‘‘RMB’’ Renminbi, the lawful currency of the PRC
‘‘Sale Equity Interest’’
with respect to each CNNP Disposal, the entire equity interest in the relevant Project Company
‘‘SASAC’’ 國務院國有資產監督管理委員會 (the State-Owned Assets Supervision and Administration Commission of the State Council*)
‘‘Second Payment Conditions’’ with respect to each CNNP Disposal, (i) where applicable, the existing share pledge over the relevant Sale Equity Interest in respect of the relevant Project Company having been released by the relevant financing party (being CDB Leasing, Hayin Finance, Hebei Finance, Huaxia Finance or Sino Lease, as the case may be); (ii) the handover of the relevant Project Company as specified in the relevant Disposal Agreement having been completed; (iii) the industry and commerce registration for (1) the transfer of the relevant Sale Equity Interest, (2) change in legal representative, director(s), supervisor(s) and other officers of the relevant Project Company as may be required by CNNP Shandong, and (3) the change in articles of association of the relevant Project Company having been completed, and the relevant Project Company having been issued with a new business license; and/or (iv) the relevant Project Company having terminated the employment of all of its existing employees and settled all relevant salaries, social insurance, provident fund contributions and other payments
‘‘Share(s)’’

ordinary share(s) in the share capital of the Company

– 7 –

DEFINITIONS

‘‘Shareholder(s)’’
‘‘Sino Lease’’
‘‘Stock Exchange’’
‘‘Subsidy Catalogue’’
‘‘Suzhou Yunyang Project’’
‘‘Suzhou Yunyang Yongqiao Project’’
‘‘Taike’’
‘‘Taike Agreement’’
‘‘Taike Disposal’’
‘‘Third Payment Conditions’’
‘‘Total Dividend’’
‘‘Transition Period’’
‘‘Transition Period Audit’’

shareholder(s) of the Company

中國金融租賃有限公司 (China Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability

The Stock Exchange of Hong Kong Limited

可再生能源電價附加資金補助目錄 (Renewable Energy Tariff Subsidy Catalogue*)
a 20 MW solar power plant owned by Yunyang in Suzhou City, Anhui Province, PRC
a 20 MW solar power plant owned by Yunyang in Yongqiao District, Suzhou City, Anhui Province, PRC
蘭州太科光伏電力有限公司 (Lanzhou Taike Photovoltaic Power Limited*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date
the equity transfer agreement dated 15 November 2019 entered into by and among CNNP Shandong, Kong Sun Yongtai and Taike in relation to the Taike Disposal
the sale and transfer of the entire equity interest in Taike by Kong Sun Yongtai to CNNP Shandong
with respect to each CNNP Disposal, the relevant Transition Period Audit in respect of the relevant Project Company having been completed with the issuance of an audit report
the Taike Dividend, the Huaguang Dividend, the Xingguang Dividend, the Zhaoxiang Dividend, the Xushuang Dividend, the Minghui Dividend, the Xinhui Dividend, the Baoyuan Dividend and the Yunyang Dividend
in respect of each CNNP Disposal, the period from (but excluding) the Reference Date to (and including) the date of completion of such CNNP Disposal
in respect of each Project Company, an audit to be performed by an auditor engaged by CNNP Shandong with respect to such Project Company from the Reference Date to the completion date of the relevant CNNP Disposal

– 8 –

DEFINITIONS

‘‘Xingguang’’
阿圖什市興光能源有限公司 (Artux Xingguang Energy Limited*), a company established in the PRC with limited liability and an indirect subsidiary of the Company as at the Latest Practicable Date
‘‘Xingguang Agreement’’ the equity transfer agreement dated 15 November 2019 entered into by and among CNNP Shandong, Kong Sun Yongtai, Junsheng Jingshi and Xingguang in relation to the Xingguang Disposal
‘‘Xingguang Disposal’’
the sale and transfer of the entire equity interest in Xingguang by the Vendor and Junsheng Jingshi to CNNP Shandong
‘‘Xinhui’’
溧陽新暉光伏發電有限公司 (Liyang Xinhui Photovoltaic Power Generation Limited*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date
‘‘Xinhui Agreement’’
the equity transfer agreement dated 15 November 2019 entered into by and among CNNP Shandong, Kong Sun Yongtai and Xinhui in relation to the Xinhui Disposal
‘‘Xinhui Disposal’’
the sale and transfer of the entire equity interest in Xinhui by the Vendor to CNNP Shandong
‘‘Xushuang’’
和靜旭雙太陽能科技有限公司 ( H e j i n g X u s h u a n g Photovoltaic Technology Limited*), a company established in the PRC with limited liability and an indirect whollyowned subsidiary of the Company as at the Latest Practicable Date
‘‘Xushuang Agreement’’
the equity transfer agreement dated 15 November 2019 entered into by and among CNNP Shandong, Kong Sun Yongtai and Xushuang in relation to the Xushuang Disposal
‘‘Xushuang Disposal’’
the sale and transfer of the entire equity interest in Xushuang by the Vendor to CNNP Shandong
‘‘Yunyang’’
宿州市雲陽新能源發電有限公司 (Suzhou Yunyang New Energy Electricity Co., Ltd.*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date
‘‘Yunyang Agreement’’
the equity transfer agreement dated 15 November 2019 entered into by and among CNNP Shandong, Kong Sun Yongtai, Yunyang in relation to the Yunyang Disposal

– 9 –

DEFINITIONS

‘‘Yunyang Disposal’’
‘‘Zhaoxiang’’
‘‘Zhaoxiang Agreement’’
‘‘Zhaoxiang Disposal’’
‘‘Zhongke Hengyuan’’
‘‘%’’

the sale and transfer of the entire equity interest in Yunyang by the Vendor to CNNP Shandong

哈密朝翔新能源科技有限公司 (Hami Zhaoxiang New Energy Technology Limited*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date

the equity transfer agreement dated 15 November 2019 entered into by and among CNNP Shandong, Kong Sun Yongtai and Zhaoxiang in relation to the Zhaoxiang Disposal

the sale and transfer of the entire equity interest in Zhaoxiang by the Vendor to CNNP Shandong

中科恒源科技股份有限公司 ( Z h o n g k e H e n g y u a n Technology Co., Ltd.*), a company established in the PRC with limited liability

per cent.

For identification purposes only

– 10 –

LETTER FROM THE BOARD

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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. Jin Yanbing (Chief Executive Officer and Chairman) Mr. Deng Chengli

Non-Executive Directors: Mr. Wu Tak Kong Mr. Wang Ke Mr. Jiang Hengwen

Registered Office and Principal Place of Business: Unit 803–4, 8/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong

Independent Non-Executive Directors: Mr. Miu Hon Kit Mr. Chen Kin Shing Ms. Wang Fang Ms. Wu Wennan

6 January 2020

To the Shareholders

Dear Sir or Madam,

(1) VERY SUBSTANTIAL DISPOSALS AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

References are made to the announcements of the Company dated 26 November 2019 and 5 December 2019, respectively in relation to, among other things, the CNNP Disposals and the Angli Disposal.

The purpose of this circular is to provide you with, among other things, (i) details of the CNNP Disposals and the Angli Disposal; (ii) the financial information of the Group, the Project Companies and Angli; (iii) the unaudited pro forma financial information of the Remaining Group; (iv) the valuation report in relation to the Project Companies and Angli and (v) the notice of the EGM.

– 11 –

LETTER FROM THE BOARD

THE CNNP DISPOSALS

On 15 November 2019, the Vendor, CNNP Shandong and the Project Companies entered into the CNNP Disposal Agreements, pursuant to which the Vendor (together with Junsheng Jingshi, as the case may be) conditionally agreed to sell the entire equity interest in the Project Companies (which hold in total ten (10) solar power projects in the PRC) to CNNP Shandong for a total consideration (comprising the CNNP Equity Consideration and the repayment of the Related Party Debts) of approximately RMB1,166,400,000.

The principal terms of the CNNP Disposal Agreements are summarised as follows:

PRINCIPAL TERMS OF THE CNNP DISPOSAL AGREEMENTS

(1) Taike Agreement

Date

15 November 2019

Parties

(i) CNNP Shandong;

(ii) the Vendor; and (iii) Taike.

Subject Matter

The entire equity interest in Taike.

Consideration

Approximately RMB172,465,000, comprising the Taike Equity Consideration and repayment of the Taike Related Party Debts.

(A) Taike Equity Consideration

The consideration for the entire equity interest in Taike (the ‘‘Taike Equity Consideration’’) is approximately RMB61,538,000, which shall be payable by CNNP Shandong to the Vendor in the following manner:

(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB6,154,000 (the ‘‘Taike Deposit’’), representing approximately 10% of the Taike Equity Consideration, shall be paid into the Escrow Account;

– 12 –

LETTER FROM THE BOARD

(ii) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Taike Deposit shall be released from the Escrow Account and be paid into the Designated Account, and CNNP Shandong shall pay a sum of approximately RMB36,923,000, representing approximately 60% of the Taike Equity Consideration, to the Designated Account;
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB12,345,000, representing approximately 20.06% of the Taike Equity Consideration, to the Designated Account; and
(iv) the balance of approximately RMB6,116,000, representing approximately 9.94% of the Taike Equity Consideration, shall be paid by CNNP Shandong to the Designated Account in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Taike Agreement, CNNP Shandong shall pay the corresponding agreed sum to the Designated Account; and
(b) within five (5) business days after the Vendor has replaced certain equipment of the project as identified by the technical consultant engaged by CNNP Shandong which replacement shall be completed within two years after the completion of the Taike Disposal, CNNP Shandong shall pay the sum of approximately RMB3,496,000 in one lump sum to the Designated Account, provided that if the Vendor has not completed the replacement by the aforesaid deadline, CNNP Shandong shall not be required to make such payment and the Vendor shall not be required to complete such replacement.

(B) Repayment of Related Party Debts

As at the Reference Date, a net amount of approximately RMB110,927,000 (after set-off against relevant amounts due to Taike and taking into account the Taike Dividend) was due and payable by Taike to the Vendor and its affiliates (the ‘‘Taike Related Party Debts’’).

The Taike Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Taike after completion of the Taike Disposal in the following manner:

(i) within twenty (20) business days after completion of the Taike Disposal, Taike shall pay a sum of approximately RMB18,523,000 to the Designated Account; and

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(ii) within five (5) business days after each time it receives payment of state renewable energy subsidy granted to it prior to the Reference Date, Taike shall pay an equivalent amount so received to the Designated Account, up to the total amount of approximately RMB92,404,000.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of Taike during the Transition Period, subject to the Transition Period Audit, shall be borne by CNNP Shandong.

During the Transition Period, the Vendor shall ensure that, among other things, Taike will continue its normal business operations in accordance with its past practices and, save as permitted under the Taike Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Taike without the prior written consent of CNNP Shandong.

Taike shall declare a dividend in favour of the Vendor in the sum of approximately RMB31,643,000, representing the accumulated distributable profits of Taike up to the Reference Date, which will be regarded as a dividend receivable by the Vendor from Taike (the ‘‘Taike Dividend’’).

Termination of Equity Pledge and Finance Lease

The entire equity interest in Taike has been pledged in favour of CDB Leasing to secure the finance lease entered into between Taike and CDB Leasing over the assets of the Lanzhou Taike Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Taike under the finance lease was approximately RMB211,860,000.

Pursuant to the Taike Agreement, (a) the Vendor shall procure for release of the equity pledge prior to completion of the Taike Disposal, and (b) CNNP Shandong shall provide relevant documents as may be required by CDB Leasing for the release of equity pledge and arrange for necessary re-financing facilities for Taike.

Termination of Guarantee

By no later than twenty (20) business days after completion of the Taike Disposal, CNNP Shandong shall procure for release of any outstanding guarantee provided by the Vendor and its affiliates to secure the borrowings of Taike. CNNP Shandong and Taike shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Taike Disposal as a result of any breach by Taike under the relevant financing arrangement prior to the release of guarantee.

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(2) Huaguang Agreement

Date

15 November 2019

Parties

(i) CNNP Shandong;
(ii) Kong Sun Yongtai, as vendor of 1.75% equity interest in Huaguang;
(iii) Junsheng Jingshi, as vendor of 98.25% equity interest in Huaguang; and
(iv) Huaguang.

Subject Matter

The entire equity interest in Huaguang.

Consideration

Approximately RMB224,909,000, comprising the Huaguang Equity Consideration and repayment of the Huaguang Related Party Debts.

(A) Huaguang Equity Consideration

The consideration for the entire equity interest in Huaguang (the ‘‘Huaguang Equity Consideration’’) is approximately RMB224,801,000, which shall be paid by CNNP Shandong in the following manner:

(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB22,480,000 (the ‘‘Huaguang Deposit’’), representing approximately 10% of the Huaguang Equity Consideration, shall be paid into the Escrow Account, and within ten (10) business days after the fulfillment of the Second Payment Conditions, the Huaguang Deposit shall be released from the Escrow Account and be paid into the Designated Account;
(ii) a sum of approximately RMB134,881,000, representing approximately 60% of the Huaguang Equity Consideration, shall be paid as follows:
(a) within ten (10) business days after the fulfillment of the Second Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB80,485,000, representing approximately 35.80% of the Huaguang Equity Consideration, to the Designated Account;

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  - (b) within five (5) business days after Huaguang has received each payment of state renewable energy subsidy granted to it prior to the Reference Date, CNNP Shandong shall pay the equivalent amount so received by Huaguang, up to approximately RMB54,396,000, representing approximately 24.20% of the Huaguang Equity Consideration, to the Designated Account;

(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB63,605,000, representing approximately 28.29% of the Huaguang Equity Consideration, to the Designated Account; and
(iv) the balance of approximately RMB3,835,000, representing approximately 1.71% of the Huaguang Equity Consideration, shall be paid by CNNP Shandong to the Designated Account in the following manner:
- (a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Huaguang Agreement, CNNP Shandong shall pay the corresponding agreed sum to the Designated Account; and
- (b) within five (5) business days after Kong Sun Yongtai has replaced certain equipment of the project as identified by the technical consultant engaged by CNNP Shandong which replacement shall be completed within two years after the completion of the Huaguang Disposal, CNNP Shandong shall pay the sum of approximately RMB1,225,000 in one lump sum to the Designated Account, provided that if Kong Sun Yongtai has not completed the replacement by the aforesaid deadline, CNNP Shandong shall not be required to make such payment and Kong Sun Yongtai shall not be required to complete such replacement.
(B) Repayment of Related Party Debts

As at the Reference Date, a net amount of approximately RMB108,000 (after set-off against relevant amounts due to Huaguang and taking into account the Huaguang Dividend) was due and payable by Huaguang to Kong Sun Yongtai and its affiliates (the ‘‘Huaguang Related Party Debts’’).

The Huaguang Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, and subject further to the total amount of state renewable energy subsidies that Huaguang has received having exceeded approximately RMB54,396,000 on a cumulative basis, shall be repaid by Huaguang within five (5) business days after it receives further amount of state renewable energy subsidies.

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Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of Huaguang during the Transition Period, subject to the Transition Period Audit, shall be borne by CNNP Shandong.

During the Transition Period, Kong Sun Yongtai and Junsheng Jingshi shall ensure that, among other things, Huaguang will continue its normal business operations in accordance with its past practices and, save as permitted under the Huaguang Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Huaguang without the prior written consent of CNNP Shandong.

Huaguang shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB31,794,000, representing the accumulated distributable profits of Huaguang up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Huaguang (the ‘‘Huaguang Dividend’’).

(3) Xingguang Agreement

Date

15 November 2019

Parties

(i) CNNP Shandong;
(ii) Kong Sun Yongtai, as vendor of 0.38% equity interest in Xingguang;
(iii) Junsheng Jingshi, as vendor of 99.62% equity interest in Xingguang; and
(iv) Xingguang.

Subject Matter

The entire equity interest in Xingguang.

Consideration

Approximately RMB226,384,000, comprising the Xingguang Equity Consideration and repayment of the Xingguang Related Party Debts.

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(A) Xingguang Equity Consideration

The consideration for the entire equity interest in Xingguang (the ‘‘Xingguang Equity Consideration’’) is approximately RMB231,263,000, which shall be paid by CNNP Shandong in the following manner:

(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB23,126,000 (the ‘‘Xingguang Deposit’’), representing approximately 10% of the Xingguang Equity Consideration, shall be paid into the Escrow Account, and within ten (10) business days after the fulfillment of the Second Payment Conditions, the Xingguang Deposit shall be released from the Escrow Account and be paid into the Designated Account;
(ii) a sum of approximately RMB138,758,000, representing approximately 60% of the Xingguang Equity Consideration, shall be paid as follows:
(a) within ten (10) business days after the fulfillment of the Second Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB84,254,000, representing approximately 36.43% of the Xingguang Equity Consideration, to the Designated Account;
(b) within five (5) business days after Xingguang has received each payment of state renewable energy subsidy granted to it prior to the Reference Date, CNNP Shandong shall pay the equivalent amount so received by Xingguang, up to approximately RMB54,504,000, representing approximately 23.57% of the Xingguang Equity Consideration, to the Designated Account;
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB66,363,000, representing approximately 28.70% of the Xingguang Equity Consideration, to the Designated Account (the ‘‘Xingguang Further Payment’’); and
(iv) the balance of approximately RMB3,016,000, representing approximately 1.30% of the Xingguang Equity Consideration, shall be paid by CNNP Shandong to the Designated Account in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Xingguang Agreement, CNNP Shandong shall pay the corresponding agreed sum to the Designated Account; and
(b) within five (5) business days after Kong Sun Yongtai has replaced certain equipment of the project as identified by the technical consultant engaged by CNNP Shandong which replacement shall be completed within two years after the completion of the Xingguang Disposal, CNNP Shandong

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shall pay the sum of approximately RMB1,225,000 in one lump sum to the Designated Account, provided that if Kong Sun Yongtai has not completed the replacement by the aforesaid deadline, CNNP Shandong shall not be required to make such payment and Kong Sun Yongtai shall not be required to complete such replacement.

(B) Repayment of Related Party Debts

As at the Reference Date, a net amount of approximately RMB4,879,000 (after setoff against relevant amounts due from Xingguang and taking into account the Xingguang Dividend) was due and payable to Xingguang by Kong Sun Yongtai and Junsheng Jingshi and their affiliates (the ‘‘Xingguang Related Party Debts’’).

The Xingguang Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be repaid by Kong Sun Yongtai and Junsheng Jingshi, without interest, within ten (10) business days after they have received the Xingguang Further Payment.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of Xingguang during the Transition Period, subject to the Transition Period Audit, shall be borne by CNNP Shandong.

During the Transition Period, Kong Sun Yongtai and Junsheng Jingshi shall ensure that, among other things, Xingguang will continue its normal business operations in accordance with its past practices and, save as permitted under the Xingguang Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Xingguang without the prior written consent of CNNP Shandong.

Xingguang shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB38,219,000, representing the accumulated distributable profits of Xingguang up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Xingguang (the ‘‘Xingguang Dividend’’).

(4) Zhaoxiang Agreement

Date

15 November 2019

Parties

(i) CNNP Shandong;
(ii) the Vendor; and
(iii) Zhaoxiang.

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Subject Matter

The entire equity interest in Zhaoxiang.

Consideration

Approximately RMB102,677,000, comprising the Zhaoxiang Equity Consideration and repayment of the Zhaoxiang Related Party Debts.

(A) Zhaoxiang Equity Consideration

The consideration for the entire equity interest in Zhaoxiang (the ‘‘Zhaoxiang Equity Consideration’’) is approximately RMB7,195,000, which shall be paid by CNNP Shandong in the following manner:

(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB720,000 (the ‘‘Zhaoxiang Deposit’’), representing approximately 10% of the Zhaoxiang Equity Consideration, shall be paid into the Escrow Account;
(ii) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Zhaoxiang Deposit shall be released from the Escrow Account and be paid into the Designated Account, and CNNP Shandong shall pay a sum of approximately RMB4,317,000, representing approximately 60% of the Zhaoxiang Equity Consideration, to the Designated Account; and
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB2,158,000, representing approximately 30% of the Zhaoxiang Equity Consideration, to the Designated Account.
(B) Repayment of Related Party Debts

As at the Reference Date, a net amount of approximately RMB95,482,000 (after setoff against relevant amounts due to Zhaoxiang and taking into account the Zhaoxiang Dividend) was due and payable by Zhaoxiang to the Vendor and its affiliates (the ‘‘Zhaoxiang Related Party Debts’’).

The Zhaoxiang Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Zhaoxiang after completion of the Zhaoxiang Disposal in the following manner:

(i) within twenty (20) business days after completion of the Zhaoxiang Disposal, Zhaoxiang shall pay a sum of approximately RMB44,138,000 to the Designated Account;

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(ii) within five (5) business days after each time it receives payment of state renewable energy subsidy granted to it prior to the Reference Date, Zhaoxiang shall pay an equivalent amount so received to the Designated Account, up to the total amount of approximately RMB45,968,000; and
(iii) approximately RMB5,376,000 shall be paid by CNNP Shandong to the Vendor after completion of the Zhaoxiang Disposal in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Zhaoxiang Agreement, CNNP Shandong shall pay the corresponding agreed sum to the Vendor; and
(b) within five (5) business days after the Vendor has replaced certain equipment of the project as identified by the technical consultant engaged by CNNP Shandong which replacement shall be completed within two years after the completion of the Zhaoxiang Disposal, CNNP Shandong shall pay the sum of approximately RMB3,186,000 in one lump sum to the Vendor, provided that if the Vendor has not completed the replacement by the aforesaid deadline, CNNP Shandong shall not be required to make such payment and the Vendor shall not be required to complete such replacement.

Arrangements during the Transition Period

Any profits and losses incurred and any changes to the net assets of Zhaoxiang during the Transition Period, subject to the Transition Period Audit, shall be borne by CNNP Shandong.

During the Transition Period, the Vendor shall ensure that, among other things, Zhaoxiang will continue its normal business operations in accordance with its past practices and, save as permitted under the Zhaoxiang Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Zhaoxiang without the prior written consent of CNNP Shandong.

Zhaoxiang shall declare a dividend in favour of the Vendor in the sum of approximately RMB8,079,000, representing the accumulated distributable profits of Zhaoxiang up to the Reference Date, which will be regarded as a dividend receivable by the Vendor from Zhaoxiang (the ‘‘Zhaoxiang Dividend’’).

Termination of Equity Pledge and Finance Lease

The entire equity interest in Zhaoxiang has been pledged in favour of CDB Leasing to secure the finance lease entered into between Zhaoxiang and CDB Leasing over the assets of the Hami Zhaoxiang Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Zhaoxiang under the finance lease was approximately RMB67,810,000.

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Pursuant to the Zhaoxiang Agreement, (a) the Vendor shall procure for release of the equity pledge prior to completion of the Zhaoxiang Disposal and (b) CNNP Shandong shall provide relevant documents as may be required by CDB Leasing for the release of equity pledge and arrange for necessary re-financing facilities for Zhaoxiang.

Termination of Guarantee

By no later than twenty (20) business days after completion of the Zhaoxiang Disposal, CNNP Shandong shall procure for release of any outstanding guarantee provided by the Vendor and its affiliates or Zhongke Hengyuan to secure the borrowings of Zhaoxiang. CNNP Shandong and Zhaoxiang shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Zhaoxiang Disposal as a result of any breach by Zhaoxiang under the relevant financing arrangement prior to the release of guarantee.

(5) Xushuang Agreement

Date

15 November 2019

Parties

(i) CNNP Shandong;
(ii) the Vendor; and
(iii) Xushuang.

Subject Matter

The entire equity interest in Xushuang.

Consideration

Approximately RMB100,169,000, comprising the Xushuang Equity Consideration and repayment of the Xushuang Related Party Debts.

(A) Xushuang Equity Consideration

The consideration for the entire equity interest in Xushuang (the ‘‘Xushuang Equity Consideration’’) is approximately RMB5,275,000, which shall be paid by CNNP Shandong in the following manner:

(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB528,000 (the ‘‘Xushuang Deposit’’), representing approximately 10% of the Xushuang Equity Consideration, shall be paid into the Escrow Account;

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(ii) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Xushuang Deposit shall be released from the Escrow Account and be paid into the Designated Account, and CNNP Shandong shall pay a sum of approximately RMB3,165,000, representing approximately 60% of the Xushuang Equity Consideration, to the Designated Account; and
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB1,582,000, representing approximately 30% of the Xushuang Equity Consideration, to the Designated Account.

(B) Repayment of Related Party Debts

As at the Reference Date, a net amount of approximately RMB94,894,000 (after setoff against relevant amounts due to Xushuang and taking into account the Xushuang Dividend) was due and payable by Xushuang to the Vendor and its affiliates (the ‘‘Xushuang Related Party Debts’’).

The Xushuang Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Xushuang after completion of the Xushuang Disposal in the following manner:

(i) within twenty (20) business days after completion of the Xushuang Disposal, Xushuang shall pay a sum of approximately RMB41,188,000 to the Designated Account;
(ii) within five (5) business days after each time it receives payment of state renewable energy subsidy granted to it prior to the Reference Date, Xushuang shall pay an equivalent amount so received to the Designated Account, up to the total amount of approximately RMB44,367,000; and
(iii) approximately RMB9,339,000 shall be paid by CNNP Shandong to the Vendor after completion of the Xushuang Disposal in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Xushuang Agreement, CNNP Shandong shall pay the corresponding agreed sum to the Vendor; and
(b) within five (5) business days after the Vendor has replaced certain equipment of the project as identified by the technical consultant engaged by CNNP Shandong which replacement shall be completed within two years after the completion of the Xushuang Disposal, CNNP Shandong shall pay the sum of approximately RMB6,127,000 in one lump sum to the Vendor, provided that if the Vendor has not completed the replacement by

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the aforesaid deadline, CNNP Shandong shall not be required to make such payment and the Vendor shall not be required to complete such replacement.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of Xushuang during the Transition Period, subject to the Transition Period Audit, shall be borne by CNNP Shandong.

During the Transition Period, the Vendor shall ensure that, among other things, Xushuang will continue its normal business operations in accordance with its past practices and, save as permitted under the Xushuang Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Xushuang without the prior written consent of CNNP Shandong.

Xushuang shall declare a dividend in favour of the Vendor in the sum of approximately RMB10,638,000, representing the accumulated distributable profits of Xushuang up to the Reference Date, which will be regarded as a dividend receivable by the Vendor from Xushuang (the ‘‘Xushuang Dividend’’).

Termination of Equity Pledge and Finance Lease

The entire equity interest in Xushuang has been pledged in favour of Huaxia Finance to secure the finance lease entered into between Xushuang and Huaxia Finance over the assets of the Hejing Xushuang Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Xushuang under the finance lease was approximately RMB89,920,000.

Pursuant to the Xushuang Agreement, (a) the Vendor shall procure for release of the equity pledge prior to completion of the Xushuang Disposal and (b) CNNP Shandong shall provide relevant documents as may be required by Huaxia Finance for the release of equity pledge and arrange for necessary re-financing facilities for Xushuang.

Termination of Guarantee

By no later than twenty (20) business days after completion of the Xushuang Disposal, CNNP Shandong shall procure for release of any outstanding guarantee provided by the Vendor and its affiliates to secure the borrowings of Xushuang. CNNP Shandong and Xushuang shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Xushuang Disposal as a result of any breach by Xushuang under the relevant financing arrangement prior to the release of guarantee.

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(6) Minghui Agreement

Date

15 November 2019

Parties

(i) CNNP Shandong;
(ii) the Vendor; and
(iii) Minghui.

Subject matter

The entire equity interest in Minghui.

Consideration

Approximately RMB69,500,000, comprising the Minghui Equity Consideration and repayment of the Minghui Related Party Debts.

(A) Minghui Equity Consideration

The consideration for the entire equity interest in Minghui (the ‘‘Minghui Equity Consideration’’) is approximately RMB42,979,000, which shall be paid by CNNP Shandong in the following manner:

(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB4,298,000 (the ‘‘Minghui Deposit’’), representing approximately 10% of the Minghui Equity Consideration, shall be paid into the Escrow Account, and within ten (10) business days after the fulfillment of the Second Payment Conditions, the Minghui Deposit shall be released from the Escrow Account and be paid into the Designated Account;
(ii) a sum of approximately RMB25,787,000, representing approximately 60% of the Minghui Equity Consideration, shall be paid as follows:
(a) within ten (10) business days after the fulfillment of the Second Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB11,867,000, representing approximately 27.61% of the Minghui Equity Consideration, to the Designated Account;
(b) within five (5) business days after Minghui having received the first payment of state renewable energy subsidy granted to it prior to the Reference Date, and subject to Minghui having set aside a specified amount thereof as Minghui Warranty Deposit (as defined below) for replacement of parts in the manner set out in the Minghui Agreement,

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CNNP Shandong shall pay an equivalent amount so received by Minghui to the Designated Account, up to the total amount of approximately RMB13,920,000, representing approximately 32.39% of the Minghui Equity Consideration;

(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB8,571,000, representing approximately 19.94% of the Minghui Equity Consideration, to the Designated Account; and
(iv) the balance of approximately RMB4,323,000, representing approximately 10.06% of the Minghui Equity Consideration, shall be paid by CNNP Shandong to the Designated Account in the following manner: within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Minghui Agreement, CNNP Shandong shall pay the corresponding agreed sum to the Designated Account.
(B) Repayment of Related Party Debts

As at the Reference Date, a net amount of approximately RMB26,521,000 (after setoff against relevant amounts due to Minghui and taking into account the Minghui Dividend) was due and payable by Minghui to the Vendor and its affiliates (the ‘‘Minghui Related Party Debts’’).

The Minghui Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Minghui after completion of the Minghui Disposal in the following manner:

(i) subject to Minghui having set aside a sum of approximately RMB2,623,000 as warranty deposit for parts replacement purpose from payment received as state renewable energy subsidies that were granted to it prior to the Reference Date (the ‘‘Minghui Warranty Deposit’’), within five (5) business days after the Vendor has replaced certain equipment of the project as identified by the technical consultant engaged by CNNP Shandong which replacement shall be completed within two years after the completion of the Minghui Disposal, Minghui shall release the Minghui Warranty Deposit in one lump sum to the Vendor, provided that if the Vendor has not completed the replacement by the aforesaid deadline, Minghui shall not be required to make such payment and the Vendor shall not be required to complete such replacement; and
(ii) subject to the total amount of state renewable energy subsidies granted to Minghui prior to the Reference Date and which Minghui has received having exceeded approximately RMB16,543,000 on a cumulative basis, Minghui shall, within five (5) business days after it has received any further amount of state renewable energy subsidies, pay the equivalent amount so received to the Designated Account, up to the total amount of approximately RMB23,898,000.

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Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of Minghui during the Transition Period, subject to the Transition Period Audit, shall be borne by CNNP Shandong.

During the Transition Period, the Vendor shall ensure that, among other things, Minghui will continue its normal business operations in accordance with its past practices and, save as permitted under the Minghui Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Minghui without the prior written consent of CNNP Shandong.

Minghui shall declare a dividend in favour of the Vendor in the sum of approximately RMB26,958,000, representing the accumulated distributable profits of Minghui up to the Reference Date, which will be regarded as a dividend receivable by the Vendor from Minghui (the ‘‘Minghui Dividend’’).

Termination of Equity Pledge and Finance Lease

The entire equity interest in Minghui has been pledged in favour of Hebei Finance to secure the finance lease entered into between Minghui and Hebei Finance over the assets of the Julu Minghui Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Minghui under the finance lease was approximately RMB111,970,000.

Pursuant to the Minghui Agreement, (a) the Vendor shall procure for release of the equity pledge prior to completion of the Minghui Disposal and (b) CNNP Shandong shall provide relevant documents as may be required by Hebei Finance for the release of equity pledge and arrange for necessary re-financing facilities for Minghui.

Termination of Guarantee

By no later than twenty (20) business days after completion of the Minghui Disposal, CNNP Shandong shall procure for release of any outstanding guarantee provided by the Vendor and its affiliates to secure the borrowings of Minghui. CNNP Shandong and Minghui shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Minghui Disposal as a result of any breach by Minghui under the relevant financing arrangement prior to the release of guarantee.

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(7) Xinhui Agreement

Date

15 November 2019

Parties

(i) CNNP Shandong;
(ii) the Vendor; and
(iii) Xinhui.

Subject Matter

The entire equity interest in Xinhui.

Consideration

Approximately RMB96,272,000, comprising the Xinhui Equity Consideration and repayment of the Xinhui Related Party Debts.

(A) Xinhui Equity Consideration

The consideration for the entire equity interest in Xinhui (the ‘‘Xinhui Equity Consideration’’) is approximately RMB26,004,000, which shall be paid by CNNP Shandong in the following manner:

(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB2,600,000 (the ‘‘Xinhui Deposit’’), representing approximately 10% of the Xinhui Equity Consideration, shall be paid into the Escrow Account;
(ii) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Xinhui Deposit shall be released from the Escrow Account and be paid into the Designated Account, and CNNP Shandong shall pay a sum of approximately RMB15,603,000, representing approximately 60% of the Xinhui Equity Consideration, to the Designated Account; and
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB7,801,000, representing approximately 30% of the Xinhui Equity Consideration, to the Designated Account.

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LETTER FROM THE BOARD

(B) Repayment of Related Party Debts

As at the Reference Date, a net amount of approximately RMB70,268,000 (after setoff against relevant amounts due to Xinhui and taking into account the Xinhui Dividend) was due and payable by Xinhui to the Vendor and its affiliates (the ‘‘Xinhui Related Party Debts’’).

The Xinhui Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Xinhui in the following manner:

(i) within twenty (20) business days after completion of the Xinhui Disposal, Xinhui shall pay a sum of approximately RMB33,682,000 to the Designated Account;
(ii) within five (5) business days after each time it receives payment of state renewable energy subsidy granted to it prior to the Reference Date, Xinhui shall pay an equivalent amount so received to the Designated Account, up to the total amount of approximately RMB30,020,000; and
(iii) approximately RMB6,566,000 shall be paid by CNNP Shandong to the Vendor after completion of the Xinhui Disposal in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Xinhui Agreement, CNNP Shandong shall pay the corresponding agreed sum to the Vendor; and
(b) within five (5) business days after the Vendor has replaced certain equipment of the project as identified by the technical consultant engaged by CNNP Shandong which replacement shall be completed within two years after the completion of the Xinhui Disposal, CNNP Shandong shall pay the sum of approximately RMB2,304,000 in one lump sum to the Vendor, provided that if the Vendor has not completed the replacement by the aforesaid deadline, CNNP Shandong shall not be required to make such payment and the Vendor shall not be required to complete such replacement.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of Xinhui during the Transition Period, subject to the Transition Period Audit, shall be borne by CNNP Shandong.

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During the Transition Period, the Vendor shall ensure that, among other things, Xinhui will continue its normal business operations in accordance with its past practices and, save as permitted under the Xinhui Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Xinhui without the prior written consent of CNNP Shandong.

Xinhui shall declare a dividend in favour of the Vendor in the sum of approximately RMB20,206,000, representing the accumulated distributable profits of Xinhui up to the Reference Date, which will be regarded as a dividend receivable by the Vendor from Xinhui (the ‘‘Xinhui Dividend’’).

Termination of Equity Pledge and Finance Lease

The entire equity interest in Xinhui has been pledged in favour of Huaxia Finance to secure the finance lease entered into between Xinhui and Huaxia Finance over the assets of the Liyang Xinhui Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Xinhui under the finance lease was approximately RMB74,980,000.

Pursuant to the Xinhui Agreement, (a) the Vendor shall procure for release of the equity pledge prior to completion of the Xinhui Disposal and (b) CNNP Shandong shall provide relevant documents as may be required by Huaxia Finance for the release of equity pledge and arrange for necessary re-financing facilities for Xinhui.

Termination of Guarantee

By no later than twenty (20) business days after completion of the Xinhui Disposal, CNNP Shandong shall procure for release of any outstanding guarantee provided by the Vendor and its affiliates to secure the borrowings of Xinhui. CNNP Shandong and Xinhui shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Xinhui Disposal as a result of any breach by Xinhui under the relevant financing arrangement prior to the release of guarantee.

(8) Baoyuan Agreement

Date

15 November 2019

Parties

(i) CNNP Shandong;
(ii) the Vendor; and
(iii) Baoyuan.

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LETTER FROM THE BOARD

Subject Matter

The entire equity interest in Baoyuan.

Consideration

Approximately RMB89,181,000, comprising the Baoyuan Equity Consideration and repayment of the Baoyuan Related Party Debts.

(A) Baoyuan Equity Consideration

The consideration for the entire equity interest in Baoyuan (the ‘‘Baoyuan Equity Consideration’’) is approximately RMB61,047,000, which shall be paid by CNNP Shandong in the following manner:

(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB6,105,000 (the ‘‘Baoyuan Deposit’’), representing approximately 10% of the Baoyuan Equity Consideration, shall be paid into the Escrow Account, and within ten (10) business days after the fulfillment of the Second Payment Conditions, the Baoyuan Deposit shall be released from the Escrow Account and be paid into the Designated Account;
(ii) a sum of approximately RMB36,628,000, representing approximately 60% of the Baoyuan Equity Consideration, shall be paid as follows:
(a) within ten (10) business days after the fulfillment of the Second Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB28,475,000, representing approximately 46.64% of the Baoyuan Equity Consideration, to the Designated Account;
(b) within five (5) business days after each time Baoyuan receives payment of state renewable energy subsidy granted to it prior to the Reference Date, CNNP Shandong shall pay an equivalent amount so received by Baoyuan to the Designated Account, up to the total amount of approximately RMB8,153,000, representing approximately 13.36% of the Baoyuan Equity Consideration;
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB12,678,000, representing approximately 20.77% of the Baoyuan Equity Consideration, to the Designated Account; and

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(iv) the balance of approximately RMB5,636,000, representing approximately 9.23% of the Baoyuan Equity Consideration, shall be paid by CNNP Shandong to the Designated Account in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Baoyuan Agreement, CNNP Shandong shall pay the corresponding agreed sum to the Designated Account; and
(b) within five (5) business days after the Vendor has replaced certain equipment of the project as identified by the technical consultant engaged by CNNP Shandong which replacement shall be completed within two years after the completion of the Baoyuan Disposal, CNNP Shandong shall pay the sum of approximately RMB3,186,000 in one lump sum to the Designated Account, provided that if the Vendor has not completed the replacement by the aforesaid deadline, CNNP Shandong shall not be required to make such payment and the Vendor shall not be required to complete such replacement.

(B) Repayment of Related Party Debts

As at the Reference Date, a net amount of approximately RMB28,134,000 (after setoff against relevant amounts due to Baoyuan and taking into account the Baoyuan Dividend) was due and payable by Baoyuan to the Vendor and its affiliates (the ‘‘Baoyuan Related Party Debts’’).

The Baoyuan Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Baoyuan in the following manner: subject to the total amount of state renewable energy subsidies granted to Baoyuan prior to the Reference Date and which Baoyuan has received having exceeded approximately RMB8,153,000 on a cumulative basis, Baoyuan shall, within five (5) business days after it has received any further amount of state renewable energy subsidies, pay the equivalent amount so received to the Designated Account, up to the total amount of approximately RMB28,134,000.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of Baoyuan during the Transition Period, subject to the Transition Period Audit, shall be borne by CNNP Shandong.

During the Transition Period, the Vendor shall ensure that, among other things, Baoyuan will continue its normal business operations in accordance with its past practices and, save as permitted under the Baoyuan Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Baoyuan without the prior written consent of CNNP Shandong.

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LETTER FROM THE BOARD

Baoyuan shall declare a dividend in favour of the Vendor in the sum of approximately RMB19,744,000, representing the accumulated distributable profits of Baoyuan up to the Reference Date, which will be regarded as a dividend receivable by the Vendor from Baoyuan (the ‘‘Baoyuan Dividend’’).

Termination of Equity Pledge and Finance Lease

The entire equity interest in Baoyuan has been pledged in favour of Sino Lease to secure the finance lease entered into between Baoyuan and Sino Lease over the assets of the Qianyan Baoyuan Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Baoyuan under the finance lease was approximately RMB100,890,000.

Pursuant to the Baoyuan Agreement, (a) the Vendor shall procure for release of the equity pledge prior to completion of the Baoyuan Disposal and (b) CNNP Shandong shall provide relevant documents as may be required by Sino Lease for the release of equity pledge and arrange for necessary re-financing facilities for Baoyuan.

Termination of Guarantee

By no later than twenty (20) business days after completion of the Baoyuan Disposal, CNNP Shandong shall procure for release of any outstanding guarantee provided by the Vendor and its affiliates to secure the borrowings of Baoyuan. CNNP Shandong and Baoyuan shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Baoyuan Disposal as a result of any breach by Baoyuan under the relevant financing arrangement prior to the release of guarantee.

(9) Yunyang Agreement

Date

15 November 2019

Parties

(i) CNNP Shandong;
(ii) the Vendor; and
(iii) Yunyang.

Subject Matter

The entire equity interest in Yunyang.

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LETTER FROM THE BOARD

Consideration

Approximately RMB84,842,000, comprising the Yunyang Equity Consideration and repayment of the Yunyang Related Party Debts.

(A) Yunyang Equity Consideration

The consideration for the entire equity interest in Yunyang (the ‘‘Yunyang Equity Consideration’’) is approximately RMB100,212,000, which shall be paid by CNNP Shandong in the following manner:

(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB10,021,000 (the ‘‘Yunyang Deposit’’), representing approximately 10% of the Yunyang Equity Consideration, shall be paid into the Escrow Account;
(ii) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Yunyang Deposit shall be released from the Escrow Account and be paid into the Designated Account;
(iii) within five (5) business days after Yunyang having received the first payment of state renewable energy subsidy granted to it prior to the Reference Date, and subject to Yunyang having set aside approximately RMB21,900,000 thereof as Yunyang warranty deposit for replacement of parts in the manner set out in the Yunyang Agreement, CNNP Shandong shall pay an equivalent amount so received by Yunyang to the Designated Account, up to the total amount of approximately RMB60,127,000 representing approximately 60% of the Yunyang Equity Consideration;
(iv) a sum of approximately RMB27,104,000 (the ‘‘Yunyang Further Payment’’), representing approximately 27.05% of the Yunyang Equity Consideration, shall be paid as follows:
(a) within ten (10) business days after the fulfillment of the Third Payment Conditions, CNNP Shandong shall pay a sum of approximately RMB23,780,000, representing approximately 23.73% of the Yunyang Equity Consideration, to the Designated Account; and
(b) within five (5) business days after each time Yunyang receives payment of state renewable energy subsidy granted to it prior to the Reference Date and provided that the accumulated amount of state renewable energy subsidy received by the Vendor under (iii) above having exceeded approximately RMB38,227,000, CNNP Shandong shall pay an equivalent amount so received by Yunyang to the Designated Account, up to the total amount of approximately RMB3,324,000, representing approximately 3.32% of the Yunyang Equity Consideration, to the Designated Account; and

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(v) the balance of approximately RMB2,960,000 representing approximately 2.95% of the Yunyang Equity Consideration, shall be paid by CNNP Shandong to the Designated Account in the following manner: within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Yunyang Agreement, CNNP Shandong shall pay the corresponding agreed sum to the Designated Account.

(B) Repayment of Related Party Debts

As at the Reference Date, a net amount of approximately RMB15,370,000 (after setoff against relevant amounts due from Yunyang and taking into account the Yunyang Dividend) was due and payable by the Vendor and its affiliates to Yunyang (the ‘‘Yunyang Related Party Debts’’).

The Yunyang Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be repaid by the Vendor, without interest, within ten (10) business days after it has received the Yunyang Further Payment.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of Yunyang during the Transition Period, subject to the Transition Period Audit, shall be borne by CNNP Shandong.

During the Transition Period, the Vendor shall ensure that, among other things, Yunyang will continue its normal business operations in accordance with its past practices and, save as permitted under the Yunyang Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Yunyang without the prior written consent of CNNP Shandong.

Yunyang shall declare a dividend in favour of the Vendor in the sum of approximately RMB21,415,000, representing the accumulated distributable profits of Yunyang up to the Reference Date, which will be regarded as a dividend receivable by the Vendor from Yunyang (the ‘‘Yunyang Dividend’’).

Termination of Equity Pledge and Finance Lease

The entire equity interest in Yunyang has been pledged in favour of Hayin Finance to secure the finance lease entered into between Yunyang and Hayin Finance over the assets of the Suzhou Yunyang Project and the Suzhou Yunyang Yongqiao Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Yunyang under the finance lease was approximately RMB213,230,000.

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Pursuant to the Yunyang Agreement, (a) the Vendor shall procure for release of the equity pledge prior to completion of the Yunyang Disposal and (b) CNNP Shandong shall provide relevant documents as may be required by Hayin Finance for the release of equity pledge and arrange for necessary re-financing facilities for Yunyang.

Termination of Guarantee

By no later than twenty (20) business days after completion of the Yunyang Disposal, CNNP Shandong shall procure for release of any outstanding guarantee provided by the Vendor and its affiliates to secure the borrowings of Yunyang. CNNP Shandong and Yunyang shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Yunyang Disposal as a result of any breach by Yunyang under the relevant financing arrangement prior to the release of guarantee.

Basis of the consideration for the CNNP Disposals

The consideration for the CNNP Disposals was determined upon arm’s length negotiations among the parties to the CNNP Disposal Agreements with reference to the unaudited net assets value of the Project Companies as at the Reference Date (‘‘NAV’’) in the aggregate amount of approximately RMB1,181,511,000 as well as the unaudited total assets value of the Project Companies as at the Reference Date in the aggregate amount of approximately RMB3,500,093,000.

The amount of approximately RMB969,010,000, representing a discount of approximately 18.0% to the NAV, is the sum of the CNNP Equity Consideration (being approximately RMB760,314,000) and the Total Dividend (being approximately RMB208,696,000), which was considered as the actual equity consideration if the Project Companies had not declared dividend in favour of Kong Sun Yongtai.

In arriving at the total consideration for the CNNP Disposals of approximately RMB1,166,400,000 (comprising the total CNNP Equity Consideration and the total Related Party Debts to be repaid), the Directors had also assessed the value of the Project Companies with reference to the unaudited total assets of the Project Companies as at the Reference Date in the amount of approximately RMB3,500,093,000, and adjusted by (i) applying a discount rate of approximately 6.1%, resulting in the amount of approximately RMB3,287,597,000 and (ii) subtracting the total liabilities due to third parties (being the total liabilities of the Project Companies less the Related Party Debts) as at the Reference Date in the amount of approximately RMB2,121,197,000, which will remain payable by the Project Companies upon completion of the CNNP Disposals.

For the CNNP Disposals, both the NAV and the unaudited total assets value of the Project Companies as at the Reference Date were considered by the Directors because they reflected the value of underlying assets of the Project Companies and the liabilities of the Project Companies.

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In considering the reasonableness of the discount represented by the consideration to the value of the underlying assets of the Project Companies, the management of the Company took into consideration of the reasons for the CNNP Disposals as set out in the paragraph headed ‘‘Reasons for and benefits of the CNNP Disposals and the Angli Disposal’’ below as well as:

(i) the unaudited total assets and total liabilities of the Project Companies as at the Reference Date;
(ii) the amount of renewable energy subsidies receivables by the Project Companies from the relevant PRC governmental entity in the amount of approximately RMB461,946,000 as at the Reference Date;
(iii) the outstanding Related Party Debts as at the Reference Date;
(iv) the registered capital of the Project Companies as at the Reference Date;
(v) the financial and cash flow position of the Project Companies, in particular, their net cash outflow position for the years ended 31 December 2017 and 2018 if the shareholder’s loans (being part of the Related Party Debts) were not provided;
(vi) the expected annual finance costs saving of the Group upon completion of the CNNP Disposals;
(vii) the expected annual solar power plant operation and maintenance service fee income of the Group to be generated upon the completion of the Disposals;
(viii) the range of the discount rates applied in the comparable transactions (the ‘‘Comparable Transactions’’) considered by the Company in determining the consideration for the CNNP Disposals. Details of the Comparable Transactions are set out in the paragraph headed under ‘‘Comparable Transactions’’ below; and
(ix) the consideration and the payment terms agreed with CNNP Shandong being the most favourable among those offered by other potential purchasers who the Company could identify.

The aggregated amount of the financial benefit to the Group is approximately RMB97,535,000, being the sum of (a) the saving of annual finance costs of not less than approximately RMB80,000,000 and (b) the annual operation and maintenance service fee of approximately RMB17,535,000 to be receivable by the Group.

Although the Project Companies are profit-making, their capital and operating expenses have been partially funded by interest-free shareholder’s loans from the Group, which in turn are funded by interest-bearing borrowings incurred by the Group at the prevailing market rate. As at the Reference Date, such shareholder’s loans (in the form of Related Party Debts without taking into account of the Total Dividend) amounted to approximately RMB197,390,000. The CNNP Disposals represent an opportunity for the Group to recoup its capital investments in the Project Companies and to relieve the Group from its funding commitment to the Project Companies in the form of shareholder’s loans, which are costly to maintain.

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LETTER FROM THE BOARD

In addition, the Company notes that the NAV included goodwill of approximately RMB52,221,000. The portion of loss on the CNNP Disposals attributable to goodwill will not have cash effect on the Group.

Given the Group highly relies on external financing in order to obtain investment capital for new solar power plants development, any interest rate changes will have impact on the Group’s capital expenditure and finance costs, hence, affecting the Group’s operating results. Transformation into asset-light model is an effective way to reduce debts and interest rate exposure. The CNNP Disposals represent a good opportunity for the Group to implement its asset-light strategy through the disposal of 10 solar power projects in bulk.

Based on the final valuation report, the Project Companies were valued at approximately RMB1,001,700,000 as at 30 September 2019, which is similar in value to the sum of the CNNP Equity Consideration and the Total Dividend, being the equity position of the consideration of the CNNP Disposals. The aggregate consideration for the CNNP Disposals (comprising the CNNP Equity Consideration and the repayment of the Related Party Debts) is approximately RMB1,166,400,000, representing a premium rate of approximately 16.4% to the aforesaid valuation amount.

Taking into consideration the factors as highlighted above, and considering that the Group will be able to realize its investments in 10 solar power projects in bulk pursuant to the CNNP Disposals, the Directors are of the view that the consideration for the CNNP Disposals is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Conditions Precedent of the CNNP Disposals

Each CNNP Disposal Agreement shall take effect subject to each party thereto having completed all internal procedures and obtained or completed all necessary approvals or filings under applicable laws for effecting the transactions contemplated under such CNNP Disposal Agreement, and in particular:

(a) with respect to Kong Sun Yongtai, the Company shall have obtained the necessary approval from the Shareholders at the EGM for the CNNP Disposals in accordance with the Listing Rules; and
(b) with respect to CNNP Shandong, it shall have obtained the necessary approval from CNNP and completed the filing of the relevant valuation report issued by an independent valuer in respect of the relevant Sale Equity Interest of the relevant Project Company.

As at the Latest Practicable Date, the above conditions have not yet been satisfied.

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LETTER FROM THE BOARD

Completion of the CNNP Disposals

Within ten (10) business days after CNNP Shandong has paid the relevant Deposit into the Escrow Account, Kong Sun Yongtai and/or Junsheng Jingshi (as the case may be) together with CNNP Shandong shall jointly attend to registration filings for the transfer of equity interest in the relevant Project Company and the change in the legal representative, director(s) and supervisor(s) of such Project Company.

Prior to completion of registration for the equity transfer of a Project Company in favour of CNNP Shandong, CNNP Shandong shall procure for discharge of the relevant finance lease entered into by such Project Company, as the case may be, and arrange for necessary refinancing facilities for such Project Company, where applicable.

On the day on which the registration for equity transfer of a Project Company is effected, the company seals and chops, accounts, licenses and other corporate documents and records of such Project Company shall be handed over to CNNP Shandong.

Completion of each CNNP Disposal shall take place on the date on which the transfer of 100% equity interest in the relevant Project Company has been registered with the relevant administration for industry and commerce and a new business license has been issued to such Project Company.

Settlement Mechanism of the CNNP Disposals

It is not uncommon that a portion of the consideration for transactions similar to each of the CNNP Disposals would be payable one year or more after the completion date and linked with the receipt of completion of rectification works, warranties deposits and/or government subsidies. Set out below is the amount of consideration to be received after each completion of the CNNP Disposals:

No. Name of Disposal 1 Taike Disposal 2 Huaguang Disposal 3 Xingguang Disposal 4 Zhaoxiang Disposal 5 Xushuang Disposal 6 Minghui Disposal 7 Xinhui Disposal 8 Baoyuan Disposal 9 Yunyang Disposal Total	Amount to be received within ten (10) business days after each completion of the CNNP Disposals RMB’000 43,077 102,965 107,380 5,036 3,692 16,165 18,203 34,579 10,021 341,118	Amount to be received within two (2) months after each completion of the CNNP Disposals RMB’000 73,945 166,570 168,865 51,333 46,463 24,736 59,686 47,257 18,431 657,286	Amount to be received within one (1) year after each completion of the CNNP Disposals RMB’000 113,527 190,981 192,457 71,910 67,421 42,613 75,956 64,222 24,872 843,959	Total Consideration RMB’000 172,465 224,909 226,384 102,677 100,169 69,500 96,272 89,181 84,842 1,166,399	% of the consideration to be received within two (2) months after each completion of the CNNP Disposals % 42.9 74.1 74.6 50.0 46.4 35.6 62.0 53.0 21.7	% of the consideration to be received within one (1) year after each completion of the CNNP Disposals % 65.8 84.9 85.0 70.0 67.3 61.3 78.9 72.0 29.3

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As at the Latest Practicable Date, the conditions precedent of the CNNP Disposals have not yet been satisfied. As such, the consideration (consisting of the CNNP Equity Consideration and the repayment of the Related Party Debts) for the CNNP Disposals have not yet been received as at the Latest Practicable Date.

Default Penalty

If CNNP Shandong fails to complete the registration formalities for effecting the equity transfer or pay or procure payment of any amount in breach of the relevant CNNP Disposal Agreement(s), CNNP Shandong will be liable to pay to Kong Sun Yongtai a daily default payment of 0.05% of the relevant amount due, and if the default continues for more than 30 days, Kong Sun Yongtai will be entitled to, among other things, terminate the relevant CNNP Disposal Agreement(s), require CNNP Shandong to return the relevant equity interest that has been transferred to CNNP Shandong and seek for damages from CNNP Shandong for all losses incurred by Kong Sun Yongtai.

Failure of CNNP Shandong to perform its obligation to pay the consideration or the default interest rate or if CNNP Shandong refuse to return the equity interest and assets of the Project Companies pursuant to the CNNP Disposal Agreements constitutes an event of default on the part of CNNP Shandong and CNNP Shandong is liable for losses incurred thereunder. Upon which, Kong Sun Yongtai is entitled to commence litigation against CNNP Shandong in the PRC court with competent jurisdiction and claim restitution in accordance with the PRC Contract Law.

In 2018 and 2019, 國務院 (the State Council of the PRC*) and SASAC issued several notices (the ‘‘Notices’’) regarding the state-owned enterprises (the ‘‘SOEs’’) to fulfill their payment obligations with respect to private enterprises and made it as an indicator for assessing the performance of SOEs and their subsidiaries.

If CNNP Shandong refuses to perform the court decision in favour of Kong Sun Yongtai, Kong Sun Yongtai may seek enforcement by the court. Under this circumstance, CNNP Shandong will be added into 失信執行人名錄 (the List of Untrustworthy Executors*) (an effective enforcement machinery in the PRC), which will have a material adverse effect on the assessment of CNNP Shandong’s credit rating and reputation.

Taking into consideration of the background of CNNP Shandong and the Notices, the Company is of the view that the possibility that CNNP Shandong would not honour its contractual commitment is relatively low.

Arrangements with Junsheng Jingshi regarding Huaguang and Xingguang

With reference to the Company’s circular dated 21 December 2018, (i) Huaguang and Xingguang were originally wholly-owned by Kong Sun Yongtai, (ii) Junsheng Jingshi acquired 98.25% and 99.62% equity interest in Huaguang and Xingguang respectively and such equity interests will be repurchased by Kong Sun Yongtai when the 5-year term of the partnership of Junsheng Jingshi expires and the Company provided a guarantee in favour of Junsheng Jingshi for the performance of Kong Sun Yongtai’s repurchase obligation; (iii) each of Huaguang and Xingguang continues to be under the control of the Group and treated as a subsidiary of the

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Company; and (iv) from the Company’s perspective, the investment and repurchase agreements with Junsheng Jingshi in respect of Huaguang and Xingguang are in substance financing arrangements with the pledge of the equity interests in Huaguang and Xingguang. Following completion of the Huaguang Disposal and the Xingguang Disposal and upon payment of consideration (comprising cost of equity of RMB270,000,000 and premium on equity calculated based on the cost of equity multiplied by 7% annualized rate of return) as agreed under the equity repurchase agreement dated 10 September 2018, the obligation of Kong Sun Yongtai to repurchase such equity interests from Junsheng Jingshi will be treated as discharged.

THE ANGLI DISPOSAL

On 5 December 2019, the Vendor, Guotou and Angli entered into the Angli Agreement, pursuant to which the Vendor conditionally agreed to sell, and Guotou conditionally agreed to acquire, the entire equity interest in Angli and the benefit of the Angli Shareholder’s Loan for a total consideration of approximately RMB446,355,000, subject to adjustment based on the Angli Transition Period Audit.

The principal terms of the Angli Agreement are summarized as follows:

PRINCIPAL TERMS OF THE ANGLI AGREEMENT

Date

5 December 2019

Parties

(i) Guotou;

(ii) the Vendor; and

(iii) Angli.

Subject Matter

The entire equity interest in Angli.

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LETTER FROM THE BOARD

Angli Disposal Consideration

The total consideration for the Angli Disposal is approximately RMB446,355,000, consisting of the Angli Equity Consideration and the Angli Debt Consideration, subject to adjustment.

(A) Angli Equity Consideration

The Angli Equity Consideration is RMB59,000,000, which shall be payable by Guotou to the Vendor in the following manner:

(i) within five (5) business days after the fulfilment of conditions (1) to (4) of the Conditions Precedent of the Angli Disposal, a sum of RMB53,100,000 (the ‘‘Angli Deposit’’), representing 90% of the Angli Equity Consideration, shall be paid into the escrow account (the ‘‘Angli Escrow Account’’) to be jointly established and operated by Guotou and the Vendor;
(ii) within five (5) business days of the later of the Angli Completion Date and the issue of the payment notice by the Vendor, the Angli Deposit shall be released from the Angli Escrow Account to a bank account designated by the Vendor; and
(iii) RMB5,900,000, representing 10% of the Angli Equity Consideration, shall be paid to the Vendor within five (5) business days of the first anniversary of the Angli Completion Date subject to the Vendor having completed certain rectification work of the Angli Project and the Vendor having complied with its representation and warranties under the Angli Agreement.

The Angli Equity Consideration shall be adjusted upon occurrence of the followings:

(i) in the event that Angli distributes dividends (the ‘‘Angli Dividends’’) to the Vendor before the Angli Completion Date resulting in the decrease of the net assets value of Angli as at the Angli Completion Date as compared with that of 31 July 2019; and
(ii) in the event of any change of net assets value of Angli as a result of matters occurred in non-ordinary course of business from 31 July 2019 to the Angli Completion Date, such change will be considered as an adjustment to the Angli Equity Consideration. The Vendor and Guotou shall agree upon the adjusted amount within five (5) business days upon issuance of the Angli Transition Period Audit report (the ‘‘Agreed Adjustment’’).

Upon the occurrence of (i) and (ii) as mentioned above, the Angli Deposit to be released to the Vendor shall be adjusted downward by the amount of the Angli Dividends and the Agreed Adjustment.

As at the Latest Practicable Date, none of the situations mentioned in (i) and (ii) above has occurred.

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LETTER FROM THE BOARD

(B) Angli Debt Consideration

As at 31 July 2019, the Angli Shareholder’s Loan was in the amount of approximately RMB387,355,000. The Angli Shareholder’s Loan as at the Angli Completion Date shall be determined based on the Angli Transition Period Audit and agreed between Guotou and the Vendor. The Angli Debt Consideration shall be payable to the Vendor on or before 31 July 2021 in the following manner:

(i) within ten (10) business days of the Angli Completion Date, the amount equal to the Angli Shareholder’s Loan as at the Angli Completion Date minus items (ii), (iii) and (iv) listed below shall be paid to the Vendor;
(ii) within five (5) business days upon the Vendor having replaced the defected equipment of the Angli Project to the satisfaction of Guotou, the amount of RMB16,875,000 shall be paid to the Vendor;
(iii) within five (5) business days upon the Vendor having completed certain rectification work required by the local power grid corporation, the amount of RMB13,500,000 shall be paid to the Vendor; and
(iv) the rectification deposit in an aggregate amount of RMB4,400,000 shall be paid to the Vendor within five (5) business days upon completion of each of the rectification work items according to the schedule set out in the Angli Agreement.

Basis of the consideration for the Angli Disposal

The consideration for the Angli Disposal was determined upon arm’s length negotiations between the Vendor and Guotou with reference to the unaudited total assets of Angli as at 31 July 2019, being the value of the underlying assets of Angli, in the amount of approximately RMB1,006,793,000, and adjusted by (a) applying a discount of approximately 6.2%, resulting in the amount of approximately RMB944,847,000; and (b) subtracting the total liabilities due to third parties (being total liabilities of Angli less the Angli Shareholder’s Loan) as at 31 July 2019 in the amount of approximately RMB498,492,000, which will remain payable by Angli upon completion of the Angli Disposal. The Angli Shareholder’s Loan, which represents the capital injected by the shareholder of Angli, was added back to the net assets value of Angli in determining the value of Angli.

When determining the total consideration for the Angli Disposal, the management of the Company took into consideration of the proportion of the Angli Shareholder’s Loan provided by the Vendor to Angli being relatively higher (i.e. approximately 42% as compared to the total borrowings of Angli) as compared to the proportion of shareholder’s loan provided by the Group to its other solar power projects (i.e. typically an average of approximately 16% as compared to the total borrowing of the relevant project company). Given the relatively higher proportion of shareholder’s loan provided by the Group to Angli as part of the capital injected by the Vendor to Angli, the leverage ratio, which was calculated by the total liabilities due to third parties over the total assets, is lower as compared to the other solar power projects of the Group. As 100% of the outstanding Angli Shareholder’s Loan and the total liabilities due to third parties would remain repayable following the completion of the Angli Disposal, the

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LETTER FROM THE BOARD

Company considers that it is appropriate to apply the discount of approximately 6.2% to the total assets of Angli in determining the total consideration for the Angli Disposal. On the other hand, given that 100% of the total liabilities due to third parties would remain payable by Angli upon completion of the Angli Disposal, 100% of the total liabilities due to third parties was subtracted for the purpose of determining the total consideration for the Angli Disposal. Based on the aforesaid, the Company is of the view that the methodology adopted in determining the total consideration for the Angli Disposal is fair and reasonable.

In considering the reasonableness of the discount represented by the consideration to the value of the underlying assets of Angli, the management of the Company took into consideration of the reasons for the Angli Disposal as set out in the paragraph headed ‘‘Reasons for and Benefits of the CNNP Disposals and the Angli Disposal’’ below as well as:

(i) the unaudited total assets and total liabilities of Angli as at 31 July 2019;
(ii) the amount of renewable energy subsidies receivable by Angli from the relevant PRC governmental entity in the amount of approximately RMB157,353,000 as at 31 July 2019;
(iii) the substantial amount of the interest-free shareholder’s loans to Angli compared with other project companies;
(iv) the outstanding amount of the Angli Shareholder’s Loan as at 31 July 2019;
(v) the financial and cash flow position of Angli, in particular, its net cash outflow position for the years ended 31 December 2017 and 2018 if the Angli Shareholder’s Loan was not provided;
(vi) the expected annual finance costs saving of the Group upon completion of the Angli Disposal;
(vii) the expected annual solar power plant operation and maintenance service fee income of the Group to be generated upon the completion of the Angli Disposal;
(viii) the Comparable Transactions identified by the Directors as a reference to determine the discount rate of approximately 6.2% applied to the total assets of Angli; and
(ix) the consideration and the payment terms agreed with Guotou being the most favourable among those offered by other potential purchasers who the Company could identify.

Based on publicly available information, the discount/premium to the total assets of the Comparable Transactions ranged from a discount rate of approximately 8.3% to a premium of approximately 5.5%. The discount rate of approximately 6.2% is within the range of Comparable Transactions identified by the Directors in determining the consideration for the Angli Disposal. Details of the Comparable Transactions are set out in the paragraph headed under ‘‘Comparable Transactions’’ below.

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LETTER FROM THE BOARD

The aggregated amount of the financial benefit of the Angli Disposal to the Group is approximately RMB36,000,000, being the sum of (a) the saving of annual finance costs of not less than approximately RMB30,000,000 and (b) the annual operation and maintenance service fee of approximately RMB6,000,000 to be receivable by the Group.

Although Angli is profit-making, its capital and operating expenses have been substantially funded by interest-free shareholder’s loans from the Group from time to time, which in turn is funded by interest-bearing borrowings incurred by the Group at the prevailing market rate. The Angli Disposal represents an opportunity for the Group to recoup its capital investments in Angli and to relieve the Group from its funding commitment to Angli in the form of shareholder’s loans, which are costly to maintain. Also, Angli was valued at approximately RMB384,529,000 as at 30 September 2019 based on the final valuation report. The total consideration for the Angli Disposal (comprising the Angli Equity Consideration and the Angli Debt Consideration) is approximately RMB446,355,000, representing a premium rate of approximately 16.1% to the aforesaid valuation amount.

Taking into consideration the factors as highlighted above, and considering that the Group will be able to realize its investment in Angli, the Directors are of the view that the consideration for the Angli Disposal is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Conditions Precedent of Angli Disposal

Completion of the Angli Disposal is subject to the following Conditions Precedent of Angli Disposal being fulfilled:

(1) CITIC Finance having provided the written consent to the Angli Disposal;
(2) the Vendor, its related parties and Angli having entered into the debt confirmation agreement in respect of the restructuring and offset of the related party debts;
(3) the Company having obtained the Shareholders’ approval at the EGM for the Angli Agreement and the transactions contemplated thereunder in accordance with the Listing Rules;
(4) Angli and the designated party of the Vendor having entered into the three-year service maintenance agreement regarding the maintenance of the Angli Project in the form to the satisfaction of Guotou;
(5) the Vendor having provided to Guotou the termination agreements of Angli’s existing employees or similar documents having the same legal effect;
(6) the Vendor having provided to Guotou a lease termination agreement or a novation agreement of Angli’s Xi’an office;

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LETTER FROM THE BOARD

(7) each party to the Angli Agreement having completed the handover procedures including numbering the properties and collating the handover documents of Angli;
(8) the Angli Deposit having been paid into the Angli Escrow Account; and
(9) the Vendor and Guotou having agreed on the adjusted Angli Equity Consideration (if applicable) and the outstanding amount of the Angli Shareholder’s Loan as at the Angli Completion Date based on the Angli Transition Period Audit.

If any of the above conditions has not be fulfilled within five (5) business days upon issuance of the Angli Transit Period Audit report, the Vendor and Guotou will negotiate to extend the deadline of these conditions or if appropriate, waive these conditions. If the Vendor and Guotou fail to reach agreement on the extension or waiver, the Angli Agreement will be terminated with immediate effect.

Save for items (2), (4), (5) and (7) of the Conditions Precedent of Angli Disposal, other Conditions Precedent has not been satisfied as at the Latest Practicable Date.

Completion of the Angli Disposal

Within five (5) business days of the satisfaction of the Conditions Precedent of Angli Disposal, each party to the Angli Agreement shall coordinate and file the documents in respect of the transfer of the equity interest of Angli with the relevant industry and commerce bureau.

Upon completion of the Angli Disposal, Angli will cease to be a subsidiary of the Company and its financial statements will no longer be consolidated in the Group’s financial statements.

Settlement Mechanism of the Angli Disposal

It is not uncommon that a portion of the consideration for transactions similar to the Angli Disposal would be payable one year or more after the completion date and linked with the receipt of completion of rectification works and/or warranties deposits. As for the Angli Disposal, (i) the payment of the Angli Deposit representing approximately 90% of the Angli Equity Consideration shall be paid to the Angli Escrow Account and released to the Vendor within five (5) business days of the Angli Completion Date; and (ii) approximately RMB352,580,000, representing approximately 90% of the Angli Debt Consideration shall be payable to the Vendor within 10 business days of the Angli Completion Date. As such, the Vendor will receive approximately RMB405,680,000, representing approximately 90.9% of the total consideration for the Angli Disposal within 10 business days of the Angli Completion Date. Approximately RMB411,580,000 representing approximately 92.2% of the total consideration for the Angli Disposal, will be received within one year after the completion of Angli Disposal. The remaining consideration in the amount of approximately RMB34,775,000 will be paid to the Vendor subject to the completion of the replacement and rectification works of Angli.

As at the Latest Practicable Date, Guotou had complied with the payment schedule in accordance with the Huzhou Xianghui Disposal agreement.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the Conditions Precedent of the Angli Disposal have not yet been fully satisfied. As such, the consideration (consisting of the Angli Equity Consideration and the Angli Debt Consideration) for the Angli Disposal have not yet been received as at the Latest Practicable Date.

Default Penalty

If Guotou fails to fulfil its obligation to pay the consideration pursuant to the terms of the Angli Agreement, Guotou will be liable to pay to the Vendor a daily default payment of 0.05% of the relevant amount due, and if the default continues for more than 30 days, the Vendor will be entitled to, among other things, terminate the Angli Agreement, require Guotou to return the relevant equity interest that has been transferred to Guotou and seek for damages from Guotou for all losses incurred by the Vendor.

Failure of Guotou to perform its obligation to pay the consideration or the default interest rate or if Guotou refuses to return the equity interest and assets of Angli pursuant to the Angli Agreement constitutes an event of default on the part of Guotou and Guotou is liable for losses incurred thereunder. Upon which, the Vendor is entitled to commence litigation against Guotou in the PRC court with competent jurisdiction and claim restitution in accordance with the PRC Contract Law.

If Guotou refuses to perform the court decision in favour of the Vendor, the Vendor may seek enforcement by the court. Under this circumstance, Guotou will be added into 失信執行人名錄 (the List of Untrustworthy Executors*) (an effective enforcement machinery in the PRC), which will have a material adverse effect on the assessment of Guotou’s credit rating and reputation.

Also, pursuant to the Notices, the fulfillment of payment obligation of SOEs to private enterprises is an indicator for assessing the performance of SOEs and their subsidiaries.

Taking into consideration of the general market practice in the solar industry, the Huzhou Xianghui Disposal underwent by the Group and Guotou, the background of Guotou and the Notices, the Directors are of the view that the settlement and completion mechanism is sufficient to safeguard the Company’s right to receive the full consideration and the possibility of Guotou would not honour its contractual commitment is relatively low.

Termination of the guarantee and the CITIC Finance Lease

As at 31 July 2019, the total amount (including, among others, rental payments, interests and handling fees) payable by Angli under the CITIC Finance Lease was approximately RMB638,703,000.

Pursuant to the Angli Agreement, by no later than 180 days after completion of the Angli Disposal, Guotou shall (i) provide necessary financing facilities to Angli for its repayment of the outstanding amount under the CITIC Finance Lease and terminate the CITIC Finance Lease and (ii) procure for the release of the guarantee provided by the Vendor and its affiliates to secure the borrowings of Angli. In the event that Guotou fails to fulfil such obligation, the

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LETTER FROM THE BOARD

Vendor is entitled to terminate the Angli Agreement and unwind the Angli Disposal and Guotou is liable to pay to the Vendor a daily default payment of 0.01% on the principal guaranteed amount under the CITIC Finance Lease.

COMPARABLE TRANSACTIONS

The Company selected the Comparable Transactions listed below as a reference to determine the rate of discount of approximately 6.1% and 6.2% applied the total assets of the Project Companies and Angli respectively. The Comparable Transactions were selected and were considered as comparable to the CNNP Disposals and the Angli Disposal as contemplated under the CNNP Disposal Agreements and the Angli Disposal Agreement as in each of the Comparable Transactions:

(i) the subject entity is principally engaged in solar power plants operations in the PRC;
(ii) the underlying power plant has been in operation for more than six months and was profit-making in the latest financial year; and
(iii) the transaction took place in either 2018 or 2019 and involved a publicly listed company.

Taking into account of the above-mentioned selection criteria, the list of Comparable Transactions represents an exhaustive list of comparable transactions identified by the Directors. Since the information of the Comparable Transactions is publicly available and thus more reliable and based on the selection criteria, they are comparable to the CNNP Disposals and the Angli Disposal. Accordingly, the Directors are of the view that they are fair and representative samples to determine the discount rate of approximately 6.1% and 6.2% being applied to the total assets of the Project Companies and Angli respectively.

Details of the Comparable Transactions with the discount/premium to the total assets of the subject entity are set out below:

				Aggregate
		Name of the	Transaction	consideration for	Total assets of the	Discount/
No.	Date	public company	description	the transaction	subject entity	Premium rate
1.	18 April 2018	Beijing Enterprises	BECE announced a	RMB1,099,682,380	RMB1,123,000,000 as	Discount of
		Clean Energy	potential acquisition		at 31 March 2018	approximately
		Group Limited	of a 100% equity			2.1% to the
		(‘‘BECE’’) (stock	interest in a			total assets of
		code: 1250),	company which was			the potential
		whose shares are	operating a 100MW			acquired entity
		listed on the	solar power plant
		Stock Exchange	in Yancheng City,
			Jiangsu Province,
			the PRC.

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LETTER FROM THE BOARD

				Aggregate
		Name of the	Transaction	consideration for	Total assets of the	Discount/
No.	Date	public company	description	the transaction	subject entity	Premium rate
2.	18 April 2018	BECE	BECE announced a	RMB251,052,605	RMB239,000,000 as at	Premium of
			potential acquisition		31 March 2018	approximately
			of a 100% equity			5.0% of the
			interest in a			total assets of
			company which was			the potential
			operating a 20MW			acquired entity
			solar power plant
			in Yancheng City,
			Jiangsu Province,
			the PRC.
3.	17 May 2018	Shenzhen Clou	Clou announced a	RMB177,915,000	RMB178,119,000 as at	Discount of
		Electronics Co	disposal of a 100%		28 April 2018	approximately
		Ltd (‘‘Clou’’)	equity interest in a			0.1% of the
		(stock code:	company which was			total assets of
		002121), whose	operating a 20MW			the disposed
		shares are listed	solar power plant			entity
		on the Shenzhen	in Zhuozi County,
		Stock Exchange)	Inner Mongolia, the
			PRC.
4.	27 June 2018	Clou	Clou announced a	RMB270,830,000	RMB260,175,000 as at	Premium of
			disposal of a 100%		31 December 2017	approximately
			equity interest in a			4.1% of the
			company which was			total assets of
			operating a 30MW			the disposed
			solar power plant			entity
			in Ningxia
			Autonomous
			Region, the PRC.
5.	13 July 2018	常州亞瑪頓股份有限	Changzhou Almaden	RMB366,960,000	RMB400,005,000 as at	Discount of
		公司(Changzhou	announced a		31 March 2018	approximately
		Almaden Co.,	disposal of 100%			8.3% to the
		Ltd.*)	equity interest in a			total assets of
		(‘‘Changzhou	company which was			the disposed
		Almaden’’) (stock	operating a 50MW			entity
		code: 002623),	solar power plant
		whose shares are	in Guizhou
		listed on the	Province, the PRC.
		Shenzhen Stock
		Exchange
6.	19 September	GCL New Energy	GCL acquired a 100%	RMB901,991,000	RMB964,862,000 as at	Discount of
	2018	Holdings Ltd	equity interest in a		the acquisition date	approximately
		(‘‘GCL’’) (stock	company which was			6.5% to the
		code: 451), whose	operating a 110			total assets
		shares are listed	MW solar power			value of the
		on the Stock	plant Huai’an City,			acquired entity
		Exchange	Jiangsu Province,
			the PRC.

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LETTER FROM THE BOARD

				Aggregate
		Name of the	Transaction	consideration for	Total assets of the	Discount/
No.	Date	public company	description	the transaction	subject entity	Premium rate
7.	2 November	珈偉新能源股份有限	Jiawei announced a	RMB1,029,566,778	RMB975,758,600 as at	Premium of
	2018	公司(Jiawei	disposal of 100%		31 December 2017	approximately
		Renewable Energy	equity interest in a			5.5% to the
		Co., Ltd.*)	company, which			total assets of
		(‘‘Jiawei’’) (stock	was operating a			the disposed
		code: 300317),	100MW solar			entity
		whose shares are	power plant in
		listed on the	Gaoyou City,
		Shenzhen Stock	Jiangsu Province,
		Exchange	the PRC.
8.	30 December	GCL	GCL disposed a 100%	RMB889,750,000	RMB871,808,000 as at	Premium of
	2018		equity interest in a		the disposal date	approximately
			company which was			2.1% to the
			operating a solar			total assets
			power plant in			value of the
			Inner Mongolia, the			disposed entity
			PRC.
9.	21 March 2019	GCL	GCL acquired a 100%	RMB356,547,000	RMB367,534,000 as at	Discount of
			equity interest in a		the acquisition date	approximately
			company which was			3.0% to the
			operating a 35MW			total assets
			solar power plant			value of the
			in the PRC.			acquired entity

Based on publicly available information, the discount/premium to the total asset of the Comparable Transactions above ranged from a discount of approximately 8.3% to a premium of approximately 5.5%, which the Company considers as comparable to the approximately 6.1% and 6.2% discount rate applied to the value of the underlying assets of the Project Companies as at the Reference Date and Angli as at 31 July 2019 respectively prior to subtracting the total liabilities due to third parties in reaching the total consideration for the CNNP Disposals and the Angli Disposals.

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LETTER FROM THE BOARD

INFORMATION ON THE PARTIES

The Company is principally engaged in the investment in and operation of solar power plants, provision of solar power plant operation and maintenance services, provision of financial services, trading of liquefied natural gas and asset management.

The Vendor is an indirect wholly-owned subsidiary of the Company which is principally engaged in the investment in and operation of solar power plants, provision of solar power plant operation and maintenance services, provision of financial services, trading of liquefied natural gas and asset management.

Junsheng Jingshi is a limited partnership established in the PRC, with (i) 君盛投資管理有限公司 (Junsheng Investment Management Co., Ltd.) (‘‘Junsheng’’), a company established in the PRC, as general partner and executive partner; (ii) 天安人壽保險有限公司 (Tianan Life Insurance Co., Ltd.) (‘‘Tianan’’), a company established in the PRC, as senior limited partner, and (iii) the Vendor as junior limited partner. The business scope of Junsheng Jingshi is equity investments and related consulting services. Junsheng Jingshi is mainly engaged in, among other things, investments in high-tech, energy sector and other high growth unlisted enterprises. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, each of Junsheng, Tianan and their respective ultimate beneficial owners are third parties independent of the Company and connected persons of the Company. Further details on Junsheng Jingshi and its partners are set out in the Company’s circular dated 21 December 2018.

CNNP Shandong is a company established in the PRC with limited liability. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, (i) CNNP Shandong is a wholly-owned subsidiary of CNNP and is ultimately controlled by SASAC; and (ii) each of CNNP Shandong and its ultimate beneficial owner(s) is a third party independent of the Company and connected persons of the Company. Based on the publicly available information, CNNP Shandong principally engages in the pre-development of nuclear power projects, nuclear power operation safety technology research and related technical services and consulting services, investment and operation management of supporting facilities for nuclear power projects, investment and management of power sales and transmission and distribution projects, investment and development and operation management of wind power, photoelectric, and pumped energy storage clean energy projects. It acquired 大柴旦明陽新能源有限公司 (Dachaidan Ming Yang New Energy Co., Ltd.) in 2019, a company engaging in the development of nuclear projects in the PRC and also entered into a share purchase agreement with 永州界牌協合風力發電有限公司 (Yongzhou Jiepai Century Concord Wind Power Co., Ltd.) in November 2019 for acquiring a wind power plant in the PRC.

Guotou is a company established in the PRC with limited liability and whose shares are listed on Shanghai Stock Exchange with the stock code of 600886. It is principally engaged in the investment, construction, operation and management of energy projects with a focus on electricity generation. The largest ultimate beneficial owner of Guotou is SASAC. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, each of Guotou and its ultimate beneficial owners is a third party independent of the Company and connected persons of the Company. According to the third quarterly report of Guotou for

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the three months ended 30 September 2019, (i) the total assets and the net assets attributable to shareholders of Guotou are approximately RMB225,178,146,000 and RMB73,873,354,000, respectively and (ii) the total revenue and the net profit attributable to shareholders of Guotou for the three months ended 30 September 2019 are RMB12,636,584,000 and RMB3,850,715,000, respectively.

INFORMATION ON THE PROJECT COMPANIES

Taike

Taike was established in the PRC on 19 April 2013. As at the Latest Practicable Date, Taike had a registered capital of RMB88,000,000 and was wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Lanzhou Taike Project. The construction of Lanzhou Taike Project has been completed and started power generation and the power plant has been connected to the power grid.

The unaudited financial results of Taike for the two years immediately preceding the Latest Practicable Date are as follows:

			For the year ended 31 December	For the year ended 31 December
			2017	2018
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	7,644	12,076
Net	profit	after tax	7,644	11,152

The unaudited net assets value of Taike as at 30 September 2019 was approximately RMB120,851,000. As at 30 September 2019, the total book value of equity of Taike, which is the sum of the unaudited net asset value of Taike and the shareholder’s loan due from Taike to the Vendor and its affiliates, is amounted to approximately RMB205,798,000. Based on the final valuation report, Taike was valued at approximately RMB151,038,000 as at 30 September 2019, representing a discount rate of approximately 26.6% to the total book value of equity of Taike as at 30 September 2019.

Artux Huaguang

Artux Huaguang was established in the PRC on 21 July 2014. As at the Latest Practicable Date, Artux Huaguang had a registered capital of RMB285,000,000 and was owned as to 98.25% by Junsheng Jingshi and 1.75% by the Vendor. It is principally engaged in the development, construction and operation of the Artux Huaguang Project. The construction of Artux Huaguang Project has been completed and started power generation and the power plant has been connected to the power grid.

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LETTER FROM THE BOARD

The unaudited financial results of Artux Huaguang for the two years immediately preceding the Latest Practicable Date are as follows:

			For the year ended 31 December	For the year ended 31 December
			2017	2018
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	11,409	12,779
Net	profit	after tax	11,409	12,779

The unaudited net assets value of Artux Huaguang as at 30 September 2019 was approximately RMB45,450,000. As at 30 September 2019, the total book value of equity of Artux Huaguang, which is the sum of the unaudited net asset value of Artux Huaguang and the shareholder’s loan due from Artux Huaguang to the Vendor and its affiliates, is amounted to approximately RMB279,172,000. Based on the final valuation report, Artux Huaguang was valued at approximately RMB217,998,000 as at 30 September 2019, representing a discount rate of approximately 21.9% to the total book value of equity of Artux Huaguang as at 30 September 2019.

Artux Xingguang

Artux Xingguang was established in the PRC on 20 March 2014. As at the Latest Practicable Date, Artux Xingguang had a registered capital of RMB261,000,000 and was owned as to 99.62% by Junsheng Jingshi and 0.38% by the Vendor. It is principally engaged in the development, construction and operation of the Artux Xingguang Project. The construction of Artux Xingguang Project has been completed and started power generation and the power plant has been connected to the power grid.

The unaudited financial results of Artux Xingguang for the two years immediately preceding the Latest Practicable Date are as follows:

			For the year ended 31 December	For the year ended 31 December
			2017	2018
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	13,137	15,381
Net	profit	after tax	13,137	15,381

The unaudited net assets value of Artux Xingguang as at 30 September 2019 was approximately RMB48,363,000. As at 30 September 2019, the total book value of equity of Artux Xingguang, which is the sum of the unaudited net asset value of Artux Xingguang and the shareholder’s loan due from Artux Xingguang to the Vendor and its affiliates, is amounted to approximately RMB250,761,000. Based on the final valuation report, Artux Xingguang was

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valued at approximately RMB199,615,000 as at 30 September 2019, representing a discount rate of approximately 20.4% to the total book value of equity of Artux Xingguang as at 30 September 2019.

Zhaoxiang

Zhaoxiang was established in the PRC on 10 September 2012. As at the Latest Practicable Date, Zhaoxiang had a registered capital of RMB30,000,000 and was wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Hami Zhaoxiang Project. The construction of Hami Zhaoxiang Project has been completed and started power generation and the power plant has been connected to the power grid.

The unaudited financial results of Zhaoxiang for the two years immediately preceding the Latest Practicable Date are as follows:

			For the year ended 31 December	For the year ended 31 December
			2017	2018
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	2,186	4,734
Net	profit	after tax	2,186	4,734

The unaudited net assets value of Zhaoxiang as at 30 September 2019 was approximately RMB40,696,000. As at 30 September 2019, the total book value of equity of Zhaoxiang, which is the sum of the unaudited net asset value of Zhaoxiang and the shareholder’s loan due from Zhaoxiang to the Vendor and its affiliates, is amounted to approximately RMB121,681,000. Based on the final valuation report, Zhaoxiang was valued at approximately RMB93,779,000 as at 30 September 2019, representing a discount rate of approximately 22.9% to the total book value of equity of Zhaoxiang as at 30 September 2019.

Xushuang

Xushuang was established in the PRC on 27 September 2012. As at the Latest Practicable Date, Xushuang had a registered capital of RMB20,000,000 and was wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Hejing Xushaung Project. The construction of Hejing Xushuang Project has been completed and started power generation and the power plant has been connected to the power grid.

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LETTER FROM THE BOARD

The unaudited financial results of Xushuang for the two years immediately preceding the Latest Practicable Date are as follows:

			For the year ended 31 December	For the year ended 31 December
			2017	2018
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	5,231	2,745
Net	profit	after tax	5,231	2,745

The unaudited net assets value of Xushuang as at 30 September 2019 was approximately RMB30,783,000. As at 30 September 2019, the total book value of equity of Xushuang, which is the sum of the unaudited net asset value of Xushuang and the shareholder’s loan due from Xushuang to the Vendor and its affiliates, is amounted to approximately RMB108,531,000. Based on the final valuation report, Xushuang was valued at approximately RMB85,154,000 as at 30 September 2019, representing a discount rate of approximately 21.5% to the total book value of equity of Xushuang as at 30 September 2019.

Minghui

Minghui was established in the PRC on 31 May 2015. As at the Latest Practicable Date, Minghui had a registered capital of RMB60,000,000 and was wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Julu Minghui Project. The construction of Julu Minghui Project has been completed and started power generation and the power plant has been connected to the power grid.

The unaudited financial results of Minghui for the two years immediately preceding the Latest Practicable Date are as follows:

			For the year ended 31 December	For the year ended 31 December
			2017	2018
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	11,310	5,853
Net	profit	after tax	11,310	5,853

The unaudited net assets value of Minghui as at 30 September 2019 was approximately RMB88,446,000. As at 30 September 2019, the total book value of equity of Minghui, which is the sum of the unaudited net asset value of Minghui and the amount due from the Group to Minghui, is amounted to approximately RMB59,299,000. Based on the final valuation report, Minghui was valued at approximately RMB58,592,000 as at 30 September 2019, representing a discount rate of approximately 1.1% to the total book value of equity of Minghui as at 30 September 2019.

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LETTER FROM THE BOARD

Xinhui

Xinhui was established in the PRC on 11 March 2015. As at the Latest Practicable Date, Xinhui had a registered capital of RMB20,000,000 and was wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Liyang Xinhui Project. The construction of Liyang Xinhui Project has been completed and started power generation and the power plant has been connected to the power grid.

The unaudited financial results of Xinhui for the two years immediately preceding the Latest Practicable Date are as follows:

			For the year ended 31 December	For the year ended 31 December
			2017	2018
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	7,746	9,248
Net	profit	after tax	7,746	8,952

The unaudited net assets value of Xinhui as at 30 September 2019 was approximately RMB44,527,000. As at 30 September 2019, the total book value of equity of Xinhui, which is the sum of the unaudited net asset value of Xinhui and the shareholder’s loan due from Xinhui to the Vendor and its affiliates, is amounted to approximately RMB60,748,000. Based on the final valuation report, Xinhui was valued at approximately RMB61,047,000 as at 30 September 2019, representing a premium rate of approximately 0.5% to the total book value of equity of Xinhui as at 30 September 2019.

Baoyuan

Baoyuan was established in the PRC on 4 March 2014. As at the Latest Practicable Date, Baoyuan had a registered capital of RMB60,000,000 and was wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Qianyang Baoyuan Project. The construction of Qianyang Baoyuan Project has been completed and started power generation and the power plant has been connected to the power grid.

The unaudited financial results of Baoyuan for the two years immediately preceding the Latest Practicable Date are as follows:

			For the year ended 31 December	For the year ended 31 December
			2017	2018
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	5,031	5,423
Net	profit	after tax	5,031	5,423

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LETTER FROM THE BOARD

The unaudited net assets value of Baoyuan as at 30 September 2019 was approximately RMB84,058,000. As at 30 September 2019, the total book value of equity of Baoyuan, which is the sum of the unaudited net asset value of Baoyuan and the shareholder’s loan due from Baoyuan to the Vendor and its affiliates, is amounted to approximately RMB92,613,000. Based on the final valuation report, Baoyuan was valued at approximately RMB76,271,000 as at 30 September 2019, representing a discount rate of approximately 17.6% to the total book value of equity of Baoyuan as at 30 September 2019.

Yunyang

Yunyang was established in the PRC on 25 September 2013. As at the Latest Practicable Date, Yunyang had a registered capital of RMB68,000,000 and was wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Suzhou Yunyang Project and the Suzhou Yunyang Yongqiao Project. The construction of the Suzhou Yunyang Project and the Suzhou Yunyang Yongqiao Project has been completed and started power generation and the power plants have been connected to the power grid.

The unaudited financial results of Yunyang for the two years immediately preceding the Latest Practicable Date are as follows:

			For the year ended 31 December	For the year ended 31 December
			2017	2018
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	18,749	5,710
Net	profit	after tax	18,749	4,495

The unaudited net assets value of Yunyang as at 30 September 2019 was approximately RMB99,535,000. As at 30 September 2019, the total book value of equity of Yunyang, which is the sum of the unaudited net asset value of Yunyang and the amount due from the Group to Yunyang, is amounted to approximately RMB39,985,000. Based on the final valuation report, Yuayang was valued at approximately RMB58,206,000 as at 30 September 2019, representing a premium rate of approximately 45.6% to the total book value of equity of Yunyang as at 30 September 2019.

Angli

Angli was established in the PRC on 13 February 2012. As at the Latest Practicable Date, Angli has a registered capital of RMB1,000,000. It is principally engaged in the development, construction and operation of the Angli Project. The construction of Angli Project has been completed and started power generation and the power plant has been connected to the power grid.

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LETTER FROM THE BOARD

The unaudited financial results of Angli for the two years immediately preceding the Latest Practicable Date are as follows:

			For the year ended 31 December	For the year ended 31 December
			2017	2018
			(unaudited)	(unaudited)
			RMB’000	RMB’000
Net	profit	before tax	29,709	27,188
Net	profit	after tax	29,709	27,188

The unaudited net assets value of Angli as at 30 September 2019 was approximately RMB120,477,000. As at 30 September 2019, the total book value of equity of Angli, which is the sum of the unaudited net asset value of Angli and the shareholder’s loan due from Angli to the Vendor and its affiliates, is amounted to approximately RMB461,071,000. Based on the final valuation report, Angli was valued at approximately RMB384,529,000 as at 30 September 2019, representing a discount rate of approximately 16.6% to the total book value of equity of Angli as at 30 September 2019.

REASONS FOR AND BENEFITS OF THE CNNP DISPOSALS AND THE ANGLI DISPOSAL

The Company has been proactively considering innovative business opportunities, which could strengthen the Group’s core business and reduce its finance costs. The CNNP Disposals and the Angli Disposal represent the Group’s long-term asset-light strategy. The Directors consider that it is a good opportunity for the Group to realise its investment in the Project Companies and Angli so as to better allocate the Group’s resources, optimise its operation model, enhance the efficiency of equipment in solar power plants and accelerate its pace in transforming to asset-light model. Upon completion of the CNNP Disposals and the Angli Disposal, the Group will continue to provide operation and maintenance services to the Project Companies and Angli, which will generate an annual service fee income of approximately RMB23,535,000 to the Group under such asset-light model.

The CNNP Disposals and the Angli Disposal will also lower the Group’s gearing ratio for the following reasons: (i) the net proceeds from the CNNP Disposals and the Angli Disposal will be applied to repay existing debts to reduce the finance costs of the Group; and (ii) related debts incurred by the Project Companies and Angli will no longer be consolidated into the Group’s financial statements upon completion of the CNNP Disposals and the Angli Disposal. By utilising the net proceeds from the CNNP Disposals and the Angli Disposal for repayment of debts, the Remaining Group can benefit from saving of annual finance costs of not less than approximately RMB110,000,000. Although the Project Companies and Angli are profit making and excluding their profits for the year ended 31 December 2018, the Remaining Group would be in a loss-making position for the year ended 31 December 2018. The capital and operating expenses of the Project Companies and Angli have been funded by interest-free shareholder’s loans from the Group from time to time, especially Angli compared with other project companies. The CNNP Disposals and the Angli Disposal will eliminate the Remaining Group’s continuous commitment as shareholder of the Project Companies and Angli including, among

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LETTER FROM THE BOARD

others, the provision of shareholder’s loans to the Project Companies and Angli that are funded by borrowings incurred by the Remaining Group at the prevailing market rate. The Directors consider that these benefits to the Company can outweigh the impact of the loss-making position of the Remaining Group upon completion of the CNNP Disposals and the Angli Disposal and the impact of realising a net loss on the CNNP Disposals and the Angli Disposal in the long run.

Further, upon completion of the CNNP Disposals and the Angli Disposal, the Company will continue to have 34 completed solar power plants with a total installed capacity of 1,278.8 MW. The Company will continue to engage in the solar power plants business with (a) the generation of solar power and sale of electricity to power grid companies through its remaining solar power plants and two solar power plants under construction and (b) the provision of solar power plant operation and maintenance services to third parties, including the various project companies disposed by the Group, through the Group’s own workforce of engineers and maintenance staff. The management team for the operation and management of the Remaining Group will not be downsized as a result of the CNNP Disposals and the Angli Disposal.

Solar power generating business is a capital intensive industry, which highly relies on external financing in order to fund for the construction of solar power plant while the recovery of capital investment takes a long period of time. Any delay in enlisting of the solar power plants of the Group on the Subsidy Catalogue or any delay in the receipt of renewable energy subsidies for its solar power plants that have been enlisted on the Subsidy Catalogue could have a material adverse effect on the Group’s business, financial condition, cash flow and operating results. To cope with the gearing risk, the Group will pay close attention to the market dynamics, and to avoid any unfavorable changes to the Group. The Group has been actively seeking for opportunities to transform into the asset-light model to optimise its finance structure and lower its gearing ratio. The CNNP Disposals and the Angli Disposal represent a good opportunity for the Group to implement its asset-light strategy.

Taking into account of the financial benefits from the CNNP Disposals and the Angli Disposal of not less than approximately RMB133,535,000, including saving of annual finance costs of not less than RMB110,000,000 and additional annual service fee income of approximately RMB23,535,000, as well as the scale of the Remaining Group’s solar power plants business, the Board is of the view that the Remaining Group (after completion of the Previous Disposals, the CNNP Disposals and the Angli Disposal) will remain viable and sustainable and will maintain a sufficient level of operations whilst in the transition to the asset-light strategy. Based on the foregoing, the Directors are of the view that the CNNP Disposals and the Angli Disposal and the terms of the CNNP Disposal Agreements and the Angli Agreement, including the consideration, were entered into on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE CNNP DISPOSALS AND THE ANGLI DISPOSAL

Upon completion of the CNNP Disposals and the Angli Disposal, the Project Companies and Angli will cease to be subsidiaries of the Company and their financial statements will no longer be consolidated into the Group’s financial statements.

Assuming that the CNNP Disposal took place on 1 January 2018 and inclusive of the possible net loss on the CNNP Disposal (without taking into account of the financial benefit from the CNNP Disposals and the annual service fee), for the financial year ended 31 December 2018, the loss/profit of the Group would have changed from a profit of approximately RMB16,277,000 to a loss of approximately RMB170,668,000 as a result of the CNNP Disposals.

Assuming that the Angli Disposal took place on 1 January 2018 and inclusive of the possible net loss on the Angli Disposal (without taking into account of the financial benefit from the Angli Disposal and the annual service fee) for the financial year ended 31 December 2018, the loss/profit of the Group would have changed from a profit of approximately RMB16,277,000 to a loss of approximately RMB74,626,000 as a result of the Angli Disposal.

The above changes in result are mainly attributable to the estimated net loss on the CNNP Disposals and the Angli Disposal. The actual losses as a result of the CNNP Disposals and the Angli Disposal to be recorded by the Company are subject to audit and will be assessed after the completion of the CNNP Disposals and the Angli Disposal.

Upon completion of the CNNP Disposals (without taking into account the Angli Disposal), the unaudited total assets and the total liabilities of the Group will be decreased by approximately RMB1,735,732,000 and RMB1,523,236,000, respectively. Upon completion of the Angli Disposal (without taking into account the CNNP Disposals), the unaudited total assets and the total liabilities of the Group will be decreased by approximately RMB984,594,000 and RMB922,649,000, respectively. Upon completion of the CNNP Disposals and the Angli Disposal, the unaudited total assets and the total liabilities of the Group will be approximately RMB17,341,572,000 and RMB11,410,989,000, respectively.

Subject to final audit, it is expected that the Group will realise a net loss on the CNNP Disposals (without taking into account the Angli Disposal) of not more than approximately RMB215,000,000, which is calculated by reference to the differences between the sum of the CNNP Equity Consideration and the Total Dividend of approximately RMB969,009,000 and (i) the net asset value of the Project Companies of approximately RMB1,181,511,000 based on the unaudited financial information of the Project Companies as at 30 June 2019; and (ii) the related transaction costs, taxes and expenses of the CNNP Disposals.

Subject to final audit, it is expected that the Group will realise a net loss on the Angli Disposal (without taking into account the CNNP Disposals) of not more than approximately RMB65,000,000, which is calculated by reference to the differences between the Angli Equity Consideration and (i) the net asset value of Angli of approximately RMB120,946,000 based on the unaudited financial information of Angli as at 31 July 2019; and (ii) the related transaction costs, taxes and expenses of the Angli Disposal.

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LETTER FROM THE BOARD

Despite the net loss on the CNNP Disposals and the Angli Disposal, having taking into consideration of the reasons for the CNNP Disposals and the Angli Disposal as stated under the paragraph headed ‘‘Reasons for and benefits of the CNNP Disposals and the Angli Disposal’’ above, the Company is of the view that the CNNP Disposals and the Angli Disposal will be in the interests of the Company and its Shareholders as a whole as it will improve the Group’s cash flow position in a long run.

USE OF PROCEEDS

The net proceeds from the CNNP Disposals and the Angli Disposal after deducting the taxation and transaction costs are estimated to be approximately RMB1,165,400,000 and RMB445,355,000, respectively. The Group intends to apply the net proceeds from the CNNP Disposals and the Angli Disposal to repay its debts to reduce the finance costs of the Group, which will lower the Group’s gearing ratio.

The net proceeds from the CNNP Disposals will be used to repay the following loans of the Group:

Identity of lender
Outstanding
amount of
the loan
as at
31 December
2019
(RMB’000)
CDB Leasing
1,642,000
內蒙古呼和浩特金谷農村
商業銀行股份有限公
司(Inner Mongolia
Hohhot Jingu Rural
Commercial Bank
Limited Company)
(‘‘Jingu Bank’’)
89,500
Jingu Bank
223,000
Jinzhou Bank
520,000
台州久安股權投資合夥企
業(有限合夥)
(Taizhou Jiuan Equity
Investment
Partnership (Limited
Partnership))
(‘‘Taizhou Jiuan’’)
1,200,000
Taizhou Jiuan
1,000,000
CDB Leasing
96,850

Amount to be
repaid in
2020
Effective
interest
rate of the
loan
Grant date of
the loan
Due date of
the loan
Expected
interest
expense for
the year
ending
31 December
2020
Purpose of the loan
(RMB’000)
(%)
(RMB’000)
110,062
8.17 26 December
2018
26 December
2030
102,062
Construction of solar
power plant
91,787
7.31 5 June 2017
25 April 2020
2,287
Construction of solar
power plant
228,698
7.31 5 June 2017
25 April 2020
5,698
Construction of solar
power plant
555,919
8.91 25 October
2017
25 October
2020
35,919
Construction of solar
power plant
94,200
9.02 3 November
2016
3 November
2021
94,200
Construction of solar
power plant
59,763
7.47 25 December
2017
20 December
2022
59,764
Construction of solar
power plant
24,971
8.58 31 July 2014
31 July 2024
6,231
Construction of solar
power plant
1,165,400

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LETTER FROM THE BOARD

The net proceeds from the Angli Disposal will be used to repay the following loans of the Group:

Identity of lender
Outstanding
amount of
the loan
as at
31 December
2019
(RMB’000)
China CITIC Bank
Corporation Limited
(‘‘CITIC Bank’’)
177,900
大唐融資租賃有限公司
(Datang Finance
Leasing Limited*)
234,532
Hebei Finance
253,850
Huaxia Finance
400,000
Taizhou Jiuan
500,000
Taizhou Jiuan
500,000
Sino Leasing
95,294
Sino Leasing
132,006
Sino Leasing
93,824
Citic Bank
100,000
Citic Bank
177,900

Amount to be
repaid in
2020
Effective
interest
rate of the
loan
Grant date of
the loan
Due date of
the loan
Expected
interest
expense for
the year
ending
31 December
2020
Purpose of the loan
(RMB’000)
(%)
(RMB’000)
66,691
7.18 9 June 2017
9 June 2027
10,002
Construction of solar
power plant
40,232
6.78 12 May 2017
12 May 2027
14,654
Construction of solar
power plant
45,439
7.28 2 June 2017
2 June 2025
17,141
Construction of solar
power plant
57,582
9.00 1 February
2019
1 February
2029
33,517
Construction of solar
power plant
39,250
9.02 9 September
2016
9 September
2021
39,250
Construction of solar
power plant
29,982
7.47 24 January
2018
23 January
2023
29,982
Construction of solar
power plant
21,804
8.88 15 September
2016
15 September
2026
7,686
Construction of solar
power plant
30,321
9.40 15 March
2017
15 March
2027
12,113
Construction of solar
power plant
21,549
9.48 15 March
2017
15 March
2027
8,608
Construction of solar
power plant
28,986
7.03 26 September
2017
26 September
2027
6,371
Construction of solar
power plant
63,519
7.24 7 July 2017
7 July 2027
8,909
Construction of solar
power plant
445,355

LISTING RULES IMPLICATIONS

As the highest of the applicable percentage ratios set forth under Rule 14.07 of the Listing Rules in respect of each of (i) the CNNP Disposals on an aggregated basis and (ii) the Angli Disposal, exceeds 75%, each of the CNNP Disposals and Angli Disposal constitute, very substantial disposals for the Company under Chapter 14 of the Listing Rules and are therefore subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules. The EGM will be convened and held for the Shareholders to consider and, if thought fit, to approve each of (i) the CNNP Disposal Agreements and the (ii) Angli Agreement, and the transactions contemplated thereunder.

– 62 –

LETTER FROM THE BOARD

LATEST DEVELOPMENT OF THE GROUP

As at the Latest Practicable Date, the Group was negotiating with independent third parties for the possible disposal of two (2) project companies, each holding one (1) solar power plant of the Group, respectively, with a total installed capacity of 80 MW (the ‘‘Further Disposals’’), and the Group had not yet entered into any legally binding agreements for the Further Disposals. If the Further Disposals materialise and assuming completion of the Disposals, the number of completed solar power plants of the Group will be further reduced to 32 and the total installed capacity will be further decreased to 1,198.8 MW. Similar to the Previous Disposals, the CNNP Disposals and the Angli Disposal, the Board expects that the Further Disposals will be in line with the Group’s asset-light strategy, with a focus on lowering the Group’s finance costs and gearing ratio and increasing the Group’s service fee income from provision of operation and maintenance services to the disposed project companies. The Company will only implement the Further Disposals if it is satisfied that the Further Disposals will be beneficial to the Company and the Shareholders as a whole. The Company will make further announcement(s) in respect of the Further Disposal(s) as and when appropriate under the Listing Rules. On the other hand, the management of the Company will look into opportunities to enhance the Company’s capabilities in providing operation and maintenance services, and thus accelerate the shift to asset-light model. However, as at the Latest Practicable Date, the Group has not entered into any legally binding agreement, and is not undergoing any negotiation with any party, for any such acquisition or business opportunities. Save as aforesaid, the Company currently has no intention to dispose or cease any of its remaining businesses or to start or acquire any new business within the coming 12 months.

EGM

Set out on pages EGM-1 to EGM-2 of this circular is a notice of the EGM to be held at Unit 803–4, 8/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong on Tuesday, 21 January 2020 at 9:30 a.m., at which ordinary resolutions will be proposed to approve the CNNP Disposal Agreements and the Angli Agreement and the transactions contemplated therein.

Whether or not you propose to attend the meeting, you are requested to read the notice of EGM and complete the accompanying 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 17M 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.

Pursuant to the Listing Rules, any Shareholder who has a material interest in the CNNP Disposal Agreements or the Angli Agreement and his/her/its close associates is/are required to abstain from voting on the relevant resolution at the EGM. As at the Latest Practicable Date, to the best of the Directors’ knowledge after having made all reasonable enquiries, no Shareholder has a material interest in the CNNP Disposals and the Angli Disposal and,

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LETTER FROM THE BOARD

accordingly, no Shareholder is required to abstain from voting on the ordinary resolutions to approve the CNNP Disposal Agreements and the Angli Agreement and the transactions contemplated thereunder at the EGM.

RECOMMENDATION

The Directors consider that the terms of the CNNP Disposal Agreements and the Angli Agreement and the transactions contemplated thereunder are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that the Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the CNNP Disposal Agreements and the Angli Agreement and the transactions contemplated thereunder.

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 Mr. Jin Yanbing Executive Director

– 64 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF THE FINANCIAL INFORMATION OF THE GROUP

Financial information of the Group for each of the three years ended 31 December 2016, 2017 and 2018 and the six months ended 30 June 2019 are set out in the annual reports of the Group for the years ended 31 December 2016 (pages 71 to 174), 2017 (pages 73 to 180) and 2018 (pages 81 to 200) and the interim report of the Group for the six months ended 30 June 2019 (pages 36 to 78), 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.com) respectively.

2. WORKING CAPITAL

The Directors, after due and careful consideration and taking into account the entering into the CNNP Disposal Agreements and the Angli Disposal, present internal resources, banking and other facilities, the net proceeds from the issuances of bonds, are of the opinion that the Group would have sufficient working capital for at least 12 months from the date of this circular.

3. STATEMENT OF INDEBTEDNESS

As at the close of business on 30 November 2019, being the latest practicable date for the purpose of this statement of indebtedness, the Group’s indebtedness includes secured loans and borrowings amounted to approximately RMB11,045,764,000 and unsecured corporate bonds amounted to approximately RMB286,254,000 and unpaid contractual lease payments amounted to approximately RMB225,745,000.

The Group’s loans and borrowings were secured by its assets, including solar power plants, trade receivables, lease prepayments, financial assets measured at fair value through other comprehensive income and the equity interests of certain subsidiaries. In addition, as at 30 November 2019, other than corporate guarantees from the subsidiaries of the Group, an independent third party had provided unlimited corporate guarantees to certain of the Group’s other borrowings amounting to approximately RMB2,030,018,000.

As at 30 November 2019, the Group had executed a guarantee with respect to a loan of approximately RMB56,968,000 granted by independent third parties to the Company’s associate, under which the Group is liable to pay the proportionate share if the independent third parties are unable to recover the loan from the Company’s associate.

As at 30 November 2019, the Group, as a lessee, has outstanding unpaid contractual lease payments amounting to approximately RMB225,745,000 in aggregate (excluding contingent rental arrangement) in relation to the remaining lease terms of certain lease contracts, which is unsecured and unguaranteed.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Directors confirm that, as of 30 November 2019, being the latest practicable date for the purpose of this statement of indebtedness, save as disclosed above, the Group did not have any issued and outstanding, or authorised or otherwise created but unissued debt securities, term loans, other borrowings, indebtedness, mortgages and charges, contingent liabilities and guarantees.

The Directors confirm that, save as disclosed above, there have been no material changes in the indebtedness or contingent liabilities of the Group as at the Latest Practicable Date.

4. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group is mainly engaged in investment in and the operation of solar power plants, provision of solar power plant operation and maintenance services, provision of financial services, trading of liquefied natural gas and asset management.

Under the Feed-in-Tariff regime, utility-scale ground-mounted solar power plants constructed under the national quota system in the PRC are in principle entitled to receive the Feed-in-Tariff at the same applicable rate for 20 years on the electricity generated after the solar power plants are grid-connected. As at 30 June 2019, the Group had a total of 1,729.3 MW installed capacity of completed solar power plants, which were developed and constructed under the national quota system in the PRC and connected to the State Grid. The Feed-inTariff for utility-scale ground-mounted solar power plant is composed of two components: the sale of electricity at the base tariff rates and the renewable energy subsidies. The sale of electricity at the base tariff rates are equal to the on-grid benchmark tariff rates of local coalfired power plants in the PRC. The renewable energy subsidies are the difference between the Feed-in-Tariff and the sale of electricity at the base tariff rates. Solar power plant operators receive the revenue from the sale of electricity at the base tariff rates from local grid companies or the State Grid. The sale of electricity at the base tariff rates are paid and settled on a monthly basis. Solar farm operators also receive from the local subsidiaries of the State Grid the renewable energy subsidies, which is funded by the Ministry of Finance utilising the income of the Renewable Energy Fund. For utility-scale solar power plant operators to receive the renewable energy subsidies, the relevant utility-scale ground-mounted solar power plants must be enlisted on the Subsidy Catalogue. Following the enlisting, the solar farm operators will receive the renewable energy subsidies due prior to enlisting in batches, as well as the renewable energy subsidies due after enlisting, on a regular basis according to the prevalent payment trends under the Feed-in-Tariff regime.

Since 2009, the Renewable Energy Fund started to record a funding shortfall and has continued to experience funding deficit, which has led to the lead time between the grid connection of solar power plants under the national quota system in the PRC and the settlement of the renewable energy subsidies by the Ministry of Finance as well as the delay of the receipt of the renewable energy subsidies. The NDRC, Ministry of Finance, and the NEA have jointly announced a total of seven batches of utility-scale ground-mounted solar power plants under the Subsidy Catalogue since 2012. The fifth batch of the Subsidy Catalogue covers the utility-scale ground-mounted solar power plants constructed under the national quota system in the PRC that were connected to the State Grid prior to the end of August 2013 and not enlisted on previous batches of the Subsidy Catalogue. As at 30 June 2019, 1 solar

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APPENDIX I

power plant of the Group have been enlisted on the fifth batch of the Subsidy Catalogue. The sixth batch of the Subsidy Catalogue covers the utility-scale ground-mounted solar power plants constructed under the national quota system in the PRC that were connected to the State Grid during the period between September 2013 and February 2015. During the fourth quarter of 2016, the solar power plants enlisted on the sixth batch of the Subsidy Catalogue started to receive the first batch of the renewable energy subsidies incurred up to April 2015. As at 30 June 2019, 5 solar power plants of the Group have been enlisted on the sixth batch of the Subsidy Catalogue. The seventh batch of the Subsidy Catalogue covers the utility-scale ground-mounted solar power plants constructed under the national quota system in the PRC that were connected to the State Grid prior to the end of March 2016 and not enlisted on previous batches of the Subsidy Catalogue. During the third quarter of 2018, the solar power plants enlisted on the seventh batch of the Subsidy Catalogue started to receive the first batch of the renewable energy subsidies incurred up to March 2017. As at 30 June 2019, 16 solar power plants of the Group have been enlisted on the seventh batch of the Subsidy Catalogue. As at 30 June 2019, 22 solar power plants of the Group with an aggregate installed capacity of approximately 709.5 MW have been enlisted on the Subsidy Catalogue, 2 solar power plants of the Group with an aggregate installed capacity of approximately 120 MW have been enlisted in the second batch of the Photovoltaic Poverty Alleviation Subsidy Catalogue* (第二批光伏扶貧補助目錄) and 22 solar power plants of the Group with an aggregate installed capacity of approximately 899.8 MW, which were connected to the State Grid during the period from April 2016 to December 2017, have yet to be enlisted on the Subsidy Catalogue.

As of 31 December 2016, 2017, and 2018 and 30 June 2019, the renewable energy subsidies receivables relating to the sale of electricity amounted to approximately RMB712,663,000, RMB1,508,620,000, RMB2,179,498,000 and RMB2,531,668,000, respectively.

Any delay in enlisting of the solar power plants of the Group on the Subsidy Catalogue or any delay in the receipt of renewable energy subsidies for its solar power plants that have been enlisted on the Subsidy Catalogue could have a material adverse effect on the Group’s business, financial condition and operating results.

In the future, by focusing on clean energy and green finance, the Group will continue to develop its solar power generation business, optimise its operation mode, enhance the efficiency of equipment in solar power plants and accelerate its pace in transforming to assetlight model of ‘‘sale of solar power plant projects and provision of solar power plant operation and maintenance services’’. Through integration of industry and finance, it will also improve its operational efficiency, so as to drive the development of green and low-carbon energy in China and make positive contributions to environmental protection.

In between December 2018 and September 2019, the Group made a strategic move towards asset-light model transformation and has achieved a major milestone. The Group successfully completed the Previous Disposals with total installed capacity of 210 MW and facilitated inflow of capital, which could promote the progress of transformation and upgrade developments and further boost the asset-light model transformation. The Group will further accelerate the asset-light model transformation with the provision of solar power plant operation and maintenance services. It is expected that by transferring the controlling interests

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APPENDIX I

of solar power plant projects, the Group will be able to recycle capital, reduce its debts and finance costs and mitigate the pressure on project financing, while further improve the return on capital and receive stable fees annually by providing solar power plant operation and maintenance services.

Solar power generating business is a capital intensive industry, which highly relies on external financing in order to fund for the construction of solar power plant while the recovery of capital investment takes a long period of time. To cope with the gearing risk, the Group will pay close attention to the market dynamics, and to avoid any unfavorable changes to the Group. Additionally, the Group is constantly pursing asset-light model transformation to optimize its finance structure and lower its gearing ratio.

5. 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 2018, being the date to which the latest audited consolidated financial statements of the Company were made up.

6. MATERIAL ACQUISITION OR DISPOSAL

Save for the CNNP Disposals and the Angli Disposal and the Previous Disposals, the Group had not carried out any material acquisition or disposal after 31 December 2018, being the date to which the latest published audited accounts of the Company have been made up, and up to the Latest Practicable Date.

7. SIGNIFICANT INVESTMENTS

Save for the CNNP Disposals and the Angli Disposal and the Previous Disposals, and save as disclosed under ‘‘Latest Development of the Group’’ in the ‘‘Letter from the Board’’ of this circular, the Group did not have any other significant investments, other material acquisition or disposal after 31 December 2018, and there was no plan authorised by the Board for other material investments or additions of capital assets up to the Latest Practicable Date.

8. MANAGEMENT DISCUSSION AND ANALYSIS ON THE REMAINING GROUP

Upon completion of the CNNP Disposals and the Angli Disposal and Previous Disposals, the Remaining Group will continue to be principally engaged in investment in and the operation of solar power plants, provision of solar power plants operation and maintenance services, provision of financial services, trading of liquefied nature gas and asset management. Set out below is the management discussion and analysis on the Remaining Group for each of the three financial years ended 31 December 2016, 2017 and 2018 and the six months ended 30

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APPENDIX I

June 2019. The financial data in respect of the Remaining Group, for the purpose of this circular, is derived from the consolidated financial statements of the Company for each of the three years ended 31 December 2016, 2017 and 2018 and the six months ended 30 June 2019.

For the year ended 31 December 2016

Business review

The Remaining Group was mainly engaged in investment in and operation of solar power plants, properties and securities investment and sales of life-like plants.

Revenue

The revenue of the Remaining Group decreased by approximately 84.1% from approximately RMB1,657,661,000 for the year ended 31 December 2015 to approximately RMB264,368,000 for the year ended 31 December 2016. The decrease was primarily due to the decrease in revenue from sales of solar energy related products.

Revenue from sales of electricity

The Remaining Group’s revenue from sales of electricity increased significantly by approximately 555.1% from approximately RMB39,415,000 for the year ended 31 December 2015 to approximately RMB258,213,000 for the year ended 31 December 2016 due to the increased installed capacity of grid-connected solar power plants on hand. As at 31 December 2016, the Remaining Group had a total of 819.8 MW installed capacity of solar power plants on hand, comparing to the 320 MW installed capacity of solar power plants on hand as at 31 December 2015.

Revenue from sales of solar energy related products

During the year ended 31 December 2016, the Remaining Group had been exerting most of its investment efforts in its electricity sales segment given that sales of electricity has a relatively higher gross margin. As such, the Remaining Group has lessen its business focus for its sales of solar energy related products which generates relatively lower profit margin and accordingly no revenue was generated from the sales of solar energy related products for the year ended 31 December 2016, as compared with the amount of approximately RMB1,611,711,000 for the year ended 31 December 2015.

Revenue from sales of life-like plants

The Remaining Group’s revenue from sales of life-like plants decreased by approximately 12.4% from approximately RMB4,929,000 for the year ended 31 December 2015 to approximately RMB4,317,000 for the year ended 31 December 2016.

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APPENDIX I

Rental income

The Remaining Group’s rental income decreased by approximately 23.7% from approximately RMB1,606,000 for the year ended 31 December 2015 to approximately RMB1,226,000 for the year ended 31 December 2016, mainly attributable to the disposal of one of the Remaining Group’s investment properties in Hong Kong.

Gross profit and gross profit margin

The gross profit of the Remaining Group decreased by approximately 12.0% from approximately RMB153,793,000 for the year ended 31 December 2015 to approximately RMB135,381,000 for the year ended 31 December 2016. The gross profit of the Remaining Group for the year ended 31 December 2016 decreased due to the decrease in revenue. However, the increase in revenue from sales of higher gross margin electricity and the decrease in revenue from sales of lower gross margin solar energy related products increased the gross profit margin of the Remaining Group from approximately 9.3% for the year ended 31 December 2015 to approximately 51.2% for the year ended 31 December 2016.

(Loss)/gain on fair value changes on investment properties

The Remaining Group holds certain properties for rental income and/or capital appreciation purposes in Hong Kong. The Remaining 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 2016, the Remaining Group recorded a loss on fair value changes on investment properties of approximately RMB5,563,000 (2015: gain of approximately RMB5,222,000). The decrease in fair value of the Remaining Group’s investment properties during the year ended 31 December 2016 was primarily due to a decrease in the property price of one of the investment properties held by the Remaining Group.

Other revenue

Other revenue of the Remaining Group increased by approximately 988.5% from approximately RMB10,178,000 for the year ended 31 December 2015 to approximately RMB110,784,000 for the year ended 31 December 2016. The increase is mainly due to (i) an increase in interest income of approximately RMB67,315,000 as a result of an increase in bank and other deposits.

Other net income (expenses)

The Remaining Group recorded an other net expenses of approximately RMB11,906,000 (2015: other net income of approximately RMB1,071,000). The increase is mainly due to a net foreign exchange loss of approximately RMB11,786,000.

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APPENDIX I

Administrative expenses

Administrative expenses of the Remaining Group increased by approximately 4.2% from approximately RMB189,577,000 for the year ended 31 December 2015 to approximately RMB197,572,000 for the year ended 31 December 2016. The increase was attributable to (i) an increase in salaries, wages and other benefits amounted to approximately RMB27,099,000 due to an increase in head count; (ii) an increase in legal and other professional fees amounted to approximately RMB14,142,000; (iii) an increase in office rental expenses amounted to approximately RMB5,550,000; (iv) an increase in depreciation of property, plant and equipment amounted to approximately RMB3,861,000; and (v) an increase in travelling and transportation expenses amounted to approximately RMB3,287,000.

Gain on disposal of subsidiaries, net

During the year ended 31 December 2016, the Remaining Group disposed of certain of its subsidiaries and recorded a net gain on disposal of subsidiaries of approximately RMB45,591,000 (2015: RMB21,006,000). For details, please refer to note 47 to the financial statements of the 2016 Annual Report.

Gain on disposal/deemed disposal of associates

During the year ended 31 December 2016, the Remaining Group disposed of certain of its associates and recorded a total gain on disposal/deemed disposal of associates of approximately RMB108,918,000 (2015: Nil). For details, please refer to note 20 to the financial statements of the 2016 Annual Report.

Finance costs

Finance costs of the Remaining Group increased by approximately RMB148,283,000 from approximately RMB39,782,000 for the year ended 31 December 2015 to approximately RMB188,065,000 for the year ended 31 December 2016. As the number of and the total installed capacity of the solar power plants held by the Remaining Group increased during the year, the finance costs related to the borrowings of the respective solar power plants also increased significantly during the year under review.

Solar power plants

As at 31 December 2016, the Remaining Group had a net carrying value of approximately RMB5,177,745,000 (2015: RMB1,193,268,000) and approximately RMB2,398,993,000 (2015: RMB2,057,955,000) in completed solar power plants and solar power plants under construction, respectively. During the year ended 31 December 2016, the Remaining Group capitalized on the implementation of the favourable policies by actively investing in and developing solar power plants in China. For details, please refer to note 18 to the financial statements of the 2016 Annual Report. As at 31 December 2016, the Remaining Group had a total of 820.3 MW installed capacity of completed solar power plants on hand, compared to the 320 MW installed capacity of solar power plants on hand as at 31 December 2015.

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APPENDIX I

Interest in a joint venture

As at 31 December 2016, the net carrying value of the joint venture was approximately RMB295,402,000 (2015: RMB286,891,000).

Investment properties

Investment properties decreased from approximately RMB49,010,000 as of 31 December 2015 to approximately RMB984,000 as of 31 December 2016. The decrease was mainly due to the reclassification of an investment property with a carrying value of approximately RMB47,498,000 (2015: Nil) under the classification of ‘‘Assets of a disposal Group classified as held for sale’’ during the year under review.

Goodwill

As at 31 December 2016, the Remaining Group had a total amount of approximately RMB94,436,000 (2015: RMB34,089,000) in respect of goodwill on the acquisition of subsidiaries.

Available-for-sale investments

During the year ended 31 December 2016, the Remaining Group acquired certain available-for-sale investments amounted to approximately RMB352,730,000 (2015: Nil). The unlisted investments are for long-term investment purposes and hence are classified as available-for-sale investments in the consolidated statement of financial position. For details, please refer to note 24 to the financial statements of the 2016 Annual Report.

Financial assets held for trading

As at 31 December 2016, the Remaining Group had financial assets held for trading with market value of approximately RMB236,629,000 (2015: Nil), representing approximately 1.5% (2015: Nil) of the total assets of the Remaining Group as at 31 December 2016. The portfolio of investments managed by the Remaining Group consists of investment in two listed equities in Hong Kong and the PRC (2015: Nil). The Remaining Group held approximately 1.3% (2015: Nil) and 1.7% (2015: Nil) shareholdings in the equity listed in Hong Kong and the PRC respectively as at 31 December 2016. During the year ended 31 December 2016, the Remaining Group had recorded a net unrealised gain on fair value changes through profit or loss which amounted to approximately RMB271,000 (2015: Nil).

Trade, Bills and Other Receivables

Trade, bills and other receivables decreased from approximately RMB3,832,409,000 as of 31 December 2015 to approximately RMB2,578,240,000 as of 31 December 2016. The decrease was mainly due to the repayment of trade and bills receivables and the repayment of loans and advances from 中科恒源科技股份有限公司 (Zhongke Hengyuan Technology Co., Ltd.*) (‘‘Zhongke Hengyuan’’).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Structured bank deposits

As at 31 December 2016, the Remaining Group had placed RMB1,125,000,000 (2015: RMB700,000,000) bank deposits with a bank in the PRC to earn a guaranteed and capital-protected return by making good use of the idle cash of the Company. The deposits were subsequently withdrawn in January 2017. For details, please refer to note 28 to the financial statements of the 2016 Annual Report’’.

Trade and Other Payables

Trade and other payables decreased from approximately RMB1,742,049,000 as of 31 December 2015 to approximately RMB2,217,478,000 as of 31 December 2016. The amount mainly comprised payables to suppliers of solar modules and equipment and EPC contractors for purchase of solar modules and equipment and construction costs of solar power plants. As more solar power plant projects were developed during the year, other payables mainly related to purchase of solar modules and equipment and construction costs of solar power plants have increased from approximately RMB140,537,000 as of 31 December 2015 to approximately RMB849,309,000 as of 31 December 2016.

Liquidity and Capital Resources

As at 31 December 2016, the total amount of structured bank deposits, pledged bank deposits and cash and cash equivalents was approximately RMB1,565,871,000 (2015: RMB1,337,732,000). As at 31 December 2016, cash and cash equivalents of the Remaining Group was approximately RMB440,871,000 (2015: RMB615,923,000), which included an amount of bank deposits of approximately RMB325,751,000 (2015: RMB480,644,000) denominated in RMB and approximately RMB35,990,000 (2015: Nil) of bank balances denominated in Hong Kong dollar placed with banks in the PRC. The remaining balance of the Remaining Group’s cash and cash equivalents consisted primarily of cash on hand and bank balances which were primarily held in Hong Kong dollar denominated accounts with banks in Hong Kong.

As at 31 December 2016, the Remaining Group’s net debt ratio, which was calculated by the total loans and other borrowings and corporate bonds minus total bank and cash on hand and structured bank deposits, over the total equity, was 0.54 (2015: 0.49).

Loans and Borrowings

As at 31 December 2016, the Remaining Group’s total loans and borrowings was approximately RMB4,376,265,000, representing an increase of approximately RMB1,643,502,000 over the amount of approximately RMB2,732,764,000 as at 31 December 2015. The increase in the Remaining Group’s total loans and borrowings was mainly due to an increase in the Remaining Group’s investments in solar power plants which lead to an increase in loans and borrowings to finance such investments. All the loans and borrowings of the Remaining Group, except for an equivalent amount of

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APPENDIX I

approximately RMB8,945,000 (2015: RMB87,305,000) which were denominated in Hong Kong dollar, were denominated in RMB, the functional currency of the Company’s major subsidiaries in the PRC.

Loan from ultimate holding company

On 19 November 2015, the Company and Pohua JT Private Equity Fund L.P. (‘‘Pohua JT’’), the ultimate holding company of the Company, entered into a loan agreement pursuant to which Pohua JT agreed to grant a loan in the aggregate principal amount of HK$1,500,000,000 (equivalent to approximately RMB1,256,670,000) to the Company. The loan was unsecured, interest bearing at 5.8% per annum and to be matured on the third anniversary of the drawndown date. On 2 March 2016, the loan was capitalised in a subscription of the Company’s shares by Pohua JT. For details, please refer to note 34 to the financial statements of the 2016 Annual Report.

Corporate bonds

During the year ended 31 December 2016, the Company issued Hong Kong dollardenominated corporate bonds due in 2019 (the ‘‘Corporate Bonds’’) with an aggregate principal amount of HK$53,500,000 (equivalent to approximately RMB47,856,000) to certain independent third parties. During the year ended 31 December 2016, the net proceeds of the issued Corporate Bonds received by the Company were approximately HK$47,883,000 (equivalent to approximately RMB42,831,000), with total issue cost amounting to approximately HK$5,617,000 (equivalent to approximately RMB5,025,000).

The Corporate Bonds bear an interest of 6% per annum, and will mature on the date immediately following the 36 months after the issue of the Corporate Bonds. The Corporate Bonds are subsequently measured at amortised cost using effective interest method by applying an effective interest rate of 10.24% per annum. Imputed interest of approximately HK$43,455,000 (equivalent to approximately RMB37,188,000) (note 13 to the financial statements of the 2016 Annual Report) was recognised in the profit or loss during the year under review.

Foreign Exchange Risk

The Remaining Group primarily operates its business in the PRC and during the year ended 31 December 2016, the Remaining Group’s revenue were primarily denominated in RMB, being the functional currency of the Remaining Group’s major operating subsidiaries. Accordingly, the Directors expect any future exchange rate fluctuation will not have any material effect on the Remaining Group’s business. The Remaining Group did not use any financial instruments for hedging purpose, but will continue to monitor foreign exchange changes to best preserve the Remaining Group’s cash value.

Charge on Assets

As at 31 December 2016, the Remaining Group had charged solar power plants, trade receivables, property, plant and equipment and lease prepayments with net book value of approximately RMB3,316,375,000 (2015: RMB1,874,683,000), approximately

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

RMB324,845,000 (2015: RMB88,350,000), approximately RMB1,219,000 (2015: RMB273,000) and approximately RMB867,000 (2015: RMB913,000) respectively, to secure general banking and other loans facilities granted to the Remaining Group.

Contingent Liabilities

The Remaining Group acquired equity interests of certain subsidiaries principally engaged in the development of solar power plants projects and the applications for the development of these solar power plant projects were actually carried out by their former shareholders. According to certain notices (the ‘‘Notices’’) issued by the NEA, the Notices prohibit the original applicants who have obtained the approval documents from the relevant government for the solar power plant projects from transferring the equity interests of solar power plant projects before the projects were connected to the power grid. Taking into consideration of the legal opinion sought from the Company’s legal adviser as to PRC law, given that the Remaining Group has obtained the preliminary approval from respective relevant government authorities to continue the remaining development of the solar power plants, the Company’s legal adviser as to PRC law is of the view that it is remote for these subsidiaries to be fined or to have adverse consequences imposed by the relevant government authorities. Accordingly, the Directors consider there is no significant impact on the Remaining Group’s control over these entities and the development of these solar power plants.

The Remaining Group has entered into a guarantee with respect to loans of approximately RMB153,000,000 (2015: RMB120,000,000) granted by 江山寶源國際融資租賃有限公司 (Kong Sun Baoyuan International Financial Leasing Limited*) (‘‘Kong Sun Baoyuan’’) to independent third parties as at 31 December 2016, under which the Remaining Group is liable to pay the proportionate share if Kong Sun Baoyuan is unable to recover the loan from the independent third parties. As at 31 December 2016, no provision for the Remaining Group’s proportionate obligation under the guarantee contracts has been made as the Directors consider that it is not probable that the repayment of the loan will be in default.

Employees and Remuneration Policy

As at 31 December 2016, the Remaining Group had approximately 531 (2015: 236) 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 2016, the total employees benefit expenses (including directors’ emoluments) were approximately RMB96,219,000 (2015: RMB91,972,000). The remuneration policy of the Remaining 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 Remaining Group’s operations.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Significant Investments And Material Acquisition And Disposal

Save as disclosed in the 2016 Annual report, the Remaining Group did not have any significant investments, other material acquisition or disposal during the year ended 31 December 2016, and there was no plan authorised by the Board for other material investments or additions of capital assets as at the date of the 2016 Annual report.

For the year ended 31 December 2017

Business review

The Remaining Group was mainly engaged in investment in and operation of solar power plants, provision of solar power plants operation and maintenance services, provision of financial services and asset management.

Revenue

The revenue of the Remaining Group increased by approximately 254.9% from approximately RMB264,368,000 for the year ended 31 December 2016 to approximately RMB938,120,000 for the year ended 31 December 2017. The increase was primarily due to the increase in revenue from sales of electricity.

Revenue from sales of electricity and provision of solar power plant operation and maintenance services

The Remaining Group’s revenue from sales of electricity increased significantly by approximately 254.0% from approximately RMB258,213,000 for the year ended 31 December 2016 to approximately RMB914,117,000 for the year ended 31 December 2017 due to the increased installed capacity of grid-connected solar power plants. As at 31 December 2017, the Remaining Group had a total of 1,468.8 MW installed capacity of solar power plants, comparing to 819.8 MW installed capacity of solar power plants as at 31 December 2016.

The Remaining Group had, for the first time, generated revenue from provision of solar power plant operation and maintenance services of approximately RMB6,482,000 (2016: Nil) for the year ended 31 December 2017.

Revenue from provision of financial services

The Remaining Groups’ revenue arising from the provision of financial services increased significantly by approximately 2,132.5% from approximately RMB612,000 for the year ended 31 December 2016 to approximately RMB13,663,000 for the year ended 31 December 2017 due to the scale expansion in provision of microfinance services.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Gross profit and gross profit margin

The gross profit of the Remaining Group increased significantly by approximately 347.0% from approximately RMB135,381,000 for the year ended 31 December 2016 to approximately RMB605,121,000 for the year ended 31 December 2017. The gross profit margin of the Remaining Group increased from approximately 51.2% for the year ended 31 December 2016 to approximately 64.5% for the year ended 31 December 2017.

Other gains and losses

Other gains and losses of the Remaining Group decreased significantly by approximately 97.9% from approximately RMB110,784,000 for the year ended 31 December 2016 to approximately RMB1,621,000 for the year ended 31 December 2017. The decrease is mainly due to (i) a decrease in interest income of approximately RMB37,860,000 as a result of a decrease in bank and other deposits; (ii) loss on fair value changes of financial assets held for trading of approximately RMB31,619,000 (2016: net gain of approximately RMB271,000); and (iii) impairment loss recognised in respect of other receivables of approximately RMB12,385,000 (2016: Nil).

Administrative expenses

Administrative expenses of the Remaining Group increased by approximately 61.6% from approximately RMB197,572,000 for the year ended 31 December 2016 to approximately RMB319,291,000 for the year ended 31 December 2017. The increase was mainly attributable to an increase in total employee benefit expenses of approximately RMB114,313,000 due to an increase in head count and an increase in office rental expenses of approximately RMB15,932,000.

Gain on bargain purchase on acquisition of subsidiaries

Gain on bargain purchase on acquisition of subsidiaries represents the excess of fair value of consideration transferred at acquisition over the fair value of the identifiable assets acquired and liabilities assumed for the acquisition. The gain on bargain purchase during the year ended 31 December 2017 amounted to approximately RMB53,260,000 (2016: Nil) as a result of acquisition of certain subsidiaries during the year. For details, please refer to note 45 to the financial statements of the 2017 Annual Report.

Gain on disposal/deregistration of subsidiaries, net

During the year ended 31 December 2017, the Remaining Group disposed/ deregistered certain subsidiaries and recorded net gain on disposal/deregistration of subsidiaries of approximately RMB12,031,000 (2016: RMB45,591,000). For details, please refer to note 46 to the financial statements of the 2017 Annual Report.

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APPENDIX I

Finance costs

Finance costs of the Remaining Group increased by approximately 95.0% from approximately RMB188,065,000 for the year ended 31 December 2016 to approximately RMB366,751,000 for the year ended 31 December 2017. As the number of and the total installed capacity of the solar power plants held by the Remaining Group increased during the year, the finance costs related to the borrowings of the respective solar power plants also increased.

Solar power plants

As at 31 December 2017, the Remaining Group had a net carrying value of approximately RMB9,172,969,000 (2016: RMB5,177,745,000) and approximately RMB1,572,080,000 (2016: RMB2,398,993,000) in completed solar power plants and solar power plants under construction, respectively. During the year ended 31 December 2017, the Remaining Group capitalised on the implementation of the favourable policies by actively investing in and developing solar power plants in the PRC. For details, please refer to note 18 to the financial statements of the 2017 Annual Report. As at 31 December 2017, the Remaining Group had a total of 1,468.8 MW installed capacity of completed solar power plants, comparing to the 819.8 MW installed capacity of solar power plants as at 31 December 2016.

Interest in a joint venture

As at 31 December 2017, the net carrying value of the joint venture was approximately RMB321,421,000 (2016: RMB295,402,000).

Goodwill

As at 31 December 2017, the Remaining Group had a total amount of approximately RMB96,230,000 (2016: RMB94,436,000) in respect of goodwill on the acquisition of subsidiaries.

Available-for-sale investments

Available-for-sale investments increased by approximately 346.9% from approximately RMB352,730,000 as at 31 December 2016 to approximately RMB1,576,206,000 as at 31 December 2017. The increase is mainly due to (i) the acquisition of unlisted equity investment in Bank of Jinzhou Co., Ltd.; (ii) the increase in unlisted equity investment in 內蒙古呼和浩特金谷農村商業銀行股份有限公司 (Inner Mongolia Hohhot Jingu Rural Commercial Bank Limited Company); and (iii) the investment in 19.99% of the total capital contribution in 台州久安股權投資合夥企業(有限合夥) (Taizhou Jiuan Equity Investment Partnership (Limited Partnership)) (‘‘Taizhou Jiuan’’). The investments are for long-term investment purpose and hence are classified as available-for-sale investments in the consolidated statement of financial position. For details, please refer to note 24 to the financial statements of the 2017 Annual Report.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Financial assets held for trading

As at 31 December 2017, the Remaining Group had financial assets held for trading with market value of approximately RMB200,281,000 (2016: RMB236,629,000), representing approximately 1.0% (2016: 1.5%) of the total assets of the Remaining Group as at 31 December 2017. The portfolio of investments managed by the Remaining Group consists of investment in two listed equities in Hong Kong and the PRC (2016: two). The Remaining Group held approximately 1.3% (2016: 1.3%) and 1.7% (2016: 1.7%) shareholdings in the equity listed in Hong Kong and the PRC respectively as at 31 December 2017. During the year ended 31 December 2017, the Remaining Group had recorded a net unrealised loss on fair value changes through profit or loss which amounted to approximately RMB31,619,000 (2016: net unrealised gain of approximately RMB271,000).

Trade, bills and other receivables

Trade, bills and other receivables increased by approximately 15.4% from approximately RMB2,578,240,000 as at 31 December 2016 to approximately RMB2,976,136,000 as at 31 December 2017. The increase was mainly due to an increase in trade and bills receivables from approximately RMB590,956,000 as at 31 December 2016 to approximately RMB1,448,576,000 as at 31 December 2017 which arose from the increase in sales of electricity.

Structured bank deposits

As at 31 December 2016, the Remaining Group placed RMB1,125,000,000 structured bank deposits with a bank in the PRC to earn a guaranteed and capital-protected return by making good use of the idle cash of the Remaining Group. The deposits were withdrawn in January 2017.

Trade and Other Payables

Trade and other payables increased by approximately 50.8% from approximately RMB2,217,478,000 as at 31 December 2016 to approximately RMB3,344,845,000 as at 31 December 2017. The balance mainly comprised payables to suppliers of solar modules and equipment and EPC contractors for purchase of solar modules and equipment and construction costs of solar power plants. As more solar power plant projects were constructing during the year, trade payables, which was mainly related to construction costs of solar power plants, have increased by approximately 117.7% from approximately RMB1,368,169,000 as at 31 December 2016 to approximately RMB2,977,861,000 as at 31 December 2017.

Liquidity and Capital Resources

As at 31 December 2017, cash and cash equivalents of the Remaining Group was approximately RMB437,784,000 (2016: RMB440,871,000), which included an amount of bank balances of approximately RMB418,555,000 (2016: RMB325,751,000) denominated in RMB placed with banks in the PRC. As at 31 December 2016, structured bank deposits

– I-15 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

of approximately RMB1,125,000,000 was denominated in RMB and placed with banks in the PRC. The remaining balance of the Remaining Group’s cash and cash equivalents consisted primarily of cash on hand and bank balances which were primarily denominated in Hong Kong dollar and placed with banks in Hong Kong.

As at 31 December 2017, the Remaining Group’s net debt ratio, which was calculated by the total loans and borrowings and corporate bonds minus total cash and cash equivalents and structured bank deposits, over total equity, was approximately 1.31 (2016: 0.54).

Loans and Borrowings

As at 31 December 2017, the Remaining Group’s total loans and borrowings was approximately RMB7,836,068,000, representing an increase of approximately RMB3,459,802,000, compared to approximately RMB4,376,265,000 as at 31 December 2016. The increase in the Remaining Group’s total loans and borrowings was mainly due to an increase in the Remaining Group’s investments in solar power plants which lead to an increase in loans and borrowings to finance such investments. All the loans and borrowings of the Remaining Group, except for an equivalent amount of approximately RMB8,359,000 (2016: RMB8,945,000) which were denominated in Hong Kong dollar, were denominated in RMB, the functional currency of the Company’s major subsidiaries in the PRC. As at 31 December 2017, loans and borrowings of approximately RMB3,652,000,000 (2016: RMB222,000,000) and approximately RMB4,184,068,000 (2016: RMB4,154,265,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2017, out of the total borrowings, approximately RMB475,900,000 (2016: RMB942,125,000) was repayable within one year and approximately RMB7,360,168,000 (2016: RMB3,434,141,000) was repayable after one year.

Corporate bonds

As at 31 December 2017 and 2016, corporate bonds denominated in Hong Kong dollar amounting to HK$423,500,000 (equivalent to approximately RMB354,800,000) in aggregate principal amount due in 2018 and HK$53,500,000 (equivalent to approximately RMB47,856,000) in aggregate principal amount due in 2019 remained outstanding with certain independent third parties. The Corporate Bonds bear an interest of 6% per annum, and will mature on the date immediately following 36 months after the issuance of the Corporate Bonds.

The Corporate Bonds are measured at amortised cost using effective interest method by applying an effective interest rate of 10.24% per annum. Imputed interest of approximately HK$43,523,000 (equivalent to approximately RMB37,710,000) (2016: HK$43,455,000 (equivalent to approximately RMB37,188,000)) (note 13 to the financial statements of the 2017 Annual Report) was recognised in profit or loss during the year ended 31 December 2017.

– I-16 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Foreign Exchange Risk

The Remaining Group primarily operates its business in the PRC and during the year ended 31 December 2017, the Remaining Group’s revenue were primarily denominated in RMB, being the functional currency of the Remaining Group’s major operating subsidiaries. Accordingly, the Directors expect any future exchange rate fluctuation will not have any material effect on the Remaining Group’s business. The Remaining Group did not use any financial instruments for hedging purpose, but will continue to monitor foreign exchange changes to best preserve the Remaining Group’s cash value.

Charge on Assets

As at 31 December 2017, the Remaining Group had charged solar power plants, trade receivables, property, plant and equipment, lease prepayments and unlisted equity investments with net book value of approximately RMB5,435,970,000 (2016: RMB3,316,375,000), approximately RMB703,743,000 (2016: RMB324,845,000), approximately RMB688,000 (2016: RMB1,219,000), approximately RMB821,000 (2016: RMB867,000) and approximately RMB830,269,000 (2016: Nil), respectively, to secure bank loans and other loans facilities granted to the Remaining Group.

Contingent Liabilities

The Remaining Group acquired equity interests of certain subsidiaries principally engaged in the development of solar power plant projects and the applications for the development of these solar power plant projects were actually made by their former shareholders. According to the Notices issued by the NEA, the Notices prohibit the original applicants who have obtained the approval documents from the government authorities for the solar power plants projects from transferring the equity interests of solar power plant projects before such solar power plants were connected to the power grid. Taking into consideration the legal opinion obtained from the Company’s legal adviser as to PRC law, and given that the Remaining Group has obtained the preliminary approval from respective relevant government authorities to continue with the development of the solar power plants, the Company’s legal adviser as to PRC law is of the view that the possibility for these subsidiaries to be fined or to face other adverse consequences imposed by the relevant government authorities is remote. Accordingly, the Directors consider there is no significant impact on the Remaining Group’s control over these subsidiaries and the development of these solar power plants.

The Remaining Group executes a guarantee with respect to a loan of approximately RMB138,211,000 (2016: Nil) granted by independent third parties to Kong Sun Baoyuan as at 31 December 2017, under which the Remaining Group is liable to pay the proportionate share if the independent third parties are unable to recover the loan from Kong Sun Baoyuan. As at the reporting date of the 2017 Annual Report, no provision for the Remaining Group’s proportionate obligation under the guarantee contracts has been made as the Directors consider that it is not probable that the repayment of the loan will be in default.

– I-17 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employees and Remuneration Policy

As at 31 December 2017, the Remaining Group had approximately 722 employees (2016: 460) 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 2017, the total employee benefit expenses (including directors’ emoluments) were approximately RMB210,033,000 (2016: RMB96,219,000). The remuneration policy of the Remaining Group is to provide remuneration packages, including basic salary, short-term bonuses and long-term rewards such as share 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 on 22 July 2009 for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Remaining Group’s operations. Pursuant to the share option scheme, 730,350,000 share options were granted to Directors, selected employees and consultants of the Remaining Group in April 2017.

Connected Transaction

During the year ended 31 December 2017, the Remaining Group entered into the following connected transactions, details of which are disclosed in compliance with the requirements of Chapter 14 and Chapter 14A of the Listing Rules.

On 13 December 2017, a wholly-owned subsidiary of the Company (the ‘‘Baoqian Purchaser’’), entered into the acquisition agreement (the ‘‘Baoqian Acquisition Agreement’’) with Zhongke Hengyuan, a company established in the PRC, pursuant to which the Baoqian Purchaser agreed to acquire, and Zhongke Hengyuan agreed to sell 30% of the equity interests in 廣州寶乾小額貸款有限公司 (Guangzhou Baoqian Microfinance Limited*) (‘‘Guangzhou Baoqian’’) at a consideration of RMB35,000,000, which shall be settled in full by the Baoqian Purchaser by way of one-off payment within thirty (30) days from the date of transfer of 30% of the equity interests in Guangzhou Baoqian to the name of the Baoqian Purchaser. Immediately before the above acquisition, the equity interests in Guangzhou Baoqian was held as to 65% by the Baoqian Purchaser, 30% by Zhongke Hengyuan and 5% by an independent third party. Upon completion of the above acquisition, Guangzhou Baoqian will continue to be a non-wholly-owned subsidiary of the Company and its financial results will continue to be consolidated into the consolidated financial statements of the Remaining Group. As at 31 December 2017, the above acquisition has not been completed.

As at the date of the Baoqian Acquisition Agreement, Zhongke Hengyuan was interested in 30% of the equity interests in Guangzhou Baoqian, a non-wholly-owned subsidiary of the Company. Therefore, Zhongke Hengyuan is a substantial shareholder of Guangzhou Baoqian, and is a connected person of the Company at the subsidiary level under Rule 14A.06(9) of the Listing Rules. Accordingly, the Baoqian Acquisition Agreement and the transactions contemplated thereunder constitute a connected transaction of the Company under Chapter 14A of the Listing Rules.

– I-18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Company intends to hold the equity interests in Guangzhou Baoqian as longterm investment with an objective to improve the capital usage efficiency and earn reasonable investment return. Based on the above, the Directors (including the independent nonexecutive Directors) consider that the Baoqian Acquisition Agreement has been entered into on normal commercial terms and is fair and reasonable, and in the interests of the Company and its shareholders as a whole.

After further negotiation and discussion, the Baoqian Purchaser and Zhongke Hengyuan decided not to proceed with the Baoqian Acquisition Agreement and entered into a termination agreement to terminate the Baoqian Acquisition Agreement on 24 January 2019.

For details, please refer to the announcements of the Company dated 13 December 2017 and 24 January 2019.

Significant Investments And Material Acquisition And Disposal

Save as disclosed in the 2017 Annual Report, the Remaining Group did not have any other significant investments, other material acquisition or disposal during the year ended 31 December 2017, and there was no plan authorised by the Board for other material investments or additions of capital assets up to the date of the 2017 Annual Report.

For the year ended 31 December 2018

Business review

Revenue

The revenue of the Remaining Group increased by approximately 62.1% from approximately RMB938,120,000 for the year ended 31 December 2017 to approximately RMB1,520,324,000 for the year ended 31 December 2018. The increase was primarily due to the increase in revenue from sales of electricity.

Revenue from sales of electricity and provision of solar power plant operation and maintenance services

The Remaining Group’s revenue from sales of electricity increased by approximately 50.3% from approximately RMB914,117,000 for the year ended 31 December 2017 to approximately RMB1,373,507,000 for the year ended 31 December 2018 due to the increased in aggregate volume of electricity generated by the Remaining Group’s grid connected solar power plants during the year. The solar power plants owned by the Remaining Group have generated electricity in an aggregate volume of approximately

– I-19 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1,718,149 megawatt-hour (‘‘MWh’’) for the year ended 31 December 2018, representing a substantial increase of approximately 44.1% as compared to approximately 1,192,499 MWh for year ended 31 December 2017.

The Remaining Group’s revenue from provision of solar power plant operation and maintenance services decreased by approximately 70.0% from approximately RMB6,482,000 for the year ended 31 December 2017 to approximately RMB1,943,000 for the year ended 31 December 2018 mainly due to the expiry of certain solar power plant operation and maintenance services contracts.

Revenue from provision of financial services

The Remaining Group’s revenue arising from the provision of financial services decreased by approximately 5.7% from approximately RMB13,663,000 for the year ended 31 December 2017 to approximately RMB12,891,000 for the year ended 31 December 2018.

Revenue from trading of liquefied natural gas

The Remaining Group had, for the first time, generated revenue from trading of liquefied natural gas of approximately RMB131,659,000 (2017: Nil) for the year ended 31 December 2018.

Gross profit and gross profit margin

The gross profit of the Remaining Group increased significantly by approximately 48.2% from approximately RMB605,121,000 for the year ended 31 December 2017 to approximately RMB896,786,000 for the year ended 31 December 2018. The gross profit margin of the Remaining Group decreased from approximately 64.5% for the year ended 31 December 2017 to approximately 59.0% for the year ended 31 December 2018 mainly due to the new business segment of trading of liquefied natural gas in 2018, which has a lower gross profit margin than the business segment of solar power plants.

Other gains and losses

Other gains of the Remaining Group increased significantly by approximately 2,454.5% from approximately RMB1,621,000 for the year ended 31 December 2017 to approximately RMB41,413,000 for the year ended 31 December 2018. The increase is mainly due to (i) the increase in dividend income amounted to approximately RMB21,232,000; (ii) the net unrealised gain on fair values changes on financial assets measured at fair value through profit or loss of approximately RMB5,864,000 (2017: Net unrealised loss of approximately RMB31,619,000)); and (iii) the office sublease income of approximately RMB33,782,000 (2017: Nil). The increase in other gains of the Remaining Group is partially netted off by the net realised loss on disposal on financial assets measured at fair value through profit or loss amounted to approximately RMB53,613,000 as a result of the disposal of the listed equity investment in the PRC during the year ended 31 December 2018.

– I-20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Administrative expenses

Administrative expenses of the Remaining Group increased by approximately 24.5% from approximately RMB319,291,000 for the year ended 31 December 2017 to approximately RMB397,435,000 for the year ended 31 December 2018. The increase was mainly attributable to (i) an increase in total employee benefit expenses of approximately RMB42,944,000 due to salary increment of top management with effect from 1 January 2018 and an increase in head count; and (ii) an increase in office rental expenses of approximately RMB22,891,000.

Gain on bargain purchase on acquisition of subsidiaries

Gain on bargain purchase on acquisition of subsidiaries represents the excess of the fair value of the identifiable assets acquired and liabilities assumed for the acquisition over fair value of consideration transferred at acquisition. The gain on bargain purchase during the year ended 31 December 2018 amounted to approximately RMB2,504,000 (2017: RMB53,260,000) as a result of acquisition of certain subsidiaries during the year. For details, please refer to note 46 to the financial statements of the 2018 Annual Report.

Gain on disposal/deregistration of subsidiaries, net

During the year ended 31 December 2018, the Remaining Group disposed/ deregistered certain subsidiaries and recorded net gain on disposal/deregistration of subsidiaries of approximately RMB2,693,000 (2017: RMB12,031,000). For details, please refer to note 47 to the financial statements of the 2018 Annual Report.

Finance costs

Finance costs of the Remaining Group increased by approximately 73.4% from approximately RMB366,751,000 for the year ended 31 December 2017 to approximately RMB636,065,000 for the year ended 31 December 2018. As the average number of and the average total installed capacity of the solar power plants held by the Remaining Group increased during the year, the finance costs related to the borrowings of the respective solar power plants also increased.

Solar power plants

As at 31 December 2018, the Remaining Group had a net carrying amount of approximately RMB9,768,209,000 (2017: RMB9,172,969,000) and approximately RMB433,798,000 (2017: RMB1,572,080,000) in completed solar power plants and solar power plants under construction, respectively. As at 31 December 2018, the Remaining Group had a total of 1,438.8 MW installed capacity of completed solar power plants, comparing to the 1,468.8 MW installed capacity of solar power plants as at 31 December 2017.

– I-21 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Interest in a joint venture

As at 31 December 2018, the net carrying amount of the joint venture was approximately RMB331,922,000 (2017: RMB321,421,000).

The Remaining Group executes a guarantee with respect to a loan of approximately RMB92,873,000 (2017: RMB138,211,000) granted by independent third parties to Kong Sun Baoyuan as at 31 December 2018, under which the Remaining Group is liable to pay the proportionate share if the independent third parties are unable to recover the loan from Kong Sun Baoyuan. As at the reporting date of the 2018 Annual Report, no provision for the Remaining Group’s proportionate obligation under the guarantee contracts has been made as the Directors consider that it is not probable that the repayment of the loan will be in default.

Goodwill

As at 31 December 2018, the Remaining Group had a total amount of approximately RMB96,976,000 (2017: RMB96,230,000) in respect of goodwill on the acquisition of subsidiaries.

Financial assets measured at fair value through other comprehensive income/Availablefor-sale investments

Financial assets measured at fair value through other comprehensive income/ Available-for-sale investments increased by approximately 12.8% from approximately RMB1,576,206,000 as at 31 December 2017 to approximately RMB1,777,434,000 as at 31 December 2018. The increase is mainly due to (i) the capital contribution paid in 蘇州君盛晶石股權投資合夥企業(有限合夥) (Suzhou Junsheng Jingshi Equity Investment Partnership (Limited Partnership)) amounted to RMB130,000,000; (ii) the additional capital contribution paid in Taizhou Jiuan amounted to RMB100,000,000; and (iii) the additional capital contribution paid in 霍爾果斯鑫和優美股權投資合夥企業(有限合夥) (Huoerguosi Xinheyoumei Equity Investment Limited Partnership) amounted to approximately RMB59,227,000. The increase is partially netted off by the fair value loss on financial assets measured at fair value through other comprehensive income amounted to approximately RMB71,452,000. The investments are held for long-term investment purpose and hence are classified as financial assets measured at fair value through other comprehensive income in the consolidated statement of financial position. For details, please refer to note 24 to the financial statements of the 2018 Annual Report.

Financial assets measured at fair value through profit or loss/Financial assets held for trading

As at 31 December 2018, the Remaining Group had financial assets measured at fair value through profit or loss/financial assets held for trading with market value of approximately RMB81,143,000 (2017: RMB200,281,000), representing approximately 0.4% (2017: 1.0%) of the total assets of the Remaining Group as at 31 December 2018. The portfolio of investments managed by the Remaining Group consists of investment in one listed equity in Hong Kong (2017: two listed equities in Hong Kong and in the PRC).

– I-22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Remaining Group held approximately 1.3% (2017: 1.3%) shareholding in the equity listed in Hong Kong as at 31 December 2018. During the year ended 31 December 2018, the Remaining Group had recorded a net unrealised gain on fair value changes of financial assets measured at fair value through profit or loss which amounted to approximately RMB5,864,000 (2017: net unrealised loss of approximately RMB31,619,000). During the year ended 31 December 2018, the Remaining Group disposed of all of its listed equity investment in the PRC at a cash consideration of approximately RMB75,062,000 and resulting in a net realised loss on disposal of financial assets measured at fair value through profit or loss amounted to approximately RMB53,613,000 (2017: Nil).

Trade, bills and other receivables

Trade, bills and other receivables increased by approximately 30.3% from approximately RMB2,976,136,000 as at 31 December 2017 to approximately RMB3,878,948,000 as at 31 December 2018. The increase was mainly due to an increase in trade and bills receivables from approximately RMB1,448,576,000 as at 31 December 2017 to approximately RMB1,980,416,000 as at 31 December 2018 which mainly arose from the increase in sales of electricity.

Structured bank deposits

As at 31 December 2018, the Remaining Group placed approximately RMB9,230,000 structured bank deposits with a bank in the PRC to earn a guaranteed and capitalprotected return by making good use of the idle cash of the Remaining Group. The deposits were withdrawn in January 2019.

Trade and Other Payables

Trade and other payables decreased by approximately 49.9% from approximately RMB3,344,845,000 as at 31 December 2017 to approximately RMB1,677,271,000 as at 31 December 2018. The balance mainly comprised payables to suppliers of solar modules and EPC contractors for purchase of solar modules and equipment and construction costs of solar power plants. Due to the settlement of construction costs after the completion of substantial solar power plants construction work during the year ended 31 December 2018, trade payables, which was mainly related to construction costs of solar power plants, have decreased by approximately 56.6% from approximately RMB2,977,861,000 as at 31 December 2017 to approximately RMB1,293,141,000 as at 31 December 2018.

Liquidity and Capital Resources

As at 31 December 2018, cash and cash equivalents of the Remaining Group was approximately RMB229,520,000 (2017: RMB437,784,000), which included an amount of bank balances of approximately RMB219,000,000 (2017: RMB418,555,000) denominated in RMB placed with banks in the PRC. The balance of the Remaining Group’s cash and cash equivalents consisted primarily of cash on hand and bank balances which were primarily denominated in Hong Kong dollar and placed with banks in Hong Kong.

– I-23 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As at 31 December 2018, the Remaining Group’s net debt ratio, which was calculated by the total loans and borrowings and corporate bonds minus total cash and cash equivalents and structured bank deposits, over total equity, was approximately 1.91 (2017: 1.31).

Loans and Borrowings

As at 31 December 2018, the Remaining Group’s total loans and borrowings was approximately RMB10,248,000,000, representing an increase of approximately RMB2,411,932,000, compared to approximately RMB7,836,068,000 as at 31 December 2017. The increase in the Remaining Group’s total loans and borrowings was mainly due to an increase in the Remaining Group’s investments in solar power plants which lead to an increase in loans and borrowings to finance such investments. All the loans and borrowings of the Remaining Group, except for an equivalent amount of approximately RMB5,283,000 (2017: RMB8,359,000) which were denominated in Hong Kong dollar, were denominated in RMB, the functional currency of the Company’s major subsidiaries in the PRC. As at 31 December 2018, loans and borrowings of approximately RMB4,918,000,000 (2017: RMB3,652,000,000) and approximately RMB5,330,000,000 (2017: RMB4,184,068,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2018, out of the total borrowings, approximately RMB689,044,000 (2017: RMB475,900,000) was repayable within one year and approximately RMB9,558,956,000 (2017: RMB7,360,168,000) was repayable after one year.

Corporate bonds

As at 31 December 2018, corporate bonds denominated in Hong Kong dollar with an aggregate principal amount of HK$344,000,000 (equivalent to approximately RMB301,413,000) (2017 : HK$477,000,000 (equivalent to approximately RMB402,656,000)) remained outstanding with certain independent third parties. The corporate bonds bear interest rates ranging from 3% to 9% (2017: 6%) per annum, and will mature on the date immediately following 3 to 96 months (2017: 36 months) after their issuance.

During the year ended 31 December 2018, the Remaining Group issued corporate bonds with an aggregate principal amount of HK$290,500,000 (equivalent to approximately RMB254,536,000) (2017: Nil) to certain independent third parties, the net proceeds of the issued corporate bonds received by the Company were approximately HK$257,727,000 (equivalent to approximately RMB225,820,000) (2017: Nil), with total issue cost amounting to approximately HK$32,773,000 (equivalent to approximately RMB28,716,000) (2017: Nil).

During the year ended 31 December 2018, the Remaining Group repaid HK$423,500,000 (equivalent to approximately RMB371,071,000) (2017: Nil) in aggregate principal amount of the corporate bonds.

– I-24 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The corporate bonds are measured at amortised cost using effective interest method by applying an effective interest rate ranging from 10.24% to 12.00% (2017: 10.24%) per annum. Imputed interest of approximately HK$44,200,000 (equivalent to approximately RMB37,318,000) (2017: HK$43,523,000 (equivalent to approximately RMB37,710,000)) (note 13 to the financial statements of the 2018 Annual Report) in respect of the corporate bonds was recognised in profit or loss during the year ended 31 December 2018.

Foreign Exchange Risk

The Remaining Group primarily operates its business in the PRC and during the year ended 31 December 2018, the Remaining Group’s revenue were primarily denominated in RMB, being the functional currency of the Remaining Group’s major operating subsidiaries. Accordingly, the Directors expect any future exchange rate fluctuation will not have any material effect on the Remaining Group’s business. The Remaining Group did not use any financial instruments for hedging purpose, but will continue to monitor foreign exchange changes to best preserve the Remaining Group’s cash value.

Charge on Assets

As at 31 December 2018, the Remaining Group had charged solar power plants, trade receivables, lease prepayments and unlisted equity investments with net book value of approximately RMB6,363,757,000 (2017: RMB5,435,970,000), approximately RMB1,613,923,000 (2017: RMB703,743,000), approximately RMB774,000 (2017: RMB821,000) and approximately RMB813,158,000 (2017: RMB830,269,000), respectively, to secure bank loans and other loans facilities granted to the Remaining Group.

Contingent Liabilities

– I-25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employees and Remuneration Policy

As at 31 December 2018, the Remaining Group had approximately 756 employees (2017: 722) 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 2018, the total employee benefit expenses (including directors’ emoluments) were approximately RMB250,434,000 (2017: RMB210,033,000). The remuneration policy of the Remaining Group is to provide remuneration packages, including basic salary, shortterm bonuses and long-term rewards such as share options, so as to attract and retain top quality staff. The remuneration committee of the Company reviews such packages annually, or when occasion requires.

Connected Transaction

On 13 December 2017, the Baoqian Purchaser, entered into the Baoqian Acquisition Agreement with Zhongke Hengyuan, a company established in the PRC, pursuant to which the Baoqian Purchaser agreed to acquire, and Zhongke Hengyuan agreed to sell 30% of the equity interests in Guangzhou Baoqian at a consideration of RMB35,000,000, which shall be settled in full by the Baoqian Purchaser by way of one-off payment within thirty (30) days from the date of transfer of 30% of the equity interests in Guangzhou Baoqian to the name of the Baoqian Purchaser. Immediately before the above acquisition, the equity interests in Guangzhou Baoqian was held as to 65% by the Baoqian Purchaser, 30% by Zhongke Hengyuan and 5% by an independent third party to the Remaining Group. Upon completion of the above acquisition, Guangzhou Baoqian will continue to be a non-wholly-owned subsidiary of the Company and its financial results will continue to be consolidated into the consolidated financial statements of the Remaining Group. As at 31 December 2018 and 2017, the above acquisition has not been completed.

– I-26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

executive Directors) consider that the Baoqian Acquisition Agreement has been entered into on normal commercial terms and is fair and reasonable, and in the interests of the Company and its shareholders as a whole.

For details, please refer to the announcements of the Company dated 13 December 2017 and 24 January 2019.

Significant Investments And Material Acquisition And Disposal

Save as disclosed in the 2018 Annual Report, the Remaining Group did not have any other significant investments, other material acquisition or disposal during the year ended 31 December 2018, and there was no plan authorised by the Board for other material investments or additions of capital assets up to the date of the 2018 Annual Report.

For the six months ended 30 June 2019

Business review

The Remaining Group was mainly engaged in investment in and operation of solar power plants, provision of solar power plant operation and maintenance services, provision of financial services, trading of liquefied natural gas and asset management.

Revenue

The revenue of the Remaining Group increased by approximately 45.7% from approximately RMB665,981,000 for the six months ended 30 June 2018 to approximately RMB970,149,000 for the six months ended 30 June 2019. The increase was primarily due to the increase in revenue from sales of electricity and the commencement of trading of liquefied natural gas in the second half of 2018.

Revenue from Sales of Electricity and Provision of Solar Power Plant Operation and Maintenance Services

The Remaining Group’s revenue from sales of electricity increased by approximately 9.6% from approximately RMB659,342,000 for the six months ended 30 June 2018 to approximately RMB722,480,000 for the six months ended 30 June 2019. As at 30 June 2019, the Group had a total of 1,378.3 MW (31 December 2018: 1,438.8 MW) installed capacity of solar power plants. The solar power plants owned by the Remaining Group have generated electricity in an aggregate volume of approximately 923,038 MWh for the six months ended 30 June 2019, representing an increase of approximately 8.4% as compared to approximately 851,842 MWh for the six months ended 30 June 2018.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Remaining Group’s revenue from provision of solar power plant operation and maintenance services decreased by approximately 49.6% from approximately RMB1,082,000 for the six months ended 30 June 2018 to approximately RMB545,000 for the six months ended 30 June 2019.

Revenue from Provision of Financial Services

The Remaining Group’s revenue arising from the provision of financial services increased by approximately 236.4% from approximately RMB5,246,000 for the six months ended 30 June 2018 to approximately RMB17,650,000 for the six months ended 30 June 2019.

Revenue from Trading of Liquefied Natural Gas

The Remaining Group had generated revenue from trading of liquefied natural gas of approximately RMB230,020,000 (six months ended 30 June 2018: Nil) for the six months ended 30 June 2019.

Gross Profit and Gross Profit Margin

The gross profit of the Remaining Group increased by approximately 25.9% from approximately RMB444,821,000 for the six months ended 30 June 2018 to approximately RMB560,061,000 for the six months ended 30 June 2019. The gross profit margin of the Remaining Group decreased from approximately 66.8% for the six months ended 30 June 2018 to approximately 57.7% for the six months ended 30 June 2019 mainly due to new business segment of trading of liquefied natural gas, which has a lower gross profit margin than the business segment of solar power plants.

Other Gains and Losses

The Remaining Group recorded other gains of approximately RMB18,399,000 (six months ended 30 June 2018: other losses of approximately RMB7,702,000) for the six months ended 30 June 2019. The change was mainly due to (i) the decrease in net realised loss on disposal on financial assets measured at fair value through profit or loss of approximately RMB52,459,000 as a result of the disposal of approximately 49.0% of the listed equity investment in Hong Kong during the six months ended 30 June 2019 compared with disposal of all listed equity investment in the PRC in the same period last year; and (ii) the decrease in net unrealised loss on fair value change of financial assets measure at fair value through profit or loss of approximately RMB4,528,000, offset by (i) the decrease in dividend income amounted to approximately RMB13,376,000; and (ii) the decrease in office sublease income of approximately RMB3,235,000.

Administrative Expenses

Administrative expenses of the Remaining Group decreased by approximately 12.2% from approximately RMB194,680,000 for the six months ended 30 June 2018 to approximately RMB170,967,000 for the six months ended 30 June 2019. The decrease was mainly attributable to a decrease in employee benefit expenses (including directors’

– I-28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

emoluments) amounted to approximately RMB20,727,000 as a result of the decrease in number of head count of employee of the Remaining Group during the six months ended 30 June 2019.

Gain/Loss on Disposal/Deregistration of Subsidiaries, Net

During the six months ended 30 June 2019, the Remaining Group disposed of certain subsidiaries, namely 霍林郭勒競日能源有限公司 (Huolin Guole Jingri Energy Limited) and 樟樹市中利騰暉光伏有限公司 (Zhangshu Zhongli Tenghui Photovoltaic Power Limited), and recorded net gain on such disposals of approximately RMB37,488,000 (six months ended 30 June 2018: net losses on disposal/deregistration of such subsidiaries of approximately RMB9,589,000).

Impairment loss on a disposal group classified as held for sale

On 29 April 2019, the Remaining Group entered into a sale and purchase agreement with an independent third party to dispose the entire equity interest in 湖州祥暉光伏發電有限公司 (Huzhou Xianghui Solar Power Co., Ltd.*) (‘‘Huzhou Xianghui’’) for a total consideration of approximately RMB413,213,000. An impairment loss of approximately RMB98,388,000, representing the sale proceeds less the carrying amount of the net assets of Huzhou Xianghui as at 30 June 2019, was charged to profit or loss during the six months ended 30 June 2019.

Finance Costs

Finance costs of the Remaining Group increased significantly by approximately 29.7% from approximately RMB285,982,000 for the six months ended 30 June 2018 to approximately RMB370,786,000 for the six months ended 30 June 2019. As the Remaining Group’s total loans and borrowings increased as compared to the corresponding period last year, the finance costs related to these borrowings also increased.

Core Loss

Core loss represents loss after tax and before one-off items. Excluding the effects of one-off items on gain on disposal/deregistration of subsidiaries of approximately RMB37,488,000 (six months ended 30 June 2018: loss of approximately RMB9,589,000) and impairment loss on a disposal group classified as held for sale of approximately RMB98,388,000 (six months ended 30 June 2018: RMB Nil), the Remaining Group recorded a core loss of approximately RMB24,535,000 (six months ended 30 June 2018: RMB36,579,000) for the six months ended 30 June 2019.

Solar Power Plants

As at 30 June 2019, the Remaining Group had a net carrying value of approximately RMB9,012,829,000 (31 December 2018: RMB9,768,209,000) and approximately RMB344,750,000 (31 December 2018: RMB433,798,000) in completed solar power plants and solar power plants under construction, respectively. During the six months

– I-29 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

ended 30 June 2019, the Remaining Group successfully completed the disposals of two completed solar power plants with total installed capacity of 60 MW. As at 30 June 2019, the Remaining Group had a total of 1,378.8 MW (31 December 2018: 1,438.3 MW) installed capacity of completed solar power plants.

Interest in a Joint Venture

As at 30 June 2019, the net carrying value of the joint venture was approximately RMB344,231,000 (31 December 2018: RMB331,922,000).

The Remaining Group executed a guarantee with respect to a loan of approximately RMB56,968,000 (31 December 2018: RMB92,873,000) granted by independent third parties to Kong Sun Baoyuan as at 30 June 2019, under which the Group is liable to pay the proportionate share if the independent third parties are unable to recover the loan from Kong Sun Baoyuan. As at the reporting date, no provision for the Remaining Group’s proportionate obligation under the guarantee contracts has been made as the Directors consider that it is not probable that the repayment of the loan will be in default.

On 21 March 2019, the Remaining Group entered into a sale and purchase agreement with a connected person of the Company at the subsidiary level to dispose 17.4% equity interests in Kong Sun Baoyuan for a total consideration of RMB105,000,000 (the ‘‘Partial Disposal’’). Upon completion, the Remaining Group’s equity interest in Kong Sun Baoyuan will decreased from 55% to 37.6%, Kong Sun Baoyuan will cease to be a joint venture of the Remaining Company and become an associate of the Remaining Company under HKAS 28. For details, please refer to the announcement of the Remaining Company dated 21 March 2019. As at 30 June 2019 and the date of the 2019 Interim Report, the Partial Disposal has not been completed and Kong Sun Baoyuan remains as a joint venture of the Remaining Company.

Goodwill

As at 30 June 2019, the Remaining Group had a total amount of approximately RMB96,930,000 (31 December 2018: RMB96,976,000) in respect of goodwill on the previous acquisitions of subsidiaries.

Right-of-use Assets and Lease Liabilities

The Remaining Group has applied HKFRS 16 and recognized right-of-use assets and lease liabilities since 1 January 2019. As at 30 June 2019, the right-of-use assets and lease liabilities amounted to approximately RMB390,967,000 (31 December 2018: Nil) and approximately RMB204,776,000 (31 December 2018: Nil).

Financial Assets Measured at Fair Value through Other Comprehensive Income

Financial assets measured at fair value through other comprehensive income decreased by approximately 14.8% from approximately RMB1,777,434,000 as at 31 December 2018 to approximately RMB1,513,789,000 as at 30 June 2019. The decrease is mainly due to the net fair value loss on the unlisted equity investments of approximately

– I-30 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

RMB362,695,000. The investments are held for long-term investment purpose and hence are classified as financial assets measured at fair value through other comprehensive income in the condensed consolidated statement of financial position. The decrease is partially offset by the increase in (i) the additional capital contribution paid in 蘇州君盛晶石股權投資合夥企業(有限合夥) (Suzhou Junsheng Jingshi Equity Investment Partnership (Limited Partnership)) amounted to RMB92,500,000; and (ii) the additional capital contribution paid in 霍爾果斯鑫和優美股權投資合夥企業（有限合夥） (Huoerguosi Xinheyoumei Equity Investment Limited Partnership) amounted to RMB6,550,000.

Financial Assets Measured at Fair Value through Profit or Loss

As at 30 June 2019, the Remaining Group had financial assets measured at fair value through profit or loss with market value of approximately RMB34,658,000 (31 December 2018: RMB81,143,000), representing approximately 0.2% (31 December 2018: 0.4%) of the total assets of the Remaining Group as at 30 June 2019. As at 30 June 2019 and 31 December 2018, the portfolio of investments managed by the Remaining Group consists of investment in one listed equity in Hong Kong. The Remaining Group held approximately 0.7% (31 December 2018: 1.3%) shareholding in the equity listed in Hong Kong as at 30 June 2019. During the six months ended 30 June 2019, the Remaining Group had recorded a net unrealised loss on fair value changes of financial assets measured at fair value through profit or loss which amounted to approximately RMB6,011,000 (six months ended 30 June 2018: RMB10,539,000). During the six months ended 30 June 2019, the Remaining Group disposed of approximately 49.0% of its listed equity investment in Hong Kong at a cash consideration of approximately RMB38,838,000 and resulting in a net realised loss on disposal on financial assets measured at fair value through profit or loss amounted to approximately RMB1,154,000 (six months ended 30 June 2018: RMB53,613,000).

Trade, Bills and Other Receivables

Trade, bills and other receivables increased by approximately 8.5% from approximately RMB3,878,948,000 as at 31 December 2018 to approximately RMB4,208,309,000 as at 30 June 2019. The increase was mainly due to an increase in trade and bills receivables by approximately 17.2% from approximately RMB1,980,416,000 as at 31 December 2018 to approximately RMB2,321,560,000 as at 30 June 2019 which arose from the increase in sales of electricity.

Structured bank deposits

– I-31 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Trade and Other Payables

Trade and other payables decreased by approximately 8.1% from approximately RMB1,677,271,000 as at 31 December 2018 to approximately RMB1,540,917,000 as at 30 June 2019. The balance mainly comprised payables to suppliers of solar modules and equipment and Engineering Procurement Construction (‘‘EPC’’) contractors for purchase of solar modules and equipment and construction costs of solar power plants. Due to settlement of construction costs after the completion of substantial solar power plants construction work during the six months ended 30 June 2019, trade payables, which was mainly related to construction costs of solar power plants, have decreased by approximately 24.0% from approximately RMB1,293,141,000 as at 31 December 2018 to approximately RMB98,252,000 as at 30 June 2019.

Liquidity and Capital Resources

As at 30 June 2019, cash and cash equivalents of the Remaining Group was approximately RMB164,691,000 (31 December 2018: RMB229,520,000), which included an amount of bank balances of approximately RMB156,153,000 (31 December 2018: RMB219,000,000) denominated in RMB placed with banks in the PRC. The remaining balance of the Remaining Group’s cash and cash equivalents consisted primarily of cash on hand and bank balances which were primarily denominated in Hong Kong dollar and placed with banks in Hong Kong.

As at 30 June 2019, the Remaining Group’s net debt ratio, which was calculated by the total loans and borrowings and corporate bonds minus total cash and cash equivalents and structured bank deposits, over total equity, was approximately 1.98 (31 December 2018: 1.91).

Loans and Borrowings

As at 30 June 2019, the Remaining Group’s total loans and borrowings was approximately RMB9,762,994,000, representing a decrease of approximately 4.7% as compared to approximately RMB10,248,000,000 as at 31 December 2018. All loans and borrowings of the Remaining Group were denominated in RMB, the functional currency of the Company’s major subsidiaries in the PRC. As at 30 June 2019, loans and borrowings of approximately RMB5,233,010,000 (31 December 2018 : RMB4,918,000,000) and approximately RMB4,529,984,000 (31 December 2018: RMB5,330,000,000) bear fixed interest rate and floating interest rate, respectively.

As at 30 June 2019, out of the total borrowings, approximately RMB792,418,000 (31 December 2018: RMB689,044,000) was repayable within one year and approximately RMB8,970,576,000 (31 December 2018: RMB9,558,956,000) was repayable after one year.

– I-32 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Corporate Bonds

As at 30 June 2019, corporate bonds denominated in Hong Kong dollar with an aggregate principal amount of HK$326,500,000 (equivalent to approximately RMB287,209,000) (31 December 2018: HK$344,000,000 (equivalent to approximately RMB301,413,000)) remained outstanding with certain independent third parties. The corporate bonds bear interest rates ranging from 3% to 7% (31 December 2018: 3% to 9%) per annum, and will mature on the date immediately following 12 to 96 months (31 December 2018: 3 to 96 months) after their issuance.

During the six months ended 30 June 2019, the Remaining Group issued corporate bonds with an aggregate principal amount of HK$44,000,000 (equivalent to approximately RMB38,705,000) (six months ended 30 June 2018: HK$115,500,000 (equivalent to approximately RMB97,378,000)) to certain independent third parties, the net proceeds of the issued corporate bonds received by the Company were approximately HK$38,909,000 (equivalent to approximately RMB34,227,000) (six months ended 30 June 2018: HK$102,795,000 (equivalent to approximately RMB86,666,000)), with total issue cost amounting to approximately HK$5,091,000 (equivalent to approximately RMB4,478,000) (six months ended 30 June 2018: HK$12,705,000 (equivalent to approximately RMB10,712,000)).

During the six months ended 30 June 2019, the Remaining Group repaid HK$61,500,000 (equivalent to approximately RMB54,099,000) (six months ended 30 June 2018: HK$161,000,000 (equivalent to approximately RMB135,739,000)) in aggregate principal amount of the corporate bonds.

The corporate bonds are measured at amortised cost using effective interest method by applying an effective interest rate ranging from 10.24% to 14.56% (six months ended 30 June 2018: 10.24% to 10.46%) per annum. Imputed interest of approximately HK$14,710,000 (equivalent to approximately RMB12,607,000) (six months ended 30 June 2018: HK$23,383,000 (equivalent to approximately RMB19,007,000)) (note 5 to the financial statements in the 2019 Interim Report) in respect of the corporate bonds was recognised in profit or loss during the six months ended 30 June 2019.

Foreign Exchange Rate Risk

The Remaining Group primarily operates its business in the PRC and during the six months ended 30 June 2019, the Remaining Group’s revenue were primarily denominated in RMB, being the functional currency of the Remaining Group’s major operating subsidiaries. Accordingly, the Directors expect that any future exchange rate fluctuation will not have any material effect on the Remaining Group’s business. The Remaining Group did not use any financial instruments for hedging purposes, but will continue to monitor foreign exchange changes to best preserve the Remaining Group’s cash value.

– I-33 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Charge on Assets

As at 30 June 2019, the Remaining Group had charged solar power plants, trade receivables, lease prepayments, right-of-use assets and unlisted equity investments with net book value of approximately RMB7,255,691,000 (31 December 2018: RMB6,363,757,000), approximately RMB1,760,924,000 (31 December 2018: RMB1,613,923,000), approximately RMB750,000 (31 December 2018: RMB774,000) and approximately RMB449,866,000 (31 December 2018: RMB813,158,000), respectively, to secure bank loans and other loans facilities granted to the Remaining Group.

Contingent Liabilities

The Remaining Group acquired equity interests of certain subsidiaries principally engaged in the development of solar power plant projects and the applications for the development of these solar power plant projects were actually made by their former shareholders. According to certain notices (the ‘‘Notices’’) issued by the State Energy Administration (國家能源局), the Notices prohibit the original applicants who have obtained the approval documents from the government authorities for the solar power plants projects from transferring the equity interests of solar power plant projects before such solar power plants were connected to the power grid. Given that the Remaining Group has obtained the preliminary approval from respective relevant government authorities to continue with the development of the solar power plants, the possibility for these subsidiaries to be fined or to face other adverse consequences imposed by the relevant government authorities is remote. Accordingly, the Directors consider there is no significant impact on the Remaining Group’s control over these subsidiaries and the development of these solar power plants.

Employees and Remuneration Policy

As at 30 June 2019, the Remaining Group had approximately 582 employees (31 December 2018: 756) in Hong Kong and in the PRC. Compensation for the employees includes basic wages, variable wages, bonuses and other staff benefits. For the six months ended 30 June 2019, the total employee benefit expenses (including directors’ emoluments) were approximately RMB104,736,000 (six months ended 30 June 2018: RMB134,519,000). The remuneration policy of the Remaining Group is to provide remuneration packages, including basic salary, short-term bonuses and long-term rewards, 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 on 22 July 2009 (the ‘‘Share Option Scheme’’) for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Remaining Group’s operations. The Share Option Scheme expired on 21 July 2019 and no further options could thereafter be granted. Notwithstanding the expiry of the Share Option Scheme, the share options which had been granted during the life of the scheme shall continue to be valid and exercisable in accordance with their terms of issue and in all other respects its provisions shall remain in full force and effect.

– I-34 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Connected Transaction

For details, please refer to the announcements of the Company dated 13 December 2017 and 24 January 2019.

– I-35 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Significant Investments And Material Acquisition And Disposal

Save as disclosed in the 2019 Interim Report, the Remaining Group did not have any other significant investments, other material acquisition or disposal during the six months ended 30 June 2019, and there was no plan authorised by the Board for other material investments or additions of capital assets up to the date of the 2019 Interim Report.

– I-36 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

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REPORT ON REVIEW OF FINANCIAL INFORMATION OF LANZHOU TAIKE PHOTOVOLTAIC POWER LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information set out on pages II-A-3 to II-A-12 which comprises the statements of financial position as at 31 December 2016, 2017 and 2018 and 30 September 2019 of Lanzhou Taike Photovoltaic Power Limited (‘‘Taike’’) and the statements of profit or loss and other comprehensive income, the statements of cash flows and the statements of changes in equity for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and explanatory notes (the ‘‘Financial Information’’). The Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Kong Sun Holdings Limited (the ‘‘Company’’) in connection with the proposed disposal of entire share of Taike in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

The directors of the Company are responsible for the preparation and presentation of the Financial Information of Taike in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the HKICPA. A review of the financial information consists of making inquiries, 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

– II-A-1 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

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.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the Financial Information is not prepared, in all material respects, in accordance with the basis of preparation set out in note 2 to the Financial Information.

BDO Limited

Certified Public Accountants

Hong Kong, 6 January 2020

– II-A-2 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

Set out below is the unaudited financial information of Taike which comprises the unaudited statements of financial position of Taike as at 31 December 2016, 2017 and 2018 and 30 September 2019 and the unaudited statements of profit or loss and other comprehensive income, unaudited statements of cash flows and unaudited statements of changes in equity for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and certain explanatory notes (altogether referred to as ‘‘Unaudited Financial Information’’).

The Unaudited Financial Information has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules and the basis of preparation as set out in note 2 to the Unaudited Financial Information.

The Unaudited Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the proposed disposal of the entire equity interest in Taike. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Taike in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable the Company’s auditor to obtain assurance that the Company’s auditor would become aware of all significant matters that might be identified in an audit. Accordingly, the Company’s auditor does not express an audit opinion. The Company’s auditor has issued an unmodified review report.

– II-A-3 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF TAIKE

Notes Revenue 3 Cost of sales Gross profit Other income Administrative expenses Other expense Finance costs Profit before income tax Income tax expense Profit for the year/period	For the year ended 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 35,353 47,170 49,480 (16,347) (18,678) (18,303) 19,006 28,492 31,177 22 129 8 (1,840) (1,092) (1,077) — — — (11,598) (19,885) (18,032) 5,590 7,644 12,076 — — (924) 5,590 7,644 11,152	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 38,463 37,903 (13,188) (19,974) 25,275 17,929 4 110 (547) (2,065) — (87) (13,735) (15,750) 10,997 137 (843) (1) 10,154 136

– II-A-4 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF TAIKE

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 4 Current assets Trade and other receivables 5 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payable Loans and borrowings 6 Shareholder’s loan Total current liabilities Net current (liabilities)/assets Total assets less current liabilities Non-current liabilities Loans and borrowings 6 Total non-current liabilities Net assets Equity Share capital Reserves Total equity	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 307 262 217 346,777 332,551 318,325 347,084 332,813 318,542 99,714 80,163 97,864 5,298 1,715 14,521 105,012 81,878 112,385 12,721 11,625 11,180 — — 81 22,077 26,335 27,366 66,500 43,104 74,407 101,298 81,064 113,034 3,714 814 (649) 350,798 333,627 317,893 248,879 224,064 197,178 248,879 224,064 197,178 101,919 109,563 120,715 88,000 88,000 88,000 13,919 21,563 32,715 101,919 109,563 120,715	As at 30 September 2019 RMB’000 385 307,656 308,041 109,646 7,041 116,687 14,534 — 28,009 84,947 127,490 (10,803) 297,238 176,387 176,387 120,851 88,000 32,851 120,851

– II-A-5 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

UNAUDITED STATEMENTS OF CASH FLOWS OF TAIKE

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Interest expense Interest income Operating profit before working capital changes (Increase)/decrease in trade, bills and other receivables (Decrease)/increase in trade and other payables Cash generated from operating activities Tax paid Net cash generated from operating activities Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Interests received Net cash generated from/(used in) investing activities	For the year ended 31 2016 2017 RMB’000 RMB’000 5,590 7,644 35 45 14,216 14,226 11,598 19,885 (22) (9) 31,417 41,791 (31,870) 19,551 12,528 (1,074) 12,075 60,268 — — 12,075 60,268 (52) — — (22) 22 9 (30) (13)	December 2018 RMB’000 12,076 45 14,226 18,032 (8) 44,371 (17,701) (445) 26,225 (843) 25,382 — — 8 8	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 10,997 137 33 55 10,669 10,669 13,735 15,750 (4) (23) 35,430 26,588 (22,690) (11,782) 1,012 3,354 13,752 18,160 (679) (82) 13,073 18,078 (4) (223) — — 4 23 — (200)

– II-A-6 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

Cash flows from financing activities Proceed from loans and borrowings Repayment of loans and borrowings Interest paid Proceed from Shareholder’s loan Repayment to shareholder Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 2016 2017 RMB’000 RMB’000 270,956 — — (20,557) (11,598) (19,885) — — (283,500) (23,396) (24,142) (63,838) (12,097) (3,583) 17,395 5,298 5,298 1,715	December 2018 RMB’000 — (25,855) (18,032) 31,303 — (12,584) 12,806 1,715 14,521	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 — — (19,183) (20,148) (13,735) (15,750) 24,125 10,540 — — (8,793) (25,358) 4,280 (7,480) 1,715 14,521 5,995 7,041

– II-A-7 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF TAIKE

Balance at 1 January 2016 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2016 and 1 January 2017 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2017 and 1 January 2018 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2018 and 1 January 2019 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2019 Balance at 31 December 2017 and 1 January 2018 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2018	Share capital RMB’000 88,000 — — 88,000 — — 88,000 — — 88,000 — — 88,000 88,000 — — 88,000	PRC statutory reserve RMB’000 — — 559 559 — 764 1,323 — 1,115 2,438 — 13 2,451 1,323 — 1,015 2,338	Retained profits RMB’000 8,329 5,590 (559) 13,360 7,644 (764) 20,240 11,152 (1,115) 30,277 136 (13) 30,400 20,240 10,154 (1,015) 29,379	Total RMB’000 96,329 5,590 —
				101,919 7,644 —
				109,563 11,152 —
				120,715 136 —
				120,851
				109,563 10,154 —
				119,717

– II-A-8 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Taike is a limited liability company incorporated in PRC. The principal activity of Taike is operation of solar power plant.

On 15 November 2019, the Vendor, an indirect wholly-owned subsidiary of the Company, CNNP Shandong and Taike entered into the Agreement, pursuant to which the Vendor agreed to sell, and CNNP Shandong agreed to acquire, the entire equity interest in Taike for a total consideration of approximately RMB172,465,000. Upon completion of the Taike Disposal, Taike will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The unaudited Financial Information of Taike for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules, and solely for the purposes of inclusion in this circular issued by the Company in connection with the Taike Disposal.

The Unaudited Financial Information has been prepared in accordance with the same accounting policies as those adopted by the Group in preparation of the consolidated financial statements of the Group for those respective year, which conform with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) (which include all HKFRSs, Hong Kong Accounting Standards (‘‘HKASs’’) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’) and accounting principles generally accepted in Hong Kong. The Unaudited Financial Information has been prepared under the historical cost convention. The Unaudited Financial Information is presented in RMB and all values are rounded to the nearest thousand (RMB’000) except when otherwise indicated.

The Unaudited Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in HKAS 1 (Revised) ‘‘Presentation of Financial Statements’’ nor a set of condensed financial statements as defined in HKAS 34 ‘‘Interim Financial Reporting’’ issued by the HKICPA and that it should be read in conjunction with the relevant published annual reports of the Company.

The Unaudited Financial Information of the Taike has been prepared on the going concern basis which assumes the realisation of assets and satisfaction of liabilities in the ordinary course of business notwithstanding the Taike had net current liabilities of approximately RMB649,000 and approximately RMB10,803,000 as at 31 December 2018 and 30 September 2019 respectively. The directors are of the opinion that the Group will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months after taking into account the followings:

(i) having reviewed the cash flow projection of the Taike for the next twelve months from the reporting date, the directors are of the opinion that the Taike is able to generate positive cash flows from its operation. In preparing the cash flow projection by the management, it was assumed that proceeds of renewable energy subsidy receivables in respect of sale of electricity will be received with reference to prevalent payment trend after successfully enlisted in the renewable energy tariff subsidy catalogue;
(ii) the Company has confirmed not to demand repayment of debt due from the Taike until such time when the repayment will not affect the Taike’s ability to repay other creditors in the normal course of business; and
(iii) the Company has confirmed to provide sufficient financial support to the Taike so as to enable the Taike to meet its liabilities and obligations as and when they fall due and to enable the Taike to continue their business for twelve months after 30 September 2019 if the Disposal is not completed, and to the completion date if the Disposal is completed.

– II-A-9 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

3. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the year ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019, sales of electricity includes renewable energy subsidies amounting to approximately RMB28,766,000, approximately RMB38,490,000, approximately RMB39,175,000, approximately RMB29,738,000 and approximately RMB28,423,000 respectively.

4. SOLAR POWER PLANTS

Cost
At 1 January 2016, 31 December 2016, 31 December 2017 and
31 December 2018 and At 30 September 2019
Accumulated depreciation
At 1 January 2016
Charged for the year
At 31 December 2016 and 1 January 2017
Charged for the year
At 31 December 2017 and 1 January 2018
Charged for the year
At 31 December 2018 and 1 January 2019
Charged for the period
At 30 September 2019
Net carrying amount
At 31 December 2016
At 31 December 2017
At 31 December 2018
At 30 September 2019

Solar power
plants
RMB’000
374,007
(13,014)
(14,216)
(27,230)
(14,226)
(41,456)
(14,226)
(55,682)
(10,669)
(66,351)
346,777
332,551
318,325
307,656

Solar power plant under construction would be transferred to solar power plant when the solar power plant completes its trial operations and is connected to provincial power grid and generate electricity.

As at 31 December 2016, 2017 and 2018 and 30 September 2019, solar plant with net carrying amount of approximately RMB346,777,000, approximately RMB332,551,000, approximately RMB318,325,000 and approximately RMB307,656,000 respectively was pledged as securities for Taike’s loans and borrowings (note 6).

– II-A-10 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

5. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 57,612 45,490 71,250 42,102 34,673 26,614 99,714 80,163 97,864	As at 30 September 2019 RMB’000 88,480 21,166
		109,646

Ageing analysis of trade receivables, based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months More than 24 months	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 10,183 11,407 10,946 10,094 11,287 10,192 14,879 21,175 24,442 22,456 1,621 25,670 — — — 57,612 45,490 71,250	As at 30 September 2019 RMB’000 11,239 10,894 21,206 45,141 —
		88,480

Ageing analysis of trade receivables, based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due More than 24 months past due	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 3,273 4,317 3,481 10,872 10,713 10,337 9,384 11,539 11,364 13,357 18,921 23,816 20,726 — 22,252 — — — 57,612 45,490 71,250	As at 30 September 2019 RMB’000 3,420 10,712 12,234 19,845 42,269 —
		88,480

Taike’s trade receivables are mainly receivables from sales of electricity. Generally, the receivables are due within 30 to 180 days from the date of billing, except for the renewable energy subsidy.

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the State Grid Company based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies. As at 31 December 2016, 2017 and 2018 and 30 September 2019, the outstanding renewable energy subsidy amounted to approximately RMB55,959,000, approximately RMB44,590,000, approximately RMB71,250,000 and approximately RMB88,480,000 respectively.

– II-A-11 –

FINANCIAL INFORMATION OF TAIKE

APPENDIX II-A

As at 31 December 2016, 2017 and 2018 and 30 September 2019, trade receivables arising from the sales of electricity including renewable energy subsidies amounting to approximately RMB57,612,000, approximately RMB45,490,000, approximately RMB71,250,000 and approximately RMB88,480,000 respectively were pledged as securities for Taike’s loans and borrowings (note 6).

6. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 22,077 26,335 27,366 248,879 224,064 197,178 270,956 250,399 224,544	As at 30 September 2019 RMB’000 28,009
		176,387
		204,396

Taike’s loans and borrowings are repayable as follows:

Within 1 year After 1 year but within 2 years After 2 years but within 5 years Over 5 years	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 22,077 26,335 27,366 24,840 26,885 28,038 85,032 88,469 91,429 139,007 108,710 77,711 270,956 250,399 224,544	As at 30 September 2019 RMB’000 28,009 29,425 93,104 53,858
		204,396

As at 31 December 2016, 2017 and 2018 and 30 September 2019, loans and other borrowings bear interest at 5.9% per annum and is subject to floating-rate.

The loans and borrowings were secured by the following assets:

Solar power plants (note 4) Trade receivables (note 5)	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 346,777 332,551 318,325 57,612 45,490 71,250 404,389 378,041 389,575	As at 30 September 2019 RMB’000 307,656 88,480
		396,136

As at 31 December 2016, 2017 and 2018 and 30 September 2019, the amount of trade receivables pledged for loans and borrowings included the outstanding renewable energy subsidies.

– II-A-12 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

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==> picture [100 x 55] intentionally omitted <==

REPORT ON REVIEW OF FINANCIAL INFORMATION OF ARTUX HUAGUANG ENERGY LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information set out on pages II-B-3 to II-B-12 which comprises the statements of financial position as at 31 December 2016, 2017 and 2018 and 30 September 2019 of Artux Huaguang Energy Limited (‘‘Huaguang’’) and the statements of profit or loss and other comprehensive income, the statements of cash flows and the statements of changes in equity for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and explanatory notes (the ‘‘Financial Information’’). The Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Kong Sun Holdings Limited (the ‘‘Company’’) in connection with the proposed disposal of entire share of Huaguang in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

The directors of the Company are responsible for the preparation and presentation of the Financial Information of Huaguang in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

– II-B-1 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

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.

Conclusion

BDO Limited

Certified Public Accountants

Hong Kong, 6 January 2020

– II-B-2 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

Set out below is the unaudited financial information of Huaguang which comprises the unaudited statements of financial position of Huaguang as at 31 December 2016, 2017 and 2018 and 30 September 2019 and the unaudited statements of profit or loss and other comprehensive income, unaudited statements of cash flows and unaudited statements of changes in equity for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and certain explanatory notes (altogether referred to as ‘‘Unaudited Financial Information’’).

The Unaudited Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the proposed disposal of the entire equity interest in Huaguang. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Huaguang in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

– II-B-3 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF HUAGUANG

Notes Revenue 3 Cost of sales Gross profit Other income Other expense Administrative expenses Finance costs Profit before income tax Income tax credit Profit for the year/period	For the year ended 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 19,492 23,862 25,718 (13,279) (11,374) (12,461) 6,213 12,488 13,257 3 2 142 — — — (138) (968) (620) — (113) — 6,078 11,409 12,779 509 — — 6,587 11,409 12,779	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 20,143 22,176 (9,292) (9,699) 10,851 12,477 1 138 — (61) (415) (1,412) — (2,917) 10,437 8,225 — — 10,437 8,225

– II-B-4 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF HUAGUANG

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 4 Current assets Inventories Trade and other receivables 5 Loan to shareholder Cash and cash equivalents Total current assets Current liabilities Trade and other payables Shareholder’s loan Total current liabilities Net current (liabilities)/assets Total assets less current liabilities Non-current liabilities Loans and borrowings 6 Total non-current liabilities Net assets Equity Share capital Reserves Total equity	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 111 80 50 242,982 233,321 223,860 243,093 233,401 223,910 — — 4 52,879 71,855 64,800 1,046 — 32,397 1,187 451 708 55,112 72,306 97,909 26,252 26,272 4,594 258,916 254,989 — 285,168 281,261 4,594 (230,056) (208,955) 93,315 13,037 24,446 317,225 — — 280,000 — — 280,000 13,037 24,446 37,225 5,000 5,000 5,000 8,037 19,446 32,225 13,037 24,446 37,225	As at 30 September 2019 RMB’000 39 216,587
		216,626
		— 68,117 322,686 1,894
		392,697
		7,465 276,408
		283,873
		108,824
		325,450
		280,000
		280,000
		45,450
		5,000 40,450
		45,450

– II-B-5 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

UNAUDITED STATEMENTS OF CASH FLOWS OF HUAGUANG

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Interest expense Interest income Operating profit before working capital changes Decrease/(Increase) in inventories (Increase)/decrease in trade, bills and other receivables (Decrease)/increase in trade and other payables Cash generated from operating activities Tax paid Net cash generated from operating activities Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Interests received Net cash used in investing activities	For the year ended 31 2016 2017 RMB’000 RMB’000 6,078 11,409 14 31 12,275 9,661 — — (3) (2) 18,364 21,099 — — (13,648) (18,976) 1,187 48 5,903 2,171 — — 5,903 2,171 (125) — — (28) 3 2 (122) (26)	December 2018 RMB’000 12,779 30 9,695 — (5) 22,499 (4) 7,055 9 29,559 — 29,559 — (21,921) 5 (21,916)	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 10,437 8,225 23 22 7,270 7,273 — 2,917 (1) (1) 17,729 18,436 (4) 4 4,014 (3,317) (66) 2,893 21,673 18,016 — — 21,673 18,016 — (11) (21,909) (22) 1 1 (21,908) (32)

– II-B-6 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

Cash flows from financing activities Proceed of loans and borrowings Interest paid Proceed from Shareholder’s loan Repayment to shareholder Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 2016 2017 RMB’000 RMB’000 — — — — — — (4,596) (2,881) (4,596) (2,881) 1,185 (736) 2 1,187 1,187 451	December 2018 RMB’000 280,000 — — (287,386) (7,386) 257 451 708	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 — — — (2,917) 788 — — (13,881) 788 (16,798) 553 1,186 451 708 1,004 1,894

– II-B-7 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF HUAGUANG

Balance at 1 January 2016 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2016 and 1 January 2017 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2017 and 1 January 2018 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2018 and 1 January 2019 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2019 Balance at 31 December 2017 and 1 January 2018 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2018	Share capital RMB’000 5,000 — — 5,000 — — 5,000 — — 5,000 — — 5,000 5,000 — — 5,000	PRC statutory reserve RMB’000 145 — 659 804 — 1,271 2,075 — 1,278 3,353 — 822 4,175 2,075 — 1,044 3,119	Retained profits RMB’000 1,305 6,587 (659) 7,233 11,409 (1,271) 17,371 12,779 (1,278) 28,872 8,225 (822) 36,275 17,371 10,437 (1,044) 26,764	Total RMB’000 6,450 6,587 —
				13,037 11,409 —
				24,446 12,779 —
				37,225 8,225 —
				45,450
				24,446 10,437 —
				34,883

– II-B-8 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Huaguang is a limited liability company incorporated in PRC. The principal activity of Huaguang is operation of solar power plant.

On 15 November 2019, the Vendor, an indirect wholly-owned subsidiary of the Company, CNNP Shandong and Huaguang entered into the Agreement, pursuant to which the Vendor agreed to sell, and CNNP Shandong agreed to acquire, the entire equity interest in Huaguang for a total consideration of approximately RMB224,909,000. Upon completion of the Huaguang Disposal, Huaguang will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of Huaguang for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules, and solely for the purposes of inclusion in this circular issued by the Company in connection with the Huaguang Disposal.

3. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the year ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019, sales of electricity includes renewable energy subsidies amounting to approximately RMB15,857,000, approximately RMB19,511,000, approximately RMB21,320,000, approximately RMB16,632,000 and approximately RMB17,675,000 respectively.

– II-B-9 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

4. SOLAR POWER PLANTS

Cost
At 1 January 2016
Additions
At 31 December 2016 and 1 January 2017
Additions
At 31 December 2017 and 1 January 2018
Additions
At 31 December 2018 and 1 January 2019
Additions
At 30 September 2019
Accumulated depreciation
At 1 January 2016
Charged for the year
At 31 December 2016 and 1 January 2017
Charged for the year
At 31 December 2017 and 1 January 2018
Charged for the year
At 31 December 2018 and 1 January 2019
Charged for the period
At 30 September 2019
Net carrying amount
At 31 December 2016
At 31 December 2017
At 31 December 2018
At 30 September 2019

Solar
power
plants
RMB’000
258,325
—
258,325
—
258,325
234
258,559
—
258,559
(3,068)
(12,275)
(15,343)
(9,661)
(25,004)
(9,695)
(34,699)
(7,273)
(41,972)
242,982
233,321
223,860
216,587

– II-B-10 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

5. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 23,427 46,023 42,965 29,452 25,832 21,835 52,879 71,855 64,800	As at 30 September 2019 RMB’000 49,527 18,590
		68,117

Ageing analysis of trade receivables, based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months More than 24 months	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 3,969 5,234 5,770 6,040 7,284 8,818 8,829 10,364 10,528 4,589 18,552 17,849 — 4,589 — 23,427 46,023 42,965	As at 30 September 2019 RMB’000 6,700 6,710 10,599 25,518 —
		49,527

Ageing analysis of trade receivables, based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due More than 24 months past due	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 1,240 1,350 1,657 4,164 6,172 6,529 7,252 7,703 8,666 6,453 8,611 9,560 4,318 17,869 16,553 — 4,318 — 23,427 46,023 42,965	As at 30 September 2019 RMB’000 2,794 8,502 6,148 10,981 21,102 —
		49,527

Huaguang’s trade receivables are mainly receivables from sales of electricity. Generally, the receivables are due within 30 to 180 days from the date of billing, except for the renewable energy subsidy.

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the State Grid Company based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies. As at 31 December 2016, 2017 and 2018 and 30 September 2019, the outstanding renewable energy subsidy amounted to approximately RMB23,142,000, approximately RMB45,970,000, approximately RMB42,633,000 and approximately RMB49,063,000 respectively.

– II-B-11 –

FINANCIAL INFORMATION OF HUAGUANG

APPENDIX II-B

6. LOANS AND BORROWINGS

As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 Non-current Secured — other borrowings — — 280,000 Total loans and borrowings — — 280,000 Huaguang’s loans and borrowings are repayable as follows: As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 After 2 years but within 5 years — — 280,000	As at 30 September 2019 RMB’000 280,000
	280,000
	As at 30 September 2019 RMB’000 280,000

As at 31 December 2018 and 30 September 2019, loans and other borrowings bear interest at 7% per annum.

– II-B-12 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

==> picture [79 x 65] intentionally omitted <==

==> picture [100 x 55] intentionally omitted <==

REPORT ON REVIEW OF FINANCIAL INFORMATION OF ARTUX XINGGUANG ENERGY LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information set out on pages II-C-3 to II-C-12 which comprises the statements of financial position as at 31 December 2016, 2017 and 2018 and 30 September 2019 of Artux Xingguang Energy Limited (‘‘Xingguang’’) and the statements of profit or loss and other comprehensive income, the statements of cash flows and the statements of changes in equity for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and explanatory notes (the ‘‘Financial Information’’). The Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Kong Sun Holdings Limited (the ‘‘Company’’) in connection with the proposed disposal of entire share of Xingguang in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

The directors of the Company are responsible for the preparation and presentation of the Financial Information of Xingguang in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

– II-C-1 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

Conclusion

BDO Limited

Certified Public Accountants

Hong Kong, 6 January 2020

– II-C-2 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

Set out below is the unaudited financial information of Xingguang which comprises the unaudited statements of financial position of Xingguang as at 31 December 2016, 2017 and 2018 and 30 September 2019 and the unaudited statements of profit or loss and other comprehensive income, unaudited statements of cash flows and unaudited statements of changes in equity for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and certain explanatory notes (altogether referred to as ‘‘Unaudited Financial Information’’).

The Unaudited Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the proposed disposal of the entire equity interest in Xingguang. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Xingguang in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

– II-C-3 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF XINGGUANG

Notes Revenue 3 Cost of sales Gross profit Other income Administrative expenses Finance costs Profit before income tax Income tax credit Profit for the year/period	For the year ended 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 19,492 23,975 26,226 (11,557) (9,751) (9,933) 7,935 14,224 16,293 4 2 6 (121) (1,089) (918) — — — 7,818 13,137 15,381 639 — — 8,457 13,137 15,381	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 20,634 22,050 (7,468) (7,924) 13,166 14,126 2 1 (550) (2,650) — (2,670) 12,618 8,807 — — 12,618 8,807

– II-C-4 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF XINGGUANG

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 4 Current assets Trade and other receivables 5 Loan to shareholder Cash and cash equivalents Total current assets Current liabilities Trade and other payables Shareholder’s loan Total current liabilities Net current (liabilities)/assets Total assets less current liabilities Non-current liabilities Loans and borrowings 6 Total non-current liabilities Net assets Equity Share capital Reserves Total equity	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 3 2 1 217,642 208,988 200,340 217,645 208,990 200,341 48,155 67,013 59,512 — — 43,599 1,723 683 490 49,878 67,696 103,601 53,712 53,713 4,386 202,773 198,798 — 256,485 252,511 4,386 (206,607) (184,815) 99,215 11,038 24,175 299,556 — — 260,000 — — 260,000 11,038 24,175 39,556 1,000 1,000 1,000 10,038 23,175 38,556 11,038 24,175 39,556	As at 30 September 2019 RMB’000 1 193,831
		193,832
		62,943 303,816 1,421
		368,180
		7,435 246,214
		253,649
		114,531
		308,363
		260,000
		260,000
		48,363
		1,000 47,363
		48,363

– II-C-5 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

UNAUDITED STATEMENTS OF CASH FLOWS OF XINGGUANG

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Interest expense Interest income Operating profit before working capital changes (Increase)/decrease in trade, bills and other receivables (Decrease)/increase in trade and other payables Cash generated from operating activities Tax paid Net cash generated from operating activities Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Interests received Net cash generated from/(used in) investing activities	For the year ended 31 2016 2017 RMB’000 RMB’000 7,818 13,137 1 1 10,995 8,654 — — (4) (2) 18,810 21,790 (13,931) (18,858) (1,025) 1 3,854 2,933 — — 3,854 2,933 (4) — (76,997) — 4 2 (76,997) 2	December 2018 RMB’000 15,381 1 8,678 — (6) 24,054 7,501 45 31,600 — 31,600 — (49,402) 6 (49,396)	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 12,618 8,807 1 1 6,508 6,509 — 2,670 (2) (1) 19,125 17,986 4,135 (3,431) (1) 3,048 23,259 17,603 — — 23,259 17,603 — — (49,370) — 2 1 (49,368) 1

– II-C-6 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

Cash flows from financing activities Proceed of loans and borrowings Interest paid Proceed from Shareholder’s loan Repayment to shareholder Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 2016 2017 RMB’000 RMB’000 — — — — 74,698 — — (3,975) 74,698 (3,975) 1,555 (1,040) 168 1,723 1,723 683	December 2018 RMB’000 260,000 — — (242,397) 17,603 (193) 683 490	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 — — — (2,670) 26,783 — — (14,003) 26,783 (16,673) 674 931 683 490 1,357 1,421

– II-C-7 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF XINGGUANG

Balance at 1 January 2016 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2016 and 1 January 2017 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2017 and 1 January 2018 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2018 and 1 January 2019 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2019 Balance at 31 December 2017 and 1 January 2018 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2018	Share capital RMB’000 1,000 — — 1,000 — — 1,000 — — 1,000 — — 1,000 1,000 — — 1,000	PRC statutory reserve RMB’000 158 — 846 1,004 — 1,313 2,317 — 1,539 3,856 — 880 4,736 2,317 — 1,262 3,579	Retained profits RMB’000 1,423 8,457 (846) 9,034 13,137 (1,313) 20,858 15,381 (1,539) 34,700 8,807 (880) 42,627 20,858 12,618 (1,262) 32,214	Total RMB’000 2,581 8,457 —
				11,038 13,137 —
				24,175 15,381 —
				39,556 8,807 —
				48,363
				24,175 12,618 —
				36,793

– II-C-8 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Xingguang is a limited liability company incorporated in PRC. The principal activity of Xingguang is operation of solar power plant.

On 15 November 2019, the Vendor, an indirect wholly-owned subsidiary of the Company, CNNP Shandong and Xingguang entered into the Agreement, pursuant to which the Vendor agreed to sell, and CNNP Shandong agreed to acquire, the entire equity interest in Xingguang for a total consideration of approximately RMB226,384,000. Upon completion of the Xingguang Disposal, Xingguang will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of Xingguang for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules, and solely for the purposes of inclusion in this circular issued by the Company in connection with the Xingguang Disposal.

3. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the year ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019, sales of electricity includes renewable energy subsidies amounting to approximately RMB15,837,000, approximately RMB19,511,000, approximately RMB21,320,000, approximately RMB16,632,000 and approximately RMB17,675,000 respectively.

– II-C-9 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

4. SOLAR POWER PLANTS

Solar power
plants
RMB’000
231,385
—
231,385
—
231,385
30
231,415
—
231,415
(2,748)
(10,995)
(13,743)
(8,654)
(22,397)
(8,678)
(31,075)
(6,509)
(37,584)
217,642
208,988
200,340
193,831

– II-C-10 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

5. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 23,427 46,111 42,919 24,728 20,902 16,593 48,155 67,013 59,512	As at 30 September 2019 RMB’000 49,529 13,414
		62,943

Ageing analysis of trade receivables, based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months More than 24 months	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 3,969 5,322 5,723 6,039 7,284 8,818 8,829 10,363 10,528 4,590 18,552 17,850 — 4,590 — 23,427 46,111 42,919	As at 30 September 2019 RMB’000 8,702 6,709 10,599 23,519 —
		49,529

Ageing analysis of trade receivables, based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due More than 24 months past due	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 1,240 1,438 1,610 4,165 6,172 6,529 7,252 7,703 8,666 6,453 8,611 9,560 4,317 17,869 16,554 — 4,318 — 23,427 46,111 42,919	As at 30 September 2019 RMB’000 2,795 8,502 6,148 10,981 21,103 —
		49,529

Xingguang’s trade receivables are mainly receivables from sales of electricity. Generally, the receivables are due within 30 to 180 days from the date of billing, except for the renewable energy subsidy.

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the State Grid Company based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies. As at 31 December 2016, 2017 and 2018 and 30 September 2019, the outstanding renewable energy subsidy amounted to approximately RMB23,142,000, approximately RMB45,970,000, approximately RMB42,633,000 and approximately RMB49,063,000 respectively.

– II-C-11 –

APPENDIX II-C

FINANCIAL INFORMATION OF XINGGUANG

6. LOANS AND BORROWINGS

Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 — — 260,000 — — 260,000	As at 30 September 2019 RMB’000 260,000
		260,000

Artux Xingguang’s loans and borrowings are repayable as follows:

After 2 years but within 5 years	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 — — 260,000	As at 30 September 2019 RMB’000 260,000

As at 31 December 2018 and 30 September 2019, loans and other borrowings bear interest at 7% per annum.

– II-C-12 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

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==> picture [100 x 55] intentionally omitted <==

REPORT ON REVIEW OF FINANCIAL INFORMATION OF HAMI ZHAOXIANG NEW ENERGY TECHNOLOGY LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information set out on pages II-D-3 to II-D-14 which comprises the statements of financial position as at 31 December 2016, 2017 and 2018 and 30 September 2019 of Hami Zhaoxiang New Energy Technology Limited (‘‘Zhaoxiang’’) and the statements of profit or loss and other comprehensive income, the statements of cash flows and the statements of changes in equity for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and explanatory notes (the ‘‘Financial Information’’). The Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Kong Sun Holdings Limited (the ‘‘Company’’) in connection with the proposed disposal of entire share of Zhaoxiang in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

The directors of the Company are responsible for the preparation and presentation of the Financial Information of Zhaoxiang in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

– II-D-1 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

Conclusion

BDO Limited

Certified Public Accountants

Hong Kong, 6 January 2020

– II-D-2 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

Set out below is the unaudited financial information of Zhaoxiang which comprises the unaudited statements of financial position of Zhaoxiang as at 31 December 2016, 2017 and 2018 and 30 September 2019 and the unaudited statements of profit or loss and other comprehensive income, unaudited statements of cash flows and unaudited statements of changes in equity for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and certain explanatory notes (altogether referred to as ‘‘Unaudited Financial Information’’).

The Unaudited Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the proposed disposal of the entire equity interest in Zhaoxiang. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Zhaoxiang in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

– II-D-3 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF ZHAOXIANG

Notes Revenue 4 Cost of sales Gross profit Other income Other expense Selling expense Administrative expenses Finance costs Profit/(loss) before income tax Income tax expense Profit/(loss) for the year/ period	For the year ended 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 16,262 20,082 20,887 (11,761) (9,125) (9,942) 4,501 10,957 10,945 34 13 3 — (432) — — (3) (3) (653) (1,828) (738) (9,561) (6,521) (5,472) (5,679) 2,186 4,735 — — — (5,679) 2,186 4,735	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 16,340 16,930 (7,012) (5,932) 9,328 10,998 2 1 — — — (384) (944) (4,193) (6,841) 4,753 3,214 — — 4,753 3,214

– II-D-4 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF ZHAOXIANG

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 5 Right-of-use asset Lease prepayments Current assets Inventories Trade and other receivables 6 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Loans and borrowings 7 Shareholder’s loan Total current liabilities Net current liabilities Total assets less current liabilities Non-current liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Share capital Reserves Total equity	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 308 64 16 147,236 141,180 135,105 — — — 9,159 8,757 8,356 156,703 150,001 143,477 27 48 48 43,666 36,370 48,087 13,563 802 520 57,256 37,220 48,655 2,130 773 1,860 15,198 15,302 15,543 76,414 62,346 77,871 93,742 78,421 95,274 (36,486) (41,201) (46,619) 120,217 108,800 96,858 89,656 76,053 59,376 89,656 76,053 59,376 30,561 32,747 37,482 30,000 30,000 30,000 561 2,747 7,482 30,561 32,747 37,482	As at 30 September 2019 RMB’000 12 130,356 8,054 — 138,422 20 50,674 304 50,998 4,513 15,632 80,984 101,129 (50,131) 88,291 47,595 47,595 40,696 30,000 10,696 40,696

– II-D-5 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

UNAUDITED STATEMENTS OF CASH FLOWS OF ZHAOXIANG

Cash flows from operating activities Profit/(loss) before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Depreciation of right-of-use asset Amortization of lease prepayments Write-off of solar power plant Interest expense Interest income Operating profit before working capital changes Decrease/(Increase) in inventories (Increase)/decrease in trade, bills and other receivables (Decrease)/increase in trade and other payables Cash generated from operating activities Tax paid Net cash generated from operating activities	For the year ended 31 2016 2017 RMB’000 RMB’000 (5,679) 2,186 55 49 8,165 6,257 — — 402 402 122 — 9,561 6,521 (34) (13) 12,592 15,402 — (21) 19,156 7,290 (1,544) (1,314) 30,204 21,357 — — 30,204 21,357	December 2018 RMB’000 4,735 50 6,287 — 401 — 5,472 (3) 16,942 — (11,717) 1,087 6,312 — 6,312	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 4,753 3,214 40 4 4,715 4,749 — 302 301 — — — 4,193 6,841 (2) (1) 14,000 15,109 — 28 (12,249) (2,587) 1,015 3,258 2,766 15,808 — — 2,766 15,808

– II-D-6 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Interests received Net cash used in investing activities Cash flows from financing activities Repayment of loans and borrowings Interest paid Proceed from Shareholder’s loan Repayment to shareholder Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 2016 2017 RMB’000 RMB’000 (4) — (553) (43) 34 13 (523) (30) (14,986) (13,499) (9,561) (6,521) 7,500 — — (14,068) (17,047) (34,088) 12,634 (12,761) 929 13,563 13,563 802	December 2018 RMB’000 (2) (212) 3 (211) (16,436) (5,472) 15,525 — (6,383) (282) 802 520	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 (2) — (212) (605) 2 1 (212) (604) (12,549) (11,692) (4,193) (6,841) 14,018 3,113 — — (2,724) (15,420) (170) (216) 802 520 632 304

– II-D-7 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF ZHAOXIANG

Balance at 1 January 2016 Loss for the year Balance at 31 December 2016 and 1 January 2017 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2017 and 1 January 2018 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2018 and 1 January 2019 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2019 Balance at 31 December 2017 and 1 January 2018 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2018	Share capital RMB’000 30,000 — 30,000 — — 30,000 — — 30,000 — — 30,000 30,000 — — 30,000	PRC statutory reserve RMB’000 — — — — 219 219 — 473 692 — 321 1,013 219 — 475 694	Retained Profits RMB’000 6,240 (5,679) 561 2,186 (219) 2,528 4,735 (473) 6,790 3,214 (321) 9,683 2,528 4,753 (475) 6,806	Total RMB’000 36,240 (5,679) 30,561 2,186 — 32,747 4,735 — 37,482 3,214 — 40,696 32,747 4,753 — 37,500

– II-D-8 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Zhaoxiang is a limited liability company incorporated in PRC. The principal activity of Zhaoxiang is operation of solar power plant.

On 15 November 2019, the Vendor, an indirect wholly-owned subsidiary of the Company, CNNP Shandong and Zhaoxiang entered into the Agreement, pursuant to which the Vendor agreed to sell, and CNNP Shandong agreed to acquire, the entire equity interest in Zhaoxiang for a total consideration of approximately RMB102,677,000. Upon completion of the Zhaoxiang Disposal, Zhaoxiang will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of Zhaoxiang for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules, and solely for the purposes of inclusion in this circular issued by the Company in connection with the Zhaoxiang Disposal.

The Unaudited Financial Information of the Zhaoxiang has been prepared on the going concern basis which assumes the realisation of assets and satisfaction of liabilities in the ordinary course of business notwithstanding the Zhaoxiang had net current liabilities of approximately RMB36,486,000, approximately RMB41,201,000, approximately RMB46,619,000 and approximately RMB50,131,000 as at 31 December 2016, 2017 and 2018 and 30 September 2019 respectively. The directors are of the opinion that the Group will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months after taking into account the followings:

(i) having reviewed the cash flow projection of the Zhaoxiang for the next twelve months from the reporting date, the directors are of the opinion that the Zhaoxiang is able to generate positive cash flows from its operation. In preparing the cash flow projection by the management, it was assumed that proceeds of renewable energy subsidy receivables in respect of sale of electricity will be received with reference to prevalent payment trend after successfully enlisted in the renewable energy tariff subsidy catalogue;
(ii) the Company has confirmed not to demand repayment of debt due from the Zhaoxiang until such time when the repayment will not affect the Zhaoxiang’s ability to repay other creditors in the normal course of business; and
(iii) the Company has confirmed to provide sufficient financial support to the Zhaoxiang so as to enable the Zhaoxiang to meet its liabilities and obligations as and when they fall due and to enable the Zhaoxiang to continue their business for twelve months after 30 September 2019 if the Disposal is not completed, and to the completion date if the Disposal is completed.

– II-D-9 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

3. CHANGES IN ACCOUNTING POLICIES

ZHAOXIANG adopted HKFRS 16 — Leases (‘‘HKFRS 16’’) using the modified retrospective approach with a date of initial application of 1 January 2019, under which the cumulative effect of initial application is recognised as at 1 January 2019. As a result, the Unaudited Financial Information presented for the years ended 31 December 2016, 2017 and 2018 have not been restated. HKFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. The impact of the adoption of HKFRS 16 on the Unaudited Financial Information is described below.

Impact of the new definition of a lease

Zhaoxiang has made use of the practical expedient available on transition to HKFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with HKAS 17 — Leases (‘‘HKAS 17’’) and HK(IFRIC)-Int 4 — Determining whether an Arrangement contains a Lease will continue to be applied to leases entered or modified before 1 January 2019.

The change in definition of a lease mainly relates to the concept of control. HKFRS 16 determines whether a contract contains a lease on the basis of whether the customer has the right to control the use of an identified asset for a period of time in exchange for consideration.

In preparation for the first-time application of HKFRS 16, Zhaoxiang assessed that the new definition in HKFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for Zhaoxiang.

Impact on lessee accounting

HKFRS 16 changes how Zhaoxiang accounts for leases previously classified as operating leases under HKAS 17, which were off-balance-sheet. Upon initial application of HKFRS 16, for all leases (except for short-term leases and leases of low value assets), Zhaoxiang (a) recognises right-of-use assets and lease liabilities in the statements of financial position, initially measured at the present value of future lease payments; (b) recognises depreciation of right-of-use assets and interest on lease liabilities in the statements of profit or loss and other comprehensive income; and (c) separately presented the total amount of cash paid into a principal portion and interest within financing activities and investing activities in the statements of cash flows.

Under HKFRS 16, right-of-use assets are tested for impairment in accordance with HKAS 36 — Impairment of Assets. This replaces the previous requirement to recognise a provision for onerous lease contracts.

As at 31 December 2018, Zhaoxiang does not have operating lease commitment. On transition to HKFRS 16, Zhaoxiang has taken advantage of the following practical expedients to leases previously classified as operating leases under HKAS 17 and recognised right-of-use assets measured at the amount equal to the lease liability, adjusted by the amount of any prepayments relating to that lease recognised in the statements of financial position.

Prepaid lease payment in respect of the land use right in the PRC is reclassified and recognised as rightof-use assets under HKFRS 16.

The adjustment of the opening balances (affected items only) resulting from the initial application of the HKFRS 16 as at 1 January 2019 is set out in the table below. The prior-year amounts were not adjusted.

– II-D-10 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

Assets: — Lease prepayments — Right-of-use assets	As at 31 December 2018 RMB’000 (Originally stated) 8,356 —	Reclassification RMB’000 (8,356) 8,356	Contract capitalisation RMB’000 — —	As at 1 January 2019 RMB’000 (Restated) — 8,356

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the year ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019, sales of electricity includes renewable energy subsidies amounting to approximately RMB13,246,000, approximately RMB16,882,000, approximately RMB17,770,000, approximately RMB13,873,000 and approximately RMB13,896,000 respectively.

5. SOLAR POWER PLANTS

Cost At 1 January 2016 Written off At 31 December 2016 and 1 January 2017 Additions At 31 December 2017 and 1 January 2018 Additions At 31 December 2018 and 1 January 2019 Additions At 30 September 2019 Accumulated depreciation At 1 January 2016 Charged for the year Written back At 31 December 2016 and 1 January 2017 Charged for the year At 31 December 2017 and 1 January 2018 Charged for the year At 31 December 2018 and 1 January 2019 Charged for the period At 30 September 2019	Solar power plants RMB’000 170,810 (135
	170,675 201
	170,876 212
	171,088 —
	171,088
	(15,287 (8,165 13
	(23,439 (6,257
	(29,696 (6,287
	(35,983 (4,749
	(40,732

– II-D-11 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

Net carrying amount At 31 December 2016 At 31 December 2017 At 31 December 2018 At 30 September 2019	Solar power plants RMB’000 147,236
	141,180
	135,105
	130,356

As at 31 December 2016, 2017 and 2018 and 30 September 2019, solar plant with net carrying amount of approximately RMB147,236,000, approximately RMB141,180,000, approximately RMB135,105,000 and approximately RMB130,356,000 respectively was pledged as securities for Zhaoxiang’s loans and borrowings (note 7).

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 25,139 21,015 35,833 18,527 15,355 12,254 43,666 36,370 48,087	As at 30 September 2019 RMB’000 40,709 9,965
		50,674

– II-D-12 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

Ageing analysis of trade receivables, based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months More than 24 months	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 3,270 5,435 4,761 4,507 6,044 5,589 7,993 8,689 10,560 9,369 847 14,923 — — — 25,139 21,015 35,833	As at 30 September 2019 RMB’000 5,647 5,439 9,457 20,166 —
		40,709

Ageing analysis of trade receivables, based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due More than 24 months past due	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 1,118 1,897 1,518 3,459 5,524 4,914 5,085 5,869 5,813 6,313 7,725 10,146 9,164 — 13,442 — — — 25,139 21,015 35,833	As at 30 September 2019 RMB’000 1,951 5,462 5,555 9,246 18,495 —
		40,709

Zhaoxiang’s trade receivables are mainly receivables from sales of electricity. Generally, the receivables are due within 30 to 180 days from the date of billing, except for the renewable energy subsidy.

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the State Grid Company based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies. As at 31 December 2016, 2017 and 2018 and 30 September 2019, the outstanding renewable energy subsidy amounted to approximately RMB24,867,000, approximately RMB20,599,000, approximately RMB35,593,000 and approximately RMB40,518,000 respectively.

As at 31 December 2016, 2017 and 2018 and 30 September 2019, trade receivables arising from the sales of electricity including renewable energy subsidies amounting to approximately RMB25,139,000, approximately RMB21,015,000, approximately RMB35,833,000 and approximately RMB40,709,000 respectively were pledged as securities for Zhaoxiang’s loans and borrowings (note 7).

– II-D-13 –

FINANCIAL INFORMATION OF ZHAOXIANG

APPENDIX II-D

7. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 15,198 15,302 15,543 89,656 76,053 59,376 104,854 91,355 74,919	As at 30 September 2019 RMB’000 15,632
		47,595
		63,227

Zhaoxiang’s loans and borrowings are repayable as follows:

Within 1 year After 1 year but within 2 years After 2 years but within 5 years Over 5 years	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 15,198 15,302 15,543 15,301 17,111 15,719 46,613 46,996 43,657 27,742 11,946 — 104,854 91,355 74,919	As at 30 September 2019 RMB’000 15,632 15,782 31,813 —
		63,227

As at 31 December 2016, 2017 and 2018 and 30 September 2019, loans and other borrowings bear interest at 5.32% per annum and is subject to floating-rate.

The loans and borrowings were secured by the following assets:

Solar power plants (note 5) Trade receivables (note 6)	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 147,236 141,180 135,105 25,139 21,015 35,833 172,375 162,195 170,938	As at 30 September 2019 RMB’000 130,356 40,709
		171,065

As at 31 December 2016, 2017 and 2018 and 30 September 2019, the amount of trade receivables pledged for loans and borrowings included the outstanding renewable energy subsidies.

– II-D-14 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

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REPORT ON REVIEW OF FINANCIAL INFORMATION OF HEJING XUSHUANG PHOTOVOLTAIC TECHNOLOGY LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information set out on pages II-E-3 to II-E-14 which comprises the statements of financial position as at 31 December 2016, 2017 and 2018 and 30 September 2019 of Hejing Xushuang Photovoltaic Technology Limited (‘‘Xushuang’’) and the statements of profit or loss and other comprehensive income, the statements of cash flows and the statements of changes in equity for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and explanatory notes (the ‘‘Financial Information’’). The Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Kong Sun Holdings Limited (the ‘‘Company’’) in connection with the proposed disposal of entire share of Xushuang in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

The directors of the Company are responsible for the preparation and presentation of the Financial Information of Xushuang in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

– II-E-1 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

Conclusion

BDO Limited

Certified Public Accountants

Hong Kong, 6 January 2020

– II-E-2 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

Set out below is the unaudited financial information of Xushuang which comprises the unaudited statements of financial position of Xushuang as at 31 December 2016, 2017 and 2018 and 30 September 2019 and the unaudited statements of profit or loss and other comprehensive income, unaudited statements of cash flows and unaudited statements of changes in equity for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and certain explanatory notes (altogether referred to as ‘‘Unaudited Financial Information’’).

The Unaudited Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the proposed disposal of the entire equity interest in Xushuang. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Xushuang in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

– II-E-3 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF XUSHUANG

Notes Revenue 4 Cost of sales Gross profit Other income Administrative expenses Finance costs Profit/(loss) before income tax Income tax expense Profit/(loss) for the year/ period	For the year ended 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 14,556 18,791 21,475 (9,835) (7,786) (8,890) 4,721 11,005 12,585 11 5 4 (261) (513) (705) (7,043) (5,267) (9,139) (2,572) 5,230 2,745 — — — (2,572) 5,230 2,745	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 16,148 16,694 (6,363) (5,797) 9,785 10,897 2 1,115 (351) (1,062) (7,608) (6,644) 1,828 4,306 — — 1,828 4,306

– II-E-4 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF XUSHUANG

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 5 Right-of-use asset Lease prepayments Current assets Inventories Trade and other receivables 6 Loan to shareholder Cash and cash equivalents Total current assets Current liabilities Trade and other payables Loans and borrowings 7 Shareholder’s loan Total current liabilities Net current liabilities Total assets less current liabilities Non-current liabilities Lease liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Share capital Reserves Total equity	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 113 107 91 158,053 151,908 145,397 — — — 1,534 1,523 1,340 159,700 153,538 146,828 — 2 — 48,809 41,832 55,007 — — — 1,097 10 457 49,906 41,844 55,464 6,471 5,159 4,701 8,164 9,969 11,491 72,838 65,102 76,369 87,473 80,230 92,561 (37,567) (38,386) (37,097) 122,133 115,152 109,731 — — — 103,631 91,420 83,254 103,631 91,420 83,254 18,502 23,732 26,477 20,000 20,000 20,000 (1,498) 3,732 6,477 18,502 23,732 26,477	As at 30 September 2019 RMB’000 68 137,899 1,282 — 139,249 — 58,161 60 875 59,096 2,976 12,081 77,808 92,865 (33,769) 105,480 — 74,697 74,697 30,783 20,000 10,783 30,783

– II-E-5 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

UNAUDITED STATEMENTS OF CASH FLOWS OF XUSHUANG

Cash flows from operating activities Profit/(loss) before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Depreciation of right-of-use asset Amortization of lease prepayments Write-off of solar power plant Interest expense Interest income Operating profit before working capital changes Decrease/(increase) in inventories (Increase)/decrease in trade, bills and other receivables (Decrease)/increase in trade and other payables Cash (used in)/generated from operating activities Tax paid Net cash (used in)/generated from operating activities	For the year ended 31 2016 2017 RMB’000 RMB’000 (2,572) 5,230 14 15 8,324 6,520 — — 8 11 — — 7,043 5,267 (11) (5) 12,806 17,038 — (2) (11,989) 6,977 (10,342) (1,249) (9,525) 22,764 — — (9,525) 22,764	December 2018 RMB’000 2,745 16 6,819 — 183 — 9,139 (4) 18,898 2 (13,175) (398) 5,327 — 5,327	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 1,828 4,306 10 25 5,189 4,902 — 58 164 — — 2,596 7,608 6,644 (2) (2) 14,797 18,529 2 — (11,672) (3,154) (1,455) (59) 1,672 15,316 — — 1,672 15,316

– II-E-6 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Payment for the purchase of lease prepayments Interests received Net cash used in investing activities Cash flows from financing activities Repayment of loans and borrowings Interest paid Proceed from Shareholder’s loan Repayment to shareholder Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 2016 2017 RMB’000 RMB’000 — (20) (14,301) (427) (1,542) — 11 5 (15,832) (442) (4,215) (10,406) (7,043) (5,267) 34,396 — — (7,736) 23,138 (23,409) (2,219) (1,087) 3,316 1,097 1,097 10	December 2018 RMB’000 — (368) — 4 (364) (6,644) (9,139) 11,267 — (4,516) 447 10 457	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 — (2) (107) (1,666) — — 2 2 (105) (1,666) (4,100) (7,967) (7,608) (6,644) 10,938 1,379 — — (770) (13,232) 797 418 10 457 807 875

– II-E-7 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF XUSHUANG

Balance at 1 January 2016 Loss for the year Balance at 31 December 2016 and 1 January 2017 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2017 and 1 January 2018 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2018 and 1 January 2019 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2019 Balance at 31 December 2017 and 1 January 2018 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2018	Share capital RMB’000 20,000 — 20,000 — — 20,000 — — 20,000 — — 20,000 20,000 — — 20,000	PRC statutory reserve RMB’000 523 — 523 — 321 844 — 274 1,118 — 431 1,549 844 — 183 1,027	Retained profits RMB’000 551 (2,572) (2,021) 5,230 (321) 2,888 2,745 (274) 5,359 4,306 (431) 9,234 2,888 1,828 (183) 4,533	Total RMB’000 21,074 (2,572) 18,502 5,230 — 23,732 2,745 — 26,477 4,306 — 30,783 23,732 1,828 — 25,560

– II-E-8 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Xushuang is a limited liability company incorporated in PRC. The principal activity of Xushuang is operation of solar power plant.

On 15 November 2019, the Vendor, an indirect wholly-owned subsidiary of the Company, CNNP Shandong and Xushuang entered into the Agreement, pursuant to which the Vendor agreed to sell, and CNNP Shandong agreed to acquire, the entire equity interest in Xushuang for a total consideration of approximately RMB101,169,000. Upon completion of the Xushuang Disposal, Xushuang will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Xushuang for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules, and solely for the purposes of inclusion in this circular issued by the Company in connection with the Xushuang Disposal.

The Unaudited Financial Information of the Xushuang has been prepared on the going concern basis which assumes the realisation of assets and satisfaction of liabilities in the ordinary course of business notwithstanding the Xushuang had net current liabilities of approximately RMB37,567,000, approximately RMB38,386,000, approximately RMB37,097,000 and approximately RMB33,769,000 as at 31 December 2016, 2017 and 2018 and 30 September 2019 respectively. The directors are of the opinion that the Group will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months after taking into account the followings:

(i) having reviewed the cash flow projection of the Xushuang for the next twelve months from the reporting date, the directors are of the opinion that the Xushuang is able to generate positive cash flows from its operation. In preparing the cash flow projection by the management, it was assumed that proceeds of renewable energy subsidy receivables in respect of sale of electricity will be received with reference to prevalent payment trend after successfully enlisted in the renewable energy tariff subsidy catalogue;
(ii) the Company has confirmed not to demand repayment of debt due from the Xushuang until such time when the repayment will not affect the Xushuang’s ability to repay other creditors in the normal course of business; and
(iii) the Company has confirmed to provide sufficient financial support to the Xushuang so as to enable the Xushuang to meet its liabilities and obligations as and when they fall due and to enable the Xushuang to continue their business for twelve months after 30 September 2019 if the Disposal is not completed, and to the completion date if the Disposal is completed.

– II-E-9 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

3. CHANGES IN ACCOUNTING POLICIES

Xushuang adopted HKFRS 16 — Leases (‘‘HKFRS 16’’) using the modified retrospective approach with a date of initial application of 1 January 2019, under which the cumulative effect of initial application is recognised as at 1 January 2019. As a result, the Unaudited Financial Information presented for the years ended 31 December 2016, 2017 and 2018 have not been restated. HKFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. The impact of the adoption of HKFRS 16 on the Unaudited Financial Information is described below.

Impact of the new definition of a lease

Xushuang has made use of the practical expedient available on transition to HKFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with HKAS 17 — Leases (‘‘HKAS 17’’) and HK(IFRIC)-Int 4 — Determining whether an Arrangement contains a Lease will continue to be applied to leases entered or modified before 1 January 2019.

In preparation for the first-time application of HKFRS 16, Xushuang assessed that the new definition in HKFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for Xushuang.

Impact on lessee accounting

HKFRS 16 changes how Xushuang accounts for leases previously classified as operating leases under HKAS 17, which were off-balance-sheet. Upon initial application of HKFRS 16, for all leases (except for short-term leases and leases of low value assets), Xushuang (a) recognises right-of-use assets and lease liabilities in the statements of financial position, initially measured at the present value of future lease payments; (b) recognises depreciation of right-of-use assets and interest on lease liabilities in the statements of profit or loss and other comprehensive income; and (c) separately presented the total amount of cash paid into a principal portion and interest within financing activities and investing activities in the statements of cash flows.

As at 31 December 2018, Xushuang does not have operating lease commitment. On transition to HKFRS 16, Xushuang has taken advantage of the following practical expedients to leases previously classified as operating leases under HKAS 17 and recognised right-of-use assets measured at the amount equal to the lease liability, adjusted by the amount of any prepayments relating to that lease recognised in the statements of financial position.

Prepaid lease payment in respect of the land use right in the PRC is reclassified and recognised as rightof-use assets under HKFRS 16.

– II-E-10 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

Assets: — Lease prepayments — Right-of-use assets	As at 31 December 2018 RMB’000 (Originally stated) 1,340 —	Reclassification RMB’000 (1,340) 1,340	Contract capitalisation RMB’000 — —	As at 1 January 2019 RMB’000 (Restated) — 1,340

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the year ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019, sales of electricity includes renewable energy subsidies amounting to approximately RMB11,934,000, approximately RMB15,642,000, approximately RMB17,776,000, approximately RMB13,276,000 and approximately RMB13,506,000 respectively.

5. SOLAR POWER PLANTS

Cost At 1 January 2016 Additions At 31 December 2016 and 1 January 2017 Additions At 31 December 2017 and 1 January 2018 Additions At 31 December 2018 and 1 January 2019 Written off At 30 September 2019 Accumulated depreciation At 1 January 2016 Charged for the year At 31 December 2016 and 1 January 2017 Charged for the year At 31 December 2017 and 1 January 2018 Charged for the year At 31 December 2018 and 1 January 2019 Charged for the period At 30 September 2019	Solar power plants RMB’000 174,674 —
	174,674 375
	175,049 308
	175,357 (2,596
	172,761
	(8,297 (8,324
	(16,621 (6,520
	(23,141 (6,819
	(29,960 (4,902
	(34,862

– II-E-11 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

Net carrying amount At 31 December 2016 At 31 December 2017 At 31 December 2018 At 30 September 2019	Solar power plants RMB’000 158,053
	151,908
	145,397
	137,899

As at 31 December 2016, 2017 and 2018 and 30 September 2019, solar plant with net carrying amount of approximately RMB158,053,000, approximately RMB151,098,000, approximately RMB145,397,000 and approximately RMB137,899,000 respectively was pledged as securities for the Xushuang’s loans and borrowings (note 7).

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 23,082 19,250 35,056 25,727 22,582 19,951 48,809 41,832 55,007	As at 30 September 2019 RMB’000 39,993 18,168
		58,161

Ageing analysis of trade receivables, based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months More than 24 months	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 2,810 4,999 5,527 4,041 5,716 6,160 7,296 7,931 9,291 8,935 604 14,078 — — — 23,082 19,250 35,056	As at 30 September 2019 RMB’000 6,005 5,629 9,209 19,150 —
		39,993

– II-E-12 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

Ageing analysis of trade receivables, based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due More than 24 months past due	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 793 1,499 1,642 2,966 5,418 6,181 5,065 5,547 5,616 5,514 6,786 8,693 8,744 — 12,924 — — — 23,082 19,250 35,056	As at 30 September 2019 RMB’000 2,084 5,629 5,558 9,869 16,853 —
		39,993

Xushuang’s trade receivables are mainly receivables from sales of electricity. Generally, the receivables are due within 30 to 180 days from the date of billing, except for the renewable energy subsidy.

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the State Grid Company based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies. As at 31 December 2016, 2017 and 2018 and 30 September 2019, the outstanding renewable energy subsidy amounted to approximately RMB22,893,000, approximately RMB18,904,000, approximately RMB34,749,000 and approximately RMB39,734,000 respectively.

As at 31 December 2016, 2017 and 2018 and 30 September 2019, trade receivables arising from the sales of electricity including renewable energy subsidies amounting to approximately RMB23,082,000, approximately RMB19,250,000, approximately RMB35,056,000 and approximately RMB39,993,000 respectively were pledged as securities for Xushuang’s loans and borrowings (note 7).

7. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 8,164 9,969 11,491 103,631 91,420 83,254 111,795 101,389 94,745	As at 30 September 2019 RMB’000 12,081
		74,697
		86,778

– II-E-13 –

FINANCIAL INFORMATION OF XUSHUANG

APPENDIX II-E

Xushuang’s loans and borrowings are repayable as follows:

Within 1 year After 1 year but within 2 years After 2 years but within 5 years Over 5 years	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 8,164 9,969 11,491 9,969 10,703 11,507 34,532 37,074 40,006 59,130 43,643 31,741 111,795 101,389 94,745	As at 30 September 2019 RMB’000 12,081 12,170 42,179 20,348
		86,778

As at 31 December 2016, 2017 and 2018 and 30 September 2019, loans and other borrowings bear interest at 5.32% per annum and is subject to floating-rate.

The loans and borrowings were secured by the following assets:

Solar power plants (note 5) Trade receivables (note 6)	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 158,053 151,908 145,397 23,082 19,250 35,056 181,135 171,158 180,453	As at 30 September 2019 RMB’000 137,899 39,993
		177,892

As at 31 December 2016, 2017 and 2018 and 30 September 2019, the amount of trade receivables pledged for loans and borrowings included the outstanding renewable energy subsidies.

– II-E-14 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

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REPORT ON REVIEW OF FINANCIAL INFORMATION OF JULU MINGHUI PHOTOVOLTAIC POWER LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information set out on pages II-F-3 to II-F-14 which comprises the statements of financial position as at 31 December 2016, 2017 and 2018 and 30 September 2019 of Julu Minghui Photovoltaic Power Limited (‘‘Minghui’’) and the statements of profit or loss and other comprehensive income, the statements of cash flows and the statements of changes in equity for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and explanatory notes (the ‘‘Financial Information’’). The Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Kong Sun Holdings Limited (the ‘‘Company’’) in connection with the proposed disposal of entire share of Minghui in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

The directors of the Company are responsible for the preparation and presentation of the Financial Information of Minghui in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

– II-F-1 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

Conclusion

BDO Limited

Certified Public Accountants

Hong Kong, 6 January 2020

– II-F-2 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

Set out below is the unaudited financial information of Minghui which comprises the unaudited statements of financial position of Minghui as at 31 December 2016, 2017 and 2018 and 30 September 2019 and the unaudited statements of profit or loss and other comprehensive income, unaudited statements of cash flows and unaudited statements of changes in equity for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and certain explanatory notes (altogether referred to as ‘‘Unaudited Financial Information’’).

The Unaudited Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the proposed disposal of the entire equity interest in Minghui. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Minghui in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

– II-F-3 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF MINGHUI

Notes Revenue 4 Cost of sales Gross profit Other income Other expense Administrative expenses Finance costs Profit/(Loss) before income tax Income tax expense Profit/(Loss) for the year/ period	For the year ended 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 16,970 27,881 28,296 (3,959) (8,133) (8,682) 13,011 19,748 19,614 5 4 3 — — — (22) (1,360) (2,024) (1,575) (7,082) (11,740) 11,419 11,310 5,853 — — — 11,419 11,310 5,853	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 22,229 19,508 (6,367) (8,403) 15,862 11,105 2 3 — (4,350) (76) (719) (6,752) (6,121) 9,036 (82) — (54) 9,036 (136)

– II-F-4 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF MINGHUI

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 5 Right-of-use asset Lease prepayments Current assets Trade and other receivables 6 Loan to shareholder Cash and cash equivalents Total current assets Current liabilities Trade and other payables Lease liabilities Loans and borrowings 7 Shareholder’s loan Total current liabilities Net current assets Total assets less current liabilities Non-current liabilities Lease liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Share capital Reserves Total equity	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 111 92 190 164,303 158,105 151,177 — — — 423 423 444 164,837 158,620 151,811 37,651 48,163 43,185 24,799 33,659 82,393 764 439 1,062 63,214 82,261 126,640 38,683 39,076 42,183 — — — — 3,876 17,442 — — 36,345 38,683 42,952 95,970 24,531 39,309 30,670 189,368 197,929 182,481 — — — 117,949 115,200 93,899 117,949 115,200 93,899 71,419 82,729 88,582 60,000 60,000 60,000 11,419 22,729 28,582 71,419 82,729 88,582	As at 30 September 2019 RMB’000 167 146,421 12,176 —
		158,764
		44,105 77,174 2,554
		123,833
		42,923 97 12,323 48,026
		103,369
		20,464
		179,228
		11,694 79,088
		90,782
		88,446
		60,000 28,446
		88,446

– II-F-5 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

UNAUDITED STATEMENTS OF CASH FLOWS OF MINGHUI

Cash flows from operating activities Profit/(Loss) before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Depreciation of right-of-use asset Amortization of lease prepayments Write-off of solar power plant Interest expense Interest income Operating profit before working capital changes (Increase)/decrease in trade, bills and other receivables Increase in trade and other payables Cash generated from operating activities Tax paid Net cash generated from operating activities	For the year ended 31 2016 2017 RMB’000 RMB’000 11,419 11,310 30 29 3,318 6,356 — — 302 725 — — 1,575 7,082 (5) (4) 16,639 25,498 (38,376) (11,237) 38,683 393 16,946 14,654 — — 16,946 14,654	December 2018 RMB’000 5,853 60 6,367 — 741 561 11,740 (3) 25,319 4,216 4,083 33,618 — 33,618	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 9,036 (82) 45 23 4,777 4,756 — 355 550 — — — 6,752 6,121 (2) (3) 21,158 11,170 (10,879) (920) 2,557 1,206 12,836 11,456 — (54) 12,836 11,402

– II-F-6 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Interests received Net cash generated from/(used in) investing activities Cash flows from financing activities Proceed from capital injection Proceed from loans and borrowings Repayment of loans and borrowings Payment of lease liabilities Interest on lease liabilities Interest paid Proceed from Shareholder’s loan Repayment to shareholder Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 2016 2017 RMB’000 RMB’000 (141) (10) (167,621) (158) 5 4 (167,757) (164) 60,000 — 117,949 1,127 — — — — — — (1,575) (7,082) — — (24,799) (8,860) 151,575 (14,815) 764 (325) — 764 764 439	December 2018 RMB’000 (158) (976) 3 (1,131) — — (7,735) — — (11,740) — (12,389) (31,864) 623 439 1,062	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 — — (399) — 2 3 (397) 3 — — 56,140 — — (19,930) — (762) — (466) (6,752) (5,655) — 16,900 (62,226) — (12,838) (9,913) (399) 1,492 439 1,062 40 2,554

– II-F-7 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF MINGHUI

Balance at 1 January 2016 Capital injection Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2016 and 1 January 2017 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2017 and 1 January 2018 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2018 and 1 January 2019 Loss for the period Balance at 30 September 2019 Balance at 31 December 2017 and 1 January 2018 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2018	Share capital RMB’000 1,000 59,000 — — 60,000 — — 60,000 — — 60,000 — 60,000 60,000 — — 60,000	PRC statutory reserve RMB’000 — — — 1,142 1,142 — 1,131 2,273 — 585 2,858 — 2,858 2,273 — 904 3,177	Retained profits RMB’000 — — 11,419 (1,142) 10,277 11,310 (1,131) 20,456 5,853 (585) 25,724 (136) 25,588 20,456 9,036 (904) 28,588	Total RMB’000 1,000 59,000 11,419 — 71,419 11,310 — 82,729 5,853 — 88,582 (136) 88,446 82,729 9,036 — 91,765

– II-F-8 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Minghui is a limited liability company incorporated in PRC. The principal activity of Minghui is operation of solar power plant.

On 15 November 2019, the Vendor, an indirect wholly-owned subsidiary of the Company, CNNP Shandong and Minghui entered into the Agreement, pursuant to which the Vendor agreed to sell, and CNNP Shandong agreed to acquire, the entire equity interest in Minghui for a total consideration of approximately RMB69,500,000. Upon completion of the Minghui Disposal, Minghui will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Minghui for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules, and solely for the purposes of inclusion in this circular issued by the Company in connection with the Minghui Disposal.

3. CHANGES IN ACCOUNTING POLICIES

Minghui adopted HKFRS 16 — Leases (‘‘HKFRS 16’’) using the modified retrospective approach with a date of initial application of 1 January 2019, under which the cumulative effect of initial application is recognised as at 1 January 2019. As a result, the Unaudited Financial Information presented for the years ended 31 December 2016, 2017 and 2018 have not been restated. HKFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. The impact of the adoption of HKFRS 16 on the Unaudited Financial Information is described below.

Impact of the new definition of a lease

Minghui has made use of the practical expedient available on transition to HKFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with HKAS 17 — Leases (‘‘HKAS 17’’) and HK(IFRIC)-Int 4 — Determining whether an Arrangement contains a Lease will continue to be applied to leases entered or modified before 1 January 2019.

In preparation for the first-time application of HKFRS 16, Minghui assessed that the new definition in HKFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for Minghui.

– II-F-9 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

Impact on lessee accounting

HKFRS 16 changes how Minghui accounts for leases previously classified as operating leases under HKAS 17, which were off-balance-sheet. Upon initial application of HKFRS 16, for all leases (except for short-term leases and leases of low value assets), Minghui (a) recognises right-of-use assets and lease liabilities in the statements of financial position, initially measured at the present value of future lease payments; (b) recognises depreciation of right-of-use assets and interest on lease liabilities in the statements of profit or loss and other comprehensive income; and (c) separately presented the total amount of cash paid into a principal portion and interest within financing activities and investing activities in the statements of cash flows.

As at 31 December 2018, Minghui had operating lease commitment of approximately RMB24,868,000. On transition to HKFRS 16, Minghui has taken advantage of the following practical expedients to leases previously classified as operating leases under HKAS 17 and recognised right-of-use assets measured at the amount equal to the lease liability, adjusted by the amount of any prepayments relating to that lease recognised in the statements of financial position.

The aggregate lease liability recognised in the statements of financial position as at 1 January 2019 and Minghui’s operating lease commitment as at 31 December 2018 is reconciled as follows:

Operating lease commitment as at 31 December 2018 Discounting effect Lease liabilities recognised as at 1 January 2019	RMB’000 (24,868) 12,781 (12,087)

Prepaid lease payment in respect of the land use right in the PRC is reclassified and recognised as rightof-use assets under HKFRS 16.

Assets: — Lease prepayments — Right-of-use assets Liabilities: — Lease liabilities	As at 31 December 2018 RMB’000 (Originally stated) 444 — —	Reclassification RMB’000 (444) 444 —	Contract capitalisation RMB’000 — 12,087 (12,087)	As at 1 January 2019 RMB’000 (Restated) — 12,531 (12,087)

– II-F-10 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the year ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019, sales of electricity includes renewable energy subsidies amounting to approximately RMB11,702,000, approximately RMB14,950,000, approximately RMB14,993,000, approximately RMB11,774,000 and approximately RMB12,403,000 respectively.

5. SOLAR POWER PLANTS

Cost At 1 January 2016 Reclassifications upon completion At 31 December 2016 and 1 January 2017 Additions At 31 December 2017 and 1 January 2018 Written off At 31 December 2018 and 1 January 2019 Additions At 30 September 2019 Accumulated depreciation At 1 January 2016 Charged for the year At 31 December 2016 and 1 January 2017 Charged for the year At 31 December 2017 and 1 January 2018 Charged for the year At 31 December 2018 and 1 January 2019 Charged for the period At 30 September 2019 Net carrying amount At 31 December 2016 At 31 December 2017 At 31 December 2018 At 30 September 2019	Solar power plants RMB’000 — 167,621 167,621 158 167,779 (561) 167,218 — 167,218 — (3,318) (3,318) (6,356) (9,674) (6,367) (16,041) (4,756) (20,797) 164,303 158,105 151,177 146,421	Solar power plants under development RMB’000 167,621 (167,621) — — — — — — — — — — — — — — — — — — — —	Total RMB’000 167,621 — 167,621 158 167,779 (561) 167,218 — 167,218 — (3,318) (3,318) (6,356) (9,674) (6,367) (16,041) (4,756) (20,797) 164,303 158,105 151,177 146,421

– II-F-11 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

As at 31 December 2016, 2017 and 2018 and 30 September 2019, solar plant with net carrying amount of approximately RMB164,303,000, approximately RMB158,105,000, approximately RMB151,177,000 and approximately RMB146,421,000 respectively was pledged as securities for Minghui’s loans and borrowings (note 7).

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 17,475 32,206 32,043 20,176 15,957 11,142 37,651 48,163 43,185	As at 30 September 2019 RMB’000 34,963 9,142
		44,105

Ageing analysis of trade receivables, based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 5,244 4,531 4,609 9,299 4,530 4,644 2,932 9,453 9,061 — 13,692 13,729 17,475 32,206 32,043	As at 30 September 2019 RMB’000 5,773 5,523 7,460 16,207
		34,963

Ageing analysis of trade receivables, based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 1,420 2,170 1,876 6,837 3,918 4,198 9,218 4,788 4,947 — 7,638 7,293 — 13,692 13,729 17,475 32,206 32,043	As at 30 September 2019 RMB’000 2,479 5,075 5,666 7,001 14,742
		34,963

Minghui’s trade receivables are mainly receivables from sales of electricity. Generally, the receivables are due within 30 to 180 days from the date of billing, except for the renewable energy subsidy.

– II-F-12 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the State Grid Company based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies. As at 31 December 2016, 2017 and 2018 and 30 September 2019, the outstanding renewable energy subsidy amounted to approximately RMB13,692,000, approximately RMB31,184,000, approximately RMB31,191,000 and approximately RMB34,051,000 respectively.

As at 31 December 2016, 2017 and 2018 and 30 September 2019, trade receivables arising from the sales of electricity including renewable energy subsidies amounting to approximately RMB17,475,000, approximately RMB32,206,000, approximately RMB32,043,000 and approximately RMB34,963,000 respectively were pledged as securities for Minghui’s loans and borrowings (note 7).

7. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 — 3,876 17,442 117,949 115,200 93,899 117,949 119,076 111,341	As at 30 September 2019 RMB’000 12,323
		79,088
		91,411

Minghui’s loans and borrowings are repayable as follows:

Within 1 year After 1 year but within 2 years After 2 years but within 5 years Over 5 years	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 — 3,876 17,442 2,756 19,200 19,330 56,922 57,600 55,533 58,271 38,400 19,036 117,949 119,076 111,341	As at 30 September 2019 RMB’000 12,323 18,183 56,122 4,783
		91,411

– II-F-13 –

FINANCIAL INFORMATION OF MINGHUI

APPENDIX II-F

As at 31 December 2016, 2017 and 2018 and 30 September 2019, loans and other borrowings bear interest at 5.88% per annum and is subject to floating-rate.

The loans and borrowings were secured by the following assets:

Solar power plants (note 5) Trade receivables (note 6)	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 164,303 158,105 151,177 17,475 32,206 32,043 181,778 190,311 183,220	As at 30 September 2019 RMB’000 146,421 34,963
		181,384

As at 31 December 2016, 2017 and 2018 and 30 September 2019, the amount of trade receivables pledged for loans and borrowings included the outstanding renewable energy subsidies.

– II-F-14 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

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REPORT ON REVIEW OF FINANCIAL INFORMATION OF LIYANG XINHUI PHOTOVOLTAIC POWER GENERATION LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information set out on pages II-G-3 to II-G-13 which comprises the statements of financial position as at 31 December 2017 and 2018 and 30 September 2019 of Liyang Xinhui Photovoltaic Power Generation Limited (‘‘Xinhui’’) and the statements of profit or loss and other comprehensive income, the statements of cash flows and the statements of changes in equity for each of the years ended 31 December 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and explanatory notes (the ‘‘Financial Information’’). The Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Kong Sun Holdings Limited (the ‘‘Company’’) in connection with the proposed disposal of entire share of Xinhui in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

The directors of the Company are responsible for the preparation and presentation of the Financial Information of Xinhui in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

– II-G-1 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

Conclusion

BDO Limited

Certified Public Accountants

Hong Kong, 6 January 2020

– II-G-2 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

Set out below is the unaudited financial information of Xinhui which comprises the unaudited statements of financial position of Xinhui as at 31 December 2017 and 2018 and 30 September 2019 and the unaudited statements of profit or loss and other comprehensive income, unaudited statements of cash flows and unaudited statements of changes in equity for the years ended 31 December 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and certain explanatory notes (altogether referred to as ‘‘Unaudited Financial Information’’).

The Unaudited Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the proposed disposal of the entire equity interest in Xinhui. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Xinhui in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

– II-G-3 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF XINHUI

Notes Revenue 4 Cost of sales Gross profit Other income Administrative expenses Other expense Finance costs Profit before income tax Income tax expense Profit for the year/period	For the year ended 31 December 2017 2018 RMB’000 RMB’000 15,796 20,423 (4,674) (6,300) 11,122 14,123 — 1,184 (50) (340) — — (3,326) (5,719) 7,746 9,248 — (296) 7,746 8,952	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 16,304 16,046 (5,032) (4,690) 11,272 11,356 908 54 (248) (647) (35) — (4,225) (6,209) 7,672 4,554 (227) (576) 7,445 3,978

– II-G-4 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF XINHUI

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 5 Right-of-use asset Lease prepayments Current assets Trade and other receivables 6 Loan to shareholder Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payable Loans and borrowings 7 Shareholder’s loan Total current liabilities Net current liabilities Total assets less current liabilities Non-current liabilities Lease liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Share capital Reserves Total equity	As at 31 December 2017 2018 RMB’000 RMB’000 112 445 131,281 126,101 — — 3,689 3,731 135,082 130,277 51,425 32,577 — 18,600 979 404 52,404 51,581 34,216 29,572 — 69 10,475 10,772 21,060 32,737 65,751 73,150 (13,347) (21,569) 121,735 108,708 — — 90,138 68,159 90,138 68,159 31,597 40,549 20,000 20,000 11,597 20,549 31,597 40,549	As at 30 September 2019 RMB’000 376 124,033 5,072 — 129,481 36,603 16,229 276 53,108 31,328 324 11,233 32,450 75,335 (22,227) 107,254 1,602 61,125 62,727 44,527 20,000 24,527 44,527

– II-G-5 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

UNAUDITED STATEMENTS OF CASH FLOWS OF XINHUI

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Depreciation of right-of-use asset Amortization of lease prepayments Interest expense Interest income Operating profit before working capital changes (Increase)/decrease in trade, bills and other receivables (Decrease)/increase in trade and other payables Cash (used in)/generated from operating activities Tax paid Net cash (used in)/generated from operating activities Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Payment for the purchase of lease prepayments Interests received Net cash used in investing activities	For the year ended 31 December 2017 2018 RMB’000 RMB’000 7,746 9,248 1 39 3,638 5,322 — — 252 339 3,326 5,719 — (2) 14,963 20,665 (51,425) 18,848 973 (282) (35,489) 39,231 — (227) (35,489) 39,004 (113) (372) (101,676) (4,503) (3,941) (382) — 2 (105,730) (5,255)	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 7,672 4,554 16 69 3,988 4,019 — 176 251 — 4,225 6,209 (1) (1) 16,151 15,026 17,410 (4,026) 828 1,841 34,389 12,841 (125) (321) 34,264 12,520 (372) — (400) (1,951) — — 1 1 (771) (1,950)

– II-G-6 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

Cash flows from financing activities Proceed from capital injection Proceed from loans and borrowings Repayment of loans and borrowings Interest on lease liabilities Interest paid Proceed from Shareholder’s loan Repayment to shareholder Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 December 2017 2018 RMB’000 RMB’000 23,851 — 100,613 — — (21,682) — — (3,326) (5,719) 21,060 — — (6,923) 142,198 (34,324) 979 (575) — 979 979 404	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 — — — — (19,441) (6,573) — (85) (4,225) (6,124) — 2,084 (10,115) — (33,781) (10,698) (288) (128) 979 404 691 276

– II-G-7 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF XINHUI

Balance at 1 January 2017 Capital injection Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2017 and 1 January 2018 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2018 and 1 January 2019 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2019 Balance at 31 December 2017 and 1 January 2018 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2018	Share capital RMB’000 — 20,000 — — 20,000 — — 20,000 — — 20,000 20,000 — — 20,000	PRC statutory reserve RMB’000 463 — — 774 1,237 — 896 2,133 — 397 2,530 1,237 — 745 1,982	Retained profits RMB’000 3,388 — 7,746 (774) 10,360 8,952 (896) 18,416 3,978 (397) 21,997 10,360 7,445 (745) 17,060	Total RMB’000 3,851 20,000 7,746 —
				31,597 8,952 —
				40,549 3,978 —
				44,527
				31,597 7,445 —
				39,042

– II-G-8 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Xinhui is a limited liability company incorporated in PRC. The principal activity of Xinhui is operation of solar power plant.

On 15 November 2019, the Vendor, an indirect wholly-owned subsidiary of the Company, CNNP Shandong and Xinhui entered into the Agreement, pursuant to which the Vendor agreed to sell, and CNNP Shandong agreed to acquire, the entire equity interest in Xinhui for a total consideration of approximately RMB96,272,000. Upon completion of the Xinhui Disposal, Xinhui will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Xinhui for the years ended 31 December 2017 and 2018 and the nine months ended 30 September 2018 and 2019 has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules, and solely for the purposes of inclusion in this circular issued by the Company in connection with the Xinhui Disposal.

The Unaudited Financial Information of the Xinhui has been prepared on the going concern basis which assumes the realisation of assets and satisfaction of liabilities in the ordinary course of business notwithstanding the Xinhui had net current liabilities of approximately RMB13,347,000, approximately RMB21,569,000 and approximately RMB22,227,000 as at 31 December 2017 and 2018 and 30 September 2019 respectively. The directors are of the opinion that the Group will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months after taking into account the followings:

(i) having reviewed the cash flow projection of the Xinhui for the next twelve months from the reporting date, the directors are of the opinion that the Xinhui is able to generate positive cash flows from its operation. In preparing the cash flow projection by the management, it was assumed that proceeds of renewable energy subsidy receivables in respect of sale of electricity will be received with reference to prevalent payment trend after successfully enlisted in the renewable energy tariff subsidy catalogue;
(ii) the Company has confirmed not to demand repayment of debt due from the Xinhui until such time when the repayment will not affect the Xinhui’s ability to repay other creditors in the normal course of business; and
(iii) the Company has confirmed to provide sufficient financial support to the Xinhui so as to enable the Xinhui to meet its liabilities and obligations as and when they fall due and to enable the Xinhui to continue their business for twelve months after 30 September 2019 if the Disposal is not completed, and to the completion date if the Disposal is completed.

– II-G-9 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

3. CHANGES IN ACCOUNTING POLICIES

Xinhui adopted HKFRS 16 — Leases (‘‘HKFRS 16’’) using the modified retrospective approach with a date of initial application of 1 January 2019, under which the cumulative effect of initial application is recognised as at 1 January 2019. As a result, the Unaudited Financial Information presented for the years ended 31 December 2017 and 2018 have not been restated. HKFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. The impact of the adoption of HKFRS 16 on the Unaudited Financial Information is described below.

Impact of the new definition of a lease

Xinhui has made use of the practical expedient available on transition to HKFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with HKAS 17 — Leases (‘‘HKAS 17’’) and HK(IFRIC)-Int 4 — Determining whether an Arrangement contains a Lease will continue to be applied to leases entered or modified before 1 January 2019.

In preparation for the first-time application of HKFRS 16, Xinhui assessed that the new definition in HKFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for Xinhui.

Impact on lessee accounting

HKFRS 16 changes how Xinhui accounts for leases previously classified as operating leases under HKAS 17, which were off-balance-sheet. Upon initial application of HKFRS 16, for all leases (except for short-term leases and leases of low value assets), Xinhui (a) recognises right-of-use assets and lease liabilities in the statements of financial position, initially measured at the present value of future lease payments; (b) recognises depreciation of right-of-use assets and interest on lease liabilities in the statements of profit or loss and other comprehensive income; and (c) separately presented the total amount of cash paid into a principal portion and interest within financing activities and investing activities in the statements of cash flows.

As at 31 December 2018, Xinhui had operating lease commitment of approximately RMB3,857,000. On transition to HKFRS 16, Xinhui has taken advantage of the following practical expedients to leases previously classified as operating leases under HKAS 17 and recognised right-of-use assets measured at the amount equal to the lease liability, adjusted by the amount of any prepayments relating to that lease recognised in the statements of financial position.

The aggregate lease liability recognised in the statements of financial position as at 1 January 2019 and Xinhui’s operating lease commitment as at 31 December 2018 is reconciled as follows:

Operating lease commitment as at 31 December 2018 Discounting effect Lease liabilities recognised as at 1 January 2019	RMB’000 (3,857) 2,340 (1,517)

Prepaid lease payment in respect of the land use right in the PRC is reclassified and recognised as rightof-use assets under HKFRS 16.

– II-G-10 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

Assets: — Lease prepayments — Right-of-use assets Liabilities: — Lease liabilities	As at 31 December 2018 RMB’000 (Originally stated) 3,731 — —	Reclassification RMB’000 (3,731) 3,731 —	Contract capitalisation RMB’000 — 1,517 (1,517)	As at 1 January 2019 RMB’000 (Restated) — 5,248 (1,517)

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the year ended 31 December 2017 and 2018 and the nine months ended 30 September 2018 and 2019, sales of electricity includes renewable energy subsidies amounting to approximately RMB12,438,000, approximately RMB12,680,000, approximately RMB9,929,000 and approximately RMB9,772,000 respectively.

5. SOLAR POWER PLANTS

Cost
At 1 January 2017
Additions
At 31 December 2017 and 1 January 2018
Additions
At 31 December 2018 and 1 January 2019
Additions
At 30 September 2019
Accumulated depreciation
At 1 January 2017
Charged for the year
At 31 December 2017 and 1 January 2018
Charged for the year
At 31 December 2018 and 1 January 2019
Charged for the period
At 30 September 2019
Net carrying amount
At 31 December 2017
At 31 December 2018
At 30 September 2019

Solar power
plants
RMB’000
140,480
—
140,480
141
140,621
1,951
142,572
(5,561)
(3,638)
(9,199)
(5,321)
(14,520)
(4,019)
(18,539)
131,281
126,101
124,033

– II-G-11 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

As at 31 December 2017 and 2018 and 30 September 2019, solar plant with net carrying amount of approximately RMB131,281,000, approximately RMB126,101,000 and approximately RMB124,033,000 respectively was pledged as securities for Xinhui’s loans and borrowings (note 7).

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2017 2018 RMB’000 RMB’000 30,140 23,752 21,285 8,825 51,425 32,577	As at 30 September 2019 RMB’000 27,785 8,818
		36,603

Ageing analysis of trade receivables, based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months More than 24 months	As at 31 December 2017 2018 RMB’000 RMB’000 3,934 3,289 3,874 4,395 6,700 7,161 14,270 8,907 1,362 — 30,140 23,752	As at 30 September 2019 RMB’000 5,345 4,081 5,476 12,883 —
		27,785

Ageing analysis of trade receivables, based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due More than 24 months past due	As at 31 December 2017 2018 RMB’000 RMB’000 1,796 968 3,079 3,583 4,117 4,519 6,547 7,572 13,972 7,110 629 — 30,140 23,752	As at 30 September 2019 RMB’000 2,256 4,404 4,098 5,406 11,621 —
		27,785

Xinhui’s trade receivables are mainly receivables from sales of electricity. Generally, the receivables are due within 30 to 180 days from the date of billing, except for the renewable energy subsidy.

– II-G-12 –

APPENDIX II-G

FINANCIAL INFORMATION OF XINHUI

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the State Grid Company based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies. As at 31 December 2017 and 2018 and 30 September 2019, the outstanding renewable energy subsidy amounted to approximately RMB30,140,000, approximately RMB23,374,000 and approximately RMB26,903,000 respectively.

As at 31 December 2017 and 2018 and 30 September 2019, trade receivables arising from the sales of electricity including renewable energy subsidies amounting to approximately RMB30,140,000, approximately RMB23,752,000 and approximately RMB27,785,000 respectively were pledged as securities for Xinhui’s loans and borrowings (note 7).

7. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2017 2018 RMB’000 RMB’000 10,475 10,772 90,138 68,159 100,613 78,931	As at 30 September 2019 RMB’000 11,233 61,125
		72,358

Xinhui’s loans and borrowings are repayable as follows:

Within 1 year After 1 year but within 2 years After 2 years but within 5 years Over 5 years	As at 31 December 2017 2018 RMB’000 RMB’000 10,475 10,772 10,772 11,396 36,273 38,427 43,093 18,336 100,613 78,931	As at 30 September 2019 RMB’000 11,233 11,908 40,108 9,109
		72,358

As at 31 December 2017 and 2018 and 30 September 2019, loans and other borrowings bear interest at 7.4% per annum and is subject to floating-rate.

The loans and borrowings were secured by the following assets:

Solar power plants (note 5) Trade receivables (note 6)	As at 31 December 2017 2018 RMB’000 RMB’000 131,281 126,101 30,140 23,752 161,421 149,853	As at 30 September 2019 RMB’000 124,033 27,785
		151,818

As at 31 December 2017 and 2018 and 30 September 2019, the amount of trade receivables pledged for loans and borrowings included the outstanding renewable energy subsidies.

– II-G-13 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

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==> picture [100 x 55] intentionally omitted <==

REPORT ON REVIEW OF FINANCIAL INFORMATION OF QIANYANG BAOYUAN PHOTOVOLTAIC POWER DEVELOPMENT LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information set out on pages II-H-3 to II-H-14 which comprises the statements of financial position as at 31 December 2016, 2017 and 2018 and 30 September 2019 of Qianyang Baoyuan Photovoltaic Power Development Limited (‘‘Baoyuan’’) and the statements of profit or loss and other comprehensive income, the statements of cash flows and the statements of changes in equity for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and explanatory notes (the ‘‘Financial Information’’). The Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Kong Sun Holdings Limited (the ‘‘Company’’) in connection with the proposed disposal of entire share of Baoyuan in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

The directors of the Company are responsible for the preparation and presentation of the Financial Information of Baoyuan in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

– II-H-1 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

Conclusion

BDO Limited

Certified Public Accountants

Hong Kong, 6 January 2020

– II-H-2 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

Set out below is the unaudited financial information of Baoyuan which comprises the unaudited statements of financial position of Baoyuan as at 31 December 2016, 2017 and 2018 and 30 September 2019 and the unaudited statements of profit or loss and other comprehensive income, unaudited statements of cash flows and unaudited statements of changes in equity for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and certain explanatory notes (altogether referred to as ‘‘Unaudited Financial Information’’).

The Unaudited Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the proposed disposal of the entire equity interest in Baoyuan. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Baoyuan in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

– II-H-3 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF BAOYUAN

Notes Revenue 4 Cost of sales Gross profit Other income Administrative expenses Finance costs Profit before income tax Income tax expense Profit for the year/period	For the year ended 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 16,807 21,055 22,591 (5,063) (7,734) (9,322) 11,744 13,321 13,269 4 3 161 (19) (82) (93) (1,724) (8,211) (7,914) 10,005 5,031 5,423 — — — 10,005 5,031 5,423	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 18,204 17,226 (7,237) (5,208) 10,967 12,018 157 107 (55) (568) (5,997) (7,655) 5,072 3,902 — (303) 5,072 3,599

– II-H-4 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF BAOYUAN

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 5 Right-of-use asset Lease prepayments Current assets Trade and other receivables 6 Loan to shareholder Cash and cash equivalents Total current assets Current liabilities Trade and other payables Lease liabilities Tax payable Loans and borrowings 7 Shareholder’s loan Total current liabilities Net current assets Total assets less current liabilities Non-current liabilities Lease liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Share capital Reserves Total equity	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 3 77 54 145,150 142,892 140,650 — — — 355 769 440 145,508 143,738 141,144 37,057 50,845 45,201 — — — 2,161 1,454 6,061 39,218 52,299 51,262 4,122 3,590 2,654 — — — — — — — 6,195 13,871 3,105 8,678 8,164 7,227 18,463 24,689 31,991 33,836 26,573 177,499 177,574 167,717 — — — 107,494 102,538 87,258 107,494 102,538 87,258 70,005 75,036 80,459 60,000 60,000 60,000 10,005 15,036 20,459 70,005 75,036 80,459	As at 30 September 2019 RMB’000 487 136,173 4,933 —
		141,593
		47,098 485 10,659
		58,242
		2,530 892 205 20,939 9,040
		33,606
		24,636
		166,229
		3,955 78,216
		82,171
		84,058
		60,000 24,058
		84,058

– II-H-5 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

UNAUDITED STATEMENTS OF CASH FLOWS OF BAOYUAN

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Depreciation of right-of-use asset Amortization of lease prepayments Interest expense Interest income Operating profit before working capital changes (Increase)/decrease in trade, bills and other receivables (Decrease)/increase in trade and other payables Cash (used in)/generated from operating activities Tax paid Net cash (used in)/generated from operating activities Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Payment for the purchase of lease prepayments Interests received Net cash used in investing activities	For the year ended 31 2016 2017 RMB’000 RMB’000 10,005 5,032 1 13 4,755 5,401 — — 823 533 1,724 8,211 (4) (3) 17,304 19,187 (37,057) (13,788) 3,437 (474) (16,316) 4,925 — — (16,316) 4,925 (4) (87) (149,219) (1,963) (1,179) (947) 4 3 (150,398) (2,994)	December 2018 RMB’000 5,423 22 5,967 — 329 7,914 (6) 19,649 5,644 (5) 25,288 — 25,288 — (4,655) — 6 (4,649)	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 5,072 3,902 17 39 4,477 4,477 — 183 245 — 5,997 7,655 (3) (7) 15,805 16,249 3,747 (1,897) 18 402 19,570 14,754 — (98) 19,570 14,656 — (472) (4,528) (309) — — 3 7 (4,525) (774)

– II-H-6 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

Cash flows from financing activities Proceed from capital injection Proceed from loans and borrowings Repayment of loans and borrowings Payment of lease liabilities Interest on lease liabilities Interest paid Proceed from Shareholder’s loan Repayment to shareholder Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 2016 2017 RMB’000 RMB’000 60,000 — 107,494 — — — — — — — (1,724) (8,211) 3,105 5,573 — — 168,875 (2,638) 2,161 (707) — 2,161 2,161 1,454	December 2018 RMB’000 — — (7,604) — — (7,914) — (514) (16,032) 4,607 1,454 6,061	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 — — — — (2,434) (1,974) — (46) — (217) (5,997) (7,438) 9,297 391 — — 866 (9,284) 15,911 4,598 1,454 6,061 17,365 10,659

– II-H-7 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF BAOYUAN

Balance at 1 January 2016 Capital injection Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2016 and 1 January 2017 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2017 and 1 January 2018 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2018 and 1 January 2019 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2019 Balance at 31 December 2017 and 1 January 2018 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2018	Share capital RMB’000 — 60,000 — — 60,000 — — 60,000 — — 60,000 — — 60,000 60,000 — — 60,000	PRC statutory reserve RMB’000 — — — 1,001 1,001 — 503 1,504 — 542 2,046 — 360 2,406 1,504 — 507 2,011	Retained profits RMB’000 — — 10,005 (1,001) 9,004 5,031 (503) 13,532 5,423 (542) 18,413 3,599 (360) 21,652 13,532 5,072 (507) 18,097	Total RMB’000 — 60,000 10,005 —
				70,005 5,031 —
				75,036 5,423 —
				80,459 3,599 —
				84,058
				75,036 5,072 —
				80,108

– II-H-8 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Baoyuan is a limited liability company incorporated in PRC. The principal activity of Baoyuan is operation of solar power plant.

On 15 November 2019, the Vendor, an indirect wholly-owned subsidiary of the Company, CNNP Shandong and Baoyuan entered into the Agreement, pursuant to which the Vendor agreed to sell, and CNNP Shandong agreed to acquire, the entire equity interest in Baoyuan for a total consideration of approximately RMB89,181,000. Upon completion of the Baoyuan Disposal, Baoyuan will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Baoyuan for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules, and solely for the purposes of inclusion in this circular issued by the Company in connection with the Baoyuan Disposal.

3. CHANGES IN ACCOUNTING POLICIES

Baoyuan adopted HKFRS 16 — Leases (‘‘HKFRS 16’’) using the modified retrospective approach with a date of initial application of 1 January 2019, under which the cumulative effect of initial application is recognised as at 1 January 2019. As a result, the Unaudited Financial Information presented for the years ended 31 December 2016, 2017 and 2018 have not been restated. HKFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. The impact of the adoption of HKFRS 16 on the Unaudited Financial Information is described below.

Impact of the new definition of a lease

Baoyuan has made use of the practical expedient available on transition to HKFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with HKAS 17 — Leases (‘‘HKAS 17’’) and HK(IFRIC)-Int 4 — Determining whether an Arrangement contains a Lease will continue to be applied to leases entered or modified before 1 January 2019.

In preparation for the first-time application of HKFRS 16, Baoyuan assessed that the new definition in HKFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for Baoyuan.

– II-H-9 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

Impact on lessee accounting

HKFRS 16 changes how Baoyuan accounts for leases previously classified as operating leases under HKAS 17, which were off-balance-sheet. Upon initial application of HKFRS 16, for all leases (except for short-term leases and leases of low value assets), Baoyuan (a) recognises right-of-use assets and lease liabilities in the statements of financial position, initially measured at the present value of future lease payments; (b) recognises depreciation of right-of-use assets and interest on lease liabilities in the statements of profit or loss and other comprehensive income; and (c) separately presented the total amount of cash paid into a principal portion and interest within financing activities and investing activities in the statements of cash flows.

As at 31 December 2018, Baoyuan had operating lease commitment of approximately RMB8,416,000. On transition to HKFRS 16, Baoyuan has taken advantage of the following practical expedients to leases previously classified as operating leases under HKAS 17 and recognised right-of-use assets measured at the amount equal to the lease liability, adjusted by the amount of any prepayments relating to that lease recognised in the statements of financial position.

The aggregate lease liability recognised in the statements of financial position as at 1 January 2019 and Baoyuan’s operating lease commitment as at 31 December 2018 is reconciled as follows:

Operating lease commitment as at 31 December 2018 Discounting effect Lease liabilities recognised as at 1 January 2019	RMB’000 (8,416) 3,740 (4,676)

Prepaid lease payment in respect of the land use right in the PRC is reclassified and recognised as right-of-use assets under HKFRS 16.

Assets: — Lease prepayments — Right-of-use assets Liabilities: — Lease liabilities	As at 31 December 2018 RMB’000 (Originally stated) 440 — —	Reclassification RMB’000 (440) 440 —	Contract capitalisation RMB’000 — 4,676 (4,676)	As at 1 January 2019 RMB’000 (Restated) — 5,116 (4,676)

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the year ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019, sales of electricity includes renewable energy subsidies amounting to approximately RMB11,183,000, approximately RMB13,990,000, approximately RMB14,751,000, approximately RMB11,839,000 and approximately RMB11,205,000 respectively.

– II-H-10 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

5. SOLAR POWER PLANTS

Cost At 1 January 2016 Reclassifications upon completion At 31 December 2016 and 1 January 2017 Additions At 31 December 2017 and 1 January 2018 Additions At 31 December 2018 and 1 January 2019 Additions At 30 September 2019 Accumulated depreciation At 1 January 2016 Charged for the year At 31 December 2016 and 1 January 2017 Charged for the year At 31 December 2017 and 1 January 2018 Charged for the year At 31 December 2018 and 1 January 2019 Charged for the period At 30 September 2019 Net carrying amount At 31 December 2016 At 31 December 2017 At 31 December 2018 At 30 September 2019	Solar power plants RMB’000 — 149,905 149,905 3,143 153,048 3,724 156,772 — 156,772 — (4,755) (4,755) (5,401) (10,156) (5,966) (16,122) (4,477) (20,599) 145,150 142,892 140,650 136,173	Solar power plants under development RMB’000 149,905 (149,905) — — — — — — — — — — — — — — — — — — — —	Total RMB’000 149,905 — 149,905 3,143 153,048 3,724 156,772 — 156,772 — (4,755) (4,755) (5,401) (10,156) (5,966) (16,122) (4,477) (20,599) 145,150 142,892 140,650 136,173

– II-H-11 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

As at 31 December 2016, 2017 and 2018 and 30 September 2019, solar plant with net carrying amount of approximately RMB145,150,000, approximately RMB142,892,000, approximately RMB140,650,000 and approximately RMB136,173,000 respectively was pledged as securities for Baoyuan’s loans and borrowings (note 7).

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 14,493 31,178 26,327 22,564 19,667 18,874 37,057 50,845 45,201	As at 30 September 2019 RMB’000 29,550 17,548
		47,098

Ageing analysis of trade receivables, based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 3,570 4,036 2,873 4,822 4,183 4,101 6,101 9,063 8,330 — 13,896 11,023 14,493 31,178 26,327	As at 30 September 2019 RMB’000 4,978 4,082 5,447 15,043
		29,550

Ageing analysis of trade receivables, based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 1,712 1,852 641 3,165 3,173 3,343 5,300 5,030 4,226 4,316 8,366 8,289 — 12,757 9,828 14,493 31,178 26,327	As at 30 September 2019 RMB’000 1,881 4,316 4,300 5,121 13,932
		29,550

Baoyuan’s trade receivables are mainly receivables from sales of electricity. Generally, the receivables are due within 30 to 180 days from the date of billing, except for the renewable energy subsidy.

– II-H-12 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the State Grid Company based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies. As at 31 December 2016, 2017 and 2018 and 30 September 2019, the outstanding renewable energy subsidy amounted to approximately RMB13,896,000, approximately RMB30,265,000, approximately RMB25,892,000 and approximately RMB28,687,000 respectively.

As at 31 December 2016, 2017 and 2018 and 30 September 2019, trade receivables arising from the sales of electricity including renewable energy subsidies amounting to approximately RMB14,493,000, approximately RMB31,178,000, approximately RMB26,327,000 and approximately RMB29,550,000 respectively were pledged as securities for Baoyuan’s loans and borrowings (note 7).

7. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 — 6,195 13,871 107,494 102,538 87,258 107,494 108,733 101,129	As at 30 September 2019 RMB’000 20,939
		78,216
		99,155

Baoyuan’s loans and borrowings are repayable as follows:

Within 1 year After 1 year but within 2 years After 2 years but within 5 years Over 5 years	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 — 6,195 13,871 6,195 15,305 12,070 38,416 36,675 37,004 62,883 50,558 38,184 107,494 108,733 101,129	As at 30 September 2019 RMB’000 20,939 12,171 37,298 28,747
		99,155

As at 31 December 2016, 2017 and 2018 and 30 September 2019, loans and other borrowings bear interest at 6.25% per annum and is subject to floating-rate.

– II-H-13 –

FINANCIAL INFORMATION OF BAOYUAN

APPENDIX II-H

The loans and borrowings were secured by the following assets:

Solar power plants (note 5) Trade receivables (note 6)	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 145,150 142,892 140,650 14,493 31,178 26,327 159,643 174,070 166,977	As at 30 September 2019 RMB’000 136,173 29,550
		165,723

As at 31 December 2016, 2017 and 2018 and 30 September 2019, the amount of trade receivables pledged for loans and borrowings included the outstanding renewable energy subsidies.

– II-H-14 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

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==> picture [100 x 55] intentionally omitted <==

REPORT ON REVIEW OF FINANCIAL INFORMATION OF SUZHOU YUNYANG NEW ENERGY ELECTRICITY CO., LTD.

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information set out on pages II-I-3 to II-I-14 which comprises the statements of financial position as at 31 December 2016, 2017 and 2018 and 30 September 2019 of Suzhou Yunyang New Energy Electricity Co., Ltd. (‘‘Yunyang’’) and the statements of profit or loss and other comprehensive income, the statements of cash flows and the statements of changes in equity for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and explanatory notes (the ‘‘Financial Information’’). The Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Kong Sun Holdings Limited (the ‘‘Company’’) in connection with the proposed disposal of entire share of Yunyang in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

The directors of the Company are responsible for the preparation and presentation of the Financial Information of Yunyang in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

– II-I-1 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

Conclusion

BDO Limited

Certified Public Accountants

Hong Kong, 6 January 2020

– II-I-2 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

Set out below is the unaudited financial information of Yunyang which comprises the unaudited statements of financial position of Yunyang as at 31 December 2016, 2017 and 2018 and 30 September 2019 and the unaudited statements of profit or loss and other comprehensive income, unaudited statements of cash flows and unaudited statements of changes in equity for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and certain explanatory notes (altogether referred to as ‘‘Unaudited Financial Information’’).

The Unaudited Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the proposed disposal of the entire equity interest in Yunyang. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Yunyang in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

– II-I-3 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF YUNYANG

Notes Revenue 4 Cost of sales Gross profit Other income Administrative expenses Finance costs Profit before income tax Income tax expense Profit for the year/period	For the year ended 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 52,493 42,205 40,197 (18,193) (11,816) (13,796) 34,300 30,389 26,401 4 5 3 (1,195) (194) (64) (2,516) (11,451) (20,630) 30,593 18,749 5,710 — — (715) 30,593 18,749 4,995	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 31,793 32,881 (9,737) (8,965) 22,056 23,916 1 2 (45) (762) (14,348) (13,528) 7,664 9,628 (958) (720) 6,706 8,908

– II-I-4 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF YUNYANG

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 5 Right-of-use asset Lease prepayments Current assets Trade and other receivables 6 Loan to shareholder Cash and cash equivalents Total current assets Current liabilities Trade and other payables Lease liabilities Tax payable Loans and borrowings 7 Shareholder’s loan Total current liabilities Net current (liabilities)/assets Total assets less current liabilities Non-current liabilities Lease liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Share capital Reserves Total equity	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 — 136 213 260,663 248,733 238,412 — — — 322 1,590 1,509 260,985 250,459 240,134 76,049 99,991 76,383 212,800 108,343 89,389 1,537 340 987 290,386 208,674 166,759 238,221 122,698 52,234 — — — — — 5 — — 54,881 — 518 15,567 238,221 123,216 122,687 52,165 85,458 44,072 313,150 335,917 284,206 — — — 220,190 224,208 167,502 220,190 224,208 167,502 92,960 111,709 116,704 68,000 68,000 68,000 24,960 43,709 48,704 92,960 111,709 116,704	As at 30 September 2019 RMB’000 223 213,478 7,325 — 221,026 79,161 89,699 5,803 174,663 61,440 119 372 86,443 30,149 178,523 (3,860) 217,166 5,791 111,840 117,631 99,535 68,000 31,535 99,535

– II-I-5 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

UNAUDITED STATEMENTS OF CASH FLOWS OF YUNYANG

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Depreciation of right-of-use asset Amortization of lease prepayments Write-off of solar power plant Interest expense Interest income Operating profit before working capital changes (Increase)/decrease in trade, bills and other receivables (Decrease)/increase in trade and other payables Cash (used in)/generated from operating activities Tax paid Net cash (used in)/generated from operating activities Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Payment for the purchase of lease prepayments Interests received Net cash used in investing activities	For the year ended 31 2016 2017 RMB’000 RMB’000 30,593 18,749 — 1 13,995 10,621 — — 404 421 — 1,309 2,516 11,451 (4) (5) 47,504 42,547 (76,048) (23,943) — (77,527) (28,544) (58,923) 38 (38) (28,506) (58,961) — (137) (36,476) (37,957) (726) (1,689) 4 5 (37,198) (39,778)	December 2018 RMB’000 5,710 24 10,321 — 488 — 20,630 (3) 37,170 23,608 2,819 63,597 (710) 62,887 (101) (73,283) (407) 3 (73,788)	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 7,664 9,628 16 25 7,704 7,426 — 278 365 — — 17,508 14,348 13,528 (1) (2) 30,096 48,391 64,935 (2,778) 2,828 659 97,859 46,272 (357) (353) 97,502 45,919 (101) (35) (20,223) (17,308) (407) — 1 2 (20,730) (17,341)

– II-I-6 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

Cash flows from financing activities Proceed from capital injection Proceed from loans and borrowings Repayment of loans and borrowings Payment of lease liabilities Interest on lease liabilities Interest paid Proceed from Shareholder’s loan Repayment to shareholder Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 2016 2017 RMB’000 RMB’000 62,367 — 220,190 4,018 — — — — — — (2,516) (11,451) — 104,975 (212,800) — 67,241 97,542 1,537 (1,197) — 1,537 1,537 340	December 2018 RMB’000 — — (1,825) — — (20,630) 34,003 — 11,548 647 340 987	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 — — — — (2,609) (24,100) — (406) — (221) (14,348) (13,307) — 14,272 (59,118) — (76,075) (23,762) 697 4,816 340 987 1,037 5,803

– II-I-7 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF YUNYANG

Balance at 1 January 2016 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2016 and 1 January 2017 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2017 and 1 January 2018 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2018 and 1 January 2019 Profit for the period Appropriation to PRC statutory reserve Proposed dividend Balance at 30 September 2019 Balance at 31 December 2017 and 1 January 2018 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2018	Share capital RMB’000 68,000 — — 68,000 — — 68,000 — — 68,000 — — — 68,000 68,000 — — 68,000	PRC statutory reserve RMB’000 — — 2,476 2,476 — 1,875 4,351 — 500 4,851 — 890 — 5,741 4,351 — 671 5,022	Retained profits/ (loss) RMB’000 (5,633) 30,593 (2,476) 22,484 18,749 (1,875) 39,358 4,995 (500) 43,853 8,908 (890) (26,077) 25,794 39,358 6,706 (671) 45,393	Total RMB’000 62,367 30,593 — 92,960 18,749 — 111,709 4,995 — 116,704 8,908 — (26,077) 99,535 111,709 6,706 — 118,415

– II-I-8 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Yunyang is a limited liability company incorporated in PRC. The principal activity of Yunyang is operation of solar power plant.

On 15 November 2019, the Vendor, an indirect wholly-owned subsidiary of the Company, CNNP Shandong and Yunyang entered into the Agreement, pursuant to which the Vendor agreed to sell, and CNNP Shandong agreed to acquire, the entire equity interest in Yunyang for a total consideration of approximately RMB84,842,000. Upon completion of the Yunyang Disposal, Yunyang will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Yunyang for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules, and solely for the purposes of inclusion in this circular issued by the Company in connection with the Yunyang Disposal.

The Unaudited Financial Information of the Yunyang has been prepared on the going concern basis which assumes the realisation of assets and satisfaction of liabilities in the ordinary course of business notwithstanding the Yunyang had net current liabilities of approximately RMB3,860,000 as at 30 September 2019. The directors are of the opinion that the Group will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months after taking into account the followings:

(i) having reviewed the cash flow projection of the Yunyang for the next twelve months from the reporting date, the directors are of the opinion that the Yunyang is able to generate positive cash flows from its operation. In preparing the cash flow projection by the management, it was assumed that proceeds of renewable energy subsidy receivables in respect of sale of electricity will be received with reference to prevalent payment trend after successfully enlisted in the renewable energy tariff subsidy catalogue;
(ii) the Company has confirmed not to demand repayment of debt due from the Yunyang until such time when the repayment will not affect the Yunyang’s ability to repay other creditors in the normal course of business; and
(iii) the Company has confirmed to provide sufficient financial support to the Yunyang so as to enable the Yunyang to meet its liabilities and obligations as and when they fall due and to enable the Yunyang to continue their business for twelve months after 30 September 2019 if the Disposal is not completed, and to the completion date if the Disposal is completed.

– II-I-9 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

3. CHANGES IN ACCOUNTING POLICIES

Yunyang adopted HKFRS 16 — Leases (‘‘HKFRS 16’’) using the modified retrospective approach with a date of initial application of 1 January 2019, under which the cumulative effect of initial application is recognised as at 1 January 2019. As a result, the Unaudited Financial Information presented for the years ended 31 December 2016, 2017 and 2018 have not been restated. HKFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. The impact of the adoption of HKFRS 16 on the Unaudited Financial Information is described below.

Impact of the new definition of a lease

Yunyang has made use of the practical expedient available on transition to HKFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with HKAS 17 — Leases (‘‘HKAS 17’’) and HK(IFRIC)-Int 4 — Determining whether an Arrangement contains a Lease will continue to be applied to leases entered or modified before 1 January 2019.

In preparation for the first-time application of HKFRS 16, Yunyang assessed that the new definition in HKFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for Yunyang.

Impact on lessee accounting

HKFRS 16 changes how Yunyang accounts for leases previously classified as operating leases under HKAS 17, which were off-balance-sheet. Upon initial application of HKFRS 16, for all leases (except for short-term leases and leases of low value assets), Yunyang (a) recognises right-of-use assets and lease liabilities in the statements of financial position, initially measured at the present value of future lease payments; (b) recognises depreciation of right-of-use assets and interest on lease liabilities in the statements of profit or loss and other comprehensive income; and (c) separately presented the total amount of cash paid into a principal portion and interest within financing activities and investing activities in the statements of cash flows.

As at 31 December 2018, Yunyang had operating lease commitment of approximately RMB10,415,000. On transition to HKFRS 16, Yunyang has taken advantage of the following practical expedients to leases previously classified as operating leases under HKAS 17 and recognised right-of-use assets measured at the amount equal to the lease liability, adjusted by the amount of any prepayments relating to that lease recognised in the statements of financial position.

The aggregate lease liability recognised in the statements of financial position as at 1 January 2019 and Yunyang’s operating lease commitment as at 31 December 2018 is reconciled as follows:

Operating lease commitment as at 31 December 2018 Discounting effect Lease liabilities recognised as at 1 January 2019	RMB’000 (10,415) 4,321 (6,094)

– II-I-10 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

Prepaid lease payment in respect of the land use right in the PRC is reclassified and recognised as rightof-use assets under HKFRS 16.

Assets: — Lease prepayments — Right-of-use assets Liabilities: — Lease liabilities	As at 31 December 2018 RMB’000 (Originally stated) 1,509 — —	Reclassification RMB’000 (1,509) 1,509 —	Contract capitalisation RMB’000 — 6,094 (6,094)	As at 1 January 2019 RMB’000 (Restated) — 7,603 (6,094)

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the year ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019, sales of electricity includes renewable energy subsidies amounting to approximately RMB32,605,000, approximately RMB26,367,000, approximately RMB24,745,000, approximately RMB19,572,000 and approximately RMB20,242,000 respectively.

– II-I-11 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

5. SOLAR POWER PLANTS

Cost
At 1 January 2016
Additions
At 31 December 2016 and 1 January 2017
Disposals
At 31 December 2017 and 1 January 2018
Additions
At 31 December 2018 and 1 January 2019
Written off
At 30 September 2019
Accumulated depreciation
At 1 January 2016
Charged for the year
At 31 December 2016 and 1 January 2017
Charged for the year
At 31 December 2017 and 1 January 2018
Charged for the year
At 31 December 2018 and 1 January 2019
Charged for the period
At 30 September 2019
Net carrying amount
At 31 December 2016
At 31 December 2017
At 31 December 2018
At 30 September 2019

Solar power
plants
RMB’000
279,897
—
279,897
(1,309)
278,588
—
278,588
(17,508)
261,080
(5,239)
(13,995)
(19,234)
(10,621)
(29,855)
(10,321)
(40,176)
(7,426)
(47,602)
260,663
248,733
238,412
213,478

– II-I-12 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

As at 31 December 2016, 2017 and 2018 and 30 September 2019, solar plant with net carrying amount of approximately RMB260,663,000, approximately RMB248,733,000, approximately RMB238,412,000 and approximately RMB213,478,000 respectively was pledged as securities for Yunyang’s loans and borrowings (note 7).

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 39,303 70,377 53,296 36,746 29,614 23,087 76,049 99,991 76,383	As at 30 September 2019 RMB’000 60,257 18,904
		79,161

Ageing analysis of trade receivables, based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 5,027 8,106 6,941 9,486 7,621 7,956 5,252 16,542 13,390 19,538 38,108 25,009 39,303 70,377 53,296	As at 30 September 2019 RMB’000 10,481 8,711 11,613 29,452
		60,257

Ageing analysis of trade receivables, based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 3,124 3,735 2,445 1,904 6,686 7,098 12,187 8,098 8,367 22,088 15,679 14,112 — 36,179 21,274 39,303 70,377 53,296	As at 30 September 2019 RMB’000 4,645 8,814 8,813 11,135 26,850
		60,257

Yunyang’s trade receivables are mainly receivables from sales of electricity. Generally, the receivables are due within 30 to 180 days from the date of billing, except for the renewable energy subsidy.

– II-I-13 –

FINANCIAL INFORMATION OF YUNYANG

APPENDIX II-I

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the State Grid Company based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies. As at 31 December 2016, 2017 and 2018 and 30 September 2019, the outstanding renewable energy subsidy amounted to approximately RMB38,148,000, approximately RMB68,998,000, approximately RMB52,357,000 and approximately RMB58,472,000 respectively.

As at 31 December 2016, 2017 and 2018 and 30 September 2019, trade receivables arising from the sales of electricity including renewable energy subsidies amounting to approximately RMB39,303,000, approximately RMB70,377,000, approximately RMB53,296,000 and approximately RMB60,257,000 respectively were pledged as securities for Suzhou Yunyang’s loans and borrowings (note 7).

7. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 — — 54,881 220,190 224,208 167,502 220,190 224,208 222,383	As at 30 September 2019 RMB’000 86,443
		111,840
		198,283

Yunyang’s loans and borrowings are repayable as follows:

Within 1 year After 1 year but within 2 years After 2 years but within 5 years	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 — — 54,881 2,270 56,774 74,329 217,920 167,434 93,173 220,190 224,208 222,383	As at 30 September 2019 RMB’000 86,443 75,002 36,838
		198,283

As at 31 December 2016, 2017 and 2018 and 30 September 2019, loans and other borrowings bear interest at 5.32% per annum and is subject to floating-rate.

The loans and borrowings were secured by the following assets:

Solar power plants (note 5) Trade receivables (note 6)	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 260,663 248,733 238,412 39,303 70,377 53,296 299,966 319,110 291,708	As at 30 September 2019 RMB’000 213,478 60,257
		273,735

As at 31 December 2016, 2017 and 2018 and 30 September 2019, the amount of trade receivables pledged for loans and borrowings included the outstanding renewable energy subsidies.

– II-I-14 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

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REPORT ON REVIEW OF FINANCIAL INFORMATION OF DINGBIAN ANGLI SOLAR POWER TECHNOLOGY CO., LTD.

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information set out on pages II-J-3 to II-J-14 which comprises the statements of financial position as at 31 December 2016, 2017 and 2018 and 30 September 2019 of Dingbian Angli Solar Power Technology Co., Ltd. (‘‘Angli’’) and the statements of profit or loss and other comprehensive income, the statements of cash flows and the statements of changes in equity for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and explanatory notes (the ‘‘Financial Information’’). The Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Kong Sun Holdings Limited (the ‘‘Company’’) in connection with the proposed disposal of entire share of Angli in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

The directors of the Company are responsible for the preparation and presentation of the Financial Information of Angli in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

– II-J-1 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

Conclusion

BDO Limited

Certified Public Accountants

Hong Kong, 6 January 2020

– II-J-2 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

Set out below is the unaudited financial information of Angli which comprises the unaudited statements of financial position of Angli as at 31 December 2016, 2017 and 2018 and 30 September 2019 and the unaudited statements of profit or loss and other comprehensive income, unaudited statements of cash flows and unaudited statements of changes in equity for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 and certain explanatory notes (altogether referred to as ‘‘Unaudited Financial Information’’).

The Unaudited Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the proposed disposal of the entire equity interest in Angli. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Angli in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

– II-J-3 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF ANGLI

Notes Revenue 4 Cost of sales Gross profit Other income Other expense Administrative expenses Finance costs Profit before income tax Income tax expense Profit for the year/period	For the year ended 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 104,779 99,767 105,387 (41,231) (34,959) (39,224) 63,548 64,808 66,163 4,617 139 22 — — — (4,638) (181) (8,164) (28,901) (35,057) (30,833) 34,626 29,709 27,188 — — — 34,626 29,709 27,188	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 79,968 88,621 (27,910) (27,020) 52,058 61,601 4 111 — (100) (6,459) (7,849) (23,290) (24,312) 22,313 29,451 — (1,497) 22,313 27,954

– II-J-4 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF ANGLI

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 5 Right-of-use asset Lease prepayments Current assets Trade and other receivables 6 Loan to shareholder Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payable Loans and borrowings 7 Shareholder’s loan Total current liabilities Net current liabilities Total assets less current liabilities Non-current liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Share capital Reserves Total equity	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 60 88 130 741,714 712,474 683,235 — — — 19,431 18,570 17,710 761,205 731,132 701,075 209,711 273,943 244,514 — — — 159,926 982 1,579 369,637 274,925 246,093 201,027 91,842 72,912 — — — 43,053 47,419 50,199 342,737 340,783 320,491 586,817 480,044 443,602 (217,180) (205,119) (197,509) 544,025 526,013 503,566 508,399 460,678 411,043 508,399 460,678 411,043 35,626 65,335 92,523 1,000 1,000 1,000 34,626 64,335 91,523 35,626 65,335 92,523	As at 30 September 2019 RMB’000 842 686,291 17,065 — 704,198 260,400 35,974 6,690 303,064 95,356 1,223 42,614 376,568 515,761 (212,697) 491,501 371,024 371,024 120,477 1,000 119,477 120,477

– II-J-5 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

UNAUDITED STATEMENTS OF CASH FLOWS OF ANGLI

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Depreciation of right-of-use asset Amortization of lease prepayments Interest expense Interest income Operating profit before working capital changes (Increase)/decrease in trade, bills and other receivables (Decrease)/increase in trade and other payables Cash (used in)/generated from operating activities Tax paid Net cash (used in)/generated from operating activities Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Payment for the purchase of lease prepayments Interests received Net cash used in investing activities	For the year ended 31 2016 2017 RMB’000 RMB’000 34,626 29,709 3 7 33,506 29,240 — — 2,079 860 28,901 35,057 (4,617) (96) 94,498 94,777 (209,711) (64,232) 4,761 (1,722) (110,452) 28,823 — — (110,452) 28,823 (63) (34) (578,954) (107,463) (21,510) — 4,617 96 (595,910) (107,401)	December 2018 RMB’000 27,188 7 29,239 — 860 30,833 (17) 88,110 29,429 (1,088) 116,451 — 116,451 (49) (17,842) — 17 (17,874)	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 22,313 29,451 5 80 21,929 22,485 — 645 645 — 23,290 24,312 (4) (11) 68,178 76,962 31,882 (15,886) (1,137) (27) 98,923 61,049 — (274) 98,923 60,775 (8) (792) (10,868) (3,070) — — 4 11 (10,872) (3,851)

– II-J-6 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

Cash flows from financing activities Proceed from capital injection Proceed from loans and borrowings Repayment of loans and borrowings Interest paid Proceed from Shareholder’s loan Repayment to shareholder Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 2016 2017 RMB’000 RMB’000 1,000 — 551,452 — — (43,355) (28,901) (35,057) 342,737 — — (1,954) 866,288 (80,366) 159,926 (158,944) — 159,926 159,926 982	December 2018 RMB’000 — — (46,855) (30,833) — (20,292) (97,980) 597 982 1,579	For the nine months ended 30 September 2018 2019 RMB’000 RMB’000 — — — — (33,889) (47,604) (23,290) (24,312) — 20,103 (30,182) — (87,361) (51,813) 690 5,111 982 1,579 1,672 6,690

– II-J-7 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF ANGLI

Balance at 1 January 2016 Capital injection Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2016 and 1 January 2017 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2017 and 1 January 2018 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2018 and 1 January 2019 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2019 Balance at 31 December 2017 and 1 January 2018 Profit for the period Appropriation to PRC statutory reserve Balance at 30 September 2018	Share capital RMB’000 — 1,000 — — 1,000 — — 1,000 — — 1,000 — — 1,000 1,000 — — 1,000	PRC statutory reserve RMB’000 — — — 3,463 3,463 — 2,971 6,434 — 2,714 9,148 — 2,795 11,943 6,434 — 2,231 8,665	Retained profits RMB’000 — — 34,626 (3,463) 31,163 29,709 (2,971) 57,901 27,188 (2,714) 82,375 27,954 (2,795) 107,534 57,901 22,313 (2,231) 77,983	Total RMB’000 — 1,000 34,626 —
				35,626 29,709 —
				65,335 27,188 —
				92,523 27,954 —
				120,477
				65,335 22,313 —
				87,648

– II-J-8 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Angli is a limited liability company incorporated in PRC. The principal activity of Angli is operation of solar power plant.

On 5 December 2019, the Vendor, an indirect wholly-owned subsidiary of the Company, CNNP Shandong and Angli entered into the Angli Agreement, pursuant to which the Vendor agreed to sell, and CNNP Shandong agreed to acquire, the entire equity interest in Angli for a total consideration of approximately RMB446,355,000. Upon completion of the Angli Disposal, Angli will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Angli for the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019 has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules, and solely for the purposes of inclusion in this circular issued by the Company in connection with the Angli Disposal.

The Unaudited Financial Information of the Angli has been prepared on the going concern basis which assumes the realisation of assets and satisfaction of liabilities in the ordinary course of business notwithstanding the Angli had net current liabilities of approximately RMB217,180,000, approximately RMB205,119,000, approximately RMB197,509,000 and approximately RMB212,697,000 as at 31 December 2016, 2017, 2018 and 30 September 2019 respectively. The directors are of the opinion that the Group will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months after taking into account the followings:

(i) having reviewed the cash flow projection of the Angli for the next twelve months from the reporting date, the directors are of the opinion that the Angli is able to generate positive cash flows from its operation. In preparing the cash flow projection by the management, it was assumed that proceeds of renewable energy subsidy receivables in respect of sale of electricity will be received with reference to prevalent payment trend after successfully enlisted in the renewable energy tariff subsidy catalogue;
(ii) the Company has confirmed not to demand repayment of debt due from the Angli until such time when the repayment will not affect the Angli’s ability to repay other creditors in the normal course of business; and
(iii) the Company has confirmed to provide sufficient financial support to the Angli so as to enable the Angli to meet its liabilities and obligations as and when they fall due and to enable the Angli to continue their business for twelve months after 30 September 2019 if the Disposal is not completed, and to the completion date if the Disposal is completed.

– II-J-9 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

3. CHANGES IN ACCOUNTING POLICIES

Angli adopted HKFRS 16 — Leases (‘‘HKFRS 16’’) using the modified retrospective approach with a date of initial application of 1 January 2019, under which the cumulative effect of initial application is recognised as at 1 January 2019. As a result, the Unaudited Financial Information presented for the years ended 31 December 2016, 2017 and 2018 have not been restated. HKFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. The impact of the adoption of HKFRS 16 on the Unaudited Financial Information is described below.

Impact of the new definition of a lease

Angli has made use of the practical expedient available on transition to HKFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with HKAS 17 — Leases (‘‘HKAS 17’’) and HK(IFRIC)-Int 4 — Determining whether an Arrangement contains a Lease will continue to be applied to leases entered or modified before 1 January 2019.

In preparation for the first-time application of HKFRS 16, Angli assessed that the new definition in HKFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for Angli.

Impact on lessee accounting

HKFRS 16 changes how Angli accounts for leases previously classified as operating leases under HKAS 17, which were off-balance-sheet. Upon initial application of HKFRS 16, for all leases (except for short-term leases and leases of low value assets), Angli (a) recognises right-of-use assets and lease liabilities in the statements of financial position, initially measured at the present value of future lease payments; (b) recognises depreciation of right-of-use assets and interest on lease liabilities in the statements of profit or loss and other comprehensive income; and (c) separately presented the total amount of cash paid into a principal portion and interest within financing activities and investing activities in the statements of cash flows.

As at 31 December 2018, Angli does not have operating lease commitment. On transition to HKFRS 16, Angli has taken advantage of the following practical expedients to leases previously classified as operating leases under HKAS 17 and recognised right-of-use assets measured at the amount equal to the lease liability, adjusted by the amount of any prepayments relating to that lease recognised in the statements of financial position.

Prepaid lease payment in respect of the land use right in the PRC is reclassified and recognised as rightof-use assets under HKFRS 16.

– II-J-10 –

APPENDIX II-J

FINANCIAL INFORMATION OF ANGLI

Assets: — Lease prepayments — Right-of-use assets Liabilities: — Lease liabilities	As at 31 December 2018 RMB’000 (Originally stated) 17,710 — —	Reclassification RMB’000 (17,710) 17,710 —	Contract capitalisation RMB’000 — — —	As at 1 January 2019 RMB’000 (Restated) — 17,710
				—

– II-J-11 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the year ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 2019, sales of electricity includes renewable energy subsidies amounting to approximately RMB67,875,000, approximately RMB65,725,000, approximately RMB74,319,000, approximately RMB55,997,000 and approximately RMB58,398,000 respectively.

5. SOLAR POWER PLANTS

Solar power
plants
RMB’000
774,160
1,060
775,220
—
775,220
—
775,220
25,541
800,761
—
(33,506)
(33,506)
(29,240)
(62,746)
(29,239)
(91,985)
(22,485)
(114,470)
741,714
712,474
683,235
686,291

– II-J-12 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

As at 31 December 2016, 2017 and 2018 and 30 September 2019, solar plant with net carrying amount of approximately RMB741,714,000, approximately RMB712,474,000, approximately RMB683,235,000 and approximately RMB686,291,000 respectively was pledged as securities for Angli’s loans and borrowings (note 7).

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 85,222 158,749 133,983 124,489 115,194 110,531 209,711 273,943 244,514	As at 30 September 2019 RMB’000 152,213 108,187
		260,400

Ageing analysis of trade receivables, based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 22,081 21,465 20,725 16,550 21,397 16,599 46,591 36,474 42,602 — 79,413 54,057 85,222 158,749 133,983	As at 30 September 2019 RMB’000 23,884 19,719 36,859 71,751
		152,213

Ageing analysis of trade receivables, based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 7,106 7,778 7,888 20,185 20,841 18,095 19,664 22,253 18,032 38,267 33,067 38,853 — 74,810 51,115 85,222 158,749 133,983	As at 30 September 2019 RMB’000 9,902 19,494 21,664 34,660 66,493
		152,213

Angli’s trade receivables are mainly receivables from sales of electricity. Generally, the receivables are due within 30 to 180 days from the date of billing, except for the renewable energy subsidy.

– II-J-13 –

FINANCIAL INFORMATION OF ANGLI

APPENDIX II-J

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the State Grid Company based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies. As at 31 December 2016, 2017 and 2018 and 30 September 2019, the outstanding renewable energy subsidy amounted to approximately RMB79,413,000 approximately RMB156,311,000 approximately RMB131,580,000 and approximately RMB148,470,000 respectively.

As at 31 December 2016, 2017 and 2018 and 30 September 2019, trade receivables arising from the sales of electricity including renewable energy subsidies amounting to approximately RMB85,222,000 approximately RMB158,749,000 approximately RMB133,983,000 and approximately RMB152,213,000 respectively were pledged as securities for Angli’s loans and borrowings (note 7).

7. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 43,053 47,419 50,199 508,399 460,678 411,043 551,452 508,097 461,242	As at 30 September 2019 RMB’000 42,614
		371,024
		413,638

Angli’s loans and borrowings are repayable as follows:

Within 1 year After 1 year but within 2 years After 2 years but within 5 years Over 5 years	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 43,053 47,419 50,199 47,575 49,635 53,911 162,504 174,531 187,756 298,320 236,512 169,376 551,452 508,097 461,242	As at 30 September 2019 RMB’000 42,614 57,069 198,102 115,853
		413,638

As at 31 December 2016, 2017 and 2018 and 30 September 2019, loans and other borrowings bear interest at 5.733% per annum and is subject to floating-rate.

The loans and borrowings were secured by the following assets:

Solar power plants (note 5) Trade receivables (note 6)	As at 31 December 2016 2017 2018 RMB’000 RMB’000 RMB’000 741,714 712,474 683,235 85,222 158,749 133,983 826,936 871,223 817,218	As at 30 September 2019 RMB’000 686,291 152,213
		838,504

As at 31 December 2016, 2017 and 2018 and 30 September 2019, the amount of trade receivables pledged for loans and borrowings included the outstanding renewable energy subsidies.

– II-J-14 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Introduction

The unaudited pro forma financial information of the Remaining Group (the ‘‘Unaudited Pro Forma Financial Information’’) presented below is prepared to illustrate (a) the financial position of the Remaining Group as if the CNNP Disposal and Angli Disposal had been completed on 30 June 2019; and (b) the results and cash flows of the Remaining Group for the year ended 31 December 2018 as if the CNNP Disposal and Angli Disposal had been completed on 1 January 2018. This Unaudited Pro Forma Financial Information has been prepared for illustrative purpose only, and because of its hypothetical nature, it may not purport to present the true picture of (i) the financial position of the Remaining Group as at 30 June 2019 or at any future date had the CNNP Disposal and Angli Disposal been completed on 30 June 2019; or (ii) the results and cash flows of the Remaining Group for the year ended 31 December 2018 or for any future period had the CNNP Disposal and Angli Disposal been completed on 1 January 2018.

The Unaudited Pro Forma Financial Information is prepared based on the consolidated statement of financial position of the Group as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income and consolidated statement of cash flows of the Group for the year ended 31 December 2018 as extracted from the consolidated financial statements of the Group for the period ended 30 June 2019 as set out in the published annual report of the Company for the period ended 30 June 2019, after giving effect to the pro forma adjustments described in the notes to the Unaudited Pro Forma Financial Information. The Unaudited Pro Forma Financial Information is prepared in accordance with Rules 4.29 and 14.68(2)(a)(ii) of the Listing Rules and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants.

– III-1 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(A) Unaudited Pro Forma Consolidated Statement of Financial Position of the Remaining Group

Non-current assets Property, plant and equipment Solar power plants Interest in a joint venture Interests in associates Goodwill Right-of-use assets Financial assets measured at fair value through other comprehensive income Deferred tax assets Current assets Financial assets measured at fair value through profit or loss Inventories Trade, bills and other receivables Cash and cash equivalents Assets of a disposal group classified as held for sale Total current assets Current liabilities Trade and other payables Lease liabilities Contract liabilities Loans and borrowings Corporate bonds Tax payable Liabilities of a disposal group classified as held for sale Total current liabilities Net current assets Total assets less current liabilities	Consolidated statement of financial position of the Group as at 30 June 2019 Pro forma adjustments Unaudited pro forma consolidated statement of financial position of the Remaining Group as at 30 June 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1(a)) (Note 2(i)) (Note 2(ii)) (Note 2(iii)) (Note 2(iv)) (Note 2(v)) (Note 2(vi)) (Note 2(vii)) (Note 2(viii)) (Note 2(ix)) (Note 2(x)) (Note 3) 35,211 (385) (39) (1) (12) (68) (167) (376) (487) (223) (842) 32,611 11,272,955 (307,656) (216,587) (193,831) (130,356) (137,899) (146,421) (124,033) (136,173) (213,478) (686,291) 8,980,230 344,231 344,231 13,094 13,094 149,151 (52,221) 96,930 446,874 (8,054) (1,282) (12,176) (5,072) (4,933) (7,325) (17,065) 390,967 1,783,789 (270,000) 1,513,789 2,136 2,136 14,047,441 11,373,988 34,658 34,658 724 (20) 704 4,937,171 (18,640) (49,607) (49,568) 32,237 29,216 (39,828) (20,382) (25,631) (131,185) 150,638 1,028,010 5,842,431 179,217 (7,041) (1,894) (1,421) (304) (875) (2,554) (276) (10,659) (5,803) (6,690) (2,000) 139,700 5,151,770 6,017,493 862,687 862,687 6,014,457 6,880,180 (1,830,342) 13,894 (38,813) (50,167) 20,145 2,976 13,775 31,328 2,530 61,441 95,356 (270,000) (1,947,877 (12,101) 97 892 118 (10,994 (5,609) 640 (4,969 (974,530) 28,009 12,081 12,323 11,233 20,939 86,443 42,614 (760,888 (2,635) (2,635 (1,940) (6,059) (18,510) (13,375) (1,927) (9,629) (4,277) 324 (12,707) (7,154) (69,221) (144,475 (2,827,157) (2,871,838 (451,642) (451,642 (3,278,799) (3,323,480 2,735,658 3,556,700 16,783,099 14,930,688	Consolidated statement of financial position of the Group as at 30 June 2019 Pro forma adjustments Unaudited pro forma consolidated statement of financial position of the Remaining Group as at 30 June 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1(a)) (Note 2(i)) (Note 2(ii)) (Note 2(iii)) (Note 2(iv)) (Note 2(v)) (Note 2(vi)) (Note 2(vii)) (Note 2(viii)) (Note 2(ix)) (Note 2(x)) (Note 3) 35,211 (385) (39) (1) (12) (68) (167) (376) (487) (223) (842) 32,611 11,272,955 (307,656) (216,587) (193,831) (130,356) (137,899) (146,421) (124,033) (136,173) (213,478) (686,291) 8,980,230 344,231 344,231 13,094 13,094 149,151 (52,221) 96,930 446,874 (8,054) (1,282) (12,176) (5,072) (4,933) (7,325) (17,065) 390,967 1,783,789 (270,000) 1,513,789 2,136 2,136 14,047,441 11,373,988 34,658 34,658 724 (20) 704 4,937,171 (18,640) (49,607) (49,568) 32,237 29,216 (39,828) (20,382) (25,631) (131,185) 150,638 1,028,010 5,842,431 179,217 (7,041) (1,894) (1,421) (304) (875) (2,554) (276) (10,659) (5,803) (6,690) (2,000) 139,700 5,151,770 6,017,493 862,687 862,687 6,014,457 6,880,180 (1,830,342) 13,894 (38,813) (50,167) 20,145 2,976 13,775 31,328 2,530 61,441 95,356 (270,000) (1,947,877 (12,101) 97 892 118 (10,994 (5,609) 640 (4,969 (974,530) 28,009 12,081 12,323 11,233 20,939 86,443 42,614 (760,888 (2,635) (2,635 (1,940) (6,059) (18,510) (13,375) (1,927) (9,629) (4,277) 324 (12,707) (7,154) (69,221) (144,475 (2,827,157) (2,871,838 (451,642) (451,642 (3,278,799) (3,323,480 2,735,658 3,556,700 16,783,099 14,930,688
		(2,871,838 (451,642
		(3,323,480
		3,556,700
		14,930,688

– III-2 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Non-current liabilities Lease liabilities Loans and borrowings Corporate bonds Deferred tax liabilities Net assets EQUITY Share capital Reserves Equity attributable to the owners of the Company Non-controlling interests Net assets	Consolidated statement of financial position of the Group as at 30 June 2019 Pro forma adjustments Unaudited pro forma consolidated statement of financial position of the Remaining Group as at 30 June 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1(a)) (Note 2(i)) (Note 2(ii)) (Note 2(iii)) (Note 2(iv)) (Note 2(v)) (Note 2(vi)) (Note 2(vii)) (Note 2(viii)) (Note 2(ix)) (Note 2(x)) (Note 3) (216,824) 11,694 1,602 3,955 5,791 (193,782 (10,098,951) 176,387 280,000 260,000 47,595 74,697 79,088 61,125 78,216 111,840 371,024 (8,558,979 (259,201) (259,201 (3,099) (3,099 (10,578,075) (9,015,061 6,205,024 5,915,627 6,486,588 6,486,588 (364,842) 2,104 (5,171) (4,818) (875) (2,804) 2,271 (2,270) (2,031) (4,602) (8,078) (263,123) (654,239 6,121,746 5,832,349 83,278 83,278 6,205,024 5,915,627	Unaudited pro forma consolidated statement of financial position of the Remaining Group as at 30 June 2019 RMB’000 (193,782 (8,558,979 (259,201 (3,099
		(9,015,061
		5,915,627
		5,832,349 83,278
		5,915,627

– III-3 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(B) Unaudited Pro Forma Consolidated Statement of Profit or Loss and Other Comprehensive Income of the Remaining Group

Revenue Cost of sales Gross profit Other gains and losses Administrative expenses Gain on disposal/deregistration of subsidiaries, net Gain on bargain purchase on acquisition of subsidiaries Gain on disposal of an associate Loss on disposal of Disposal Companies Finance costs Share of profit of a joint venture Share of loss of associates Profit/(Loss) before income tax Income tax expense Profit/(Loss) for the period Profit/(Loss) for the period attributable to: Owners of the Company Non-controlling interests	Consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 Pro forma adjustments Unaudited pro forma consolidated statement of profit or loss and other comprehensive income of the Remaining Group for the year ended 31 December 2018 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1(b)) (Note 4(i)) (Note 4(ii)) (Note 4(iii)) (Note 4(iv)) (Note 4(v)) (Note 4(vi)) (Note 4(vii)) (Note 4(viii)) (Note 4(ix)) (Note 4(x)) (Note 5) 1,881,004 (49,480) (25,718) (26,226) (20,887) (21,475) (28,296) (20,423) (22,591) (40,197) (105,387) 1,520,324 (760,392) 18,303 12,461 9,933 9,942 8,890 8,682 6,300 9,322 13,796 39,224 (623,539 1,120,612 896,785 41,413 (8) (142) (6) (3) (4) (3) (1,184) (161) (3) (22) 39,877 (412,178) 1,077 620 918 741 705 2,024 340 93 64 8,164 (397,432 2,693 2,693 2,504 2,504 5,661 5,661 — (208,385) (208,385 (745,545) 18,032 5,472 9,139 11,740 5,719 7,914 20,630 30,833 (636,066 10,501 10,501 (837) (837 24,824 (284,699 (8,547) 924 296 715 (6,612 16,277 (291,311 15,415 (11,152) (12,779) (15,381) (4,735) (2,745) (5,853) (8,952) (5,423) (4,995) (27,188) (208,385) (292,173 862 862 16,277 (291,311	Unaudited pro forma consolidated statement of profit or loss and other comprehensive income of the Remaining Group for the year ended 31 December 2018 RMB’000 1,520,324 (623,539
		(291,311

– III-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Profit/(Loss) for the period Other comprehensive income, net of tax Items that will not be reclassified to profit or loss: Fair value changes in financial assets measured at fair value through other comprehensive income, net Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of foreign operations Release of exchange reserve upon disposal of subsidiaries Other comprehensive income for the year, net of tax Total comprehensive income for the year Total comprehensive income for the year attributable to: Owners of the Company Non-controlling interests	Consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 Pro forma adjustments Unaudited pro forma consolidated statement of profit or loss and other comprehensive income of the Remaining Group for the year ended 31 December 2018 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1(b)) (Note 4(i)) (Note 4(ii)) (Note 4(iii)) (Note 4(iv)) (Note 4(v)) (Note 4(vi)) (Note 4(vii)) (Note 4(viii)) (Note 4(ix)) (Note 4(x)) (Note 5) 16,277 (11,152) (12,779) (15,381) (4,735) (2,745) (5,853) (8,952) (5,423) (4,995) (27,188) (208,385) (291,311 (71,452) (71,452 (1,732) (1,732 (19) (19 (73,203) (73,203 (56,926) (364,514 (57,788) (11,152) (12,779) (15,381) (4,735) (2,745) (5,853) (8,952) (5,423) (4,995) (27,188) (208,385) (365,376 862 862 (56,926) (364,514	Consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 Pro forma adjustments Unaudited pro forma consolidated statement of profit or loss and other comprehensive income of the Remaining Group for the year ended 31 December 2018 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1(b)) (Note 4(i)) (Note 4(ii)) (Note 4(iii)) (Note 4(iv)) (Note 4(v)) (Note 4(vi)) (Note 4(vii)) (Note 4(viii)) (Note 4(ix)) (Note 4(x)) (Note 5) 16,277 (11,152) (12,779) (15,381) (4,735) (2,745) (5,853) (8,952) (5,423) (4,995) (27,188) (208,385) (291,311 (71,452) (71,452 (1,732) (1,732 (19) (19 (73,203) (73,203 (56,926) (364,514 (57,788) (11,152) (12,779) (15,381) (4,735) (2,745) (5,853) (8,952) (5,423) (4,995) (27,188) (208,385) (365,376 862 862 (56,926) (364,514
		(364,514

– III-5 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(C) Unaudited Pro Forma Consolidated Statement of Cash Flows of the Remaining Group

Cash flows from operating activities Profit/(Loss) before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plants Amortisation of lease prepayments Equity-settled share-based payment expenses Foreign exchange gain, net Gain on bargain purchase on acquisition of subsidiaries Gain on disposal/deregistration of a subsidiaries, net Loss on disposal of Disposal Companies Gain on disposal of associates Write-off/loss on disposal of property, plant and equipment Write-off of solar power plant Net unrealised gain on fair value changes of financial assets measured at fair value through profit or loss Net realised loss on disposal of financial assets measured at fair value through profit or loss Share of profit of a joint venture Share of loss of associates Interest expense Interest income Dividend income Reversal of impairment loss recognised in respect of other receivables, net Write-back of other payables Operating profit before working capital changes Decrease in inventories, net Increase in trade, bills and other receivables Increase in trade and other payables	Consolidated statement of cash flows of the Group for the year ended 31 December 2018 Pro forma adjustments Unaudited pro forma consolidated statement of cash flows of the Remaining Group for the year ended 31 December 2018 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1(b)) (Note 6(i)) (Note 6(ii)) (Note 6(iii)) (Note 6(iv)) (Note 6(v)) (Note 6(vi)) (Note 6(vii)) (Note 6(viii)) (Note 6(ix)) (Note 6(x)) (Note 5 & 7) 24,824 (12,076) (12,779) (15,381) (4,735) (2,745) (5,853) (9,248) (5,423) (5,710) (27,188) (208,385) (284,699 8,788 (45) (30) (1) (50) (16) (60) (39) (22) (24) (7) 8,494 492,452 (14,226) (9,695) (8,678) (6,287) (6,819) (6,367) (5,322) (5,967) (10,321) (29,239) 389,531 26,587 (401) (183) (741) (339) (329) (488) (860) 23,246 33,850 33,850 (2,826) (2,826 (2,504) (2,504 (2,693) (2,693 — 208,385 208,385 (5,661) (5,661 471 471 16,103 — (561) 15,542 (5,864) (5,864 53,613 53,613 (10,501) (10,501 837 837 745,545 (18,032) — — (5,472) (9,139) (11,740) (5,719) (7,914) (20,630) (30,833) 636,066 (9,555) 8 5 6 3 4 3 2 6 3 17 (9,498 (23,492) (23,492 (963) (963 (9,421) (9,421 1,329,590 1,011,913 1,823 4 — (2) 1,825 (913,806) (13,602) (7,055) (7,501) (3,808) 1,908 (4,978) (11,925) (5,130) (23,608) (9,137) (998,642 365,766 445 287,377 242,352 (1,087) 398 8,306 282 5 (36,822) 1,088 868,110	Consolidated statement of cash flows of the Group for the year ended 31 December 2018 Pro forma adjustments Unaudited pro forma consolidated statement of cash flows of the Remaining Group for the year ended 31 December 2018 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1(b)) (Note 6(i)) (Note 6(ii)) (Note 6(iii)) (Note 6(iv)) (Note 6(v)) (Note 6(vi)) (Note 6(vii)) (Note 6(viii)) (Note 6(ix)) (Note 6(x)) (Note 5 & 7) 24,824 (12,076) (12,779) (15,381) (4,735) (2,745) (5,853) (9,248) (5,423) (5,710) (27,188) (208,385) (284,699 8,788 (45) (30) (1) (50) (16) (60) (39) (22) (24) (7) 8,494 492,452 (14,226) (9,695) (8,678) (6,287) (6,819) (6,367) (5,322) (5,967) (10,321) (29,239) 389,531 26,587 (401) (183) (741) (339) (329) (488) (860) 23,246 33,850 33,850 (2,826) (2,826 (2,504) (2,504 (2,693) (2,693 — 208,385 208,385 (5,661) (5,661 471 471 16,103 — (561) 15,542 (5,864) (5,864 53,613 53,613 (10,501) (10,501 837 837 745,545 (18,032) — — (5,472) (9,139) (11,740) (5,719) (7,914) (20,630) (30,833) 636,066 (9,555) 8 5 6 3 4 3 2 6 3 17 (9,498 (23,492) (23,492 (963) (963 (9,421) (9,421 1,329,590 1,011,913 1,823 4 — (2) 1,825 (913,806) (13,602) (7,055) (7,501) (3,808) 1,908 (4,978) (11,925) (5,130) (23,608) (9,137) (998,642 365,766 445 287,377 242,352 (1,087) 398 8,306 282 5 (36,822) 1,088 868,110
		1,011,913
		1,825 (998,642 868,110

– III-6 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Cash generated from operations Tax paid Net cash generated from operating activities Cash flows from investing activities Payments for purchase of property, plant and equipment Dividend income received Payments for construction cost of in respect of solar power plants Payments for purchase of financial assets measured at fair value through other comprehensive income Receipt from disposal of financial assets measured at fair value through profit or loss Receipt from disposal of financial assets measured at fair value through other comprehensive income Payments for purchase of lease prepayments Interests received Proceeds from disposal of subsidiaries, net of cash disposed Proceeds from disposal of Disposal Companies Proceeds from disposal of associates Increase in structured bank deposits, net Receipts from acquisition of subsidiaries, net of cash acquired Payments for acquisition of associates, net of cash acquired Payment for acquisition of additional interest in subsidiaries Net cash generated from investing activities	Consolidated statement of cash flows of the Group for the year ended 31 December 2018 Pro forma adjustments RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1(b)) (Note 6(i)) (Note 6(ii)) (Note 6(iii)) (Note 6(iv)) (Note 6(v)) (Note 6(vi)) (Note 6(vii)) (Note 6(viii)) (Note 6(ix)) (Note 6(x)) (Note 5 & 7) 783,373 (7,656) 843 227 710 775,717 (7,192) 2 — 158 372 — 101 49 23,492 (2,396,889) 21,921 49,402 212 368 976 4,503 4,655 73,283 17,842 (561,070) 75,062 47,000 (16,274) 762 382 407 9,555 (8) (5) (6) (3) (4) (3) (2) (6) (3) (17) 71,840 — 1,804,964 22,000 (9,230) 22,896 (13,431) (8,485) (2,740,726)	Unaudited pro forma consolidated statement of cash flows of the Remaining Group for the year ended 31 December 2018 RMB’000 883,206 (5,876
		877,330
		(6,510 23,492 (2,223,727 (561,070 75,062 47,000 (14,723 9,498 71,840 1,804,964 22,000 (9,230 22,896 (13,431 (8,485
		(760,424

– III-7 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Cash flows from financing activities Capital element of finance lease rentals paid Proceed from new loans and borrowings Repayment of loans and borrowings Interest paid Net proceeds from issue of corporate bonds Repayment of corporate bonds Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes, net Cash and cash equivalents at end of year	Consolidated statement of cash flows of the Group for the year ended 31 December 2018 Pro forma adjustments RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1(b)) (Note 6(i)) (Note 6(ii)) (Note 6(iii)) (Note 6(iv)) (Note 6(v)) (Note 6(vi)) (Note 6(vii)) (Note 6(viii)) (Note 6(ix)) (Note 6(x)) (Note 5 & 7) (220) 3,319,000 (280,000) (260,000) (792,180) 25,855 16,436 6,644 7,735 21,682 7,604 1,825 46,855 (615,837) 18,032 — — 5,472 9,139 11,740 5,719 7,914 20,630 30,833 225,820 (371,071) 1,765,512 (199,497) (12,806) (257) 193 282 (447) (623) 575 (4,607) (647) (597) 1,804,964 445,638 (1,715) (451) (683) (802) (10) (439) (979) (1,454) (340) (982) 10,504 256,645	Unaudited pro forma consolidated statement of cash flows of the Remaining Group for the year ended 31 December 2018 RMB’000 (220 2,779,000 (657,544 (506,358 225,820 (371,071
		1,469,627
		1,586,533
		437,783 10,504
		2,034,820

– III-8 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(D) Notes to the Unaudited Pro Forma Financial Information of the Remaining Group

(1) (a) The amounts are extracted from the unaudited condensed consolidated statement of financial position of the Group as at 30 June 2019 as set out in the published interim report of the Group for the six months ended 30 June 2019.
(b) The amounts are extracted from the consolidated statement of profit or loss, consolidated statement of other comprehensive income and consolidated statement of cash flows of the Group for the year ended 31 December 2018 as set out in the published annual report of the Group for the year ended 31 December 2018.
(2) (i) The adjustment reflects the exclusion of assets and liabilities of Taike as at 30 June 2019 as if the CNNP Disposal had been completed on 30 June 2019. The amounts are extracted from the unaudited financial information of Taike set out in Appendix II to this circular.
(ii) The adjustment reflects the exclusion of assets and liabilities of Huaguang as at 30 June 2019 as if the CNNP Disposal had been completed on 30 June 2019. The amounts are extracted from the unaudited financial information of Huaguang set out in Appendix II to this circular.
(iii) The adjustment reflects the exclusion of assets and liabilities of Xingguang as at 30 June 2019 as if the CNNP Disposal had been completed on 30 June 2019. The amounts are extracted from the unaudited financial information of Xingguang set out in Appendix II to this circular.
(iv) The adjustment reflects the exclusion of assets and liabilities of Zhaoxiang as at 30 June 2019 as if the CNNP Disposal had been completed on 30 June 2019. The amounts are extracted from the unaudited financial information of Zhaoxiang set out in Appendix II to this circular.
(v) The adjustment reflects the exclusion of assets and liabilities of Xushuang as at 30 June 2019 as if the CNNP Disposal had been completed on 30 June 2019. The amounts are extracted from the unaudited financial information of Xushuang set out in Appendix II to this circular.
(vi) The adjustment reflects the exclusion of assets and liabilities of Minghui as at 30 June 2019 as if the CNNP Disposal had been completed on 30 June 2019. The amounts are extracted from the unaudited financial information of Minghui set out in Appendix II to this circular.
(vii) The adjustment reflects the exclusion of assets and liabilities of Xinhui as at 30 June 2019 as if the CNNP Disposal had been completed on 30 June 2019. The amounts are extracted from the unaudited financial information of Xinhui set out in Appendix II to this circular.

– III-9 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(viii) The adjustment reflects the exclusion of assets and liabilities of Baoyuan as at 30 June 2019 as if the CNNP Disposal had been completed on 30 June 2019. The amounts are extracted from the unaudited financial information of Baoyuan set out in Appendix II to this circular.
(ix) The adjustment reflects the exclusion of assets and liabilities of Yunyang as at 30 June 2019 as if the CNNP Disposal had been completed on 30 June 2019. The amounts are extracted from the unaudited financial information of Yunyang set out in Appendix II to this circular.
(x) The adjustment reflects the exclusion of assets and liabilities of Angli as at 30 June 2019 as if the Angli Disposal had been completed on 30 June 2019. The amounts are extracted from the unaudited financial information of Angli set out in Appendix II to this circular.
(3) The adjustment represents the pro forma loss on CNNP Disposal and the Angli Disposal as if the CNNP Disposal and the Angli Disposal had been completed on 30 June 2019, which is calculated as follows:

Notes Total consideration (a) Share of net assets in the Disposal Companies as at 30 June 2019 (b) Goodwill of the Disposal Companies as at 30 June 2019 (b) Assignment of shareholder’s loan to CNNP Shandong (c) Estimated professional fees directly attributable to the CNNP Disposal and the Angli Disposal (d) Estimated loss on the CNNP Disposal and the Angli Disposal of the Disposal Companies	Total RMB’000 1,616,295 (1,236,912) (52,221) (588,285) (2,000) (263,123)

(a) In accordance with the Agreement, the Group agreed to dispose of its 100% equity interest in the Disposal Companies, together with the shareholder’s loan owing by the Disposal Companies to the Group, to CNNP Shandong, which is an independent third party. The total consideration for the CNNP Disposal and the Angli Disposal is approximately RMB1,616,295,000, which is comprised of RMB819,314,000 for the transfer of the entire equity interest in the Disposal Companies and approximately RMB796,981,000 for the amount of the outstanding Shareholder’s Loans as at 30 June 2019.
(b) The amount represents the net assets and goodwill of the Disposal Companies of approximately RMB1,236,912,000 and RMB52,221,000 respectively as at 30 June 2019.

– III-10 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(c) The amount represents the loans owing by the Disposal Companies to the Group of approximately RMB796,981,000 less the dividends declared by the Disposal Companies to the Group of approximately RMB208,696,000 as at 30 June 2019. Pursuant to the terms of the Agreement, the Company would assign these net amounts from the Disposal Companies to CNNP Shandong upon the CNNP Disposal and the Angli Disposal.
(d) The amount represents certain professional fees in relation to the CNNP Disposal and the Angli Disposal, such as fee incurred for legal and professional service and valuation service, amounting to approximately RMB2,000,000 and assumed to be fully settled by cash on 30 June 2019.
(4) (i) The adjustment is to exclude each line item of Taike that has been incorporated in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(ii) The adjustment is to exclude each line item of Huaguang that has been incorporated in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(iii) The adjustment is to exclude each line item of Xingguang that has been incorporated in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(iv) The adjustment is to exclude each line item of Zhaoxiang that has been incorporated in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(v) The adjustment is to exclude each line item of Xushuang that has been incorporated in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(vi) The adjustment is to exclude each line item of Minghui that has been incorporated in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(vii) The adjustment is to exclude each line item of Xinhui that has been incorporated in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.

– III-11 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(viii) The adjustment is to exclude each line item of Baoyuan that has been incorporated in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(ix) The adjustment is to exclude each line item of Yunyang that has been incorporated in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(x) The adjustment is to exclude each line item of Angli that has been incorporated in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2018 as if the Angli Disposal had been completed on 1 January 2018.
(5) The adjustments reflect the recognition of the pro forma loss on the CNNP Disposal and the Angli Disposal as if the CNNP Disposal and the Angli Disposal had been completed on 1 January 2018:

Notes Total consideration (a) Share of net assets in the Disposal Companies as at 1 January 2018 (b) Goodwill of the Disposal Companies as at 30 June 2019 (b) Assignment of shareholder’s loan to CNNP Shandong (c) Estimated professional fees directly attributable to the CNNP Disposal and the Angli Disposal (d) Estimated loss on CNNP Disposal and the Angli Disposal of the Disposal Companies	Total RMB’000 1,895,629 (1,121,069) (52,221) (928,724) (2,000) (208,385)

(a) In accordance with the Agreement, the Group agreed to dispose of its 100% equity interest in the Disposal Companies, together with the shareholder’s loan owing by the Disposal Companies to the Group, to CNNP Shandong, which is an independent third party. The total consideration for the CNNP Disposal and the Angli Disposal is approximately RMB1,895,629,000, which is comprised of RMB819,314,000 for the transfer of the entire equity interest in the Disposal Companies and approximately RMB1,076,315,000 for the amount of the outstanding Shareholder’s Loans as at 1 January 2018.
(b) The amount represents the net assets and goodwill of the Disposal Companies of approximately RMB1,121,069,000 and RMB52,221,000 respectively as at 1 January 2018 as extracted from the Unaudited Financial Information in Appendix II.

– III-12 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(c) The amount represents the loans owing by the Disposal Companies to the Group of RMB1,076,315,000 less the dividends declared by the Disposal Companies to the Group of approximately RMB147,591,000 as at 1 January 2018. Pursuant to the terms of the Agreement, the Company would assign these net amounts from the Disposal Companies to CNNP Shandong upon the CNNP Disposal and the Angli Disposal.
(d) The amount represents certain professional fees in relation to the CNNP Disposal and the Angli Disposal, such as fee incurred for legal and professional service and valuation service, amounting to approximately RMB2,000,000 and assumed to be fully settled by cash on 1 January 2018.
(6) (i) The adjustment is to exclude the cash flows from Taike incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(ii) The adjustment is to exclude the cash flows from Huaguang incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(iii) The adjustment is to exclude the cash flows from Xingguang incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(iv) The adjustment is to exclude the cash flows from Zhaoxiang incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(v) The adjustment is to exclude the cash flows from Xushuang incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(vi) The adjustment is to exclude the cash flows from Minghui incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(vii) The adjustment is to exclude the cash flows from Xinhui incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.

– III-13 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(viii) The adjustment is to exclude the cash flows from Baoyuan incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(ix) The adjustment is to exclude the cash flows from Yunyang incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2018 as if the CNNP Disposal had been completed on 1 January 2018.
(x) The adjustment is to exclude the cash flows from Angli incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2018 as if the Angli Disposal had been completed on 1 January 2018.
(7) This adjustment represents the net cash inflow of approximately RMB1,804,964,000 represents the consideration will be received immediately for the amount of approximately RMB1,805,164,000 less the estimated professional fee and other expenses directly attributable to the CNNP Disposal and the Angli Disposal of RMB2,000,000 (note 5(c)) as if the CNNP Disposal and the Angli Disposal had been completed on 1 January 2018.

Consideration for transfer to equity interest in
the Disposal Companies expected to be
received within a year
Sum of (a)(i)(ii)(iii),
(c)(i)(ii)(iii)(iv),
(e)(i)(ii)(iii)(iv),
(g)(i)(ii)(iii),
(i)(i)(ii)(iii),
(k)(i)(ii)(iii)(iv),
(m)(i)(ii)(iii),
(o)(i)(ii)(iii)(iv),
(q)(i)(ii)(iii)(iv) and
(s)(i)
Outstanding loan to shareholder as at
1 January 2018 expected to be received
within a year
Sum of (b)(i)(ii), (d),
(f), (h)(i)(ii), (j)(i)(ii),
l(ii), (n)(i)(ii), p, r
and t(i)

Total
RMB’000
787,528
1,017,636

1,805,164

– III-14 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Pursuant to the Agreement, the total consideration for the CNNP Disposal and the Angli Disposal is comprised of the following:

For disposal of Taike

(a) RMB61,538,000, for the transfer of the entire equity interest in Taike which shall be settled as the following manner:
(i) RMB6,154,000 shall be payable to the Group within ten (10) business days after the fulfilment of the First Payment Conditions;
(ii) RMB36,923,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Second Payment Conditions;
(iii) RMB12,345,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Third Payment Conditions;
(iv) RMB2,620,000 shall be payable to the Group within ten (10) business days after obtaining outstanding regulatory approval or completing rectification work; and
(v) RMB3,496,000 shall be payable to the Group within five (5) business days after the Group has replace certain equipment within two years.
(b) Approximately RMB63,344,000, being the amount of the outstanding loan to shareholder as at 1 January 2018, which shall be settled in the following manner:
(i) RMB18,523,000 shall be payable to the Group within twenty (20) business days of the Completion Date; and
(ii) RMB44,821,000 shall be payable to the Group within five (5) business days after each time renewable energy subsidy is received.

For disposal of Huaguang

(c) RMB224,801,000, for the transfer of the entire equity interest in Huaguang which shall be settled as the following manner:
(i) RMB22,480,000 shall be payable to the Group within ten (10) business days after the fulfilment of the First Payment Conditions;
(ii) RMB80,485,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Second Payment Conditions;
(iii) RMB54,396,000 shall be payable to the Group within five (5) business days after each time renewable energy subsidy is received;

– III-15 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(iv) RMB63,605,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Third Payment Conditions;
(v) RMB2,610,000 shall be payable to the Group within ten (10) business days after obtaining outstanding regulatory approval or completing rectification work; and
(vi) RMB1,225,000 shall be payable to the Group within five (5) business days after the Group has replace certain equipment within two years.
(d) Approximately RMB272,360,000, being the amount of the outstanding loan to shareholder as at 1 January 2018, which shall be payable to the Group within five (5) business days after renewable energy subsidy is received.

For disposal of Xingguang

(e) RMB231,263,000, for the transfer of the entire equity interest in Xingguang which shall be settled as the following manner:
(i) RMB23,126,000 shall be payable to the Group within ten (10) business days after the fulfilment of the First Payment Conditions;
(ii) RMB84,254,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Second Payment Conditions;
(iii) RMB54,504,000 shall be payable to the Group within five (5) business days after each time renewable energy subsidy is received;
(iv) RMB66,363,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Third Payment Conditions (the ‘‘Xingguang Further Payment’’);
(v) RMB1,791,000 shall be payable to the Group within ten (10) business days after obtaining outstanding regulatory approval or completing rectification work; and
(vi) RMB1,225,000 shall be payable to the Group within five (5) business days after the Group has replace certain equipment within two years.
(f) Approximately RMB219,655,000, being the amount of the outstanding loan to shareholder as at 1 January 2018, which shall be payable to the Group within ten (10) business days after receiving the Xingguang Further Payment.

– III-16 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

For disposal of Zhaoxiang

(g) RMB7,195,000, for the transfer of the entire equity interest in Xingguang which shall be settled as the following manner:
(i) RMB720,000 shall be payable to the Group within ten (10) business days after the fulfilment of the First Payment Conditions;
(ii) RMB4,317,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Second Payment Conditions; and
(iii) RMB2,158,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Third Payment Conditions.
(h) Approximately RMB69,875,000, being the amount of the outstanding loan to shareholder as at 1 January 2018, which shall be settled in the following manner:
(i) RMB44,138,000 shall be payable to the Group within twenty (20) business days of the Completion Date;
(ii) RMB20,361,000 shall be payable to the Group within five (5) business days after each time renewable energy subsidy is received;
(iii) RMB2,190,000 shall be payable to the Group within ten (10) business days after obtaining outstanding regulatory approval or completing rectification work; and
(iv) RMB3,186,000 shall be payable to the Group within five (5) business days after the Group has replace certain equipment within two years.

For disposal of Xushuang

(i) RMB5,275,000, for the transfer of the entire equity interest in Xushuang which shall be settled as the following manner:
(i) RMB528,000 shall be payable to the Group within ten (10) business days after the fulfilment of the First Payment Conditions;
(ii) RMB3,165,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Second Payment Conditions; and
(iii) RMB1,582,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Third Payment Conditions.

– III-17 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(j) Approximately RMB67,989,000, being the amount of the outstanding loan to shareholder as at 1 January 2018, which shall be settled in the following manner:
(i) RMB41,188,000 shall be payable to the Group within twenty (20) business days of the Completion Date;
(ii) RMB17,462,000 shall be payable to the Group within five (5) business days after each time renewable energy subsidy is received;
(iii) RMB3,212,000 shall be payable to the Group within ten (10) business days after obtaining outstanding regulatory approval or completing rectification work; and
(iv) RMB6,127,000 shall be payable to the Group within five (5) business days after the Group has replace certain equipment within two years.

For disposal of Minghui

(k) RMB42,979,000, for the transfer of the entire equity interest in Minghui which shall be settled as the following manner:
(i) RMB4,298,000 shall be payable to the Group within ten (10) business days after the fulfilment of the First Payment Conditions;
(ii) RMB11,867,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Second Payment Conditions;
(iii) RMB13,920,000 shall be payable to the Group within five (5) business days after each time renewable energy subsidy is received;
(iv) RMB8,571,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Third Payment Conditions; and
(v) RMB4,323,000 shall be payable to the Group within five (5) business days after the Group has replace certain equipment within two years.
(l) Approximately RMB23,904,000, being the amount of the outstanding loan to shareholder as at 1 January 2018, which shall be settled in the following manner:
(i) RMB2,623,000 shall be payable to the Group within five (5) business days after the Group has replace certain equipment within two years; and
(ii) RMB21,281,000 shall be payable to the Group within five (5) business days after each time renewable energy subsidy is received.

– III-18 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

For disposal of Xinhui

(m) RMB26,004,000, for the transfer of the entire equity interest in Xinhui which shall be settled as the following manner:
(i) RMB2,600,000 shall be payable to the Group within ten (10) business days after the fulfilment of the First Payment Conditions;
(ii) RMB15,603,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Second Payment Conditions; and
(iii) RMB7,801,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Third Payment Conditions.
(n) Approximately RMB64,662,000, being the amount of the outstanding loan to shareholder as at 1 January 2018, which shall be settled in the following manner:
(i) RMB33,682,000 shall be payable to the Group within twenty (20) business days of the Completion Date;
(ii) RMB24,414,000 shall be payable to the Group within five (5) business days after each time renewable energy subsidy is received;
(iii) RMB4,262,000 shall be payable to the Group within ten (10) business days after obtaining outstanding regulatory approval or completing rectification work; and
(iv) RMB2,304,000 shall be payable to the Group within five (5) business days after the Group has replace certain equipment within two years.

For disposal of Baoyuan

(o) RMB61,047,000, for the transfer of the entire equity interest in Baoyuan which shall be settled as the following manner:
(i) RMB6,105,000 shall be payable to the Group within ten (10) business days after the fulfilment of the First Payment Conditions;
(ii) RMB28,475,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Second Payment Conditions;
(iii) RMB8,153,000 shall be payable to the Group within five (5) business days after each time renewable energy subsidy is received;
(iv) RMB12,678,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Third Payment Conditions;

– III-19 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(v) RMB2,450,000 shall be payable to the Group within ten (10) business days after obtaining outstanding regulatory approval or completing rectification work; and
(vi) RMB3,186,000 shall be payable to the Group within five (5) business days after the Group has replace certain equipment within two years.
(p) Approximately RMB22,210,000, being the amount of the outstanding loan to shareholder as at 1 January 2018, which shall be payable to the Group within five (5) business days after renewable energy subsidy is received.

For disposal of Yunyang

(q) RMB100,212,000, for the transfer of the entire equity interest in Yunyang which shall be settled as the following manner:
(i) RMB10,021,000 shall be payable to the Group within ten (10) business days after the fulfilment of the First Payment Conditions;
(ii) RMB60,127,000 shall be payable to the Group within five (5) business days after each time renewable energy subsidy is received;
(iii) RMB23,780,000 shall be payable to the Group within ten (10) business days after the fulfilment of the Third Payment Conditions;
(iv) RMB3,324,000 shall be payable to the Group within five (5) business days after renewable energy subsidy is received; and
(v) RMB2,960,000 shall be payable to the Group within five (5) business days after the Group has replace certain equipment within two years.
(r) Approximately RMB68,467,000, being the amount of the outstanding loan to shareholder as at 1 January 2018, which shall be paid by the Group within ten (10) business days after (q)(iii) and (q)(iv) above is received.

– III-20 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

For disposal of Angli

(s) RMB59,000,000, for the transfer of the entire equity interest in Angli which shall be settled as the following manner:
- (i) RMB53,100,000 shall be payable to the Group within five (5) business days after the fulfilment of (a) CITIC Financial Leasing Co., Ltd., the lessor of the Group, having provided the written consent to the disposal; (b) the Group, its related parties and the Disposal Company having entered into the debt confirmation agreement in respect of the restricting and offset the related party debts; (c) the Group having obtained the shareholders’ approval at the EGM for the Disposal contemplated thereunder in accordance with the Listing Rules; and (d) the Disposal Company and the designated party of the Group having entered into the service maintenance agreement regarding the maintenance in the form to the satisfaction of CNNP Shandong; and
- (ii) RMB5,900,000 shall be payable to the Group within five (5) business days of the first anniversary of the Completion Date subject to the Group having completed certain rectification work and complied with its representation and warranties under the agreement.
(t) Approximately RMB340,783,000, being the amount of the outstanding loan to shareholder as at 1 January 2018, which shall be settled in the following manner:
- (i) RMB306,008,000 shall be payable to the Group within ten (10) business days of the Completion Date;
- (ii) RMB16,875,000 shall be payable to the Group within five (5) business days upon the Group having replaced the defected equipment;
- (iii) RMB13,500,000 shall be payable to the Group within five (5) business days upon the Group having completed certain rectification work required by the power grid; and
- (iv) RMB4,400,000 shall be payable to the Group within five (5) business days upon completion of each of the rectification work.
(8) The above adjustments are not expected to have a continuing effect on the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and the unaudited pro forma consolidated statement of cash flows of the Remaining Group.

– III-21 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

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INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION TO THE DIRECTORS OF KONG SUN HOLDINGS LIMITED

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Kong Sun Holdings Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) prepared by the directors of the Company for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of financial position as at 30 June 2019, the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and the unaudited pro forma consolidated statement of cash flows for the year ended 31 December 2018 and related notes as set out on pages III-1 to III-21 of Appendix III of the circular dated 6 January 2020 (the ‘‘Circular’’) in connection to the proposed disposal of entire issued share capital of 蘭州太科光伏電力有限公司 (Lanzhou Taike Photovoltaic Power Limited) (‘‘Taike’’), 阿圖什市華光能源有限公司 (Artux Huaguang Energy Limited) (‘‘Huaguang’’), 阿圖什市興光能源有限公司 (Artux Xingguang Energy Limited) (‘‘Xingguang’’), 哈密朝翔新能源科技有限公司 (Hami Zhaoxiang New Energy Technology Limited) (‘‘Zhaoxiang’’), 和靜旭雙太陽能科技有限公司 (Hejing Xushuang Photovoltaic Technology Limited) (‘‘Xushuang’’), 巨鹿縣明暉太陽能發電有限公司 (Julu Minghui Photovoltaic Power Limited) (‘‘Minghui’’), 溧陽新暉光伏發電有限公司 (Liyang Xinhui Photovoltaic Power Generation Limited) (‘‘Xinhui’’), 千陽縣寶源光伏電力開發有限公司 (Qianyang Baoyuan Photovoltaic Power Development Limited) (‘‘Baoyuan’’), 宿州市雲陽新能源發電有限公司 (Suzhou Yunyang New Energy Electricity Co., Ltd.*) (‘‘Yunyang’’) (the ‘‘CNNP Disposal’’) as well as 定邊縣昂立光伏科技有限公司 (Dingbian Angli Solar Power Technology Co., Ltd.) (‘‘Angli’’) (the ‘‘Angli Disposal’’). The applicable criteria on the basis of which the directors of the Company have compiled the unaudited pro forma financial information are described on pages III-1 to III-21 of Appendix III of the Circular.

The unaudited pro forma financial information has been compiled by the directors of the Company to illustrate the impact of the CNNP Disposal and the Angli Disposal on the Group’s financial position as at 30 June 2019 and the Group’s financial performance and cash flows for the year ended 31 December 2018 as if the CNNP Disposal and the Angli Disposal had taken place at 30 June 2019 and 1 January 2018, respectively. As part of this process, information about the Group’s financial position, financial performance and cash flows has been extracted by the directors of the Company from the Company’s consolidated financial statements for the year ended 31 December 2018 and period ended 30 June 2019, on which an independent auditor’s report for the year ended 31 December 2018 has been published.

– III-22 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

DIRECTORS’ RESPONSIBILITY FOR THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

The directors of the Company are responsible for compiling the unaudited 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’’).

OUR INDEPENDENCE AND QUALITY CONTROL

We have complied with the independence and other ethical requirement of the ‘‘Code of Ethics for Professional Accountants’’ issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Our firm applies Hong Kong Standard on Quality Control 1 ‘‘Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements’’ issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

REPORTING ACCOUNTANTS’ RESPONSIBILITIES

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 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 plan and perform procedures to obtain reasonable assurance about whether the directors of the Company have compiled the unaudited 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 purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the unaudited 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 unaudited pro forma financial information.

– III-23 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

The purpose of unaudited pro forma financial information included in a circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the entity as if the event had occurred or the transaction 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 CNNP Disposal and Angli Disposal at 30 June 2019 or 1 January 2018 would have been as presented.

A reasonable assurance engagement to report on whether the unaudited 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 unaudited 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 unaudited pro forma adjustments give appropriate effect to those criteria; and
. the unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

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

The engagement also involves evaluating the overall presentation of the unaudited 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 unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated;
(b) such basis is consistent with the accounting policies of the Company; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

BDO Limited Certified Public Accountants Hong Kong 6 January 2020

– III-24 –

VALUATION REPORT

APPENDIX IV

The following is the text of a letter and valuation report, prepared for the purpose of incorporation in this circular received from Royson Valuation Advisory Limited, an independent valuer, in connection with its valuation as at 30 September 2019 of the entire equity interest in the business enterprises of ten project companies which are holding in total eleven solar power projects in the PRC.

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Royson Valuation Advisory Limited Unit 1503, 15/F, The L. Plaza 367–375 Queen’s Road Central Hong Kong

6 January 2020

Kong Sun Holdings Limited

Unit 803–4, 8/F, Everbright Centre 108 Gloucester Road Wanchai, Hong Kong

Dear Sir or Madam,

RE: VALUATION OF THE ENTIRE EQUITY INTEREST

We have been instructed by Kong Sun Holdings Limited (the ‘‘Company’’, together with its subsidiaries as the ‘‘Group’’) to perform an appraisal of the fair value of the entire equity interest in the business enterprises of the following entities as at 30 September 2019 for transaction purpose and our valuation will also be used in connection with a public document of the Company:

蘭州太科光伏電力有限公司 (‘‘Taike’’);
阿圖什市華光能源有限公司 (‘‘Huaguang’’);
阿圖什市興光能源有限公司 (‘‘Xingguang’’);
哈密朝翔新能源科技有限公司 (‘‘Zhaoxiang’’);
和靜旭雙太陽能科技有限公司 (‘‘Xushuang’’);
巨鹿縣明暉太陽能發電有限公司 (‘‘Minghui’’);
溧陽新暉光伏發電有限公司 (‘‘Xinhui’’);
千陽縣寶源光伏電力開發有限公司 (‘‘Baoyuan’’);
宿州市雲陽新能源發電有限公司 (‘‘Yunyang’’); and
定邊縣昂立光伏科技有限公司 (‘‘Angli’’).

– IV-1 –

VALUATION REPORT

APPENDIX IV

(All of the above entities other than Angli are collectively referred as to the ‘‘Project Companies’’.)

The Project Companies and Angli were all established in the People’s Republic of China (the ‘‘PRC’’) with limited liability. They are principally engaged in the development, construction and operation of solar power plants in the PRC. The solar power plants of the Project Companies and Angli are in normal operation as at the Appraisal Date.

In this appraisal, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value of the equity interest in the Project Companies and Angli is principally derived by the application of the Comparable Transactions Method and the Guideline Publiclytraded Comparable Method under the market approach. In this valuation, the shareholder’s loan is considered as part of equity. Our opinion of value relies on a going-concern premise. This premise assumes that each of the Project Companies and Angli is an ongoing business enterprise with management operating in a rational way with a goal of maximising shareholder value.

I. DESCRIPTION OF THE APPRAISAL

On 15 November 2019, 江山永泰投資控股有限公司 (‘‘Kong Sun Yongtai’’) which is an indirect wholly-owned subsidiary of the Company, 中核山東能源有限公司 (‘‘CNNP Shandong’’) and the Project Companies entered into a series of disposal agreements (the ‘‘CNNP Disposal Agreements’’), pursuant to which Kong Sun Yongtai (together with 蘇州君盛晶石股權投資合夥企業 (有限合夥) (‘‘Junsheng Jingshi’’) as the case may be) agreed to sell the entire equity interest in the Project Companies (which hold in total ten solar power projects in the PRC) to CNNP Shandong (the ‘‘CNNP Disposal(s)’’). The total consideration of the CNNP Disposals is composed of four components: (i) the consideration for equity interest in the Project Companies (the ‘‘CNNP Equity Consideration’’), (ii) the predetermined amounts of dividends to be declared by each of the Project Companies in favour of Kong Sun Yongtai (the ‘‘Project Companies Dividend Receivables’’) which represent the accumulated distributable profits up to 30 June 2019 (the ‘‘CNNP Reference Date’’) of the respective Project Companies; (iii) the net amount due from (to) Kong Sun Yongtai and its affiliates (i.e. the Group) by the Project Companies as at the date of completion of the CNNP Disposals (the ‘‘Project Companies Related Party Debts’’); and (iv) the downward/upward adjustments on profits to be generated/losses to be incurred by the Project Companies between the Reference Date and the date of completion of the CNNP Disposals (the ‘‘CNNP Transition Period’’), which shall be borne by CNNP Shandong.

The sum of the CNNP Equity Consideration, the Project Companies Dividend Receivables and the Project Companies Related Party Debts as at the CNNP Reference Date is approximately RMB1,166,400,000.

On 5 December 2019, Kong Sun Yongtai and 國投電力控股股份有限公司 (‘‘Guotou’’) entered into an equity transfer agreement (the ‘‘Angli Agreement’’), pursuant to which Kong Sun Yongtai agreed to sell and Guotou agreed to acquire the entire equity interest in Angli.

– IV-2 –

VALUATION REPORT

APPENDIX IV

The total consideration of the Angli Disposal equals to the sum of (i) the consideration for equity interest in Angli (the ‘‘Angli Equity Consideration’’), (ii) the outstanding shareholder’s loan provided by Kong Sun Yongtai to Angli as at the date of completion of the Angli Disposal (the ‘‘Angli Shareholder’s Loan’’); and (iii) the downward/upward adjustments on profits to be generated/losses to be incurred by Angli between 31 July 2019 and the date of completion of the Angli Disposal (the ‘‘Angli Transition Period’’), which shall be borne by Guotou.

The sum of the Angli Equity Consideration and the Angli Shareholder’s Loan as at 31 July 2019 is approximately RMB446,355,000.

The objective of this valuation is to provide an independent opinion on the fair value of the entire equity interest in the Project Companies and Angli for transaction purpose. We understand that our valuation will also be used in connection with a public document of the Company.

The appraisal is conducted in conformity with Hong Kong Generally Accepted Accounting Principles and the International Valuation Standards (2017 Edition) published by International Valuation Standards Council. These standards contain guideline on the basis and valuation approaches used.

II. BASIS OF VALUE

The valuation has been performed based on fair value. As defined in Hong Kong Financial Reporting Standard 13 — Fair Value Measurement (HKFRS 13), fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

III. PREMISE OF VALUE

Our opinion of value relies on a going-concern premise. This premise assumes that each of the Project Companies and Angli is an ongoing business enterprise with management operating in a rational way with a goal of maximising shareholder value.

IV. SCOPE OF WORK

This appraisal reflects facts and conditions existing at the Appraisal Date. Subsequent events have not been considered and we are not required to update our report for such events and conditions.

Our appraisal opinion is based on the assumptions stated herein and on information provided by the management of the Company (the ‘‘Management’’). In the course of our valuation, we have conducted the following processes and procedures:

Collected and analysed the relevant historical financial statements and other financial and operational information of the Project Companies and Angli from the Management;

– IV-3 –

VALUATION REPORT

APPENDIX IV

Conducted interviews with the Management in relation to the history and operations of the Project Companies and Angli as well as the prospects of their businesses;
Researched the general economic outlook and the outlook for the specific industry affecting the businesses of the Project Companies and Angli, their industries and their markets;
Examined the reasonableness of the information as well as other records and documents provided by the Management, in light of our research and analysis on the industry and economic data;
Determined the most appropriate valuation method for the valuation;
Identified the comparable transactions and the comparable companies of the Project Companies and Angli; and
Developed the business enterprise value of the Project Companies and Angli based on the assumptions and valuation method stated in the report.

V. INFORMATION SOURCES

To aid us in our analysis, we have consulted, reviewed and relied on the following key information which is publicly available or provided by the Management:

Financial database empowered by Bloomberg;
Relevant industry report and economic data;
Unaudited and/or audited historical financial and operational information of the Project Companies and Angli;
Public announcements on the website of The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) and The Shenzhen Stock Exchange; and
Discussions with the Management.

VI. LIMITING CONDITIONS

This appraisal relies upon the following contingent and limiting conditions:

Public, industry, statistical, and other information furnished by others, upon which all or portions of this analysis is based, is believed to be reliable. However, we make no representation as to the accuracy or completeness of such information and have performed no procedures to corroborate the information.
The Company and its representatives warranted to us that the information they supplied is complete and accurate to the best of their knowledge and that the financial statement information reflects the results of operations and financial of the Project Companies and Angli and their business condition in accordance with

– IV-4 –

VALUATION REPORT

APPENDIX IV

generally accepted accounting principles, unless otherwise noted. The financial statements and other related information supplied by management has been accepted as correct without further verification. We have not audited, reviewed, or compiled the financial information provided to us and, accordingly, we express no audit opinion or any other form of assurance on this information. We also have no reason to believe that any material facts have been withheld from us.

This report is to be used for the specific purposes stated herein and any other use is invalid. No one should rely on our report as a substitute for their own due diligence. No reference to our name or our report, in whole or in part, in any document to be prepared or distributed to third parties may be made without our written consent and approval.
The opinion of value is valid only for the stated purpose as of the valuation date indicated. We take no responsibility for changes in market conditions and assume no obligation to revise our conclusion of value to reflect events or conditions which occur subsequent to the valuation date.
For the prospective financial information approved by management that is used in our engagement, we have not examined or compiled the prospective financial information and therefore, do not express an audit opinion or any other form of assurance on the prospective financial information or the related assumptions. Events and circumstances frequently do not occur as expected and there will usually be differences between prospective financial information and actual results, and those differences may be material.
In arriving at our opinion of value, we have relied to a very considerable extent on the above-mentioned information. Any variation to the assumptions in the valuation could seriously affect our opinion of value.

VII. INFORMATION ABOUT THE COMPANY

The Company is an investment holding company and its shares are listed on the Main Board of the Stock Exchange (stock code: 295). The Company is principally engaged in the investment in and operation of solar power plants, provision of solar power plant operation and maintenance services, provision of financial services, trading of liquefied natural gas and asset management.

The Company acquired the Project Companies and Angli between 2015 and 2016 after the construction work of their solar power plants had been completed and the power plants connected to power grid. Since then, the Project Companies and Angli have become the wholly-owned subsidiaries of the Company. The Project Companies and Angli are profitmaking, their capital and operating expenses have been partially funded by interest-free shareholder’s loans from the Group.

– IV-5 –

VALUATION REPORT

APPENDIX IV

VIII. INFORMATION ABOUT THE CNNP DISPOSALS

On 15 November 2019, Kong Sun Yongtai conditionally agreed to sell both the equity interest and the Project Companies Related Party Debts to CNNP Shandong at a total consideration of approximately RMB1,166,400,000, which is the sum of the CNNP Equity Consideration, the Project Companies Dividend Receivables and the Project Companies Related Party Debts as at the CNNP Reference Date, subject to adjustments.

The total consideration of the CNNP Disposals is composed of four components: (i) the CNNP Equity Consideration, (ii) the Project Companies Dividend Receivables; (iii) the Project Companies Related Party Debts as at the date of completion of the CNNP Disposals; and (iv) the downward/upward adjustments on profits to be generated/losses to be incurred by the Project Companies during the CNNP Transition Period.

The CNNP Equity Consideration and the Project Companies Dividend Receivables of each Project Company are summarised as follows:

Project Companies 1. Taike 2. Huaguang 3. Xingguang 4. Zhaoxiang 5. Xushuang 6. Minghui 7. Xinhui 8. Baoyuan 9. Yunyang Total:	Equity Consideration RMB 61,538,000 224,801,000 231,263,000 7,195,000 5,275,000 42,979,000 26,004,000 61,047,000 100,212,000 760,314,000	Project Companies Dividend Receivables RMB 31,643,000 31,794,000 38,219,000 8,079,000 10,638,000 26,958,000 20,206,000 19,744,000 21,415,000 208,696,000	Project Companies Related Party Debts as at the CNNP Reference Date RMB 79,284,000 (31,686,000) (43,098,000) 87,403,000 84,256,000 (437,000) 50,062,000 8,390,000 (36,785,000) 197,389,000	Total RMB 172,465,000 224,909,000 226,384,000 102,677,000 100,169,000 69,500,000 96,272,000 89,181,000 84,842,000
				1,166,399,000

– IV-6 –

VALUATION REPORT

APPENDIX IV

IX. INFORMATION ABOUT THE PROJECT COMPANIES

The following tables summarise the unaudited financial information of the Project Companies for the period from 1 October 2018 to 30 September 2019 (the ‘‘Period’’):

1. Taike

Location and zoning of the solar power plant	:	Lanzhou, Gansu Province, PRC
		(Zone 3)
Capacity	:	49.5 MW
		RMB
Registered capital as at the Appraisal Date	:	88,000,000
Revenue for the Period	:	48,920,000
Normalised earnings before interest, tax,	:	35,556,000
depreciation and amortization for the Period
(the ‘‘T12 EBITDA’’)
Net profit for the Period		1,134,000
Total assets as at the Appraisal Date	:	424,728,000
Net debts as at the Appraisal Date	:	197,355,000
(i.e. loan and borrowing minus cash and bank
balances)
Amounts due to the Group as at the Appraisal	:	84,947,000
Date (the ‘‘Taike Related Party Debts’’)
Net book value adjusted for dividend receivable by	:	89,208,000
Kong Sun Yongtai (‘‘Adjusted NAV’’) as at the
Appraisal Date
Total equity after capitalisation of the Taike	:	205,798,000
Related Party Debts as at the Appraisal Date

– IV-7 –

VALUATION REPORT

APPENDIX IV

2. Huaguang

Location and Zoning	:	Artux, Xinjiang Uygur
		Autonomous Region,
		PRC (Zone 2)
Capacity	:	30 MW
		RMB
Registered capital as at the Appraisal Date	:	285,000,000
Revenue for the Period	:	27,751,000
T12 EBITDA	:	23,211,000
Net profit for the Period		10,567,000
Total assets (excluding the amount due from the	:	286,637,000
Group) as at the Appraisal Date
Net debt as at the Appraisal Date	:	—
Amount due from the Group as at the Appraisal	:	46,278,000
Date (the ‘‘Huaguang Related Party
Receivables’’)
Adjusted NAV with capitalization of loan from	:	293,656,000
Junsheng Jingshi as at the Appraisal Date
Total equity less the Huaguang Related Party	:	279,172,000
Receivables as at the Appraisal Date
Xingguang
Location and Zoning	:	Artux, Xinjiang Uygur
		Autonomous Region,
		PRC (Zone 2)
Capacity	:	30 MW
		RMB
Registered capital as at the Appraisal Date	:	261,000,000
Revenue for the Period	:	27,642,000
T12 EBITDA	:	22,920,000
Net profit for the Period		11,570,000
Total assets (excluding the amount due from the	:	258,196,000
Group) as at the Appraisal Date
Net debt as at the Appraisal Date	:	—
Amount due from the Group	:	57,602,000
(the ‘‘Xingguang Related Party Receivables’’)
Adjusted NAV with capitalization of loan from	:	270,144,000
Junsheng Jingshi as at the Appraisal Date
Total equity less the Xingguang Related Party	:	250,761,000
Receivables as at the Appraisal Date

3. Xingguang

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VALUATION REPORT

APPENDIX IV

4. Zhaoxiang

Location and Zoning	:	Hami, Xinjiang Uygur
		Autonomous Region,
		PRC (Zone 1)
Capacity	:	20 MW
		RMB
Registered capital as at the Appraisal Date	:	30,000,000
Revenue for the Period	:	21,476,000
T12 EBITDA	:	18,052,000
Net profit for the Period		3,195,000
Total assets as at the Appraisal Date	:	189,420,000
Net debts as at the Appraisal Date	:	66,998,000
Amount due to the Group (the ‘‘Zhaoxiang	:	80,984,000
Related Party Debts’’)
Adjusted NAV as at the Appraisal Date	:	32,617,000
Total equity after capitalisation of the Zhaoxiang	:	121,681,000
Related Party Debts as at the Appraisal Date
Xushuang
Location and Zoning	:	Hejing, Xinjiang Uygur
		Autonomous Region,
		PRC (Zone 2)
Capacity	:	20 MW
		RMB
Registered capital as at the Appraisal Date	:	20,000,000
Revenue for the Period	:	22,020,000
T12 EBITDA	:	20,037,000
Net profit for the Period		5,222,000
Total assets as at the Appraisal Date	:	198,284,000
Net debts as at the Appraisal Date	:	85,903,000
Amounts due to the Group	:	77,748,000
(the ‘‘Xushuang Related Party Debts’’)
Adjusted NAV as at the Appraisal Date	:	20,145,000
Total equity after capitalisation of the Xushuang	:	108,531,000
Related Party Debts as at the Appraisal Date

Xushuang

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VALUATION REPORT

APPENDIX IV

6. Minghui

Location and Zoning	:	Julu, Hebei Province, PRC
		(Zone 3)
Capacity	:	21 MW
		RMB
Registered capital as at the Appraisal Date	:	60,000,000
Revenue for the Period	:	25,575,000
T12 EBITDA	:	19,123,000
Net profit for the Period		1,084,000
Total assets (excluding the amount due from the	:	205,423,000
Group) as at the Appraisal Date
Net debts as at the Appraisal Date	:	88,856,000
Amounts due from the Group (the ‘‘Minghui	:	29,147,000
Related Party Receivables’’)
Adjusted NAV as at the Appraisal Date	:	61,488,000
Total equity less the Minghui Related Party	:	59,299,000
Receivables as at the Appraisal Date
Xinhui
Location and Zoning	:	Liyang, Jiangsu Province, PRC
		(Zone 3)
Capacity	:	20 MW
		RMB
Registered capital as at the Appraisal Date	:	20,000,000
Revenue for the Period	:	20,166,000
T12 EBITDA	:	19,541,000
Net profit for the Period		5,484,000
Total assets as at the Appraisal Date	:	166,360,000
Net debts as at the Appraisal Date	:	72,082,000
Amounts due to the Group	:	16,221,000
(the ‘‘Xinhui Related Party Debts’’)
Adjusted NAV as at the Appraisal Date	:	24,321,000
Total equity after capitalisation of the Xinhui	:	60,748,000
Related Party Debts as at the Appraisal Date

Xinhui

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VALUATION REPORT

APPENDIX IV

Baoyuan

Location and Zoning	:	Qianyang, Shaanxi Province,
		PRC (Zone 3)
Capacity	:	20 MW
		RMB
Registered capital as at the Appraisal Date	:	6,000,000
Revenue for the Period	:	21,613,000
T12 EBITDA	:	20,104,000
Net profit for the Period		3,951,000
Total assets as at the Appraisal Date	:	199,350,000
Net debts as at the Appraisal Date	:	88,496,000
Amounts due to the Group (the ‘‘Baoyuan Related	:	8,555,000
Party Debts’’) as at the Appraisal Date
Adjusted NAV as at the Appraisal Date	:	64,314,000
Total equity after capitalisation of the Baoyuan	:	92,613,000
Related Party Debts at the Appraisal Date
Yunyang
Location and Zoning	:	Suzhou City, Anhui Province,
		PRC (Zone 3)
Capacity	:	20 MW
		RMB
Registered capital as at the Appraisal Date	:	68,000,000
Revenue for the Period	:	41,286,000
T12 EBITDA	:	37,961,000
Net profit for the Period		7,197,000
Total assets as at the Appraisal Date	:	305,989,000
Net debts as at the Appraisal Date	:	192,480,000
Amounts due from the Group (the ‘‘Yunyang	:	59,550,000
Related Party Receivables’’) as at the
Appraisal Date
Adjusted NAV as at the Appraisal Date	:	78,120,000
Total equity less the Yunyang Related Party	:	39,985,000
Receivables as at the Appraisal Date

Yunyang

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VALUATION REPORT

APPENDIX IV

X. INFORMATION ABOUT THE ANGLI DISPOSAL

On 5 December 2019, Kong Sun Yongtai conditionally agreed to sell, and Guotou conditionally agreed to acquire, the entire equity interest in Angli and the benefit of the Angli Shareholder’s Loan for a total consideration of approximately RMB446,355,000, subject to adjustment based on the Angli Transition Period Audit.

The Angli Equity Consideration is RMB59,000,000 and as at 31 July 2019, the Angli Shareholder’s Loan was in the amount of approximately RMB387,355,000. The Angli Shareholder’s Loan as at the Angli Completion Date shall be determined based on the Angli Transition Period Audit and agreed between Guotou and Kong Sun Yongtai.

XI. INFORMATION ABOUT ANGLI

The following table summarises the unaudited financial information of Angli for the period from the Period:

Location and Zoning of the solar power plant	:	Yulin City, Shanxi Province,
		PRC (Zone 2)
Capacity	:	100 MW
		RMB
Registered capital as at the Appraisal Date	:	1,000,000
Revenue for the Period	:	114,041,000
T12 EBITDA	:	96,918,000
Net profits for the Period		32,829,000
Total assets as at the Appraisal Date	:	971,288,000
Net debts as at the Appraisal Date	:	406,948,000
Amounts due to the Group	:	340,594,000
(i.e. Angli Shareholder’s Loan)
Adjusted NAV as at the Appraisal Date	:	120,477,000
Total equity after capitalisation of the Angli	:	461,071,000
Shareholder’s Loan as at the Appraisal Date

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VALUATION REPORT

APPENDIX IV

XII. INDUSTRY OVERVIEW

Solar photovoltaic (‘‘PV’’) industry has developed rapidly in the PRC since the promulgation of a series of incentive policies that covered both national and sub-national levels in 2013. As a result, the annual installation capacity has soared from 3.58 gigawatts (‘‘GW’’) in 2012 to 53.06 GW in 2017 while the total installed photovoltaic capacity jumped from 6.50 GW at the end of 2012 to 130.25 GW by 2017.

On 31 May 2018, the PRC government announced subsidy reductions for photovoltaic power generation, widely known as the ‘‘531 Policy’’. The move led to the sudden contraction of the country’s PV market and has had a great impact on the local PV industry. As a result, the photovoltaic installation capacity dropped to 44.26 GW in 2018. The 531 Policy also limits the construction of new large-scale solar power stations.

The solar photovoltaic sector has been heavily relied on government’s subsidy for survival. Tariff on electricity is regulated by government. The business is capital intensive and the construction costs have been higher than the income to be generated in the market. The most influential part of the supportive policies is the subsidy rates in electricity price that turning the operations of a PV power plant into profitable. As a result, the supportive policy has attracted great capital investment pouring into the sector, resulting in sharp growth in the accumulated installation capacity in the past 5 years.

Back to August 2013, the subsidy rates for large-scale solar power stations and distributed solar PV were in the range of RMB0.9/kWh and RMB1.0/kWh depending on regions and RMB0.42/kWh respectively. Due to technological advance, the production cost of a new plant has been falling. The government subsidy rates have also been adjusting downward year-byyear. According to the 531 Policy, the subsidy rates for large-scale solar power stations and distributed solar PV have been cut to the range between RMB0.5/kWh and RMB0.7/kWh and RMB0.32/kWh respectively.

The operations of a power plant are straightforward. Its customer is the local electricity company while the supply mainly depends on the weather (i.e. solar insolation for the year). The government subsidy and incentive provide the solar power plant operations with a stable income once the power plant is on-grid. Once the power plant has been connected to electricity and admitted into the government subsidy scheme, the subsidy rate will be fixed for a period of time (generally 20 years). Government subsidy is expected to be received by the power plant in 1–2 years after sale of electricity. With relatively stable income stream and the power plant itself as collateral, it is common to fund the construction cost with debt financing, such as financial leases, in the market.

However, in recent years, the situation had been worse and the average aging of the receivable on subsidy was extended to 2–3 years. As many of the power plant have high financial leverage, such delay in payment impose pressure on their liquidity for loan repayment. The larger the scale, the more capital tighten up in the working capital and the less liquidity the business is.

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VALUATION REPORT

APPENDIX IV

According to the research report published by TUV Rheinland Great China and PricewaterhouseCoopers China, the 531 Policy has simulated the merger and acquisition activities on solar plant assets. The aggregated capacity traded after the 531 policy is about 3 times larger than the total traded in the three years from 2015 to 2017. Previously, the M&A market was dominated by the trade of newly established plant that just connected to electricity. Due to the 531 Policy, there are now more deals on plants with 1–3 years of operating history and large market player acquiring plants from small- or medium competitors which have weaker financial strength.

It is also expected that the future growth of the PV industry would be driven by the increase in distributed solar PV and the subsidy would gradually be withdrawn. Operational efficiency would be enhanced and entities that are financially weak would be eliminated. The market could sustain growth in long run.

XIII. VALUATION METHODOLOGY

Overview of the Three Main Valuation Approaches

In this valuation, we have considered the three generally recognised valuation approaches, namely the market approach, income approach and cost approach. The approach or approaches deemed most relevant will then be selected for use.

Market Approach

The market approach provides an indication of value by comparing the asset with identical or comparable (that is similar) assets for which price information is available. Third-party transactions in the equity of an enterprise generally represent the best estimate of fair value if they are done at arm’s length.

In using transactions from similar enterprises, there are two primary methods. The first, often referred to as the Comparable Transactions Method (‘‘Method 1’’), involves determining valuation multiples from sales of enterprises with similar financial and operating characteristics and applying those multiples to the subject enterprise. The second, often referred to as the Guideline Publicly-traded Comparable Method (‘‘Method 2’’), involves identifying and selecting publicly-traded enterprises with financial and operating characteristics similar to the enterprise being valued. Once publicly traded enterprises are identified, valuation multiples can be derived, adjusted for comparability, and then applied to the subject enterprise to estimate the value of its equity or enterprise value.

Income Approach

The income approach provides an indication of value by converting future cash flow to a single current value. Under the income approach, the value of an asset/the business entity is determined by reference to the value of income, cash flow or cost savings generated by the asset/the business entity. A fundamental basis for the income approach is that investors expect to receive a return on their investments and that such a return should reflect the perceived level of risk in the investment. A commonly used methodology under

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VALUATION REPORT

APPENDIX IV

the income approach is a discounted cash flow analysis. A discounted cash flow analysis involves forecasting the appropriate cash flow stream over an appropriate period and then discounting it back to a present value at an appropriate discount rate. This discount rate should consider the time value of money, inflation, and the risk inherent in ownership of the asset or security interest being valued.

Cost Approach

The cost approach provides an indication of value using the economic principle that a buyer will pay no more for an asset than the cost to obtain an asset of equal utility, whether by purchase or by construction, unless undue time, inconvenience, risk or other factors are involved. The approach provides an indication of value by calculating the current replacement or reproduction cost of an asset and making deductions for physical deterioration and all other relevant forms of obsolescence.

Selected Approach

We have relied primarily on the Method 1 and the Method 2 under the market approach because there are some closely comparable transactions publicly available and some closely comparable publicly traded entities with financial and operating characteristics similar to that of the Project Companies and Angli can be identified. The market approach is simple to understand and employs more observable market data. To form a more comprehensive view, our opinion of value is the average of the results from these two methods. From design to connection to power grid and to revenue generating, it undergoes a series of approvals, process and procedures. A purely cost approach cannot fairly reflect the value of the Project Companies and Angli which have survived through the uncertainty. For the income approach, it relies on explicit financial forecasts which require many assumptions. Both of them are considered as inferior to the market approach in this valuation and thus, not being selected.

Method 1: Comparable Transactions Method

The Comparable Transactions Method utilises information on transactions involving assets that are the same or similar to the subject asset to arrive at an indication of value. A major requirement in applying the Comparable Transactions Method is to identify transactions that are comparable to the subject company in terms of business nature and associated risks.

The 531 PV Policy had cooled down the pace of new investment in large-scale PV power plants, but simulated the merger and acquisition activities on the operating solar power plants in the PRC.

– IV-15 –

VALUATION REPORT

APPENDIX IV

We have selected comparable transactions we think fit for this valuation primarily based on the following criteria: (1) the subject entity is principally engaged in solar power plants operations in the PRC; (2) the underlying power plant is operating for more than 6 months and profit-making in the latest financial year; and (3) the transaction was taken place either in 2018 and up to the Appraisal Date.

Based on the above criteria, we conducted a comprehensive research and came up with below exhaustive list of 13 comparable transactions which are conducted by 10 different pairs of buyers and sellers. As such, the below list of comparable transactions is considered as fair and representative for the purpose of this valuation. A description of the selected comparable transactions is summarised below:

	Announcement				Ratio of
	Date/Completion		Consideration for	Net Assets of the	Price-to-
	Date	Description	equity interest	Subject Entity	Book Value
1.	18–04–18	Beijing Enterprises Clean Energy	RMB378,874,812	RMB446,000,000 as at	0.85
		Group Limited (‘‘BECE’’) (stock	for 100% equity	31 March 2018
		code: 1250, listed in Hong Kong)	interest
		announced a potential acquisition
		of a company which was
		operating a 100 MW solar power
		plant in Yancheng City, Jiangsu
		Province, the PRC. The
		acquisition was completed in May
		2018.
		The subject power plant recorded a
		profit after taxation of
		RMB14,491,792 in 2017. Its total
		asset value as at 31 March 2018
		was RMB1,123,000,000.
2.	18–04–18	BECE announced a potential	RMB78,804,286 for	RMB85,000,000 as at 31	0.93
		acquisition of a company which	100% equity interest	March 2018
		was operating a 20 MW solar
		power plant in Yancheng City,
		Jiangsu Province, the PRC. The
		acquisition was completed in May
		2018.

The subject power plant recorded a profit after taxation of RMB3,515,173 in 2017. Its total asset value as at 31 March 2018 was RMB239,000,000.

– IV-16 –

VALUATION REPORT

APPENDIX IV

	Announcement				Ratio of
	Date/Completion		Consideration for	Net Assets of the	Price-to-
	Date	Description	equity interest	Subject Entity	Book Value
3.	17–05–18	Shenzhen Clou Electronics Co Ltd	RMB17,781,484 for	RMB17,985,830 as at 28	0.99
		(‘‘Clou’’) (stock code: 002121,	100% equity interest	April 2018
		listed in the PRC) announced its
		disposal of a 100% equity
		interest in a company which
		operates a 20 MW solar power
		plant in Zhuozi, Inner Mongolia,
		the PRC.
		The subject power plant recorded a
		profit after taxation of
		RMB9,029,618 in 2017. Its total
		asset value as at 28 March 2018
		was RMB178,119,209.
		The subject power plant was
		connected to power grid in June
		2017 and the expected production
		capacity is 36 MWH per year.
4.	27–06–18	Clou announced its disposal of a	RMB72,470,367 for	RMB61,795,989 as at 31	1.17
		100% equity interest in a	100% equity interest	December 2017
		company which operates a
		30 MW solar power plant in
		Ningxia, the PRC.
		The subject power plant recorded a
		profit after taxation of
		RMB36,143,000 in 2017. Its total
		asset value as at 28 March 2018
		was approximately
		RMB260,175,000.
		The subject power plant was
		connected to power grid in 2015.

– IV-17 –

VALUATION REPORT

APPENDIX IV

	Announcement				Ratio of
	Date/Completion		Consideration for	Net Assets of the	Price-to-
	Date	Description	equity interest	Subject Entity	Book Value
5.	12–07–18	Changzhou Almaden Stock Co Ltd	RMB192,896,878 for	RMB204,722,700 as at	0.94
		(stock code: 002623, listed in the	100% equity interest	21 June 2018
		PRC) announced its disposal of a
		100% equity interest in a
		company which was operating a
		50 MW solar power plant in
		Guizhou, the PRC.
		The subject power plant recorded the
		net revenue and net profits
		attributable to the vendor of
		RMB17,782,600 and
		RMB2,784,600 respectively for
		the three months ended 31 March
		2018. Its total asset value and
		total liabilities as at 31 March
		2018 amounted to
		RMB400,047,000 and
		RMB291,074,300 respectively.
		The subject entity completed a
		capital injection of
		RMB95,750,000 on 21 June 2018.
6.	19–09–18	GCL New Energy Holdings Ltd	RMB192,000,000 for	RMB254,871,000 as at	0.75
		(‘‘GCL’’) (stock code: 451, listed	100% equity interest	the acquisition date
		in Hong Kong) repurchase 100%
		equity interest in a company
		which was operating a 100 MW
		solar power plant in Huaian City,
		Jiangsu Province, the PRC from
		its joint venture.

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VALUATION REPORT

APPENDIX IV

	Announcement				Ratio of
	Date/Completion		Consideration for	Net Assets of the	Price-to-
	Date	Description	equity interest	Subject Entity	Book Value
7.	24–10–18	On 24 October 2018, GCL	RMB93,488 for 80%	RMB112,454,000 as at	1.04
		announced to dispose an 80%	equity interest (i.e.	the date of disposal
		equity interest in a company	implied RMB116,860	for 100% equity
		which was operating a 60 MW	for 100% equity	interest
		solar power plant in Linzhou	interest)
		City, Henan Province, the PRC at
		consideration of RMB93,488,000
		and the repayment of
		corresponding interest in
		shareholder’s loan as at the date
		of completion of disposal.
		The disposal completed on 19
		February 2019. On the subject
		entity had a total asset value
		amounted to RMB557,783,000
		while the intragroup payables
		were RMB181,978,000.
8.	24–10–18	In 2018, GCL also disposed an 80%	RMB119,160,000 for	RMB177,288,000 as at	0.84
		equity interest in a company	80% equity interest	30 June 2018
		which was operating a 100 MW	(i.e. RMB148,950,000
		solar power plant in Yueyang	for 100% equity
		City, Hunan Province, the PRC.	interest)
		The subject power plant recorded a
		net profit of RMB25,131,000 in
		2017. Its total asset value as at
		30 June 2018 amounted to
		RMB644,654,000.

– IV-19 –

APPENDIX IV

VALUATION REPORT

	Announcement				Ratio of
	Date/Completion		Consideration for	Net Assets of the	Price-to-
	Date	Description	equity interest	Subject Entity	Book Value
9.	02–11–18	Jiawei Renewable Energy Co Ltd	RMB323,478,337 for	RMB297,503,100 as at	1.42 (based
		(stock code: 300317, listed in the	100% equity interest	30 September 2018	on the
		PRC) announced its disposal of a		RMB227,708,300 as	adjusted
		100% equity interest in a		at 30 September	Book Value)
		company which was operating a		2018, after downward
		100 MW solar power plant in		adjustment for the
		Gaoyou, Jiangsu, the PRC.		value of current
				assets to be retained
		The The subject power plant		by the vendor
		recorded the net revenue and net
		profits of RMB85,495,800 and
		RMB31,800,600 respectively for
		the nine months ended 30
		September 2018. Its total asset
		value and total liabilities as at 30
		September 2018 amounted to
		RMB892,499,100 and
		RMB594,995,900 respectively.
10.	30–12–18	GCL disposed the 100% equity	RMB250,891,000 for	RMB232,949,000 as at	1.08
		interest in certain subsidiaries	100% equity interest	the disposal date
		were operating a solar power
		plant in Inner Mongolia, the
		PRC.
11.	21–03–19	GCL repurchased a 100% equity	RMB72,000,000 for	RMB82,987,000 as at the	0.87
		interest in a company which was	100% equity interest	acquisition date
		operating a 100 MW solar power
		plant in Shandong, the PRC from
		its joint venture.
12.	28–03–19	GCL announced to dispose a 55%	RMB335,142,000 for	RMB596,446,000 as at	1.02
		equity interest in a number of	55% equity interest	the disposal date
		solar power plants with a	(i.e. implied
		capacity of approximately 280	RMB609,349,000 for
		MW in the PRC. The disposals	100% equity interest)
		were completed in April 2019.
13.	23–05–19	GCL announced to dispose a 70%	RMB1,607,270,000 for	RMB2,161,528,000 as at	1.06
		equity interest in certain of its	70% equity interest	30 November 2019
		subsidiaries which own 19 solar	(i.e. implied
		power plants in the PRC with an	RMB2,296,100,000
		aggregate installed capacity of	for 100% equity
		approximately 977 MW. The	interest)
		transaction had been approved by
		the shareholders of GCL.

– IV-20 –

VALUATION REPORT

APPENDIX IV

As the business model of a PV power plant is straightforward, and similar across different capacity and different regions. The comparable transactions share many common properties, such as on material characteristics (i.e. size, specifications, etc.), ownership characteristics (i.e. highly leveraged via finance leases and/or shareholders’ loans). Common units of comparison can be formed as the basis of the comparison to derive the key valuation metrics.

Given that there is evidence of several transactions of very similar assets from reliable and trusted source, the respective transaction dates are within 21 months from the Appraisal Date, and each of those transactions is disclosed in similar format, we considered that the Comparable Transactions Method allow a meaning comparison.

The business of the Project Companies and Angli is capital intensive and the asset size is considered as one of the common and important value ratios considered by market participants.

Enterprise value (‘‘EV’’) is the sum of (1) market capitalisation or value of equity; (2) value of total debt; (3) value of preferred equity and non-controlling interest and less (4) the value of cash and cash equivalents. EV is a measure of a company’s total value.

The equity consideration and the net assets value of the underlying entity are usually clearly stated in the public documents of the transaction while the value of total assets and total debts as well as the debts consideration, if any, cannot not be easily identified in some cases. Therefore, we have not considered the price-to-total assets ratio or EV-tototal assets ratio for this valuation.

On the other hand, the equity interest can be valued directly by means of the book value multiple (the ‘‘PB ratio’’) in the selected comparable transactions. Thus, we consider that the PB multiple is the most appropriate ratio under the Comparable Transactions Method.

The PB ratio of the comparable transactions ranged from 0.75 time to 1.42 times with an average of 0.997 time and a median of 0.989 time.

The fair value of the Project Companies is the product of the median of the PB ratio generated from the available market information as shown above and the adjusted NAV of the Project Companies as at the Appraisal Date, plus the Project Companies Dividend Receivables and the Project Companies Related Party Debts. While the fair value of Angli is also the product of the median of the PB ratio generated from the available market information as shown above and the Adjusted NAV of Angli as at the Appraisal Date, plus the Angli Shareholder’s Loan as at the Appraisal Date. Such calculation generally yields valuation information at the non-marketable controlling level of value, no valuation premium and discount are applicable.

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APPENDIX IV

Method 2: Guideline Publicly-traded Comparable Method

In the Guideline Publicly-traded Comparable method, the fair value is based on prices at which stocks of similar companies are trading in a public market. A ‘‘value measure’’ is usually a multiple computed by dividing the price of the guideline company’s stock as at the valuation date by some relevant economic variable observed or calculated from the guideline company’s financial statements.

Selection of Comparable Companies

A major requirement in applying the Guideline Publicly-traded Comparable method is to identify companies that are comparable to the subject company in terms of business nature and associated risks. We have selected comparable companies we think fit for this valuation primarily based on the following criteria: (1) principally engaged in similar business (i.e. owners and operators of solar power plant in the PRC); (2) profit-making in the last two financial years; and (3) listed in a recognisable exchange for over two years.

Based on the above criteria, we have conducted a comprehensive research and came up with below exhaustive list of 3 comparable companies. There are no comparable companies that are perfectly comparable with the Project Companies and Angli in terms of business. Nevertheless, the comparable companies selected have a major portion of revenue contributed by the solar power generation business. The inclusion of 3 comparable companies also accommodates the fact of not perfectly comparable business. As such, the below list of comparable companies is considered as fair and representative for the purpose of this valuation. A description of their business operation is summarized below:

1. GCL

GCL, through its subsidiaries, offers solar plant operation and maintenance. The company also offers energy storage technology, micro-grid and intelligent integration capabilities. As at the Appraisal Date, its market capitalisation was approximately HK$5,341 million.

2. Panda Green Energy Group Limited (stock code: 686, listed in Hong Kong)

Panda Green Energy Group Limited operates solar power plant construction businesses. The company provides solar energy projects development, solar energy projects investment, solar power plant management, and other services. Panda Green Energy Group also operates wind power station development, hydroelectric power generation, and other businesses. As at the Appraisal Date, its market capitalisation was approximately HK$3,508 million.

– IV-22 –

VALUATION REPORT

APPENDIX IV

CECEP Solar Energy Co., Ltd. (stock code: 000591, listed in the PRC)

CECEP Solar Energy Co., Ltd. operates in the solar energy industry. The Company manages solar power stations, and manufactures photovoltaic components. CECEP Solar Energy markets worldwide. As at the Appraisal Date, its market capitalisation was approximately RMB9,472 million.

Market Multiple

In applying the Guideline Publicly-traded Comparable Method, different value measures or market multiples of the comparable companies are calculated and analysed to induce a series of multiples that are considered representative of the industry average. Then, we applied the relevant industry multiples to the subject company to determine a value for the subject company that is on a freely-traded basis.

We applied the EV multiples under the Guideline Publicly-traded Comparable Method because the financial information of the selected comparable companies is transparent and can be easily assessed from their annual/interim reports for calculation of the EV. EV is often used as a more comprehensive alternative to equity market capitalisation or value of shareholder’s equity. In addition, the PB ratio has been used in the Comparable Transactions Method and the use of the EV multiples here can diversify the value inputs and provide a more comprehensive analysis from different perspective for this valuation. It is used as the basis for many financial ratios that measure the performance of a company.

Specifically, we have applied the multiples of EV-to-EBITDA (‘‘EV/EBITDA’’) and the EV-to-total assets (‘‘EV/Assets’’) of comparable companies for this appraisal. EV/ EBITDA metric is used as a valuation tool to compare the value of a company, debt included, to the company’s cash earnings less non-cash expenses. The advantage is that it is capital structure-neutral, and, therefore, this multiple can be used to directly compare companies with different levels of debt. It is useful for transnational comparisons because it ignores the distorting effects of individual countries taxation policies. It is also useful for valuing capital-intensive business with high levels of depreciation and amortisation. EBITDA is usually positive even when earnings per share is not.

Another commonly used multiple for determining the relative value of businesses which are asset-driven and with more or less constant return on assets is the EV/Assets ratio. This would also make assets the prefect indicator of future cash flows.

The following table summarises the ratios of EV/EBITDA and EV/Assets of the selected comparable companies as at the Appraisal Date:

	Average	Median
EV/EBITDA ratio	9.77	10.03
EV/Assets ratio	0.75	0.74

– IV-23 –

VALUATION REPORT

APPENDIX IV

After considering its financial results, we consider that the historical earnings records and the book value of the total assets of the Project Companies and Angli can form a meaningful and relevant basis for this valuation and the following value ratios applied are considered as appropriate.

	Selected	Weighting
Valuation Parameter	Multiple	Factor
EV/EBITDA ratio	9.77	50%
EV/Assets ratio	0.75	50%

The fair value of the Project Companies and Angli is mainly derived from the product of the selected value ratios of comparable companies generated from the available market figures as at the Appraisal Date and the historical financial information of the Project Companies and Angli as at the Appraisal Date, and then minus the result by the respective net debts as at the Appraisal Date. The calculated value is then subject to the adjustments for the control premium and the discount for lack of marketability.

Valuation Premium and Discounts

Control Premium

It is widely recognised that an investment which offers an investor control of a business is worth more than a minority stake. In valuation perspective, a shareholder with majority stake normally owns the control power in a company, and thus, a control premium is generally recognized. In contrast, a minority discount is recognized when the holder of a minority interest lacks control over corporate policies like election of directors or selection of management, acquisition or liquidation of assets, control over dividend policy, ability to set corporate strategies, ability to affect future earnings, etc.

According to the Control Premium Study for the 2nd Quarter 2018 published by FactSet Mergerstat, LLC, the average and median of the control premium (including negative premiums and for international transactions) are 36.6% and 16.4% respectively. Such range is concurred with our findings on other relevant research papers (both formal and informal) and valuation journals on valuation premiums and discounts which are publicly available.

Considering the current capital structure of the Project Companies and Angli, the business model of a typical solar power plant and the government policies and regulations over the industry, we consider that a 20.0% control premium is appropriate in this valuation.

Discount for Lack of Marketability

The concept of marketability deals with the liquidity of an ownership interest, that is, how quickly and easily it can be converted to cash if the owner chooses to sell. The discount for lack of marketability reflects the fact that there is no ready market for shares in a closely held corporation. Ownership interests in closely held companies are typically

– IV-24 –

VALUATION REPORT

APPENDIX IV

not readily marketable compared to similar interests in public companies. Therefore, a share of stock in a privately held company is usually worth less than an otherwise comparable share in a publicly held company.

The discount for lack of marketability generally falls into a range from 0% to 40% with an average of 20.7% and a median of 15.8%, according to the Stout Restricted Stock Study Company Guide published by Stout Risins Ross LLC. Such range is concurred with our findings on other relevant research papers (both formal and informal) and valuation journals on valuation premiums and discounts which are publicly available.

The shares of the Project Companies and Angli are not publicly traded and an active market for its shares does not exist. Delay in receipt of government subsidies increases cash flow pressure of the owners, especially for those with high financial leverage. In view of the market range of marketability discount, we conclude that it is reasonable to apply a 40.0% discount to appraise the value of equity interest of a private company with high financial leverage and being capital intensive like the Project Companies and Angli.

Overall Conclusion

The fair value of the equity interest in the Project Companies and Angli (including the Project Companies Dividends Receivables and capitalization of the Project Companies Related Party Debts/the Angli Shareholder’s Loan as at the Appraisal Date) is considered as the average of the indicated value developed under Method 1 and Method 2:

1. Taike 2. Huaguang 3. Xingguang 4. Zhaoxiang 5. Xushuang 6. Minghui 7. Xinhui 8. Baoyuan 9. Yunyang Total: 10. Angli	Method 1 RMB 204,784,000 275,835,000 247,692,000 121,310,000 108,302,000 58,600,000 60,472,000 91,882,000 39,098,000 1,207,975,000 459,702,000	Method 2 RMB 97,292,000 160,160,000 151,538,000 66,247,000 62,006,000 58,584,000 61,622,000 60,659,000 77,314,000 795,422,000 309,355,000	Average RMB 151,038,000 217,998,000 199,615,000 93,779,000 85,154,000 58,592,000 61,047,000 76,271,000 58,206,000
			1,001,700,000
			384,529,000

– IV-25 –

VALUATION REPORT

APPENDIX IV

XIV. VALUATION ASSUMPTIONS

A number of assumptions have to be established in order to sufficiently support our opinion of value. The major assumptions adopted in this appraisal are:

There will be no major changes in the existing political, legal, fiscal and economic conditions in which the Project Companies and Angli carry on its business;
There will be no major changes in the current taxation law in the country where the Project Companies and Angli operate, that the rates of tax payable will remain unchanged and that all applicable laws and regulations will be complied with;
There will be no material changes in the industry in which the Project Companies and Angli involves that would materially affect the revenues, profits, cash flows attributable to the Project Companies and Angli;
The Project Companies and Angli and/or their partners will obtain the necessary licenses and approvals to provide its service;
Exchange rates and interest rates will not differ materially from those presently prevailing;
The availability of finance will not be a constraint on the forecasted growth of operations of the Project Companies and Angli;
The Project Companies and Angli will successfully maintain its competitiveness and market share through optimising the utilization of its resources and expanding its marketing network;
The Project Companies and Angli can keep abreast of the latest development of the industry such that its competitiveness and profitability can be sustained;
The Project Companies and Angli will utilize and maintain its current operational, administrative and technical facilities to expand and increase its sales;
The Project Companies and Angli will be able to secure funds to repay its debts when they fall due;
The Project Companies and Angli will retain and have competent management, key personnel, and technical staff to support its ongoing operations;
Industry trends and market conditions for related industries will not deviate materially from economic forecasts; and
The Project Companies and Angli have no material contingent liability as at the Appraisal Date.

– IV-26 –

VALUATION REPORT

APPENDIX IV

XV. OPINION OF VALUE

Based upon the investigation and analysis outlined above and the appraisal methods employed, it is our opinion that the fair values of a 100% equity interest in the Project Companies and Angli, including the Project Companies Dividend Receivables and the Project Companies Related Party Debts/the Angli Shareholder’s Loan, as at 30 September 2019 are reasonably stated as follows:

1. Taike 2. Huaguang 3. Xingguang 4. Zhaoxiang 5. Xushuang 6. Minghui 7. Xinhui 8. Baoyuan 9. Yunyang Sub-total 10. Angli Total	Fair Value RMB 151,038,000 217,998,000 199,615,000 93,779,000 85,154,000 58,592,000 61,047,000 76,271,000 58,206,000
	1,001,700,000
	384,529,000
	1,386,229,000

This opinion of value has been based on generally accepted valuation procedures and practices that rely extensively on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained. Any variation to the assumptions and limiting conditions presented in the following report could seriously affect our opinion of value.

Although our valuation is intended to estimate fair value, we assume no responsibility for the inability of a seller or buyer to obtain a sale or purchase contract at that price.

We have no obligation to update this report or our opinion of value for information that comes to our attention after the date of this report.

– IV-27 –

VALUATION REPORT

APPENDIX IV

We hereby certify that we have neither present nor prospective interests in the Group, including the Project Companies and Angli, CNNP Shandong, Guotou or the values reported.

Respectfully submitted, For and on behalf of

Royson Valuation Advisory Limited

Amy W.S. Chan Director

Ms. Chan is a member of the Hong Kong Institute of Certified Public Accountants. She has been working in the valuation field since 2010 and has participated in over 700 assignments regarding business valuation, derivatives valuation, intangible assets valuation and purchase price allocation for numerous listed companies and private entities in different industries.

– IV-28 –

GENERAL INFORMATION

APPENDIX V

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 Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (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/she 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:

Interest in underlying shares of the Company

				Number of	Approximate
				share options	percentage of
				outstanding as	shareholding
		Date of	share	at the Latest	upon fully
		options	granted	Practicable	exercise of
Name of Director(s)	Nature of interest	(Note 1)		Date	share options
Executive Directors
Jin Yanbing (Chairman)	Beneficial owner	3 April 2017		16,000,000	0.10%
	Beneficial owner	28 April	2017	5,670,000	0.04%
Deng Chengli	Beneficial owner	3 April 2017		25,000,000	0.16%
	Beneficial owner	28 April	2017	5,670,000	0.04%

– V-1 –

GENERAL INFORMATION

APPENDIX V

Name of Director(s) Nature of interest Date of share options granted (Note 1) Independent non-executive Directors Miu Hon Kit Beneficial owner 28 April 2017 Chen Kin Shing Beneficial owner 28 April 2017 Wang Fang Beneficial owner 28 April 2017 Total:	Number of share options outstanding as at the Latest Practicable Date 1,000,000 1,000,000 1,000,000 55,340,000	Approximate percentage of shareholding upon fully exercise of share options 0.01% 0.01% 0.01%
		0.37%

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 Up to 25% of the total number of granted options to 2nd anniversary of the date of grant
From 2nd anniversary of the date of grant Up to 25% of the total number of granted options to 3rd anniversary of the date of grant
From 3rd anniversary of the date of grant Up to 25% of the total number of granted options to 4th anniversary of the date of grant
From 4th anniversary of the date of grant Up to 25% of the total number of granted options to 5th anniversary of the date of grant
The percentage represents the number of underlying shares interested divided by the enlarged issue share capital of the Company as at the Latest Practicable Date, assuming all the outstanding share options are exercised.

Save as disclosed above, as at the Latest Practical Date, none of the Directors and chief executive of the Company, or their respective associate, had any interests or short positions in the shares, underlying shares or debentures of the Company or 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 under section 352 of the SFO or required to be notified to the Company or the Stock Exchange under the Model Code.

– V-2 –

GENERAL INFORMATION

APPENDIX V

(b) Substantial Shareholders’ Interests

So far as is known to any Director, as at the Latest Practicable Date, the following persons, other than a Director or chief executive of the Company, had or deemed or taken to have an interest or short position in the Shares or underlying Shares of the Company would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO:

		Number of
		Shares or
		underlying	Percentage of
Name	Nature of interest	Shares held	shareholding(2)
Poly Longma Asset Management	Deemed interest in	9,258,965,000 (L)	61.87%
Co., Ltd.*	controlled corporation(1)
(保利龍馬資產管理有限公司)
Shanghai Lianmi Investment	Deemed interest in	9,258,965,000 (L)	61.87%
Management Co., Ltd.*	controlled corporation(1)
(上海聯米投資管理有限公司)
Forever Bright Consultants Limited	Deemed interest in	9,258,965,000 (L)	61.87%
	controlled corporation(1)
Golden Port Holdings Limited	Deemed interest in	9,258,965,000 (L)	61.87%
	controlled corporation(1)
Pohua JT Capital Partners Limited	Deemed interest in	9,258,965,000 (L)	61.87%
	controlled corporation(1)
Pohua JT Private Equity Fund L.P.	Beneficial owner (1)	9,258,965,000 (L)	61.87%
Xiang Jun	Beneficial owner	756,831,000 (L)	5.06%

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 32% by Golden Port Holdings Limited. Forever Bright Consultants Limited owns 100% equity interest of Golden Port Holdings Limited, which in turn is owned as to 100% by Shanghai Lianmi Investment Management Co., Ltd. Shanghai Lianmi Investment Management Co., Ltd. is 100% owned by Poly Longma Asset Management Co., Ltd. Accordingly, each of Poly Longma Asset Management Co., Ltd., Shanghai Lianmi Investment Management Co., Ltd., Forever Bright Consultants Limited, Golden Port Holdings Limited and Pohua JT Capital Partners Limited is deemed to be interested in a long position of an aggregate of 9,258,965,000 shares held by Pohua JT Private Equity Fund L.P.
(2) 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, being 14,964,442,519 shares.
(3) The letter ‘‘L’’ denotes the person’s long position in such securities.

– V-3 –

GENERAL INFORMATION

APPENDIX V

Save as disclosed above and as at the Latest Practicable Date, the Company had not been notified by any person, other than a Director or chief executive of the Company, who had interests or short positions in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under section 336 of the SFO.

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 2018 (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.

– V-4 –

GENERAL INFORMATION

APPENDIX V

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

Qualification

Royson Valuation Advisory Professional valuer Limited

BDO Limited

Certified Public Accountants

As at the Latest Practicable Date, each of the experts 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 2018 (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 Angli Agreement;
(b) the CNNP Disposal Agreements;
(c) the disposal agreement dated 29 April 2019 between Kong Sun Yongtai, Guotou and 湖州祥暉光伏發電有限公司 (Huzhou Xianghui Solar Power Co., Ltd.*) (‘‘Huzhou Xianghui’’) pursuant to which Kong Sun Yongtai agreed to sell and Guotou agreed to acquire the entire equity interest in Huzhou Xianghui for a total consideration of approximately RMB413,213,000 (the ‘‘Huzhou Xianghui Disposal’’);
(d) the supplemental agreement dated 11 July 2019 and entered into among Guotou, Kong Sun Yongtai and Huzhou Xianghui in relation to the escrow arrangement of the consideration for the Huzhou Xianghui Disposal;
(e) the credit confirmation agreement dated 29 April 2019 and entered into among Guotou, Kong Sun Yongtai and Huzhou Xianghui, pursuant to which Huzhou Xianghui agreed to continue to repay the outstanding amount of the outstanding shareholder’s loan provided by Kong Sun Yongtai to Huzhou Xianghui in the amount of approximately RMB363,213,000;

– V-5 –

GENERAL INFORMATION

APPENDIX V

(f) the disposal agreement dated 28 March 2019 between Kong Sun Yongtai and 中廣核太陽能開發有限公司 (CGN Solar Energy Development Co., Ltd.) (‘‘CGN’’), pursuant to which the Vendor agreed to sell and CGN agreed to acquire the entire equity interest in 樟樹市中利騰暉光伏有限公司 (Zhangshu Zhongli Tenghui Solar Co., Ltd.) (‘‘Zhangshu Zhongli’’) for a consideration of RMB109,715,000 (the ‘‘Zhangshu Zhongli Disposal’’);
(g) the legally binding cooperation memorandum dated 16 May 2019 and entered into among Kong Sun Yongtai, CGN and Zhangshu Zhongli in relation to the settlement of the consideration of the Zhangshu Zhongli Disposal;
(h) the disposal agreement dated 21 March 2019 between the Vendor and 新華電力發展投資有限公司 (Xinhua Electricity Development Investment Co., Ltd.) (‘‘Xinhua Electricity’’), pursuant to which the Vendor agreed to sell and Xinhua Electricity agreed to acquire the entire equity interest in 霍林郭勒競日能源有限公司 (Huolin Guole Jingri Energy Co., Ltd.) for a consideration of RMB148,608,800;
(i) the disposal agreement dated 21 March 2019 between BD Technology Limited as vendor and 深圳市雄韜電源科技股份有限公司 (Shenzhen Xiongtao Electronic Technology Company Co., Ltd.) (‘‘Shenzhen Xiongtao’’), pursuant to which BD Technology Limited agreed to sell, and Shenzhen Xiongtao agreed to acquire 17.4% equity interest in 江山寶源國際融資租賃有限公司 (Kong Sun Baoyuan International Financial Leasing Co., Ltd.) at a consideration of RMB105,000,000;
(j) the disposal agreement dated 24 December 2018 between the Vendor and 青海新能源(集團)有限公司(Qinghai New Energy (Group) Limited) (‘‘Qinghai New Energy’’), pursuant to which (i) the Vendor agreed to sell, and Qinghai New Energy agreed to acquire, the entire equity interest in 貴溪市中元太陽能電力有限公司 (Guixi City Zhongyuan Solar Power Co., Ltd.) (‘‘Guixi Zhongyuan’’); and (ii) Qinghai New Energy agreed to assume the outstanding shareholder’s loan from the Vendor to Guixi Zhongyuan for a total consideration of RMB134,846,100;
(k) the capital increase, investment and equity transfer agreements dated 10 September 2018 between the Group and 蘇州君盛晶石股權投資合夥企業(有限合夥) (Suzhou Junsheng Jingshi Equity Investment Partnership (Limited Partnership)) (the ‘‘Limited Partnership’’), pursuant to which the Limited Partnership would commit to make capital contributions of RMB280,000,000 to 阿圖什市華光能源有限公司(Artux Huaguang Energy Co., Ltd.) (‘‘Artux Huaguang’’), RMB260,000,000 to 阿圖什市興光能源有限公司 (Artux Xingguang Energy Company Co., Ltd.) (‘‘Artux Xingguang’’) and RMB 260,000,000 to 黃驊市正陽新能源有限公司 (Huanghua Zhengyang New Energy Co., Ltd.) (‘‘Huanghua Zhengyang’’);
(l) the equity repurchase agreement dated 10 September 2018 between Kong Sun Yongtai and the Limited Partnership, pursuant to which the Limited Partnership shall transfer to Kong Sun Yongtai approximately 98.25%, 99.62% and 96.30% equity interests in Artux Huaguang, Artux Xingguang and Huanghua Zhengyang, respectively, held by the Limited Partnership, after payment by Kong Sun Yongtai to the Limited Partnership of all of the consideration for the transfer; and

– V-6 –

GENERAL INFORMATION

APPENDIX V

(m) the partnership agreement dated 21 August 2018 between Kong Sun Yongtai, Tianan Life Insurance Co., Ltd. and 君盛投資管理有限公司 (Junsheng Investment Management Co., Ltd.*) (the ‘‘Partners’’), pursuant to which the Partners agreed to set up the Limited Partnership;
For identification purposes only

10. MISCELLANEOUS

(a) The company secretary of the Company is Mr. Chen Cong, who is a fellow member of both The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators;
(b) The registered office and the principal place of business of the Company is at Unit 803–4, 8/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong;
(c) The share registrar of the Company is Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong; and
(d) This circular has 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 during normal business hours on any weekday (except for public holidays) at Unit 803–4, 8/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong, for a period of 14 days from the date of this circular:

(a) the articles of association of the Company;
(b) the annual reports of the Group for the three years ended 31 December 2016, 2017 and 2018 and the interim report of the Group for the six months ended 30 June 2019;
(c) the unaudited consolidated financial information of the Project Companies and Angli, the text of which is set out in Appendix II to this circular;
(d) the letter on the unaudited pro forma financial information of the Remaining Group issued by BDO Limited, the text of which is set out in Appendix III to this circular;
(e) the valuation report issued by Royson Valuation Advisory Limited, the text of which is set out in Appendix IV to this circular;
(f) the material contracts as referred to in the paragraph headed ‘‘Material contracts’’ in this appendix;
(g) the written consents referred to in the paragraph headed ‘‘Experts and consents’’ in this appendix;

– V-7 –

GENERAL INFORMATION

APPENDIX V

(h) the circulars of the Company dated 28 June 2019 and 18 July 2019; and
(i) this circular.

– V-8 –

NOTICE OF THE EGM

==> picture [36 x 53] intentionally omitted <==

==> picture [34 x 43] intentionally omitted <==

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 Unit 803–4, 8/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong on Tuesday, 21 January 2020 at 9:30 a.m. for the purposes of considering and, if thought fit, passing, with or without amendments, the following resolutions as the ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

Words and expressions that are not expressly defined in this notice shall bear the same meaning as that defined in the circular dated 6 January 2020 of the Company.

(A) ‘‘THAT:
(i) the CNNP Disposal Agreements (as defined in the Company’s circular dated 6 January 2020 and a copy of each has been tabled at the meeting marked ‘‘A’’ and signed by the chairman of the meeting for identification purpose) and the transactions contemplated thereunder, be and are hereby approved, ratified and confirmed; and
(ii) any one Director be and is authorised to do all such things and take all such actions as he or she may consider necessary or desirable to implement and/or give effect to the CNNP Disposal Agreements and the transactions contemplated thereunder; and

– EGM-1 –

NOTICE OF THE EGM

(B) ‘‘THAT:

(i) the Angli Agreement (as defined in the Company’s circular dated 6 January 2020 and a copy of the agreement has been tabled at the meeting marked ‘‘B’’ and signed by the chairman of the meeting for identification purpose) and the transaction contemplated thereunder, be and are hereby approved, ratified and confirmed; and
(ii) any one Director be and is authorised to do all such things and take all such actions as he or she may consider necessary or desirable to implement and/or give effect to the Angli Agreement and the transaction contemplated thereunder.’’

By Order of the Board Kong Sun Holdings Limited Mr. Jin Yanbing Executive Director

Hong Kong, 6 January 2020

Notes:

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/her stead. A proxy need not be a member of the Company.
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.
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 of the date of this notice, the Board comprises two executive Directors, Mr. Jin Yanbing and Mr. Deng Chengli, three non-executive Directors, Mr. Wu Tak Kong, Mr. Wang Ke and Mr. Jiang Hengwen, and four independent non-executive Directors, Mr. Miu Hon Kit, Mr. Chen Kin Shing, Ms. Wang Fang and Ms. Wu Wennan.

– EGM-2 –

AI assistant

Novautek Technologies Group Limited — Proxy Solicitation & Information Statement 2020

49267_rns_2020-01-06_d2abd5ad-ae0e-4a47-8118-3c0a9570c144.pdf

KONG SUN HOLDINGS LIMITED 江 山 控 股 有 限 公 司

(1) VERY SUBSTANTIAL DISPOSALS AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

KONG SUN HOLDINGS LIMITED 江 山 控 股 有 限 公 司

(1) VERY SUBSTANTIAL DISPOSALS AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

THE CNNP DISPOSALS

PRINCIPAL TERMS OF THE CNNP DISPOSAL AGREEMENTS

Subject Matter

Consideration

(B) Repayment of Related Party Debts

Arrangements during the Transition Period

Termination of Equity Pledge and Finance Lease

Termination of Guarantee

(2) Huaguang Agreement

Subject Matter

Consideration

Arrangements during the Transition Period

(3) Xingguang Agreement

Parties

Subject Matter

Consideration

(A) Xingguang Equity Consideration

(B) Repayment of Related Party Debts

Arrangements during the Transition Period

(4) Zhaoxiang Agreement

Date

Parties

Subject Matter

Consideration

Arrangements during the Transition Period

Termination of Equity Pledge and Finance Lease

Termination of Guarantee

(5) Xushuang Agreement

Parties

Subject Matter

Consideration

(A) Xushuang Equity Consideration

(B) Repayment of Related Party Debts

Arrangements during the Transition Period

Termination of Equity Pledge and Finance Lease

Termination of Guarantee

(6) Minghui Agreement

Subject matter

Consideration

Arrangements during the Transition Period

Termination of Equity Pledge and Finance Lease

Termination of Guarantee

(7) Xinhui Agreement

Parties

Subject Matter

Consideration

(A) Xinhui Equity Consideration

(B) Repayment of Related Party Debts

Arrangements during the Transition Period

LETTER FROM THE BOARD

Termination of Equity Pledge and Finance Lease

Termination of Guarantee

(8) Baoyuan Agreement

Date

Parties

Subject Matter

Consideration

(A) Baoyuan Equity Consideration

(B) Repayment of Related Party Debts

Arrangements during the Transition Period

Termination of Equity Pledge and Finance Lease

Termination of Guarantee

(9) Yunyang Agreement

Date

Parties

Subject Matter

Novautek Technologies Group Limited Proxy Solicitation & Information Statement 2020

KONG SUN HOLDINGS LIMITED 江山控股有限公司

KONG SUN HOLDINGS LIMITED 江山控股有限公司