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 DISPOSAL AND (2) NOTICE OF EXTRAORDINARY GENERAL MEETING

A letter from the Board is set out on pages 11 to 48 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, 14 September 2021 at 11:00 a.m. (the ‘‘EGM’’) is set out on pages EGM-1 to EGM-2 of this circular. Whether or not you intend to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar, Computershare Hong Kong Investor Services Limited at 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.

PRECAUTIONARY MEASURES AND SPECIAL ARRANGEMENTS FOR THE EGM

Please refer to page 1 of this circular for measures being implemented at the EGM to try to prevent and control the spread of the novel coronavirus (‘‘COVID-19’’), including, without limitation:

all attendees being required to (a) undergo body temperature screening; and (b) wear surgical masks prior to admission to the EGM venue;
all attendees who are subject to health quarantine prescribed by the Hong Kong Government not being admitted to the EGM venue;
all attendees being required to wear surgical masks throughout the EGM;
appropriate seating arrangement being implemented; and
no distribution of corporate gift or refreshment.

The Company reminds attendees that they should carefully consider the risks of attending the EGM, taking into account their own personal circumstances. Furthermore, the Company would like to remind the Shareholders that physical attendance in person at the EGM is not necessary for the purpose of exercising their voting rights and strongly recommends that Shareholders appoint the chairman of the EGM as their proxy and submit their form of proxy as early as possible. Subject to the development of COVID-19, the Company may implement further changes and precautionary measures and may issue further announcement on such measures as appropriate.

30 August 2021

CONTENTS

Pages

Precautionary Measures for the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix I — Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II-A — Financial Information of Jinta Yongjia . . . . . . . . . . . . . . . . . . . . . .	II-A-1
Appendix II-B — Financial Information of Gansu Hongyuan . . . . . . . . . . . . . . . . . .	II-B-1
Appendix II-C — Financial Information of Dunhuang Wanfa . . . . . . . . . . . . . . . . . .	II-C-1
Appendix II-D — Financial Information of Hualong County Ruiqida . . . . . . . . . .	II-D-1
Appendix II-E — Financial Information of Huanghua Zhengyang . . . . . . . . . . . . .	II-E-1
Appendix II-F — Financial Information of Jiayuguan Xiehe . . . . . . . . . . . . . . . . . . .	II-F-1
Appendix II-G — Financial Information of Lintan Tianlang . . . . . . . . . . . . . . . . . . .	II-G-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 –

PRECAUTIONARY MEASURES FOR THE EGM

The health of our Shareholders, staff and stakeholders is of paramount importance to us. In view of the ongoing COVID-19 pandemic, the Company will implement the following precautionary measures at the EGM to protect attending Shareholders, staff and stakeholders from the risk of infection:

(i) Compulsory body temperature checks will be conducted for every Shareholder, proxy or other attendee at each entrance of the meeting venue. Any person with a body temperature of over 37.4 degrees Celsius may be denied entry into the meeting venue or be required to leave the meeting venue;
(ii) Each attendee may be asked whether (a) he/she has travelled outside of Hong Kong within the 14-day period immediately before the EGM; and (b) he/she is subject to any Hong Kong Government prescribed quarantine. Anyone who responds positively to any of these questions may be denied entry into the meeting venue or be required to leave the meeting venue;
(iii) All attendees are required to wear a surgical face mask throughout the meeting and inside the meeting venue, and to maintain a safe distance between seats; and
(iv) No refreshment will be served, and there will be no corporate gift.

To the extent permitted under law, the Company reserves the right to deny entry into the EGM venue or require any person to leave the EGM venue in order to ensure the safety of the attendees at the EGM.

In addition, the Company reminds all Shareholders that physical attendance in person at the meeting is not necessary for the purpose of exercising voting rights. Shareholders may appoint the chairman of the meeting as their proxy to vote on the relevant resolutions at the meeting instead of attending the meeting in person, by completing and return the proxy form attached to this circular.

If any Shareholder chooses not to attend the EGM in person but has any question about any resolution or about the Company, or has any matter for communication with the Board, he/ she is welcome to send such question or matter in writing to our head office and principal place of business in Hong Kong.

If any Shareholder has any question relating to the meeting, please contact Computershare Hong Kong Investor Services Limited, the Company’s share registrar in Hong Kong as follow:

Computershare Hong Kong Investor Services Limited 17M Floor, Hopewell Centre 183 Queen’s Road East Wanchai, Hong Kong Tel: +852 28628555

– 1 –

DEFINITIONS

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

‘‘Agricultural Bank’’
Agricultural Bank of China Limited, a company established in the PRC with limited liability
‘‘Agricultural Bank Loan’’ the outstanding indebtedness in the amount of approximately RMB27,914,000 due by the First Project Company to Agricultural Bank
‘‘Announcement’’
the announcement of the Company dated 11 July 2021 in relation to the Disposals
‘‘Board’’ the board of Directors
‘‘CDB Loan’’ the outstanding indebtedness in the amount of approximately RMB85,530,000 due by the Second Project Company to CDB Leasing
‘‘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)
‘‘certain deliverables’’
deliverable items including but not limited to the company seal, licenses, financial information, contract information, various equipment and facilities
‘‘Changshu Honglue’’
常熟宏略光伏電站開發有限公司 (Changshu Honglue Photovoltaic Power Plants Development Co., Ltd.*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
‘‘China Resources Szitic Trust’’ China Resources Szitic Trust Co., Ltd., a company established in the PRC with limited liability
‘‘CNNP Disposals’’
the disposal of the entire equity interests of 9 target companies by Kong Sun Yongtai to CNNP Shandong, details of which can be found in the circular of the Company dated 6 January 2020
‘‘CNNP Shandong’’
中核山東能源有限公司 (CNNP Shandong Energy Co., Ltd.*), a company established under the laws of 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 (stock code: 295)
‘‘connected person(s)’’
has the meaning ascribed to it under the Listing Rules

– 2 –

DEFINITIONS

‘‘Debts’’ the First Debts, the Second Debts, the Third Debts, the Fourth Debts, the Fifth Debts, the Sixth Debts and the Seventh Debts
‘‘Deposits’’ the First Deposit, the Second Deposit, the Third Deposit, the Fourth Deposit, the Fifth Deposit, the Sixth Deposit and the Seventh Deposit
‘‘Director(s)’’ director(s) of the Company
‘‘Disposal Agreements’’ the First Agreement, the Second Agreement, the Third Agreement, the Fourth Agreement, the Fifth Agreement, the Sixth Agreement and the Seventh Agreement (each, a ‘‘Disposal Agreement’’)
‘‘Disposals’’ the First Disposal, the Second Disposal, the Third Disposal, the Fourth Disposal, the Fifth Disposal, the Sixth Disposal and the Seventh Disposal
‘‘EGM’’ the extraordinary general meeting of the Company to be convened for the purpose of considering and, if thought fit, approve, among other things, the Disposals
‘‘Escrow Account’’
in respect of each Disposal Agreement, the bank account to be established under the joint control by the relevant vendor and the Purchaser for holding the relevant deposit pursuant to the terms of such Disposal Agreement
‘‘Fifth Agreement’’ the equity transfer agreement dated 10 July 2021 entered into by and among the Purchaser, Suzhou Junsheng, Kong Sun Yongtai and the Fifth Project Company in relation to the Fifth Disposal
‘‘Fifth Completion Date’’
the date of issuing the new business license of the Fifth Project Company in respect of the transfer of the Fifth Sale Equity Interest from Kong Sun Yongtai and Suzhou Junsheng to the Purchaser
‘‘Fifth Debts’’
the outstanding loans, advances, interests (if any) and other sums owed by Kong Sun Yongtai and their related parties to the Fifth Project Company
‘‘Fifth Disposal’’
the disposal of the Fifth Sale Equity Interest
‘‘Fifth Project’’
a 30 MW solar power plant owned by the Fifth Project Company in Hebei Province, the PRC
‘‘Fifth Project Company’’
黃驊市正陽新能源有限公司 (Huanghua Zhengyang New Energy Limited*), a company established in the PRC with limited liability and a subsidiary of the Company

– 3 –

DEFINITIONS

‘‘Fifth Sale Equity Interest’’
the entire equity interests of the Fifth Project Company
‘‘First Agreement’’
the equity transfer agreement dated 10 July 2021 entered into by and among the Purchaser, Kong Sun Yongtai and the First Project Company in relation to the First Disposal
‘‘First Completion Date’’
the date of issuing the new business license of the First Project Company in respect of the transfer of the First Sale Equity Interest from Kong Sun Yongtai to the Purchaser
‘‘First Debts’’
the outstanding loans, advances, interests (if any) and other sums owed by the First Project Company to Kong Sun Yongtai and its related parties
‘‘First Disposal’’ the disposal of the First Sale Equity Interest
‘‘First Equity Consideration’’
the consideration for the First Sale Equity Interest
‘‘First Guarantee’’
the guarantee provided by Kong Sun Yongtai and Zhongke for securing the existing borrowings of the First Project Company
‘‘First Project’’
a 9 MW solar power plant owned by the First Project Company in Gansu Province, the PRC
‘‘First Project Company’’
金塔縣永嘉新能源有限公司 (Jinta Yongjia New Energy Limited*), a company established in the PRC with limited liability and a subsidiary of the Company
‘‘First Sale Equity Interest’’

the entire equity interests of the First Project Company

‘‘Fourth Agreement’’
the equity transfer agreement dated 10 July 2021 entered into by and among the Purchaser, Changshu Honglue and the Fourth Project Company in relation to the Fourth Disposal
‘‘Fourth Completion Date’’
the date of issuing the new business license of the Fourth Project Company in respect of the transfer of the Fourth Sale Equity Interest from Changshu Honglue to the Purchaser
‘‘Fourth Debts’’
the outstanding loans, advances, interests (if any) and other sums owed by Changshu Honglue and its related parties to the Fourth Project Company
‘‘Fourth Disposal’’

the disposal of the Fourth Sale Equity Interest

‘‘Fourth Equity Consideration’’

the consideration for the Fourth Sale Equity Interest

– 4 –

DEFINITIONS

‘‘Fourth Guarantee’’

the guarantee provided by Kong Sun Yongtai and its related companies for securing the existing borrowings of the Fourth Project Company

‘‘Fourth Project’’
a 20 MW solar power plant owned by the Fourth Project Company in Qinghai Province, the PRC
‘‘Fourth Project Company’’ 化隆縣瑞啟達新能源有限公司 (Hualong County Ruiqida New Energy Limited*), a company established in the PRC with limited liability and a subsidiary of the Company
‘‘Fourth Sale Equity Interest’’

the entire equity interests of the Fourth Project Company

‘‘Group’’ the Company and its subsidiaries
‘‘Guarantees’’
the First Guarantee, the Second Guarantee and the Fourth Guarantee
‘‘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: 600886)
‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC
‘‘Jiaxing Shengshi’’ 嘉興盛世神州永贏投資合夥企業 ( 有限合夥 ) (Jiaxing Shengshi Shenzhou Yong Ying Investment Partnership (Limited Partnership)*), a limited partnership established in the PRC
‘‘Jinan Tianguan’’ 濟南天冠能源科技有限公司 (Jinan Tianguan Energy Technology Co., Ltd.*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
‘‘Kong Sun Baoyuan’’ 江山寶源國際融資租賃有限公司 (Kong Sun Baoyuan International Financial Leasing Limited*), a company established in the PRC with limited liability and an associated company of the Company
‘‘Kong Sun Baoyuan Loan’’ the outstanding indebtedness in the amount of approximately RMB59,247,000 due by the Fourth Project Company to Kong Sun Baoyuan
‘‘Kong Sun Yongtai’’ 江山永泰投資控股有限公司 (Kong Sun Yongtai Investment Holdings Limited*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company

– 5 –

DEFINITIONS

‘‘Latest Practicable Date’’
25 August 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular
‘‘Listing Rules’’
the Rules Governing the Listing of Securities on the Stock Exchange
‘‘Long Stop Date’’ 31 October 2021
‘‘MW’’ mega watts
‘‘PRC’’ the People’s Republic of China
‘‘Previous Disposals’’
the disposals of 威縣天海光伏發電有限公司 (Weixian Tianhai Photovoltaic Power Generation Co., Ltd.), 平山縣天匯能源科技有限公司 (Pingshan Tianhui Energy Technology Co., Ltd.), 山東新泰樓德佳陽光伏發電有限公司 (Shandong Xintailou Dejia Solar Power Co., Ltd.) and 德州市陵城區乾超兄弟能源科技有限公司 (Dezhou City Lingcheng District Qianchao Brothers Energy Technology Co., Ltd.), details of which can be found in the Company’s announcement dated 22 October 2020
‘‘Project Companies’’
the First Project Company, the Second Project Company, the Third Project Company, the Fourth Project Company, the Fifth Project Company, the Sixth Project Company and the Seventh Project Company
‘‘Purchaser’’
新華電力發展投資有限公司 ( X i n h u a E l e c t r i c i t y Development Investment Limited*), a company incorporated in the PRC
‘‘Reference Date’’ 28 February 2021
‘‘RFYD’’ 北京潤豐元大小額貸款有限公司 (Beijing Runfeng Yuanda Microfinance Limited*)
‘‘RMB’’
Renminbi, the lawful currency of the PRC
‘‘SASAC’’
國務院國有資產監督管理委員會 (State-owned Assets Supervision and Administration Commission of the State Council)
‘‘Second Agreement’’
the equity transfer agreement dated 10 July 2021 entered into by and among the Purchaser, China Resources Szitic Trust and the Second Project Company in relation to the Second Disposal

– 6 –

DEFINITIONS

‘‘Second Completion Date’’
the date of issuing the new business license of the Second Project Company in respect of the transfer of the Second Sale Equity Interest from China Resources Szitic Trust and Kong Sun Yongtai to the Purchaser
‘‘Second Debts’’
the outstanding loans, advances, interests (if any) and other sums owed by the Second Project Company to Kong Sun Yongtai and its related parties
‘‘Second Disposal’’

the disposal of the Second Sale Equity Interest

‘‘Second Equity Consideration’’

the consideration for the Second Sale Equity Interest

‘‘Second Guarantee’’
the guarantee provided by Kong Sun Yongtai and its related companies and Zhongke for securing the existing borrowings of the Second Project Company
‘‘Second Project’’
a 30 MW solar power plant owned by the Second Project Company in Gansu Province, the PRC
‘‘Second Project Company’’
甘肅宏遠光電有限責任公司 (Gansu Hongyuan Photovoltaic Limited*), a company established in the PRC with limited liability and a subsidiary of the Company
‘‘Second Sale Equity Interest’’
the entire equity interests of the Second Project Company
‘‘Seventh Agreement’’
the equity transfer agreement dated 10 July 2021 entered into by and among the Purchaser, Changshu Honglue and the Seventh Project Company in relation to the Seventh Disposal
‘‘Seventh Completion Date’’
the date of issuing the new business license of the Seventh Project Company in respect of the transfer of the Seventh Sale Equity Interest from Changshu Honglue to the Purchaser
‘‘Seventh Debts’’
the outstanding loans, advances, interests (if any) and other sums owed by Changshu Honglue and its related parties to the Seventh Project Company
‘‘Seventh Disposal’’
the disposal of the Seventh Sale Equity Interest
‘‘Seventh Project’’
a 20 MW solar power plant owned by the Seventh Project Company in Gansu Province, the PRC
‘‘Seventh Project Company’’ 臨潭天朗新能源科技有限公司 (Lintan Tianlang New Energy Technology Co., Ltd.*), a company established in the PRC with limited liability and a subsidiary of the Company
‘‘Seventh Sale Equity Interest’’ the entire equity interests of the Seventh Project Company

– 7 –

DEFINITIONS

‘‘Share(s)’’

ordinary shares of the Company

‘‘Shareholders’’ holders of the Shares
‘‘Sixth Agreement’’
the equity transfer agreement dated 10 July 2021 entered into by and among the Purchaser, Changshu Honglue and the Sixth Project Company in relation to the Sixth Disposal
‘‘Sixth Completion Date’’
the date of issuing the new business license of the Sixth Project Company in respect of the transfer of the Sixth Sale Equity Interest from Changshu Honglue to the Purchaser
‘‘Sixth Debts’’
the outstanding loans, advances, interests (if any) and other sums owed by the Sixth Project Company to Changshu Honglue and its related parties
‘‘Sixth Disposal’’ the disposal of the Sixth Sale Equity Interest
‘‘Sixth Project’’
a 50 MW solar power plant owned by the Sixth Project Company in Gansu Province, the PRC
‘‘Sixth Project Company’’
嘉峪關協合新能源有限公司 (Jiayuguan Xiehe New Energy Co. Ltd.*), a company established in the PRC with limited liability and a subsidiary of the Company
‘‘Sixth Sale Equity Interest’’

the entire equity interests of the Sixth Project Company

‘‘Stock Exchange’’
The Stock Exchange of Hong Kong Limited
‘‘Suzhou Junsheng’’ 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
‘‘Taizhou Jiuan’’ 台州久安股權投資合夥企業 (有限合夥) (Taizhou Jiuan Equity Investment Partnership (Limited Partnership)*), a limited partnership established in the PRC

– 8 –

DEFINITIONS

‘‘Taizhou Jiuan Cooperation Agreement’’
the agreement dated 30 September 2017 entered into between the Group and Taizhou Jiuan, pursuant to which Taizhou Jiuan agreed to increase the capital to Changshu Honglue, and the Group agreed to maintain the financial and operating policy control of Changshu Honglue to manage its related activities and the right to obtain significant economic benefits. The Group agreed to repurchase the relevant equity interest in Changshu Honglue from Taizhou Jiuan at the agreed time. In order to secure the Group’s repurchase obligations, the Group pledged the Fourth Sale Equity Interest, the Sixth Sale Equity Interest and the Seventh Sale Equity Interest held by Changshu Honglue in favour of Tianan Life. Details of the Taizhou Jiuan Cooperation Agreement were set out in the announcements of the Company dated 30 September 2017 and 13 December 2017
‘‘Third Agreement’’ the equity transfer agreement dated 10 July 2021 entered into by and among the Purchaser, Jiaxing Shengshi, Kong Sun Yongtai and the Third Project Company in relation to the Third Disposal
‘‘Third Completion Date’’
the date of issuing the new business license of the Third Project Company in respect of the transfer of the Third Sale Equity Interest from Jiaxing Shengshi and Kong Sun Yongtai to the Purchaser
‘‘Third Debts’’ the outstanding loans, advances, interests (if any) and other sums owed by the Third Project Company to Kong Sun Yongtai and its related parties
‘‘Third Disposal’’
the disposal of the Third Sale Equity Interest
‘‘Third Equity Consideration’’
the consideration for the Third Sale Equity Interest
‘‘Third Project’’
a 60 MW solar power plant owned by the Third Project Company in Gansu Province, the PRC
‘‘Third Project Company’’
敦煌萬發新能源有限公司 (Dunhuang Wanfa New Energy Limited Company*), a company established in the PRC with limited liability and a subsidiary of the Company
‘‘Third Sale Equity Interest’’
the entire equity interests of the Third Project Company
‘‘Tianan Life’’
天安人壽保險股份有限公司 (Tianan Life Insurance Co., Ltd.), a company established in the PRC with limited liability
‘‘Transition Period’’
in respect of each Disposal, the period from (but excluding) the Reference Date to (but excluding) the date of completion of such Disposal

– 9 –

DEFINITIONS

‘‘Transition Period Audit’’ an audit to be performed by an auditor engaged by the Purchaser with respect to each Project Company for the Transition Period
‘‘Zhongke’’ 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
‘‘Zhuhai Jiuyin’’ 珠海久銀股權投資基金管理有限公司 (Zhuhai Jiuyin Equity Investment Fund Management Co., Ltd.*), a limited partnership established in the PRC

– 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. Qin Hongfu

Non-Executive Director:

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

Mr. Jiang Hengwen

Independent Non-Executive Directors:

Mr. Lang Wangkai Ms. Wu Wennan Mr. Xu Xiang

30 August 2021

To the Shareholders

Dear Sir or Madam,

(1) VERY SUBSTANTIAL DISPOSAL AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the Announcement.

The purpose of this circular is to provide you with, among other things, further details of the Disposals and the Guarantees, the financial information of the Group, the financial information and the valuation report of the Project Companies, the notice convening the EGM and other information as required under the Listing Rules.

– 11 –

LETTER FROM THE BOARD

PRINCIPAL TERMS OF THE DISPOSAL AGREEMENTS

(A) The First Agreement

Subject matter

On 10 July 2021, Kong Sun Yongtai, the Purchaser and the First Project Company entered into the First Agreement, pursuant to which Kong Sun Yongtai conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the First Sale Equity Interest. The Company agreed to guarantee the obligations of Kong Sun Yongtai in favour of the Purchaser under the First Agreement.

Consideration

The consideration for the First Disposal is approximately RMB37,474,000, which shall be payable by the Purchaser in cash in the following manner:

(i) an amount of approximately RMB22,485,000, representing approximately 60.00% of the consideration for the First Disposal, shall be paid into the Escrow Account before completion of the First Disposal (the ‘‘First Earnest Money’’) and shall be transferred to Kong Sun Yongtai within five (5) business days after completion of the First Disposal;
(ii) an amount of approximately RMB10,283,000, representing approximately 27.44% of the consideration for the First Disposal, shall be paid to Kong Sun Yongtai within five (5) business days after completion of handover of certain deliverables relating to the First Project Company; and
(iii) within ten (10) business days upon each receipt of the First Project Company of the state renewable energy subsidies, up to a total amount of approximately RMB4,706,000, representing approximately 12.56% of the consideration for the First Disposal and approximately 20% of the state renewable energy subsidies of the First Project Company granted to it prior to the Reference Date, shall be paid to Kong Sun Yongtai.

Repayment of the First Debts

As at the Reference Date, the First Project Company had the outstanding First Debts in the amount of approximately RMB10,817,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined under the Transition Period Audit, which shall be payable by the First Project Company to Kong Sun Yongtai in cash in the following manner:

(i) an amount of approximately RMB9,598,000, shall be settled by the First Project Company within five (5) business days after completion of the Transition Period Audit; and
(ii) a lump-sum amount of up to approximately RMB1,219,000, shall be paid to Kong Sun Yongtai within ten (10) business days upon completion of all rectification works items of the First Project by Kong Sun Yongtai required by

– 12 –

LETTER FROM THE BOARD

the Purchaser. The rectification works shall all be completed not later than within twenty-four (24) months after completion of the First Disposal. The estimated cost of all rectification works items of the First Project is approximately RMB1,219,000. If all required rectification works cannot be completed by the 24[th] month after completion of the First Disposal, Kong Sun Yongtai will receive the agreed amount of the corresponding rectification work items completed for the First Project on dollar-to-dollar basis.

The Transition Period Audit report will be issued within fifteen (15) business days of completion of the First Disposal. In the event of any change of net assets value of the First Project Company as a result of matters occurred not in the ordinary course of business during the Transition Period, such change will be considered as a consideration adjustment. The Purchaser has the right to request compensation from Kong Sun Yongtai. However, it is contemplated that no matter will be occurred out of the ordinary course of business during the Transition Period that will constitute a material change of net assets value of the First Project Company. Therefore, there is no cap for the consideration adjustment.

Default

If the Purchaser fails to pay the consideration for the First Disposal pursuant to the terms of the First Agreement or the First Project Company fails to repay the First Debts pursuant to the terms of the First Agreement, Kong Sun Yongtai has the right to request the Purchaser and the First Project Company to pay to it a default payment, which is calculated based on the relevant unpaid amounts due and a penalty at 0.05% of the relevant amounts due on a daily basis. If the default continues for more than thirty (30) calendar days from the relevant due date, Kong Sun Yongtai will be entitled to terminate the First Agreement, refund all the payments made by the Purchaser after deducting a default payment in the maximum amount of approximately RMB3,747,000, representing approximately 10.00% of the consideration for the First Disposal and request the Purchaser to compensate for all losses incurred by Kong Sun Yongtai.

Kong Sun Yongtai will also be entitled to commence litigation against the Purchaser in the PRC court with competent jurisdiction in accordance with the PRC law. If the Purchaser refuses to perform the court decision in favour of Kong Sun Yongtai, Kong Sun Yongtai may seek enforcement by the court. Under this circumstance, the Purchaser may be added into 失信執行人名錄 (the List of Untrustworthy Executors*) (an effective enforcement machinery in the PRC), which may have a material adverse effect on the assessment of the Purchaser’s credit rating and reputation. Taking into consideration of the general market practice in the solar industry as well as the background of the Purchaser, 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 the Purchaser would not honour its contractual commitment is relatively low.

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Conditions Precedent

Completion of the First Disposal is subject to the satisfaction of the following conditions precedent:

(a) Kong Sun Yongtai obtained the approval from the Board and the Shareholders at the EGM in accordance with the Listing Rules regarding for the First Disposal and the First Guarantee;
(b) the written consent from Agricultural Bank in respect of the First Disposal regarding the Agricultural Bank Loan;
(c) Kong Sun Yongtai, its related parties and the First Project Company having agreed and completed the debt restructuring under which, the inter-company debts of the First Project Company will be netted off;
(d) the Purchaser having paid the First Earnest Money into the Escrow Account;
(e) the representations and warranties provided by Kong Sun Yongtai as at the date of the First Agreement and the First Completion Date being true, complete and accurate in all material respects; and
(f) the Purchaser having completed the filing of valuation report within sixty (60) business days of the date of the First Agreement.

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

Kong Sun Yongtai shall use its best efforts to procure satisfaction of the conditions precedent (a), (b), (c) and (e) on or before the Long Stop Date. If Kong Sun Yongtai fails to fulfil its obligation pursuant to the terms of the First Agreement, the Purchaser will be entitled to: (1) terminate the First Agreement; or (2) negotiate with Kong Sun Yongtai to postpone the Long Stop Date. Pursuant to the First Agreement, the Purchaser is entitled to waive the condition precedent (e). Save for condition precedent (e), other conditions precedent cannot be waived.

The Purchaser shall use its best efforts to procure satisfaction of the condition precedent (b) with Kong Sun Yongtai, and condition precedents (d) and (f) by itself. In the event that the condition precedent (b) is not satisfied due to the default of the Purchaser or the condition precedent (d) is not satisfied, Kong Sun Yongtai is entitled to (1) terminate the First Agreement; or (2) negotiate with the Purchaser to postpone the Long Stop Date. In the event that the Purchaser fails to satisfy the condition precedent (f), Kong Sun Yongtai may give the Purchaser a grace period of fifteen (15) business days and require the Purchaser to compensate Kong Sun Yongtai for the losses incurred; Kong Sun Yongtai has the right to terminate the First Agreement and require damages of approximately RMB3,474,000 if the Purchaser has not satisfied such condition precedent during the grace period.

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Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of the First Project Company during the Transition Period, subject to consideration adjustment as a result of matters occurred not in the ordinary course of business during the Transition Period, shall be borne by the First Project Company.

During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, the First Project Company will continue its normal business operations in accordance with its past practices. No encumbrances or other third party rights will be created with respect to the equity interest in the First Project Company without the prior written consent of the Purchaser.

Termination of the First Guarantee

The amount of the First Guarantee is the amount of the Agricultural Bank Loan. Pursuant to the First Agreement, by no later than ninety (90) days after completion of the First Disposal, the Purchaser shall procure the release of the First Guarantee by Agricultural Bank. In the event that the Purchaser does not procure completion of the release of the First Guarantee within ninety (90) days after completion of the First Disposal, Kong Sun Yongtai shall have the right to seek for damages from the Purchaser and default penalty incurred thereunder calculated at a daily percentage rate of 0.05% based on the principal of guarantee amount. If the Purchaser fails to procure completion of the release of the First Guarantee within ninety (90) days after completion of the First Disposal, Kong Sun Yongtai shall have the right to rescind the First Agreement, and seek for damages from the Purchaser in the amount of not more than RMB3,474,000 and the Purchaser shall bear all the costs and expenses in connection with the transactions contemplated thereunder. The Company will then make assessment on the possible implications under the Listing Rules and make further disclosure as and when appropriate to comply with it.

The continuation of the First Guarantee was agreed after an arm’s length negotiation between the parties and was one of the key commercial terms for the Purchaser to agree to the transactions contemplated under the First Agreement. In view of the financial stress that the Group is encountering though the terms and conditions of the First Guarantee may not be ideal, the Directors consider that the First Disposal and the First Guarantee are still the best available option under the circumstances for the Company to cut losses and streamline its operation at an appropriate timing after identifying the Purchaser. The First Guarantee would also facilitate Agricultural Bank to provide its written consent regarding the First Disposal in respect of the Agricultural Bank Loan, which is a condition precedent under the First Agreement. Without the First Guarantee, completion of the First Disposal may be prolonged given it will take time for Kong Sun Yongtai and the Purchaser to explain to the Agricultural Bank for the change in control of the First Project Company and to get the consent from the Agricultural Bank for the purpose of satisfaction of the condition precedent under the First Agreement. In the worst case scenario where the Purchaser fails to procure release of the First Guarantee within ninety (90) days after completion of the First Disposal, Kong Sun Yongtai shall have the right to

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rescind the First Agreement. On the above basis, the continuation of the First Guarantee for a short period of time after completion of the First Disposal is on normal commercial terms, fair and reasonable and in the interest of the Company and its Shareholders.

(B) The Second Agreement

Subject matter

On 10 July 2021, Kong Sun Yongtai, China Resources Szitic Trust, the Purchaser and the Second Project Company entered into the Second Agreement, pursuant to which Kong Sun Yongtai conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the Second Sale Equity Interest. The Company agreed to guarantee the obligations of Kong Sun Yongtai in favour of the Purchaser under the Second Disposal Agreement.

As at the Latest Practicable Date, the Second Project Company is held by China Resources Szitic Trust as a trustee because of the equity pledge arrangement for the CDB Loan but is still accounted as a subsidiary of the Group. CDB Leasing will terminate the pledge arrangement before the completion of the Second Disposal and instruct China Resources Szitic Trust to allocate the equity in the Second Project Company to Kong Sun Yongtai according to the current status, and Kong Sun Yongtai is not required to pay any consideration.

Consideration

The consideration for the Second Disposal is approximately RMB21,401,000, which shall be payable by the Purchaser in cash in the following manner:

(i) an amount of approximately RMB7,490,000, representing approximately 35.00% of the consideration for the Second Disposal, shall be paid into the Escrow Account before completion of the Second Disposal (the ‘‘Second Earnest Money’’) and shall be transferred to Kong Sun Yongtai within five (5) business days after completion of the Second Disposal;
(ii) an amount of approximately RMB1,713,000, representing approximately 8.00% of the consideration for the Second Disposal, shall be paid to Kong Sun Yongtai within five (5) business days after completion of handover of certain deliverables relating to the Second Project Company; and
(iii) within ten (10) business days upon each receipt of the Second Project Company of the state renewable energy subsidies receivable before the Reference Date, up to a total amount of approximately RMB12,198,000, representing approximately 57.00% of the consideration for the Second Disposal and approximately 20% of the state renewable energy subsidies of the Second Project Company granted to it prior to the Reference Date, shall be paid to Kong Sun Yongtai.

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Repayment of the Second Debts

As at the Reference Date, the Second Project Company had the outstanding Second Debts in the amount of approximately RMB115,814,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined under the Transition Period Audit, which shall be payable by the Second Project Company to Kong Sun Yongtai in cash in the following manner:

(i) an amount of approximately RMB111,471,000, shall be settled by the Second Project Company within five (5) business days after completion of the Transition Period Audit; and
(ii) a lump-sum amount of up to approximately RMB4,343,000, shall be paid to Kong Sun Yongtai within ten (10) business days upon completion of all rectification works items of the Second Project by Kong Sun Yongtai required by the Purchaser. The rectification works shall all be completed not later than within twenty-four (24) months after completion of the Second Disposal. The estimated cost of all rectification works items of the Second Project is approximately RMB4,343,000. If all required rectification works cannot be completed by the end of the 24[th] month after completion of the Second Disposal, Kong Sun Yongtai will receive the agreed amount of the corresponding rectification work items completed for the Second Project on dollar-to-dollar basis.

The Transition Period Audit report will be issued within fifteen (15) business days of completion of the Second Disposal. In the event of any change of net assets value of the Second Project Company as a result of matters occurred not in the ordinary course of business during the Transition Period, such change will be considered as a consideration adjustment. The Purchaser has the right to request compensation from Kong Sun Yongtai. However, it is contemplated that no matter will be occurred out of the ordinary course of business during the Transition Period that will constitute a material change of net assets value of the Second Project Company. Therefore, there is no cap for the consideration adjustment.

Default

If the Purchaser fails to pay the consideration for the Second Disposal pursuant to the terms of the Second Agreement or the Second Project Company fails to repay the Second Debts pursuant to the terms of the Second Agreement, Kong Sun Yongtai has the right to request the Purchaser and the Second Project Company to pay to it a default payment, which is calculated based on the relevant unpaid amounts due and a penalty at 0.05% of the relevant amounts due on a daily basis. If the default continues for more than thirty (30) calendar days from the relevant due date, Kong Sun Yongtai will be entitled to terminate the Second Agreement, refund all the payments made by the Purchaser after deducting a default payment in the maximum amount of approximately RMB2,140,000, representing approximately 10.00% of the consideration for the Second Disposal and request the Purchaser to compensate for all losses incurred by Kong Sun Yongtai.

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Conditions Precedent

Completion of the Second Disposal is subject to the satisfaction of the following conditions precedent:

(a) Kong Sun Yongtai obtained the approval from the Board and the Shareholders at the EGM in accordance with the Listing Rules regarding for the Second Disposal and the Second Guarantee;
(b) Kong Sun Yongtai, its related parties and the Second Project Company having agreed and completed the debt restructuring under which, the inter-company debts of the Second Project Company will be netted off;
(c) the written consent from CDB Leasing in respect of the Second Disposal regarding the CDB Loan;
(d) the Purchaser having paid the Second Earnest Money into the Escrow Account;
(e) the representations and warranties provided by Kong Sun Yongtai as at the date of the Second Agreement and the Second Completion Date being true, complete and accurate in all material respects; and
(f) the Purchaser having completed the filing of valuation report within sixty (60) business days of the date of the Second Agreement.

As at the Latest Practicable Date, save for (c), the above conditions precedent have not been satisfied.

Kong Sun Yongtai shall use its best efforts to procure satisfaction of the conditions precedent (a), (b), (c) and (e) on or before the Long Stop Date. If Kong Sun Yongtai fails to fulfil its obligation pursuant to the terms of the Second Agreement, the Purchaser will be entitled to: (1) terminate the Second Agreement; or (2) negotiate with Kong Sun Yongtai to postpone the Long Stop Date. Pursuant to the Second Agreement, the Purchaser is entitled to waive the condition precedent (e). Save for condition precedent (e), other conditions precedent cannot be waived.

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The Purchaser shall use its best efforts to procure satisfaction of the condition precedent (b) with Kong Sun Yongtai, and condition precedents (d) and (f) by itself. In the event that the condition precedent (b) is not satisfied due to the default of the Purchaser or the condition precedent (d) is not satisfied, Kong Sun Yongtai is entitled to (1) terminate the Second Agreement; or (2) negotiate with the Purchaser to postpone the Long Stop Date. In the event that the Purchaser fails to satisfy the condition precedent (f) as scheduled, Kong Sun Yongtai may give the Purchaser a grace period of fifteen (15) business days and require the Purchaser to compensate Kong Sun Yongtai for the losses incurred; Kong Sun Yongtai has the right to terminate the Second Agreement and require damages of approximately RMB2,140,000 if the Purchaser has not satisfied such condition precedent during the grace period.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of the Second Project Company during the Transition Period, subject to consideration adjustment as a result of matters occurred not in the ordinary course of business during the Transition Period, shall be borne by the Second Project Company.

During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, the Second Project Company will continue its normal business operations in accordance with its past practices and save for the equity pledge over the Second Sale Equity Interest in favour of CDB Leasing to secure the CDB Loan as permitted under the Second Disposal Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in the Second Project Company without the prior written consent of the Purchaser.

Termination of the Second Guarantee

The amount of the Second Guarantee is the amount of the CDB Loan. Pursuant to the Second Agreement, by no later than ninety (90) days after completion of the Second Disposal, the Purchaser shall procure the release of the Second Guarantee by CDB Leasing. In the event that the Purchaser does not procure completion of the release of the Second Guarantee within ninety (90) days after completion of the Second Disposal, Kong Sun Yongtai shall have the right to seek for damages from the Purchaser and default penalty incurred thereunder calculated at a daily percentage rate of 0.05% based on the principal of guarantee amount. If the Purchaser fails to procure completion of the release of the Second Guarantee within ninety (90) days after completion of the Second Disposal, Kong Sun Yongtai shall have the right to rescind the Second Agreement, and seek for damages from the Purchaser in the maximum amount of RMB2,140,000 and the Purchaser shall bear all the costs and expenses in connection with the transactions contemplated thereunder. The Company will then make assessment on the possible implications under the Listing Rules and make further disclosure as and when appropriate to comply with it.

The continuation of the Second Guarantee was agreed after an arm’s length negotiation between the parties and was one of the key commercial terms for the Purchaser to agree to the transactions contemplated under the Second Agreement. In view of the financial stress that the Group is encountering though the terms and conditions of

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the Second Guarantee may not be ideal, the Directors consider that the Second Disposal and the Second Guarantee are still the best available option under the circumstances for the Company to cut losses and streamline its operation at an appropriate timing after identifying the Purchaser. The Second Guarantee would also facilitate CDB Leasing to provide its written consent regarding the Second Disposal in respect of the CDB Loan, which is a condition precedent under the Second Agreement. Without the Second Guarantee, completion of the Second Disposal may be prolonged given it will take time for Kong Sun Yongtai and the Purchaser to explain to CDB Leasing for the change in control of the Second Project Company and to get the consent from CDB Leasing for the purpose of satisfaction of the condition precedent under the Second Agreement. In the worst case scenario where the Purchaser fails to procure release of the Second Guarantee within ninety (90) days after completion of the Second Disposal, Kong Sun Yongtai shall have the right to rescind the Second Agreement. On the above basis, the continuation of the Second Guarantee for a short period of time after completion of the Second Disposal is on normal commercial terms, fair and reasonable and in the interest of the Company and its Shareholders.

(C) The Third Agreement

Subject matter

On 10 July 2021, Kong Sun Yongtai, Jiaxing Shengshi, the Purchaser and the Third Project Company entered into the Third Agreement, pursuant to which Kong Sun Yongtai and Jiaxing Shengshi conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the Third Sale Equity Interest. The Company agreed to guarantee the obligations of Kong Sun Yongtai in favour of the Purchaser under the Third Agreement.

Consideration

The consideration for the Third Disposal is approximately RMB471,917,000, which shall be payable by the Purchaser to Kong Sun Yongtai and Jiaxing Shengshi in cash in the following manner:

(i) an amount of approximately RMB283,150,000, representing approximately 60.00% of the consideration for the Third Disposal, shall be paid into the Escrow Account before completion of the Third Disposal (the ‘‘Third Earnest Money’’) and shall be transferred to Kong Sun Yongtai and Jiaxing Shengshi within five (5) business days after completion of the Third Disposal;
(ii) an amount of approximately RMB160,342,000, representing approximately 33.98% of the consideration for the Third Disposal, shall be paid to Kong Sun Yongtai within five (5) business days after completion of handover of certain deliverables relating to the Third Project Company; and
(iii) within ten (10) business days upon each receipt of the Third Project Company of the state renewable energy subsidies receivable before the Reference Date, up to a total amount of approximately RMB28,425,000, representing approximately 6.02% of the consideration for the Third Disposal and

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approximately 20% of the state renewable energy subsidies of the Third Project Company granted to it prior to the Reference Date, shall be paid to Kong Sun Yongtai.

Repayment of the Third Debts

As at the Reference Date, the Third Project Company had the outstanding Third Debts in the amount of approximately RMB24,751,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined under the Transition Period Audit, which shall be payable by the Third Project Company to Kong Sun Yongtai in cash in the following manner:

(i) an amount of approximately RMB23,058,000, shall be settled by the Third Project Company within five (5) business days after completion of the Transition Period Audit; and
(ii) a lump-sum amount of up to approximately RMB1,693,000, shall be paid to Kong Sun Yongtai within ten (10) business days upon completion of all rectification works items of the Third Project by Kong Sun Yongtai required by the Purchaser. The rectification works shall all be completed not later than within twenty-four (24) months after completion of the Third Disposal. The estimated cost of all rectification works items of the Third Project is approximately RMB1,693,000. If all required rectification works cannot be completed by the end of the 24[th] month after completion of the Third Disposal, Kong Sun Yongtai will receive the agreed amount of the corresponding rectification work items completed for the Third Project on dollar-to-dollar basis.

The Transition Period Audit report will be issued within fifteen (15) business days of completion of the Third Disposal. In the event of any change of net assets value of the Third Project Company as a result of matters occurred not in the ordinary course of business during the Transition Period, such change will be considered as a consideration adjustment. The Purchaser has the right to request compensation from Kong Sun Yongtai. However, it is contemplated that no matter will be occurred out of the ordinary course of business during the Transition Period that will constitute a material change of net assets value of the Third Project Company. Therefore, there is no cap for the consideration adjustment.

Default

If the Purchaser fails to pay the consideration for the Third Disposal pursuant to the terms of the Third Agreement or the Third Project Company fails to repay the Third Debts pursuant to the terms of the Third Agreement, Kong Sun Yongtai has the right to request the Purchaser and the Third Project Company to pay to it a default payment, which is calculated based on the relevant unpaid amounts due and a penalty at 0.05% of the relevant amounts due on a daily basis. If the default continues for more than thirty (30) calendar days from the relevant due date, Kong Sun Yongtai will be entitled to terminate the Third Agreement, refund all the payments made by the Purchaser after

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deducting a default payment in the maximum amount of approximately RMB47,192,000, representing approximately 10.00% of the consideration for the Third Disposal, and request the Purchaser to compensate for all losses incurred by Kong Sun Yongtai.

Conditions Precedent

Completion of the Third Disposal is subject to the satisfaction of the following conditions precedent:

(a) Kong Sun Yongtai obtained the approval from the Board and the Shareholders at the EGM in accordance with the Listing Rules regarding for the Third Disposal;
(b) Kong Sun Yongtai, its related parties and the Third Project Company having agreed and completed the debt restructuring under which, the inter-company debts of the Third Project Company will be netted off;
(c) the Purchaser having paid the Third Earnest Money into the Escrow Account;
(d) the representations and warranties provided by Kong Sun Yongtai as at the date of the Third Agreement and the Third Completion Date being true, complete and accurate in all material respects; and
(e) the Purchaser having completed the filing of valuation report within sixty (60) business days of the date of the Third Agreement.

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

Kong Sun Yongtai shall use its best efforts to procure satisfaction of the conditions precedent (a), (b) and (d) on or before the Long Stop Date. If Kong Sun Yongtai fails to fulfil its obligation pursuant to the terms of the Third Agreement, the Purchaser will be entitled to: (1) terminate the Third Agreement; or (2) negotiate with Kong Sun Yongtai to

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postpone the Long Stop Date. Pursuant to the Third Agreement, the Purchaser is entitled to waive the condition precedent (d). Save for condition precedent (d), other conditions precedent cannot be waived.

The Purchaser shall use its best efforts to procure satisfaction of the conditions precedent (c) and (e) by itself. In the event that any of such conditions precedent is not satisfied, Kong Sun Yongtai is entitled to (1) terminate the Third Agreement; or (2) negotiate with the Purchaser to postpone the Long Stop Date. In the event that the Purchaser fails to satisfy the condition precedent (e) as scheduled, Kong Sun Yongtai may give the Purchaser a grace period of fifteen (15) business days and require the Purchaser to compensate Kong Sun Yongtai for the losses incurred; Kong Sun Yongtai has the right to terminate the Third Agreement and require damages of approximately RMB47,192,000 if the Purchaser has not satisfied such condition precedent during the grace period.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of the Third Project Company during the Transition Period, subject to consideration adjustment as a result of matters occurred not in the ordinary course of business during the Transition Period, shall be borne by the Third Project Company.

During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, the Third Project Company will continue its normal business operations in accordance with its past practices and, no encumbrances or other third party rights will be created with respect to the equity interest in the Third Project Company without the prior written consent of the Purchaser.

(D) The Fourth Agreement

Subject matter

On 10 July 2021, Changshu Honglue, the Purchaser and the Fourth Project Company entered into the Fourth Agreement, pursuant to which Changshu Honglue conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the Fourth Sale Equity Interest. The Company agreed to guarantee the obligations of Changshu Honglue in favour of the Purchaser under the Fourth Agreement.

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Consideration

The consideration for the Fourth Disposal is approximately RMB95,985,000, which shall be payable by the Purchaser in cash in the following manner:

(i) an amount of approximately RMB6,719,000, representing approximately 7.00% of the consideration for the Fourth Disposal, shall be paid into the Escrow Account before completion of the Fourth Disposal (the ‘‘Fourth Earnest Money’’) and shall be transferred to Changshu Honglue within five (5) business days after completion of the Fourth Disposal;
(ii) an amount of approximately RMB63,974,000, representing approximately 66.65% of the consideration for the Fourth Disposal, shall be paid to Changshu Honglue within five (5) business days after completion of handover of certain deliverables relating to the Fourth Project Company and the Transition Period Audit report having been issued;
(iii) a lump-sum amount of up to approximately RMB17,928,000, representing approximately 18.68% of the consideration for the Fourth Disposal, shall be paid to Changshu Honglue within ten (10) business days upon the completion of all rectification works items of the Fourth Project by Changshu Honglue required by the Purchaser. The rectification works shall all be completed not later than within twenty-four (24) months after completion of the Fourth Disposal. The estimated cost of all rectification works items of the Fourth Project is approximately RMB17,928,000. If all required rectification works cannot be completed by the end of the 24[th] month after completion of the Fourth Disposal, Changshu Honglue will receive the agreed amount of the corresponding rectification work items completed for the Fourth Project on dollar-to-dollar basis; and
(iv) within ten (10) business days upon each receipt of the Fourth Project Company of the state renewable energy subsidies receivable before the Reference Date, up to a total amount of approximately RMB7,364,000, representing approximately 7.67% of the consideration for the Fourth Disposal and approximately 20% of the state renewable energy subsidies of the Fourth Project Company granted to it prior to the Reference Date, shall be paid to Changshu Honglue.

Repayment of the Fourth Debts

As at the Reference Date, the Fourth Project Company had the outstanding Fourth Debts in the amount of approximately RMB60,573,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined under the Transition Period Audit, shall be settled by Changshu Honglue and its related parties within five (5) business days after completion of the Transition Period Audit.

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The Transition Period Audit report will be issued within fifteen (15) business days of completion of the Fourth Disposal. In the event of any change of net assets value of the Fourth Project Company as a result of matters occurred not in the ordinary course of business during the Transition Period, such change will be considered as a consideration adjustment. However, it is contemplated that no matter will be occurred out of the ordinary course of business during the Transition Period that will constitute a material change of net assets value of the Fourth Project Company. Therefore, there is no cap for the consideration adjustment.

Default

If the Purchaser fails to pay the consideration for the Fourth Disposal pursuant to the terms of the Fourth Agreement or the Fourth Project Company fails to repay the Fourth Debts pursuant to the terms of the Fourth Agreement, Changshu Honglue has the right to request the Purchaser and the Fourth Project Company to pay to it a default payment, which is calculated based on the relevant unpaid amounts due and a penalty at 0.05% of the relevant amounts due on a daily basis. If the default continues for more than thirty (30) calendar days from the relevant due date, Changshu Honglue will be entitled to terminate the Fourth Agreement, refund all the payments made by the Purchaser after deducting a default payment in the maximum amount of approximately RMB9,599,000, representing approximately 10.00% of the consideration for the Fourth Disposal and request the Purchaser to compensate for all losses incurred by Changshu Honglue.

Changshu Honglue will also be entitled to commence litigation against the Purchaser in the PRC court with competent jurisdiction in accordance with the PRC law. If the Purchaser refuses to perform the court decision in favour of Changshu Honglue, Changshu Honglue may seek enforcement by the court. Under this circumstance, the Purchaser may be added into 失信執行人名錄 (the List of Untrustworthy Executors*) (an effective enforcement machinery in the PRC), which may have a material adverse effect on the assessment of the Purchaser’s credit rating and reputation. Taking into consideration of the general market practice in the solar industry as well as the background of the Purchaser, 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 the Purchaser would not honour its contractual commitment is relatively low.

Conditions Precedent

Completion of the Fourth Disposal is subject to the satisfaction of the following conditions precedent:

(a) Changshu Honglue obtained the approval from the Board and the Shareholders at the EGM in accordance with the Listing Rules regarding for the Fourth Disposal and the Fourth Guarantee;
(b) Tianan Life having agreed to release the equity pledge of the Fourth Sale Equity Interest given by the Group for the purpose of ensuring the performance of the Taizhou Jiuan Cooperation Agreement;

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(c) the written consent from Kong Sun Baoyuan in respect of the Fourth Disposal;
(d) Changshu Honglue, its related parties and the Fourth Project Company having agreed and completed the debt restructuring under which, the inter-company debts of the Fourth Project Company will be netted off;
(e) The solar power plant built by the Fourth Project Company has been included into the ‘‘List of National Renewable Energy Subsidies’’, (國家可再生能源補貼目錄), and get the price not lower than RMB0.74 per kwh;
(f) the Purchaser having paid the Fourth Earnest Money into the Escrow Account;
(g) the representations and warranties provided by Changshu Honglue as at the date of the Fourth Agreement and the Fourth Completion Date being true, complete and accurate in all material respects; and
(h) the Purchaser having completed the filing of valuation report within sixty (60) business days after condition precedent (e) has been satisfied.

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

Changshu Honglue shall use its best efforts to procure satisfaction of the conditions precedent (a), (b), (c), (d), (e) and (g) on or before 31 January 2022. If the conditions precedent have not been satisfied in time due to Changshu Honglue pursuant to the terms of the Fourth Agreement, the Purchaser will be entitled to: (1) terminate the Fourth Agreement; or (2) delay the Long Stop Date with certain conditions which should be agreed by Changshu Honglue. Pursuant to the Fourth Agreement, the Purchaser is entitled to waive the conditions precedent (e) and (g). Save for conditions precedent (e) and (g), other conditions precedent cannot be waived.

The Purchaser shall use its best efforts to procure satisfaction of the condition precedent (c) with Changshu Honglue, and condition precedents (f) and (h) by itself. In the event that the condition precedent (c) is not satisfied due to the default of the Purchaser or the condition precedent (f) is not satisfied, Changshu Honglue is entitled to (1) terminate the Fourth Agreement; or (2) negotiate with the Purchaser to postpone the Long Stop Date. In the event that the Purchaser fails to satisfy the condition precedent (h) as scheduled, Changshu Honglue may give the Purchaser a grace period of fifteen (15) business days and require the Purchaser to compensate Changshu Honglue for the losses incurred; Changshu Honglue has the right to terminate the Fourth Agreement and require damages of approximately RMB9,599,000 if the Purchaser has not satisfied such condition precedent during the grace period.

Conditions precedent (b), (c), (d) and (f) shall be satisfied within 3 working days before the expected completion date. If any of the conditions has not been satisfied due to reasons other than the parties, the parties shall not be liable for breach of agreement. The parties shall negotiate to extend the period or terminate the agreement.

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Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of the Fourth Project Company during the Transition Period, subject to consideration adjustment as a result of matters occurred not in the ordinary course of business during the Transition Period, shall be borne by the Fourth Project Company.

During the Transition Period, Changshu Honglue shall ensure that, among other things, the Fourth Project Company will continue its normal business operations in accordance with its past practices, no encumbrances or other third party rights will be created with respect to the equity interest in the Fourth Project Company without the prior written consent of the Purchaser.

Termination of the Fourth Guarantee

The amount of the Fourth Guarantee is the amount of the Kong Sun Baoyuan Loan. Pursuant to the Fourth Agreement, by no later than ninety (90) days after the completion of the Fourth Disposal, the Purchaser shall procure the release of the Fourth Guarantee by Kong Sun Baoyuan. In the event that the Purchaser does not procure completion of the release of the Fourth Guarantee within ninety (90) days after completion of the Fourth Disposal, Changshu Honglue shall have the right to seek for compensation for damages from the Purchaser and default penalty incurred thereunder calculated at a daily percentage rate of 0.05% based on the principal of guarantee amount. If the Purchaser fails to procure completion of the release of the Fourth Guarantee within ninety (90) days after completion of the Fourth Disposal, Changshu Honglue shall have the right to rescind the Fourth Agreement, and seek for compensation for damages from the Purchaser in the maximum amount of RMB 9,599,000 and the Purchaser shall bear all the costs and expenses in connection with the transactions contemplated thereunder. The Company will then make assessment on the possible implications under the Listing Rules and make further disclosure as and when appropriate to comply with it.

The continuation of the Fourth Guarantee was agreed after an arm‘s length negotiation between the parties and was one of the key commercial terms for the Purchaser to agree to the transactions contemplated under the Fourth Agreement. In view of the financial stress that the Group is encountering though the terms and conditions of the Fourth Guarantee may not be ideal, the Directors consider that the Fourth Disposal and the Fourth Guarantee are still the best available option under the circumstances for the Company to cut losses and streamline its operation at an appropriate timing. The Fourth Guarantee would also facilitate Kong Sun Baoyuan to provide its written consent regarding the Fourth Disposal in respect of the Kong Sun Baoyuan Loan, which is a condition precedent under the Fourth Agreement. Without the Fourth Guarantee, completion of the Fourth Disposal may be prolonged given it will take time for Changshu Honglue and the Purchaser to explain to Kong Sun Baoyuan for the change in control of the Fourth Project Company and to get the consent from Kong Sun Baoyuan for the purpose of satisfaction of the condition precedent under the Fourth Agreement. In the worst case scenario where the Purchaser fails to procure release of the Fourth Guarantee within ninety (90) days after completion of the Fourth Disposal, Changshu Honglue shall

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have the right to rescind the Fourth Agreement. On the above basis, the continuation of the Fourth Guarantee for a short period of time after completion of the Fourth Disposal is on normal commercial terms, fair and reasonable and in the interest of the Company and its Shareholders.

(E) The Fifth Agreement

Subject matter

On 10 July 2021, Kong Sun Yongtai, Suzhou Junsheng, the Purchaser and the Fifth Project Company entered into the Fifth Agreement, pursuant to which Kong Sun Yongtai and Suzhou Junsheng conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the Fifth Sale Equity Interest. The Company agreed to guarantee the obligations of Kong Sun Yongtai in favour of the Purchaser under the Fifth Agreement.

Consideration

The consideration for the Fifth Disposal is approximately RMB241,476,000, which shall be payable by the Purchaser to Kong Sun Yongtai and Suzhou Junsheng in cash in the following manner:

(i) an amount of approximately RMB144,885,000, representing approximately 60.00% of the consideration for the Fifth Disposal, shall be paid into the Escrow Account before completion of the Fifth Disposal (the ‘‘Fifth Earnest Money’’) and shall be transferred to Kong Sun Yongtai and Suzhou Junsheng within five (5) business days after completion of the Fifth Disposal;
(ii) an amount of approximately RMB76,419,000, representing approximately 31.65% of the consideration for the Fifth Disposal, shall be paid within five (5) business days after completion of handover of certain deliverables relating to the Fifth Project Company and the Transition Period Audit report having been issued and the Fifth Project Company received the certification issued by RFYD;
(iii) a lump-sum amount of up to approximately RMB2,616,000, representing approximately 1.08% of the consideration for the Fifth Disposal, shall be paid within ten (10) business days upon the completion of all rectification works items of the Fifth Project required by the Purchaser, which in any event, within twenty-four (24) months after completion of the Fifth Disposal. The estimated cost of all such rectification works items of the Fifth Project is approximately RMB2,616,000. If all required rectification works cannot be completed by the end of the 24[th] month after completion of the Fifth Disposal, Kong Sun Yongtai and Suzhou Junsheng will receive the agreed amount of the corresponding rectification work items completed for the Fifth Project on dollar-to-dollar basis; and

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(iv) within ten (10) business days upon each receipt of the Fifth Project Company of the state renewable energy subsidies receivable before the Reference Date, up to a total amount of approximately RMB17,556,000, representing approximately 7.27% of the consideration for the Fifth Disposal and approximately 20% of the state renewable energy subsidies of the Fifth Project Company granted to it prior to the Reference Date, shall be paid to Kong Sun Yongtai and Suzhou Junsheng.

Repayment of the Fifth Debts

As at the Reference Date, the Fifth Project Company had the outstanding Fifth Debts in the amount of approximately RMB1,021,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined under the Transition Period Audit, shall be settled by Kong Sun Yongtai, Suzhou Junsheng and its related parties within five (5) business days after completion of the Transition Period Audit.

The Transition Period Audit report will be issued within fifteen (15) business days of completion of the Fifth Disposal. In the event of any change of net assets value of the Fifth Project Company as a result of matters occurred not in the ordinary course of business during the Transition Period, such change will be considered as a consideration adjustment. However, it is contemplated that no matter will be occurred out of the ordinary course of business during the Transition Period that will constitute a material change of net assets value of the Fifth Project Company. Therefore, there is no cap for the consideration adjustment.

Default

If the Purchaser fails to pay the consideration for the Fifth Disposal pursuant to the terms of the Fifth Agreement or the Fifth Project Company fails to repay the Fifth Debts pursuant to the terms of the Fifth Agreement, Kong Sun Yongtai has the right to request the Purchaser and the Fifth Project Company to pay to it a default payment, which is calculated based on the relevant unpaid amounts due and a penalty at 0.05% of the relevant amounts due on a daily basis. If the default continues for more than thirty (30) calendar days from the relevant due date, Kong Sun Yongtai will be entitled to terminate the Fifth Agreement, refund all the payments made by the Purchaser after deducting a default payment in the maximum amount of approximately RMB24,148,000, representing approximately 10.00% of the consideration for the Fifth Disposal and request the Purchaser to compensate for all losses incurred by Kong Sun Yongtai.

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sufficient to safeguard the Company’s right to receive the full consideration and the possibility of the Purchaser would not honour its contractual commitment is relatively low.

Conditions Precedent

Completion of the Fifth Disposal is subject to the satisfaction of the following conditions precedent:

(a) Kong Sun Yongtai obtained the approval from the Board and the Shareholders at the EGM in accordance with the Listing Rules regarding for the Fifth Disposal;
(b) Kong Sun Yongtai, its related parties and the Fifth Project Company having agreed and completed the debt restructuring under which, the inter-company debts of the Fifth Project Company will be netted off;
(c) no less than 30MW capacity of solar power plant built by the Fifth Project Company has been included in the ‘‘List of National Renewable Energy Subsidies’’, (國家可再生能源補貼目錄), and 18MW capacity of the plant get the price not lower than RMB0.83 per kwh, the other 12MW capacity of the plant get the price not lower than RMB0.96 per kwh, or the total 30MW capacity get the price not lower than RMB0.882 per kwh;
(d) the Purchaser having paid the Fifth Earnest Money into the Escrow Account;
(e) the representations and warranties provided by the Purchaser as at the date of the Fifth Agreement and the Fifth Completion Date being true, complete and accurate in all material respects; and
(f) the Purchaser having completed the filing of valuation report within sixty (60) business days after condition precedent (c) has been satisfied.

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

Kong Sun Yongtai shall use its best efforts to procure satisfaction of the conditions precedent (a), (b), (c) and (e) on or before 31 January 2022. If the conditions precedent have not been satisfied in time due to Kong Sun Yongtai pursuant to the terms of the Fifth Agreement, the Purchaser will be entitled to: (1) terminate the Fifth Agreement; or (2) delay the Long Stop Date with certain conditions which should be agreed by Kong Sun Yongtai. Pursuant to the Fifth Agreement, the Purchaser is entitled to waive the conditions precedent (c) and (e). Save for conditions precedent (c) and (e), other conditions precedent cannot be waived.

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negotiate with the Purchaser to postpone the Long Stop Date. In the event that the Purchaser fails to satisfy the condition precedent (f) as scheduled, Kong Sun Yongtai may give the Purchaser a grace period of fifteen (15) business days and require the Purchaser to compensate Kong Sun Yongtai for the losses incurred; Kong Sun Yongtai has the right to terminate the Fifth Agreement and require damages of approximately RMB24,148,000 if the Purchaser has not satisfied such condition precedent during the grace period.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of the Fifth Project Company during the Transition Period, subject to consideration adjustment as a result of matters occurred not in the ordinary course of business during the Transition Period, shall be borne by the Fifth Project Company.

During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, the Fifth Project Company will continue its normal business operations in accordance with its past practices and, no encumbrances or other third party rights will be created with respect to the equity interest in the Fifth Project Company without the prior written consent of the Purchaser.

(F) The Sixth Agreement

Subject matter

On 10 July 2021, Changshu Honglue, the Purchaser and the Sixth Project Company entered into the Sixth Agreement, pursuant to which Changshu Honglue conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the Sixth Sale Equity Interest. The Company agreed to guarantee the obligations of Changshu Honglue in favour of the Purchaser under the Sixth Agreement.

Consideration

The consideration for the Sixth Disposal is approximately RMB279,849,000, which shall be payable by the Purchaser in cash in the following manner:

(i) an amount of approximately RMB167,910,000, representing approximately 60.00% of the consideration for the Sixth Disposal, shall be paid into the Escrow Account before completion of the Sixth Disposal (the ‘‘Sixth Earnest Money’’) and shall be transferred to Changshu Honglue within five (5) business days after completion of the Sixth Disposal;
(ii) an amount of approximately RMB90,189,000, representing approximately 32.23% of the consideration for the Sixth Disposal, shall be paid to Changshu Honglue within five (5) business days after completion of handover of certain deliverables relating to the Sixth Project Company; and

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(iii) within ten (10) business days upon each receipt of the Sixth Project Company of the state renewable energy subsidies receivable before the Reference Date, up to a total amount of approximately RMB21,750,000, representing approximately 7.77% of the consideration for the Sixth Disposal and approximately 20% of the state renewable energy subsidies of the Sixth Project Company granted to it prior to the Reference Date, shall be paid to Changshu Honglue.

Repayment of the Sixth Debts

As at the Reference Date, the Sixth Project Company had the outstanding Sixth Debts in the amount of approximately RMB125,689,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined under the Transition Period Audit, which shall be payable by the Sixth Project Company to Changshu Honglue in cash in the following manner:

(i) an amount of approximately RMB123,999,000, shall be settled by the Sixth Project Company within five (5) business days after completion of the Transition Period Audit; and
(ii) a lump-sum amount of up to approximately RMB1,690,000, shall be paid to Changshu Honglue within ten (10) business days upon completion of all rectification works items of the Sixth Project by Changshu Honglue required by the Purchaser. The rectification works shall all be completed not later than within twenty-four (24) months after completion of the Sixth Disposal. The estimated cost of all rectification works items of the Sixth Project is approximately RMB1,690,000. If all required rectification works cannot be completed by the end of the 24[th] month after completion of the Sixth Disposal, Changshu Honglue will receive the agreed amount of the corresponding rectification work items completed for the Sixth Project on dollar-to-dollar basis.

The Transition Period Audit report will be issued within fifteen (15) business days of completion of the Sixth Disposal. In the event of any change of net assets value of the Sixth Project Company as a result of matters occurred not in the ordinary course of business during the Transition Period, such change will be considered as a consideration adjustment. The Purchaser has the right to request compensation from Changshu Honglue. However, it is contemplated that no matter will be occurred out of the ordinary course of business during the Transition Period that will constitute a material change of net assets value of the Sixth Project Company. Therefore, there is no cap for the consideration adjustment.

Default

If the Purchaser fails to pay the consideration for the Sixth Disposal pursuant to the terms of the Sixth Agreement or the Sixth Project Company fails to repay the Sixth Debts pursuant to the terms of the Sixth Agreement, Changshu Honglue has the right to request the Purchaser and the Sixth Project Company to pay to it a default payment, which is

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calculated based on the relevant unpaid amounts due and a penalty at 0.05% of the relevant amounts due on a daily basis. If the default continues for more than thirty (30) calendar days from the relevant due date, Changshu Honglue will be entitled to terminate the Sixth Agreement, refund all the payments made by the Purchaser after deducting a default payment in the maximum amount of approximately RMB27,985,000, representing approximately 10.00% of the consideration for the Sixth Disposal and request the Purchaser to compensate for all losses incurred by Changshu Honglue.

Conditions Precedent

Completion of the Sixth Disposal is subject to the satisfaction of the following conditions precedent:

(a) Changshu Honglue obtained the approval from the Board and the Shareholders at the EGM in accordance with the Listing Rules regarding for the Sixth Disposal;
(b) Tianan Life having agreed to release the equity pledge of the Sixth Sale Equity Interest given by the Group for the purpose of ensuring the performance of the Taizhou Jiuan Cooperation Agreement;
(c) Changshu Honglue, its related parties and the Sixth Project Company having agreed and completed the debt restructuring under which, the inter-company debts of the Sixth Project Company will be netted off;
(d) the Purchaser having paid the Sixth Earnest Money into the Escrow Account;
(e) the representations and warranties provided by Changshu Honglue as at the date of the Sixth Agreement and the Sixth Completion Date being true, complete and accurate in all material respects; and
(f) the Purchaser having completed the filing of valuation report within sixty (60) business days of the date of the Sixth Agreement.

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

Changshu Honglue shall use its best efforts to procure satisfaction of the conditions precedent (a), (b), (c) and (e) on or before the Long Stop Date. If Changshu Honglue fails to fulfil its obligation pursuant to the terms of the Sixth Agreement, the Purchaser will be entitled to: (1) terminate the Sixth Agreement; or (2) delay the Long Stop Date with certain conditions which should be agreed by Changshu Honglue. Pursuant to the Sixth Agreement, the Purchaser is entitled to waive the condition precedent (e). Save for condition precedent (e), other conditions precedent cannot be waived.

The Purchaser shall use its best efforts to procure satisfaction of the conditions precedent (d) and (f) by itself. In the event that any of such conditions precedent is not satisfied, Changshu Honglue is entitled to (1) terminate the Sixth Agreement; or (2) negotiate with the Purchaser to postpone the Long Stop Date. In the event that the Purchaser fails to satisfy the condition precedent (f) as scheduled, Changshu Honglue may give the Purchaser a grace period of fifteen (15) business days and require the Purchaser to compensate Changshu Honglue for the losses incurred; Changshu Honglue has the right to terminate the Sixth Agreement and require damages of approximately RMB27,985,000 if the Purchaser has not satisfied such condition precedent during the grace period.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of the Sixth Project Company during the Transition Period, subject to consideration adjustment as a result of matters occurred not in the ordinary course of business during the Transition Period, shall be borne by the Sixth Project Company.

During the Transition Period, Changshu Honglue shall ensure that, among other things, the Sixth Project Company will continue its normal business operations in accordance with its past practices, no encumbrances or other third party rights will be created with respect to the equity interest in the Sixth Project Company without the prior written consent of the Purchaser.

(G) The Seventh Agreement

Subject matter

On 10 July 2021, Changshu Honglue, the Purchaser and the Seventh Project Company entered into the Seventh Agreement, pursuant to which Changshu Honglue conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the Seventh Sale Equity Interest. The Company agreed to guarantee the obligations of Changshu Honglue in favour of the Purchaser under the Seventh Agreement.

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Consideration

The consideration for the Seventh Disposal is approximately RMB137,712,000, which shall be payable by the Purchaser in cash in the following manner:

(i) an amount of approximately RMB82,627,000, representing approximately 60.00% of the consideration for the Seventh Disposal, shall be paid into the Escrow Account before completion of the Seventh Disposal (the ‘‘Seventh Earnest Money’’) and shall be transferred to Changshu Honglue within five (5) business days after completion of the Seventh Disposal;
(ii) an amount of approximately RMB44,444,000, representing approximately 32.27% of the consideration for the Seventh Disposal, shall be paid to Changshu Honglue within five (5) business days after completion of handover of certain deliverables relating to the Seventh Project Company and the Transition Period Audit report having been issued;
(iii) a lump-sum amount of up to approximately RMB4,858,000, representing approximately 3.53% of the consideration for the Seventh Disposal, shall be paid to Changshu Honglue within ten (10) business days upon the completion of all rectification works items of the Seventh Project by Changshu Honglue required by the Purchaser. The rectification works shall all be completed not later than within twenty-four (24) months after completion of the Seventh Disposal. The estimated cost of all rectification works items of the Seventh Project is approximately RMB4,858,000. If all required rectification works cannot be completed by the end of the 24[th] month after completion of the Seventh Disposal, Changshu Honglue will receive the agreed amount of the corresponding rectification work items completed for the Seventh Project on dollar-to-dollar basis; and
(iv) within ten (10) business days upon each receipt of the Seventh Project Company of the state renewable energy subsidies receivable from the State Grid Corporation of China before the Reference Date, an amount equal to the amount of the subsidy receipt, up to a total amount of approximately RMB5,783,000, representing approximately 4.20% of the consideration for the Seventh Disposal and approximately 20% of the state renewable energy subsidies of the Seventh Project Company granted to it prior to the Reference Date, shall be paid to Changshu Honglue.

Repayment of the Seventh Debts

As at the Reference Date, the Seventh Project Company had the outstanding Seventh Debts in the amount of approximately RMB228,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined under the Transition Period Audit, shall be settled by Changshu Honglue and its related parties within five (5) business days after completion of the Transition Period Audit.

The Transition Period Audit report will be issued within fifteen (15) business days of completion of the Seventh Disposal. In the event of any change of net assets value of the

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Seventh Project Company as a result of matters occurred not in the ordinary course of business during the Transition Period, such change will be considered as a consideration adjustment. However, it is contemplated that no matter will be occurred out of the ordinary course of business during the Transition Period that will constitute a material change of net assets value of the Seventh Project Company. Therefore, there is no cap for the consideration adjustment.

Default

If the Purchaser fails to pay the consideration for the Seventh Disposal pursuant to the terms of the Seventh Agreement or the Seventh Project Company fails to repay the Seventh Debts pursuant to the terms of the Seventh Agreement, Changshu Honglue has the right to request the Purchaser and the Seventh Project Company to pay to it a default payment, which is calculated based on the relevant unpaid amounts due and a penalty at 0.05% of the relevant amounts due on a daily basis. If the default continues for more than thirty (30) calendar days from the relevant due date, Changshu Honglue will be entitled to terminate the Seventh Agreement, refund all the payments made by the Purchaser after deducting a default payment in the maximum amount of approximately RMB13,771,000, representing approximately 10.00% of the consideration for the Seventh Disposal and request the Purchaser to compensate for all losses incurred by Changshu Honglue. Changshu Honglue will also be entitled to commence litigation against the Purchaser in the PRC court with competent jurisdiction and claim restitution in accordance with the PRC law.

If the Purchaser refuses to perform the court decision in favour of Changshu Honglue, Changshu Honglue may seek enforcement by the court. Under this circumstance, the Purchaser may be added into 失信執行人名錄 (the List of Untrustworthy Executors*) (an effective enforcement machinery in the PRC), which may have a material adverse effect on the assessment of the Purchaser’s credit rating and reputation. Taking into consideration of the general market practice in the solar industry as well as the background of the Purchaser, 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 the Purchaser would not honour its contractual commitment is relatively low.

Conditions Precedent

Completion of the Seventh Disposal is subject to the satisfaction of the following conditions precedent:

(a) Changshu Honglue obtained the approval from the Board and the Shareholders at the EGM in accordance with the Listing Rules regarding for the Seventh Disposal;
(b) Tianan Life having agreed to release the equity pledge of the Seventh Sale Equity Interest given by the Group for the purpose of ensuring the performance of the Taizhou Jiuan Cooperation Agreement;

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(c) Changshu Honglue, its related parties and the Seventh Project Company having agreed and completed the debt restructuring under which, the inter-company debts of the Seventh Project Company will be netted off;
(d) the Purchaser having paid the Seventh Earnest Money into the Escrow Account;
(e) the representations and warranties provided by the Purchaser as at the date of the Seventh Agreement and the Seventh Completion Date being true, complete and accurate in all material respects; and
(f) the Purchaser having completed the filing of valuation report within sixty (60) business days of the date of the Seventh Agreement.

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

Changshu Honglue shall use its best efforts to procure satisfaction of the conditions precedent (a), (b), (c) and (e) on or before the Long Stop Date. If Changshu Honglue fails to fulfil its obligation pursuant to the terms of the Seventh Agreement, the Purchaser will be entitled to: (1) terminate the Seventh Agreement; or (2) delay the Long Stop Date with certain conditions which should be agreed by Changshu Honglue. Pursuant to the Seventh Agreement, the Purchaser is entitled to waive the condition precedent (e). Save for condition precedent (e), other conditions precedent cannot be waived.

The Purchaser shall use its best efforts to procure satisfaction of the conditions precedent (d) and (f) by itself. In the event that any of such conditions precedent is not satisfied, Changshu Honglue is entitled to (1) terminate the Seventh Agreement; or (2) negotiate with the Purchaser to postpone the Long Stop Date. In the event that the Purchaser fails to satisfy the condition precedent (f) as scheduled, Changshu Honglue may give the Purchaser a grace period of fifteen (15) business days and require the Purchaser to compensate Changshu Honglue for the losses incurred; Changshu Honglue has the right to terminate the Seventh Agreement and require damages of approximately RMB13,771,000 if the Purchaser has not satisfied such condition precedent during the grace period.

Arrangements during the Transition Period

Any profits generated and any losses incurred and any changes to the net assets of the Seventh Project Company during the Transition Period, subject to the consideration adjustment as a result of matters occurred not in the ordinary course of business during Transition Period, shall be borne by the Seventh Project Company.

During the Transition Period, Changshu Honglue shall ensure that, among other things, the Seventh Project Company will continue its normal business operations in accordance with its past practices, no encumbrances or other third party rights will be created with respect to the equity interest in the Seventh Project Company without the prior written consent of the Purchaser.

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BASIS OF THE CONSIDERATION FOR THE DISPOSALS

The consideration for the Disposals was determined upon arm’s length negotiations between the parties with reference to (i) the unaudited net assets of the Project Companies, in the amount approximately RMB1,605,429,000 as at 31 May 2021, and adjusted by applying a discount of approximately 19.9% (i.e. RMB318,746,000), resulting in the amount approximately RMB1,285,814,000; (ii) the gearing position of the Project Companies; and (iii) the valuation of the Project Companies in the amount of approximately RMB1,231,248,000 appraised by an independent valuer.

The amount of unaudited net assets of the Project Companies of approximately RMB 1,605,429,000 as at 31 May 2021 is different from that is shown in Appendix II is due to the following:

the inclusion of loans and borrowings of the Third Project Company, the Fourth Project Company, the Fifth Project Company, the Sixth Project Company and the Seventh Project Company recorded on the Group’s level of approximately RMB1,370,634,000 (the ‘‘Loans’’); and
the inclusion of imputed interest of RMB75,312,000 related to the Loans which are included into the financial statements of the Third Project Company, the Fourth Project Company, the Fifth Project Company, the Sixth Project Company and the Seventh Project Company as recorded on the Group’s level.

In determining the discount to be applied to the net asset value of the Project Companies for the determination of the consideration for the Disposals, the Directors took into consideration account the following factors:

(i) the Disposals represent an opportunity for the Group to recoup its capital investment in the Project Companies, which will relieve the Group from its further funding commitment to the Project Companies in the form of shareholder’s loan which is costly to maintain;
(ii) the Project Companies recorded a significant amount of accounts receivables, being the state renewable energy subsidies to be received from the State Grid Corporation of China, of approximately RMB488,470,000 as at the Reference Date, the receipt of which depends on the decision of the relevant government authority;
(iii) the net debt ratio of the Project Companies is approximately 6.88 as at 30 April 2021, which is higher than the net debt ratio of the Group of approximately 1.36 as at 31 December 2020;
(iv) the Group is expected to save an annual finance costs of approximately RMB130,000,000 upon completion of the Disposals;
(v) the consideration is close to the valuation amount of the Project Companies (i.e. approximately RMB1,231,248,000) as appraised by an independent valuer; and

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(vi) the Group will continue to provide operation and maintenance services to the Project Companies, which will generate an annual service fee income of approximately RMB10,470,000 to the Group until at least 30 April 2023.

It is the usual practice in the industry and in previous disposals of the Company for having a portion of consideration to be held in an escrow account before the completion of the relevant disposal. With approximately RMB715,266,000, representing approximately 55.63% of the consideration for the Disposals being kept in the Escrow Account jointly controlled by the relevant vendor and the Purchaser, this arrangement is under normal commercial terms, fair and reasonable and in the interest of the Company and its Shareholders.

COMPLETION OF THE DISPOSALS

As at the Latest Practicable Date, the Project Companies are subsidiaries of the Company.

Completion of each 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.

Completion of each Disposal is not conditional on completion of any other Disposals.

INFORMATION ON THE PROJECT COMPANIES

(A) The First Project Company

The First Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. As at the Latest Practicable Date, the First Project Company is a direct wholly-owned subsidiary of Kong Sun Yongtai.

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

			For the year	ended
			31 December
			2019	2020
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	2,668	1,311
Net	profit	after tax	2,341	1,118

The unaudited net asset value of the First Project Company as at 30 April 2021 was approximately RMB50,579,000.

(B) The Second Project Company

The Second Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. As at the Latest Practicable Date, the Second Project Company is treated as wholly-owned by China Resources Szitic Trust because

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of the equity pledge arrangement for the CDB Loan but is still accounted as a subsidiary of the Group. CDB Leasing designated China Resources Szitic Trust to hold the Second Sale Equity Interest as nominee for the equity pledge arrangement for the CDB Loan.

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

			For the year	ended
			31 December
			2019	2020
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	7,033	6,595
Net	profit	after tax	7,033	6,595

The unaudited net asset value of the Second Project Company as at 30 April 2021 was approximately RMB70,688,000.

(C) The Third Project Company

The Third Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation.

According to cooperation agreement dated 24 October 2016 entered into between the Group and Jiaxing Shengshi, Jiaxing Shengshi contributed a capital of RMB500,000,000 to the Third Project Company and has held 86.207% equity interest of the Third Project Company upon completion of the capital contribution while the Group has retained the power to control the financial and operating policies of the Third Project Company so as to direct its relevant activities and to obtain significant economic benefits from its activities. As at the Latest Practicable Date, the Third Project Company is owned as to 86.207% equity interests by Jiaxing Shengshi, and the remaining equity interests by Kong Sun Yongtai. The Third Project Company is a subsidiary of the Company from the accounting perspective.

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LETTER FROM THE BOARD

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

			For the year	ended
			31 December
			2019	2020
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	28,175	15,929
Net	profit	after tax	28,175	15,929

The unaudited net asset value of the Third Project Company as at 30 April 2021 was approximately RMB589,184,000.

(D) The Fourth Project Company

The Fourth Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. As at the Latest Practicable Date, the Fourth Project Company is a direct wholly-owned subsidiary of Changshu Honglue.

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

			For the year	ended
			31 December
			2019	2020
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	(loss)/profit	before tax	(3,220)	449
Net	(loss)/profit	after tax	(3,220)	449

The unaudited net asset value of the Fourth Project Company as at 30 April 2021 was approximately RMB124,148,000.

(E) The Fifth Project Company

The Fifth Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. According to the investment and repurchase agreement dated 21 August 2018 entered into between the Group and Suzhou Junsheng, Suzhou Junsheng contributed capital of RMB260,000,000 to the Fifth Project Company and has held 96.60% equity interest of the Fifth Project Company upon completion of the capital contribution while the Group has retained the power to control the financial and operating policies of the Fifth Project Company so as to direct its relevant activities and to obtain significant economic benefits from its activities. As at the Latest Practicable Date, the Fifth Project Company is owned as to 96.60% equity interests by Suzhou Junsheng, and the remaining equity interests by Kong Sun Yongtai.

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LETTER FROM THE BOARD

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

			For the year	ended
			31 December
			2019	2020
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	23,532	18,622
Net	profit	after tax	23,532	16,683

The unaudited net asset value of the Fifth Project Company as at 30 April 2021 was approximately RMB279,336,000.

(F) The Sixth Project Company

The Sixth Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. As at the Latest Practicable Date, the Sixth Project Company is a direct wholly-owned subsidiary of Changshu Honglue.

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

			For the year	ended
			31 December
			2019	2020
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	22,718	28,353
Net	profit	after tax	22,718	28,353

The unaudited net asset value of the Sixth Project Company as at 30 April 2021 was approximately RMB307,916,000.

(G) The Seventh Project Company

The Seventh Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. As at the Latest Practicable Date, the Seventh Project Company is a direct wholly-owned subsidiary of Changshu Honglue.

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LETTER FROM THE BOARD

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

			For the year	ended
			31 December
			2019	2020
			(Unaudited)	(Unaudited)
			RMB’000	RMB’000
Net	profit	before tax	8,612	9,271
Net	profit	after tax	8,612	9,271

The unaudited net asset value of the Seventh Project Company as at 30 April 2021 was approximately RMB182,709,000.

INFORMATION ON THE PARTIES

Kong Sun Yongtai

Kong Sun Yongtai is an indirect wholly-owned subsidiary of the Company and is principally engaged in the investment in and operation of solar power plants. As at the Latest Practicable Date, the First Project Company is a direct wholly-owned subsidiary of Kong Sun Yongtai.

Changshu Honglue

Changshu Honglue is owned as to 99.94% by Taizhou Jiuan and 0.06% by Kong Sun Yongtai. Taizhou Jiuan has 3 limited partners, namely Tianan Life, 延安富秦清潔能源有限公司(Yanan Fuqin Clean Energy Co., Ltd.*) (a wholly-owned subsidiary of Kong Sun Yongtai) and Zhuhai Jiuyin which holds 79.97%, 19.99% and 0.04% partnership interest in it, respectively. Zhuhai Jiuyin is also a general partner of Taizhou Jiuan. Changshu Honglue is treated as an indirect wholly-owned subsidiary of the Company from the accounting perspective and is principally engaged in the investment in solar power plants. As at the Latest Practicable Date, each of the Fourth Project Company, the Sixth Project Company and the Seventh Project Company is a direct wholly-owned subsidiary of Changshu Honglue.

The Company

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 Purchaser

The Purchaser is a company established in the PRC and is principally engaged in investment and exploration of mineral resources; mineral product processing (for branch operation only) and sales; industrial and agricultural water supply engineering; urban water supply engineering; sewage treatment engineering; property management; scenic tourism

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LETTER FROM THE BOARD

development (excluding real estate development); technical consultation; clean energy development (projects that are subject to approval in accordance with the law can only be carried out after approval by relevant authorities). As at the Latest Practicable Date, the Purchaser is owned as to 55% by China National Nuclear Corporation (‘‘China Nuclear’’) and 45% by Xinhua Water Resources Holding Group Corporation Ltd. (‘‘Xinhua Water Resources’’). China Nuclear is wholly owned by the SASAC. Xinhua Water Resources is wholly owned by Bureau of Comprehensive Development Ministry of Water Resources.

China Resources Szitic Trust

China Resources Szitic Trust is a company established in the PRC. As at the Latest Practicable Date, it is owned as to 51% by SASAC and 49% by SASAC of Shenzhen.

Jiaxing Shengshi

Jiaxing Shengshi is a limited partnership established in the PRC and is principally engaged in investment in high-tech, energy sector and other high growth unlisted enterprises. As at the Latest Practicable Date, Jiaxing Shengshi is owned as to 14.99% by Kong Sun Yongtai, 0.06% by 盛世神州投資基金管理(北京)股份有限公司 (Shengshi Shenzhou Investment Fund Management (Beijing) Co., Ltd.*) and 84.95% by Tianan Life, each of which is a third party independent of the Company and connected persons of the Company.

Suzhou Junsheng

Suzhou Junsheng is a limited partnership established in the PRC and is principally engaged in investment in high-tech, energy sector and other high growth unlisted enterprises. As at the Latest Practicable Date, Suzhou Junsheng is owned as to 49.995% by Kong Sun Yongtai, 0.01% by 君盛投資管理有限公司 (Junsheng Investment Management Co., Ltd.*) and 49.995% by Tianan Life, each of which is a third party independent of the Company and connected persons of the Company.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the Purchaser and China Resources Szitic Trust and its ultimate beneficial owner is a third party independent of the Company and connected persons of the Company.

REASONS AND BENEFITS FOR THE DISPOSALS

The Directors consider that it is a good opportunity for the Group to realise its investment in the Project Companies 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.

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LETTER FROM THE BOARD

Lender Borrower Details of Guarantee Details of pledge Loan 1 Agricultural Bank First Project Company Kong Sun Yongtai provided guarantee Solar power plants and trade receivables of the First Project Company Loan 2 CDB Leasing Second Project Company Kong Sun Yongtai provided guarantee Solar power plants and trade receivables of the Second Project Company Loan 3 Jiaxing Shengshi Kong Sun Yongtai — 86.21% equity interests of the Third Project Company Loan 4 Kong Sun Baoyuan Fourth Project Company Kong Sun Yongtai provided guarantee Solar power plants and trade receivables of the Fourth Project Company Loan 5 Taizhou Jiuan Kong Sun Yongtai — 99.94% equity interests of the Fourth Project Company Loan 6 Suzhou Junsheng Kong Sun Yongtai — 96.30% equity interests of the Fifth Project Company Loan 7 Taizhou Jiuan Kong Sun Yongtai — 99.94% equity interests of the Sixth Project Company Loan 8 Taizhou Jiuan Kong Sun Yongtai — 99.94% equity interests of the Seventh Project Company Total	Amount as at 31 May 2021 in the respective Project Company’s level (RMB’000) 25,000 72,017 — 93,241 — — — —	Amount as at 31 May 2021 in the Group’s level (RMB’000) — — 500,000 — 130,634 260,000 300,000 180,000
	190,258	1,370,634

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LETTER FROM THE BOARD

Upon completion of the Disposals, the Company intends to repay and settle the following loans and borrowings recorded on the Group’s level relating to the respective Project Companies:

Loans and borrowings — Third Project Company — Fourth Project Company — Fifth Project Company — Sixth Project Company — Seventh Project Company	RMB’000 500,000 130,634 260,000 300,000 180,000
	1,370,634

The amount of approximately RMB1,370,634,000 has been agreed with the lenders.

Upon completion of the Disposals, the Company will continue to have 22 completed solar power plants with a total installed capacity of 619.8 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 (b) the provision of solar power plant operation and maintenance services to third parties, including the 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 Disposals.

Solar power generating business is a capital intensive industry, which highly relies on external financing in order to fund for the construction of a 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 可再生能源電價附加資助目錄 (Renewable Energy Tariff Subsidy Catalogue*) (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 Disposals represent a good opportunity for the Group to implement its asset-light strategy. The Company may consider further disposal(s) when it considers beneficial to the Company and the Shareholders as a whole in future.

In addition, the Disposals will lower the Group’s gearing ratio given the net proceeds from the Disposals will be applied for repaying the existing debts.

Based on the foregoing, the Directors are of the view that the Disposals and the terms of the Disposal Agreements 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 DISPOSALS AND INTENDED USE OF PROCEEDS

As at the Latest Practicable Date, each of the Project Companies is an indirect whollyowned subsidiary of the Company. With effect from completion of the Disposal Agreements, the Project Companies will cease to be subsidiaries of the Company and the assets and liabilities and results of operation of the Project Companies will cease to be consolidated in the financial statements of the Company.

Upon completion of the Disposals, the unaudited total assets and the total liabilities of the Group will be decreased by approximately RMB1,254,621,000 and RMB738,875,000, respectively.

Subject to final audit, it is expected that the Group will realise a net loss on the Disposals of not more than approximately RMB344,400,000, which is calculated by reference to the difference between (i) the consideration for the Disposals (approximately RMB1,285,814,000) and net asset value of the Project Companies (excluding the goodwill as it is derived in consolidated level) and its goodwill of approximately RMB1,605,429,000 and RMB24,819,000, respectively as at 31 May 2021 and (ii) the related transaction costs, taxes and expenses of the Disposals (approximately RMB2,563,000). Despite the net loss on the Disposals, having taking into consideration of the reasons for the Disposals as stated under the paragraph headed ‘‘Reasons and Benefits for the Disposals’’ above, the Company is of the view that the Disposals will be in the interests of the Company and the Shareholders as a whole as it will lower the Group’s gearing ratio.

Upon completion of the Disposals, the net proceeds from the Disposals (being the consideration for the Disposals (approximately RMB1,285,814,000) and from repayment of the net Debts (approximately RMB215,249,000) after deducting the taxation and transaction costs (approximately RMB2,563,000)) are estimated to be approximately RMB1,498,500,000. Upon completion of the Disposals and settlement of the Loans, the net proceeds will be approximately RMB127,866,000. The Group intends to apply the net proceeds from the Disposals to repay its existing indebtedness, including, but not limited to the Loans.

LISTING RULES IMPLICATIONS

The Disposals

As all of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Disposals, on an aggregated basis, are more than 75%, the transactions contemplated under the Disposal Agreements constitute a very substantial disposal for the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

As one of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Guarantees is 5% or more but all of such percentage ratios are lower than 25%, these Guarantees constitute a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

– 47 –

LETTER FROM THE BOARD

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, 14 September 2021 at 11:00 a.m., at which ordinary resolutions will be proposed to approve the Disposal Agreements, the Guarantees and the transactions contemplated thereunder.

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, Wanchai, 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 Disposals and the Guarantees and his/her/its close associates is/are required to abstain from voting on the relevant resolutions 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 Disposals and the Guarantees and, accordingly, no Shareholder is required to abstain from voting on the ordinary resolutions to approve the Disposal Agreements, the Guarantees and the transactions contemplated thereunder at the EGM.

RECOMMENDATION

The Directors consider that the terms of the Disposal Agreements, the Guarantees and the transactions contemplated thereunder are fair and reasonable, in the ordinary and usual course of business of the Group and on normal commercial terms, 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 resolutions to be proposed at the EGM to approve the Disposal Agreements, the Guarantees 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

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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 2018, 2019 and 2020 are set out in the annual reports of the Group for the years ended 31 December 2018 (pages 81 to 200), 2019 (pages 81 to 196) and 2020 (pages 81 to 202), 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 proceeds from the Disposals, the timely settlement of the Group’s certain renewable energy subsidy receivables from the State Grid Companies as expected, present internal resources and banking and other facilities, are of the opinion that the Group would have sufficient working capital for at least 12 months from the date of this circular. The Company has obtained the relevant confirmation as required under Rule 14.66(12) of the Listing Rules.

3. STATEMENT OF INDEBTEDNESS

As at the close of business on 30 June 2021, 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 RMB5,632,767,000 and unsecured corporate bonds amounted to approximately RMB253,034,000 and lease liabilities amounted to approximately RMB175,025,000.

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 June 2021, 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 RMB99,620,000.

As at 30 June 2021, the Group had executed a guarantee with respect to a loan of approximately RMB1,630,000,000 granted by independent third parties to Yulin City Jiangshan Yongchen New Energy Limited, a former subsidiary of the Company before disposal as at 30 April 2021.

As at 30 June 2021, the Group’s lease liabilities amounted to approximately RMB175,025,000 in relation to the remaining lease terms of certain lease contracts, which is unsecured and unguaranteed.

The Directors confirm that, as of 30 June 2021, 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.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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.

In the long run, by focusing on clean energy and green finance, the Group will continue to develop its solar power generation business, optimise its operation mode and enhance the efficiency of equipment in solar power plants. Through integration of industry and finance, it will also improve its operational efficiency, so as to drive the development of green and lowcarbon energy in China and make positive contributions to environmental protection.

It is expected that by transferring the controlling interests 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.

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.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, there has been no material adverse change in the financial or trading position of the Group since 31 December 2020, being the date to which the latest audited consolidated financial statements of the Company were made up.

6. MATERIAL ACQUISITION OR DISPOSAL

The Group had not carried out any material acquisition or disposal after 31 December 2020, 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 as disclosed above in this circular, the Group did not have any other significant investments after 31 December 2020, and there was no plan authorised by the Board for other material investments or additions of capital assets up to the Latest Practicable Date.

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

8. MANAGEMENT DISCUSSION AND ANALYSIS ON THE REMAINING GROUP

Upon completion of the 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 2018, 2019 and 2020. 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 2018, 2019 and 2020.

For the year ended 31 December 2018

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, trading of liquefied natural gas (‘‘LNG’’) and asset management.

Revenue

The revenue of the Remaining Group increased by approximately 42.1% from approximately RMB1,236,029,000 for the year ended 31 December 2017 to approximately RMB1,755,857,000 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 32.8% from approximately RMB1,212,026,000 for the year ended 31 December 2017 to approximately RMB1,609,040,000 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 2,015,858 megawatt-hour (‘‘MWh’’) for the year ended 31 December 2018, representing a substantial increase of approximately 36.1% as compared to approximately 1,480,915 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.

– I-3 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 30.9% from approximately RMB801,337,000 for the year ended 31 December 2017 to approximately RMB1,049,333,000 for the year ended 31 December 2018. The gross profit margin of the Remaining Group decreased from approximately 64.8% for the year ended 31 December 2017 to approximately 59.8% for the year ended 31 December 2018 mainly due to the business segment of trading of liquefied natural gas in 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 by approximately 34.2% from approximately RMB30,475,000 for the year ended 31 December 2017 to approximately RMB40,907,000 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.

Administrative expenses

Administrative expenses of the Remaining Group increased by approximately 26.9% from approximately RMB318,426,000 for the year ended 31 December 2017 to approximately RMB404,197,000 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 headcount; and (ii) an increase in office rental expenses of approximately RMB22,891,000.

– I-4 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 61.0% from approximately RMB453,545,000 for the year ended 31 December 2017 to approximately RMB730,087,000 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 RMB10,734,244,000 (2017: RMB11,110,042,000) and approximately RMB297,134,000 (2017: RMB670,320,000) in completed solar power plants and solar power plants under construction, respectively. As at 31 December 2018, the Remaining Group had a total of 1,570.3 MW installed capacity of completed solar power plants, comparing to the 1,620.3 MW installed capacity of solar power plants as at 31 December 2017.

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 江山寶源國際融資租賃有限公司 (Kong Sun Baoyuan International Financial Leasing Limited*) (‘‘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

– I-5 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 RMB124,378,000 (2017: RMB123,631,000) 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)) ( ‘‘ Suzhou Junsheng ’’ ) amounted to RMB130,000,000; (ii) the additional capital contribution paid in 台州久安股權投資合夥企業(有限合夥) (Taizhou Jiuan Equity Investment Partnership (Limited Partnership)) 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*) (‘‘Huoerguosi’’) 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). 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

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 21.8% from approximately RMB3,519,904,000 as at 31 December 2017 to approximately RMB4,288,284,000 as at 31 December 2018. The increase was mainly due to an increase in trade and bills receivables from approximately RMB1,904,654,000 as at 31 December 2017 to approximately RMB2,310,047,000 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 48.7% from approximately RMB3,529,237,000 as at 31 December 2017 to approximately RMB1,810,979,000 as at 31 December 2018. The balance mainly comprised payables to suppliers of solar modules and Engineering Procurement Construction (‘‘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 55.2% from approximately RMB3,148,098,000 as at 31 December 2017 to approximately RMB1,409,735,000 as at 31 December 2018.

Liquidity and Capital Resources

As at 31 December 2018, cash and cash equivalents of the Remaining Group was approximately RMB254,129,000 (2017: RMB442,136,000), which included an amount of bank balances of approximately RMB243,609,000 (2017: RMB422,907,000) 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.

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 2.00 (2017: 1.45).

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APPENDIX I

Loans and Borrowings

As at 31 December 2018, the Remaining Group’s total loans and borrowings was approximately RMB10,910,200,000, representing an increase of approximately RMB2,331,999,000, compared to approximately RMB8,578,201,000 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 RMB5,926,201,000 (2017: RMB4,926,201,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2018, out of the total borrowings, approximately RMB839,300,000 (2017: RMB544,162,000) was repayable within one year and approximately RMB10,070,900,000 (2017: RMB8,034,039,000) 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.

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.

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APPENDIX I

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 RMB7,715,608,000 (2017: RMB7,187,831,000), approximately RMB1,651,939,000 (2017: RMB890,642,000), 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

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 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.

Employees and Remuneration Policy

As at 31 December 2018, the Remaining Group had approximately 846 employees (2017: 826) 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 RMB252,161,000 (2017: RMB210,539,000). The remuneration policy of the Remaining Group is to provide remuneration packages, including basic salary, short-

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 (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.

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 an acquisition agreement (the ‘‘Baoqian Acquisition Agreement’’) with 中科恒源科技股份有限公司 (Zhongke Hengyuan Technology Co., Ltd.) (‘‘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 to the Remaining Group. Upon completion of the above acquisition, Guangzhou Baoqian will continue to be a nonwholly-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.

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.

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 non-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.

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APPENDIX I

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 this circular, 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.

For the year ended 31 December 2019

Business review

The Remaining Group was 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 LNG and asset management.

Revenue

The revenue of the Remaining Group increased by approximately 5.7% from approximately RMB1,755,857,000 for the year ended 31 December 2018 to approximately RMB1,856,118,000 for the year ended 31 December 2019. The increase was primarily due to the increase in revenue from trading of liquefied natural gas.

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

The Remaining Group’s revenue from sales of electricity decreased by approximately 8.6% from approximately RMB1,609,040,000 for the year ended 31 December 2018 to approximately RMB1,470,330,000 for the year ended 31 December 2019 due to the increased in aggregate volume of electricity generated by the Remaining Group’s gridconnected solar power plants with lower selling price during the year. The solar power plants owned by the Remaining Group have generated electricity in an aggregate volume of approximately 1,887,050 MWh for the year ended 31 December 2019, representing a slight decrease of approximately 6.4% as compared to approximately 2,015,858 MWh for year ended 31 December 2018.

The Remaining Group’s revenue from provision of solar power plant operation and maintenance services increased by approximately 932.9% from approximately RMB1,943,000 for the year ended 31 December 2018 to approximately RMB20,070,000 for the year ended 31 December 2019 mainly due to the start of certain solar power plant operation and maintenance services contracts.

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APPENDIX I

Revenue from provision of financial services

The Remaining Groups’ revenue arising from the provision of financial services increased by approximately 205.5% from approximately RMB12,891,000 for the year ended 31 December 2018 to approximately RMB39,385,000 for the year ended 31 December 2019.

Revenue from trading of liquefied natural gas

The Remaining Group’s revenue arising from trading of liquefied natural gas increased by approximately 147.9% from approximately RMB131,659,000 for the year ended 31 December 2018 to approximately RMB326,333,000 for the year ended 31 December 2019.

Gross profit and gross profit margin

The gross profit of the Remaining Group decreased by approximately 5.1% from approximately RMB1,049,333,000 for the year ended 31 December 2018 to approximately RMB996,089,000 for the year ended 31 December 2019. The gross profit margin of the Remaining Group decreased from approximately 59.8% for the year ended 31 December 2018 to approximately 53.7% for the year ended 31 December 2019 mainly due to increase in revenue from 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 losses of approximately RMB69,693,000 for the year ended 31 December 2019 compared with other gains of approximately RMB40,907,000 for the year ended 31 December 2018. The losses are mainly due to (i) the recognition of impairment loss in respect of trade and other receivables amounted to approximately RMB77,113,000 (2018: reversal of RMB963,000); (ii) the decrease of office sublease income of approximately RMB33,782,000; (iii) the decrease in dividend income of approximately RMB12,522,000; and (iv) the net unrealised loss on fair values changes on financial assets measured at fair value through profit or loss of approximately RMB9,239,000 (2018: gain of RMB5,864,000). The other losses of the Remaining Group is partially netted off by the (i) decrease in net realised loss on disposal on financial assets measured at fair value through profit or loss amounted to approximately RMB52,060,000 as a result of the disposal of the listed equity investment during the year ended 31 December 2019; and (ii) decrease in write off of solar power plant of approximately RMB16,103,000.

Administrative expenses

Administrative expenses of the Remaining Group decreased by approximately 13.0% from approximately RMB404,197,000 for the year ended 31 December 2018 to approximately RMB351,626,000 for the year ended 31 December 2019. The decrease was

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

mainly attributable to a decrease in total employee benefit expenses of approximately RMB31,254,000 as a result of the decrease in number of headcount for the year ended 31 December 2019.

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. There was no gain on bargain purchase on acquisition of subsidiaries during the year ended 31 December 2019 (2018: RMB2,504,000) For details, please refer to note 45 to the financial statements of the 2019 Annual Report.

Loss/gain on disposal/deregistration of subsidiaries, net

During the year ended 31 December 2019, the Remaining Group disposed/ deregistered certain subsidiaries and recorded net loss on disposal/deregistration of subsidiaries of approximately RMB66,618,000 (2018: gain of RMB2,693,000). For details, please refer to note 46 to the financial statements of the 2019 Annual Report.

Impairment loss on a disposal group classified as held for sale

On 15 November 2019, the Remaining Group entered into sale and purchase agreements with an independent third party to dispose the entire equity interests in 千陽縣寶源光伏電力開發有限公司 Qianyang Baoyuan Photovoltaic Power Development Limited, 阿圖什市華光能源有限公司 Artux Huaguang Energy Limited, 巨鹿縣明暉太陽能發電有限公司Julu Minghui Photovoltaic Power Limited, 蘭州太科光伏電力有限公司 Lanzhou Taike Photovoltaic Power Limited, 阿圖什市興光能源有限公司 Artux Xingguang Energy Limited, 溧陽新暉光伏發電有限公司 Liyang Xinhui Photovoltaic Power Generation Limited, 和靜旭雙太陽能科技有限公司 Hejing Xushuang Photovoltaic Technology Limited, 宿州市雲陽新能源發電有限公司 Suzhou Yunyang New Energy Electricity Co., Ltd. and 哈密朝翔新能源科技有限公司 Hami Zhaoxiang New Energy Technology Limited (together the ‘‘Nine Project Companies’’) for a total equity consideration of approximately RMB760,314,000. On 5 December 2019, the Remaining Group entered into a sale and purchase agreement with an independent third party to dispose the entire equity interest in 定邊縣昂立光伏科技有限公司 (Dingbian Angli Solar Power Technology Co., Limited*) (‘‘Angli’’) for an equity consideration of approximately RMB59,000,000. An impairment loss of approximately RMB327,729,000, representing the sale proceeds less the carrying amount of the net assets of the Nine Project Companies and Angli as at 31 December 2019, was charged to profit or loss during the year ended 31 December 2019.

Impairment loss on solar power plants

During the year ended 31 December 2019, the Remaining Group has made an impairment loss of certain solar power plants of approximately RMB43,735,000 (2018: Nil).

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APPENDIX I

Finance costs

Finance costs of the Remaining Group decreased by approximately 19.6% from approximately RMB730,087,000 for the year ended 31 December 2018 to approximately RMB873,528,000 for the year ended 31 December 2019. As the Remaining Group’s average total loans and borrowings decreased as compared to the corresponding period of last year, the finance costs related to the borrowings also decreased.

Solar power plants

As at 31 December 2019, the Remaining Group had a net carrying amount of approximately RMB7,117,026,000 (2018: RMB10,734,244,000) and approximately RMB101,134,000 (2018: RMB297,134,000) in completed solar power plants and solar power plants under construction, respectively. As at 31 December 2019, the Remaining Group had a total of 1,410.3 MW installed capacity of completed solar power plants, comparing to the 1,570.3 MW installed capacity of solar power plants as at 31 December 2018.

Interest in associates

As at 31 December 2019, the net carrying amount of associates was approximately RMB226,691,000 (2018: RMB13,290,000). The increase was mainly due to the reclassification of Kong Sun Baoyuan from interest in a joint venture to interest in associates upon the disposal of 17.4% of its equity interest.

During the year ended 31 December 2019, the Remaining Group disposed of 17.4% equity interests in Kong Sun Baoyuan for a consideration of RMB105,000,000 to a connected person of the Company at the subsidiary level. Upon completion, the Remaining Group’s equity interest in Kong Sun Baoyuan decreased from 55% to 37.6%, Kong Sun Baoyuan ceased to be a joint venture of the Company and become an associate of the Company under HKAS 28. For details, please refer to the announcement of the Company dated 21 March 2019.

The Remaining Group executes a guarantee with respect to a loan of approximately RMB44,621,000 (2018: RMB92,873,000) granted by independent third parties to Kong Sun Baoyuan as at 31 December 2019, 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, 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 2019, the Remaining Group had a total amount of approximately RMB72,111,000 (2018: RMB124,378,000) in respect of goodwill on the acquisition of subsidiaries. The decrease is mainly contributed by the reclassification of an amount of

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

approximately RMB52,221,000 to disposal group classified as held for sale upon the entering into the sale and purchase agreements with an independent third party for the disposal of the Nine Project Companies on 15 November 2019.

Right-of-use Assets and Lease Liabilities

The Remaining Group has applied HKFRS 16 and recognised right-of-use assets and lease liabilities since 1 January 2019. As at 31 December 2019, the right-of-use assets and lease liabilities amounted to approximately RMB371,460,000 (2018: Nil) and approximately RMB187,502,000 (2018: Nil).

Financial assets measured of fair value through other comprehensive income

Financial assets measured of fair value through other comprehensive income decreased by approximately 15.5% from approximately RMB2,047,434,000 as at 31 December 2018 to approximately RMB1,729,091,000 as at 31 December 2019. The decrease is mainly due to the fair value loss on financial assets measured at fair value through other comprehensive income amounted to approximately RMB422,893,000 during the year ended 31 December 2019. The decrease is partially netted off by (i) the capital contribution paid in Suzhou Junsheng amounted to RMB92,500,000; and (ii) the capital contribution paid in Huoerguosi amounted to approximately RMB12,050,000 during the year ended 31 December 2019. 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 23 to the financial statements of the 2019 Annual Report.

Financial assets measured of fair value through profit or loss

As at 31 December 2019, the Remaining Group had financial assets measured at fair value through profit or loss with market value of approximately RMB28,198,000 (2018: RMB81,143,000), representing approximately 0.2% (2018: 0.4%) of the total assets of the Remaining Group as at 31 December 2019. The portfolio of investments managed by the Remaining Group consists of investment in one (2018: one) listed equity in Hong Kong. The Remaining Group held approximately 0.8% (2018: 1.3%) shareholding in the listed equity as at 31 December 2019. During the year ended 31 December 2019, the Remaining Group had recorded an unrealised loss on fair value changes of financial assets measured at fair value through profit or loss which amounted to approximately RMB9,239,000 (2018: gain of RMB5,864,000). During the year ended 31 December 2019, the Remaining Group disposed of approximately 54.7% of its listed equity investment at a cash consideration of approximately RMB43,034,000 and resulting in a net realised loss on disposal of financial assets measured at fair value through profit or loss amounted to approximately RMB1,553,000 (2018: RMB53,613,000).

Trade, bills and other receivables

Trade, bills and other receivables decreased by approximately 11.1% from approximately RMB4,288,284,000 as at 31 December 2018 to approximately RMB3,812,529,000 as at 31 December 2019. The decrease was mainly due to the

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

reclassification of approximately RMB798,264,000 to disposal group classified as held for sale upon the entering into the sale and purchase agreements with independent third parties for the disposals of the Nine Project Companies and Angli on 15 November 2019 and 5 December 2019, respectively.

Structured bank deposits

As at 31 December 2019, the Remaining Group placed approximately RMB4,230,000 (2018: RMB9,230,000) 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.

Trade and Other Payables

Trade and other payables decreased by approximately 10.7% from approximately RMB1,810,979,000 as at 31 December 2018 to approximately RMB1,617,874,000 as at 31 December 2019. 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.

Liquidity and Capital Resources

As at 31 December 2019, cash and cash equivalents of the Remaining Group was approximately RMB193,133,000 (2018: RMB254,129,000), which included an amount of bank balances of approximately RMB189,936,000 (2018: RMB243,609,000) 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 31 December 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 2.11 (2018: 2.00).

Capital Expenditure

During the year ended 31 December 2019, the Remaining Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB19,333,000 (2018: RMB7,192,000) and approximately RMB67,807,000 (2018: RMB222,743,000), respectively.

Loans and Borrowings

As at 31 December 2019, the Remaining Group’s total loans and borrowings was approximately RMB8,946,516,000, representing a decrease of approximately 18% compared to approximately RMB10,910,200,000 as at 31 December 2018. The decrease in the Remaining Group’s total loans and borrowings was mainly due to a decrease in the Remaining Group’s investments in solar power plants upon the entering into the sale and

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APPENDIX I

purchase agreements with independent third parties for the disposals of the Nine Project Companies and Angli on 15 November 2019 and 5 December 2019, respectively, which lead to a decrease in loans and borrowings to finance such investments. All the 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 31 December 2019, loans and borrowings of approximately RMB4,533,500,000 (2018: RMB4,918,000,000) and approximately RMB4,413,016,000 (2018: RMB5,992,200,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2019, out of the total borrowings, approximately RMB1,293,409,000 (2018: RMB839,300,000) was repayable within one year and approximately RMB7,653,107,000 (2018: RMB10,070,900,000) was repayable after one year. For details, please refer to note 32 to the financial statements of the 2019 Annual Report.

Corporate bonds

As at 31 December 2019, corporate bonds denominated in Hong Kong dollar with an aggregate principal amount of HK$343,500,000 (equivalent to approximately RMB307,700,000) (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% (2018: 3% to 9%) per annum, and will mature on the date immediately following 6 to 96 months (2018: 3 to 96 months) after their issuance.

During the year ended 31 December 2019, the Remaining Group issued corporate bonds with an aggregate principal amount of HK$64,000,000 (equivalent to approximately RMB56,353,000) (2018 : HK$290,500,000 (equivalent to approximately RMB254,536,000)) to certain independent third parties, the net proceeds of the issued corporate bonds received by the Company were approximately HK$57,761,000 (equivalent to approximately RMB50,860,000) (2018: HK$257,727,000 (equivalent to approximately RMB225,820,000)), with total issue cost amounting to approximately HK$6,239,000 (equivalent to approximately RMB5,493,000) (2018: HK$32,773,000 (equivalent to approximately RMB28,716,000)).

During the year ended 31 December 2019, the Remaining Group repaid HK$64,500,000 (equivalent to approximately RMB56,794,000) (2018: HK$423,500,000 (equivalent to approximately RMB371,071,000)) 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 10.40% to 14.56% (2018: 10.24% to 12.00%) per annum. Imputed interest of approximately HK$31,013,000 (equivalent to approximately RMB27,308,000) (2018: HK$44,200,000 (equivalent to approximately RMB37,318,000)) (note 13 to the financial statements of the 2019 Annual Report) in respect of the corporate bonds was recognised in profit or loss during the year ended 31 December 2019.

– I-17 –

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 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 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 2019, the Remaining Group had charged solar power plants, trade receivables, right-of-use assets/lease prepayments and unlisted equity investments with net book value of approximately RMB6,113,591,000 (2018: RMB7,715,608,000), approximately RMB1,944,575,000 (2018: RMB1,651,939,000), approximately RMB756,000 (2018: RMB774,000) and approximately RMB438,840,000 (2018: RMB813,158,000), respectively, to secure bank loans and other loans facilities granted to the Remaining Group.

Save as disclosed above and in note 32 to the financial statements of the 2019 Annual Report, during the year ended 31 December 2019, the Remaining Group has no other charges on assets.

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 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. 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.

Save as disclosed above, during the year ended 31 December 2019, the Remaining Group has no other significant contingent liabilities.

– I-18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employees and Remuneration Policy

As at 31 December 2019, the Remaining Group had approximately 611 employees (2018: 846) 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 2019, the total employee benefit expenses (including directors’ emoluments) were approximately RMB181,178,000 (2018: RMB252,161,000). For details, please refer to note 10 to the financial statements of the 2019 Annual Report. The remuneration policy of the Remaining Group is to provide remuneration packages, including basic salary and short-term bonuses, 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 the 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. 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.

Connected Transaction

On 13 December 2017, the Baoqian Purchaser, entered into the Baoqian Acquisition Agreement with the Vendor, pursuant to which the Baoqian Purchaser agreed to acquire, and the Vendor 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 the Vendor 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.

As at the date of the Baoqian Acquisition Agreement, the Vendor was interested in 30% of the equity interests in Guangzhou Baoqian, a non-wholly-owned subsidiary of the Company. Therefore, the Vendor 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.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

After further negotiation and discussion, the Baoqian Purchaser and the Vendor 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.

On 21 March 2019, BD Technology Limited (‘‘BD Technology’’), an indirect wholly-owned subsidiary of the Company, entered into a sale and purchase agreement as vendor with 深圳市雄韜電源科技股份有限公司 (Shenzhen Xiongtao Electronic Technology Company Limited*) (‘‘Shenzhen Xiongtao’’) as purchaser pursuant to which BD Technology agreed to sell and Shenzhen Xiongtao agreed to acquire 17.4% equity interest in Kong Sun Baoyuan for a total consideration of RMB105,000,000. As at the date of the transaction, Kong Sun Baoyuan was owned as to 55% by BD Technology, and as to 45% by Shenzhen Xiongtao. Accordingly, Shenzhen Xiongtao is a connected person of the Company at the subsidiary level under Rule 14A.06(9) of the Listing Rules and the transaction constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules. Upon completion, the Remaining Group’s equity interest in Kong Sun Baoyuan decreased from 55% to 37.6%, Kong Sun Baoyuan ceased to be a joint venture of the Company and become an associate of the Company. For details, please refer to the announcement of the Company dated 21 March 2019.

Significant Investments and Material Acquisition and Disposal

Save as disclosed in this circular, the Remaining Group did not have any other significant investments, did not hold any significant investments in an investee company with a value of 5% more of the Company’s total assets, other material acquisition or disposal during the year ended 31 December 2019, and there was no plan authorised by the Board for other material investments or additions of capital assets.

For the year ended 31 December 2020

Business Review

The Company is an investment holding company with its subsidiaries 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 LNG and asset management.

– I-20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Revenue

The revenue of the Remaining Group decreased by approximately 32.0% from approximately RMB1,856,118,000 for the year ended 31 December 2019 to approximately RMB1,261,474,000 for the year ended 31 December 2020. The decrease was primarily due to the decrease in revenue from sales of electricity and trading of LNG.

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

The Remaining Group’s revenue from sales of electricity decreased by approximately 21.2% from approximately RMB1,470,330,000 for the year ended 31 December 2019 to approximately RMB1,158,755,000 for the year ended 31 December 2020 due to the decrease in aggregate volume of electricity generated by the Remaining Group’s gridconnected solar power plants with the disposal of subsidiaries. The solar power plants owned by the Remaining Group have generated electricity in an aggregate volume of 1,501,241 MWh for the year ended 31 December 2020, representing a decrease of approximately 20.4% as compared to 1,887,050 MWh for year ended 31 December 2019.

The Remaining Group’s revenue from provision of solar power plant operation and maintenance services increased by approximately 4.8% from approximately RMB20,070,000 for the year ended 31 December 2019 to approximately RMB21,038,000 for the year ended 31 December 2020 mainly due to the start of certain solar power plant operation and maintenance services contracts.

Revenue from provision of financial services

The Remaining Groups’ revenue arising from the provision of financial services decreased by approximately 5.3% from approximately RMB39,385,000 for the year ended 31 December 2019 to approximately RMB37,304,000 for the year ended 31 December 2020.

Revenue from trading of liquefied natural gas

The Remaining Group’s revenue arising from trading of LNG decreased by approximately 86.4% from approximately RMB326,333,000 for the year ended 31 December 2019 to approximately RMB44,377,000 for the year ended 31 December 2020. The decrease is mainly due to city lockdowns and suspension of work, production and transportation in most regions in the PRC due to the outbreak of the novel coronavirus pneumonia starting in the first half of 2020. With the decrease in business in trading of LNG, the Remaining Group plans to allocate the resources to other segments.

Gross profit and gross profit margin

The gross profit of the Remaining Group decreased by approximately 20.0% from approximately RMB996,089,000 for the year ended 31 December 2019 to approximately RMB796,643,000 for the year ended 31 December 2020. The gross profit margin of the Remaining Group increased from approximately 53.7% for the year ended 31 December

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2019 to approximately 63.2% for the year ended 31 December 2020 mainly due to decrease in revenue from trading of liquefied natural gas, which had a lower gross profit margin than the business segment of solar power plants.

Other gains, net

The other gains, net of the Remaining Group increased by approximately 297.2% from approximately RMB4,509,000 for the year ended 31 December 2019 to approximately RMB17,912,000 for the year ended 31 December 2020. The increase was mainly due to (i) the decrease in net unrealised losses on fair values changes on financial assets measured at fair value through profit or loss of approximately RMB5,356,000; (ii) the increase in rental income of approximately RMB5,925,000; and (iii) the increase in gain on lease modification of approximately RMB2,834,000.

Administrative expenses

Administrative expenses of the Remaining Group decreased by approximately 20.1% from approximately RMB351,626,000 for the year ended 31 December 2019 to approximately RMB281,025,000 for the year ended 31 December 2020. The decrease was mainly attributable to a decrease in total employee benefit expenses of approximately RMB50,570,000 during the year ended 31 December 2020.

Losses on disposal of subsidiaries, net

During the year ended 31 December 2020, the Remaining Group disposed of certain subsidiaries and recorded net losses on disposal of subsidiaries of approximately RMB182,220,000 (2019: RMB66,618,000). For details, please refer to note 44 to the financial statements of the 2020 Annual Report.

Impairment losses on a disposal group classified as held for sale

On 22 October 2020, the Remaining Group entered into sale and purchase agreements with an independent third party to dispose the entire equity interests in 平山縣天匯能源科技有限公司 (Pingshan Tianhui Energy Technology Co., Ltd.) (‘‘Tianhui’’) and 德州市陵城區乾超兄弟能源科技有限公司 (Dezhou City Lingcheng District Qianchao Brothers Energy Technology Co., Ltd.) (‘‘Qianchao Brothers’’) for a total equity consideration of approximately RMB60,176,000.

On 4 December 2020, the Remaining Group entered into a sale and purchase agreement with the same independent third party to dispose the entire equity interest in 榆林市江山永宸新能源有限公司 (Yulin City Jiangshan Yongchen New Energy Limited) (‘‘Yongchen’’) for an equity consideration of approximately RMB1,177,829,000. On 14 December 2020, the Remaining Group entered into a sale and purchase agreement with another independent third party to dispose the entire equity interest in 玉門市永聯科技新能源開發有限公司 (Yumen Yonglian Technology New Energy Development Co., Ltd.) (‘‘Yumen’’) for an equity consideration of approximately RMB33,580,000.

– I-22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

An impairment loss of approximately RMB160,650,000, representing the sale proceeds less the carrying amount of the net assets of Tianhui, Qianchao Brothers, Yongchen and Yumen as at 31 December 2020, was charged to profit or loss during the year ended 31 December 2020.

Impairment losses on solar power plants under construction

During the year ended 31 December 2020, impairment losses of approximately RMB84,445,000 (2019: RMB43,735,000) on a solar power plant under construction was recognised as the approval from the relevant government authority was not granted eventually, resulting in the demolition of the solar power plant.

Impairment losses on trade and other receivables, net

During the year ended 31 December 2020, impairment losses of approximately RMB78,429,000 (2019: RMB77,113,000) on trade and other receivables, net was recorded based on the lifetime expected credit losses.

Finance costs

Finance costs of the Remaining Group decreased by approximately 18.3% from approximately RMB873,528,000 for the year ended 31 December 2019 to approximately RMB713,271,000 for the year ended 31 December 2020. As the Remaining Group’s loans and borrowings decreased during the year ended 31 December 2020, the finance costs related to the borrowings also decreased.

Solar power plants

As at 31 December 2020, the Remaining Group had a net carrying amount of approximately RMB3,873,153,000 (2019: RMB7,117,026,000) and approximately RMB11,909,000 (2019: RMB413,662,000) in completed solar power plants and solar power plants under construction, respectively. As at 31 December 2020, the Remaining Group had a total of 959.8 MW (2019: 1,410.3 MW) installed capacity of completed solar power plants.

Interest in associates

As at 31 December 2020, the net carrying amount of associates was approximately RMB227,984,000 (2019: RMB226,691,000).

As at 31 December 2019, the Remaining Group executed guarantees with respect to loans of approximately RMB24,925,000 granted by independent third parties to Kong Sun Baoyuan, under which the Remaining Group was liable to pay the proportionate share if independent third parties are unable to recover the loan from Kong Sun Baoyuan. As at 31 December 2020, Kong Sun Baoyuan fully repaid such loans to independent third parties and the guarantees were released accordingly.

– I-23 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Goodwill

As at 31 December 2020, the Remaining Group had a total amount of approximately RMB4,803,000 (2019: RMB72,111,000) in respect of goodwill on the acquisition of subsidiaries in previous years. The decrease was mainly caused by the disposals of subsidiaries during the year ended 31 December 2020.

Right-of-use Assets

As at 31 December 2020, the right-of-use assets amounted to approximately RMB244,450,000 (2019: RMB371,460,000). The decrease was mainly caused by the disposals of subsidiaries during the year ended 31 December 2020.

Financial assets measured of fair value through other comprehensive income

Financial assets measured of fair value through other comprehensive income decreased by approximately 26.3% from approximately RMB1,729,091,000 as at 31 December 2019 to approximately RMB1,275,156,000 as at 31 December 2020. The decrease was mainly due to (i) the fair value loss amounted to approximately RMB184,365,000; and (ii) the return of capital from Suzhou Junsheng amounted to RMB270,000,000 during the year ended 31 December 2020. 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 22 to the financial statements of the 2020 Annual Report.

Financial assets measured of fair value through profit or loss

As at 31 December 2020, the Remaining Group had financial assets measured at fair value through profit or loss with market value of approximately RMB16,921,000 (2019: RMB28,198,000), representing approximately 0.1% (2019: 0.2%) of the total assets of the Remaining Group as at 31 December 2020. The portfolio of investments managed by the Remaining Group consists of investment in one (2019: one) listed equity in Hong Kong. The Remaining Group held approximately 0.1% (2019: 0.1%) shareholding in the listed equity as at 31 December 2020. During the year ended 31 December 2020, the Remaining Group had recorded unrealised loss on fair value changes of financial assets measured at fair value through profit or loss which amounted to approximately RMB3,883,000 (2019: RMB9,239,000). During the year ended 31 December 2020, the Remaining Group disposed of approximately 16.7% of its listed equity investment at a cash consideration of approximately RMB3,630,000 (2019: RMB43,034,000) and resulting in net realised losses on disposal of financial assets measured at fair value through profit or loss amounted to approximately RMB2,602,000 (2019: RMB1,553,000).

Trade, bills and other receivables

Trade, bills and other receivables decreased by approximately 22.7% from approximately RMB3,812,259,000 as at 31 December 2019 to approximately RMB2,948,694,000 as at 31 December 2020. The decrease was mainly due to the

– I-24 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

reclassification of approximately RMB1,057,105,000 to disposal group classified as held for sale upon the entering into the sale and purchase agreements with independent third parties for the disposals of the subsidiaries on 22 October 2020, 4 December 2020 and 14 December 2020, respectively.

Structured bank deposits

As at 31 December 2020, the Remaining Group placed approximately RMB4,230,000 (2019: RMB4,230,000) 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.

Trade and Other Payables

Trade and other payables decreased by approximately 37.6% from approximately RMB1,617,874,000 as at 31 December 2019 to approximately RMB1,010,325,000 as at 31 December 2020. 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. Due to the settlement of construction costs after the completion of substantial solar power plants construction work in recent years, trade payables, which was mainly related to construction costs of solar power plants, have decreased by approximately 74.1% from approximately RMB1,003,582,000 as at 31 December 2019 to approximately RMB259,435,000 as at 31 December 2020.

Liquidity and Capital Resources

As at 31 December 2020, cash and cash equivalents of the Remaining Group was approximately RMB160,863,000 (2019: RMB193,133,000), which included an amount of bank balances of approximately RMB159,659,000 (2019: RMB189,936,000) 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 31 December 2020, 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 1.65 (2019: 2.11).

Capital Expenditure

During the year ended 31 December 2020, the Remaining Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB1,869,000 (2019: RMB19,333,000) and approximately RMB26,149,000 (2019: RMB67,807,000), respectively.

– I-25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Loans and Borrowings

As at 31 December 2020, the Remaining Group’s total loans and borrowings was approximately RMB5,591,106,000 representing a decrease of approximately 37.5% compared to approximately RMB8,946,516,000 as at 31 December 2019. The decrease in the Remaining Group’s total loans and borrowings was mainly due to disposal of subsidiaries, in which the loans and borrowings of these subsidiaries will be excluded from the Remaining Group upon their disposals. All the 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 31 December 2020, loans and borrowings of approximately RMB3,907,500,000 (2019: RMB4,533,500,000) and approximately RMB1,683,606,000 (2019: RMB4,413,016,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2020, out of the total borrowings, approximately RMB1,998,473,000 (2019: RMB1,293,409,000) was repayable within one year and approximately RMB3,592,633,000 (2019: RMB7,653,107,000) was repayable after one year. For details, please refer to note 30 to the financial statements of the 2020 Annual Report.

Corporate bonds

As at 31 December 2020, corporate bonds denominated in Hong Kong dollar with an aggregate principal amount of HK$336,500,000 (equivalent to approximately RMB283,212,000) (2019 : HK$343,500,000 (equivalent to approximately RMB307,700,000)) remained outstanding with certain independent third parties. The corporate bonds bear interest rates ranging from 3% to 7% (2019: 3% to 7%) per annum, and will mature on the date immediately following 3 to 96 months (2019: 6 to 96 months) after their issuance.

During the year ended 31 December 2020, the Remaining Group issued corporate bonds with an aggregate principal amount of HK$13,500,000 (equivalent to approximately RMB12,005,000) (2019: HK$64,000,000 (equivalent to approximately RMB56,353,000)) to certain independent third parties, the net proceeds of the issued corporate bonds received by the Company were approximately HK$12,492,000 (equivalent to approximately RMB11,110,000) (2019: HK$57,761,000 (equivalent to approximately RMB50,860,000)), with total issue cost amounting to approximately HK$1,008,000 (equivalent to approximately RMB895,000) (2019: HK$6,239,000 (equivalent to approximately RMB5,493,000)).

During the year ended 31 December 2020, the Remaining Group repaid HK$20,500,000 (equivalent to approximately RMB18,231,000) (2019: HK$64,500,000 (equivalent to approximately RMB56,794,000)) 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 10.40% to 14.56% (2019: 10.40% to 14.56%) per annum. Imputed interest of approximately HK$33,401,000 (equivalent to

– I-26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

approximately RMB29,704,000) (2019: HK$31,013,000 (equivalent to approximately RMB27,308,000)) (note 13 to the financial statements of the 2020 Annual Report) in respect of the corporate bonds was recognised in profit or loss during the year ended 31 December 2020.

Lease Liabilities

As at 31 December 2020, the lease liabilities amounted to approximately RMB159,768,000 (2019: RMB187,502,000). The decrease was mainly caused by the disposals of subsidiaries during the year ended 31 December 2020.

Foreign Exchange Risk

The Remaining Group primarily operates its business in the PRC and during the year ended 31 December 2020, 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 2020, the Remaining Group had charged solar power plants, trade receivables, right-of-use assets and unlisted equity investments with net book value of approximately RMB3,033,976,000 (2019: RMB6,113,591,000), approximately RMB1,076,231,000 (2019: RMB1,944,575,000), approximately RMB719,000 (2019: RMB756,000) and approximately RMB295,441,000 (2019: RMB438,840,000), respectively, to secure bank loans and other loans facilities granted to the Remaining Group.

Save as disclosed above and in note 30 to the financial statements of the 2020 Annual Report, during the year ended 31 December 2020, the Remaining Group has no other charges on assets.

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 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. 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

– I-27 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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.

As at 31 December 2020, the Remaining Group had executed a guarantee with respect to a loan of approximately RMB205,168,000 granted by independent third parties to 靖邊縣智光新能源開發有限公司 (Jingbian Zhiguang New Energy Development Co., Ltd.), an indirect wholly-owned subsidiary of the Company before its disposal on 12 October 2020.

Save as disclosed above, during the year ended 31 December 2020, the Remaining Group has no other significant contingent liabilities.

Employees and Remuneration Policy

As at 31 December 2020, the Remaining Group had approximately 619 (2019: 611) employees 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 2020, the total employee benefit expenses (including directors’ emoluments) were approximately RMB138,677,000 (2019: RMB181,178,000). For details, please refer to note 10 in the financial statements of the 2020 Annual Report. The remuneration policy of the Remaining Group is to provide remuneration packages, including basic salary and short-term bonuses, 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 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.

Significant Investments and Material Acquisition and Disposal

Save as disclosed in this circular, the Remaining Group did not have any other significant investments, did not hold any significant investments in an investee company with a value of 5% more of the Company’s total assets, other material acquisition or disposal during the year ended 31 December 2020, and there was no plan authorised by the Board for other material investments or additions of capital assets.

– I-28 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

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REPORT ON REVIEW OF FINANCIAL INFORMATION OF JINTA YONGJIA NEW ENERGY LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the financial information of Jinta Yongjia New Energy Limited (‘‘Jinta Yongjia’’) set out on pages II-A-3 to II-A-15 which comprises the statements of financial position as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Jiangshan Yongchen 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 Jinta Yongjia 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

– II-A-1 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

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

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

Au Yiu Kwan

Practising Certificate Number P05018 Hong Kong, 30 August 2021

– II-A-2 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

Set out below is the unaudited financial information of Jinta Yongjia which comprises the unaudited statements of financial position of Jinta Yongjia as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 the Jinta Yongjia. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Jinta Yongjia 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 JINTA YONGJIA

APPENDIX II-A

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF JINTA YONGJIA

Notes Revenue 4 Cost of sales Gross profit Other gains and losses Administrative expenses Finance costs Profit before income tax Income tax expense 5 Profit for the year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 9,369 10,840 9,633 (4,735) (5,376) (5,849) 4,634 5,464 3,784 — 1 1 (300) (817) (883) (2,379) (1,981) (1,590) 1,955 2,667 1,312 — (326) (192) 1,955 2,341 1,120	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 4,029 4,080 (2,959) (2,297) 1,070 1,783 1 — (360) (407) (707) (535) 4 841 — (89) 4 752

– II-A-4 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF JINTA YONGJIA

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 6 Current assets Trade and other receivables 7 Tax recoverable Amounts due from immediate holding company 9 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payables Loans and borrowings 8 Amounts due to intermediate holding company 9 Amounts due to fellow subsidiaries 9 Total current assets Net current assets Total assets less current liabilities	2018 RMB’000 (Unaudited) 4 69,722 69,726 19,506 — 8,634 147 28,287 134 — 8,000 1,450 135 9,719 18,568 88,294	31 December 2019 RMB’000 (Unaudited) 194 66,282 66,476 18,502 — 8,726 14 27,242 407 123 8,000 2,390 163 11,083 16,159 82,635	2020 RMB’000 (Unaudited) 152 62,842 62,994 22,572 21 4,033 345 26,971 231 — 8,000 10,439 72 18,742 8,229 71,223	31 May 2021 RMB’000 (Unaudited) 134 61,408
				61,542
				26,547 17 4,001 83
				30,648
				525 — 7,500 15,039 651
				23,715
				6,933
				68,475

– II-A-5 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

Notes Non-current liabilities Loans and borrowings 8 Total non-current liabilities Net assets Equity Paid in capital Reserves Total equity	2018 RMB’000 (Unaudited) 37,000 37,000 51,294 48,600 2,694 51,294	31 December 2019 RMB’000 (Unaudited) 29,000 29,000 53,635 48,600 5,035 53,635	2020 RMB’000 (Unaudited) 21,000 21,000 50,223 48,600 1,623 50,223	31 May 2021 RMB’000 (Unaudited) 17,500
				17,500
				50,975
				48,600 2,375
				50,975

– II-A-6 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

UNAUDITED STATEMENTS OF CASH FLOWS OF JINTA YONGJIA

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Written-off of solar power plant Interest expense Interest income Operating profit before working capital changes (Increase)/Decrease in trade and other receivables (Decrease)/Increase in trade and other payables Cash generated from/(used in) operating activities Tax paid Net cash generated from/(used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment Payments for purchase of solar power plant Interests received Net cash (used in)/generated from investing activities	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 1,955 2,667 1,312 10 32 42 3,435 3,440 3,440 308 — — 2,379 1,981 1,590 — (1) (1) 8,087 8,119 6,383 29,943 1,004 (4,070) (677) 273 (176) 37,353 9,396 2,137 — (203) (336) 37,353 9,193 1,801 — (222) — (288) — — — 1 1 (288) (221) 1	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 4 841 18 18 1,434 1,434 — — 707 535 (1) — 2,162 2,828 (2,784) (3,975) 328 294 (294) (853) (127) (85) (421) (938) — — — — 1 — 1 —

– II-A-7 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

Cash flows from financing activities Repayments of loans and borrowings Interest paid Dividend paid to immediate holding company Advances from intermediate holding company Advances from immediate holding company Advances from fellow subsidiaries Repayments to immediate holding company Repayments to fellow subsidiaries Net cash (used in)/generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (8,000) (8,000) (8,000) (2,379) (1,981) (1,590) — — (4,532) 1,450 940 8,049 — — 4,693 107 28 — (28,111) (92) — — — (91) (36,933) (9,105) (1,471) 132 (133) 331 15 147 14 147 14 345	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) (4,000) (4,000) (707) (535) (4,532) — 4,839 4,600 4,680 32 147 579 — — — — 427 676 7 (262) 14 345 21 83

– II-A-8 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF JINTA YONGJIA

Balance at 1 January 2018 Profit for the year Appropriation to statutory reserves Balance at 31 December 2018 and 1 January 2019 Profit for the year Appropriation to statutory reserves Balance at 31 December 2019 and 1 January 2020 Profit for the year Appropriation to statutory reserves Proposed dividend Balance at 31 December 2020 and 1 January 2021 Profit for the period Appropriation to statutory reserves Balance at 31 May 2021 Balance at 31 December 2019 and 1 January 2020 Profit for the period Proposed dividend Balance at 31 May 2020	Paid in capital RMB’000 (Unaudited) 48,600 — — 48,600 — — 48,600 — — — 48,600 — — 48,600 48,600 — — 48,600	Statutory reserves RMB’000 (Unaudited) 74 — 196 270 — 234 504 — 112 — 616 — 75 691 504 — — 504	Retained profits RMB’000 (Unaudited) 665 1,955 (196) 2,424 2,341 (234) 4,531 1,120 (112) (4,532) 1,007 752 (75) 1,684 4,531 4 (4,532) 3	Total RMB’000 (Unaudited) 49,339 1,955 — 51,294 2,341 — 53,635 1,120 — (4,532) 50,223 752 — 50,975 53,635 4 (4,532) 49,107

– II-A-9 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 10 July 2021, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Jinta Yongjia entered into the agreement (the ‘‘First Agreement’’), pursuant to which the Vendor agreed to sell, and the Purchaser agreed to acquire, the entire equity interest in Jinta Yongjia at a total consideration of approximately RMB37,474,000 (the ‘‘First Disposal’’). Upon completion of the First Disposal, Jinta Yongjia will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Jinta Yongjia for the years ended 31 December 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 First 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.

3. CHANGES IN ACCOUNTING POLICIES

The HKICPA has issued a number of new or revised HKFRSs which are relevant to the Group and became effective during the respective year. The impact of these new or revised HKFRSs in respective year is summarised as follows:

HKFRS 9 — Financial Instruments

HKFRS 9 is effective for the accounting period beginning on or after 1 January 2018. HKFRS 9 replaces HKAS 39, Financial instruments: recognition and measurement (‘‘HKAS 39’’). It sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The new impairment model in HKFRS 9 replaces the ‘‘incurred loss’’ model in HKAS 39 with an expected credit loss (‘‘ECL’’) model. Under the ECL model, it will no longer be necessary for a loss event to occur before an impairment loss is recognised. Instead, an entity is required to recognise and measure either a 12-month ECL or a lifetime ECL, depending on the asset and the facts and circumstances. As a consequence of adopting HKFRS 9, Jinta Yongjia’s trade and other receivables amounting to RMB12,755,000 as at 1 January 2018 was reclassified from ‘‘loans and receivables’’ as ‘‘amortised cost financial assets’’. Applying ECL model does not result in further provision for ECL as the settlement of these receivables is regulated by the Central Government of the PRC, and periodic payments have been received with no history of default in the past. As such, the Directors consider that the ECL in renewable energy subsidies receivables as at 1 January 2018 is immaterial.

– II-A-10 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

As at 1 January 2018, the Company’s amounts due from immediate holding company and cash and cash equivalents were reclassified from the original classification of ‘‘Loan and receivables’’ under HKAS 39 to the new classification of ‘‘Amortised cost’’ under HKFRS 9. As at 1 January 2018, the directors consider that there is no material difference between the previous carrying amounts and that under new classification.

HKFRS 15 — Revenue from Contracts with Customers

HKFRS 15 is effective for the accounting period beginning on or after 1 January 2018. HKFRS 15 establishes a comprehensive framework for recognising revenue and some costs from contracts with customers. HKFRS 15 replaces HKAS 18, Revenue, which covered revenue arising from sale of goods and rendering of services, and HKAS 11, Construction Contracts, which specified the accounting for construction contracts, and related interpretations.

Jinta Yongjia has adopted HKFRS 15 using cumulative effect method without practical expedients. Jinta Yongjia has recognised the cumulative effect of initially applying HKFRS 15 as an adjustment to the opening balance of accumulated losses at the date of initial application (that is, 1 January 2018). As a result, the unaudited financial information presented for 2017 has not been restated.

Jinta Yongjia sells electricity to the power grid company. Revenue from sales of electricity is recognised over time when the electricity generated and transmitted is simultaneously received and consumed by the power grid companies. Jinta Yongjia has elected the practical expedient to recognise revenue in the amount to which Jinta Yongjia has a right to invoice as the amount represents and corresponds directly with the value of performance completed and transferred to the power grid company. Jinta Yongjia has no unsatisfied performance obligations at each reporting date. In the opinion of the Directors, the adoption of HKFRS 15 did not result in significant impact on Jinta Yongjia’s accounting policies on revenue.

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2018, 2019 and 2020 and the five months ended 31 May 2020 and 2021, unaudited sales of electricity includes renewable energy subsidies amounting to RMB7,428,000, RMB8,532,000, RMB8,225,000, RMB3,327,000 and RMB3,324,000 respectively.

5. INCOME TAX EXPENSE

Pursuant to CaiShui 2008 No. 46 Notice on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment* (財政部、國家稅務總局關於執行公共基礎設施項目企業所得稅優惠目錄有關問題的通知), Jinta Yongjia has been approved to entitle a tax holiday of a 3-year full exemption followed by a 3-year 50% exemption commencing from their respective years in which their first operating income is derived.

– II-A-11 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

6. SOLAR POWER PLANTS

Cost
At 1 January 2018
Additions
Written off
At 31 December 2018, 2019 and 2020 and 31 May 2021
Accumulated depreciation
At 1 January 2018
Charged for the year
At 31 December 2018 and 1 January 2019
Charged for the year
At 31 December 2019 and 1 January 2020
Charged for the year
At 31 December 2020 and 1 January 2021
Charged for the period
At 31 May 2021
Net carrying amount
At 31 December 2018
At 31 December 2019
At 31 December 2020
At 31 May 2021

Solar power
plants
RMB’000
(Unaudited)
90,188
288
(308)
90,168
17,011
3,435
20,446
3,440
23,886
3,440
27,326
1,434
28,760
69,722
66,282
62,842
61,408

As at 31 December 2018, 2019 and 2020 and 31 May 2021, solar plants were all pledged as securities for Jinta Yongjia’s loans and borrowings (note 8).

– II-A-12 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

7. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 17,772 18,101 22,546 1,734 401 26 19,506 18,502 22,572	As at 31 May 2021 RMB’000 (Unaudited) 26,497 50
		26,547

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 1,914 2,481 2,204 2,418 2,723 2,671 4,389 4,865 4,866 8,188 8,032 9,702 863 — 3,103 17,772 18,101 22,546	As at 31 May 2021 RMB’000 (Unaudited) 2,871 2,079 4,773 9,610 7,164
		26,497

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 460 797 631 2,185 2,477 2,484 2,419 2,734 2,657 4,314 4,453 4,665 7,747 7,640 9,398 647 — 2,711 17,772 18,101 22,546	As at 31 May 2021 RMB’000 (Unaudited) 1,270 2,372 1,963 5,075 9,505 6,312
		26,497

Jinta Yongjia’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 2018, 2019 and 2020 and 31 May 2021, the outstanding renewable energy subsidy amounted to RMB8,032,000, RMB17,733,000, RMB22,099,000 and RMB25,855,000 respectively.

– II-A-13 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

Expected loss rate of these renewable energy subsidy receivables are assessed to be low, because the debtor is state-owned and have good repayment history. In addition, the directors of the Jinta Yongjia are confident that the renewable energy subsidy receivables are fully recoverable but only subject to timing of allocation of funds from the PRC government. Accordingly, the credit risk regarding contract assets of tariff income receivables is limited.

8. LOANS AND BORROWINGS

Current Secured — bank borrowings Non-current Secured — bank borrowings Total loans and borrowings	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 8,000 8,000 8,000 37,000 29,000 21,000 45,000 37,000 29,000	As at 31 May 2021 RMB’000 (Unaudited) 7,500 17,500
		25,000

Jinta Yongjia’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 Effective Interest rates	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 8,000 8,000 8,000 8,000 8,000 7,000 22,000 21,000 14,000 7,000 — — 45,000 37,000 29,000 4.9% 4.9% 4.9%	As at 31 May 2021 RMB’000 (Unaudited) 7,500 7,000 10,500 —
		25,000
		4.9%

Loans and borrowings were all secured by solar power plants, trade receivables and guarantee provided by Jinta Yongjia’s immediate holding company Kong Sun Yongtai Investment Holdings Limited.

9. AMOUNTS DUE FROM/TO INTERMEDIATE HOLDING COMPANY/IMMEDIATE HOLDING COMPANY/FELLOW SUBSIDIARIES

Amounts due from/to intermediate holding company/immediate holding company/fellow subsidiaries are interest-free, unsecured and repayable on demand.

– II-A-14 –

FINANCIAL INFORMATION OF JINTA YONGJIA

APPENDIX II-A

10. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Jinta Yongjia entered into the following transactions with related parties:

	Related party	Type of				For the five months	For the five months	For the five months
Name of related party	relationship	transaction	For the	year ended 31	December		ended 31 May
			2018	2019	2020		2020	2021
			RMB’000	RMB’000	RMB’000	RMB’000		RMB’000
			(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)		(Unaudited)
江山永泰投資控股有限公司	Immediate	Operation and	—	533	533		222	222
(Kong Sun Yongtai	holding	maintenance
Investment Holdings	company	fee
Limited)
北京鑫泰綠能科技有限公司	Fellow	Operation and	226	28	340		142	577
(Beijing Xintai Green	subsidiary	maintenance
Energy Technology		fee
Co., Ltd.)

– II-A-15 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

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REPORT ON REVIEW OF FINANCIAL INFORMATION OF GANSU HONGYUAN PHOTOVOLTAIC LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the financial information of Gansu Hongyuan Photovoltaic Limited (‘‘Gansu Hongyuan’’) set out on pages II-B-3 to II-B-17 which comprises the statements of financial position as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Gansu Hongyuan (the ‘‘Circular’’) 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 Gansu Hongyuan 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 GANSU HONGYUAN

APPENDIX II-B

Conclusion

Emphasis of Matter — Material Uncertainty Related to Going Concern

Without qualifying our conclusion, we draw attention to note 2 to the Financial Information of Gansu Hongyuan, which indicates that Gansu Hongyuan had net current liabilities of RMB44,048,000 as at 31 May 2021. These conditions indicate the existence of a material uncertainty that may cast significant doubt about Gansu Hongyuan’s ability to continue as a going concern.

BDO Limited

Certified Public Accountants

Au Yiu Kwan

Practising Certificate Number P05018 Hong Kong, 30 August 2021

– II-B-2 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

Set out below is the unaudited financial information of Gansu Hongyuan which comprises the unaudited statements of financial position of Gansu Hongyuan as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 the Gansu Hongyuan. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Gansu Hongyuan 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 GANSU HONGYUAN

APPENDIX II-B

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF GANSU HONGYUAN

Notes Revenue 4 Cost of sales Gross profit Other gains and losses Administrative expenses Finance costs Profit before income tax Income tax expense 5 Profit for the year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 24,762 28,502 24,541 (11,762) (13,672) (11,541) 13,000 14,830 13,000 2 (8) (2) (541) (843) (820) (8,141) (6,946) (5,583) 4,320 7,033 6,595 — — — 4,320 7,033 6,595	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 10,968 12,398 (4,075) (5,206) 6,893 7,192 (8) 4 (454) (444) (2,359) (1,927) 4,072 4,825 — (133) 4,072 4,692

– II-B-4 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF GANSU HONGYUAN

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 6 Right-of-use assets Lease prepayments Current assets Inventories Trade and other receivables 7 Amounts due from intermediate holding company 9 Amounts due from fellow subsidiaries 9 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Loans and borrowings 8 Tax payables Amounts due to intermediate holding company 9 Amounts due to immediate holding company 9 Amounts due to fellow subsidiaries 9 Total current liabilities Net current liabilities Total assets less current liabilities	2018 RMB’000 (Unaudited) 218 185,368 — 4,116 189,702 493 68,911 900 — 115 70,419 6,917 21,037 — — 75,224 450 103,628 (33,209) 156,493	31 December 2019 RMB’000 (Unaudited) 386 176,948 4,009 — 181,343 493 76,261 — — 11 76,765 8,418 21,107 — 12,861 72,835 600 115,821 (39,056) 142,287	2020 RMB’000 (Unaudited) 295 168,528 3,902 — 172,725 493 85,531 — — 6,103 92,127 7,559 21,178 — 27,681 87,497 279 144,194 (52,067) 120,658	31 May 2021 RMB’000 (Unaudited) 270 165,020 3,858 — 169,148 357 96,287 — 136 4,825 101,605 7,107 21,213 133 27,681 87,828 1,691 145,653 (44,048) 125,100

– II-B-5 –

APPENDIX II-B

FINANCIAL INFORMATION OF GANSU HONGYUAN

Notes Non-current liabilities Loans and borrowings 8 Total non-current liabilities Net assets Equity Paid in capital Reserves Total equity	2018 RMB’000 (Unaudited) 93,781 93,781 62,712 60,000 2,712 62,712	31 December 2019 RMB’000 (Unaudited) 72,542 72,542 69,745 60,000 9,745 69,745	2020 RMB’000 (Unaudited) 51,054 51,054 69,604 60,000 9,604 69,604	31 May 2021 RMB’000 (Unaudited) 50,804
				50,804
				74,296
				60,000 14,296
				74,296

– II-B-6 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

UNAUDITED STATEMENTS OF CASH FLOWS OF GANSU HONGYUAN

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Amortization of right-of-use assets Amortization of lease prepayments Written-off of property, plant and equipment Written-off of solar power plant Interest expense Interest income Operating profit before working capital changes Decrease in Inventories Increase in trade and other receivables Increase/(Decrease) in trade and other payables Net cash generated from/(used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment Payments for purchase of solar power plant Payments for purchase of lease prepayments Net cash used in investing activities	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 4,320 7,033 6,595 93 111 91 8,420 8,420 8,420 — 107 107 98 — — — 5 — 617 — — 8,141 6,946 5,583 (2) — — 21,687 22,622 20,796 124 — — (11,891) (7,350) (9,270) 2,660 1,501 (381) 12,580 16,773 11,145 (3) (284) — (5,590) — (478) (400) — — (5,993) (284) (478)	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 4,072 4,825 45 25 3,508 3,508 45 44 — — — — — — 2,359 1,927 — (4) 10,029 10,325 — 136 (7,883) (10,756) (999) 39 1,147 (256) — — (478) — — — (478) —

– II-B-7 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

Cash flows from financing activities Repayments of loans and borrowings Interest paid Dividend paid to immediate holding company Advances from intermediate holding company Advances from immediate holding company Advances from fellow subsidiaries Repayments to intermediate holding company Repayments to immediate holding company Repayments to fellow subsidiaries Net cash (used in)/generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (23,919) (21,169) (21,417) (8,141) (6,946) (5,583) — — (6,736) — 13,761 14,820 24,018 — 14,662 450 150 — (900) — — — (2,389) — — — (321) (8,492) (16,593) (4,575) (1,905) (104) 6,092 2,020 115 11 115 11 6,103	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) (10,895) (702) (2,359) (1,927) (6,736) — 5,420 — 14,151 331 500 1,276 — — — — — — 81 (1,022) 750 (1,278) 11 6,103 761 4,825

– II-B-8 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF GANSU HONGYUAN

Balance at 1 January 2018 Profit for the year Appropriation to statutory reserves Balance at 31 December 2018 and 1 January 2019 Profit for the year Appropriation to statutory reserves Balance at 31 December 2019 and 1 January 2020 Profit for the year Appropriation to statutory reserves Proposed dividend Balance at 31 December 2020 and 1 January 2021 Profit for the period Appropriation to statutory reserves Balance at 31 May 2021 Balance at 31 December 2019 and 1 January 2020 Profit for the period Appropriation to statutory reserves Proposed dividend Balance at 31 May 2020	Paid in capital RMB’000 (Unaudited) 60,000 — — 60,000 — — 60,000 — — — 60,000 — — 60,000 60,000 — — — 60,000	Statutory reserves RMB’000 (Unaudited) 1,333 — 432 1,765 — 703 2,468 — 660 — 3,128 — 469 3,597 2,468 — 407 — 2,875	(Accumulated losses)/ Retained profits RMB’000 (Unaudited) (2,941) 4,320 (432) 947 7,033 (703) 7,277 6,595 (660) (6,736) 6,476 4,692 (469) 10,699 7,277 4,072 (407) (6,736) 4,206	Total RMB’000 (Unaudited) 58,392 4,320 — 62,712 7,033 — 69,745 6,595 — (6,736) 69,604 4,692 — 74,296 69,745 4,072 — (6,736) 67,081

– II-B-9 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 10 July 2021, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Gansu Hongyuan entered into the agreement (the ‘‘Second Agreement’’), pursuant to which the Vendor agreed to sell, and the Purchaser agreed to acquire, the entire equity interest in Gansu Hongyuan at a total consideration of approximately RMB21,401,000 (the ‘‘Second Disposal’’). Upon completion of the Second Disposal, Gansu Hongyuan will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Gansu Hongyuan for the years ended 31 December 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Second Disposal.

The Unaudited Financial Information of Gansu Hongyuan 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 Gansu Hongyuan had net current liabilities of RMB44,048,000 as at 31 May 2021. These conditions indicate the existence of a material certainty which may cast significant doubt on Gansu Hongyuan’s ability to continue as a going concern and therefore Gansu Hongyuan may not be able to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, the directors of the Company are of the opinion that Gansu Hongyuan will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months from 31 May 2021 after taking into account the followings:

(i) the cash flow projection of Gansu Hongyuan for the next twelve months from 31 May 2021, the directors of the Company are of the opinion that Gansu Hongyuan is able to generate positive cash flows from its operation. In preparing the cash flow projection by the directors of Gansu Hongyuan, 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) intermediate holding company, immediate holding company (‘‘Kong Sun Yongtai’’) and fellow subsidiaries have confirmed not to demand repayment of debt due from Gansu Hongyuan until such time when the repayment will not affect Gansu Hongyuan’s ability to repay other creditors in the normal course of business for the twelve months after 31 May 2021 or up to the completion date of the Second Disposal, whichever is earlier;

– II-B-10 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

(iii) Gansu Hongyuan scheduled to repay the loans and borrowings of RMB72,017,000 as at 31 May 2021 according to the repayment terms of the borrowings. On July 2021, RMB600,000 has been repaid. Pursuant to the Second Agreement, Kong Sun Yongtai will continue to provide the guarantees in respect of existing loans and borrowings of Gansu Hongyuan of RMB72,017,000 as at 31 May 2021 after the completion of the Second Disposal until the guarantees are released and the Purchaser will procure the release of the guarantees within 90 days of completion of the Second Disposal;
(iv) Kong Sun Yongtai has confirmed to provide continuing financial support to Gansu Hongyuan so as to enable Gansu Hongyuan to meet its liabilities and obligations as and when they fall due and to continue its business for twelve months after 31 May 2021 or up to the completion date of the Second Disposal, whichever is earlier; and
(v) the Purchaser has agreed, conditionally upon the completion of the Second Disposal, to provide continuing financial support to Gansu Hongyuan so as to enable Gansu Hongyuan to meet its liabilities and obligations (including the repayment of the loans and borrowing) as and when they fall due and to continue its business after the completion of the Second Disposal.

Should Gansu Hongyuan be unable to continue in business as a going concern, adjustments would have to be made in the financial information to write down the values of the assets to their net realisable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effect of such adjustments has not yet been reflected in the financial statements.

3. CHANGES IN ACCOUNTING POLICIES

HKFRS 9 — Financial Instruments

HKFRS 9 is effective for the accounting period beginning on or after 1 January 2018. HKFRS 9 replaces HKAS 39, Financial instruments: recognition and measurement (‘‘HKAS 39’’). It sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The new impairment model in HKFRS 9 replaces the ‘‘incurred loss’’ model in HKAS 39 with an expected credit loss (‘‘ECL’’) model. Under the ECL model, it will no longer be necessary for a loss event to occur before an impairment loss is recognised. Instead, an entity is required to recognise and measure either a 12-month ECL or a lifetime ECL, depending on the asset and the facts and circumstances. As a consequence of adopting HKFRS 9, Gansu Hongyuan’s trade and other receivables amounting to RMB57,022,000 as at 1 January 2018 was reclassified from ‘‘loans and receivables’’ as ‘‘amortised cost financial assets’’. Applying ECL model does not result in further provision for ECL as the settlement of these receivables is regulated by the Central Government of the PRC, and periodic payments have been received with no history of default in the past. As such, the Directors consider that the ECL in renewable energy subsidies receivables as at 1 January 2018 is immaterial.

As at 1 January 2018, the Company’s cash and cash equivalents were reclassified from the original classification of ‘‘Loan and receivables’’ under HKAS 39 to the new classification of ‘‘Amortised cost’’ under HKFRS 9. As at 1 January 2018, the directors consider that there is no material difference between the previous carrying amounts and that under new classification.

HKFRS 15 — Revenue from Contracts with Customers

– II-B-11 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

Gansu Hongyuan has adopted HKFRS 15 using cumulative effect method without practical expedients. Gansu Hongyuan has recognised the cumulative effect of initially applying HKFRS 15 as an adjustment to the opening balance of accumulated losses at the date of initial application (that is, 1 January 2018). As a result, the unaudited financial information presented for 2017 has not been restated.

Gansu Hongyuan sells electricity to the power grid company. Revenue from sales of electricity is recognised over time when the electricity generated and transmitted is simultaneously received and consumed by the power grid companies. Gansu Hongyuan has elected the practical expedient to recognise revenue in the amount to which Gansu Hongyuan has a right to invoice as the amount represents and corresponds directly with the value of performance completed and transferred to the power grid company. Gansu Hongyuan has no unsatisfied performance obligations at each reporting date. In the opinion of the Directors, the adoption of HKFRS 15 did not result in significant impact on Gansu Hongyuan’s accounting policies on revenue.

HKFRS 16 — Lease

HKFRS 16 is effective for the accounting period beginning on or after 1 January 2019. The adoption of HKFRS 16 primarily affects Gansu Hongyuan’s accounting as a lessee of leases which are classified as operating leases under HKAS 17, Leases. Upon the adoption of HKFRS 16, at the lease commencement date, Gansu Hongyuan as a lessee recognises a right-of-use asset and a lease liability, except for short-term leases with a lease term of 12 months or less and leases of low-value assets. The application of HKFRS 16 has impact on the recognition of right-of-use assets and lease liabilities as well as the recognition of depreciation charges of right-of-use assets and the interest expense on lease liabilities.

Gansu Hongyuan has applied 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 comparative information presented in 2018 has not been restated and continues to be reported under HKAS 17, as permitted under the simplified transition approach in the standard. The reclassifications and the adjustments arising from HKFRS 16 are therefore recognised in the opening balances on 1 January 2019. In the opinion of our Directors, the adoption of HKFRS 16 resulted in reclassification of Gansu Hongyuan’s ‘‘Lease prepayments’’ as ‘‘Right-of-use assets’’ and did not have significant impact on Gansu Hongyuan’s net assets and net profits when compared with those that would have been presented under HKAS 17.

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2018, 2019 and 2020 and the five months ended 31 May 2020 and 2021, unaudited sales of electricity includes renewable energy subsidies amounting to RMB19,333,000, RMB22,270,000, RMB20,732,000, RMB8,930,000 and RMB10,112,000 respectively.

5. INCOME TAX EXPENSE

Pursuant to CaiShui 2008 No. 46 Notice on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment* (財政部、國家稅務總局關於執行公共基礎設施項目企業所得稅優惠目錄有關問題的通知), Gansu Hongyuan has been approved to entitle a tax holiday of a 3-year full exemption followed by a 3-year 50% exemption commencing from their respective years in which their first operating income is derived.

– II-B-12 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

6. SOLAR POWER PLANTS

Cost
At 1 January 2018
Additions
Written off
At 31 December 2018 and 2019 and 2020 and 31 May 2021
Accumulated depreciation
At 1 January 2018
Charged for the year
At 31 December 2018 and 1 January 2019
Charged for the year
At 31 December 2019 and 1 January 2020
Charged for the year
At 31 December 2020 and 1 January 2021
Charged for the period
At 31 May 2021
Net carrying amount
At 31 December 2018
At 31 December 2019
At 31 December 2020
At 31 May 2021

Solar power
plants
RMB’000
(Unaudited)
227,721
315
(617)
227,419
(33,631)
(8,420)
(42,051)
(8,420)
(50,471)
(8,420)
(58,891)
(3,508)
(62,399)
185,368
176,948
168,528
165,020

As at 31 December 2018, 2019 and 2020 and 31 May 2021, solar plants were all pledged as securities for Gansu Hongyuan’s loans and borrowings (note 8).

– II-B-13 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

7. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 36,166 46,363 58,182 32,745 29,898 27,349 68,911 76,261 85,531	As at 31 May 2021 RMB’000 (Unaudited) 70,159 26,128
		96,287

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 5,403 4,965 6,456 5,994 7,089 5,703 11,686 13,290 12,916 13,083 21,019 25,344 — — 7,763 36,166 46,363 58,182	As at 31 May 2021 RMB’000 (Unaudited) 8,468 6,745 11,670 24,165 19,111
		70,159

– II-B-14 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 1,524 1,436 2,254 5,612 5,586 6,360 6,321 6,974 6,032 11,350 12,283 11,866 11,359 20,084 24,842 — — 6,828 36,166 46,363 58,182	As at 31 May 2021 RMB’000 (Unaudited) 3,102 7,678 6,200 12,266 24,093 16,820
		70,159

Gansu Hongyuan’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 2018, 2019 and 2020 and 31 May 2021, the outstanding renewable energy subsidy amounted to RMB21,019,000, RMB46,363,000, RMB56,534,000 and RMB67,961,000 respectively.

Expected loss rate of these renewable energy subsidy receivables are assessed to be low, because the debtor is state-owned and have good repayment history. In addition, the directors of the Gansu Hongyuan are confident that the renewable energy subsidy receivables are fully recoverable but only subject to timing of allocation of funds from the PRC government. Accordingly, the credit risk regarding contract assets of tariff income receivables is limited.

– II-B-15 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

8. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 21,037 21,107 21,178 93,781 72,542 51,054 114,818 93,649 72,232	As at 31 May 2021 RMB’000 (Unaudited) 21,213 50,804
		72,017

Gansu Hongyuan’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 Effective Interest rates	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 21,037 21,107 21,178 21,107 21,178 21,248 63,745 51,364 29,806 8,929 — — 114,818 93,649 72,232 6.90% 6.90% 6.90%	As at 31 May 2021 RMB’000 (Unaudited) 21,213 21,284 29,520 —
		72,017
		6.90%

Loans and borrowings were all secured by solar power plants, trade receivables and guarantee provided by Kong Sun Yongtai.

9. AMOUNTS DUE FROM/TO INTERMEDIATE HOLDING COMPANY/IMMEDIATE HOLDING COMPANY/FELLOW SUBSIDIARIES

Amounts due from/to intermediate holding company/immediate holding company/fellow subsidiaries are interest-free, unsecured and repayable on demand.

– II-B-16 –

FINANCIAL INFORMATION OF GANSU HONGYUAN

APPENDIX II-B

10. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Gansu Hongyuan entered into the following transactions with related parties:

	Related party						For the five months	For the five months	For the five months
Name of related party	relationship	Type of transaction	For the	year ended 31	December			ended 31 May
			2018	2019		2020		2020	2021
			RMB’000	RMB’000	RMB’000		RMB’000		RMB’000
			(Unaudited)	(Unaudited)	(Unaudited)		(Unaudited)		(Unaudited)
江山永泰投資控股有限公司	Immediate holding	Operation and	—	794		794		331	331
(Kong Sun Yongtai	company	maintenance fee
Investment Holdings
Limited)
北京鑫泰綠能科技有限公司	Fellow subsidiary	Operation and	755	94		1,132		472	1,107
(Beijing Xintai Green		maintenance fee
Energy Technology
Co., Ltd.)

– II-B-17 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

==> picture [95 x 63] intentionally omitted <==

REPORT ON REVIEW OF FINANCIAL INFORMATION OF DUNHUANG WANFA NEW ENERGY LIMITED COMPANY

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the financial information of Dunhuang Wanfa New Energy Limited Company (‘‘Dunhuang Wanfa’’) set out on pages II-C-3 to II-C-15 which comprises the statements of financial position as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Dunhuang Wanfa (the ‘‘Circular’’) 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 Dunhuang Wanfa 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 DUNHUANG WANFA

Conclusion

Emphasis of Matter — Material Uncertainty Related to Going Concern

Without qualifying our conclusion, we draw attention to note 2 to the Financial Information of Dunhuang Wanfa, which indicates that Dunhuang Wanfa has incurred a loss of RMB22,321,000 and RMB3,852,000 for the year ended 31 December 2020 and five months ended 31 May 2021 respectively and had net current liabilities of RMB416,728,000 as at 31 May 2021. These conditions indicate the existence of a material uncertainty that may cast significant doubt about Dunhuang Wanfa’s ability to continue as a going concern.

BDO Limited

Certified Public Accountants

Au Yiu Kwan Practising Certificate Number P05018 Hong Kong, 30 August 2021

– II-C-2 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

Set out below is the unaudited financial information of Dunhuang Wanfa which comprises the unaudited statements of financial position of Dunhuang Wanfa as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 the Dunhuang Wanfa. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Dunhuang Wanfa 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 DUNHUANG WANFA

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF DUNHUANG WANFA

Notes Revenue 4 Cost of sales Gross profit Other gains and losses Administrative expenses Finance costs Loss before income tax Income tax expense 5 Loss for the year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 29,765 59,186 57,786 (15,558) (27,233) (29,959) 14,207 31,953 27,827 1 (1,003) (9,119) (758) (2,775) (2,779) (38,250) (38,250) (38,250) (24,800) (10,075) (22,321) — — — (24,800) (10,075) (22,321)	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 24,467 24,912 (14,023) (9,833) 10,444 15,079 (9,120) — (1,272) (1,266) (15,938) (15,938) (15,886) (2,125) — (1,727) (15,886) (3,852)

– II-C-4 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF DUNHUANG WANFA

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 6 Current assets Trade and other receivables 7 Amounts due from immediate holding company 9 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payables Loans and borrowings 8 Amounts due to intermediate holding company 9 Amounts due to immediate holding company 9 Amounts due to fellow subsidiaries 9 Total current liabilities Net current assets/(liabilities) Total assets less current liabilities Non-current liabilities Loans and borrowings 8 Total non-current liabilities Net assets Equity Paid in capital Reserves Total equity	2018 RMB’000 (Unaudited) 56 473,627 473,683 105,161 33,671 91 138,923 10,150 — — 35,990 — 16,849 62,989 75,934 549,617 500,000 500,000 49,617 80,000 (30,383) 49,617	31 December 2019 RMB’000 (Unaudited) 225 456,172 456,397 148,227 682 18 148,927 4,479 — — 43,023 — 18,280 65,782 83,145 539,542 500,000 500,000 39,542 80,000 (40,458) 39,542	2020 RMB’000 (Unaudited) 161 437,665 437,826 185,877 — 78 185,955 2,962 — 500,000 48,563 34,717 20,318 606,560 (420,605) 17,221 — — 17,221 80,000 (62,779) 17,221	31 May 2021 RMB’000 (Unaudited) 143 429,954 430,097 206,517 — 661 207,178 2,881 1,727 500,000 47,813 49,342 22,143 623,906 (416,728) 13,369 — — 13,369 80,000 (66,631) 13,369

– II-C-5 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

UNAUDITED STATEMENTS OF CASH FLOWS OF DUNHUANG WANFA

Cash flows from operating activities Loss before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Impairment losses for other receivables Interest expense Operating profit before working capital changes Increase in trade and other receivables Increase/(Decrease) in trade and other payables Net cash generated from/(used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Payments for purchase of solar power plant Proceeds from disposal of solar power plants under construction Net cash used in investing activities	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (24,800) (10,075) (22,321) 22 51 65 12,478 18,479 18,507 — 1,204 9,120 38,250 38,250 38,250 25,950 47,909 43,621 (49,345) (44,270) (46,770) 43,162 (44) (4) 19,767 3,595 (3,153) (6) (221) — (12,289) — — (32,342) (6,650) (1,514) 24,078 — — (20,559) (6,871) (1,514)	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) (15,886) (2,125) 26 18 7,711 7,711 9,120 — 15,938 15,938 16,909 21,542 (19,775) (20,640) (3) (1) (2,869) 901 — — — — (684) (80) — — (684) (80)

– II-C-6 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

Cash flows from financing activities Advances from intermediate holding company Advances from fellow subsidiaries Repayments to intermediate holding company Repayments to immediate holding company Net cash generated from/(used in) financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/ period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 8,590 7,033 5,540 — 1,431 2,038 — — — (7,883) (5,261) (2,851) 707 3,203 4,727 (85) (73) 60 176 91 18 91 18 78	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 3,520 — 1,000 1,825 — (750) (908) (1,313) 3,612 (238) 59 583 18 78 77 661

– II-C-7 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF DUNHUANG WANFA

Balance at 1 January 2018 Loss for the year Balance at 31 December 2018 and 1 January 2019 Loss for the year Balance at 31 December 2019 and 1 January 2020 Loss for the year Balance at 31 December 2020 and 1 January 2021 Loss for the year Balance at 31 May 2021 Balance at 31 December 2019 and 1 January 2020 Loss for the year Balance at 31 May 2020	Paid in capital RMB’000 (Unaudited) 80,000 — 80,000 — 80,000 — 80,000 — 80,000 80,000 — 80,000	Accumulated losses RMB’000 (Unaudited) (5,583) (24,800) (30,383) (10,075) (40,458) (22,321) (62,779) (3,852) (66,631) (40,458) (15,886) (56,344)	Total RMB’000 (Unaudited) 74,417 (24,800) 49,617 (10,075) 39,542 (22,321) 17,221 (3,852) 13,369 39,542 (15,886) 23,656

– II-C-8 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 10 July 2021, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Dunhuang Wanfa entered into the agreement (the ‘‘Third Agreement’’), pursuant to which the Vendor agreed to sell, and the Purchaser agreed to acquire, the entire equity interest in Dunhuang Wanfa at a total consideration of approximately RMB471,917,000 (the ‘‘Third Disposal’’). Upon completion of the Third Disposal, Dunhuang Wanfa will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Dunhuang Wanfa for the years ended 31 December 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Third Disposal.

The Unaudited Financial Information of Dunhuang Wanfa 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 Dunhuang Wanfa has incurred a loss of RMB22,321,000 and RMB3,852,000 for the year ended 31 December 2020 and five months ended 31 May 2021 respectively and had net current liabilities of RMB416,728,000 as at 31 May 2021. These conditions indicate the existence of a material certainty which may cast significant doubt on Dunhuang Wanfa’s ability to continue as a going concern and therefore Dunhuang Wanfa may not able to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, the directors of the Company are of the opinion that Dunhuang Wanfa will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months from 31 May 2021 after taking into account the followings:

(i) the cash flow projection of Dunhuang Wanfa for the next twelve months from 31 May 2021, the directors of the Company are of the opinion that Dunhuang Wanfa is able to generate positive cash flows from its operation. In preparing the cash flow projection by the directors of Dunhuang Wanfa, 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 immediate holding company (‘‘Kong Sun Yongtai’’), intermediate holding company and fellow subsidiaries have confirmed not to demand repayment of debt due from Dunhuang Wanfa until such time when the repayment will not affect Dunhuang Wanfa’s ability to repay other creditors in the normal course of business for twelve months after 31 May 2021 or up to the completion date of the Third Disposal, whichever is earlier;

– II-C-9 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

(iii) as set out of in note 8 to the Unaudited Financial Information, Kong Sun Yongtai will settle the loans and borrowings of RMB500,000,000 as at 31 May 2021 after the completion of the Third Disposal;
(iv) Kong Sun Yongtai has confirmed to provide continuing financial support to Dunhuang Wanfa so as to enable Dunhuang Wanfa to meet its liabilities and obligations as and when they fall due and to continue its business for twelve months after 31 May 2021 or up to the completion date of the Third Disposal, whichever is earlier; and
(v) the Purchaser has agreed, conditionally upon the completion of the Third Disposal, to provide continuing financial support to Dunhuang Wanfa so as to enable Dunhuang Wanfa to meet its liabilities and obligations as and when they fall due and to continue its business after the completion of the Third Disposal.

Should Dunhuang Wanfa be unable to continue in business as a going concern, adjustments would have to be made in the financial information to write down the values of the assets to their net realisable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effect of such adjustments has not yet been reflected in the financial statements.

3. CHANGES IN ACCOUNTING POLICIES

HKFRS 9 — Financial Instruments

HKFRS 9 is effective for the accounting period beginning on or after 1 January 2018. HKFRS 9 replaces HKAS 39, Financial instruments: recognition and measurement (‘‘HKAS 39’’). It sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The new impairment model in HKFRS 9 replaces the ‘‘incurred loss’’ model in HKAS 39 with an expected credit loss (‘‘ECL’’) model. Under the ECL model, it will no longer be necessary for a loss event to occur before an impairment loss is recognised. Instead, an entity is required to recognise and measure either a 12-month ECL or a lifetime ECL, depending on the asset and the facts and circumstances. As a consequence of adopting HKFRS 9, Dunhuang Wanfa’s trade and other receivables amounting to RMB79,893,000 as at 1 January 2018 was reclassified from ‘‘loans and receivables’’ as ‘‘amortised cost financial assets’’. Applying ECL model does not result in further provision for ECL as the settlement of these receivables is regulated by the Central Government of the PRC, and periodic payments have been received with no history of default in the past. As such, the Directors consider that the ECL in renewable energy subsidies receivables as at 1 January 2018 is immaterial.

– II-C-10 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

HKFRS 15 — Revenue from Contracts with Customers

Dunhuang Wanfa has adopted HKFRS 15 using cumulative effect method without practical expedients. Dunhuang Wanfa has recognised the cumulative effect of initially applying HKFRS 15 as an adjustment to the opening balance of accumulated losses at the date of initial application (that is, 1 January 2018).

Dunhuang Wanfa sells electricity to the power grid company. Revenue from sales of electricity is recognised over time when the electricity generated and transmitted is simultaneously received and consumed by the power grid companies. Dunhuang Wanfa has elected the practical expedient to recognise revenue in the amount to which Dunhuang Wanfa has a right to invoice as the amount represents and corresponds directly with the value of performance completed and transferred to the power grid company. Dunhuang Wanfa has no unsatisfied performance obligations at each reporting date. In the opinion of the Directors, the adoption of HKFRS 15 did not result in significant impact on Dunhuang Wanfa’s accounting policies on revenue.

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2018, 2019 and 2020 and the five months ended 31 May 2020 and 2021, unaudited sales of electricity includes renewable energy subsidies amounting to RMB22,700,000, RMB44,681,000, RMB47,188,000, RMB18,978,000 and RMB19,745,000 respectively.

5. INCOME TAX EXPENSE

Pursuant to CaiShui 2008 No. 46 Notice on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment* (財政部、國家稅務總局關於執行公共基礎設施項目企業所得稅優惠目錄有關問題的通知), Dunhuang Wanfa has been approved to entitle a tax holiday of a 3-year full exemption followed by a 3-year 50% exemption commencing from their respective years in which their first operating income is derived.

– II-C-11 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

6. SOLAR POWER PLANTS

Cost At 1 January 2018 Additions Disposal Transfer upon completion At 31 December 2018 and 1 January 2019 Additions At 31 December 2019 and 2020 and 31 May 2021 Accumulated depreciation At 1 January 2018 Charged for the year At 31 December 2018 and 1 January 2019 Charged for the year At 31 December 2019 and 1 January 2020 Charged for the year At 31 December 2020 and 1 January 2021 Charged for the period At 31 May 2021 Net carrying amount At 31 December 2018 At 31 December 2019 At 31 December 2020 At 31 May 2021	Solar power plants RMB’000 (Unaudited) — — — 486,105 486,105 1,024 487,129 — (12,478) (12,478) (18,479) (30,957) (18,507) (49,464) (7,711) (57,175) 473,627 456,172 437,665 429,954	Solar power plants under construction RMB’000 (Unaudited) 494,573 12,289 (20,757) (486,105) — — — — — — — — — — — — — — — —	Total RMB’000 (Unaudited) 494,573 12,289 (20,757) — 486,105 1,024 487,129 — (12,478) (12,478) (18,479) (30,957) (18,507) (49,464) (7,711) (57,175) 473,627 456,172 437,665 429,954

– II-C-12 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

7. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits Impairment losses for other receivables Other receivables, prepayments and deposits, net	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 30,227 81,368 134,945 74,934 68,063 61,256 — (1,204) (10,324) 74,934 66,859 50,932 105,161 148,227 185,877	As at 31 May 2021 RMB’000 (Unaudited) 158,725
		58,116 (10,324
		47,792
		206,517

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 8,731 11,435 12,853 11,869 13,300 14,015 8,170 26,724 27,356 1,457 28,451 50,812 — 1,458 29,909 30,227 81,368 134,945	As at 31 May 2021 RMB’000 (Unaudited) 16,600 11,671 27,746 50,547 52,161
		158,725

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 2,514 4,191 4,348 9,179 10,686 13,010 12,113 14,330 14,889 6,409 24,448 25,531 12 27,701 49,454 — 12 27,713 30,227 81,368 134,945	As at 31 May 2021 RMB’000 (Unaudited) 7,033 13,594 11,306 29,545 49,866 47,381
		158,725

– II-C-13 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

Movements in provision for impairment of other receivables are as follows:

At 1 January 2018 and 31 December 2018 Impairment made during the year At 31 December 2019 and 1 January 2020 Impairment made during the year At 31 December 2020 and 31 May 2021	Solar power plants RMB’000 (Unaudited) — 1,204
	1,204 9,120
	10,324

Dunhuang Wanfa’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 2018, 2019 and 2020 and 31 May 2021, the outstanding renewable energy subsidy amounted to RMB29,909,000, RMB80,730,000, RMB134,052,000 and RMB156,364,000 respectively.

Expected loss rate of these renewable energy subsidy receivables are assessed to be low, because the debtor is state-owned and have good repayment history. In addition, the directors of the Dunhuang Wanfa are confident that the renewable energy subsidy receivables are fully recoverable but only subject to timing of allocation of funds from the PRC government. Accordingly, the credit risk regarding trade receivables of tariff income is limited.

8. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — — 500,000 500,000 500,000 — 500,000 500,000 500,000	As at 31 May 2021 RMB’000 (Unaudited) 500,000 —
		500,000

Dunhuang Wanfa’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 Effective Interest rates	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — — 500,000 — 500,000 — 500,000 — — 500,000 500,000 500,000 7.7% 7.7% 7.7%	As at 31 May 2021 RMB’000 (Unaudited) 500,000 — —
		500,000
		7.7%

– II-C-14 –

APPENDIX II-C

FINANCIAL INFORMATION OF DUNHUANG WANFA

According to cooperation agreement entered into between Kong Sun Yongtai and Jiaxing Shengshi (the ‘‘Cooperation Agreement’’), Jiaxing Shengshi contributed a capital of RMB500,000,000 to Dunhuang Wanfa and holds 86.207% equity interest of Dunhuang Wanfa upon completion of the capital contribution while Kong Sun Yongtai retains the power to control the financial and operating policies of Dunhuang Wanfa so as to direct its relevant activities and to obtain significant economic benefits from its activities. Dunhuang Wanfa holds a solar power plant of 60 MW in Dunhuang, Gansu Province of the PRC. Pursuant to the Cooperation Agreement, after repayment by Kong Sun Yongtai to Jiaxing Shengshi of the pre-agreed price, comprising (i) the cost of equity in the amount of RMB500,000,000 to be paid at the end of the term of this arrangement (i.e. 5 years from 2017); and (ii) premium on equity (in substance a finance cost) to be paid in quarterly instalments throughout the term of Jiaxing Shengshi (i.e. 5 years from 2017), Jiaxing Shengshi will transfer back the 86.207% equity interest of Dunhuang Wanfa to Kong Sun Yongtai. In view of Kong Sun Yongtai’s power to control the financial and operating policies of Dunhuang Wanfa so as to direct the relevant activities of Dunhuang Wanfa and to obtain significant economic benefits from its activities, the directors of the Company are of the opinion that the arrangement under the Cooperation Agreement is in substance a financing arrangement of RMB500,000,000 with the pledge of the 86.207% equity interests of Dunhuang Wanfa and therefore Dunhuang Wanfa is continuously treated as a whollyowned subsidiary of Kong Sun Yongtai as at 31 December 2018, 2019, 2020 and 31 May 2021.

As one of the condition precedents of the Third Agreement, Jiaxing Shengshi will transfer the 86.207% pledged equity interest in Dunhuang Wanfa back to Kong Sun Yongtai before the completion of the Third Disposal.

Kong Sun Yongtai will take up and repay the loans and borrowings of RMB500,000,000 to Jiaxing Shengshi after the completion date of the Third Disposal.

9. AMOUNTS DUE FROM/TO INTERMEDIATE HOLDING COMPANY/IMMEDIATE HOLDING COMPANY/FELLOW SUBSIDIARIES

Amounts due from/to intermediate holding company/immediate holding company/fellow subsidiaries are interest-free, unsecured and repayable on demand.

10. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Dunhuang Wanfa entered into the following transactions with related parties:

	Related party						For the five months	For the five months
Name of related party	relationship	Type of transaction	For the	year ended 31	December		ended 31 May
			2018	2019		2020	2020	2021
			RMB’000	RMB’000	RMB’000		RMB’000	RMB’000
			(Unaudited)	(Unaudited)	(Unaudited)		(Unaudited)	(Unaudited)
江山永泰投資控股有限公司	Immediate holding	Operation and	—	1,168		1,168	486	486
(Kong Sun Yongtai	company	maintenance fee
Investment Holdings
Limited)
北京鑫泰綠能科技有限公司	Fellow subsidiary	Operation and	1,509	189		2,264	943	1,197
(Beijing Xintai Green		maintenance fee
Energy Technology Co.,
Ltd.)

– II-C-15 –

FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

==> picture [95 x 63] intentionally omitted <==

REPORT ON REVIEW OF FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA NEW ENERGY LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the financial information of Hualong County Ruiqida New Energy Limited (‘‘Hualong County Ruiqida’’) set out on pages II-D-3 to II-D-15 which comprises the statements of financial position as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Hualong County Ruiqida (the ‘‘Circular’’) 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 Hualong County Ruiqida 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 HUALONG COUNTY RUIQIDA

APPENDIX II-D

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

Conclusion

Emphasis of Matter — Material Uncertainty Related to Going Concern

Without qualifying our conclusion, we draw attention to note 2 to the Financial Information of Hualong County Ruiqida, which indicates that Hualong County Ruiqida has incurred a loss of RMB6,889,000 and RMB2,276,000 for the year ended 31 December 2020 and five months ended 31 May 2021 respectively and had net liabilities of RMB31,192,000 as at 31 May 2021. These conditions indicate the existence of a material uncertainty that may cast significant doubt about Hualong County Ruiqida’s ability to continue as a going concern.

BDO Limited

Certified Public Accountants

Au Yiu Kwan

Practising Certificate Number P05018 Hong Kong, 30 August 2021

– II-D-2 –

FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

Set out below is the unaudited financial information of Hualong County Ruiqida which comprises the unaudited statements of financial position of Hualong County Ruiqida as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 the Hualong County Ruiqida. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Hualong County Ruiqida 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 HUALONG COUNTY RUIQIDA

APPENDIX II-D

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF HUALONG COUNTRY RUIQIDA

Notes Revenue 4 Cost of sales Gross profit Other gains and losses Administrative expenses Finance costs Loss before income tax Income tax expense 5 Loss for the year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 5,591 15,698 15,933 (1,079) (10,328) (6,469) 4,512 5,370 9,464 501 (50) — (616) (1,000) (741) (12,274) (14,876) (15,612) (7,877) (10,556) (6,889) — — — (7,877) (10,556) (6,889)	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 6,835 7,661 (2,588) (3,312) 4,247 4,349 — — (289) (312) (6,542) (6,313) (2,584) (2,276) — — (2,584) (2,276)

– II-D-4 –

FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF HUALONG COUNTRY RUIQIDA

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 6 Right-of-use assets Lease payments Current assets Trade other receivables 7 Amounts due from immediate holding company 9 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Loans and borrowings 8 Amounts due to intermediate holding company 9 Amounts due to fellow subsidiaries 9 Total current liabilities Net current assets Total assets less current liabilities Non-current liabilities Loans and borrowings 8 Total non-current liabilities Net liabilities Equity Paid in capital Reserves Total equity	31 December 2018 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 4 397 126,492 122,529 — 2,675 2,286 — 128,782 125,601 24,026 32,581 103,801 144,911 128 77 127,955 177,569 16,646 16,485 — — 31,520 42,730 42,191 42,435 90,357 101,650 37,598 75,919 166,380 201,520 177,851 223,547 177,851 223,547 (11,471) (22,027) — — (11,471) (22,027) (11,471) (22,027)	2020 RMB’000 (Unaudited) 310 121,688 2,563 — 124,561 44,826 139,561 106 184,493 20,503 3,994 51,060 42,532 118,089 66,404 190,965 219,881 219,881 (28,916) — (28,916) (28,916)	31 May 2021 RMB’000 (Unaudited) 274 119,591 2,517 — 122,382 50,949 135,536 442 186,927 21,080 51,053 52,210 43,336 167,679 19,248 141,630 172,822 172,822 (31,192) — (31,192) (31,192)

– II-D-5 –

FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

UNAUDITED STATEMENTS OF CASH FLOWS OF HUALONG COUNTRY RUIQIDA

Cash flows from operating activities Loss before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Depreciation of right-of-use assets Interest expense Interest income Operating profit before working capital changes Increase in trade and other receivables Increase in trade and other payables Net cash (used in)/generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Payments purchase of right-of-use assets Interests received Net cash used in investing activities	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (7,877) (10,556) (6,889) 1 55 87 802 4,909 5,061 — 112 112 12,274 14,876 15,612 (1) (1) (1) 5,199 9,395 13,982 (7,528) (8,555) (12,245) 137 3,872 4,018 (2,192) 4,712 5,755 (5) (448) — (69,131) (4,979) (4,220) (300) (501) — 1 1 1 (69,435) (5,927) (4,219)	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) (2,584) (2,276) 34 36 1,979 2,097 63 46 6,542 6,313 (1) (1) 6,033 6,215 (5,343) (6,123) 3,319 2,546 4,009 2,638 — — (2,150) (1,969) — — 1 1 (2,149) (1,968)

– II-D-6 –

FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

Cash flows from financing activities Proceeds from loans and borrowings Repayments of loans and borrowings Interest paid Advances from intermediate holding company Advances from fellow subsidiaries Repayments to immediate holding company Net cash generated from/(used in) financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 130,634 45,000 — (22,783) — — (4,938) (7,540) (7,948) 31,520 11,210 8,330 42,191 244 97 (105,417) (47,750) (1,986) 71,207 1,164 (1,507) (420) (51) 29 548 128 77 128 77 106	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) — — — — (3,320) (3,257) 2,180 1,150 326 804 (1,052) 969 (1,866) (334) (6) 336 77 106 71 442

– II-D-7 –

FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF HUALONG COUNTRY RUIQIDA

Balance at 1 January 2018 Loss for the year Balance at 31 December 2018 and 1 January 2019 Loss for the year Balance at 31 December 2019 and 1 January 2020 Loss for the year Balance at 31 December 2020 and 1 January 2021 Loss for the period Balance at 31 May 2021 Balance at 31 December 2019 and 1 January 2020 Loss for the period Balance at 31 May 2020	Paid in capital RMB’000 (Unaudited) — — — — — — — — — — — —	Accumulated losses RMB’000 (Unaudited) (3,594) (7,877) (11,471) (10,556) (22,027) (6,889) (28,916) (2,276) (31,192) (22,027) (2,584) (24,611)	Total RMB’000 (Unaudited) (3,594) (7,877) (11,471) (10,556) (22,027) (6,889) (28,916) (2,276) (31,192) (22,027) (2,584) (24,611)

– II-D-8 –

FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 10 July 2021, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Hualong County Ruiqida entered into the agreement (the ‘‘Fourth Agreement’’), pursuant to which the Vendor agreed to sell, and the Purchaser agreed to acquire, the entire equity interest in Hualong County Ruiqida at a total consideration of approximately RMB95,895,000 (the ‘‘Fourth Disposal’’). Upon completion of the Fourth Disposal, Hualong County Ruiqida will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Hualong County Ruiqida for the years ended 31 December 2017, 2018 and 2019 and for the five months ended 31 May 2020 and 2021 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 Fourth Disposal.

The Unaudited Financial Information of Hualong County Ruiqida 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 Hualong County Ruiqida has incurred a loss of RMB6,889,000 and RMB2,276,000 for the year ended 31 December 2020 and five months ended 31 May 2021 respectively and had net liabilities of RMB31,192,000 as at 31 May 2021. These conditions indicate the existence of a material certainty which may cast significant doubt on Hualong County Ruiqida’s ability to continue as a going concern and therefore Hualong County Ruiqida may not be able to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, the directors of the Company are of the opinion that Hualong County Ruiqida will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months from 31 May 2021 after taking into account the followings:

(i) the cash flow projection of Hualong County Ruiqida for the next twelve months from 31 May 2021, the directors of the Company are of the opinion that Hualong County Ruiqida is able to generate positive cash flows from its operation. In preparing the cash flow projection by the directors of Hualong County Ruiqida, 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 intermediate holding company (‘‘Kong Sun Yongtai’’) and fellow subsidiaries of Hualong County Ruiqida has confirmed not to demand repayment of debt due from Hualong County Ruiqida until such time when the repayment will not affect Hualong County Ruiqida’s ability to repay other creditors in the normal course of business for twelve months after 31 May 2021 or up to the completion date of the Fourth Disposal, whichever is earlier;
(iii) as set out in note 8(a) to the Unaudited Financial Information, Kong Sun Youngtai will settle the loans and borrowings of RMB130,634,000 as at 31 May 2021 after the completion of the Fourth Disposal.

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FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

(iv) Hualong County Ruiqida will repay the remaining loans and borrowings of RMB93,241,000 (the ‘‘Remaining Borrowings’’) as at 31 May 2021 according to the repayment terms of the borrowings. Pursuant to the Fourth Agreement, Kong Sun Yongtai will continue to provide the guarantees in respect of the Remaining Borrowings of Hualong County Ruiqida (note 8(b)) after the completion of the Fourth Disposal until the guarantees are released and the Purchaser will procure the release of the guarantees within 90 days of completion of the Fourth Disposal;
(v) Kong Sun Yongtai has confirmed to provide continuing financial support to Hualong County Ruiqida so as to enable to meet its liabilities and obligations as and when they fall due and to continue its business for twelve months after 31 May 2021 or up to the completion date of the Fourth Disposal, whichever is earlier; and
(vi) the Purchaser has agreed, conditionally upon the completion of the Fourth Disposal, to provide continuing financial support to Hualong County Ruiqida so as to enable Hualong County Ruiqida to meet its liabilities and obligations (including the repayment of Remaining Borrowings as set out in note 2 (iii) above) as and when they fall due and to continue its business after the completion of the Fourth Disposal.

Should Hualong County Ruiqida be unable to continue in business as a going concern, adjustments would have to be made in the financial information to write down the values of the assets to their net realisable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effect of such adjustments has not yet been reflected in the financial statements.

3. CHANGES IN ACCOUNTING POLICIES

HKFRS 9 — Financial Instruments

HKFRS 9 is effective for the accounting period beginning on or after 1 January 2018. HKFRS 9 replaces HKAS 39, Financial instruments: recognition and measurement (‘‘HKAS 39’’). It sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The new impairment model in HKFRS 9 replaces the ‘‘incurred loss’’ model in HKAS 39 with an expected credit loss (‘‘ECL’’) model. Under the ECL model, it will no longer be necessary for a loss event to occur before an impairment loss is recognised. Instead, an entity is required to recognise and measure either a 12-month ECL or a lifetime ECL, depending on the asset and the facts and circumstances. As a consequence of adopting HKFRS 9, Hualong County Ruiqida‘s trade and other receivables amounting to RMB16,498,000 as at 1 January 2018 was reclassified from ‘‘loans and receivables’’ as ‘‘amortised cost financial assets’’. Applying ECL model does not result in further provision for ECL as the settlement of these receivables is regulated by the Central Government of the PRC, and periodic payments have been received with no history of default in the past. As such, the Directors consider that the ECL in renewable energy subsidies receivables as at 1 January 2018 is immaterial.

As at 1 January 2018, the Company’s amounts due from intermediate holding company, amounts due from fellow subsidiaries and cash and cash equivalents were reclassified from the original classification of ‘‘Loan and receivables’’ under HKAS 39 to the new classification of ‘‘Amortised cost’’ under HKFRS 9. As at 1 January 2018, the directors consider that there is no material difference between the previous carrying amounts and that under new classification.

HKFRS 15 — Revenue from Contracts with Customers

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FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

Hualong County Ruiqida has adopted HKFRS 15 using cumulative effect method without practical expedients. Hualong County Ruiqida has recognised the cumulative effect of initially applying HKFRS 15 as an adjustment to the opening balance of accumulated losses at the date of initial application (that is, 1 January 2018).

Hualong County Ruiqida sells electricity to the power grid company. Revenue from sales of electricity is recognised over time when the electricity generated and transmitted is simultaneously received and consumed by the power grid companies. Hualong County Ruiqida has elected the practical expedient to recognise revenue in the amount to which Hualong County Ruiqida has a right to invoice as the amount represents and corresponds directly with the value of performance completed and transferred to the power grid company. Hualong County Ruiqida has no unsatisfied performance obligations at each reporting date. In the opinion of the Directors, the adoption of HKFRS 15 did not result in significant impact on Hualong County Ruiqida‘s accounting policies on revenue.

HKFRS 16 — Lease

HKFRS 16 is effective for the accounting period beginning on or after 1 January 2019. The adoption of HKFRS 16 primarily affects Hualong County Ruiqida‘s accounting as a lessee of leases which are classified as operating leases under HKAS 17, Leases. Upon the adoption of HKFRS 16, at the lease commencement date, Hualong County Ruiqida as a lessee recognises a right-of-use asset and a lease liability, except for shortterm leases with a lease term of 12 months or less and leases of low-value assets. The application of HKFRS 16 has impact on the recognition of right-of-use assets and lease liabilities as well as the recognition of depreciation charges of right-of-use assets and the interest expense on lease liabilities.

Hualong County Ruiqida has applied 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 comparative information presented in 2018 has not been restated and continues to be reported under HKAS 17, as permitted under the simplified transition approach in the standard. The reclassifications and the adjustments arising from HKFRS 16 are therefore recognised in the opening balances on 1 January 2019. In the opinion of our Directors, the adoption of HKFRS 16 resulted in reclassification of Hualong County Ruiqida‘s ‘‘Lease prepayments’’ as ‘‘Right-of-use assets’’ and did not have significant impact on Hualong County Ruiqida‘s net assets and net profits when compared with those that would have been presented under HKAS 17.

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2018, 2019 and 2020 and the five months ended 31 May 2020 and 2021, unaudited sales of electricity includes renewable energy subsidies amounting to RMB4,240,000, RMB11,780,000, RMB12,357,000, RMB5,501,636 and RMB5,391,000 respectively.

5. INCOME TAX EXPENSE

Pursuant to CaiShui 2008 No. 46 Notice on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment* (財政部、國家稅務總局關於執行公共基礎設施項目企業所得稅優惠目錄有關問題的通知), Hualong County Ruiqida has been approved to entitle a tax holiday of a 3-year full exemption followed by a 3-year 50% exemption commencing from their respective years in which their first operating income is derived.

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FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

6. SOLAR POWER PLANTS

Cost At 1 January 2018 Additions Transfer upon completion At 31 December 2018 and 1 January 2019 Additions At 31 December 2019 and 1 January 2020 Additions At 31 December 2020 and 31 May 2021 Accumulated depreciation At 1 January 2018 Charged for the year At 31 December 2018 and 1 January 2019 Charged for the year At 31 December 2019 and 1 January 2020 Charged for the year At 31 December 2020 and 1 January 2021 Charged for the period At 31 May 2021 Net carrying amount At 31 December 2018 At 31 December 2019 At 31 December 2020 At 31 May 2021	Solar power plants RMB’000 (Unaudited) — 35,715 91,579 127,294 946 128,240 4,220 132,460 — (802) (802) (4,909) (5,711) (5,061) (10,772) (2,097) (12,869) 126,492 122,529 121,688 119,591	Solar power plants under construction RMB’000 (Unaudited) 90,154 1,425 (91,579) — — — — — — — — — — — — — — — — — —	Total RMB’000 (Unaudited) 90,154 37,140 — 127,294 946 128,240 4,220 132,460 — (802) (802) (4,909) (5,711) (5,061) (10,772) (2,097) (12,869) 126,492 122,529 121,688 119,591

As at 31 December 2018, 2019 and 2020 and 31 May 2021, solar plants were all pledged as securities for Hualong County Ruiqida‘s loans and borrowings (note 8).

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FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

7. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 7,225 20,439 34,262 16,801 12,142 10,564 24,026 32,581 44,826	As at 31 May 2021 RMB’000 (Unaudited) 41,344 9,605
		50,949

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 3,322 3,712 3,464 1,487 3,041 3,318 2,416 6,833 7,439 — 6,853 13,188 — — 6,853 7,225 20,439 34,262	As at 31 May 2021 RMB’000 (Unaudited) 4,521 4,013 6,552 13,589 12,669
		41,344

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 1,605 1,550 1,453 2,275 3,113 3,108 1,422 3,108 3,444 1,923 7,049 7,368 — 5,619 13,270 — — 5,619 7,225 20,439 34,262	As at 31 May 2021 RMB’000 (Unaudited) 1,982 3,893 3,599 6,869 13,488 11,513
		41,344

Hualong County Ruiqida‘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 2018, 2019 and 2020 and 31 May 2021, the outstanding renewable energy subsidy amounted to RMB6,853,000, RMB20,041,000, RMB34,004,000 and RMB41,100,000 respectively.

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FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

Expected loss rate of these renewable energy subsidy receivables are assessed to be low, because the debtor is state-owned and have good repayment history. In addition, the directors of the Hualong County Ruiqida are confident that the renewable energy subsidy receivables are fully recoverable but only subject to timing of allocation of funds from the PRC government. Accordingly, the credit risk regarding trade receivables of tariff income is limited.

8. LOANS AND BORROWINGS

Current Secured — other borrowings Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — — 3,994 177,851 223,547 219,881 177,851 223,547 223,875	As at 31 May 2021 RMB’000 (Unaudited) 51,053 172,822
		223,875

Hualong County Ruiqida’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 Effective Interest rates	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — — 3,994 — 3,994 53,490 152,324 203,311 160,642 25,527 16,242 5,749 177,851 223,547 223,875 5.6%–8.17% 5.6%–8.5% 5.6%–8.5%	As at 31 May 2021 RMB’000 (Unaudited) 51,053 139,298 30,620 2,904
		223,875
		5.6%–8.5%

Except for amount of RMB130,634,000, the remaining loans and borrowings were all secured by solar power plants, trade receivables and guarantee provided by Kong Sun Yongtai .

(a) According to cooperation agreement entered into between Kong Sun Yongtai and Taizhou Jiuan (the ‘‘Cooperation Agreement’’), Taizhou Jiuan contributed a capital of RMB180,000,000 to Hualong County Ruiqida and holds 99.96% equity interest of Hualong County Ruiqida upon completion of the capital contribution while Kong Sun Yongtai retains the power to control the financial and operating policies of Hualong County Ruiqida so as to direct its relevant activities and to obtain significant economic benefits from its activities. Hualong County Ruiqida holds a solar power plant of 20 MW in Hualong County, Qinghai Province of the PRC. Pursuant to the Cooperation Agreement, after repayment by Kong Sun Yongtai to Taizhou Jiuan of the pre-agreed price, comprising (i) the cost of equity in the amount of RMB130,634,000 to be paid at the end of this arrangement (i.e. 5 years from 2018); and (ii) premium on equity (in substance a finance cost) to be paid in quarterly instalments throughout the term of Taizhou Jiuan (i.e. 5 years from 2018), Taizhou Jiuan will transfer back the 99.96% equity interest of Hualong County Ruiqida to Kong Sun Yongtai. In view of Kong Sun Yongtai’s power to control the financial and operating policies of Hualong County Ruiqida so as to direct the relevant activities of Hualong County Ruiqida and to obtain significant economic benefits

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FINANCIAL INFORMATION OF HUALONG COUNTY RUIQIDA

APPENDIX II-D

from its activities, the directors of the Company are of the opinion that the arrangement under the Cooperation Agreement is in substance a financing arrangement of RMB130,634,000 with the pledge of the 99.96% equity interests of Hualong County Ruiqida and therefore Hualong County Ruiqida is continuously treated as a wholly-owned subsidiary of Kong Sun Yongtai as at 31 December 2018, 2019, 2020 and 31 May 2021.

As one of the condition precedents of the Fourth Agreement, Taizhou Jiuan will transfer the 99.96% pledged equity interest in Hualong County Ruiqida back to Kong Sun Yongtai before the completion of the Fourth Disposal.

Kong Sun Yongtai will to take up and repay the loans and borrowings of RMB130,634,000 to Taizhou Jiuan after the completion date of the Fourth Disposal.

(b) Other than the above, the remaining loans and borrowings of RMB47,217,000, RMB92,913,000, RMB93,241,000 and RMB93,241,000 as at 31 December 2018, 2019, 2020 and 31 May 2021 are secured by solar power plants and trade receivables of Hualong County Ruiqida and corporate guarantee by Kong Sun Yongtai.

9. AMOUNTS DUE FROM/TO INTERMEDIATE HOLDING COMPANY/IMMEDIATE HOLDING COMPANY/FELLOW SUBSIDIARIES

Amounts due from/to intermediate holding company/immediate holding company/fellow subsidiaries are interest-free, unsecured and repayable on demand.

10. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Hualong County Ruiqida entered into the following transactions with related parties:

	Related party					For the five months	For the five months	For the five months
Name of related party	relationship	Type of transaction	For the	year ended 31	December		ended 31 May
			2018	2019	2020		2020	2021
			RMB’000	RMB’000	RMB’000	RMB’000		RMB’000
			(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)		(Unaudited)
江山永泰投資控股	Immediate holding	Operation and	—	670	670		300	282
有限公司(Kong Sun	company	maintenance fee
Yongtai Investment
Holdings Limited)
北京鑫泰綠能科技	Fellow subsidiary	Operation and	—	—	800		326	802
有限公司(Beijing Xintai		maintenance fee
Green Energy Technology
Co., Ltd.)

– II-D-15 –

FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

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REPORT ON REVIEW OF FINANCIAL INFORMATION OF HUANGHAU ZHENGYANG NEW ENERGY LIMITED

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the financial information of Huanghua Zhengyang New Energy Limited (‘‘Huanghua Zhengyang’’) and its subsidiaries (together the ‘‘Disposal Group’’) set out on pages II-E-3 to II-E-14 which comprises the consolidated statements of financial position as at 31 December 2018, 2019 and 2020 and 31 May 2021 and the consolidated statements of profit or loss and other comprehensive income, the consolidated statements of cash flows and the consolidated statements of changes in equity for each of the years ended 31 December 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Huanghua Zhengyang 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 Huanghua Zhengyang 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 HUANGHUA ZHENGYANG

APPENDIX II-E

Conclusion

BDO Limited

Certified Public Accountants

Au Yiu Kwan Practising Certificate Number P05018 Hong Kong, 30 August 2021

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FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

Set out below is the unaudited financial information of the Huanghua Zhengyang and its subsidiaries which comprises the unaudited statements of financial position of Huanghua Zhengyang as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 the Huanghua Zhengyang. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Huanghua Zhengyang 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.

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FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF HUANGHUA ZHENGYANG

Notes Revenue 4 Cost of sales Gross profit Other gains and losses Administrative expenses Finance costs Profit before income tax Income tax expense 5 Profit for the year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 39,116 41,828 38,072 (14,146) (14,799) (13,972) 24,970 27,029 24,100 2 1 (841) (1,127) (1,523) (3,262) (6,825) (13,175) (12,948) 17,020 12,332 7,049 — — (2,019) 17,020 12,332 5,030	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 17,526 15,090 (6,309) (6,535) 11,217 8,555 71 23 (592) (566) (5,396) (5,023) 5,300 2,989 (1,137) (848) 4,163 2,141

– II-E-4 –

FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF HUANGHUA ZHENGYANG

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 6 Right-of-use assets Lease prepayments Current assets Trade and other receivables 7 Amounts due from intermediate holding company 9 Amounts due from fellow subsidiaries 9 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payables Lease liabilities Amounts due to immediate holding company 9 Amounts due to fellow subsidiaries 9 Total current liabilities Net current assets Total assets less current liabilities Non-current liabilities Lease liabilities Loans and borrowings 8 Total non-current liabilities Net assets Equity Paid in capital Reserves Total equity	31 December 2018 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 120 157 246,304 248,596 — 27,552 3,904 — 250,328 276,305 63,006 83,742 78,110 142,206 — — 1,574 157 142,690 226,105 2,556 891 — — — 8,951 92,354 102,308 5 61,959 94,915 174,109 47,775 51,996 298,103 328,301 — 17,866 260,000 260,000 260,000 277,866 38,103 50,435 10,000 10,000 28,103 40,435 38,103 50,435	2020 RMB’000 (Unaudited) 59 238,746 26,158 — 264,963 100,403 154,078 1,458 3,306 259,245 6,954 936 4,027 112,250 64,405 188,572 70,673 335,636 20,171 260,000 280,171 55,465 10,000 45,465 55,465	31 May 2021 RMB’000 (Unaudited) 45 236,232 25,461 —
			261,738
			109,147 152,858 1,458 2,279
			265,742
			6,993 633 — 116,433 65,621
			189,680
			76,062
			337,800
			20,194 260,000
			280,194
			57,606
			10,000 47,606
			57,606

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FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

UNAUDITED STATEMENTS OF CASH FLOWS OF HUANGHUA ZHENGYANG

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Amortization of right-of-use assets Amortization of lease prepayments Write-off of solar power plant Impairment loss of other receivable Interest expense Interest income Operating profit before working capital changes Increase in trade and other receivables Increase/(Decrease) in trade and other payables Cash (used in)/generated from operating activities Tax paid Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Payments for purchase of solar power plant Proceeds from disposal of property, plant and equipment Net cash (used in)/generated from investing activities	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 17,020 12,332 7,049 14 31 39 9,840 9,918 9,953 — 1,394 1,394 2,060 — — 3,665 — — — — 1,000 6,825 13,175 12,948 (2) (1) (1) 39,422 36,849 32,382 (19,157) (20,736) (16,661) 633 (115) 5,057 20,898 15,998 20,778 — — (1,083) 20,898 15,998 19,695 (134) (68) — (59,479) (13,764) — — — 66 (59,613) (13,832) 66	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 5,300 2,989 20 8 4,147 4,147 658 697 — — — — — — 5,396 5,023 (1) — 15,520 12,864 (8,998) (8,744) 90 39 6,612 4,159 (202) (1,151) 6,410 3,008 — — — (1,223) — — — (1,223)

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FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

Cash flows from financing activities Proceeds from loans and borrowings Payments of lease liabilities Advances from intermediate holding company Advances from immediate holding company Advances from fellow subsidiaries Repayments to intermediate holding company Repayments to immediate holding company Repayments to fellow subsidiaries 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 Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 260,000 — — — — (4,270) — — — — 854 842 — 59,659 — (78,510) (64,096) (11,872) (141,837) — — (5) — (1,312) 39,648 (3,583) (16,612) 933 (1,417) 3,149 641 1,574 157 1,574 157 3,306	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) — — — (4,681) — 1,220 331 391 857 258 (7,472) — — — — — (6,284) (2,812) 126 (1,027) 157 3,306 283 2,279

– II-E-7 –

FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF HUANGHUA ZHENGYANG

Balance at 1 January 2018 Profit for the year Appropriation to statutory reserves Balance at 31 December 2018 and 1 January 2019 Profit for the year Appropriation to statutory reserves Balance at 31 December 2019 and 1 January 2020 Profit for the year Appropriation to statutory reserves Balance at 31 December 2020 and 1 January 2021 Profit for the period Appropriation to statutory reserves Balance at 31 May 2021 Balance at 31 December 2019 and 1 January 2020 Profit for the period Appropriation to statutory reserves Balance at 31 May 2020	Paid in capital RMB’000 (Unaudited) 10,000 — — 10,000 — — 10,000 — — 10,000 — — 10,000 10,000 — — 10,000	Statutory reserves RMB’000 (Unaudited) 1,108 — 1,702 2,810 — 1,233 4,043 — 503 4,546 — 214 4,760 4,043 — 416 4,459	Retained profits RMB’000 (Unaudited) 9,975 17,020 (1,702) 25,293 12,332 (1,233) 36,392 5,030 (503) 40,919 2,141 (214) 42,846 36,392 4,163 (416) 40,139	Total RMB’000 (Unaudited) 21,083 17,020 —
				38,103 12,332 —
				50,435 5,030 —
				55,465 2,141 —
				57,606
				50,435 4,163 —
				54,598

– II-E-8 –

FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 10 July 2021, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Huanghua Zhengyang entered into the agreement (the ‘‘Fifth agreement’’), pursuant to which the Vendor agreed to sell, and the Purchaser agreed to acquire, the entire equity interest in Huanghua Zhengyang at a total consideration of approximately RMB241,476,000 (the ‘‘Fifth Disposal’’). Upon completion of the Fifth Disposal, Huanghua Zhengyang will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Huanghua Zhengyang for the years ended 31 December 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Fifth Disposal.

3. CHANGES IN ACCOUNTING POLICIES

HKFRS 9 — Financial Instruments

HKFRS 9 is effective for the accounting period beginning on or after 1 January 2018. HKFRS 9 replaces HKAS 39, Financial instruments: recognition and measurement (‘‘HKAS 39’’). It sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The new impairment model in HKFRS 9 replaces the ‘‘incurred loss’’ model in HKAS 39 with an expected credit loss (‘‘ECL’’) model. Under the ECL model, it will no longer be necessary for a loss event to occur before an impairment loss is recognised. Instead, an entity is required to recognise and measure either a 12-month ECL or a lifetime ECL, depending on the asset and the facts and circumstances. As a consequence of adopting HKFRS 9, Huanghua Zhengyang’s trade and other receivables amounting to RMB43,850,000 as at 1 January 2018 was reclassified from ‘‘loans and receivables’’ as ‘‘amortised cost financial assets’’. Applying ECL model does not result in further provision for ECL as the settlement of these receivables is regulated by the Central Government of the PRC, and periodic payments have been received with no history of default in the past. As such, the Directors consider that the ECL in renewable energy subsidies receivables as at 1 January 2018 is immaterial.

– II-E-9 –

FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

HKFRS 15 — Revenue from Contracts with Customers

Huanghua Zhengyang has adopted HKFRS 15 using cumulative effect method without practical expedients. Huanghua Zhengyang has recognised the cumulative effect of initially applying HKFRS 15 as an adjustment to the opening balance of accumulated losses at the date of initial application (that is, 1 January 2018).

Huanghua Zhengyang sells electricity to the power grid company. Revenue from sales of electricity is recognised over time when the electricity generated and transmitted is simultaneously received and consumed by the power grid companies. Huanghua Zhengyang has elected the practical expedient to recognise revenue in the amount to which Huanghua Zhengyang has a right to invoice as the amount represents and corresponds directly with the value of performance completed and transferred to the power grid company. Huanghua Zhengyang has no unsatisfied performance obligations at each reporting date. In the opinion of the Directors, the adoption of HKFRS 15 did not result in significant impact on Huanghua Zhengyang’s accounting policies on revenue.

HKFRS 16 — Lease

HKFRS 16 is effective for the accounting period beginning on or after 1 January 2019. The adoption of HKFRS 16 primarily affects Huanghua Zhengyang’s accounting as a lessee of leases which are classified as operating leases under HKAS 17, Leases. Upon the adoption of HKFRS 16, at the lease commencement date, Huanghua Zhengyang as a lessee recognises a right-of-use asset and a lease liability, except for short-term leases with a lease term of 12 months or less and leases of low-value assets. The application of HKFRS 16 has impact on the recognition of right-of-use assets and lease liabilities as well as the recognition of depreciation charges of right-of-use assets and the interest expense on lease liabilities.

Huanghua Zhengyang has applied 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 comparative information presented in 2018 has not been restated and continues to be reported under HKAS 17, as permitted under the simplified transition approach in the standard. The reclassifications and the adjustments arising from HKFRS 16 are therefore recognised in the opening balances on 1 January 2019. In the opinion of our Directors, the adoption of HKFRS 16 resulted in reclassification of Huanghua Zhengyang’s ‘‘Lease prepayments’’ as ‘‘Right-of-use assets’’ and did not have significant impact on Huanghua Zhengyang’s net assets and net profits when compared with those that would have been presented under HKAS 17.

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2018, 2019 and 2020 and the five months ended 31 May 2020 and 2021, unaudited sales of electricity includes renewable energy subsidies amounting to RMB20,816,000, RMB21,908,000, RMB21,185,000, RMB9,336,000 and RMB9,021,000 respectively.

– II-E-10 –

APPENDIX II-E

FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

5. INCOME TAX EXPENSE

Pursuant to CaiShui 2008 No. 46 Notice on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment* (財政部、國家稅務總局關於執行公共基礎設施項目企業所得稅優惠目錄有關問題的通知), Huanghua Zhengyang has been approved to entitle a tax holiday of a 3-year full exemption followed by a 3-year 50% exemption commencing from their respective years in which their first operating income is derived.

6. SOLAR POWER PLANTS

Cost At 1 January 2018 Additions Written off At 31 December 2018 and 1 January 2019 Additions At 31 December 2019 and 1 January 2020 Additions At 31 December 2020 and 1 January 2021 Additions At 31 May 2021 Accumulated depreciation At 1 January 2018 Charged for the year At 31 December 2018 and 1 January 2019 Charged for the year At 31 December 2019 and 1 January 2020 Charged for the year At 31 December 2020 and 1 January 2021 Charged for the period At 31 May 2021 Net carrying amount At 31 December 2018 At 31 December 2019 At 31 December 2020 At 31 May 2021	Solar power plants RMB’000 (Unaudited) 262,542 2,246 (3,665) 261,123 12,210 273,333 — 273,333 — 273,333 (4,979) (9,840) (14,819) (9,918) (24,737) (9,953) (34,690) (4,147) (38,837) 246,304 248,596 238,643 234,496	Solar power plants under construction RMB’000 (Unaudited) — — — — — — 103 103 1,633 1,736 — — — — — — — — — — — 103 1,736	Total RMB’000 (Unaudited) 262,542 2,246 (3,665) 261,123 12,210 273,333 103 273,436 1,633 275,069 (4,979) (9,840) (14,819) (9,918) (24,737) (9,953) (34,690) (4,147) (38,837) 246,304 248,596 238,746 236,232

– II-E-11 –

FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

7. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits Impairment losses for other receivables Other receivables, prepayments and deposits, net	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 36,924 61,977 85,926 26,082 21,765 15,477 — — (1,000) 26,082 21,765 14,477 63,006 83,742 100,403	As at 31 May 2021 RMB’000 (Unaudited) 96,644
		13,503 (1,000
		12,503
		109,147

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 6,578 6,602 6,895 6,184 6,558 5,962 12,600 13,259 12,668 11,562 23,996 24,842 — 11,562 35,559 36,924 61,977 85,926	As at 31 May 2021 RMB’000 (Unaudited) 8,863 5,167 11,691 24,365 46,558
		96,644

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 2,887 3,072 3,312 5,758 5,710 5,718 6,399 6,638 5,973 10,317 12,520 12,021 11,563 22,475 24,865 — 11,562 34,037 36,924 61,977 85,926	As at 31 May 2021 RMB’000 (Unaudited) 4,718 5,729 5,071 12,606 24,678 43,842
		96,644

– II-E-12 –

FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

Movements in provision for impairment of other receivables are as follows:

At 1 January 2018 and 31 December 2018 and 2019 Impairment made during the year At 31 December 2020 and 31 May 2021	Solar power plants RMB’000 (Unaudited) — 1,000
	1,000

Huanghua Zhengyang’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 2018, 2019 and 2020 and 31 May 2021, the outstanding renewable energy subsidy amounted to RMB35,738,000, RMB60,658,000, RMB84,638,000 and RMB94,832,000 respectively.

Expected loss rate of these renewable energy subsidy receivables are assessed to be low, because the debtor is state-owned and have good repayment history. In addition, the directors of the Huanghua Zhengyang are confident that the renewable energy subsidy receivables are fully recoverable but only subject to timing of allocation of funds from the PRC government. Accordingly, the credit risk regarding trade receivables of tariff income is limited.

8. LOANS AND BORROWINGS

Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 260,000 260,000 260,000 260,000 260,000 260,000	As at 31 May 2021 RMB’000 (Unaudited) 260,000
		260,000

Huanghua Zhengyang’s loans and borrowings are repayable as follows:

After 1 year but within 2 years After 2 years but within 5 years Effective Interest rates	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — — — 260,000 260,000 260,000 260,000 260,000 260,000 3.5% 3.5% 3.5%	As at 31 May 2021 RMB’000 (Unaudited) 260,000 —
		260,000
		3.5%

The loans and borrowings were secured by 100% equity interests of Huanghua Zhengyang’s immediate holding company, Kong Sun Yongtai Investment Holdings Limited.

– II-E-13 –

FINANCIAL INFORMATION OF HUANGHUA ZHENGYANG

APPENDIX II-E

9. AMOUNTS DUE FROM/TO INTERMEDIATE HOLDING COMPANY/IMMEDIATE HOLDING COMPANY/FELLOW SUBSIDIARIES

Amounts due from/to intermediate holding company/immediate holding company/fellow subsidiaries are interest-free, unsecured and repayable on demand.

Amount due to a fellow subsidiary, 北京潤豐元大小額貸款有限公司, of RMB46,000,000, is unsecured and interest bearing at 5% interest rate per annum and repayable on demand.

10. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Huanghua Zhengyang entered into the following transactions with related parties:

	Related party	Type of				For the five months	For the five months
Name of related party	relationship	transaction	For the year ended 31		December	ended 31 May
			2018	2019	2020	2020	2021
			RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
			(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
江山永泰投資控股有限公司	Immediate holding	Operation and	—	794	794	331	331
(Kong Sun Yongtai	company	maintenance fee
Investment Holdings
Limited)
北京鑫泰綠能科技有限公司	Fellow subsidiary	Operation and	755	94	1,132	472	967
(Beijing Xintai Green		maintenance fee
Energy Technology
Co., Ltd.)
北京潤豐元大小額貸款有限公司	Fellow subsidiary	Interest changes	—	2,300	2,300	958	958

– II-E-14 –

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

APPENDIX II-F

==> picture [95 x 63] intentionally omitted <==

REPORT ON REVIEW OF FINANCIAL INFORMATION OF JIAYUGUAN XIEHE NEW ENERGY CO. LTD.

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the financial information of Jiayuguan Xiehe New Energy Co. Ltd. (‘‘Jiayuguan Xiehe’’) set out on pages II-F-3 to II-F-14 which comprises the statements of financial position as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Jiangshan Yongchen 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 Jiayuguan Xiehe 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 JIAYUGUAN XIEHE

APPENDIX II-F

Conclusion

BDO Limited

Certified Public Accountants

Au Yiu Kwan

Practising Certificate Number P05018 Hong Kong, 30 August 2021

– II-F-2 –

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

APPENDIX II-F

Set out below is the unaudited financial information of Jiayuguan Xiehe which comprises the unaudited statements of financial position of Jiayuguan Xiehe as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 the Jiayuguan Xiehe. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Jiayuguan Xiehe 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 JIAYUGUAN XIEHE

APPENDIX II-F

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF JIAYUGUAN XIEHE

Notes Revenue 4 Cost of sales Gross profit Other gains and losses Administrative expenses Finance costs (Loss)/profit before income tax Income tax expense 5 (Loss)/Profit for the year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 16,545 49,428 48,837 (6,375) (21,340) (15,770) 10,170 28,088 33,067 — — 131 (4,306) (5,370) (4,845) (16,800) (16,800) (16,800) (10,936) 5,918 11,553 — — — (10,936) 5,918 11,553	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 22,233 22,120 (6,410) (8,318) 15,823 13,802 — — (2,328) (1,631) (7,000) (7,000) 6,495 5,171 — (1,521) 6,495 3,650

– II-F-4 –

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

APPENDIX II-F

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF JIAYUGUAN XIEHE

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 6 Current assets Trade and other receivables 7 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payables Amounts due to intermediate holding companies 9 Amounts due to immediate holding companies 9 Amounts due to fellow subsidiaries 9 Total current assets Net current (liabilities)/assets Total assets less current liabilities Non-current liabilities Loans and borrowings 8 Total non-current liabilities Net (liabilities)/assets Equity Paid in capital Reserves Total equity	31 December 2018 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 98 584 325,724 314,494 325,822 315,078 58,710 90,134 160 17 58,870 90,151 39,820 5,016 — — 40,399 72,862 16,800 33,600 — 160 97,019 111,638 (38,149) (21,487) 287,673 293,591 300,000 300,000 300,000 300,000 (12,327) (6,409) 2,000 2,000 (14,327) (8,409) (12,327) (6,409)	2020 RMB’000 (Unaudited) 453 303,428 303,881 128,183 179 128,362 2,798 — 73,502 50,400 399 127,099 1,263 305,144 300,000 300,000 5,144 2,000 3,144 5,144	31 May 2021 RMB’000 (Unaudited) 399 297,159
			297,558
			146,409 656
			147,065
			2,180 1,493 73,208 57,400 1,548
			135,829
			11,236
			308,794
			300,000
			300,000
			8,794
			2,000 6,794
			8,794

– II-F-5 –

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

APPENDIX II-F

UNAUDITED STATEMENTS OF CASH FLOWS OF JIAYUGUAN XIEHE

Cash flows from operating activities (Loss)/Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Write-off of property, plant and equipment Interest expense Operating profit before working capital changes Increase in trade and other receivables Increase/(Decrease) in trade and other payables Cash generated from operating activities Tax paid Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Payments for construction cost of in respect of solar power plant Payments for purchase of solar power plant Net cash used in investing activities	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (10,936) 5,918 11,553 18 83 130 5,217 12,585 12,577 — — — 16,800 16,800 16,800 11,099 35,386 41,060 (40,253) (31,424) (38,048) 30,816 (141) — 1,662 3,821 3,012 — — — 1,662 3,821 3,012 (23) (569) — (129,148) — — (1,337) (36,018) (3,729) (130,508) (36,587) (3,729)	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 6,495 5,171 54 54 5,241 5,241 — 1,164 7,000 7,000 18,790 18,630 (18,352) (18,226) 644 — 1,082 404 — (28) 1,082 376 — — — — (1,668) (754) (1,668) (754)

– II-F-6 –

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

APPENDIX II-F

Cash flows from financing activities Advances from intermediate holding companies Advances from fellow subsidiaries Repayments to intermediate holding companies Net cash (used in)/generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 128,938 32,463 640 — 160 239 — — — 128,938 32,623 879 92 (143) 162 68 160 17 160 17 179	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) — — 811 1,149 (203) (294) 608 855 22 477 17 179 39 656

– II-F-7 –

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

APPENDIX II-F

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF JIAYUGUAN XIEHE

Balance at 1 January 2018 Loss for the year Balance at 31 December 2018 and 1 January 2019 Profit for the year Appropriation to statutory reserves Balance at 31 December 2019 and 1 January 2020 Profit for the year Appropriation to statutory reserves Balance at 31 December 2020 and 1 January 2021 Profit for the period Appropriation to statutory reserves Balance at 31 May 2021 Balance at 31 December 2019 and 1 January 2020 Profit for the period Appropriation to statutory reserves Balance at 31 May 2020	Paid in capital RMB’000 (Unaudited) 2,000 — 2,000 — — 2,000 — — 2,000 — — 2,000 2,000 — — 2,000	Statutory reserves RMB’000 (Unaudited) — — — — 592 592 — 1,155 1,747 — 365 2,112 592 — 650 1,242	(Accumulated losses)/ Retained profits RMB’000 (Unaudited) (3,391) (10,936) (14,327) 5,918 (592) (9,001) 11,553 (1,155) 1,397 3,650 (365) 4,682 (9,001) 6,495 (650) (3,156)	Total RMB’000 (Unaudited) (1,391) (10,936) (12,327) 5,918 — (6,409) 11,553 — 5,144 3,650 — 8,794 (6,409) 6,495 — 86

– II-F-8 –

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

APPENDIX II-F

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 10 July 2021, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Jiayuguan Xiehe entered into the agreement (the ‘‘Sixth Agreement’’), pursuant to which the Vendor agreed to sell, and the Purchaser agreed to acquire, the entire equity interest in Jiayuguan Xiehe at a total consideration of approximately RMB279,849,000 (the ‘‘Sixth Disposal’’). Upon completion of the Sixth Disposal, Jiayuguan Xiehe will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Jiayuguan Xiehe for the years ended 31 December 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Sixth Disposal.

3. CHANGES IN ACCOUNTING POLICIES

HKFRS 9 — Financial Instruments

HKFRS 9 is effective for the accounting period beginning on or after 1 January 2018. HKFRS 9 replaces HKAS 39, Financial instruments: recognition and measurement (‘‘HKAS 39’’). It sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The new impairment model in HKFRS 9 replaces the ‘‘incurred loss’’ model in HKAS 39 with an expected credit loss (‘‘ECL’’) model. Under the ECL model, it will no longer be necessary for a loss event to occur before an impairment loss is recognised. Instead, an entity is required to recognise and measure either a 12-month ECL or a lifetime ECL, depending on the asset and the facts and circumstances. As a consequence of adopting HKFRS 9, Jiayuguan Xiehe’s trade and other receivables amounting to RMB18,457,000 as at 1 January 2018 was reclassified from ‘‘loans and receivables’’ as ‘‘amortised cost financial assets’’. Applying ECL model does not result in further provision for ECL as the settlement of these receivables is regulated by the Central Government of the PRC, and periodic payments have been received with no history of default in the past. As such, the Directors consider that the ECL in renewable energy subsidies receivables as at 1 January 2018 is immaterial.

– II-F-9 –

APPENDIX II-F

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

As at 1 January 2018, the Company’s amounts due from intermediate holding company and cash and cash equivalents were reclassified from the original classification of ‘‘Loan and receivables’’ under HKAS 39 to the new classification of ‘‘Amortised cost’’ under HKFRS 9. As at 1 January 2018, the directors consider that there is no material difference between the previous carrying amounts and that under new classification.

HKFRS 15 — Revenue from Contracts with Customers

Jiayuguan Xiehe has adopted HKFRS 15 using cumulative effect method without practical expedients. Jiayuguan Xiehe has recognised the cumulative effect of initially applying HKFRS 15 as an adjustment to the opening balance of accumulated losses at the date of initial application (that is, 1 January 2018).

Jiayuguan Xiehe sells electricity to the power grid company. Revenue from sales of electricity is recognised over time when the electricity generated and transmitted is simultaneously received and consumed by the power grid companies. Jiayuguan Xiehe has elected the practical expedient to recognise revenue in the amount to which Jiayuguan Xiehe has a right to invoice as the amount represents and corresponds directly with the value of performance completed and transferred to the power grid company. Jiayuguan Xiehe has no unsatisfied performance obligations at each reporting date. In the opinion of the Directors, the adoption of HKFRS 15 did not result in significant impact on Jiayuguan Xiehe’s accounting policies on revenue.

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2018, 2019 and 2020 and the five months ended 31 May 2020 and 2021, unaudited sales of electricity includes renewable energy subsidies amounting to RMB11,335,000, RMB36,777,000, RMB39,779,000, RMB16,997,000 and RMB17,572,000 respectively.

5. INCOME TAX EXPENSE

Pursuant to CaiShui 2008 No. 46 Notice on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment* (財政部、國家稅務總局關於執行公共基礎設施項目企業所得稅優惠目錄有關問題的通知), Jiayuguan Xiehe has been approved to entitle a tax holiday of a 3-year full exemption followed by a 3-year 50% exemption commencing from their respective years in which their first operating income is derived.

– II-F-10 –

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

APPENDIX II-F

6. SOLAR POWER PLANTS

Cost At 1 January 2018 Additions Transfer upon completion At 31 December 2018 and 1 January 2019 Additions At 31 December 2019 and 1 January 2020 Additions At 31 December 2020 and 1 January 2021 Additions Written-off At 31 May 2021 Accumulated depreciation At 1 January 2018 Charged for the year At 31 December 2018 and 1 January 2019 Charged for the year At 31 December 2019 and 1 January 2020 Charged for the year At 31 December 2020 and 1 January 2021 Charged for the period At 31 May 2021 Net carrying amount At 31 December 2018 At 31 December 2019 At 31 December 2020 At 31 May 2021	Solar power plants RMB’000 (Unaudited) — 1,337 329,604 330,941 1,355 332,296 1,511 333,807 136 (1,164) 332,779 — (5,217) (5,217) (12,585) (17,802) (12,577) (30,379) (5,241) (35,620) 325,724 314,494 303,428 297,159	Solar power plants under construction RMB’000 (Unaudited) 200,456 129,148 (329,604) — — — — — — — — — — — — — — — — — — — — —	Total RMB’000 (Unaudited) 200,456 130,485 — 330,941 1,355 332,296 1,511 333,807 136 (1,164) 332,779 — (5,217) (5,217) (12,585) (17,802) (12,577) (30,379) (5,241) (35,620) 325,724 314,494 303,428 297,159

As at 31 December 2018, 2019 and 2020 and 31 May 2021, solar plants were all pledged as securities for Jiayuguan Xiehe’s loans and borrowings (note 8).

– II-F-11 –

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

APPENDIX II-F

7. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 15,401 56,841 102,745 43,309 33,293 25,438 58,710 90,134 128,183	As at 31 May 2021 RMB’000 (Unaudited) 123,781 22,628
		146,409

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 8,069 8,238 10,278 7,291 11,510 12,015 41 22,415 23,936 — 14,678 41,839 — — 14,677 15,401 56,841 102,745	As at 31 May 2021 RMB’000 (Unaudited) 15,029 9,982 22,520 42,629 33,621
		123,781

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 2,272 3,440 3,236 8,227 7,609 10,954 4,902 12,172 12,306 — 20,532 22,898 — 13,088 40,263 — — 13,088 15,401 56,841 102,745	As at 31 May 2021 RMB’000 (Unaudited) 5,628 13,009 9,133 24,404 42,087 29,520
		123,781

Jiayuguan Xiehe’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 2018, 2019 and 2020 and 31 May 2021, the outstanding renewable energy subsidy amounted to RMB14,677,000, RMB56,516,000, RMB101,466,000 and RMB121,323,000 respectively.

– II-F-12 –

APPENDIX II-F

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

Expected loss rate of these renewable energy subsidy receivables are assessed to be low, because the debtor is state-owned and have good repayment history. In addition, the directors of the Jiayuguan Xiehe are confident that the renewable energy subsidy receivables are fully recoverable but only subject to timing of allocation of funds from the PRC government. Accordingly, the credit risk regarding trade receivables of tariff income is limited.

8. LOANS AND BORROWINGS

Non-current Secured — bank borrowings Total loans and borrowings Jiayuguan Xiehe’s loans and borrowings are repayable After 1 year but within 2 years After 2 years but within 5 years Effective Interest rates	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 300,000 300,000 300,000 300,000 300,000 300,000 as follows: As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — — 300,000 300,000 300,000 — 300,000 300,000 300,000 5.6% 5.6% 5.6%	As at 31 May 2021 RMB’000 (Unaudited) 300,000
		300,000
		As at 31 May 2021 RMB’000 (Unaudited) 300,000 —
		300,000
		5.6%

The loans and borrowings were secured by 100% equity interests of Jiayuguan Xiehe’s immediate holding company, Changshu Honglue Photovoltaic Power Plants Development Co., Ltd..

9. AMOUNTS DUE FROM/TO INTERMEDIATE HOLDING COMPANY/IMMEDIATE HOLDING COMPANY/FELLOW SUBSIDIARIES

Amounts due from/to intermediate holding company/immediate holding company/fellow subsidiaries are interest-free, unsecured and repayable on demand.

– II-F-13 –

FINANCIAL INFORMATION OF JIAYUGUAN XIEHE

APPENDIX II-F

10. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Jiayuguan Xiehe entered into the following transactions with related parties:

	Related party	Type of				For the five months ended	For the five months ended
Name of related party	relationship	transaction	For the year ended 31		December	31 May
			2018	2019	2020	2020	2021
			RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
			(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
江山永泰投資控股有限公司	Immediate holding	Operation and	—	1,043	1,043	435	435
(Kong Sun Yongtai	company	maintenance fee
Investment Holdings
Limited)
北京鑫泰綠能科技有限公司	Fellow subsidiary	Operation and	232	157	1,887	786	1,140
(Beijing Xintai Green		maintenance fee
Energy Technology
Co., Ltd.)

– II-F-14 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

==> picture [95 x 63] intentionally omitted <==

REPORT ON REVIEW OF FINANCIAL INFORMATION OF LINTAN TIANLANG NEW ENERGY TECHNOLOGY CO., LTD.

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the financial information of Lintan Tianlang New Energy Technology Co., Ltd. (‘‘Lintan Tianlang’’) set out on pages II-G-3 to II-G-15 which comprises the statements of financial position as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Lintan Tianlang (the ‘‘Circular’’) 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 Lintan Tianlang 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 LINTAN TIANLANG

Conclusion

Emphasis of Matter — Material Uncertainty Related to Going Concern

Without qualifying our conclusion, we draw attention to note 2 to the Financial Information of Lintan Tianlang, which indicates that Lintan Tianlang has incurred a loss of RMB808,000 and RMB1,289,000 for the year ended 31 December 2020 and five months ended 31 May 2021 respectively and had net liabilities of RMB14,365,000 as at 31 May 2021. These conditions indicate the existence of a material uncertainty that may cast significant doubt about Lintan Tianlang’s ability to continue as a going concern.

BDO Limited

Certified Public Accountants

Au Yiu Kwan

Practising Certificate Number P05018 Hong Kong, 30 August 2021

– II-G-2 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

Set out below is the unaudited financial information of Lintan Tianlang which comprises the unaudited statements of financial position of Lintan Tianlang as at 31 December 2018, 2019 and 2020 and 31 May 2021 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 2018, 2019 and 2020 and for the five months ended 31 May 2020 and 2021 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 Lintan Tianlang. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Lintan Tianlang 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 LINTAN TIANLANG

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF LINTAN TIANLANG

Notes Revenue 4 Cost of sales Gross profit Other income Administrative expenses Finance costs (Loss)/profit before income tax Income tax expense 5 (Loss)/profit for the year/period	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — 18,492 20,800 — (6,475) (7,241) — 12,017 13,559 — 3 1 (544) (2,946) (3,811) (10,080) (10,545) (10,557) (10,624) (1,471) (808) — — — (10,624) (1,471) (808)	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 8,589 11,275 (2,873) (5,572) 5,716 5,703 1 — (723) (2,682) (4,358) (4,310) 636 (1,289) — — 636 (1,289)

– II-G-4 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF LINTAN TIANLANG

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 6 Right-of-use assets Other receivables 7 Lease payments Current assets Inventories Trade and other receivables 7 Amounts due from immediate holding company 9 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Lease liabilities Amounts due to intermediate holding company 9 Amounts due to fellow subsidiaries 9 Total current liabilities Net current assets Total assets less current liabilities Non-current liabilities Lease liabilities 8 Loans and borrowings Total non-current liabilities Net liabilities Equity Paid in capital Accumulated loss Total equity	31 December 2018 2019 RMB’000 RMB’000 (Unaudited) (Unaudited) 6 4 136,664 144,752 — 6,112 246 — 403 — 137,319 150,868 — — 18,378 31,136 59,624 49,566 61 832 78,063 81,534 16,459 15,741 — 362 29,720 33,875 — 8,867 46,179 58,845 31,884 22,689 169,203 173,557 — 5,825 180,000 180,000 180,000 185,825 (10,797) (12,268) — — (10,797) (12,268) (10,797) (12,268)	2020 RMB’000 (Unaudited) 3 142,168 7,479 — — 149,650 2,410 42,676 38,143 39 83,268 10,063 602 39,505 9,175 59,345 23,923 173,573 6,649 180,000 186,649 (13,076) — (13,076) (13,076)	31 May 2021 RMB’000 (Unaudited) 2 139,995 7,310 — — 147,307 2,410 49,563 30,444 62 82,479 3,276 498 44,155 9,960 57,889 24,590 171,897 6,262 180,000 186,262 (14,365) — (14,365) (14,365)

– II-G-5 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

UNAUDITED STATEMENTS OF CASH FLOWS OF LINTAN TIANLANG

Cash flows from operating activities (Loss)/profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Amortization of right-of-use assets Interest expense Interest income Operating (loss)/profit before working capital changes Increase in inventories Increase in trade and other receivables Decrease in trade and other payables Net cash (used in)/generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Payments for purchase of solar power plant Payments for right-of-use assets Interests received Net cash used in investing activities	For Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (10,624) (1,471) (808) 1 2 1 — 4,922 5,300 — 304 684 10,080 10,545 10,557 (3) (3) (2) (546) 14,299 15,732 — — (2,410) (5,965) (12,512) (11,540) (39) (24) (15) (6,550) 1,763 1,767 (4) — — (38,222) (13,703) (8,379) (403) (292) (1,101) 3 3 2 (38,626) (13,992) (9,478)	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 636 (1,289) 1 1 2,126 2,447 193 169 4,358 4,310 (1) (1) 7,313 5,637 — — (5,075) (6,887) (25) (10) 2,213 (1,260) — — (3,744) (7,051) (1,275) — 1 1 (5,018) (7,050)

– II-G-6 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

Cash flows from financing activities Repayments of lease liabilities Advances from intermediate holding company Advances from immediate holding company Advances from fellow subsidiaries Repayments to immediate holding company Net cash generated from 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 Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — — (363) 29,720 4,155 5,630 15,482 — 1,343 — 8,867 308 — (22) — 45,202 13,000 6,918 26 771 (793) 35 61 832 61 832 39	For Five months ended 31 May 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) — (601) 2,330 4,650 99 3,499 325 785 — — 2,754 8,333 (51) 23 832 39 781 62

– II-G-7 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF LINTAN TIANLANG

Balance at 1 January 2018 Loss for the year Balance at 31 December 2018 and 1 January 2019 Loss for the year Balance at 31 December 2019 and 1 January 2020 Loss for the year Balance at 31 December 2020 and 1 January 2021 Loss for the period Balance at 31 May 2021 Balance at 31 December 2019 and 1 January 2020 Profit for the period Appropriation to statutory reserves Balance at 31 May 2020	Paid in capital RMB’000 (Unaudited) — — — — — — — — — — — — —	Statutory reserves RMB’000 (Unaudited) — — — — — — — — — — — 64 64	Accumulated loss RMB’000 (Unaudited) (173) (10,624) (10,797) (1,471) (12,268) (808) (13,076) (1,289) (14,365) (12,268) 636 (64) (11,696)	Total RMB’000 (Unaudited) (173) (10,624) (10,797) (1,471) (12,268) (808) (13,076) (1,289) (14,365) (12,268) 636 — (11,632)

– II-G-8 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 10 July 2021, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Lintan Tianlang entered into the agreement (the ‘‘Seventh Agreement’’), pursuant to which the Vendor agreed to sell, and the Purchaser agreed to acquire, the entire equity interest in Lintan Tianlang at a total consideration of approximately RMB137,712,000 (the ‘‘Seventh Disposal’’). Upon completion of the Seventh Disposal, Lintan Tianlang will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of, Lintan Tianlang for the years ended 31 December 2018, 2019 and 2020 and the five months ended 31 May 2020 and 2021 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 Seventh Disposal.

The Unaudited Financial Information of Lintan Tianlang 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 Lintan Tianlang has incurred a loss of RMB808,000 and RMB1,289,000 for the year ended 31 December 2020 and five months ended 31 May 2021 respectively and had net liabilities of RMB14,365,000 as at 31 May 2021. These conditions indicate the existence of a material certainty which may cast significant doubt on Lintan Tianlang’s ability to continue as a going concern and therefore Lintan Tianlang may not be able to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, the directors of the Company are of the opinion that Lintan Tianlang will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months from 31 May 2021 after taking into account the followings:

(i) the cash flow projection of Lintan Tianlang for the next twelve months from 31 May 2021, the directors of the Company are of the opinion that Lintan Tianlang is able to generate positive cash flows from its operation. In preparing the cash flow projection by the directors of Lintan Tianlang, 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 intermediate holding company (Kong Sun Yongtai’’) and fellow subsidiaries of Lintan Tianlang has confirmed not to demand repayment of debt due from Lintan Tianlang until such time when the repayment will not affect Lintan Tianlang’s ability to repay other creditors in the normal course of business for twelve months after 31 May 2021 or up to the completion date of the Seventh Disposal, whichever is earlier;

– II-G-9 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

(iii) As set out in note 9 to the Unaudited Financial Information, Kong Sun Yongtai will settle the loans and borrowings of RMB180,000,000 as at 31 May 2021 after the completion of the Seventh Disposal;
(iv) Kong Sun Yongtai has confirmed to provide continuing financial support to Lintan Tianlang so as to enable Lintan Tianlang to meet its liabilities and obligations as and when they fall due and to continue its business for twelve months after 31 May 2021 or up to the completion date of the Seventh Disposal, whichever is earlier; and
(v) the Purchaser has agreed, conditionally upon the completion of the Seventh Disposal to provide continuing financial support to Lintan Tianlang so as to enable Lintan Tianlang to meet its liabilities and obligations as and when they fall due and to continue its business after the completion of the Seventh Disposal.

Should Lintan Tianlang be unable to continue in business as a going concern, adjustments would have to be made in the financial information to write down the values of the assets to their net realisable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effect of such adjustments has not yet been reflected in the financial statements.

3. CHANGES IN ACCOUNTING POLICIES

HKFRS 9 — Financial Instruments

HKFRS 9 is effective for the accounting period beginning on or after 1 January 2018. HKFRS 9 replaces HKAS 39, Financial instruments: recognition and measurement (‘‘HKAS 39’’). It sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The new impairment model in HKFRS 9 replaces the ‘‘incurred loss’’ model in HKAS 39 with an expected credit loss (‘‘ECL’’) model. Under the ECL model, it will no longer be necessary for a loss event to occur before an impairment loss is recognised. Instead, an entity is required to recognise and measure either a 12-month ECL or a lifetime ECL, depending on the asset and the facts and circumstances. As a consequence of adopting HKFRS 9, Lintan Tianlang‘s trade other receivables amounting to RMB12,659,000 as at 1 January 2018 was reclassified from ‘‘loans and receivables’’ as ‘‘amortised cost financial assets’’. Applying ECL model does not result in further provision for ECL as the settlement of these receivables is regulated by the Central Government of the PRC, and periodic payments have been received with no history of default in the past. As such, the Directors consider that the ECL in renewable energy subsidies receivables as at 1 January 2018 is immaterial.

HKFRS 15 — Revenue from Contracts with Customers

Lintan Tianlang has adopted HKFRS 15 using cumulative effect method without practical expedients. Lintan Tianlang has recognised the cumulative effect of initially applying HKFRS 15 as an adjustment to the opening balance of accumulated losses at the date of initial application (that is, 1 January 2018).

– II-G-10 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

Lintan Tianlang sells electricity to the power grid company. Revenue from sales of electricity is recognised over time when the electricity generated and transmitted is simultaneously received and consumed by the power grid companies. Lintan Tianlang has elected the practical expedient to recognise revenue in the amount to which Lintan Tianlang has a right to invoice as the amount represents and corresponds directly with the value of performance completed and transferred to the power grid company. Lintan Tianlang has no unsatisfied performance obligations at each reporting date. In the opinion of the Directors, the adoption of HKFRS 15 did not result in significant impact on Lintan Tianlang‘s accounting policies on revenue.

HKFRS 16 — Lease

HKFRS 16 is effective for the accounting period beginning on or after 1 January 2019. The adoption of HKFRS 16 primarily affects the Lintan Tianlang‘s accounting as a lessee of leases which are classified as operating leases under HKAS 17, Leases. Upon the adoption of HKFRS 16, at the lease commencement date, Lintan Tianlang as a lessee recognises a right-of-use asset and a lease liability, except for short-term leases with a lease term of 12 months or less and leases of low-value assets. The application of HKFRS 16 has impact on the recognition of right-of-use assets and lease liabilities as well as the recognition of depreciation charges of right-of-use assets and the interest expense on lease liabilities.

Lintan Tianlang has applied 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 comparative information presented in 2019 and 2018 has not been restated and continues to be reported under HKAS 17, as permitted under the simplified transition approach in the standard. The reclassifications and the adjustments arising from HKFRS 16 are therefore recognised in the opening balances on 1 January 2019. In the opinion of our Directors, the adoption of HKFRS 16 resulted in reclassification of Lintan Tianlang’s ‘‘Lease prepayments’’ as ‘‘Right-of-use assets’’ and did not have significant impact on Lintan Tianlang‘s net assets and net profits when compared with those that would have been presented under HKAS 17.

4. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2018, 2019 and 2020 and the five months ended 31 May 2020 and 2021, unaudited sales of electricity includes renewable energy subsidies amounting to nil, RMB12,603,000, RMB14,077,000 RMB5,803,000 and RMB7,630,000 respectively.

5. INCOME TAX EXPENSE

Pursuant to CaiShui 2008 No. 46 Notice on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment* (財政部、國家稅務總局關於執行公共基礎設施項目企業所得稅優惠目錄有關問題的通知), Lintan Tianlang has been approved to entitle a tax holiday of a 3-year full exemption followed by a 3-year 50% exemption commencing from their respective years in which their first operating income is derived.

– II-G-11 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

6. SOLAR POWER PLANTS

Cost At 1 January 2018 Additions At 31 December 2018 and 1 January 2019 Additions Transfers upon completion At 31 December 2019 and 1 January 2020 Additions Transfers upon completion At 31 December 2020 and 1 January 2021 Additions At 31 May 2021 Accumulated depreciation At 1 January 2018 and 2019 Charged for the year At 31 December 2019 and 1 January 2020 Charged for the year At 31 December 2020 and 1 January 2021 Charged for the period At 31 May 2021 Net carrying amount At 31 December 2018 At 31 December 2019 At 31 December 2020 At 31 May 2021	Solar power plants RMB’000 (Unaudited) — — — — 129,538 129,538 — 22,852 152,390 274 152,664 — (4,922) (4,922) (5,300) (10,222) (2,447) (12,669) — 124,616 142,168 139,995	Solar power plants under construction RMB’000 (Unaudited) 116,576 20,088 136,664 13,010 (129,538) 20,136 2,716 (22,852) — — — — — — — — — — 136,664 20,136 — —	Total RMB’000 (Unaudited) 116,576 20,088 136,664 13,010 — 149,674 2,716 — 152,390 274 152,664 — (4,922) (4,922) (5,300) (10,222) (2,447) (12,669) 136,664 144,752 142,168 139,995

– II-G-12 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

7. TRADE, BILLS AND OTHER RECEIVABLES

Trade receivables Other receivables and prepayments Trade and other receivables — net Less: Non-current portion (note (i)) Current trade and other receivables	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — 13,875 26,818 18,624 17,261 15,858 18,624 31,136 42,676 (246) — — 18,378 31,136 42,676	As at 31 May 2021 RMB’000 (Unaudited) 35,551 14,012
		49,563 —
		49,563

Note (i): The non-current portion related the amounts of prepayment for construction of solar power plant.

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — 4,703 5,360 — 3,431 3,864 — 5,741 5,855 — — 11,739 — — — — 13,875 26,818	As at 31 May 2021 RMB’000 (Unaudited) 5,990 4,902 7,970 5,901 10,788
		35,551

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 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — 2,560 2,158 — 3,139 4,586 — 3,563 3,384 — 4,613 5,901 — — 10,789 — — — — 13,875 26,818	As at 31 May 2021 RMB’000 (Unaudited) 2,506 5,327 5,094 6,866 5,772 9,986
		35,551

Lintan Tianlang’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-13 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

Renewable energy subsidy receivables represent PRC government subsidies on solar power plants to be received from the Gansu Electric Power Corporation. 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 2018, 2019 and 2020 and 31 May 2021, the outstanding renewable energy subsidy amounted to nil, RMB12,571,000, RMB25,469,000 and RMB34,090,000 respectively.

Expected loss rate of these renewable energy subsidy receivables are assessed to be low, because the debtor is state-owned and have good repayment history. In addition, the directors of the Lintan Tianlang are confident that the renewable energy subsidy receivables are fully recoverable but only subject to timing of allocation of funds from the PRC government. Accordingly, the credit risk regarding trade receivables of tariff income is limited.

8. AMOUNTS DUE FROM/TO INTERMEDIATE HOLDING COMPANY/IMMEDIATE HOLDING COMPANY

Amounts due from/to intermediate holding company/immediate holding company are interest-free, unsecured and repayable on demand.

9. LOANS AND BORROWINGS

Non-current Secured — other borrowings Total loans and borrowings	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 180,000 180,000 180,000 180,000 180,000 180,000	As at 31 May 2021 RMB’000 (Unaudited) 180,000
		180,000

Lintan Tianlang’s loans and borrowings are repayable as follows:

After 1 year but within 2 years After 2 years but within 5 years Effective Interest rates	As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) — — — 180,000 180,000 180,000 180,000 180,000 180,000 5.6% 5.6% 5.6%	As at 31 May 2021 RMB’000 (Unaudited) 180,000 —
		180,000
		5.6%

According to cooperation agreement entered into between Kong Sun Yongtai and Taizhou Jiuan (the ‘‘Cooperation Agreement’’), Taizhou Jiuan contributed a capital of RMB180,000,000 to Lintan Tianlang and holds 99.96% equity interest of Lintan Tianlang upon completion of the capital contribution while Kong Sun Yongtai retains the power to control the financial and operating policies of Lintan Tianlang so as to direct its relevant activities and to obtain significant economic benefits from its activities. Lintan Tianlang holds a solar power plant of 20 MW in Lintan County, Gansu Province of the PRC. Pursuant to the Cooperation Agreement, after repayment by Kong Sun Yongtai to Taizhou Jiuan of the pre-agreed price, comprising (i) the cost of equity in the amount of RMB180,000,000 to be paid at the end of this arrangement (i.e. 5 years from 2018); and (ii) premium on equity (in substance a finance cost) to be paid in quarterly instalments throughout the term of Taizhou Jiuan (i.e. 5 years from 2018), Taizhou Jiuan will transfer back the 99.96% equity interest of Lintan Tianlang to Kong Sun Yongtai. In view of Kong Sun Yongtai’s power to control the financial and operating policies of Lintan Tianlang so as to direct the relevant activities of Lintan Tianlang and to obtain significant economic benefits from its activities, the directors of

– II-G-14 –

APPENDIX II-G

FINANCIAL INFORMATION OF LINTAN TIANLANG

the Company are of the opinion that the arrangement under the Cooperation Agreement is in substance a financing arrangement of RMB180,000,000 with the pledge of the 99.96% equity interests of Lintan Tianlang and therefore Lintan Tianlang is continuously treated as a wholly-owned subsidiary of Kong Sun Yongtai as at 31 December 2018, 2019, 2020 and 31 May 2021.

As one of the condition precedents of the Seventh Agreement, Taizhou Jiuan will transfer the 99.94% pledged equity interest in Lintan Tianlang back to Kong Sun Yongtai before the completion of the Seventh Disposal.

Kong Sun Yongtai will take up and repay the loans and borrowings of RMB180,000,000 to Taizhou Jiuan after the completion date of the Seventh Disposal.

10. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Lintan Tianlang entered into the following transactions with related parties:

	Related party					For the five months	For the five months
Name of related party	relationship	Type of transaction	For the	year ended 31	December	ended 31 May
			2018	2019	2020	2020	2021
			RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
			(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
江山永泰投資控股有限公司	Immediate holding	Operation and	—	670	670	279	279
(Kong Sun Yongtai	company	maintenance fee
Investment Holdings
Limited)
北京鑫泰綠能科技有限公司	Fellow subsidiary	Operation and	—	629	629	326	326
(Beijing Xintai Green		maintenance fee
Energy Technology Co.,
Ltd.)

– II-G-15 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

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 Disposal had been completed on 31 December 2020; and (b) the results and cash flows of the Remaining Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020. 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 31 December 2020 or at any future date had the Disposal been completed on 31 December 2020; or (ii) the results and cash flows of the Remaining Group for the year ended 31 December 2020 or for any future period had the Disposal been completed on 1 January 2020.

The Unaudited Pro Forma Financial Information is prepared based on the consolidated statement of financial position of the Group as at 31 December 2020, 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 2020 as set out in the published annual report of the Company for the year ended 31 December 2020, after giving effect to the pro forma adjustments described in the notes to the Unaudited Pro Forma Financial Information that are directly attributable to the Disposal and factually supportable. 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.

The Unaudited Pro Forma Financial Information should be read in conjunction with the historical financial information of the Group as set out in the published Annual Report 2020 and other financial information included elsewhere in this circular.

– III-1 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

statement of	financial position	of the Remaining	Group as at	31 December 2020	RMB’000			26,932	3,909,045	227,984	4,803	235,215		1,275,156	3,695	5,682,830			16,921	831	2,675,081	4,230	1,318,369	4,015,432		3,350,435	7,365,867		542,933	22,644	2,496,879	229,601	2,339	3,294,396		1,792,136	5,086,532	2,279,335	7,962,165
					RMB’000	(Note 8)		—	—	—	—	—		—	—				—	—	—	—	(4,200)			—			—	—	—	—	—			—
					RMB’000	(Note 3)		—	—	—	(24,819)	—		—	—				—	—	123,184	—	1,162,630			—			242,424	—	500,000	—	—			—
					RMB’000	(Note 2(vii))		(2)	(139,995)	—	—	(7,310)		—	—				—	(2,410)	(80,007)	—	(62)			—			(57,391)	(498)	—	—	—			—
				Pro forma adjustments	RMB’000 RMB’000 RMB’000	(Note 2(iv)) (Note 2(v)) (Note 2(vi))		(274) (45) (399)	(119,591) (236,232) (297,159)	— — —	— — —	(2,517) (25,461) —		— — —	— — —				— — —	— — —	(186,485) (263,463) (146,409)	— — —	(442) (2,279) (656)			— — —			(116,626) (189,047) (134,336)	— — —	(51,053) — —	— — —	— (633) (1,493)			— — —
					RMB’000	(Note 2(iii))		(143)	(429,954)	—	—	—		—	—				—	—	(206,517)	—	(661)			—			(122,179)	—	(500,000)	—	(1,727)			—
					RMB’000	(Note 2(ii))		(270)	(165,020)	—	—	(3,858)		—	—				—	(357)	(96,423)	—	(4,825)			—			(124,307)	—	(21,213)	—	(133)			—
					RMB’000	(Note 2(i))		(134)	(61,408)	—	—	—		—	—				—	—	(30,565)	—	(83)			—			(16,215)	—	(7,500)	—	—			—
Consolidated	statement of	financial position	of the Group as at	31 December 2020	RMB’000	(Note 1)		28,199	5,358,404	227,984	29,622	274,361		1,275,156	3,695	7,197,421			16,921	3,598	3,561,766	4,230	168,947	3,755,462		3,350,435	7,105,897		1,060,610	23,142	2,576,645	229,601	6,325	3,896,323		1,792,136	5,688,459	1,417,438	8,614,859
							Non-current assets	Property, plant and equipment	Solar power plants	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	Structured bank deposits	Cash and cash equivalents		Assets of disposal groups classified as	held for sale	Total current assets	Current liabilities	Trade and other payables	Lease liabilities	Loans and borrowings	Corporate bonds	Tax payable		Liabilities of disposal groups classified as	held for sale	Total current liabilities	Net current assets	Total assets less current liabilities

– III-2 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

statement of	financial position	of the Remaining	Group as at	31 December 2020	RMB’000			132,630	3,598,441	44,032	3,775,103	4,187,062		6,486,588	(2,381,383)		4,105,205	81,857	4,187,062
					RMB’000	(Note 8)		—	—	—				—	(4,200)			—
					RMB’000	(Note 3)		—	870,634	—				200,600	(552,663)			—
					RMB’000	(Note 2(vii))		(6,262)	(180,000)	—				—	14,365			—
				Pro forma adjustments	RMB’000 RMB’000 RMB’000	(Note 2(iv)) (Note 2(v)) (Note 2(vi))		— (20,194) —	(172,822) (260,000) (300,000)	— — —				— (10,000) (2,000)	31,192 (47,606) (6,794)			— — —
					RMB’000	(Note 2(iii))		—	—	—				(80,000)	66,631			—
					RMB’000	(Note 2(ii))		—	(50,804)	—				(60,000)	(14,296)			—
					RMB’000	(Note 2(i))		—	(17,500)	—				(48,600)	(2,375)			—
Consolidated	statement of	financial position	of the Group as at	31 December 2020	RMB’000	(Note 1)		159,086	3,708,933	44,032	3,912,051	4,702,808		6,486,588	(1,865,637)		4,620,951	81,857	4,702,808
							Non-current liabilities	Lease liabilities	Loans and borrowings	Corporate bonds		Net assets	EQUITY	Share capital	Reserves	Equity attributable to the owners of	the Company	Non-controlling interests	Net assets

– III-3 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

consolidated	statement of profit	or loss of the	Remaining Group	for the year ended	31 December 2020	RMB’000		1,278,763	(474,344)	804,419	18,912	—	(289,761)		(625,369)				(160,650)			(84,445)			(69,310)	(636,304)	(1,707)	(1,044,215)	(23,148)	(1,067,363)			(1,068,447)	1,084	(1,067,363)
						RMB’000	(Note 8)	—	—		—	—	(4,200)		—				—			—			—	—	—		—				(4,200)	—
						RMB’000	(Note 7)	16,156	(8,184)		—	—	(5,672)		—				—			—			—	(2,300)	—		—				—	—
						RMB’000	(Note 5)	—	—		—	—	—		(443,149)				—			—			—	—	—		—				(443,149)	—
						RMB’000	(Note 4(vii))	(20,800)	7,241		(1)	—	3,811		—				—			—			—	10,557	—		—				808	—
					Pro forma adjustments	RMB’000 RMB’000	(Note 4(v)) (Note 4(vi))	(38,072) (48,837)	13,972 15,770		841 (131)	— —	3,262 4,845		— —				— —			— —			— —	12,948 16,800	— —		2,019 —				(5,030) (11,553)	— —
						RMB’000	(Note 4(iv))	(15,933)	6,469		—	—	741		—				—			—			—	15,612	—		—				6,889	—
						RMB’000	(Note 4(iii))	(57,786)	29,959		—	—	2,779		—				—			—			9,119	38,250	—		—				22,321	—
						RMB’000	(Note 4(ii))	(24,541)	11,541		2	—	820		—				—			—			—	5,583	—		—				(6,595)	—
						RMB’000	(Note 4(i))	(9,633)	5,849		(1)	—	883		—				—			—			—	1,590	—		192				(1,120)	—
Consolidated	statement of profit	or loss of the	Group for the	year ended	31 December 2020	RMB’000	(Note 1)	1,478,209	(556,961)	921,248	18,202	—	(297,030)		(182,220)				(160,650)			(84,445)			(78,429)	(735,344)	(1,707)	(600,375)	(25,359)	(625,734)			(626,818)	1,084	(625,734)
								Revenue	Cost of sales	Gross profit	Other gains and losses	Other interest income	Administrative expenses	Loss on disposal of	subsidiaries, net	Impairment loss on a	disposal group	classified as held for	sale	Impairment loss on solar	power plants under	construction	Impairment losses on trade	and other receivables,	net	Finance costs	Share of loss of associates	Loss before income tax	Income tax expense	Loss for the year	Loss for the year	attributable to:	Owners of the Company	Non-controlling interests

– III-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

consolidated	statement of other	comprehensive	income of the	Remaining Group	for the year ended	31 December 2020	RMB’000		(1,067,363)											(184,365)								16,334			(168,031)		(1,235,394)				(1,236,478)	1,084	(1,235,394)
							RMB’000	(Note 8)	(4,200)											—								—									(4,200)	—
							RMB’000	(Note 7)	—											—								—									—	—
							RMB’000	(Note 5)	(443,149)											—								—									(443,149)	—
							RMB’000	(Note 4(vii))	808											—								—									808	—
						Pro forma adjustments	RMB’000 RMB’000	(Note 4(v)) (Note 4(vi))	(5,030) (11,553)											— —								— —									(5,030) (11,553)	— —
							RMB’000	(Note 4(iv))	6,889											—								—									6,889	—
							RMB’000	(Note 4(iii))	22,321											—								—									22,321	—
							RMB’000	(Note 4(ii))	(6,595)											—								—									(6,595)	—
							RMB’000	(Note 4(i))	(1,120)											—								—									(1,120)	—
Consolidated	statement of other	comprehensive	income of the	Group for	the year ended	31 December 2020	RMB’000	(Note 1)	(625,734)											(184,365)								16,334			(168,031)		(793,765)				(794,849)	1,084	(793,765)
									Loss for the year	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	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

– III-5 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

statement of cash	flows of the	Remaining Group	for the year	ended	31 December	2020	RMB’000				(1,044,215)			8,740		323,096		34,897		4,864		997		625,369		19			84,445					3,883					2,602	1,707	634,004	(981)				(1,940)
							RMB’000	(Note 10)			—			—		—		—		—		—		—		—			—					—					—	—	—	—				—
							RMB’000	(Note 9)			—			—		—		—		—		—		—		—			—					—					—	—	—	—				—
							RMB’000	(Note 8)			(4,200)			—		—		—		—		—		—		—			—					—					—	—	—	—				—
							RMB’000	(Note 5)			(443,149)			—		—		—		—		—		443,149		—			—					—					—	—	—	—				—
						Pro forma adjustments	RMB’000 RMB’000 RMB’000	(Note 6(v)) (Note 6(vi)) (Note 6(vii))			(7,049) (11,553) 808			(39) (130) (1)		(9,953) (12,577) (5,300)		(1,394) — (684)		— — —		— — —		— — —		— — —			— — —					— — —					— — —	— — —	(12,948) (16,800) (10,557)	1 — 2				— — —
							RMB’000	(Note 6(iv))			6,889			(87)		(5,061)		(112)		—		—		—		—			—					—					—	—	(15,612)	1				—
							RMB’000	(Note 6(iii))			22,321			(65)		(18,507)		—		—		—		—		—			—					—					—	—	(38,250)	—				—
							RMB’000	(Note 6(ii))			(6,595)			(91)		(8,420)		(107)		—		—		—		—			—					—					—	—	(5,583)	—				—
							RMB’000	(Note 6(i))			(1,312)			(42)		(3,440)		—		—		—		—		—			—					—					—	—	(1,590)	1				—
Consolidated	statement of cash	flows of the	Group for the	year ended	31 December	2020	RMB’000	(Note 1)			(600,375)			9,195		386,354		37,194		4,864		997		182,220		19			84,445					3,883					2,602	1,707	735,344	(986)				(1,940)
									Cash flows from operating	activities	Loss before income tax	Adjustments for:	Depreciation of property,	plant and equipment	Depreciation of solar power	plants	Amortisation of right-of-use	assets	Equity-settled share-based	payment expenses	Foreign exchange losses,	net	Loss on disposal of	subsidiaries, net	Write-off of property, plant	and equipment	Impairment loss on solar	power plants under	construction	Net unrealised losses 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 loss of associates	Interest expense	Interest income	Dividend income from	financial assets	measured at fair value	through profit or loss

– III-6 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

statement of cash	flows of the	Remaining Group	for the year	ended	31 December	2020	RMB’000						(8,712)			68,309			160,650	(2,834)			894,900	(1)		1,883,564		(1,911,808)		866,655	(20,265)		846,390					(1,869)				1,940
							RMB’000	(Note 10)					—			—			—	—				—		—		—			—							—				—
							RMB’000	(Note 9)					—			—			—	—				—		202,858		—			—							—				—
							RMB’000	(Note 8)					—			—			—	—				—		—		—			—							—				—
							RMB’000	(Note 5)					—			—			—	—				—		—		—			—							—				—
						Pro forma adjustments	RMB’000 RMB’000 RMB’000	(Note 6(v)) (Note 6(vi)) (Note 6(vii))					— — —			(1,000) — —			— — —	— — —				— — 2,410		29,003 37,169 4,259		(5,057) — 15			1,083 — —							— — —				— — —
							RMB’000	(Note 6(iv))					—			—			—	—				—		5,804		(4,018)			—							—				—
							RMB’000	(Note 6(iii))					—			(9,120)			—	—				—		42,043		4			—							—				—
							RMB’000	(Note 6(ii))					—			—			—	—				—		(13,155)		381			—							—				—
							RMB’000	(Note 6(i))					—			—			—	—				—		(4,049)		176			336							—				—
Consolidated	statement of cash	flows of the	Group for the	year ended	31 December	2020	RMB’000	(Note 1)					(8,712)			78,429			160,650	(2,834)			1,073,056	(2,411)		1,579,632		(1,903,309)		746,968	(21,684)		725,284					(1,869)				1,940
									Dividend income from	financial assets	measured at fair value	through other	comprehensive income	Impairment loss on trade	and other receivables,	net	Impairment loss on disposal	group classified as held	for sale	Gain on lease modification	Operating profit before	working capital	changes	Increase in inventories, net	Decrease in trade, bills and	other receivables	Decrease in trade and other	payables	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 from	financial assets	measured at fair value	through profit or loss

– III-7 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

statement of cash	flows of the	Remaining Group	for the year	ended	31 December	2020	RMB’000						8,712			(7,829)					(430)		1,101			(66)				3,630					270,000	982			2,048,342			(3,000)		2,321,513
							RMB’000	(Note 10)					—			—					—		—			—				—					—	—			1,161,504			—
							RMB’000	(Note 9)					—			—					—		—			—				—					—	—			—			—
							RMB’000	(Note 8)					—			—					—		—			—				—					—	—			—			—
							RMB’000	(Note 5)					—			—					—		—			—				—					—	—			—			—
						Pro forma adjustments	RMB’000 RMB’000 RMB’000	(Note 6(v)) (Note 6(vi)) (Note 6(vii))					— — —			— 3,729 8,379					— — —		— — 1,101			(66) — —				— — —					— — —	— — (2)			— — —			— — —
							RMB’000	(Note 6(iv))					—			4,220					—		—			—				—					—	(1)			—			—
							RMB’000	(Note 6(iii))					—			1,514					—		—			—				—					—	—			—			—
							RMB’000	(Note 6(ii))					—			478					—		—			—				—					—	—			—			—
							RMB’000	(Note 6(i))					—			—					—		—			—				—					—	(1)			—			—
Consolidated	statement of cash	flows of the	Group for the	year ended	31 December	2020	RMB’000	(Note 1)					8,712			(26,149)					(430)		—			—				3,630					270,000	986			886,838			(3,000)		1,140,658
									Dividend income from	financial assets	measured at fair value	through other	comprehensive income	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	Payments for purchase of	right-of-use asset	Receipt from disposal of	property, plant and	equipment	Receipt from disposal of	financial assets	measured at fair value	through profit or loss	Proceeds from return of	capital of financial	assets measured at fair	value through other	comprehensive income	Interests received	Proceeds from disposal of	subsidiaries, net of cash	disposed	Payments for acquisition of	associates, net of cash	acquired	Net cash generated from	investing activities

– III-8 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

statement of cash	flows of the	Remaining Group	for the year	ended	31 December	2020	RMB’000					(62,231)		322,500		(1,599,733)	(473,694)		11,110		(18,231)			(1,590)		(1,821,869)		1,346,034		253,756		(95)		1,599,695
							RMB’000	(Note 10)				—		—		—	—		—		—			—				1,161,504		1,126		—		1,162,630
							RMB’000	(Note 9)				—		—		—	—		—		—			—				202,858		—		—		202,858
							RMB’000	(Note 8)				—		—		—	—		—		—			—				(4,200)		—		—		(4,200)
							RMB’000	(Note 5)				—		—		—	—		—		—			—				—		—		—		—
						Pro forma adjustments	RMB’000 RMB’000 RMB’000	(Note 6(v)) (Note 6(vi)) (Note 6(vii))				4,270 — 363		— — —		— — —	— — —		— — —		— — —			— — —				(3,149) (162) 793		(157) (17) (832)		— — —		(3,306) (179) (39)
							RMB’000	(Note 6(iv))				—		—		—	7,948		—		—			—				(29)		(77)		—		(106)
							RMB’000	(Note 6(iii))				—		—		—	—		—		—			—				(60)		(18)		—		(78)
							RMB’000	(Note 6(ii))				—		—		21,417	5,583		—		—			—				(6,092)		(11)		—		(6,103)
							RMB’000	(Note 6(i))				—		—		8,000	1,590		—		—			—				(331)		(14)		—		(345)
Consolidated	statement of cash	flows of the	Group for the	year ended	31 December	2020	RMB’000	(Note 1)				(66,864)		322,500		(1,629,150)	(488,815)		11,110		(18,231)			(1,590)		(1,871,040)		(5,098)		253,756		(95)		248,563
									Cash flows from financing	activities	Repayment of lease	liabilities	Proceed from new loans	and borrowings	Repayment of loans and	borrowings	Interest paid	Net proceeds from issue of	corporate bonds	Repayment of corporate	bonds	Payment for acquisition of	additional interest in a	subsidiary	Net cash used in financing	activities	Net decrease 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

– III-9 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(E) Notes to the Unaudited Pro Forma Financial Information of the Remaining Group

(1) The amounts are extracted from the audited consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of other comprehensive income and consolidated statement of cash flows of the Group as at 31 December 2020 as set out in the published annual report of the Group for the year ended 31 December 2020.
(2) (i) The adjustment reflects the exclusion of assets and liabilities of Jinta Yongjia as at 31 May 2021 as if the Disposal had been completed on 31 December 2020. The amounts except adjustment on reserves are extracted from the unaudited financial information of Jinta Yongjia set out in Appendix II to this circular. The adjustment on reserves can be referred to note 3(b) set out in Appendix III to this circular.
(ii) The adjustment reflects the exclusion of assets and liabilities of Gansu Hongyuan as at 31 May 2021 as if the Disposal had been completed on 31 December 2020. The amounts except adjustment on reserves are extracted from the unaudited financial information of Gansu Hongyuan set out in Appendix II to this circular. The adjustment on reserves can be referred to note 3(b) set out in Appendix III to this circular.
(iii) The adjustment reflects the exclusion of assets and liabilities of Dunhuang Wanfa as at 31 May 2021 as if the Disposal had been completed on 31 December 2020. The amounts except adjustment on reserves are extracted from the unaudited financial information of Dunhuang Wanfa set out in Appendix II to this circular. The adjustment on reserves can be referred to note 3(b) set out in Appendix III to this circular.
(iv) The adjustment reflects the exclusion of assets and liabilities of Hualong County Ruiqida as at 31 May 2021 as if the Disposal had been completed on 31 December 2020. The amounts except adjustment on reserves are extracted from the unaudited financial information of Hualong County Ruiqida set out in Appendix II to this circular. The adjustment on reserves can be referred to note 3(b) set out in Appendix III to this circular.
(v) The adjustment reflects the exclusion of assets and liabilities of Huanghua Zhengyang as at 31 May 2021 as if the Disposal had been completed on 31 December 2020. The amounts except adjustment on reserves are extracted from the unaudited financial information of Huanghua Zhengyang set out in Appendix II to this circular. The adjustment on reserves can be referred to note 3(b) set out in Appendix III to this circular.

– III-10 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(vi) The adjustment reflects the exclusion of assets and liabilities of Jiayuguan Xiehe as at 31 May 2021 as if the Disposal had been completed on 31 December 2020. The amounts except adjustment on reserves are extracted from the unaudited financial information of Jiayuguan Xiehe set out in Appendix II to this circular. The adjustment on reserves can be referred to note 3(b) set out in Appendix III to this circular.
(vii) The adjustment reflects the exclusion of assets and liabilities of Lintan Tianlang as at 31 May 2021 as if the Disposal had been completed on 31 December 2020. The amounts except adjustment on reserves are extracted from the unaudited financial information of Lintan Tianlang set out in Appendix II to this circular. The adjustment on reserves can be referred to note 3(b) set out in Appendix III to this circular.
(3) The adjustment represents the pro forma loss on Disposal as if the Disposal had been completed on 31 December 2020, which is calculated as follows:

Notes Total consideration (a) Less: Assignment of net amounts due to group companies to the Purchaser (c) Net consideration Less: Share of net assets of the Disposal Companies as at 31 December 2020 (b) Less: Loans and borrowings and interest expense included in amounts due liable from the Group (d) Less: Goodwill of the Disposal Companies as at 31 December 2020 (e) Estimated loss on Disposal	RMB’000 1,621,334 (335,520) 1,285,814 (159,483) (1,613,058) (24,819) (511,546)

(a) In accordance with the Agreement, the Group agreed to dispose of its 100% equity interest in the Disposal Companies, together with the amounts due to group companies by the Disposal Companies to the Group, to the Purchaser, which is an independent third party. The total consideration for the Disposal amounts to RMB1,621,334,000, which is comprised of RMB1,285,814,000 for the transfer of the entire equity interest in Disposal Companies and RMB335,520,000 (note 3(c)) for net amounts due to group companies as at 31 December 2020.

– III-11 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(b) This amount represents the net assets of the Disposal Companies amounting to approximately RMB159,483,000 as at 31 December 2020.

Net assets/(liabilities) of the Disposal Companies as at 31 December 2020 is determined as follows:

— Jinta Yongjia — Gansu Hongyuan — Dunhuang Wanfa — Hualong County Ruiqida — Huanghua Zhengyang — Jiayuguan Xiehe — Lintan Tianlang	RMB’000 50,975 74,296 13,369 (31,192) 57,606 8,794 (14,365) 159,483

(c) The amount represents net amounts due by the Disposal Companies to the Group of approximately RMB335,520,000 (note 3(a)). Pursuant to the terms of the Agreement, the Company would assign these amounts from Disposal Companies to Purchaser upon the completion of the Disposal.

Amounts due to/(from) group companies of the Disposal Companies as at 31 December 2020 is as follows:

— Jinta Yongjia — Gansu Hongyuan — Dunhuang Wanfa — Hualong County Ruiqida — Huanghua Zhengyang — Jiayuguan Xiehe — Lintan Tianlang	RMB’000 6,478 115,456 103,598 (45,968) 21,119 124,300 10,537 335,520

– III-12 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(d) The amount represents Loans and borrowings and interest expense of the Disposal Companies which is due from the Group of approximately RMB1,613,058,000. Pursuant to the terms of the Agreement, the Group would liable to these amounts.

Loans and borrowings and interest expense of the Disposal Companies as at 31 December 2020 is as follows:

— Dunhuang Wanfa — Hualong County Ruiqida — Huanghua Zhengyang — Jiayuguan Xiehe — Lintan Tianlang	Loans and borrowings RMB’000 500,000 130,634 260,000 300,000 180,000 1,370,634	Amounts due to group companies — interest expense RMB’000 114,750 22,008 25,026 50,400 30,240 242,424	Total RMB’000 614,750 152,642 285,026 350,400 210,240
			1,613,058

(e) This amount represents goodwill of Gansu Hongyuan amounting to approximately RMB24,819,000 as at 31 December 2020.
(4) The below adjustments are not expected to have a continuing effect on the unaudited pro forma consolidated statement of profit or loss and comprehensive income of the Remaining Group.
(i) The adjustment is to exclude each line item of Jinta Yongjia that has been incorporated in the consolidated statement of profit or loss and consolidated statement of other comprehensive income of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(ii) The adjustment is to exclude each line item of Gansu Hongyuan that has been incorporated in the consolidated statement of profit or loss and consolidated statement of other comprehensive income of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(iii) The adjustment is to exclude each line item of Dunhuang Wanfa that has been incorporated in the consolidated statement of profit or loss and consolidated statement of other comprehensive income of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.

– III-13 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(iv) The adjustment is to exclude each line item of Hualong County Ruiqida that has been incorporated in the consolidated statement of profit or loss and consolidated statement of other comprehensive income of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(v) The adjustment is to exclude each line item of Jiayuguan Xiehe that has been incorporated in the consolidated statement of profit or loss and consolidated statement of other comprehensive income of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(vi) The adjustment is to exclude each line item of Huanghua Zhengyang that has been incorporated in the consolidated statement of profit or loss and consolidated statement of other comprehensive income of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(vii) The adjustment is to exclude each line item of Lintan Tianlang that has been incorporated in the consolidated statement of profit or loss and consolidated statement of other comprehensive income of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(5) The adjustments represents the pro forma loss on Disposal as if the Disposal had been completed on 1 January 2020, which is calculated as follows:

Notes Total consideration (a) Less: Assignment of amounts due to group companies to the Purchaser (c) Net consideration Less: Share of net assets in the Disposal Companies as at 1 January 2020 (b) Less: Loans and borrowings and interest expense included in amounts due liable from the Group (d) Less: Goodwill of the Disposal Companies as at 1 January 2020 (e) Estimated loss on Disposal	RMB’000 1,488,672 (202,858) 1,285,814 (172,653) (1,531,491) (24,819) (443,149)

(a) In accordance with the Agreement, the Group agreed to dispose of its 100% equity interest in the Disposal Companies, together with the amounts due to group companies owed by Disposal Companies to the Group, to the Purchaser, which is an independent third party. The total consideration for the Disposal amounts to RMB1,488,672,000, which is comprised of RMB1,285,814,000 for

– III-14 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

the transfer of the entire equity interest in the Disposal Companies and RMB202,858,000 (note 5(c) and 9) amounts due to group companies as at 1 January 2020.

(b) This amount represents the net assets of the Disposal Companies amounting to approximately RMB172,653,000 as at 1 January 2020 as extracted from the Unaudited Financial Information in Appendix II.

Net assets of the Disposal Companies as at 1 January 2020 is determined as follows:

— Jinta Yongjia — Gansu Hongyuan — Dunhuang Wanfa — Hualong County Ruiqida — Huanghua Zhengyang — Jiayuguan Xiehe — Lintan Tianlang	RMB’000 (53,636) (69,745) (39,541) 22,028 (50,436) 6,409 12,268 (172,653)

(c) The amount represents the loans owed by the Disposal Companies to the Group of RMB202,858,000 (note 5(a)) as at 1 January 2020. Pursuant to the terms of the Agreement, the Company would assign these amounts from Disposal Companies to the Purchaser upon the completion of the Disposal.

Amounts due to/(from) group companies of the Disposal Companies as at 1 January 2020 as extracted from the Unaudited Financial Information in Appendix II is as follows:

— Jinta Yongjia — Gansu Hongyuan — Dunhuang Wanfa — Hualong County Ruiqida — Huanghua Zhengyang — Jiayuguan Xiehe — Lintan Tianlang	RMB’000 (6,173) 86,296 60,621 (59,746) 22,061 106,623 (6,824) (202,858)

– III-15 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(d) The amount represents Loans and borrowings and interest expense of the Disposal Companies which is liable to the Group of approximately RMB1,531,491,000. Pursuant to the terms of the Agreement, the Group would liable to these amounts.

Loans and borrowings and interest expense of the Disposal Companies as at 1 January 2020 is as follows:

— Dunhuang Wanfa — Hualong County Ruiqida — Huanghua Zhengyang — Jiayuguan Xiehe — Lintan Tianlang	Loans and borrowings RMB’000 500,000 130,634 260,000 300,000 180,000 1,370,634	Amounts due to group companies — interest expense RMB’000 76,500 14,672 15,925 33,600 20,160 160,857	Total RMB’000 576,500 145,306 275,925 333,600 200,160
			1,531,491

(e) This amount represents goodwill of Gansu Hongyuan amounting to approximately RMB24,819,000 as at 1 January 2020.
(6) The following adjustments are not expected to have a continuing effect on the unaudited pro forma consolidated statement of cash flows of the Remaining Group.
(i) The adjustment is to exclude the cash flows from Jinta Yongjia incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(ii) The adjustment is to exclude the cash flows from Gansu Hongyuan incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(iii) The adjustment is to exclude the cash flows from Dunhuang Wanfa incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(iv) The adjustment is to exclude the cash flows from Hualong County Ruiqida incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.

– III-16 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(v) The adjustment is to exclude the cash flows from Huanghua Zhengyang incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(vi) The adjustment is to exclude the cash flows from Jiayuguan Xiehe incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(vii) The adjustment is to exclude the cash flows from Lintan Tianlang incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020.
(7) The adjustment represents the reversal of elimination of the intercompany transactions between the Disposal Companies and the Remaining Group, which were reflected in the consolidated financial statements of the Group for the year ended 31 December 2020, as if the Disposal had been completed on 1 January 2020 for the purpose of the financial performance of the Remaining Group.

Reversal of elimination of the intercompany transactions are extracted from the Unaudited Financial Information in Appendix II as follows:

Operation and maintenance fee charged by Kong Sun Yongtai Investment Holdings Limited, an immediate holding company during the year ended 31 December 2020 attributable to: — Jinta Yongjia — Gansu Hongyuan — Dunhuang Wanfa — Hualong County Ruiqida — Huanghua Zhengyang — Jiayuguan Xiehe — Lintan Tianlang	RMB’000 533 794 1,168 670 794 1,043 670
	5,672

– III-17 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

RMB’000

Operation and maintenance fee charged by Beijing Xintai Green
Energy Technology Co., Ltd, a fellow subsidiary during the
year ended 31 December 2020 attributable to:
— Jinta Yongjia
— Gansu Hongyuan
— Dunhuang Wanfa
— Hualong County Ruiqida
— Huanghua Zhengyang
— Jiayuguan Xiehe
— Lintan Tianlang
Finance cost charged by Beijing Runfengyuanda Micro Loan Co.,
Ltd., a fellow subsidiary during the year ended 31 December
2020 attributable to:
— Huanghua Zhengyang

340
1,132
2,264
800
1,132
1,887
629

8,184

RMB’000
2,300

(8) The amount represents the professional fees in connection with the Disposal, such as fee incurred for legal and professional service and valuation service, amounting to approximately RMB4,200,000 and assumed to be fully settled by cash.
(9) The amount represents the receipt of amounts due to group companies, amounting to approximately RMB202,858,000 (note 5(a)).
(10) This adjustment represents the estimated net cash inflow from the Disposal as if the Disposal had been completed on 1 January 2020 calculated as follows:
Consideration for transfer to equity interest in Disposal Companies expected to be received within a year
Cash and cash equivalents disposed of

RMB’000 Sum of note (a)(i)(ii), (c)(i)(ii), (e)(i)(ii), (g)(i)(ii), (i)(i)(ii), (k)(i)(ii), (m)(i)(ii) 1,162,630 Note (1,126)

Net cash inflows arising from disposal of subsidiaries

1,161,504

– III-18 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Pursuant to the Agreement, the total consideration for the Disposal comprises of the followings:

Disposal of Jinta Yongjia (‘‘First Disposal’’)

(a) RMB37,474,000, being the cash consideration for the transfer of the entire equity interest in Jinta Yongjia, shall be settled in the following manner:
(i) RMB22,485,000 shall be payable to the Group within five (5) business days upon completion of the First Disposal;
(ii) RMB10,283,000 shall be payable to the Group within five (5) business days after completion of handover of certain deliverables related to Jinta Yongjia; and
(iii) RMB4,706,000 shall be payable to the Group within ten (10) business days upon each receipt of the state renewable energy subsidies from the State Grid Corporation of China.
(b) Approximately RMB10,817,000, being the amounts due to group companies as at Reference Date, shall be settled in the following manner:
(i) RMB9,598,000 shall be payable to the Group within five (5) business days completion of the transition period audit which the report will be issued within fifteen (15) business days of the completion of the First Disposal; and
(ii) RMB1,219,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed not later than within twenty-four (24) months after completion of the First Disposal.

Disposal of Gansu Hongyuan (‘‘Second Disposal’’)

(c) RMB21,401,000, being the cash consideration for the transfer of the entire equity interest in Gansu Hongyuan, shall be settled in the following manner:
(i) RMB7,490,000 shall be payable to the Group within five (5) business days upon completion of the Second Disposal;
(ii) RMB1,713,000 shall be payable to the Group within five (5) business days after completion of handover of certain deliverables related to Gansu Hongyuan; and

– III-19 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(iii) RMB12,198,000 shall be payable to the Group within ten (10) business days upon each receipt of the state renewable energy subsidies from the State Grid Corporation of China.
(d) Approximately RMB115,814,000, being the amounts due to group companies as at Reference Date, shall be settled in the following manner:
(i) RMB111,471,000 shall be payable to the Group within five (5) business days completion of the transition period audit which the report will be issued within fifteen (15) business days of the completion of the Second Disposal; and
(ii) RMB4,343,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed not later than within twenty-four (24) months after completion of the Second Disposal.

Disposal of Dunhuang Wanfa (‘‘Third Disposal’’)

(e) RMB471,917,000, being the cash consideration for the transfer of the entire equity interest in Dunhuang Wanfa, shall be settled in the following manner:
(i) RMB283,150,000 shall be payable to the Group within five (5) business days upon completion of the Third Disposal;
(ii) RMB160,342,000 shall be payable to the Group within five (5) business days after completion of handover of certain deliverables related to Dunhuang Wanfa; and
(iii) RMB28,425,000 shall be payable to the Group within ten (10) business days upon each receipt of the state renewable energy subsidies from the State Grid Corporation of China.
(f) Approximately RMB24,751,000, being the amounts due to group companies as at Reference Date, shall be settled in the following manner:
(i) RMB23,058,000 shall be payable to the Group within five (5) business days completion of the transition period audit which the report will be issued within fifteen (15) business days of the completion of the Third Disposal; and
(ii) RMB1,693,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed not later than within twenty-four (24) months after completion of the Third Disposal.

– III-20 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Disposal of Hualong County Ruiqida (‘‘Forth Disposal’’)

(g) RMB95,985,000, being the cash consideration for the transfer of the entire equity interest in Hualong County Ruiqida, shall be settled in the following manner:
(i) RMB6,719,000 shall be payable to the Group within five (5) business days upon completion of the Forth Disposal;
(ii) RMB63,974,000 shall be payable to the Group within five (5) business days after completion of handover of certain deliverables related to Hualong County Ruiqida;
(iii) RMB17,928,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed not later than within twenty-four (24) months after completion of the Forth Disposal; and
(iv) RMB7,364,000 shall be payable to the Group within ten (10) business days upon each receipt of the state renewable energy subsidies from the State Grid Corporation of China.
(h) Approximately RMB60,573,000 shall be payable by the Group within five (5) business days completion of the transition period audit which the report will be issued within fifteen (15) business days of the completion of the Forth Disposal.

Disposal of Huanghua Zhengyang (‘‘Fifth Disposal’’)

(i) RMB241,476,000, being the cash consideration for the transfer of the entire equity interest in Huanghua Zhengyang, shall be settled in the following manner:
(i) RMB144,885,000 shall be payable to the Group within five (5) business days upon completion of the Fifth Disposal;
(ii) RMB76,419,000 shall be payable to the Group within five (5) business days after completion of handover of certain deliverables related to Huanghua Zhengyang;
(iii) RMB2,616,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed not later than within three (3) months after completion of the Fifth Disposal; and
(iv) RMB17,556,000 shall be payable to the Group within ten (10) business days upon each receipt of the state renewable energy subsidies from the State Grid Corporation of China.

– III-21 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(j) Approximately RMB1,021,000 shall be payable by the Group within five (5) business days completion of the transition period audit which the report will be issued within fifteen (15) business days of the completion of the Fifth Disposal.

Disposal of Jiayuguan Xiehe (‘‘Sixth Disposal’’)

(k) RMB279,849,000, being the cash consideration for the transfer of the entire equity interest in Jiayuguan Xiehe, shall be settled in the following manner:
(i) RMB167,910,000 shall be payable to the Group within five (5) business days upon completion of the Sixth Disposal;
(ii) RMB90,189,000 shall be payable to the Group within five (5) business days after completion of handover of certain deliverables related to Jiayuguan Xiehe; and
(iii) RMB21,750,000 shall be payable to the Group within ten (10) business days upon each receipt of the state renewable energy subsidies from the State Grid Corporation of China.
(l) Approximately RMB125,689,000, being the amounts due to group companies as at Reference Date, shall be settled in the following manner:
(i) RMB123,999,000 shall be payable to the Group within five (5) business days completion of the transition period audit which the report will be issued within fifteen (15) business days of the completion of the Sixth Disposal; and
(ii) RMB1,690,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed not later than within twenty-four (24) months after completion of the Sixth Disposal.

Disposal of Lintan Tianlang (‘‘Seventh Disposal’’)

(m) RMB137,712,000, being the cash consideration for the transfer of the entire equity interest in Lintan Tianlang, shall be settled in the following manner:
(i) RMB82,627,000 shall be payable to the Group within five (5) business days upon completion of the Seventh Disposal;
(ii) RMB44,444,000 shall be payable to the Group within five (5) business days after completion of handover of certain deliverables related to Lintan Tianlang;

– III-22 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

  - (iii) RMB4,858,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed not later than within twenty-four (24) months after completion of the Seventh Disposal; and

  - (iv) RMB5,783,000 shall be payable to the Group within ten (10) business days upon each receipt of the state renewable energy subsidies from the State Grid Corporation of China.

(n) Approximately RMB228,000 shall be payable by the Group within five (5) business days completion of the transition period audit which the report will be issued within fifteen (15) business days of the completion of the Seventh Disposal.
(11) The adjustment in respect of the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and unaudited pro forma consolidated statement of cash flows above are not expected to have a continuing effect on the Group’s consolidated financial statements except for those that have been clearly identified to have a continuing effect.

– III-23 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

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 31 December 2020, 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 2020 and related notes as set out on pages III-1 to III-23 of Appendix III of the circular dated 30 August 2021 (the ‘‘Circular’’) in connection to the proposed disposal of entire equity interests in 金塔縣永嘉新能源有限公司 (Jinta Yongjia New Energy Limited) (‘‘Jinta Yongjia’’), 甘肅宏遠光電有限責任公司 (Gansu Hongyuan Photovoltaic Limited) (‘‘Gansu Hongyuan’’), 敦煌萬發新能源有限公司 (Dunhuang Wanfa New Energy Limited Company) (‘‘Dunhuang Wanfa’’), 化隆縣瑞啟達新能源有限公司 (Hualong County Ruiqida New Energy Limited) (‘‘Hualong County Ruiqida’’), 黃驊市正陽新能源有限公司 (Huanghua Zhengyang New Energy Limited) (‘‘Huanghua Zhengyang’’), 嘉峪關協合新能源有限公司 (Jiayuguan Xiehe New Energy Co. Ltd.) (‘‘Jiayuguan Xiehe’’) and 臨潭天朗新能源科技有限公司 (Lintan Tianlang New Energy Technology Co., Ltd.) (‘‘Lintan Tianlang’’) (the ‘‘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-23 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 Disposal on the Group’s financial position as at 31 December 2020 and the Group’s financial performance and cash flows for the year ended 31 December 2020 as if the Disposal had taken place at 31 December 2020 and 1 January 2020, 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 2020, on which an independent auditor’s report for the year ended 31 December 2020 has been published.

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

– III-24 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

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.

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 Disposal as at 31 December 2020 or 1 January 2020 would have been as presented.

– III-25 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

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 30 August 2021

– III-26 –

VALUATION REPORT

APPENDIX IV

The following is the text of a valuation report prepared for the purpose of incorporation in this circular received from Valor Appraisal & Advisory Limited, an independent valuer, in connection with their valuation of 100% equity interests in 金塔縣永嘉新能源有限公司, 甘肅宏遠光電有限責任公司, 敦煌萬發新能源有限公司, 化隆縣瑞啟達新能源有限公司, 黃驊市正陽新能源有限公司, 嘉峪關協合新能源有限公司, 臨潭天朗新能源科技有限公司 as at 30 April 2021.

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Date: 30 August 2021

The Board of Directors Kong Sun Holdings Limited

Unit 803–4, 8/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong

Dear Sir/Madam,

RE: Valuation Report of 金塔縣永嘉新能源有限公司, 甘肅宏遠光電有限責任公司, 敦煌萬發新能源有限公司, 化隆縣瑞啟達新能源有限公司, 黃驊市正陽新能源有限公司, 嘉峪關協合新能源有限公司, 臨潭天朗新能源科技有限公司 for Circular Reference for Kong Sun Holdings Limited

In accordance with the instruction of Kong Sun Holdings Limited (‘‘Kong Sun’’), we have made an appraisal of the equitable values of 100% equity interests in 金塔縣永嘉新能源有限公司, 甘肅宏遠光電有限責任公司, 敦煌萬發新能源有限公司, 化隆縣瑞啟達新能源有限公司, 黃驊市正陽新能源有限公司, 嘉峪關協合新能源有限公司 and 臨潭天朗新能源科技有限公司 for circular reference as at the valuation date (30 April 2021).

The details and conclusion of the valuation are presented in the attached valuation report, which outlines the factors considered, valuation methodology, basis and assumptions employed in formulating our opinion of values.

– IV-1 –

VALUATION REPORT

APPENDIX IV

Valor Appraisal & Advisory Limited (‘‘Valor’’) is an independent firm providing full range of valuation and advisory services. This report has been prepared independently. Neither Valor nor any authors of this report hold any interest in Kong Sun or its related parties. The fee for providing this report is based on Valor’s normal professional rates, whilst expenses (if incurred) are being reimbursed at cost. Payment of fees and reimbursements are not contingent upon the conclusions drawn in the report.

Yours faithfully, For and on behalf of

Valor Appraisal & Advisory Limited Haydn Y.C. Lee CFA CPA (Aust.) MRICS MAusIMM RBV Director

– IV-2 –

APPENDIX IV

VALUATION REPORT

1. INTRODUCTION & PURPOSE OF VALUATION

In accordance with the instruction of Kong Sun Holdings Limited (‘‘Kong Sun’’ or the ‘‘Company’’), Valor Appraisal & Advisory Limited (‘‘Valor’’) is required to provide an independent valuation report (the ‘‘Valuation Report’’) to assess the equitable values (the ‘‘Equitable Values’’) of 100% equity interests (the ‘‘Equity Interests’’) in 金塔縣永嘉新能源有限公司 (translated as Jinta Yongjia New Energy Limited and hereinafter referred to as the ‘‘First Project Company’’), 甘肅宏遠光電有限責任公司 (translated as Gansu Hongyuan Photovoltaic Limited and hereinafter referred to as the ‘‘Second Project Company’’), 敦煌萬發新能源有限公司 (translated as Dunhuang Wanfa New Energy Limited Company and hereinafter referred to as the ‘‘Third Project Company’’), 化隆縣瑞啟達新能源有限公司 (translated as Hualong County Ruiqida New Energy Limited and hereinafter referred to as the ‘‘Fourth Project Company’’), 黃驊市正陽新能源有限公司 (translated as Huanghua Zhengyang New Energy Limited and hereinafter referred to as the ‘‘Fifth Project Company’’), 嘉峪關協合新能源有限公司 (translated as Jiayuguan Xiehe New Energy Co. Ltd. and hereinafter referred to as the ‘‘Sixth Project Company’’) and 臨潭天朗新能源科技有限公司 (translated as Lintan Tianlang New Energy Technology Co., Ltd. and hereinafter referred to as the ‘‘Seventh Project Company’’) for circular reference as at 30 April 2021 (the ‘‘Valuation Date’’). The First Project Company, the Second Project Company, the Third Project Company, the Fourth Project Company, the Fifth Project Company, the Sixth Project Company and the Seventh Project Company are hereinafter collectively referred to as the ‘‘ ’’ Project Companies .

Relevant enquiries have been made and required information have been obtained that Valor considers to be necessary in forming an independent opinion of the Equitable Values of the Equity Interests, as at the Valuation Date.

This Valuation Report states valuation methodology and approach adopted in assessing the Equitable Values of the Equity Interests, as well as outlines Valor’s latest findings and valuation conclusion, which is prepared solely for the purpose of circular reference for Kong Sun and its subsidiaries (collectively referred to as the ‘‘Group’’).

In this Valuation Report, words in the singular number include the plural and vice versa; the words asset or assets are deemed to include liability or liabilities, except where it is expressly stated otherwise, or is clear from the context that liabilities are excluded; headings are inserted for convenient reference only and have no effect in limiting or extending the language to which they refer.

2. BACKGROUND INFORMATION OF THE PROJECT COMPANIES

The following background information of the Project Companies has been complied with reference to the documents received from and representation by the management of the Group and the Project Companies (the ‘‘Management’’), which are assumed to be accurate and relied upon when conducting this valuation exercise.

– IV-3 –

APPENDIX IV

VALUATION REPORT

The First Project Company is a company established in the People’s Republic of China (the ‘‘PRC’’) with limited liability. It is principally engaged in solar power generation. As at the Valuation Date, the First Project Company is a direct wholly-owned subsidiary of 江山永泰投資控股有限公司 (translated as Kong Sun Yongtai Investment Holdings Limited and hereinafter referred to as ‘‘Kong Sun Yongtai’’).

The Second Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. As at the Valuation Date, the Second Project Company is treated as wholly-owned by China Resources Szitic Trust Co., Ltd. (‘‘China Resources Szitic Trust’’) because of the equity pledge arrangement for the outstanding indebtedness in the amount of approximately RMB85,530,000 due by the Second Project Company to 國銀金融租賃股份有限公司 (the ‘‘CDB Loan’’) but is still accounted as a subsidiary of the Group. 國銀金融租賃股份有限公司 designated China Resources Szitic Trust to hold the entire equity interest of the Second Project Company as nominee for the equity pledge arrangement for the CDB Loan.

The Third Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. According to cooperation agreement dated 24 October 2016 entered into between the Group and 嘉興盛世神州永贏投資合夥企業(有限合夥) (translated as Jiaxing Shengshi Shenzhou Yong Ying Investment Partnership (Limited Partnership) and hereinafter referred to as ‘‘Jiaxing Shengshi’’), Jiaxing Shengshi contributed a capital of RMB500,000,000 to the Third Project Company and has held 86.207% equity interest of the Third Project Company upon completion of the capital contribution while the Group has retained the power to control the financial and operating policies of the Third Project Company so as to direct its relevant activities and to obtain significant economic benefits from its activities. As at the Valuation Date, the Third Project Company is owned as to 86.207% equity interest by Jiaxing Shengshi, and the remaining equity interest by Kong Sun Yongtai.

The Fourth Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. As at the Valuation Date, the Fourth Project Company is a direct wholly-owned subsidiary of 常熟宏略光伏電站開發有限公司 (translated as Changshu Honglue Photovoltaic Power Plants Development Co., Ltd. and hereinafter referred to as ‘‘Changshu Honglue’’).

The Fifth Project Company is a company established in the PRC with limited liability. According to the investment and repurchase agreement dated 21 August 2018 entered into between the Group and 蘇州君盛晶石股權投資合夥企業(有限合夥) (translated as Suzhou Junsheng Jingshi Equity Investment Partnership (Limited Partnership) and hereinafter referred to as ‘‘Suzhou Junsheng’’), Suzhou Junsheng contributed capital of RMB260,000,000 to the Fifth Project Company and has held 96.60% equity interest of the Fifth Project Company upon completion of the capital contribution while the Group has retained the power to control the financial and operating policies of the Fifth Project Company so as to direct its relevant activities and to obtain significant economic benefits from its activities. It is principally engaged in solar power generation. As at the Valuation Date, the Fifth Project Company is owned as to 96.60% equity interest by Suzhou Junsheng, and the remaining equity interest by Kong Sun Yongtai.

– IV-4 –

VALUATION REPORT

APPENDIX IV

The Sixth Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. As at the Valuation Date, the Sixth Project Company is a direct wholly-owned subsidiary of Changshu Honglue.

The Seventh Project Company is a company established in the PRC with limited liability. It is principally engaged in solar power generation. As at the Valuation Date, the Seventh Project Company is a direct wholly-owned subsidiary of Changshu Honglue.

3. SCOPE OF WORK

In conducting this valuation exercise, Valor’s appraisers have:

. gathered all relevant information;
. discussed with the Management;
. collected market data from reliable sources;
. investigated into the information, and considered the basis and assumptions of the opinion of values;
. analysed the financial information of companies in a similar industry; and
. designed an appropriate valuation model to derive the Equitable Values of the Equity Interests.

4. BASIS OF VALUATION

The valuation was carried out on an Equitable Value basis. According to International Valuation Standards 2020 (‘‘IVS 2020’’) issued by International Valuation Standards Council (‘‘IVSC’’), Equitable Value is defined as ‘‘the estimated price for the transfer of an asset or liability between identified knowledgeable and willing parties that reflects the respective interests of those parties’’. In particular, the Equitable Values of the Equity Interests in this valuation exercise refer to the equity value, which is defined as ‘‘the value of a business to all of its equity shareholders’’ in accordance with International Valuation Standard 200 Businesses and Business Interests in IVS 2020.

5. BASIS OF OPINION

The valuation was conducted in accordance with IVS 2020 issued by IVSC. The valuation procedure includes review of the financial and economic conditions of the subject business interests, an assessment of key assumptions, estimates, and representations made by the Management. All matters essential to the proper understanding of the valuation are disclosed in the valuation report. Opinion of values included in the valuation report is impartial, independent and unbiased.

– IV-5 –

VALUATION REPORT

APPENDIX IV

The following factors also form a considerable part of the basis of opinion:

. assumptions on the market and on the subject business interests that are considered to be fair and reasonable;
. financial performance that shows a consistent trend of the operations of the subject business interests;
. consideration and analysis on the micro and macro economic factors; and
. analytical review of the subject business interests.

In the course of conducting the valuation, all the information and explanations considered necessary have been obtained so that there are sufficient evidences and reasonable basis in forming the opinion of values on the subject business interests.

6. SOURCES OF INFORMATION

In conducting the valuation of the subject business interests, the following key information, including but not limited to those provided by the Management and derived from the public have been considered, reviewed, and relied upon:

. Draft equity transfer agreement entered into by and among 新華電力發展投資有限公司 (translated as Xinhua Electricity Development Investment Limited and hereinafter referred to as the ‘‘Purchaser’’), Kong Sun Yongtai and the First Project Company in relation to the disposal of the entire equity interest of the First Project Company;
. Draft equity transfer agreement entered into by and among the Purchaser, China Resources Szitic Trust and the Second Project Company in relation to the disposal of the entire equity interest of the Second Project Company;
. Draft equity transfer agreement entered into by and among the Purchaser, Jiaxing Shengshi, Kong Sun Yongtai and the Third Project Company in relation to the disposal of the entire equity interest of the Third Project Company;
. Draft equity transfer agreement entered into by and among the Purchaser, Changshu Honglue and the Fourth Project Company in relation to the disposal of the entire equity interest of the Fourth Project Company;
. Draft equity transfer agreement entered into by and among the Purchaser, Suzhou Junsheng, Kong Sun Yongtai and the Fifth Project Company in relation to the disposal of the entire equity interest of the Fifth Project Company;
. Draft equity transfer agreement entered into by and among the Purchaser, Changshu Honglue and the Sixth Project Company in relation to the disposal of the entire equity interest of the Sixth Project Company;

– IV-6 –

VALUATION REPORT

APPENDIX IV

. Draft equity transfer agreement entered into by and among the Purchaser, Changshu Honglue and the Seventh Project Company in relation to the disposal of the entire equity interest of the Seventh Project Company;
. Management accounts of the Project Companies as at 31 December 2020 and 30 April 2021;
. IVS 2020 issued by IVSC;
. Overview of the nature of the subject business interests;
. Discussions with the Management;
. Discount for Lack of Marketability — Job Aid for IRS Valuation Professional issued by Internal Revenue Service (the ‘‘IRS DLOM Job Aid’’);
. 2020 Edition of the Stout Restricted Stock Study Companion Guide;
. Navigating Valuations in the World of COVID-19 compiled by PwC China;
. Control Premium Study, 2[nd] Quarter 2018, FactSet Mergerstat, LLC;
. Annual reports, interim reports, quarterly reports, announcements and circulars of Concord New Energy Group Limited (182:HK), GCL New Energy Holdings Limited (451:HK), Beijing Energy International Holding Co Ltd (686:HK), Shunfeng International Clean Energy Limited (1165:HK), Beijing Enterprises Clean Energy Group Limited (1250:HK), Xinyi Energy Holdings Limited (3868:HK), CECEP Solar Energy Co., Ltd. (000591:CH) and Jiawei Renewable Energy Co., Ltd. (300317:CH); and
. Hong Kong Exchanges and Clearing Limited (‘‘HKEX’’), Hong Kong Monetary Authority, Shenzhen Stock Exchange, Google, Yahoo, Bloomberg, Reuters, and other reliable sources of market data.

In arriving at the opinion of the Equitable Values, the accuracy and completeness of the information reviewed for the purpose of this valuation have been assumed and relied on. In addition, the statements, information, opinion and representations provided by Kong Sun and the Project Companies have been relied upon.

Research was conducted using various sources including government statistical releases and other publications to assess the reasonableness and fairness of information provided.

The opinion is based upon economic, market, financial and other conditions as exist and can be evaluated on the date of this report and no responsibility is assumed to update or revise the opinion based on events or circumstances occurring after the date of this report. In reaching the opinion, assumptions have been made with respect to such economic, market, financial and other conditions and other matters, many of which are beyond the control of Valor or any party involved in this valuation exercise.

– IV-7 –

VALUATION REPORT

APPENDIX IV

7. VALUATION APPROACH AND METHODOLOGY

In carrying out this valuation exercise, the following approaches and methodologies have been considered:

Cost Approach — The cost approach provides an indication of value using the economic principal 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. This approach is based on the principle that the price that a buyer in the market would pay for the asset being valued would, unless undue time, inconvenience, risk or other factors are involved, be not more than the cost to purchase or construct an equivalent asset. Often the asset being valued will be less attractive than the alternative that could be purchased or constructed because of age or obsolescence. Where this is the case, adjustments may need to be made to the cost of the alternative asset depending on the required basis of value.

The cost approach cannot normally be applied to the valuation of a business or business interest except in the case of early stage or start-up businesses where profits and/ or cash flow cannot be reliably determined and adequate market information is available on the entity’s assets.

Unlike market and income approaches which either incorporate market sentiments or future earnings capacity of an asset as a function to determine its current value, cost approach considers the fundamental cost it takes to form the asset. In our opinion this approach is inapplicable to the current analysis as there is no convincing association of the values of the subject business interests with their costs.

Income Approach — The income approach provides an indication of value by converting future cash flows to a single current capital value. This approach considers the income that an asset will generate over its useful life and indicates value through a capitalisation process. Capitalisation involves the conversion of income into a capital sum through the application of an appropriate discount rate. The income stream may be derived under a contract or contracts, or be non-contractual, for example the anticipated profit generated from either the use of or holding of the asset.

Enterprise value is typically derived through the capitalisation of profits or cash flows through the application of a capitalisation rate or discount rate before debt servicing costs. The capitalisation or discount rate applied is the weighted average cost of capital of an appropriate mix of debt and equity. The market value of the interest bearing debt is deducted from the enterprise value to determine the overall equity value. Redundant, ie non-operating, assets need to be considered when calculating enterprise or equity value.

This approach is not preferred in this exercise because there are relevant market comparables to the subject business interests and reliable projections of the amounts and timing of future income streams are not available for the subject business interests as at the Valuation Date.

– IV-8 –

VALUATION REPORT

APPENDIX IV

Market Approach — The market approach provides an indication of value by comparing the subject asset with identical or similar assets for which price information is available. Under this approach the first step is to consider the prices for transactions of identical or similar assets that have occurred recently in the market. If few recent transactions have occurred, it may also be appropriate to consider the prices of identical or similar assets that are listed or offered for sale provided the relevance of this information is clearly established and critically analysed. It may be necessary to adjust the price information from other transactions to reflect any differences in the terms of the actual transaction and the basis of value and any assumptions to be adopted in the valuation being undertaken. There may also be differences in the legal, economic or physical characteristics of the assets in other transactions and the asset being valued.

The market approach compares the subject business to similar businesses, business ownership interests and securities that have been exchanged in the market and any relevant transactions of shares in the same business. Prior transactions or offers for any component of the business may be also indicative of value.

In this valuation exercise, the values of the subject business interests were developed through the application of the market approach techniques known as guideline transactions method and guideline publicly-traded comparable method. The guideline transaction method utilizes information on transactions involving assets that are the same or similar to the subject asset to arrive at an indication of value, whereas the guideline publicly-traded method utilizes information on publicly-traded comparables that are similar to the subject asset to arrive at an indication of value. The guideline transactions method and guideline publicly-traded method require the proper selection of valuation metrics/comparable evidence and calculation of the selected valuation metrics of comparable transactions and companies to derive the values of the subject business interests.

Under guideline transactions method, the valuation metrics adopted are price-to-book ratio (‘‘PB Ratio’’) and price-to-earnings ratio (‘‘PE Ratio’’) and the final result is the average of values calculated by PB Ratio and PE Ratio. Both PB Ratio and PE Ratio were adopted under guideline transactions method because both the asset and earnings sides of transactions were considered and the final result gives a more balanced and comprehensive indication of value.

Under guideline publicly-traded method, the valuation metrics adopted are PB Ratio and enterprise value-to-earnings before interest and taxes ratio (‘‘EV/EBIT Ratio’’) and the final result is the average of values calculated by PB Ratio and EV/EBIT Ratio. Both PB Ratio and EV/EBIT Ratio were adopted under guideline publicly-traded method because both the asset and earnings sides of publicly-traded comparables were considered and the final result gives a more balanced and comprehensive indication of value.

– IV-9 –

VALUATION REPORT

APPENDIX IV

8. KEY ASSUMPTIONS

Key Assumptions

The assumptions considered having significant sensitivity effects in this valuation have been evaluated in arriving at the assessed values with key assumptions listed as follows:

. there will be no material change in the existing political, legal, technological, fiscal or economic conditions which might adversely affect the economy in general and the operations of the Project Companies;
. there will be no major changes in the current taxation laws in the PRC;
. there will be no material fluctuation of the finance costs and availability of finance in the PRC;
. The Project Companies will fulfil all legal and regulatory requirements for the principal operations;
. the development of the subject business interests will not be constrained by the availability of finance and there will be no material fluctuation of the finance costs;
. there will not be any adverse events beyond the control of the management of the Project Companies, including natural disasters, catastrophes, fire, explosion, flooding, riots, acts of terrorism, epidemics and pandemics that may adversely affect the operations of the subject business interests;
. the future movement of exchange rates and interest rates will not differ materially from prevailing market rates; and
. The Project Companies will retain competent management, key personnel and technical staff for its operation and the relevant shareholders will support its ongoing operation.

9. GUIDELINE TRANSACTIONS METHOD

Comparable Transactions

Since the subject entities are principally engaged in operations of solar power plants in the PRC, with a view to selecting appropriate comparable transactions, we focus on those transactions of solar power plants which are located in the PRC and are in operation (instead of in development and construction).

Selection criteria of comparable transactions are listed as follows:

Solar power plant transactions undertaken by listed companies in Hong Kong and the PRC;

– IV-10 –

VALUATION REPORT

APPENDIX IV

Transactions of solar power plants which are located in the PRC and are in operation (instead of in development and construction);
Connected transactions and sale and leaseback transactions are excluded; and
The announcement dates of transactions are within the period from 1 January 2020 to 7 May 2021.

Based on the above selection criteria, we have selected the following comparable transactions:

Transaction: 1 Announcement Date: 29 June 2020 Completion Date: July 2020 Target Company: 金湖正輝太陽能電力有限公司 Installed Capacity: 100 mega watts (‘‘MW’’) Consideration: RMB136,624,000 Equity Interest: 75% Net Asset: RMB180,433,000 (31 May 2010) Net Profit After Income Tax: RMB38,346,000 (2019) PB Ratio: 1.01 PE Ratio 4.75 Transaction: 2 Announcement Date: 21 January 2020 Target Companies: 余干縣協鑫新能源有限責任公司, 寧夏金信光伏電力有限公司, 寧夏綠昊光伏發電有限公司, 哈密歐瑞光伏發電有限公司, 哈密耀輝光伏電力有限公司, 寧夏金禮光伏電力有限公司 Installed Capacity: 294MW Consideration: RMB850,500,000 Equity Interest: 100%

– IV-11 –

VALUATION REPORT

APPENDIX IV

Net Asset:	RMB944,531,000 (31 December 2019)
Net Profit After Income Tax:	RMB106,533,000 (2019)
PB Ratio:	0.90
PE Ratio	7.98
Transaction:	3
Announcement Date:	9 July 2020
Target Company:	金昌國源電力有限公司
Installed Capacity:	100MW
Consideration:	RMB226,595,000
Equity Interest:	70%
Net Asset:	RMB322,159,200 (31 May 2020)
Net Profit After Income Tax:	RMB39,624,200 (2019)
PB Ratio:	1.00
PE Ratio:	8.17
Transaction:	4
Announcement Date:	18 March 2020
Completion Date:	July 2020
Target Company:	阿克蘇大唐新能源有限公司
Installed Capacity:	20MW
Consideration:	RMB28,508,322
Equity Interest:	100%
Net Asset:	RMB47,479,000 (31 December 2019)
Net Profit After Income Tax:	RMB3,298,000 (2019)
PB Ratio:	0.60
PE Ratio:	8.64

– IV-12 –

VALUATION REPORT

APPENDIX IV

Transaction: 5 Announcement Date: 18 March 2020 Completion Date: July 2020 Target Company: 岳普湖高科新能源發電有限公司 Installed Capacity: 20MW Consideration: RMB8,193,632 Equity Interest: 100% Net Asset: RMB38,711,000 (31 December 2019) Net Profit After Income Tax: -RMB2,332,000 (2019) PB Ratio: 0.21 PE Ratio: Not applicable Transaction: 6 Announcement Date: 18 March 2020 Completion Date: July 2020 Target Company: 和碩恒鑫新能源科技有限公司 Installed Capacity: 30MW Consideration: RMB61,435,356 Equity Interest: 100% Net Asset: RMB100,105,000 (31 December 2019) Net Profit After Income Tax: RMB4,064,000 (2019) PB Ratio: 0.61 PE Ratio: 15.12

– IV-13 –

VALUATION REPORT

APPENDIX IV

Transaction: 7 Announcement Date: 18 March 2020 Completion Date: July 2020 Target Company: 吐魯番聯星新能源有限公司 Installed Capacity: 20MW Consideration: RMB14,939,872 Equity Interest: 100% Net Asset: RMB61,629,000 (31 December 2019) Net Profit After Income Tax: -RMB2,122,000 (2019) PB Ratio: 0.24 PE Ratio: Not applicable Transaction: 8 Announcement Date: 18 March 2020 Completion Date: July 2020 Target Company: 溫宿縣日月輝新能源有限公司 Installed Capacity: 20MW Consideration: RMB19,730,341 Equity Interest: 100% Net Asset: RMB41,705,000 (31 December 2019) Net Profit After Income Tax: RMB2,308,000 (2019) PB Ratio: 0.47 PE Ratio: 8.55

– IV-14 –

VALUATION REPORT

APPENDIX IV

Transaction:	9
Announcement Date:	18 March 2020
Completion Date:	July 2020
Target Company:	和靜益鑫新能源科技有限公司
Installed Capacity:	30MW
Consideration:	RMB35,825,766
Equity Interest:	100%
Net Asset:	RMB97,254,000 (31 December 2019)
Net Profit After Income Tax:	RMB5,276,000 (2019)
PB Ratio:	0.37
PE Ratio:	6.79
Transaction:	10
Announcement Date:	29 September 2020
Target Companies:	包頭市中利騰暉光伏發電有限公司, 淇縣協鑫新
	能源有限公司, 寧夏中衛協鑫光伏電力有限公司,
	輝縣市協鑫光伏電力有限公司, 汝陽協鑫新能源
	有限公司, 湖北省麻城市金伏太陽能電力有限公
	司
Installed Capacity:	403MW
Consideration:	RMB576,001,213
Equity Interest:	100%
Net Asset:	RMB717,307,000 (30 September 2019)
Net Profit After Income Tax:	RMB178,527,000 (2019)
PB Ratio:	0.80
PE Ratio:	3.23

– IV-15 –

VALUATION REPORT

APPENDIX IV

Transaction:	11
Announcement Date:	8 May 2020
Completion Date:	28 May 2020
Target Company:	響水恒能太陽能發電有限公司
Installed Capacity:	100MW
Consideration:	RMB438,000,000
Equity Interest:	100%
Net Asset:	RMB437,620,000 (30 April 2020)
Net Profit After Income Tax:	RMB35,144,000 (2019)
PB Ratio:	1.00
PE Ratio:	12.46
Transaction:	12
Announcement Date:	8 May 2020
Completion Date:	28 May 2020
Target Company:	響水永能太陽能發電有限公司
Installed Capacity:	20MW
Consideration:	RMB100,000,000
Equity Interest:	100%
Net Asset:	RMB98,730,000 (30 April 2020)
Net Profit After Income Tax:	RMB11,364,000 (2019)
PB Ratio:	1.01
PE Ratio:	8.80

– IV-16 –

VALUATION REPORT

APPENDIX IV

Transaction: 13 Announcement Date: 2 November 2020 Target Company: 永仁協合太陽能發電有限公司, 華坪協合太陽能發電有限公司 Installed Capacity: 100MW Consideration: RMB174,700,000 Equity Interest: 100% Net Asset: RMB210,380,000 (30 September 2020) Net Profit After Income Tax: RMB35,410,000 (2019) PB Ratio: 0.83 PE Ratio: 4.93 Transaction: 14 Announcement Date: 21 January 2020 Completion Date: First half of 2020 Target Company: 阜陽衡銘太陽能電力有限公司, 鎮江協鑫新能源有限公司 Installed Capacity: 40MW Consideration: RMB77,476,000 Equity Interest: 100% Net Asset: RMB76,468,000 (First half of 2020) Net Profit After Income Tax: Not available PB Ratio: 1.01 PE Ratio: Not applicable

– IV-17 –

VALUATION REPORT

APPENDIX IV

Transaction:	15
Announcement Date:	19 November 2020
Target Company:	寶應鑫源光伏發電有限公司, 德令哈協合光伏發
	電有限公司, 德令哈陽光能源電力有限公司, 德
	令哈時代新能源發電有限公司, 海南州世能光伏
	發電有限公司, 和田協鑫光伏電力有限公司, 高
	唐縣協鑫晶輝光伏有限公司, 蘭溪金瑞太陽能發
	電有限公司, 漣水鑫源光伏電力有限公司, 聊城
	協昌光伏電力有限公司, 鹽邊鑫能光伏電力有限
	公司, 中利騰暉海南電力有限公司
Installed Capacity:	360MW (Estimated)
Consideration:	RMB612,214,000
Equity Interest:	100%
Net Asset:	RMB779,915,000 (30 June 2020)
Net Profit After Income Tax:	RMB115,981,000 (2019)
PB Ratio:	0.78
PE Ratio:	5.28
Transaction:	16
Announcement Date:	19 November 2020
Target Company:	伊犁協鑫能源有限公司
Installed Capacity:	30MW (Estimated)
Consideration:	RMB26,509,592
Equity Interest:	56.51%
Net Asset:	RMB59,197,000 (30 June 2020)
Net Profit After Income Tax:	RMB13,477,000 (2019)
PB Ratio:	0.79
PE Ratio:	3.48

– IV-18 –

VALUATION REPORT

APPENDIX IV

Transaction:	17
Announcement Date:	19 November 2020
Target Company:	鄆城鑫華能源開發有限公司
Installed Capacity:	40MW (Estimated)
Consideration:	RMB27,930,300
Equity Interest:	51%
Net Asset:	RMB57,041,000 (30 June 2020)
Net Profit After Income Tax:	RMB16,014,000 (2019)
PB Ratio:	0.96
PE Ratio:	3.42
Transaction:	18
Announcement Date:	4 December 2020
Target Company:	正藍旗國電光伏發電有限公司
Installed Capacity:	50MW
Consideration:	RMB211,100,000
Equity Interest:	99.2%
Net Asset:	RMB166,396,223 (30 September 2020)
Net Profit After Income Tax:	RMB33,394,718 (2019)
PB Ratio:	1.28
PE Ratio:	6.37

– IV-19 –

VALUATION REPORT

APPENDIX IV

Transaction:	19
Announcement Date:	22 November 2020
Target Company:	碭山協鑫光伏電力有限公司, 阜南協鑫光伏電力
	有限公司, 合肥鑫仁光伏電力有限公司, 天長市
	協鑫光伏電力有限公司
Installed Capacity:	197MW (Estimated)
Consideration:	RMB288,949,313
Equity Interest:	90%
Net Asset:	RMB349,355,000 (30 July 2020)
Net Profit After Income Tax:	RMB64,698,000 (2019)
PB Ratio:	0.92
PE Ratio:	4.96
Transaction:	20
Announcement Date:	22 November 2020
Target Company:	太湖鑫能光伏電力有限公司
Installed Capacity:	20MW (Estimated)
Consideration:	RMB23,778,908
Equity Interest:	50%
Net Asset:	RMB47,558,000 (30 July 2020)
Net Profit After Income Tax:	RMB10,322,000 (2019)
PB Ratio:	1.00
PE Ratio:	4.61

– IV-20 –

VALUATION REPORT

APPENDIX IV

Transaction:	21
Announcement Date:	1 April 2021
Target Company:	榆林隆源光伏電力有限公司, 榆林市榆神工業區
	東投能源有限公司
Installed Capacity:	256MW (Estimated)
Consideration:	RMB867,900,000
Equity Interest:	100%
Net Asset:	RMB676,805,000 (31 December 2020)
Net Profit After Income Tax:	RMB121,739,000 (2020)
PB Ratio:	1.28
PE Ratio:	7.13
Transaction:	22
Announcement Date:	1 April 2021
Target Company:	靖邊協鑫光伏電力有限公司
Installed Capacity:	43MW (Estimated)
Consideration:	RMB79,704,000
Equity Interest:	98.4%
Net Asset:	RMB85,922,000 (31 December 2020)
Net Profit After Income Tax:	RMB13,781,000 (2020)
PB Ratio:	0.94
PE Ratio:	5.88

– IV-21 –

VALUATION REPORT

APPENDIX IV

Transaction: 23 Announcement Date: 1 April 2021 Target Company: 橫山晶合太陽能發電有限公司 Installed Capacity: 171MW (Estimated) Consideration: RMB302,603,400 Equity Interest: 80.35% Net Asset: RMB247,247,000 (31 December 2020) Net Profit After Income Tax: RMB50,271,000 (2020) PB Ratio: 1.52 PE Ratio: 7.49 Transaction: 24 Announcement Date: 26 April 2021 Target Company: 定安協鑫光伏電力有限公司 Installed Capacity: 31MW (Estimated) Consideration: RMB41,000,000 Equity Interest: 100% Net Asset: RMB41,788,919 (28 February 2021) Net Profit After Income Tax: RMB8,209,000 (2020) PB Ratio: 0.98 PE Ratio: 4.99

– IV-22 –

VALUATION REPORT

APPENDIX IV

Transaction:	25
Announcement Date:	26 April 2021
Target Company:	羅甸協鑫光伏電力有限公司, 遂溪協鑫光伏電力
	有限公司
Installed Capacity:	70MW (Estimated)
Consideration:	RMB116,642,300
Equity Interest:	100%
Net Asset:	RMB127,695,068 (31 December 2020)
Net Profit After Income Tax:	RMB14,579,000 (2020)
PB Ratio:	0.91
PE Ratio:	8.00
Transaction:	26
Announcement Date:	26 April 2021
Target Company:	海南意晟新能源有限公司
Installed Capacity:	25MW (Estimated)
Consideration:	RMB53,023,300
Equity Interest:	88.37%
Net Asset:	RMB48,388,000 (28 February 2021)
Net Profit After Income Tax:	RMB9,744,000 (2020)
PB Ratio:	1.24
PE Ratio:	6.16

– IV-23 –

VALUATION REPORT

APPENDIX IV

Transaction:	27
Announcement Date:	26 April 2021
Target Company:	英德協鑫光伏電力有限公司
Installed Capacity:	20MW (Estimated)
Consideration:	RMB38,027,500
Equity Interest:	90.1%
Net Asset:	RMB32,893,000 (31 December 2020)
Net Profit After Income Tax:	RMB5,053,000 (2020)
PB Ratio:	1.28
PE Ratio:	8.35
Transaction:	28
Announcement Date:	26 April 2021
Target Company:	冊亨協鑫光伏電力有限公司, 六枝協鑫光伏電力
	有限公司
Installed Capacity:	138MW (Estimated)
Consideration:	RMB219,160,000
Equity Interest:	100%
Net Asset:	RMB187,713,000 (31 December 2020)
Net Profit After Income Tax:	RMB34,157,000 (2020)
PB Ratio:	1.17
PE Ratio:	6.42

– IV-24 –

VALUATION REPORT

APPENDIX IV

Transaction: 29 Announcement Date: 7 May 2021 Target Company: 永城鑫能光伏電力有限公司 Installed Capacity: 86MW Consideration: RMB193,000,000 Equity Interest: 100% Net Asset: RMB136,971,269 (31 October 2020) Net Profit After Income Tax: RMB26,413,000 (2020) PB Ratio: 1.41 PE Ratio: 7.31 Transaction: 30 Announcement Date: 29 January 2021 Target Company: 烏拉特後旗源海新能源有限責任公司 Installed Capacity: 50MW Consideration: RMB52,550,000 Equity Interest: 100% Net Asset: RMB72,904,000 (30 September 2020) Net Profit After Income Tax: RMB20,307,000 (2019) PB Ratio: 0.72 PE Ratio: 2.59

– IV-25 –

VALUATION REPORT

APPENDIX IV

Transaction: 31 Announcement Date: 8 February 2021 Target Company: 內蒙古明華新能源股份有限公司 Installed Capacity: 115MW Consideration: RMB300,580,000 Equity Interest: 100% Net Asset: RMB239,721,000 (23 December 2020) Net Profit After Income Tax: RMB64,006,000 (2019) PB Ratio: 1.25 PE Ratio: 4.70

Valuation Metrics for Guideline Transactions Method

The valuation metrics adopted for guideline transactions method are PB Ratio and PE Ratio.
Consideration of comparable transactions was taken as numerators in calculating the PB Ratio and PE Ratio of comparable transactions.
Net asset of comparable transactions was taken as denominator in calculating the PB Ratio of comparable transactions.
Net profit after tax was taken as denominator in calculating the PE Ratio of comparable transactions.
Installed capacity of comparable transactions was taken as the weighting factor in calculating the weighted PB Ratio and weighted PE Ratio of comparable transactions.
The weighted average PB Ratio of comparable transactions was calculated to be 0.98.
The weighted average PE Ratio of comparable transactions was calculated to be 6.15.
Net asset of the First Project Company as at 30 April 2021 is RMB50,579,000, as per management accounts of the First Project Company as at 30 April 2021.

– IV-26 –

VALUATION REPORT

APPENDIX IV

Net profit after tax of the First Project Company for the period from 1 May 2020 to 30 April 2021 is RMB1,867,000, calculated from the management accounts of the First Project Company as at 31 December 2020 and 30 April 2021.
The value of the 100% equity interest in the First Project Company calculated by applying PB Ratio under guideline transactions method is RMB49,685,000.
The value of the 100% equity interest in the First Project Company calculated by applying PE Ratio under guideline transactions method is RMB11,491,000.
By taking the average of values calculated using PB Ratio and PE Ratio, the value of the 100% equity interest in the First Project Company under guideline transactions method was calculated to be RMB30,588,000.
Net asset of the Second Project Company as at 30 April 2021 is RMB70,688,000, as per management accounts of the Second Project Company as at 30 April 2021.
Net profit after tax of the Second Project Company for the period from 1 May 2020 to 30 April 2021 is RMB7,891,000, calculated from the management accounts of the Second Project Company as at 31 December 2020 and 30 April 2021.
The value of the 100% equity interest in the Second Project Company calculated by applying PB Ratio under guideline transactions method is RMB69,439,000.
The value of the 100% equity interest in the Second Project Company calculated by applying PE Ratio under guideline transactions method is RMB48,563,000.
By taking the average of values calculated using PB Ratio and PE Ratio, the value of the 100% equity interest in the Second Project Company under guideline transactions method was calculated to be RMB59,001,000.
Net asset of the Third Project Company as at 30 April 2021 is RMB589,184,000, as per management accounts of the Third Project Company as at 30 April 2021.
Net profit after tax of the Third Project Company for the period from 1 May 2020 to 30 April 2021 is RMB29,531,000, calculated from the management accounts of the Third Project Company as at 31 December 2020 and 30 April 2021.
The value of the 100% equity interest in the Third Project Company calculated by applying PB Ratio under guideline transactions method is RMB578,774,000.
The value of the 100% equity interest in the Third Project Company calculated by applying PE Ratio under guideline transactions method is RMB181,734,000.
By taking the average of values calculated using PB Ratio and PE Ratio, the value of the 100% equity interest in the Third Project Company under guideline transactions method was calculated to be RMB380,254,000.

– IV-27 –

VALUATION REPORT

APPENDIX IV

Net asset of the Fourth Project Company as at 30 April 2021 is RMB124,148,000, as per management accounts of the Fourth Project Company as at 30 April 2021.
Net profit after tax of the Fourth Project Company for the period from 1 May 2020 to 30 April 2021 is RMB513,000, calculated from the management accounts of the Fourth Project Company as at 31 December 2020 and 30 April 2021.
The value of the 100% equity interest in the Fourth Project Company calculated by applying PB Ratio under guideline transactions method is RMB121,954,000.
The value of the 100% equity interest in the Fourth Project Company calculated by applying PE Ratio under guideline transactions method is RMB3,158,000.
By taking the average of values calculated using PB Ratio and PE Ratio, the value of the 100% equity interest in the Fourth Project Company under guideline transactions method was calculated to be RMB62,556,000.
Net asset of the Fifth Project Company as at 30 April 2021 is RMB279,336,000, as per management accounts of the Fifth Project Company as at 30 April 2021.
Net profit after tax of the Fifth Project Company for the period from 1 May 2020 to 30 April 2021 is RMB9,625,000, calculated from the management accounts of the Fifth Project Company as at 31 December 2020 and 30 April 2021.
The value of the 100% equity interest in the Fifth Project Company calculated by applying PB Ratio under guideline transactions method is RMB274,400,000.
The value of the 100% equity interest in the Fifth Project Company calculated by applying PE Ratio under guideline transactions method is RMB59,235,000.
By taking the average of values calculated using PB Ratio and PE Ratio, the value of the 100% equity interest in the Fifth Project Company under guideline transactions method was calculated to be RMB166,817,000.
Net asset of the Sixth Project Company as at 30 April 2021 is RMB307,916,000, as per management accounts of the Sixth Project Company as at 30 April 2021.
Net profit after tax of the Sixth Project Company for the period from 1 May 2020 to 30 April 2021 is RMB26,678,000, calculated from the management accounts of the Sixth Project Company as at 31 December 2020 and 30 April 2021.
The value of the 100% equity interest in the Sixth Project Company calculated by applying PB Ratio under guideline transactions method is RMB302,476,000.
The value of the 100% equity interest in the Sixth Project Company calculated by applying PE Ratio under guideline transactions method is RMB164,181,000.

– IV-28 –

VALUATION REPORT

APPENDIX IV

By taking the average of values calculated using PB Ratio and PE Ratio, the value of the 100% equity interest in the Sixth Project Company under guideline transactions method was calculated to be RMB233,329,000.
Net asset of the Seventh Project Company as at 30 April 2021 is RMB182,709,000, as per management accounts of the Seventh Project Company as at 30 April 2021.
Net profit after tax of the Seventh Project Company for the period from 1 May 2020 to 30 April 2021 is RMB6,775,000, calculated from the management accounts of the Seventh Project Company as at 31 December 2020 and 30 April 2021.
The value of the 100% equity interest in the Seventh Project Company calculated by applying PB Ratio under guideline transactions method is RMB179,481,000.
The value of the 100% equity interest in the Seventh Project Company calculated by applying PE Ratio under guideline transactions method is RMB41,693,000.
By taking the average of values calculated using PB Ratio and PE Ratio, the value of the 100% equity interest in the Seventh Project Company under guideline transactions method was calculated to be RMB110,587,000.

10. GUIDELINE PUBLICLY-TRADED METHOD

Selection of Comparable Listed Companies

With a view to selecting appropriate comparable listed companies, we focus on those companies listed in Hong Kong and the PRC which are principally engaged in operation of solar power plants in the PRC.

Selection criteria of comparable companies are listed as follows:

Companies listed in Hong Kong and the PRC; and
Companies principally engaged in operation of solar power plants in the PRC.

The following searching procedures have been adopted in order to obtain a full and exhaustive list of potential comparable companies:

. Using search engine to search comparable companies based on the above criteria; and
. Cross checking the list of comparable companies with financial websites.

– IV-29 –

VALUATION REPORT

APPENDIX IV

Upon procuring the list of potential comparable companies, the following review procedures have been adopted in order to select the appropriate comparable companies:

. Reviewing the potential comparable companies’ annual reports, news and announcements; and
. Cross checking the potential comparable companies’ segment revenue in their annual reports to ensure relevancy and comparability.

Based on the above selection criteria, searching and review procedures, we have selected the following comparable companies:

Stock Code Company Name Company Description

451:HK GCL New Energy ‘‘GCL New Energy Holdings Limited is a Hong Holdings Limited Kong-based investment holding company principally engaged in energy and printed circuit board (PCB) businesses. The Company operates through two segments. Solar Energy segment is engaged in the sales of electricity and the construction, operation and management of solar power plants. PCB segment is mainly engaged in the manufacture and sales of PCBs. The Company is also involved in the holding of properties.’’ (Source: HKEX)
686:HK Beijing Energy ‘‘Beijing Energy International Holding Co Ltd, International formerly Panda Green Energy Group Ltd, is an Holding Co Ltd, investment holding company principally engaged in solar power plants businesses. The Company is principally engaged in development, investment, operation and management of solar power plants and other renewable energy projects. The renewable energy projects include photovoltaic, wind power, hydropower and other clean energy investment operations. The Company’s new energy projects cover China and some overseas regions, including Inner Mongolia, Qinghai, Ningxia, Shanxi, Hubei, Xinjiang, Gansu, Yunnan, Shandong, Jiangsu, Hebei, Guangdong and other places.’’ (Source: HKEX)

– IV-30 –

VALUATION REPORT

APPENDIX IV

Stock Code Company Name Company Description

3868:HK Xinyi Energy ‘‘Xinyi Energy Holdings Limited is a China-based Holdings Limited investment holding company. The Company is principally engaged in the management and operation of solar farms through its subsidiaries, and generates revenue by selling the electricity to subsidiaries of the State Grid. The Company operates Jinzhai Solar Farm, Sanshan Solar Farm, Nanping Solar Farm, Lixin Solar Farm, Binhai Solar Farm, HongAn Solar Farm and Wuwei Solar Farm, among others. These solar farms are mainly located in Anhui, Tianjin, Fujian and Hubei Provinces in China. The Company mainly conducts its businesses in domestic market.’’ (Source: HKEX)

000591:CN CECEP Solar ‘‘CECEP Solar Energy Co., Ltd., formerly Energy Co., Ltd. CHONGQING TONG JUN GE CO.,LTD., is a China-based company principally engaged in the investment and operation of solar photovoltaic power stations, as well as the production and sale of solar cell modules. The Company operates through three segments: solar power, solar products and others. The Company’s main products include electric power and photovoltaic components. The Company principally operates its businesses within the domestic market.’’ (Source: Reuters)

– IV-31 –

VALUATION REPORT

APPENDIX IV

Valuation Metrics for Guideline Publicly-Traded Method

The valuation metrics adopted for guideline publicly-traded method are PB Ratio and EV/EBIT Ratio.
Market capitalization of comparable companies as at 30 April 2021 was taken as numerator in calculating the PB Ratio of comparable companies.
Latest equity attributable to equity holders of comparable companies was taken as denominator in calculating the PB Ratio of comparable companies.
The median PB Ratio of comparable companies was calculated to be 1.09.
Enterprise value of comparable companies as at 30 April 2021 was taken as numerator in calculating the EV/EBIT Ratio of comparable companies.
Latest earnings before interest and taxes of comparable companies was taken as denominator in calculating the EV/EBIT Ratio of comparable companies.
The median EV/EBIT Ratio of comparable companies was calculated to be 20.59.

Control Premium

Control Premiums are applied to reflect differences between the comparables and the subject asset with regard to the ability to make decisions and the changes that can be made as a result of exercising control. All else being equal, participants would generally prefer to have a control over an asset than not. Circumstances where control premiums should be considered include where shares of public companies generally do not have the ability to make decisions related to the operations of the company (they lack control). As such, when applying the guideline public comparable method to value a subject asset that reflects a controlling interest, a control premium may be appropriate.

Since the Equity Interests of the Project Companies are controlling interests whereas shares of the comparable listed companies are minority interests, a control premium has been applied to reflect the difference of the ability to make decisions as a result of exercising control. According to Navigating Valuations in the World of COVID-19 compiled by PwC China, there has been a gradual decline in value and count in global merger and acquisition quarterly activity since second quarter of 2018 with a significant drop in first quarter of 2020 in both volume and deal value. Average control premiums have followed a similar trend with a drop to around 10% in first quarter of 2020 versus an average premium of around 20% in 2018 and 2019. However, with the introduction of COVID-19 vaccines, the control premium is expected to be reverted to the normal. A control premium of 20% has been applied in this valuation exercise.

– IV-32 –

VALUATION REPORT

APPENDIX IV

Discount for Lack of Marketability

According to the IRS DLOM Job Aid, marketability is defined as ‘‘the ability to quickly convert property to cash at minimal cost... with a high degree of certainty of realizing the anticipated amount of proceeds’’ and a discount for lack of marketability (‘‘DLOM’’) is defined as ‘‘an amount or percentage deducted from the value of an ownership interest to reflect the relative absence of marketability’’. It is expected that a higher price will be paid by investors for business interest with high marketability and a lesser price will be paid by investors for business interest with low marketability.

In this valuation exercise, a DLOM has been applied to reflect that Project Companies are private companies, hence having lower marketability than the comparable listed companies. With reference to the 2020 Edition of the Stout Restricted Stock Study Companion Guide, the Stout Restrict Stock Study have examined 759 private placement transactions of unregistered common stock, with and without registration rights, issued by publicly traded companies from July 1980 through December 2019. Except for the Third Project Company, a DLOM of 40% has been adopted in this valuation exercise, which is with reference to 43.15% median discount for the 5[th] quintile of these 759 transactions. The median discount in the 5[th] quintile has been with reference to because the median market value of transactions in the 5[th] quintile is US$62 million, which is comparable or higher than the Equitable Values of the Project Companies, except for the Third Project Company. Since the Third Project Company has the highest Equitable Value and book value of equity amongst the Project Companies, a lower DLOM of 20% has been adopted for the Third Project Company.

Values Estimated by Guideline Publicly-Traded Method

Values of the Project Companies under the guideline publicly-traded method were calculated by taking the average of values calculated using PB Ratio and EV/EBIT Ratio, then adjusting for the control premium and DLOM.
The value of the 100% equity interest in the First Project Company under guideline publicly-traded method was calculated to be RMB33,554,000.
The value of the 100% equity interest in the Second Project Company under guideline publicly-traded method was calculated to be RMB57,520,000.
The value of the 100% equity interest in the Third Project Company under guideline publicly-traded method was calculated to be RMB587,079,000.
The value of the 100% equity interest in the Fourth Project Company under guideline publicly-traded method was calculated to be RMB100,602,000.

– IV-33 –

VALUATION REPORT

APPENDIX IV

The value of the 100% equity interest in the Fifth Project Company under guideline publicly-traded method was calculated to be RMB228,482,000.
The value of the 100% equity interest in the Sixth Project Company under guideline publicly-traded method was calculated to be RMB284,342,000.
The value of the 100% equity interest in the Seventh Project Company under guideline publicly-traded method was calculated to be RMB127,784,000.

11. WEIGHTING FACTOR

An equal weighting factor, viz 50/50, has been given to the guideline transactions method and guideline publicly-traded method. An equal weighting factor will give a more balanced result considering the pros and cons of both methods.
The final result is calculated by taking the average of values calculated under guideline transactions method and guideline publicly-traded method.

12. VALUATION COMMENTS

As part of the analysis, the information and documents provided by the Management, the financial and business information from public sources with such available financial information, client representation, project documentation and other pertinent data concerning the Equity Interests have been reviewed. The accuracy of such information have been assumed and relied on to a considerable extent in arriving at the opinion of values.

Relevant searches and enquiries have been made and such further information as considered necessary has been obtained for the purpose of this valuation exercise.

The opinion of values is based on accepted valuation procedures and practices that rely substantially on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained. Further, while the assumptions and consideration of such matters are regarded to be reasonable, they are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Kong Sun, the Project Companies and Valor. No assurance is provided on the achievability of any financial results estimated by Kong Sun and/or the Project Companies because events and circumstances frequently do not occur as expected; differences between actual and expected results may be material; and achievement of the financial results is dependent on actions, plans and assumptions of the management. In addition, the other limiting and general service conditions are attached in Appendix I.

– IV-34 –

VALUATION REPORT

APPENDIX IV

13. RISK FACTORS

The recent outbreak of coronavirus disease worldwide may result in the slowdown of economy

The recent outbreak of coronavirus disease 2019 (‘‘COVID-19’’) since December 2019 has increased uncertainties to the global economy. If the development of COVID-19 persists or intensifies, the global economy may be adversely affected. In such event, the resultant unfavourable global economic conditions, dampened market sentiment and decreased purchasing power of the global economy could adversely impact business operations and financial performances of the Project Companies.

Economic, political and social considerations

Any unfavourable global and regional economic condition such as the trade war between the United States and its key trading partners like China and the decision by the United Kingdom to exit the European Union, may have a detrimental impact on the businesses of the Project Companies. Due to the uncertainties in economic situation, there is no guarantee that the expected financial performance will materialize. Any changes in global political, economic and social conditions, laws, regulations and policies may have significant impacts on the projections of the future incomes of the Project Companies. In view of the current situation, the possibility of trade protectionism cannot be ruled out. None of these changes can be foreseen with certainty.

Technological changes

Any change in the technological developments and advancements may have significant impacts on the future financial results of the Project Companies. To remain competitive in the industry, the Project Companies may be required to make substantial capital expenditures to keep up with technological changes.

Company specific risk

The operation of the Project Companies may perform better or worse than the expectation, and the resulting earnings and cash flows will be very different from the estimates. The possibility of severe operational incidence, whether it is exogenous or endogenous, cannot be precluded.

– IV-35 –

VALUATION REPORT

APPENDIX IV

14. OPINION OF VALUES

Based on the investigation and analysis outlined in this report, we are of the opinion that as at the Valuation Date, which is 30 April 2021, the total Equitable Value of 100% equity interests in the Project Companies is RMB1,231,248,000 (RENMINBI ONE BILLION TWO HUNDRED THIRTY ONE MILLION TWO HUNDRED FORTY EIGHT THOUSAND), with breakdown of Equitable Values of Project Companies stated as follows:

Guideline Guideline PubliclyEquitable Value of Transactions traded Comparable 100% Equity Company Method Method Interest First Project Company RMB30,588,000 RMB33,554,000 RMB32,071,000 Second Project Company RMB59,001,000 RMB57,520,000 RMB58,260,000 Third Project Company RMB380,254,000 RMB587,079,000 RMB483,667,000 Fourth Project Company RMB62,556,000 RMB100,602,000 RMB81,579,000 Fifth Project Company RMB166,817,000 RMB228,482,000 RMB197,650,000 Sixth Project Company RMB233,329,000 RMB284,342,000 RMB258,835,000 Seventh Project Company RMB110,587,000 RMB127,784,000 RMB119,186,000 Total RMB1,043,132,000 RMB1,419,363,000 RMB1,231,248,000

Yours faithfully, For and on behalf of Valor Appraisal & Advisory Limited Haydn Y.C. Lee CFA CPA (Aust.) MRICS MAusIMM RBV Director

Mr. Haydn Y.C. Lee is a Chartered Financial Analyst charterholder, member of CPA Australia, professional member of Royal Institution of Chartered Surveyors, member of the Australasian Institute of Mining & Metallurgy and Registered Business Valuer. He has 13 years’ experience in business valuation. He oversees the business valuation services of Valor and has provided a wide range of valuation services to listed companies and private entities in different industries in the PRC, Hong Kong and Singapore.

– IV-36 –

VALUATION REPORT

APPENDIX IV

APPENDIX I — LIMITING AND GENERAL SERVICE CONDITIONS

As part of the analysis, Valor’s appraisers have reviewed financial and business information from public sources together with such financial information, client representation, project documentation and other pertinent data concerning the project made available to Valor during the course of the valuation. Valor’s appraisers have assumed the accuracy of, and have relied on the information and client representations provided in arriving at the opinion of value. 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.
Our report was used as part of the analysis of the Group in reaching their conclusion of value and the ultimate responsibility of the determination of value of the subject asset rests solely with the Group.
It is assumed that the Management is responsible to ensure proper books of accounts are maintained, and the financial statements give a true and fair view and have been prepared in accordance with the relevant companies’ ordinance.
Valor shall not be required to give testimony or attendance in court or to any government agency by reason of this valuation and with reference to the project described herein unless prior arrangements have been made.
No opinion is intended to be expressed for matters which require legal or other specialised expertise or knowledge, beyond what is customarily employed by Valor’s appraisers.
The conclusions assume continuation of prudent client policies over whatever period of time that is considered to be necessary in order to maintain the character and integrity of the asset valued.
It is assumed that there are no hidden or unexpected conditions associated with the asset valued that might adversely affect the reported value. Further, it is assumed that no responsibility for changes in market conditions after the date of this report.
This valuation report has been prepared solely for the use of the designated parties. The valuation report should not be otherwise referred to, in whole or in part, or quoted in any document, circular or statement in any manner, or distributed in whole or in part or copied to any third party without prior written consent from Valor.
This report is confidential to the client for the specific purpose to which it refers. In accordance with Valor’s standard practice, it is stated that this report and valuation is for the use only of the party to whom it is addressed and no responsibility is accepted with respect to any third party for the whole or any part of its contents.
Valor have made no investigation of and assumed no responsibility for the title to or any liabilities against the asset appraised.

– IV-37 –

VALUATION REPORT

APPENDIX IV

In the event that Valor becomes involved in any capacity in any action, proceedings or investigation brought by or against any person, in connection with or as a result of either the Valor’s engagement or any matter referred to in the service engagement, the Group will reimburse the Valor for all legal and other expenses incurred in connection therewith. Except where it is determined by final judgement of a court to have resulted from wilful default or gross negligence of Valor or its officers, the Group will fully indemnify and hold Valor harmless against any and all losses, claims, damages or liabilities to any such person in connection with or as a result of either the Valor’s engagement or any matter referred to in the service engagement. The reimbursement, indemnity and contributions to each of its associates shall ensure to the benefit of the Valor’s successors, assigns, heirs and personal representatives of the Valor, any such affiliate and any such persons. In the event the Valor is subject to any liability in connection with this service engagement, such liability will be limited to the amount of fees received for this engagement.
The Group agrees that itself or any of its associates will make no claim against Valor or any of its associates in connection with the engagement of the Valor except as a result of the Valor’s wilful default or gross negligence, and that neither Valor nor any of its associates will have any direct or indirect liability to the Group or except where it is determined by final judgement of a court to have resulted from wilful default or gross negligence of Valor or its officers.

– IV-38 –

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 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

Name of Director Nature of interest Date of share options granted (Note 1) Executive Director Jin Yanbing (Chairman) Beneficial owner 3 April 2017 Beneficial owner 28 April 2017 Total: Name of Director Nature of interest Executive Director Jin Yanbing (Chairman) Beneficial owner	Number of share options outstanding as at the Latest Practicable Date 16,000,000 5,670,000 22,670,000 Number of Shares held/ interested in 12,000,000	Approximate percentage of shareholding upon fully exercise of share options 0.11% 0.04%
		0.15%
		Approximate percentage of shareholding 0.08%

– V-1 –

GENERAL INFORMATION

APPENDIX V

Note 1:

The share options were granted pursuant to 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 1[st] anniversary of the date of grant to Up to 25% of the total number of granted options 2[nd] anniversary of the date of grant From 2[nd] anniversary of the date of grant to Up to 25% of the total number of granted options 3[rd] anniversary of the date of grant From 3[rd] anniversary of the date of grant to Up to 25% of the total number of granted options 4[th] anniversary of the date of grant From 4[th] anniversary of the date of grant to Up to 25% of the total number of granted options 5[th] 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)
Miao Yu	Deemed interest in	4,169,300,000 (L)	27.86%
	controlled corporation(1)
Prospect Ace Limited	Beneficial owner(1)	4,169,300,000 (L)	27.86%
Xiang Jun	Beneficial owner	756,831,000 (L)	5.06%

Notes:

(1) Miao Yu owns 100% equity interest of Prospect Ace Limited. Accordingly, Miao Yu is deemed to be interested in a long position of an aggregate of 4,169,300,000 shares held by Prospect Ace Limited.
(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.

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 2020 (being the date to which the latest published audited consolidated financial statements of the

– V-3 –

GENERAL INFORMATION

APPENDIX V

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.

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 Valor Appraisal & Advisory Limited Professional valuer 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 2020 (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.

– V-4 –

GENERAL INFORMATION

APPENDIX V

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 Disposal Agreements;
(b) the disposal agreement dated 14 December 2020 entered into between Kong Sun Yongtai and CNNP Shandong in relation to the disposal of the entire equity interest of 玉門市永聯科技新能源有限公司 (Yumen Yonglian Technology New Energy Limited Company*) for a total consideration of RMB33,580,000;
(c) the equity transfer agreement dated 4 December 2020 entered into between 江山豐融投資有限公司 (Jiangshan Fengrong Investment Company Limited), an indirect wholly-owned subsidiary of the Company, 北京聯合榮邦新能源科技有限公司 (Beijing United Rongbang New Energy Technology Co., Ltd.) (‘‘Beijing United Rongbang’’) and 榆林市江山永宸新能源有限公司 (Yulin City Jiangshan Yongchen New Energy Limited*) (‘‘Yongchen’’) in relation to the disposal of Yongchen at a consideration of approximately RMB1,177,829,000;
(d) the disposal agreements dated 22 October 2020 entered into between Kong Sun Yongtai and Jinan Tianguan (as the case may be) and Beijing United Rongbang in relation to the Previous Disposals for a total consideration of RMB100,210,000;
(e) the disposal agreement dated 21 September 2020 entered into between Kong Sun Yongtai and Guotou in relation to the disposal of the entire equity interest of 靖邊縣智光新能源開發有限公司 (Jingbian Zhiguang New Energy Development Co., Ltd.*) for a total consideration of RMB82,000,000 subject to adjustment;
(f) the disposal agreement dated 5 December 2019 entered into between Kong Sun Yongtai and Guotou in relation to the disposal of the entire equity interest of 定邊縣昂立光伏科技有限公司 (Dingbian Angli Solar Power Technology Co., Ltd.*) for a total consideration of RMB446,355,000 subject to adjustment; and
(g) the disposal agreements dated 15 November 2019 entered into between Kong Sun Yongtai and CNNP Shandong in relation to the CNNP Disposals for a total consideration of RMB1,166,400,000.

10. MISCELLANEOUS

(a) The company secretary of the Company is Mr. Ching Kin Wai, who has been a member of the Hong Kong Institute of Certified Public Accountants since July 2013;
(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;
For identification purposes only

– V-5 –

GENERAL INFORMATION

APPENDIX V

(c) The share registrar of the Company is Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17[th] 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 2018, 2019 and 2020;
(c) the unaudited consolidated financial information of the Project Companies, the texts of which are set out in Appendix II-A to Appendix II-G 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 Valor Appraisal & 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;
(h) the circular dated 26 February 2021 issued by the Company in relation to the disposal of Yongchen; and
(i) this circular.

– V-6 –

NOTICE OF THE EGM

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==> 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, 14 September 2021 at 11:00 a.m. for the purposes of considering and, if thought fit, passing, with or without amendments, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTION

Words and expressions that are not expressly defined in this notice shall bear the same meaning as that defined in the circular dated 30 August 2021 of the Company.

‘‘THAT:
(i) the Disposal Agreements (copies of which have 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 Disposal Agreements and the transactions contemplated thereunder.’’

By Order of the Board Kong Sun Holdings Limited Mr. Jin Yanbing Executive Director

Hong Kong, 30 August 2021

– EGM-1 –

NOTICE OF THE EGM

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 17M 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. Qin Hongfu, one non-executive Director, Mr. Jiang Hengwen and three independent non-executive Directors, Mr. Lang Wangkai, Ms. Wu Wennan and Mr. Xu Xiang.

– EGM-2 –

AI assistant

Novautek Technologies Group Limited — Proxy Solicitation & Information Statement 2021

49267_rns_2021-08-30_b3d3c482-7502-443c-b4ea-b3b7aa465b22.pdf

KONG SUN HOLDINGS LIMITED 江山控股有限公司

(1) VERY SUBSTANTIAL DISPOSAL AND (2) NOTICE OF EXTRAORDINARY GENERAL MEETING

PRECAUTIONARY MEASURES AND SPECIAL ARRANGEMENTS FOR THE EGM

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

KONG SUN HOLDINGS LIMITED 江山控股有限公司

(Stock Code: 295)

(1) VERY SUBSTANTIAL DISPOSAL AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

PRINCIPAL TERMS OF THE DISPOSAL AGREEMENTS

Subject matter

Consideration

Repayment of the First Debts

Default

Conditions Precedent

Arrangements during the Transition Period

Termination of the First Guarantee

(B) The Second Agreement

Subject matter

Consideration

Repayment of the Second Debts

Default

LETTER FROM THE BOARD

Conditions Precedent

LETTER FROM THE BOARD

Arrangements during the Transition Period

Termination of the Second Guarantee

(C) The Third Agreement

Subject matter

Consideration

Repayment of the Third Debts

Default

LETTER FROM THE BOARD

Conditions Precedent

Arrangements during the Transition Period

(D) The Fourth Agreement

Subject matter

Consideration

Repayment of the Fourth Debts

LETTER FROM THE BOARD

Default

Conditions Precedent

Arrangements during the Transition Period

Termination of the Fourth Guarantee

(E) The Fifth Agreement

Subject matter

Consideration

Repayment of the Fifth Debts

Default

Conditions Precedent

Arrangements during the Transition Period

(F) The Sixth Agreement

Subject matter

Consideration

Repayment of the Sixth Debts

Default

LETTER FROM THE BOARD

Conditions Precedent

Arrangements during the Transition Period

(G) The Seventh Agreement

Subject matter

Consideration

Repayment of the Seventh Debts

LETTER FROM THE BOARD

Default

Conditions Precedent

Arrangements during the Transition Period

BASIS OF THE CONSIDERATION FOR THE DISPOSALS

COMPLETION OF THE DISPOSALS

INFORMATION ON THE PROJECT COMPANIES

(A) The First Project Company

(B) The Second Project Company

(C) The Third Project Company

LETTER FROM THE BOARD

Novautek Technologies Group Limited Proxy Solicitation & Information Statement 2021

KONG SUN HOLDINGS LIMITED `江山控股有限公司`

KONG SUN HOLDINGS LIMITED `江山控股有限公司`