Novautek Technologies Group Limited - Proxy Solicitation & Information Statement 2023

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

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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)

VERY SUBSTANTIAL DISPOSAL DISPOSALS OF SIX SUBSIDIARIES INVOLVING PROVISION OF GUARANTEE AND FINANCIAL ASSISTANCE AND NOTICE OF EXTRAORDINARY GENERAL MEETING

A letter from the Board is set out on pages 8 to 38 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 Wednesday, 20 September 2023 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.

31 August 2023

		Pages
Definitions. . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Appendix I –	Financial Information of the Group. . . . . . . . . . . . . . . . . . . . . . . I-1
Appendix II-A –	Financial Information of the First Project Company. . . . . . . . . . II-A-1
Appendix II-B –	Financial Information of the Second Project Company. . . . . . . . II-B-1
Appendix II-C –	Financial Information of the Third Project Company. . . . . . . . . II-C-1
Appendix II-D –	Financial Information of the Fourth Project Company. . . . . . . . II-D-1
Appendix II-E –	Financial Information of the Fifth Project Company. . . . . . . . . II-E-1
Appendix II-F –	Financial Information of the Sixth Project Company. . . . . . . . . II-F-1
Appendix III –	Unaudited Pro Forma Financial Information
	of the Remaining Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
Appendix IV –	Valuation Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
Appendix V –	General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
Notice of the EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		EGM-1

— i —

DEFINITIONS

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

“Board”

the board of Directors

“CDB Leasing”
國銀金融租賃股份有限公司 (China Development Bank Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability, the H-shares of which are listed on the Stock Exchange (stock code: 1606)
“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 and an indirect wholly-owned subsidiary of the Company
“CITIC Financial Leasing”
中信金融租賃有限公司 (CITIC Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability
“Company”
Kong Sun Holdings Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange (stock code: 295)
“connected person(s)”
has the meaning ascribed to it under the Listing Rules
“Debts”
the First Debts, the Second Debts, the Third Debts, the Fourth Debts and the Fifth Debts
“Deliverable Items” deliverable items including but not limited to the company seal, licenses, financial information, contract information, various equipment and facilities of the relevant Project Company
“Director(s)” director(s) of the Company
“Disposal Agreements”
the First Agreement, the Second Agreement, the Third Agreement, the Fourth Agreement, the Fifth Agreement and the Sixth Agreement (each, a “ Disposal Agreement ”)
“Disposals”
the First Disposal, the Second Disposal, the Third Disposal, the Fourth Disposal, the Fifth Disposal and the Sixth Disposal
“EGM”

the extraordinary general meeting of the Company to be convened for the purpose of considering and, if thought fit, approving, among other things, the Disposals

— 1 —

DEFINITIONS

“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 instalment of the consideration pursuant to the terms of such Disposal Agreement
“Fifth Agreement” the equity transfer agreement dated 11 August 2023 entered into by and among the Purchaser, Changshu Honglue 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
“Fifth Debts” the net outstanding loans, advances, interests (if any) and other sums owed by the Fifth Project Company to Changshu Honglue
“Fifth Disposal” the disposal of the Fifth Sale Equity Interest
“Fifth Guarantee” the guarantee provided by Kong Sun Yongtai to secure the existing borrowings of the Fifth Project Company
“Fifth Project” a 30 MW solar power plant owned by the Fifth Project Company in Shaanxi Province, the PRC
“Fifth Project Company”
定邊縣晶陽電力有限公司 (Dingbian Jingyang Electric Co., Ltd.*), a company established in the PRC with limited liability and a subsidiary of the Company as at the Latest Practicable Date
“Fifth Sale Equity Interest” the entire equity interests in the Fifth Project Company
“First Agreement” the equity transfer agreement dated 11 August 2023 entered into by and among the Purchaser, Tianhao New Energy 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
“First Debts” the net outstanding loans, advances, interests (if any) and other sums owed by the First Project Company to Tianhao New Energy
“First Disposal”
the disposal of the First Sale Equity Interest
“First Project”
a 30 MW solar power plant owned by the First Project Company in Shaanxi Province, the PRC

— 2 —

DEFINITIONS

“First Project Company” 定邊縣萬和順新能源發電有限公司 (Dingbian Wanheshun New Energy Power Generation Limited*), a company established in the PRC with limited liability and a subsidiary of the Company as at the Latest Practicable Date
“First Sale Equity Interest” the entire equity interests in the First Project Company
“Fourth Agreement” the equity transfer agreement dated 11 August 2023 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
“Fourth Debts” the net outstanding loans, advances, interests (if any) and other sums owed by the Fourth Project Company to Changshu Honglue
“Fourth Disposal” the disposal of the Fourth Sale Equity Interest
“Fourth Guarantee” the guarantee provided by Kong Sun Yongtai to secure the existing borrowings of the Fourth Project Company
“Fourth Project” a 19.8 MW “tea-photovoltaic complementary” solar power project owned by the Fourth Project Company in Zhejiang Province, the PRC
“Fourth Project Company” 嵊州懿暉光伏發電有限公司 (Shengzhou Yihui Photovoltaic Power Generation Limited*), a company established in the PRC with limited liability and a subsidiary of the Company as at the Latest Practicable Date
“Fourth Sale Equity Interest” the entire equity interests in the Fourth Project Company
“Group” the Company and its subsidiaries
“Guarantees” the Second Guarantee, the Third Guarantee, the Fourth Guarantee, the Fifth Guarantee and the Sixth Guarantee
“Hebei Financial Leasing” 河北省金融租賃有限公司 (Hebei Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability
“High Consumption 限制高消費令, an indirect enforcement measure to limit high Restriction” consumption of executee imposed by the people’s courts of the PRC

— 3 —

DEFINITIONS

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

“Huadian Financial Leasing”
華電融資租賃有限公司 (Huadian Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability
“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 and an indirect wholly-owned subsidiary of the Company
“kwh”
kilowatt-hour
“Latest Practicable Date” 28 August 2023, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular
“List of Dishonest Enforcees” 失信被執行人名單, a list of persons who have been determined by the people’s courts at all levels of the PRC to have the ability to perform but fail to perform the obligations according to an effective legal document
“Listing Rules”
the Rules Governing the Listing of Securities on the Stock Exchange
“Long Stop Date” 31 October 2023
“MW” mega watts
“PRC” the People’s Republic of China
“PRC GAAP”

the generally accepted accounting principles of the PRC

“Project Companies”

the First Project Company, the Second Project Company, the Third Project Company, the Fourth Project Company, the Fifth Project Company and the Sixth Project Company

“Purchaser”
新華電力發展投資有限公司 (Xinhua Electricity Development Investment Limited*), a company incorporated in the PRC
“Reference Date”
31 December 2022

— 4 —

DEFINITIONS

“Remaining Group” the Company and its subsidiaries after completion of the Disposals

“RMB” Renminbi, the lawful currency of the PRC
“Second Agreement” the equity transfer agreement dated 11 August 2023 entered into by and among the Purchaser, Kong Sun Yongtai and the Second Project Company in relation to the Second Disposal
“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
“Second Debts” the net outstanding loans, advances, interests (if any) and other sums owed by the Second Project Company to Kong Sun Yongtai
“Second Disposal” the disposal of the Second Sale Equity Interest
“Second Guarantee” the guarantee provided by Kong Sun Yongtai to secure the existing borrowings of the Second Project Company
“Second Project” a 30 MW grid-connected solar power plant owned by the Second Project Company in Huangshi City, the PRC
“Second Project Company” 黃石黃源光伏電力開發有限公司 (Huangshi Huangyuan Photovoltaic Power Development Limited*), a company established in the PRC with limited liability and a subsidiary of the Company as at the Latest Practicable Date
“Second Sale Equity Interest” the entire equity interests in the Second Project Company
“SFO” the Securities and Futures Ordinance (Cap. 571 of the laws of Hong Kong)
“Shares” ordinary share(s) in the share capital of the Company
“Shareholder(s)” holder(s) of the Shares
“Sixth Agreement” the equity transfer agreement dated 11 August 2023 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

— 5 —

DEFINITIONS

“Sixth Debts”

the net outstanding loans, advances, interests (if any) and other sums owed by Changshu Honglue to the Sixth Project Company
“Sixth Disposal” the disposal of the Sixth Sale Equity Interest
“Sixth Guarantee” the guarantee provided by Kong Sun Yongtai to secure the existing borrowings of the Sixth Project Company
“Sixth Project” a 50 MW solar power plant owned by the Sixth Project Company in Shannxi Province, the PRC
“Sixth Project Company” 定邊縣智信達新能源有限公司 (Dingbian County Zhixinda New Energy Limited*), a company established in the PRC with limited liability and a subsidiary of the Company as at the Latest Practicable Date
“Sixth Sale Equity Interest” the entire equity interests in the Sixth Project Company
“Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Subsidies Receivable” the state renewable energy subsidies receivable by the relevant Project Company from the State Grid Corporation of China as at the Reference Date
“Third Agreement” the equity transfer agreement dated 11 August 2023 entered into by and among the Purchaser, 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
“Third Debts” the net outstanding loans, advances, interests (if any) and other sums owed by the Third Project Company to Kong Sun Yongtai
“Third Disposal” the disposal of the Third Sale Equity Interest
“Third Guarantee” the guarantee provided by Kong Sun Yongtai to secure the existing borrowings of the Third Project Company
“Third Project”
a 30 MW solar power plant owned by the Third Project Company in Shaanxi Province, the PRC

— 6 —

DEFINITIONS

“Third Project Company” 榆林正信電力有限公司 (Yulin Zhengxin Electricity Limited*), a company established in the PRC with limited liability and a subsidiary of the Company as at the Latest Practicable Date
“Third Sale Equity Interest”
the entire equity interests in the Third Project Company
“Tianan Life Insurance”
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
“Tianhao New Energy” 常州市金壇區天昊新能源有限公司 (Changzhou City Jintan Tianhao New Energy Co., Ltd.*), a company established in the PRC and an indirect wholly-owned subsidiary of the Company
“Transition Period” in respect of each Disposal, the period from (but excluding) the Reference Date to (and including) the date of completion of such Disposal
“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
“Vendors”
Tianhao New Energy, Kong Sun Yongtai and Changshu Honglue, and each a “Vendor”
“%” per cent.
For identification purposes only

— 7 —

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 Director: Mr. Xian He Non-executive Director: Mr. Jiang Hengwen (Chairman)

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

Independent non-executive Directors: Ms. Tang Yinghong Ms. Wu Wennan Mr. Xu Xiang

31 August 2023

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL DISPOSALS OF SIX SUBSIDIARIES INVOLVING PROVISION OF GUARANTEE AND FINANCIAL ASSISTANCE

INTRODUCTION

Reference is made to the announcement of the Company dated 11 August 2023 in relation to the Disposals. The purpose of this circular is to provide you with, among other things, further details of the Disposals, 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.

THE DISPOSALS

On 11 August 2023, the Vendors (wholly-owned subsidiaries of the Company), the Purchaser and the Project Companies, among others, entered into the Disposal Agreements, pursuant to which the Vendors conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the entire equity interests in the Project Companies (which hold in total six (6) solar power projects in the PRC) for a total consideration of approximately RMB758,028,000. The Company agreed to guarantee the obligations of the Vendors under the Disposal Agreements in favour of the Purchaser.

— 8 —

LETTER FROM THE BOARD

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

(A) The First Agreement

Subject matter

On 11 August 2023, Tianhao New Energy, the Purchaser and the First Project Company entered into the First Agreement, pursuant to which Tianhao New Energy conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the First Sale Equity Interest. The Company agreed to guarantee the obligations of Tianhao New Energy under the First Agreement in favour of the Purchaser and the First Project Company.

Consideration

The consideration for the First Disposal is approximately RMB607,000, which shall be payable by the Purchaser in cash in the following manner:

(a) an amount of RMB200,000, representing approximately 32.9% of the consideration for the First Disposal, shall first be paid into the Escrow Account not later than three (3) business days before completion of the First Disposal and shall then be transferred to the designated bank account of Tianhao New Energy within five (5) business days after the First Completion Date; and
(b) the balance of approximately RMB407,000, representing approximately 67.1% of the consideration for the First Disposal, shall be paid to Tianhao New Energy within fifteen (15) business days after the First Project having passed the relevant verification process and becoming included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority.

Repayment of the First Debts

As at the Reference Date, the First Project Company had outstanding First Debts, which is unsecured, interest-free and repayable on demand, in the amount of approximately RMB312,945,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined pursuant to the Transition Period Audit. The Transition Period Audit report will be issued within fifteen (15) business days after the First Completion Date for the parties’ confirmation, and the official report will be issued within five (5) business days after such confirmation.

— 9 —

LETTER FROM THE BOARD

The outstanding First Debts based on the Transition Period Audit report shall be payable by the First Project Company to Tianhao New Energy in cash in the following manner:

(a) an amount of approximately RMB50,618,000 shall be paid within five (5) business days after the issue of the official Transition Period Audit report;
(b) a total amount of RMB3,015,000, which is equivalent to the total costs of certain rectification works of the First Project undertaken to be carried out and completed by Tianhao New Energy within six (6) months after the First Completion Date, shall be paid to Tianhao New Energy within ten (10) business days upon completion of such rectification works as inspected by the Purchaser once every three (3) months after the First Completion Date;
(c) (provided that the First Project has passed the relevant verification procedures and has been included in the list of projects qualified for state renewable energy subsidies published by the relevant PRC authority) within ten (10) business days after the issue of the Transition Period Audit report (in respect of the Subsidies Receivable received before the First Completion Date) and within ten (10) business days every time the First Project Company receives the Subsidies Receivable after the First Completion Date, an amount equivalent to such Subsidies Receivable received by the First Project Company, adding up to a total amount of approximately RMB14,022,000, shall be paid to Tianhao New Energy;
(d) an amount of approximately RMB212,849,000 shall be paid within fifteen (15) business days after the First Project has passed the relevant verification process and become included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority; and
(e) the balance of approximately RMB32,441,000 shall be paid within fifteen (15) business days after the Third Project has passed the relevant verification process and become included in the list of projects qualified for state renewable energy subsidies as published by the relevant authority.

The First Project Company has already applied to the relevant PRC authority for the state renewable energy subsidies. Taking into account the uncertainty in the timing of receipt of such subsidies and based on the commercial negotiations with the Purchaser, the Directors consider that it would be fair and reasonable not to charge any interest on the outstanding First Debts.

— 10 —

LETTER FROM THE BOARD

Default in payment

If the Purchaser fails to pay any instalment of the consideration for the First Disposal pursuant to the terms of the First Agreement or the First Project Company fails to repay any instalment of the First Debts pursuant to the terms of the First Agreement, the Purchaser and/or the First Project Company (as the case may be) shall be liable to pay to Tianhao New Energy a daily default interest of 0.05%. If the default continues for more than thirty (30) days from the relevant due date, Tianhao New Energy shall be entitled to terminate the First Agreement, upon which all the payments made by the Purchaser and the First Project Company shall be refunded and the Purchaser shall pay to Tianhao New Energy a default payment of approximately RMB61,000, representing 10% of the consideration for the First Disposal within twenty (20) business days after such termination.

Conditions Precedent

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

(a) the approval by the Board and the Shareholders at the EGM in respect of the First Agreement and the transactions contemplated thereunder (including the guarantee to be provided by the Company and the continuation of the First Debts) having been obtained in accordance with the Listing Rules;
(b) the representations, warranties and undertakings provided by Tianhao New Energy in the First Agreement being and remaining true, complete and accurate in all material respects as at the date of the First Agreement and the First Completion Date;
(c) the litigation and arbitration cases of the First Project Company as debtor having been closed, executed and performed completely, the High Consumption Restriction imposed on the First Project Company having been lifted, and the First Project Company having been removed from the List of Dishonest Enforcees; and
(d) the obligations of the First Project Company as guarantor for the indebtedness of the Third Project Company owing to CITIC Financial Leasing having been released.

Tianhao New Energy shall procure satisfaction of the conditions set out above on or before the Long Stop Date. If any of such conditions is not satisfied on or before the Long Stop Date, the Purchaser will be entitled to: (1) terminate the First Agreement; (2) unilaterally decide to postpone the Long Stop Date or negotiate with Tianhao New Energy to postpone the Long Stop Date; or (3) waive any condition (except the condition set out in (a) above which cannot be waived).

— 11 —

LETTER FROM THE BOARD

Arrangements during the Transition Period

Subject to the First Agreement, any profits generated in the ordinary course of business of the First Project Company during the Transition Period shall belong to the Purchaser, whereas any loss incurred in the ordinary course of business of the First Project Company during the Transition Period shall be borne by Tianhao New Energy. The Purchaser shall be entitled to deduct from any instalment of the consideration payable under the First Agreement the amount of any such loss based on the Transition Period Audit report.

During the Transition Period, Tianhao New Energy shall ensure that, among other things, the First Project Company will continue its normal business operations in accordance with its previous practices. No encumbrances or other third party rights shall be created with respect to the First Sale Equity Interest without the prior written consent of the Purchaser.

(B) The Second Agreement

Subject matter

On 11 August 2023, Kong Sun Yongtai, 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 under the Second Agreement in favour of the Purchaser and the Second Project Company.

Consideration

The consideration for the Second Disposal is approximately RMB40,529,000, which shall be payable by the Purchaser in cash in the following manner:

(a) an amount of RMB1,000,000, representing approximately 2.5% of the consideration for the Second Disposal, shall first be paid into the Escrow Account not later than three (3) business days before completion of the Second Disposal and shall then be transferred to the designated bank account of Kong Sun Yongtai within five (5) business days after the Second Completion Date;

— 12 —

LETTER FROM THE BOARD

(b) within ten (10) business days upon each receipt by the Second Project Company of the Subsidies Receivable, an equivalent amount shall be paid to Kong Sun Yongtai, adding up to a total amount of approximately RMB8,507,000, representing approximately 21.0% of the consideration for the Second Disposal; and
(c) the balance of approximately RMB31,022,000, representing approximately 76.5% of the consideration for the Second Disposal, shall be paid to Kong Sun Yongtai within fifteen (15) business days after (i) the Second Project having been included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority and the on-grid electricity price is at a pre-determined price, or (ii) the Second Project Company having received the first batch of state renewable energy subsidies.

Repayment of the Second Debts

As at the Reference Date, the Second Project Company had outstanding Second Debts, which is unsecured, interest-free and repayable on demand, in the amount of approximately RMB128,538,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined pursuant to the Transition Period Audit. The Transition Period Audit report will be issued within fifteen (15) business days after the Second Completion Date for the parties’ confirmation, and the official report will be issued within five (5) business days after such confirmation.

The outstanding Second Debts based on the Transition Period Audit report shall be payable by the Second Project Company to Kong Sun Yongtai in cash in the following manner:

(a) an amount of approximately RMB29,222,000 shall be paid within five (5) business days after the issue of the official Transition Period Audit report;
(b) a total amount of RMB6,174,000, which is equivalent to the total costs of certain rectification works of the Second Project undertaken to be carried out and completed by Kong Sun Yongtai within six (6) months after the Second Completion Date, shall be paid to Kong Sun Yongtai within ten (10) business days upon completion of such rectification works as inspected by the Purchaser once every three (3) months after the Second Completion Date; and
(c) the balance of approximately RMB93,142,000 shall be paid within fifteen (15) business days after (i) the Second Project having been included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority and the on-grid electricity price is at a pre-determined price, or (ii) the Second Project Company having received the first batch of state renewable energy subsidies.

— 13 —

LETTER FROM THE BOARD

The Second Project Company has already applied to the relevant PRC authority for the state renewable energy subsidies. Taking into account the uncertainty in the timing of receipt of such subsidies and based on the commercial negotiations with the Purchaser, the Directors consider that it would be fair and reasonable not to charge any interest on the outstanding Second Debts.

Default in payment

If the Purchaser fails to pay any instalment of the consideration for the Second Disposal pursuant to the terms of the Second Agreement or the Second Project Company fails to repay any instalment of the Second Debts pursuant to the terms of the Second Agreement, the Purchaser and/or the Second Project Company (as the case may be) shall be liable to pay to Kong Sun Yongtai a daily default interest of 0.05%. If the default continues for more than thirty (30) days from the relevant due date, Kong Sun Yongtai shall be entitled to terminate the Second Agreement, upon which all the payments made by the Purchaser and the Second Project Company shall be refunded and the Purchaser shall pay to Kong Sun Yongtai a default payment of approximately RMB4,053,000, representing 10% of the consideration for the Second Disposal within twenty (20) business days after such termination.

Conditions Precedent

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

(a) the approval by the Board and the Shareholders at the EGM in respect of the Second Agreement and the transactions contemplated thereunder (including the guarantee to be provided by the Company and the continuation of the Second Guarantee and the Second Debts) having been obtained in accordance with the Listing Rules;
(b) the representations, warranties and undertakings provided by Kong Sun Yongtai in the Second Agreement being and remaining true, complete and accurate in all material respects as at the date of the Second Agreement and the Second Completion Date; and
(c) the freezing order over the Second Sale Equity Interest imposed by the PRC court having been discharged.

Kong Sun Yongtai shall procure satisfaction of the conditions set out above on or before the Long Stop Date. If any of such conditions is not satisfied on or before the Long Stop Date, the Purchaser will be entitled to: (1) terminate the Second Agreement; (2) unilaterally decide to postpone the Long Stop Date or negotiate with Kong Sun Yongtai to postpone the Long Stop Date; or (3) waive any condition (except the condition set out in (a) above which cannot be waived).

— 14 —

LETTER FROM THE BOARD

Arrangements during the Transition Period

Subject to the Second Agreement, any profits generated in the ordinary course of business of the Second Project Company during the Transition Period shall belong to the Purchaser, whereas any loss incurred in the ordinary course of business of the Second Project Company during the Transition Period shall be borne by Kong Sun Yongtai. The Purchaser shall be entitled to deduct from any instalment of the consideration payable under the Second Agreement the amount of any such loss based on the Transition Period Audit report.

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 previous practices. No encumbrances or other third party rights shall be created with respect to the Second Sale Equity Interest without the prior written consent of the Purchaser.

Release of the Second Guarantee

As at 30 June 2023, the amount covered under the Second Guarantee is approximately RMB63,730,000, which is equivalent to the amount of the existing borrowing due by the Second Project Company to Hebei Financial Leasing. Pursuant to the Second Agreement, by no later than ninety (90) days after the Second Completion Date, the Purchaser shall procure the release of the Second Guarantee, failing which Kong Sun Yongtai shall be entitled to (1) a default payment payable by the Purchaser calculated at a daily rate of 0.05% based on the principal amount guaranteed; (2) rescind the Second Agreement; (3) a default payment payable by the Purchaser of approximately RMB4,053,000, representing 10% of the consideration for the Second Disposal; and (4) seek compensation from the Purchaser for the costs and expenses incurred by Kong Sun Yongtai as a result of the Purchaser’s breach. In this case, the Company will assess the possible implications under the Listing Rules and make further disclosure as and when appropriate.

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LETTER FROM THE BOARD

(C) The Third Agreement

Subject matter

On 11 August 2023, Kong Sun Yongtai, the Purchaser and the Third Project Company entered into the Third Agreement, pursuant to which Kong Sun Yongtai 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 under the Third Agreement in favour of the Purchaser and the Third Project Company.

Consideration

The consideration for the Third Disposal is approximately RMB52,858,000, which shall be payable by the Purchaser in cash in the following manner:

(a) an amount of RMB1,000,000, representing approximately 1.9% of the consideration for the Third Disposal, shall first be paid into the Escrow Account not later than three (3) business days before completion of the Third Disposal and shall then be transferred to the designated bank account of Kong Sun Yongtai within five (5) business days after the Third Completion Date;
(b) (provided that the Third Project has passed the relevant verification procedures and has been included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority) within ten (10) business days after the issue of the Transition Period Audit report (in respect of the Subsidies Receivable received before the Third Completion Date) and within ten (10) business days every time the Third Project Company receives the Subsidies Receivable after the Third Completion Date, an amount equivalent to such Subsidies Receivable received by the Third Project Company, adding up to a total amount of approximately RMB11,136,000, shall be paid to Kong Sun Yongtai, representing approximately 21.1% of the consideration for the Third Disposal; and
(c) the balance of approximately RMB40,722,000, representing approximately 77.0% of the consideration for the Third Disposal, shall be paid within fifteen (15) business days after the Third Project having passed the relevant verification process and becoming included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority.

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LETTER FROM THE BOARD

Repayment of the Third Debts

As at the Reference Date, the Third Project Company had outstanding Third Debts, which is unsecured, interest-free and repayable on demand, in the amount of approximately RMB157,218,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined pursuant to the Transition Period Audit. The Transition Period Audit report will be issued within fifteen (15) business days after the Third Completion Date for the parties’ confirmation, and the official report will be issued within five (5) business days after such confirmation.

The outstanding Third Debts based on the Transition Period Audit report shall be payable by the Third Project Company to Kong Sun Yongtai in cash in the following manner:

(a) a total amount of RMB3,762,000, which is equivalent to the total costs of certain rectification works of the Third Project undertaken to be carried out and completed by Kong Sun Yongtai within six (6) months after the Third Completion Date, shall be paid to Kong Sun Yongtai within ten (10) business days upon completion of such rectification works as inspected by the Purchaser once every three (3) months after the Third Completion Date; and
(b) the balance of approximately RMB153,456,000 shall be paid within fifteen (15) business days after the Third Project having been included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority.

The Third Project Company has already applied to the relevant PRC authority for the state renewable energy subsidies. Taking into account the uncertainty in the timing of receipt of such subsidies and based on the commercial negotiations with the Purchaser, the Directors consider that it would be fair and reasonable not to charge any interest on the outstanding Third Debts.

Default in payment

If the Purchaser fails to pay any instalment of the consideration for the Third Disposal pursuant to the terms of the Third Agreement or the Third Project Company fails to repay any instalment of the Third Debts pursuant to the terms of the Third Agreement, the Purchaser and/or the Third Project Company (as the case may be) shall be liable to pay to Kong Sun Yongtai a daily default interest of 0.05%. If the default continues for more than thirty (30) days from the relevant due date, Kong Sun Yongtai shall be entitled to terminate the Third Agreement, upon which all the payments made by the Purchaser and the Third Project Company shall be refunded and the Purchaser shall pay to Kong Sun Yongtai a default payment of approximately RMB5,286,000, representing 10% of the consideration for the Third Disposal within twenty (20) business days after such termination.

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LETTER FROM THE BOARD

Conditions Precedent

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

(a) the approval by the Board and the Shareholders at the EGM in respect of the Third Agreement and the transactions contemplated thereunder (including the guarantee to be provided by the Company and the continuation of the Third Guarantee and the Third Debts) having been obtained in accordance with the Listing Rules;
(b) the representations, warranties and undertakings provided by Kong Sun Yongtai in the Third Agreement being and remaining true, complete and accurate in all material respects as at the date of the Third Agreement and the Third Completion Date;
(c) the litigation and arbitration cases of the Third Project Company as debtor having been closed, executed and performed completely, the High Consumption Restriction imposed on the Third Project Company having been lifted, and the Third Project Company having been removed from the List of Dishonest Enforcees; and
(d) the obligations of the Third Project Company as guarantor for the indebtedness of the First Project Company owing to CITIC Financial Leasing having been released.

Kong Sun Yongtai shall procure satisfaction of the conditions set out above on or before the Long Stop Date. If any of such conditions is not satisfied on or before the Long Stop Date, the Purchaser will be entitled to: (1) terminate the Third Agreement; (2) unilaterally decide to postpone the Long Stop Date or negotiate with Kong Sun Yongtai to postpone the Long Stop Date; or (3) waive any condition (except the condition set out in (a) above which cannot be waived).

Arrangements during the Transition Period

Subject to the Third Agreement, any profits generated in the ordinary course of business of the Third Project Company during the Transition Period shall belong to the Purchaser, whereas any loss incurred in the ordinary course of business of the Third Project Company during the Transition Period shall be borne by Kong Sun Yongtai. The Purchaser shall be entitled to deduct from any instalment of the consideration payable under the Third Agreement the amount of any such loss based on the Transition Period Audit report.

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LETTER FROM THE BOARD

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 previous practices. No encumbrances or other third party rights shall be created with respect to the Third Sale Equity Interest without the prior written consent of the Purchaser.

Release of the Third Guarantee

As at 30 June 2023, the amount covered under the Third Guarantee is approximately RMB66,040,000, which is equivalent to the amount of the existing borrowing due by the Third Project Company to CITIC Financial Leasing. Pursuant to the Third Agreement, by no later than ninety (90) days after the Third Completion Date, the Purchaser shall procure the release of the Third Guarantee, failing which Kong Sun Yongtai shall be entitled to (1) a default payment payable by the Purchaser calculated at a daily rate of 0.05% based on the principal amount guaranteed; (2) rescind the Third Agreement; (3) a default payment payable by the Purchaser of approximately RMB5,286,000, representing 10% of the consideration for the Third Disposal; and (4) seek compensation from the Purchaser for the costs and expenses incurred by Kong Sun Yongtai as a result of the Purchaser’s breach. In this case, the Company will assess the possible implications under the Listing Rules and make further disclosure as and when appropriate.

(D) The Fourth Agreement

Subject matter

On 11 August 2023, 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 under the Fourth Agreement in favour of the Purchaser and the Fourth Project Company.

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LETTER FROM THE BOARD

Consideration

The consideration for the Fourth Disposal is approximately RMB38,501,000, which shall be payable by the Purchaser in cash in the following manner:

(a) an amount of approximately RMB23,100,000, representing approximately 60.0% of the consideration for the Fourth Disposal, shall first be paid into the Escrow Account not later than three (3) business days before completion of the Fourth Disposal and shall then be transferred to the designated bank account of Changshu Honglue within five (5) business days after the Fourth Completion Date;
(b) an amount of approximately RMB13,611,000, representing approximately 35.4% of the consideration for the Fourth Disposal, shall be paid to Changshu Honglue within five (5) business days after the handover of the Deliverable Items related to the Fourth Project Company; and
(c) within ten (10) business days after the issue of the Transition Period Audit report (in respect of the Subsidies Receivable received before the Fourth Completion Date) and within ten (10) business days every time the Fourth Project Company receives the Subsidies Receivable after the Fourth Completion Date, an amount equivalent to such Subsidies Receivable received by the Fourth Project Company, adding up to a total amount of approximately RMB1,790,000, shall be paid to Changshu Honglue, representing approximately 4.6% of the consideration for the Fourth Disposal.

Repayment of the Fourth Debts

As at the Reference Date, the Fourth Project Company had outstanding Fourth Debts, which is unsecured, interest-free and repayable on demand, in the amount of approximately RMB142,023,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined pursuant to the Transition Period Audit. The Transition Period Audit report will be issued within fifteen (15) business days after the Fourth Completion Date for the parties’ confirmation, and the official report will be issued within five (5) business days after such confirmation.

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LETTER FROM THE BOARD

The outstanding Fourth Debts based on the Transition Period Audit report shall be payable by the Fourth Project Company to Changshu Honglue in cash in the following manner:

(a) an amount of approximately RMB136,786,000 shall be paid within five (5) business days after the issue of the official Transition Period Audit report; and
(b) a total amount of RMB5,237,000, which is equivalent to the total costs of certain rectification works of the Fourth Project undertaken to be carried out and completed by Changshu Honglue within six (6) months after the Fourth Completion Date, shall be paid to Changshu Honglue within ten (10) business days upon completion of such rectification works as inspected by the Purchaser once every three (3) months after the Fourth Completion Date.

The Fourth Project Company has already applied to the relevant PRC authority for the state renewable energy subsidies. Taking into account the uncertainty in the timing of receipt of such subsidies and based on the commercial negotiations with the Purchaser, the Directors consider that it would be fair and reasonable not to charge any interest on the outstanding Fourth Debts.

Default in payment

If the Purchaser fails to pay any instalment of the consideration for the Fourth Disposal pursuant to the terms of the Fourth Agreement or the Fourth Project Company fails to repay any instalment of the Fourth Debts pursuant to the terms of the Fourth Agreement, the Purchaser and/or the Fourth Project Company (as the case may be) shall be liable to pay to Changshu Honglue a daily default interest of 0.05%. If the default continues for more than thirty (30) days from the relevant due date, Changshu Honglue shall be entitled to terminate the Fourth Agreement, upon which all the payments made by the Purchaser and the Fourth Project Company shall be refunded and the Purchaser shall pay to Changshu Honglue a default payment of approximately RMB3,850,000, representing 10% of the consideration for the Fourth Disposal within twenty (20) business days after such termination.

Conditions Precedent

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

(a) the approval by the Board and the Shareholders at the EGM in respect of the Fourth Agreement and the transactions contemplated thereunder (including the guarantee to be provided by the Company and the continuation of the Fourth Guarantee and the Fourth Debts) having been obtained in accordance with the Listing Rules; and

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LETTER FROM THE BOARD

(b) the representations, warranties and undertakings provided by Changshu Honglue in the Fourth Agreement being and remaining true, complete and accurate in all material respects as at the date of the Fourth Agreement and the Fourth Completion Date.

Changshu Honglue shall procure satisfaction of the conditions set out above on or before the Long Stop Date. If any of such conditions is not satisfied on or before the Long Stop Date, the Purchaser will be entitled to: (1) terminate the Fourth Agreement; (2) unilaterally decide to postpone the Long Stop Date or negotiate with Changshu Honglue to postpone the Long Stop Date; or (3) waive any condition (except the condition set out in (a) above which cannot be waived).

Arrangements during the Transition Period

Subject to the Fourth Agreement, any profits generated in the ordinary course of business of the Fourth Project Company during the Transition Period shall belong to the Purchaser, whereas any loss incurred in the ordinary course of business of the Fourth Project Company during the Transition Period shall be borne by Changshu Honglue. The Purchaser shall be entitled to deduct from any instalment of the consideration payable under the Fourth Agreement the amount of any such loss based on the Transition Period Audit report.

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 previous practices. No encumbrances or other third party rights shall be created with respect to the Fourth Sale Equity Interest without the prior written consent of the Purchaser.

Release of the Fourth Guarantee

As at 30 June 2023, the amount covered under the Fourth Guarantee is approximately RMB109,900,000, which is equivalent to the amount of the existing borrowing due by the Fourth Project Company to CDB Leasing. Pursuant to the Fourth Agreement, by no later than ninety (90) days after the Fourth Completion Date, the Purchaser shall procure the release of the Fourth Guarantee, failing which Changshu Honglue shall be entitled to (1) a default payment payable by the Purchaser calculated at a daily rate of 0.05% based on the principal amount guaranteed; (2) rescind the Fourth Agreement; (3) a default payment payable by the Purchaser of approximately RMB3,850,000, representing 10% of the consideration for the Fourth Disposal; and (4) seek compensation from the Purchaser for the costs and expenses incurred by Changshu Honglue as a result of the Purchaser’s breach. In this case, the Company will assess the possible implications under the Listing Rules and make further disclosure as and when appropriate.

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LETTER FROM THE BOARD

(E) The Fifth Agreement

Subject matter

On 11 August 2023, Changshu Honglue, the Purchaser and the Fifth Project Company entered into the Fifth Agreement, pursuant to which Changshu Honglue conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the Fifth Sale Equity Interest. The Company agreed to guarantee the obligations of Changshu Honglue under the Fifth Agreement in favour of the Purchaser and the Fifth Project Company.

Consideration

The consideration for the Fifth Disposal is approximately RMB256,185,000, which shall be payable by the Purchaser in cash in the following manner:

(a) an amount of approximately RMB17,652,000, representing approximately 6.9% of the consideration for the Fifth Disposal, shall first be paid into the Escrow Account not later than three (3) business days before completion of the Fifth Disposal and shall then be transferred to the designated bank account of Changshu Honglue within five (5) business days after the Fifth Completion Date;
(b) an amount of approximately RMB11,768,000, representing approximately 4.6% of the consideration for the Fifth Disposal, shall be paid to Changshu Honglue within five (5) business days after the handover of the Deliverable Items related to the Fifth Project Company;
(c) (provided that the Fifth Project has passed the relevant verification procedures and has been included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority) within ten (10) business days after the issue of the Transition Period Audit report (in respect of the Subsidies Receivable received before the Fifth Completion Date) and within ten (10) business days every time the Fifth Project Company receives the Subsidies Receivable after the Fifth Completion Date, an amount equivalent to such Subsidies Receivable received by the Fifth Project Company, adding up to a total amount of approximately RMB13,685,000, shall be paid to Changshu Honglue, representing approximately 5.3% of the consideration for the Fifth Disposal; and
(d) the balance of approximately RMB213,080,000, representing approximately 83.2% of the consideration for the Fifth Disposal, shall be paid to Changshu Honglue within fifteen (15) business days after the Fifth Project having passed the relevant verification process and becoming included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority.

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LETTER FROM THE BOARD

Repayment of the Fifth Debts

As at the Reference Date, the Fifth Project Company had outstanding Fifth Debts, which is unsecured, interest-free and repayable on demand, in the amount of approximately RMB55,603,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined pursuant to the Transition Period Audit. The Transition Period Audit report will be issued within fifteen (15) business days after the Fifth Completion Date for the parties’ confirmation, and the official report will be issued within five (5) business days after such confirmation.

The outstanding Fifth Debts based on the Transition Period Audit report shall be payable by the Fifth Project Company to Changshu Honglue in cash in the following manner:

(a) an amount of approximately RMB52,514,000 shall be paid within five (5) business days after the issue of the official Transition Period Audit report; and
(b) a total amount of RMB3,089,000, which is equivalent to the total costs of certain rectification works of the Fifth Project undertaken to be carried out and completed by Changshu Honglue within six (6) months after the Fifth Completion Date, shall be paid to Changshu Honglue within ten (10) business days upon completion of such rectification works as inspected by the Purchaser once every three (3) months after the Fifth Completion Date.

The Fifth Project Company has already applied to the relevant PRC authority for the state renewable energy subsidies. Taking into account the uncertainty in the timing of receipt of such subsidies and based on the commercial negotiations with the Purchaser, the Directors consider that it would be fair and reasonable not to charge any interest on the outstanding Fifth Debts.

Default in payment

If the Purchaser fails to pay any instalment of the consideration for the Fifth Disposal pursuant to the terms of the Fifth Agreement or the Fifth Project Company fails to repay any instalment of the Fifth Debts pursuant to the terms of the Fifth Agreement, the Purchaser and/or the Fifth Project Company (as the case may be) shall be liable to pay to Changshu Honglue a daily default interest of 0.05%. If the default continues for more than thirty (30) days from the relevant due date, Changshu Honglue shall be entitled to terminate the Fifth Agreement, upon which all the payments made by the Purchaser and the Fifth Project Company shall be refunded and the Purchaser shall pay to Changshu Honglue a default payment of approximately RMB25,618,000, representing 10% of the consideration for the Fifth Disposal within twenty (20) business days after such termination.

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LETTER FROM THE BOARD

Conditions Precedent

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

(a) the approval by the Board and the Shareholders at the EGM in respect of the Fifth Agreement and the transactions contemplated thereunder (including the guarantee to be provided by the Company and the continuation of the Fifth Guarantee and the Fifth Debts) having been obtained in accordance with the Listing Rules;
(b) the representations, warranties and undertakings provided by Changshu Honglue in the Fifth Agreement being and remaining true, complete and accurate in all material respects as at the date of the Fifth Agreement and the Fifth Completion Date;
(c) the litigation and arbitration cases of the Fifth Project Company as debtor having been closed, executed and performed completely, the High Consumption Restriction imposed on the Fifth Project Company having been lifted, and the Fifth Project Company having been removed from the List of Dishonest Enforcees; and
(d) the obligations of the Fifth Project Company as guarantor for the bank borrowing of two wholly-owned subsidiaries of the Company having been released.

Changshu Honglue shall procure satisfaction of the conditions set out above on or before the Long Stop Date. If any of such conditions is not satisfied on or before the Long Stop Date, the Purchaser will be entitled to: (1) terminate the Fifth Agreement; (2) unilaterally decide to postpone the Long Stop Date or negotiate with Changshu Honglue to postpone the Long Stop Date; or (3) waive any condition (except the condition set out in (a) above which cannot be waived).

Arrangements during the Transition Period

Subject to the Fifth Agreement, any profits generated in the ordinary course of business of the Fifth Project Company during the Transition Period shall belong to the Purchaser, whereas any loss incurred in the ordinary course of business of the Fifth Project Company during the Transition Period shall be borne by Changshu Honglue. The Purchaser shall be entitled to deduct from any instalment of the consideration payable under the Fifth Agreement the amount of any such loss based on the Transition Period Audit report.

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LETTER FROM THE BOARD

During the Transition Period, Changshu Honglue shall ensure that, among other things, the Fifth Project Company will continue its normal business operations in accordance with its previous practices. No encumbrances or other third party rights shall be created with respect to the Fifth Sale Equity Interest without the prior written consent of the Purchaser.

Release of the Fifth Guarantee

As at 30 June 2023, the amount covered under the Fifth Guarantee is approximately RMB156,310,000, which is equivalent to the amount of the existing borrowing due by the Fifth Project Company to Tianan Life Insurance. Pursuant to the Fifth Agreement, by no later than ninety (90) days after the Fifth Completion Date, the Purchaser shall procure the release of the Fifth Guarantee, failing which Changshu Honglue shall be entitled to (1) a default payment payable by the Purchaser calculated at a daily rate of 0.05% based on the principal amount guaranteed; (2) rescind the Fifth Agreement; (3) a default payment payable by the Purchaser of approximately RMB25,619,000, representing 10% of the consideration for the Fifth Disposal; and (4) seek compensation from the Purchaser for the costs and expenses incurred by Changshu Honglue as a result of the Purchaser’s breach. In this case, the Company will assess the possible implications under the Listing Rules and make further disclosure as and when appropriate.

(F) The Sixth Agreement

Subject matter

On 11 August 2023, 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 under the Sixth Agreement in favour of the Purchaser and the Sixth Project Company.

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LETTER FROM THE BOARD

Consideration

The consideration for the Sixth Disposal is approximately RMB369,348,000, which shall be payable by the Purchaser in cash in the following manner:

(a) an amount of approximately RMB43,546,000, representing approximately 11.8% of the consideration for the Sixth Disposal, shall first be paid into the Escrow Account not later than three (3) business days before completion of the Sixth Disposal and shall then be transferred to the designated bank account of Changshu Honglue within five (5) business days after the Sixth Completion Date;
(b) an amount of approximately RMB314,825,000, representing approximately 85.2% of the consideration for the Sixth Disposal, shall be paid within five (5) business days after the issue of the official Transition Period audit report;
(c) within ten (10) business days after the issue of the Transition Period Audit report (in respect of Subsidies Receivable received before the Sixth Completion Date) and within ten (10) business days every time the Sixth Project Company receives Subsidies Receivable after the Sixth Completion Date, an amount equivalent to such Subsidies Receivable received by the Sixth Project Company, adding up to a total amount of approximately RMB4,373,000, shall be paid to Changshu Honglue, representing approximately 1.2% of the consideration for the Sixth Disposal; and
(d) the balance of approximately RMB6,604,000, representing approximately 1.8% of the consideration for the Sixth Disposal, which is equivalent to the total costs of certain rectification works of the Sixth Project undertaken to be carried out and completed by Changshu Honglue within six (6) months after the Sixth Completion Date, shall be paid to Changshu Honglue within ten (10) business days upon completion of such rectification works as inspected by the Purchaser once every three (3) months after the Sixth Completion Date.

The Sixth Project Company has already applied to the relevant PRC authority for the state renewable energy subsidies.

Repayment of the Sixth Debts

As at the Reference Date, the Sixth Project Company had outstanding Sixth Debts, which is unsecured, interest-free and repayable on demand, in the amount of approximately RMB54,825,000, subject to adjustment for any net increase or decrease thereof during the Transition Period as determined pursuant to the Transition Period Audit. The Transition Period Audit report will be issued within twenty (20) business days of completion of the Sixth Disposal.

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LETTER FROM THE BOARD

The Purchaser shall be entitled to deduct from any instalment of the consideration payable under the Sixth Agreement the amount of the Sixth Debts based on the Transition Period Audit report.

Default in payment

If the Purchaser fails to pay any instalment of the consideration for the Sixth Disposal pursuant to the terms of the Sixth Agreement or the Sixth Project Company fails to repay any instalment of the Sixth Debts (if any) pursuant to the terms of the Sixth Agreement, the Purchaser and/or the Sixth Project Company (as the case may be) shall be liable to pay to Changshu Honglue a daily default interest of 0.05%. If the default continues for more than thirty (30) days from the relevant due date, Changshu Honglue shall be entitled to terminate the Sixth Agreement, upon which all the payments made by the Purchaser and the Sixth Project Company shall be refunded and the Purchaser shall pay to Changshu Honglue a default payment of approximately RMB36,935,000, representing 10% of the consideration for the Sixth Disposal within twenty (20) business days after such termination.

Conditions Precedent

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

(a) the approval by the Board and the Shareholders at the EGM in respect of the Sixth Agreement and the transactions contemplated thereunder (including the guarantee to be provided by the Company and the continuation of the Sixth Guarantee) having been obtained in accordance with the Listing Rules;
(b) the representations, warranties and undertakings provided by Changshu Honglue in the Sixth Agreement being and remaining true, complete and accurate in all material respects as at the date of the Sixth Agreement and the Sixth Completion Date; and
(c) the obligations of the Sixth Project Company as guarantor for the bank borrowing of two wholly-owned subsidiaries of the Company having been released.

Changshu Honglue shall procure satisfaction of the conditions set out above on or before the Long Stop Date. If any of such conditions is not satisfied on or before the Long Stop Date, the Purchaser will be entitled to: (1) terminate the Sixth Agreement; (2) unilaterally decide to postpone the Long Stop Date or negotiate with Changshu Honglue to postpone the Long Stop Date; or (3) waive any condition (except the condition set out in (a) above which cannot be waived).

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LETTER FROM THE BOARD

Arrangements during the Transition Period

Subject to the Sixth Agreement, any profits generated in the ordinary course of business of the Sixth Project Company during the Transition Period shall belong to the Purchaser, whereas any loss incurred in the ordinary course of business of the Sixth Project Company during the Transition Period shall be borne by Changshu Honglue. The Purchaser shall be entitled to deduct from any instalment of the consideration payable under the Sixth Agreement the amount of any such loss based on the Transition Period Audit report.

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 previous practices. No encumbrances or other third party rights shall be created with respect to the Sixth Sale Equity Interest without the prior written consent of the Purchaser.

Release of the Sixth Guarantee

As at 30 June 2023, the amount covered under the Sixth Guarantee is approximately RMB260,000,000, which is equivalent to the amount of the existing borrowing due by the Sixth Project Company to Huadian Financial Leasing. Pursuant to the Sixth Agreement, by no later than ninety (90) days after the Sixth Completion Date, the Purchaser shall procure the release of the Sixth Guarantee, failing which Changshu Honglue shall be entitled to (1) a default payment payable by the Purchaser calculated at a daily rate of 0.05% based on the principal amount guaranteed; (2) rescind the Sixth Agreement; (3) a default payment payable by the Purchaser of approximately RMB36,935,000, representing 10% of the consideration for the Sixth Disposal; and (4) seek compensation from the Purchaser for the costs and expenses incurred by Changshu Honglue as a result of the Purchaser’s breach. In this case, the Company will assess the possible implications under the Listing Rules and make further disclosure as and when appropriate.

BASIS OF THE CONSIDERATION FOR THE DISPOSALS

The total consideration for the Disposals of approximately RMB758,028,000 was determined upon arm’s length negotiations between the parties with reference to (i) the audited net assets of the Project Companies as at 31 May 2023, in the aggregate amount of approximately RMB887,818,000, adjusted by applying a discount of approximately 14.6%, which was determined based on the difference of the audited net assets of the Project Companies as at 31 May 2023 and the total consideration, divided by the audited net assets of the Project Companies as at 31 May 2023; (ii) the aggregate amount of the outstanding Debts of RMB741,502,000 as at the Reference Date; (iii) the gearing position of the Project Companies as at 31 December 2022; and (iv) the valuation of the Project Companies in the amount of approximately RMB749,197,000 as appraised by an independent valuer using the market approach valuation 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.

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LETTER FROM THE BOARD

The valuation of each Project Company is set out below:

Project Company The First Project Company The Second Project Company The Third Project Company The Fourth Project Company The Fifth Project Company The Sixth Project Company	Valuation (RMB’000) 12,225 48,295 55,207 39,944 246,266 347,260
	749,197

In determining the discount to be applied to the unaudited net asset value of the Project Companies for the determination of the consideration for the Disposals, the Directors took into 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 net debt ratio of the Project Companies was approximately 1.45 as at 30 April 2023, which is higher than the net debt ratio of the Group of approximately 0.52 as at 31 December 2022;
(iii) the Group is expected to save an annual finance costs of approximately RMB94,000,000 upon completion of the Disposals;
(iv) the consideration is still higher than the valuation amount of the Project Companies (i.e. approximately RMB749,197,000) as appraised by an independent valuer; and
(v) the Group will continue to provide operation and maintenance services to the Project Companies from September 2023 to September 2026, which is expected to generate an annual service fee income of approximately RMB8,580,000 to the Group, pursuant to agreements entered into between the Group and the Project Companies.

COMPLETION OF THE DISPOSALS

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 PRC authority 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.

— 30 —

LETTER FROM THE BOARD

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 an indirect wholly-owned subsidiary of the Company.

The audited financial results of the First Project Company (prepared under the PRC GAAP) for the two years ended 31 December 2022 are as follows:

	For the year ended 31 December	For the year ended 31 December
	2021	2022
	(Audited)	(Audited)
	RMB’000	RMB’000
Net profit (loss) before tax	5,069	(616)
Net profit (loss) after tax	4,689	(610)

The audited net asset value of the First Project Company as at 31 December 2022 and the unaudited net asset value of the First Project Company as at 31 May 2023 was approximately RMB15,597,000 and RMB19,638,000, respectively.

(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 an indirect wholly-owned subsidiary of the Company.

The audited financial results of the Second Project Company (prepared under the PRC GAAP) for the two years ended 31 December 2022 are as follows:

	For the year ended 31 December	For the year ended 31 December
	2021	2022
	(Audited)	(Audited)
	RMB’000	RMB’000
Net profit before tax	4,800	5,618
Net profit after tax	4,200	5,080

The audited net asset value of the Second Project Company as at 31 December 2022 and the unaudited net asset value of the Second Project Company as at 31 May 2023 was approximately RMB63,392,000 and RMB65,381,000, respectively.

— 31 —

LETTER FROM THE BOARD

(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. As at the Latest Practicable Date, the Third Project Company is an indirect wholly-owned subsidiary of the Company.

The audited financial results of the Third Project Company (prepared under the PRC GAAP) for the two years ended 31 December 2022 are as follows:

	For the year ended 31 December	For the year ended 31 December
	2021	2022
	(Audited)	(Audited)
	RMB’000	RMB’000
Net loss before tax	(692)	(21)
Net loss after tax	(692)	(195)

The audited net asset value of the Third Project Company as at 31 December 2022 and the unaudited net asset value of the Third Project Company as at 31 May 2023 was approximately RMB59,220,000 and RMB60,220,000, respectively.

(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 an indirect wholly-owned subsidiary of the Company.

The audited financial results of the Fourth Project Company (prepared under the PRC GAAP) for the two years ended 31 December 2022 are as follows:

	For the year ended 31 December	For the year ended 31 December
	2021	2022
	(Audited)	(Audited)
	RMB’000	RMB’000
Net profit before tax	3,575	5,243
Net profit after tax	3,130	3,932

The audited net asset value of the Fourth Project Company as at 31 December 2022 and the unaudited net asset value of the Fourth Project Company as at 31 May 2023 was approximately RMB50,659,000 and RMB52,279,000, respectively.

— 32 —

LETTER FROM THE BOARD

(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. As at the Latest Practicable Date, the Fifth Project Company is an indirect wholly-owned subsidiary of the Company.

The audited financial results of the Fifth Project Company (prepared under the PRC GAAP) for the two years ended 31 December 2022 are as follows:

	For the year ended 31 December	For the year ended 31 December
	2021	2022
	(Audited)	(Audited)
	RMB’000	RMB’000
Net profit (loss) before tax	9,382	(742)
Net profit (loss) after tax	8,678	(739)

The audited net asset value of the Fifth Project Company as at 31 December 2022 and the unaudited net asset value of the Fifth Project Company as at 31 May 2023 was approximately RMB270,241,000 and RMB274,533,000, respectively.

(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 an indirect wholly-owned subsidiary of the Company.

The audited financial results of the Sixth Project Company (prepared under the PRC GAAP) for the two years ended 31 December 2022 are as follows:

	For the year ended 31 December	For the year ended 31 December
	2021	2022
	(Audited)	(Audited)
	RMB’000	RMB’000
Net profit before tax	19,533	15,978
Net profit after tax	18,030	14,641

The audited net asset value of the Sixth Project Company as at 31 December 2022 and the unaudited net asset value of the Sixth Project Company as at 31 May 2023 was approximately RMB411,086,000 and RMB415,767,000, respectively.

INFORMATION ON THE PARTIES

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 and asset management.

— 33 —

LETTER FROM THE BOARD

Tianhao New Energy

Tianhao New Energy 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 Tianhao New Energy.

Kong Sun Yongtai

Kong Sun Yongtai is an indirect wholly-owned subsidiary of the Company and is principally engaged in investment holding. As at the Latest Practicable Date, each of the Second Project Company and the Third Project Company is a direct wholly-owned subsidiary of Kong Sun Yongtai.

Changshu Honglue

Changshu Honglue is an indirect wholly-owned subsidiary of the Company and is principally engaged in solar power generation. As at the Latest Practicable Date, each of the Fourth Project Company, the Fifth Project Company and the Sixth Project Company is a direct wholly-owned subsidiary of Changshu Honglue.

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 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 directly owned as to 66.75% and 33.25% by Xinhua Hydropower Company Limited (“ Xinhua Hydropower ”) and CCB Financial Asset Investment Co., Ltd. (“ CCB Financial ”), respectively. Xinhua Hydropower is owned as to 55% and 45% by China National Nuclear Corporation (“ China Nuclear ”) and Xinhua Water Resources Holding Group Corporation Ltd. (“ Xinhua Water Resources ”), respectively. China Nuclear is wholly-owned by 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). Xinhua Water Resources is wholly-owned by the Bureau of Comprehensive Development Ministry of Water Resources of the PRC. CCB Financial is a wholly-owned subsidiary of China Construction Bank Corporation, the shares of which are listed on the Shanghai Stock Exchange and the Stock Exchange (A share stock code: 601939, H share stock code: 000939).

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

— 34 —

LETTER FROM THE BOARD

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. The Directors have considered various alternative financing methods, including but not limited to finance leasing, offshore debt financing, and other ways of equity financing such as placing. The Company has already carried out various finance lease transactions in recent years and will continue to explore new opportunities as they arise. In respect of offshore debt financing, the Directors do not consider it a desirable option under the prevailing high interest rate environment. Nor is equity financing a feasible option due to the low prevailing trading prices of the Shares. In light of the above, the Directors consider that the Disposals would be the only viable fund raising option currently available to the Company to address its funding needs.

Upon completion of the Disposals, the Company will continue to have seven completed solar power plants with a total installed capacity of 170 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 of 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 Group will continue the strategies on the operation of solar power plants, optimise asset allocation efficiency and step up to improve the efficiency of the equipment at the power stations, continue to develop its green finance and inclusive finance business, meanwhile accelerate its transformation into new businesses in other energy and health sectors, increase the proportion of asset-light and high-tech businesses, so as to maximise the return of the assets and value for the Shareholders.

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

— 35 —

LETTER FROM THE BOARD

As regards the Guarantees and the Debts, the continuation of the Guarantees and the Debts was agreed after an arm’s length negotiation between the parties to the relevant Disposal Agreements and was one of the key commercial terms for the Purchaser to agree to the transactions contemplated under the relevant Disposal Agreements. In view of the financial stress that the Group is encountering, the Directors consider that the Disposals with the continuation of the Guarantees and the Debts are still the best available options under the circumstances for the Group to cut losses and streamline its operation at an appropriate timing after identifying the Purchaser. The Guarantees would also facilitate the obtaining of the relevant lenders’ consent to the Disposals. Based on the past experience of Group in respect of similar disposals, under normal circumstances, the purchasers were usually able to procure the release of the guarantees within 90 days after completion of the transfer. Therefore, the Directors consider that the length of a 90-day period granted to the Purchaser for procuring the release of the Guarantees is not unreasonable. In the worst case scenario where the Purchaser fails to procure the release of any of the Guarantees or repay the Debts within the agreed period, the relevant Vendor will still have recourse to the remedies as set out in the section headed “The Disposals” above. In this regard, the Board had also carried out due diligence review of the Purchaser’s financial position by asking for its key financial information in the past three financial years, including total assets, net assets and profits before and after tax, and was satisfied that in the event that the Purchaser failed to procure the release of the Guarantees within the agreed period, it would have the financial means to compensate the Group. On the above basis, the Directors are of the view that the continuation of the Guarantees and the Debts for a short period of time after the completion of the Disposals is on normal commercial terms, fair and reasonable and in the interest of the Company and its Shareholders.

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.

FINANCIAL EFFECT OF THE DISPOSALS AND INTENDED USE OF PROCEEDS

As at the Latest Practicable Date, each of the Project Companies is an indirect wholly-owned subsidiary of the Company. Upon completion of the Disposals, the Project Companies will cease to be subsidiaries of the Company and the results of the Project Companies will cease to be consolidated in the results of the Group.

Upon completion of the Disposals, the unaudited total assets and the total liabilities of the Group will be decreased by approximately RMB691,374,000 and RMB557,237,000, respectively.

— 36 —

LETTER FROM THE BOARD

Subject to final audit, it is expected that the Group will realise a net loss on the Disposals of not more than approximately RMB114,000,000, which is calculated by reference to the difference between (i) the total consideration for the Disposals of approximately RMB758,028,000, and (ii) the total net asset value of the Project Companies and goodwill of approximately RMB869,776,000 and RMB547,000, respectively as at 30 April 2023 and the related transaction costs, taxes and expenses of the Disposals of approximately RMB1,500,000. Despite the net loss on the Disposals, having taking into consideration 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.

The net proceeds from the Disposals, being the aggregate of the total consideration of approximately RMB758,028,000 and the total Debts receivable from the relevant Project Companies of approximately RMB741,502,000, minus the taxation and transaction costs of approximately RMB1,500,000, are estimated to be approximately RMB1,498,000,000. The Group intends to apply the net proceeds from the Disposals to repay its existing indebtedness. The Company expects that (i) RMB600,000,000 will be utilised by the end of 2023; (ii) RMB500,000,000 will be utilised within 2024; and (iii) the remaining net proceeds will be utilised within 2025, on the assumption that the proceeds will be received in full in accordance with the relevant Disposal Agreements. Even if the Group could not receive the proceeds for the Disposals in full by the end of 2023, the Group will repay the aforesaid RMB600 million indebtedness in 2023 with (i) the aggregate amount of net proceeds which the Group expects to receive within 25 business days after completion of the Disposals, which is estimated to be approximately RMB614,138,000 (being the aggregate amount of proceeds of approximately RMB615,638,000 which the Group expects to receive within one (1) month after completion of the Disposals pursuant to the Disposal Agreements, minus the taxation and transaction costs of approximately RMB1,500,000). As to the balance of the proceeds, it is expected that (i) approximately RMB53,260,000 will be received within around 6 months after completion of the Disposals subject to completion of the relevant rectification works and (in respect of the Fourth Disposal and the Fifth Disposal) handover of the Deliverable Items; and (ii) approximately RMB830,632,000 will be received subject to the inclusion of the relevant project into the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority and/or receipt of the Subsidies Receivable.

LISTING RULES IMPLICATIONS

The Disposals

As the highest applicable percentage ratio under Rule 14.07 of the Listing Rules in respect of the Disposals, on an aggregated basis, exceeds 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.

The Continuation of the Guarantees and the Debts

As the highest percentage ratio in respect of the Guarantees and the Debts exceeds 25%, the continuation of the Guarantees and the Debts provided by the Group to the relevant Project Companies after completion of the relevant Disposals is subject to the reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

— 37 —

LETTER FROM THE BOARD

Completion of the Disposals is conditional upon satisfaction of certain conditions precedent. Completion of each of the Disposals is not inter-conditional upon each other. Accordingly, the Disposals may or may not proceed. Shareholders and potential investors should therefore exercise caution when dealing in the Shares.

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 Wednesday, 20 September 2023 at 11:00 a.m., at which an ordinary resolution will be proposed to approve the Disposal Agreements 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 his/her/its close associates is/are required to abstain from voting on the relevant resolution at the EGM. As at the Latest Practicable Date, to the best of the Directors’ knowledge after having made all reasonable enquiries, no Shareholder has a material interest in the Disposals and, accordingly, no Shareholder is required to abstain from voting on the ordinary resolution to approve the Disposal Agreements and the transactions contemplated thereunder at the EGM.

RECOMMENDATION

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 Accordingly, the Directors recommend that the Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Disposal Agreements 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. Jiang Hengwen Chairman and non-executive Director

— 38 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF THE FINANCIAL INFORMATION OF THE GROUP

The financial information of the Group for the three years ended 31 December 2020, 2021 and 2022 are set out in the following documents which have been published on the websites of the Stock Exchange (http://www.hkex.com.hk) and the website of the Company (www.kongsun.com):

The audited consolidated financial statements of the Group for the year ended 31 December 2020 have been set out on pages 81 to 202 of the 2020 annual report of the Company published on 20 April 2021. Please also see below the link to the 2020 annual report:

https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0420/2021042000331.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2021 have been set out on pages 79 to 192 of the 2021 annual report of the Company published on 26 April 2022. Please also see below the link to the 2021 annual report:

https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0426/2022042601962.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2022 have been set out on pages 88 to 197 of the 2022 annual report of the Company published on 26 April 2023. Please also see below the link to the 2022 annual report:

https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0426/2023042602663.pdf

2. WORKING CAPITAL

The Directors, after due and careful consideration and taking into account the proceeds from the Disposals, the timely settlement of certain of the Group’s renewable energy subsidy receivables from the State Grid Companies on the expected dates, present internal resources and banking and other facilities and the net proceeds from the successful completion of the Previous Disposals, 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 31 July 2023, being the latest practicable date for the purpose of this statement of indebtedness, the Group’s indebtedness includes secured loans and borrowings which amounted to approximately RMB2,058,495,000 and unsecured corporate bonds which amounted to approximately RMB16,523,000 and lease liabilities amounted to approximately RMB126,116,000.

— I-1 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group’s loans and borrowings were secured by its assets, including solar power plants, trade receivables, property, plant and equipment, lease prepayments, financial assets measured at fair value through other comprehensive income and the equity interests of certain subsidiaries.

As at 31 July 2023, the Group’s lease liabilities amounted to approximately RMB126,116,000 in relation to the remaining lease terms of certain lease contracts, which is unsecured and unguaranteed.

The Directors confirm that, as of 31 July 2023, being the latest practicable date for the purpose of this statement of indebtedness, save as disclosed above, the Group did not have any issued and outstanding, or authorised or otherwise created but unissued debt securities, term loans, other borrowings, indebtedness, mortgages and charges, contingent liabilities and guarantees.

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

4. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group is mainly engaged in investment in and the operation of solar power plants, provision of solar power plant operation and maintenance services, provision of financial services 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 low-carbon energy in China and make positive contributions to environmental protection.

It is expected that by transferring the equity 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.

— I-2 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 2022, being the date to which the latest audited consolidated financial statements of the Company were made up.

6. 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 (“ LNG ”) 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 2020, 2021 and 2022. 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 2020, 2021 and 2022.

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.

Revenue

The revenue of the Remaining Group decreased by approximately 31.9% from approximately RMB1,897,065,000 for the year ended 31 December 2019 to approximately RMB1,291,380,000 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 21.3% from approximately RMB1,511,277,000 for the year ended 31 December 2019 to approximately RMB1,188,661,000 for the year ended 31 December 2020 due to the decrease in aggregate volume of electricity generated by the Remaining Group’s grid-connected 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 1,589,170MWh for the year ended 31 December 2020, representing a decrease of approximately 19.1% as compared to 1,964,359MWh for year ended 31 December 2019.

— I-3 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 19.7% from approximately RMB999,552,000 for the year ended 31 December 2019 to approximately RMB802,472,000 for the year ended 31 December 2020. The gross profit margin of the Remaining Group increased from approximately 52.7% for the year ended 31 December 2019 to approximately 62.1% for the year ended 31 December 2020 mainly due to decrease in revenue from trading of LNG, 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 286.9% from approximately RMB4,356,000 for the year ended 31 December 2019 to approximately RMB16,852,000 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 RMB3,356,000; (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.

— I-4 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Administrative expenses

Administrative expenses of the Remaining Group decreased by approximately 19% from approximately RMB345,781,000 for the year ended 31 December 2019 to approximately RMB280,056,000 for the year ended 31 December 2020. The decrease was mainly attributable to a decrease in total employee benefit expenses of approximately RMB46,920,000 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.

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.

— I-5 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 17.6% from approximately RMB845,216,000 for the year ended 31 December 2019 to approximately RMB696,093,000 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 RMB4,219,709,000 (2019: RMB7,443,711,000) and approximately RMB11,909,000 (2019: RMB121,270,000) in completed solar power plants and solar power plants under construction, respectively. As at 31 December 2020, the Remaining Group had a total of 989.0MW (2019: 1,439.5MW) 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 江山寶源國際融資租賃有限公司 (Kong Sun Baoyuan International Financial Leasing Limited) (“ 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.

Goodwill

As at 31 December 2020, the Remaining Group had a total amount of approximately RMB29,622,000 (2019: RMB409,133,000) 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 Remaining Group’s right-of-use assets amounted to approximately RMB216,240,000 (2019: RMB391,162,000). The decrease was mainly caused by the disposals of subsidiaries during the year ended 31 December 2020.

— I-6 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 22.0% from approximately RMB3,741,540,000 as at 31 December 2019 to approximately RMB2,917,859,000 as at 31 December 2020. The decrease was mainly due to the 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.

— I-7 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Trade and Other Payables

Trade and other payables decreased by approximately 33.5% from approximately RMB1,369,774,000 as at 31 December 2019 to approximately RMB910,408,000 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 72.2% from approximately RMB1,042,309,000 as at 31 December 2019 to approximately RMB289,306,000 as at 31 December 2020.

Liquidity and Capital Resources

As at 31 December 2020, cash and cash equivalents of the Remaining Group was approximately RMB158,463,000 (2019: RMB176,224,000), which included an amount of bank balances of approximately RMB157,259,000 (2019: RMB173,027,000) 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 1.55 (2019: 2.01).

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 RMB25,366,000 (2019: RMB67,808,000), respectively.

Loans and Borrowings

As at 31 December 2020, the Remaining Group’s total loans and borrowings was approximately RMB5,899,992,000 representing a decrease of approximately 35.2% compared to approximately RMB9,102,310,000 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 RMB4,407,500,000 (2019: RMB5,033,500,000) and approximately RMB1,492,492,000 (2019: RMB4,068,810,000) bear fixed interest rate and floating interest rate, respectively.

— I-8 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As at 31 December 2020, out of the total borrowings, approximately RMB2,517,715,000 (2019: RMB1,241,699,000) was repayable within one year and approximately RMB3,382,277,000 (2019: RMB7,860,611,000) 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 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 Remaining Group’s lease liabilities amounted to approximately RMB164,290,000 (2019: RMB197,428,000). The decrease was mainly caused by the disposals of subsidiaries during the year ended 31 December 2020.

— I-9 —

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 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-assets and unlisted equity investments with net book value of approximately RMB2,667,782,000 (2019: RMB5,727,983,000), approximately RMB871,680,000 (2019: RMB1,762,239,000), 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 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.

— I-10 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employees and Remuneration Policy

As at 31 December 2020, the Remaining Group had approximately 622 (2019: 614) 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 RMB138,682,000 (2019: RMB185,597,000). 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 above, 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.

For the year ended 31 December 2021

Business review

Revenue

The revenue of the Remaining Group decreased by approximately 36.7% from approximately RMB1,291,380,000 for the year ended 31 December 2020 to approximately RMB817,307,000 for the year ended 31 December 2021. The decrease was primarily due to the decrease in revenue from sales of electricity and trading of LNG.

— I-11 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 39.4% from approximately RMB1,188,661,000 for the year ended 31 December 2020 to approximately RMB720,376,000 for the year ended 31 December 2021 due to the decrease in aggregate volume of electricity generated by the Remaining Group’s grid-connected 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 967,728MWh for the year ended 31 December 2021, representing a decrease of approximately 39.1% as compared to 1,589,170MWh for year ended 31 December 2020.

The Remaining Group’s revenue from provision of solar power plant operation and maintenance services increased by approximately 211.2% from approximately RMB21,038,000 for the year ended 31 December 2020 to approximately RMB65,463,000 for the year ended 31 December 2021 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 19.5% from approximately RMB37,304,000 for the year ended 31 December 2020 to approximately RMB30,014,000 for the year ended 31 December 2021 mainly due to lesser customers during the year.

Revenue from trading of liquefied natural gas

The Remaining Group’s revenue arising from trading of LNG decreased by approximately 96.7% from approximately RMB44,377,000 for the year ended 31 December 2020 to approximately RMB1,454,000 for the year ended 31 December 2021. 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 40.7% from approximately RMB802,472,000 for the year ended 31 December 2020 to approximately RMB475,471,000 for the year ended 31 December 2021. The gross profit margin of the Remaining Group decreased from approximately 62.1% for the year ended 31 December 2020 to approximately 58.2% for the year ended 31 December 2021 mainly due to disposals of subsidiaries which has a higher gross profit margin than that of the Remaining Group during the year ended 31 December 2021.

— I-12 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Other gains, net

The other gains, net of the Remaining Group increased by approximately 99.8% from approximately RMB16,852,000 for the year ended 31 December 2020 to approximately RMB33,674,000 for the year ended 31 December 2021. The increase was mainly due to the increase in write-back of other payables of approximately RMB43,327,000 offset by the increase in solar power plant rectification expenses of approximately RMB26,872,000.

Administrative expenses

Administrative expenses of the Remaining Group decreased by approximately 14.0% from approximately RMB280,056,000 for the year ended 31 December 2020 to approximately RMB240,975,000 for the year ended 31 December 2021. The decrease was mainly attributable to a decrease in total employee benefit expenses of approximately RMB7,014,000 during the year ended 31 December 2021.

Losses on disposal of subsidiaries, net

During the year ended 31 December 2021, the Remaining Group disposed of certain subsidiaries and recorded net losses on disposal of subsidiaries of approximately RMB484,570,000 (2020: RMB182,220,000). For details, please refer to note 44 to the financial statements of the 2021 annual report.

Impairment losses on a disposal group classified as held for sale

On 10 July 2021, the Remaining Group entered into sale and purchase agreements with an independent third party to dispose the entire equity interests in 化隆縣瑞啟達新能源有限公司 (Hualong County Ruiqida New Energy Limited) (“ Hualong County Ruiqida ”) and 黃驊市正陽新能源有限公司 (Huanghua Zhengyang New Energy Limited) (“ Huanghua Zhengyang ”), for a total equity consideration of approximately RMB337,461,000.

An impairment loss of approximately RMB79,787,000, representing the sale proceeds less the carrying amount of the net assets of Hualong County Ruiqida and Huanghua Zhengyang as at 31 December 2021, was charged to profit or loss during the year ended 31 December 2021.

Impairment losses on solar power plants under construction

During the year ended 31 December 2020, impairment losses of approximately RMB84,445,000 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. No such amount was recorded for the year ended 31 December 2021.

— I-13 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Impairment losses on trade and other receivables, net

During the year ended 31 December 2021, impairment losses of approximately RMB150,588,000 (2020: RMB78,429,000) 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 35.0% from approximately RMB696,093,000 for the year ended 31 December 2020 to approximately RMB452,682,000 for the year ended 31 December 2021. As the Remaining Group’s loans and borrowings decreased during the year ended 31 December 2021, the finance costs related to the borrowings also decreased.

Solar power plants

As at 31 December 2021, the Remaining Group had a net carrying amount of approximately RMB1,763,126,000 (2020: RMB4,219,709,000) and approximately RMB6,904,000 (2020: RMB11,909,000) in completed solar power plants and solar power plants under construction, respectively. As at 31 December 2021, the Remaining Group had a total of 340MW (2020: 989MW) installed capacity of completed solar power plants.

Interest in associates

As at 31 December 2021, the net carrying amount of associates was approximately RMB172,237,000 (2020: RMB227,984,000).

Goodwill

As at 31 December 2021, the Remaining Group had a total amount of approximately RMB574,000 (2020: RMB29,622,000) in respect of goodwill on the acquisition of subsidiaries in previous years. The decrease was contributed by the disposals of subsidiaries and impairment of goodwill of approximately RMB746,000 during the year ended 31 December 2021.

Right-of-use Assets

As at 31 December 2021, the Remaining Group’s right-of-use assets amounted to approximately RMB135,820,000 (2020: RMB216,240,000). The decrease is mainly contributed by the disposals of subsidiaries during the year ended 31 December 2021.

— I-14 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Financial assets measured of fair value through other comprehensive income

Financial assets measured of fair value through other comprehensive income decreased by approximately 7.0% from approximately RMB1,275,156,000 as at 31 December 2020 to approximately RMB1,186,361,000 as at 31 December 2021. The decrease is mainly due to (i) the fair value loss amounted to approximately RMB13,820,000; and (ii) the return of capital from 嘉興盛世神州永贏投資合夥企業（有限合夥）(Jiaxing Shengshi Shenzhou Yongying Investment Partnership (Limited Partnership)) (“ Jiaxing Shengshi* ”) amounted to RMB75,000,000 during the year ended 31 December 2021. 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 2021 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 representing approximately 0.1% of the total assets of the Remaining Group as at 31 December 2020. No such investment was held by the Remaining Group as at 31 December 2021. 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. During the year ended 31 December 2021, the Remaining Group disposed of all of its listed equity investment at a cash consideration of approximately RMB16,970,000 (2020: RMB3,630,000) and resulting in net realised losses on disposal of financial assets measured at fair value through profit or loss amounted to approximately RMB12,050,000 (2020: RMB2,602,000).

Trade, bills and other receivables

Trade, bills and other receivables decreased by approximately 35.2% from approximately RMB2,917,859,000 as at 31 December 2020 to approximately RMB1,891,350,000 as at 31 December 2021. The decrease was mainly due to disposals of subsidiaries during the year ended 31 December 2021.

Structured bank deposits

As at 31 December 2020, the Remaining Group placed approximately 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. No such amount was recorded as at 31 December 2021.

— I-15 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Trade and Other Payables

Trade and other payables decreased by approximately 57.1% from approximately RMB910,408,000 as at 31 December 2020 to approximately RMB390,654,000 as at 31 December 2021. The balance mainly comprised payables to suppliers of solar modules and equipment and engineering procurement construction contractors for purchase of solar modules and equipment and construction costs of solar power plants. The decrease was mainly due to disposals of subsidiaries during the year ended 31 December 2021.

Liquidity and Capital Resources

As at 31 December 2021, cash and cash equivalents of the Remaining Group was approximately RMB691,782,000 (2020: RMB158,463,000), which included an amount of bank balances of approximately RMB681,347,000 (2020: RMB157,259,000) 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 2021, 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 0.92 (2020: 1.55).

Capital Expenditure

During the year ended 31 December 2021, the Remaining Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB4,348,000 (2020: RMB1,869,000) and approximately RMB4,206,000 (2020: RMB25,366,000), respectively.

Loans and Borrowings

As at 31 December 2021, the Remaining Group’s total loans and borrowings was approximately RMB3,283,105,000 representing a decrease of approximately 44.4% compared to approximately RMB5,899,992,000 as at 31 December 2020. The decrease in the Remaining Group’s total loans and borrowings was mainly due to disposals 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 2021, loans and borrowings of approximately RMB2,551,446,000 (2020: RMB4,407,500,000) and approximately RMB731,659,000 (2020: RMB1,492,492,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2021, out of the total borrowings, approximately RMB1,751,488,000 (2020: RMB2,517,715,000) was repayable within one year and approximately RMB1,531,617,000 (2020: RMB3,382,277,000) was repayable after one year. For details, please refer to note 30 to the financial statements of the 2021 annual report.

— I-16 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Corporate bonds

As at 31 December 2021, corporate bonds denominated in Hong Kong dollar with an aggregate principal amount of HK$102,000,000 (equivalent to approximately RMB83,395,000) (2020: HK$336,500,000 (equivalent to approximately RMB283,212,000)) remained outstanding with certain independent third parties. The corporate bonds bear interest rates ranging from 3% to 7% (2020: 3% to 7%) per annum, and will mature on the date immediately following 3 to 96 months (2020: 3 to 96 months) after their issuance.

During the year ended 31 December 2021, the Remaining Group issued corporate bonds with an aggregate principal amount of HK$10,500,000 (equivalent to approximately RMB8,715,000) (2020: HK$13,500,000 (equivalent to approximately RMB12,005,000)) to certain independent third parties, the net proceeds of the issued corporate bonds received by the Company were approximately HK$9,853,000 (equivalent to approximately RMB8,178,000) (2020: HK$12,492,000 (equivalent to approximately RMB11,110,000)), with total issue cost amounting to approximately HK$648,000 (equivalent to approximately RMB537,000) (2020: HK$1,008,000 (equivalent to approximately RMB895,000)).

During the year ended 31 December 2021, the Remaining Group repaid HK$245,000,000 (equivalent to approximately RMB203,350,000) (2020: HK$20,500,000 (equivalent to approximately RMB18,231,000)) 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% (2020: 10.40% to 14.56%) per annum. Imputed interest of approximately HK$22,861,000 (equivalent to approximately RMB18,974,000) (2020: HK$33,401,000 (equivalent to approximately RMB29,704,000)) (note 13 to the financial statements in the 2021 annual report) in respect of the corporate bonds was recognised in profit or loss during the year ended 31 December 2021.

Lease Liabilities

As at 31 December 2021, the Remaining Group’s lease liabilities amounted to approximately RMB129,945,000 (2020: RMB164,290,000). The decrease is mainly contributed by the disposals of subsidiaries during the year ended 31 December 2021.

Foreign Exchange Risk

The Remaining Group primarily operates its business in the PRC and during the year ended 31 December 2021, 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.

— I-17 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Charge on Assets

As at 31 December 2021, the Remaining Group had charged solar power plants, trade receivables, right-of-use assets and unlisted equity investments with net book value of approximately RMB1,425,066,000 (2020: RMB2,667,782,000), approximately RMB533,683,000 (2020: RMB871,680,000), approximately RMBNil (2020: RMB719,000) and approximately RMB281,365,000 (2020: RMB295,441,000), respectively, to secure bank loans and other loans facilities granted to the Group.

Save as disclosed above and in note 30 to the financial statements in the 2021 annual report, during the year ended 31 December 2021, 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 certain notices (the “ Notices ”) issued by the State Energy Administration（國家能源局）, the Notices prohibit the original applicants who have obtained the approval documents from the government authorities for the solar power plants projects from transferring the equity interests of solar power plant projects before such solar power plants were connected to the power grid. 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.

As at 31 December 2021, the Remaining Group had executed guarantee with respect to a loan of approximately RMB82,601,000 granted by independent third parties to 甘肅宏遠光電有限責任公司 (Gansu Hongyuan Photovoltaic Limited) (“ Gansu Hongyuan* ”), an indirect wholly-owned subsidiary of the Company before its disposal on 22 September 2021.

As at 31 December 2021, the Remaining Group had executed guarantee with respect to a loan of approximately RMB54,092,000 granted by independent third parties to 烏什縣華陽偉業太陽能科技有限公司 (Wushi Huayangweiye Solar Technology Limited) (“ Wushi Huayangweiye* ”), an indirect wholly-owned subsidiary of the Company before its disposal on 22 December 2021.

As at 31 December 2021, the Remaining Group had executed guarantee with respect to a loan of approximately RMB54,092,000 granted by independent third parties to 庫車天華新能源電力有限公司 (Kuche Tianhua New Energy Electric Power Limited) (“ Kuche Tianhua* ”) an indirect wholly-owned subsidiary of the Company before its disposal on 21 December 2021.

— I-18 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save as disclosed above, during the year ended 31 December 2021, the Remaining Group has no other significant contingent liabilities.

Employees and Remuneration Policy

As at 31 December 2021, the Remaining Group had approximately 837 (2020: 622) 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 2021, the total employee benefit expenses (including directors’ emoluments) were approximately RMB131,668,000 (2020: RMB138,682,000). For details, please refer to note 10 in the financial statements to the 2021 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.

Significant Investments and Material Acquisition and Disposal

Save as disclosed above, 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 2021, and there was no plan authorised by the Board for other material investments or additions of capital assets.

— I-19 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the year ended 31 December 2022

Business review

Revenue

The revenue of the Remaining Group decreased by approximately 50.4% from approximately RMB817,307,000 for the year ended 31 December 2021 to approximately RMB404,978,000 for the year ended 31 December 2022. The decrease was due to the decrease 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 decreased by approximately 67.4% from approximately RMB720,376,000 for the year ended 31 December 2021 to approximately RMB234,946,000 for the year ended 31 December 2022 due to the decrease in aggregate volume of electricity generated by the Remaining Group’s grid-connected 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 325,159MWh for the year ended 31 December 2022, representing a decrease of approximately 66.4% as compared to 967,728MWh for the year ended 31 December 2021.

The Remaining Group’s revenue from provision of solar power plant operation and maintenance services increased by approximately 78.7% from approximately RMB65,463,000 for the year ended 31 December 2021 to approximately RMB116,991,000 for the year ended 31 December 2022 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 increased by approximately 76.7% from approximately RMB30,014,000 for the year ended 31 December 2021 to approximately RMB53,041,000 for the year ended 31 December 2022 mainly due to launch of new product during the year, which attracts new customers and thus increasing the revenue from this segment.

— I-20 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Revenue from trading of liquefied natural gas

The Remaining Group’s revenue arising from trading of LNG was approximately RMB1,454,000 for the year ended 31 December 2021. No such amount was recorded for the year ended 31 December 2022.

Gross profit and gross profit margin

The gross profit of the Remaining Group decreased by approximately 58.6% from approximately RMB475,471,000 for the year ended 31 December 2021 to approximately RMB196,929,000 for the year ended 31 December 2022. The gross profit margin of the Remaining Group decreased from approximately 58.2% for the year ended 31 December 2021 to approximately 48.6% for the year ended 31 December 2022 mainly due to the increase in portion of revenue from provision of solar power plant operation and maintenance services, which has a lower gross profit margin than that of the revenue from sales of electricity during the year ended 31 December 2022.

Other (losses)/gains, net

The other (losses)/gains, net of the Remaining Group changed from net gains of approximately RMB33,674,000 for the year ended 31 December 2021 to net losses of approximately RMB25,495,000 for the year ended 31 December 2022. The change was mainly due to the decrease in write-back of other payables of approximately RMB36,785,000 and the increase in solar power plant rectification expenses of approximately RMB13,348,000.

Administrative expenses

Administrative expenses of the Remaining Group decreased by approximately 36.9% from approximately RMB240,975,000 for the year ended 31 December 2021 to approximately RMB152,023,000 for the year ended 31 December 2022. The decrease was mainly attributable to a decrease in consultancy and legal and professional expenses related to disposals of approximately RMB60,220,000 during the year ended 31 December 2022.

Losses on disposal of subsidiaries, net

During the year ended 31 December 2022, the Remaining Group disposed of certain subsidiaries and recorded net losses on disposal of subsidiaries of approximately RMB8,587,000 (2021: RMB484,570,000). For details, please refer to note 43 to the financial statements of the 2022 Annual Report.

— I-21 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Impairment loss on a solar power plant

During the year ended 31 December 2022, impairment loss of approximately RMB28,029,000 on a solar power plant was recognised as a result of the impairment test performed on certain completed solar power plant. No such amount was recorded for the year ended 31 December 2021.

Impairment losses on a disposal group classified as held for sale

On 10 July 2021, the Remaining Group entered into sale and purchase agreements with an independent third party to dispose the entire equity interests in Hualong County Ruiqida and Huanghua Zhengyang, for a total equity consideration of approximately RMB337,461,000.

No such amount was recorded for the year ended 31 December 2022.

Impairment losses on trade and other receivables, net

During the year ended 31 December 2022, impairment losses of approximately RMB135,411,000 (2021: RMB150,588,000) 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 65.6% from approximately RMB452,682,000 for the year ended 31 December 2021 to approximately RMB155,681,000 for the year ended 31 December 2022. As the Remaining Group’s loans and borrowings decreased during the year ended 31 December 2022, the finance costs related to the borrowings also decreased.

Solar power plants

As at 31 December 2022, the Remaining Group had a net carrying amount of approximately RMB988,409,000 (2021: RMB1,763,126,000) and approximately RMB3,390,000 (2021: RMB6,904,000) in completed solar power plants and solar power plants under construction, respectively. As at 31 December 2022, the Remaining Group had a total of 170MW (2021: 340MW) installed capacity of completed solar power plants.

— I-22 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Interest in associates

As at 31 December 2022, the net carrying amount of associates was approximately RMB180,448,000 (2021: RMB172,237,000).

Goodwill

As at 31 December 2022, the Remaining Group had a total amount of approximately RMB547,000 (2021: RMB547,000) in respect of goodwill on the acquisition of subsidiaries in previous years.

Right-of-use Assets

As at 31 December 2022, the Remaining Group’s right-of-use assets amounted to approximately RMB105,671,000 (2021: RMB135,820,000). The decrease was mainly contributed by the disposals of subsidiaries during the year ended 31 December 2022.

Financial assets measured of fair value through other comprehensive income

Financial assets measured of fair value through other comprehensive income decreased by approximately 64.1% from approximately RMB1,186,361,000 as at 31 December 2021 to approximately RMB760,194,000 as at 31 December 2022. The decrease is mainly due to (i) the fair value loss amounted to approximately RMB23,684,000; and (ii) the return of capital from Jiaxing Shengshi and 蘇州君盛晶石股權投資合夥企業（有限合夥）(Suzhou Junsheng Jingshi Equity Investment Partnership (Limited Partnership)*) which amounted to RMB180,000,000 and RMB222,500,000, respectively during the year ended 31 December 2022. 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 in the 2022 annual report.

Loan to an associate

As at 31 December 2022, the Remaining Group had a loan to an associate of approximately RMB121,400,000. The Remaining Group entered into a loan agreement with an associate, Kong Sun Baoyuan on 11 November 2022 for a loan period of 3 years. The loan is unsecured and interest-bearing, which carries interest rate of 9.0% per annum. No such amount was recorded for the year ended 31 December 2021.

— I-23 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Trade, bills and other receivables

Trade, bills and other receivables decreased by approximately 17.9% from approximately RMB1,891,350,000 as at 31 December 2021 to approximately RMB1,552,659,000 as at 31 December 2022. The decrease was mainly due to disposals of subsidiaries during the year ended 31 December 2022.

Trade and Other Payables

Trade and other payables decreased by approximately 17.1% from approximately RMB390,654,000 as at 31 December 2021 to approximately RMB323,783,000 as at 31 December 2022. The balance mainly comprised payables to suppliers of solar modules and equipment and engineering procurement construction contractors for purchase of solar modules and equipment and construction costs of solar power plants. The decrease was mainly due to disposals of subsidiaries during the year ended 31 December 2022.

Liquidity and Capital Resources

As at 31 December 2022, cash and cash equivalents of the Remaining Group was approximately RMB270,374,000 (2021: RMB691,782,000), which included an amount of bank balances of approximately RMB267,920,000 (2021: RMB681,347,000) 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 2022, 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, over total equity, was approximately 0.64 (2021: 0.92).

Capital Expenditure

During the year ended 31 December 2022, the Remaining Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB2,942,000 (2021: RMB4,348,000) and approximately RMB51,091,000 (2021: RMB4,206,000), respectively.

— I-24 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Loans and Borrowings

As at 31 December 2022, the Remaining Group’s total loans and borrowings was approximately RMB1,900,405,000 representing a decrease of approximately 42.1% compared to approximately RMB3,283,105,000 as at 31 December 2021. The decrease in the Remaining Group’s total loans and borrowings was mainly due to disposals 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 2022, loans and borrowings of approximately RMB1,567,241,000 (2021: RMB2,551,446,000) and approximately RMB333,164,000 (2021: RMB731,659,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2022, out of the total borrowings, approximately RMB358,420,000 (2021: RMB1,751,488,000) was repayable within one year and approximately RMB1,541,985,000 (2021: RMB1,531,617,000) was repayable after one year. For details, please refer to note 30 to the financial statements of the 2022 annual report.

Corporate bonds

As at 31 December 2022, corporate bonds denominated in Hong Kong dollar with an aggregate principal amount of HK$19,000,000 (equivalent to approximately RMB16,972,000) (2021: HK$102,000,000 (equivalent to approximately RMB83,395,000)) remained outstanding with certain independent third parties. The corporate bonds bear interest rates ranging from 3% to 6% (2021: 3% to 7%) per annum, and will mature on the date immediately following 3 to 96 months (2021: 3 to 96 months) after their issuance.

During the year ended 31 December 2022, the Remaining Group did not issue any corporate bonds.

During the year ended 31 December 2021, the Remaining Group issued corporate bonds with an aggregate principal amount of HK$10,500,000 (equivalent to approximately RMB8,715,000) to certain independent third parties, the net proceeds of the issued corporate bonds received by the Company were approximately HK$9,853,000 (equivalent to approximately RMB8,178,000), with total issue cost amounting to approximately HK$648,000 (equivalent to approximately RMB537,000).

During the year ended 31 December 2022, the Remaining Group repaid HK$83,000,000 (equivalent to approximately RMB71,289,000) (2021: HK$245,000,000 (equivalent to approximately RMB203,350,000)) in aggregate principal amount of the corporate bonds.

— I-25 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The corporate bonds are measured at amortised cost using effective interest method by applying an effective interest rate ranging from 10.40% (2021: 10.40% to 14.56%) per annum. Imputed interest of approximately HK$2,432,000 (equivalent to approximately RMB2,089,000) (2021: HK$22,861,000 (equivalent to approximately RMB18,974,000)) (note 13 to the financial statements in the 2022 annual report) in respect of the corporate bonds was recognised in profit or loss during the year ended 31 December 2022.

Lease Liabilities

As at 31 December 2022, the Remaining Group’s lease liabilities amounted to approximately RMB116,603,000 (2021: RMB129,945,000). The decrease was mainly contributed by the disposals of subsidiaries during the year ended 31 December 2022.

Foreign Exchange Risk

The Remaining Group primarily operates its business in the PRC and during the year ended 31 December 2022, 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 2022, the Remaining Group had charged solar power plants, trade receivables and unlisted equity investments with net book value of approximately RMB676,538,000 (2021: RMB1,425,066,000), approximately RMB235,711,000 (2021: RMB533,683,000) and approximately RMB276,726,000 (2021: RMB281,365,000), 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 in the 2022 annual report, during the year ended 31 December 2022, the Remaining Group has no other charges on assets.

Contingent Liabilities

— I-26 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

in the future. The relevant PRC government authorities are currently conducting nationwide inspections on matters such as compliance of equity transfer of solar power plants and full grid-connected power generation time. The Remaining Group will actively cooperate with the relevant PRC government authorities in inspections if necessary and assess the impact of the inspection results on the development of the Remaining Group’s solar power plants in a timely manner.

As at 31 December 2021, the Remaining Group had executed guarantee with respect to a loan of approximately RMB82,601,000 granted by independent third parties to Gansu Hongyuan, an indirect wholly-owned subsidiary of the Company before its disposal on 22 September 2021.

As at 31 December 2021, the Remaining Group had executed guarantee with respect to a loan of approximately RMB54,092,000 granted by independent third parties to Wushi Huayangweiye, an indirect wholly-owned subsidiary of the Company before its disposal on 22 December 2021.

As at 31 December 2021, the Remaining Group had executed guarantee with respect to a loan of approximately RMB54,092,000 granted by independent third parties to Kuche Tianhua, an indirect wholly-owned subsidiary of the Company before its disposal on 21 December 2021.

As at 31 December 2022, all guarantees granted by the Remaining Group in respect of the above loans have been released.

Save as disclosed above, during the year ended 31 December 2022, the Remaining Group had no other significant contingent liabilities.

Employees and Remuneration Policy

As at 31 December 2022, the Remaining Group had approximately 769 (2021: 837) 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 2022, the total employee benefit expenses (including directors’ emoluments) were approximately RMB173,094,000 (2021: RMB131,668,000). For details, please refer to note 10 in the financial statements to the 2022 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.

— I-27 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Significant Investments and Material Acquisition and Disposal

During the year ended 31 December 2022, the Remaining Group did not have any significant investments with a value of 5% more of the Company’s total assets.

Material Acquisitions and Disposals of Subsidiaries, Joint Ventures and Associated Companies

On 25 March 2022, the Remaining Group entered into sale and purchase agreements with an independent third party to dispose the entire equity interest in 濟源大峪江山光伏發電有限公司 (Jiyuan Dayu Jiangshan Photovoltaic Power Generation Limited)(“ Jiyuan Dayu ”) and 50% equity interest in 寶豐縣鑫泰光伏電力科技開發有限公司 (Baofeng Xintai Photovoltaic Power Technology Development Limited) (“ Baofeng Xintai ”), for a total consideration of approximately RMB118,675,000. The disposals of the entire equity interest in Jiyuan Dayu and 50% equity interest in Baofeng Xintai were completed on 27 June 2022 and 30 June 2022 respectively. Details of the disposals are set out in the Company’s announcement dated 25 March 2022 and the Company’s circular dated 19 May 2022.

On 11 November 2022, the Remaining Group entered into a partnership agreement in relation to the formation of the limited partnership 北京紅楓新能源合夥企業（有限合夥） (Beijing Hongfeng New Energy Investment Partnership (Limited Partnership)*). Details are set out in the Company’s announcement dated 11 November 2022.

Save as disclosed above, there was no material acquisition or disposal of subsidiaries, joint ventures and associated companies by the Company during the year ended 31 December 2022. The Remaining Group had no definite plans for material investments and capital assets.

— I-28 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

R E P O R T O N R E V I E W O F F I N A N C I A L I N F O R M A T I O N O F D I N G B I A N WANHESHUN NEW ENERGY POWER GENERATION LIMITED (“DINGBIAN WANHESHUN”)

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information of Dingbian Wanheshun New Energy Power Generation Limited (“ Dingbian Wanheshun ”) set out on pages II-A-3 to II-A-15 which comprises the statements of financial position as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Dingbian Wanheshun 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 Dingbian Wanheshun in accordance with the basis of preparation set out in note 2 to the Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rules. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error. The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) “Presentation of Financial Statements” or an interim financial report as defined in Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”). Our responsibility is to express a conclusion on this Financial Information based on our review. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” and with reference to Practice Note 750 “Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal” issued by the HKICPA. A review of the financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in 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.

— II-A-1 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

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.

Emphasis of Matter – Material Uncertainty Related to Going Concern

Without qualifying our conclusion, we draw attention to note 2 to the Financial Information of Dingbian Wanheshun, which indicates that Dingbian Wanheshun had net current liabilities of RMB164,090,000 as at 31 May 2023. These conditions indicate the existence of a material uncertainty that may cast significant doubt about Dingbian Wanheshun’s ability to continue as a going concern.

BDO Limited

Certified Public Accountants Hong Kong, 31 August 2023

— II-A-2 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

Set out below is the unaudited financial information of Dingbian Wanheshun which comprises the unaudited statements of financial position of Dingbian Wanheshun as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Dingbian Wanheshun. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Dingbian Wanheshun 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 THE FIRST PROJECT COMPANY

APPENDIX II-A

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF DINGBIAN WANHESHUN

Notes Revenue 3 Cost of sales Gross profit/(loss) Other gains, net Administrative expenses Finance costs Profit/(Loss) before income tax Income tax (expense)/credit 4 Profit/(Loss) for the year/ period	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 30,511 27,697 19,885 (10,470) (12,173) (13,567) 20,041 15,524 6,318 – 85 100 (2,616) (4,088) (2,359) (9,899) (6,238) (4,669) 7,526 5,283 (610) (606) (354) – 6,920 4,929 (610)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 3,535 11,526 (5,670) (5,003) (2,135) 6,523 – – (940) (1,135) (2,684) – (5,759) 5,388 1,440 (1,347) (4,319) 4,041

— II-A-4 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

U N A U D I T E D S T A T E M E N T S O F F I N A N C I A L P O S I T I O N O F D I N G B I A N WANHESHUN

Notes ASSETS AND LIABILITIES Non-current assets Solar power plant 5 Right-of-use assets Current assets Trade and other receivables 6 Amounts due from fellow subsidiaries 8 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payables Loans and borrowings 7 Amount due to immediate holding company 8 Amounts due to fellow subsidiaries 8 Amounts due to intermediate holding companies 8 Total current liabilities Net current liabilities Total assets less current liabilities	31 December 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 181,503 176,837 8,423 8,012 189,926 184,849 124,488 148,331 22,807 22,807 1 1 147,296 171,139 23,993 7,224 – 290 14,771 15,826 102,785 102,785 37,445 45,488 59,191 93,463 238,185 265,076 (90,889) (93,937) 99,037 90,912	2022 RMB’000 (Unaudited) 180,129 7,605 187,734 159,258 22,807 102 182,167 16,489 – – 102,785 50,505 184,525 354,304 (172,137) 15,597	31 May 2023 RMB’000 (Unaudited) 176,293 7,435 183,728 166,923 22,807 102 189,832 12,364 1,333 – 102,785 52,427 185,013 353,922 (164,090) 19,638

— II-A-5 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

Notes Non-current liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Paid-in capital Reserves Total equity	2020 RMB’000 (Unaudited) 87,759 87,759 11,278 995 10,283 11,278	31 December 2021 RMB’000 (Unaudited) 74,705 74,705 16,207 995 15,212 16,207	2022 RMB’000 (Unaudited) – – 15,597 995 14,602 15,597	31 May 2023 RMB’000 (Unaudited) –
				–
				19,638

				995 18,643
				19,638

— II-A-6 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

UNAUDITED STATEMENTS OF CASH FLOWS OF DINGBIAN WANHESHUN

Cash flows from operating activities Profit/(Loss) before income tax Adjustments for: Depreciation of solar power plant Amortisation of right-of-use assets Interest expense Operating profit before working capital changes Increase in trade and other receivables (Decrease)/Increase in trade and other payables Cash (used in)/generated from operating activities Tax paid Net cash (used in)/generated from operating activities Cash flows from investing activities Payments for purchase of solar power plant Net cash used in investing activities	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 7,526 5,283 (610) 8,285 8,285 8,731 410 411 407 9,899 6,238 4,669 26,120 20,217 13,197 (21,132) (23,843) (10,927) (7,898) 2,322 15 (2,910) (1,304) 2,285 (683) (64) (290) (3,593) (1,368) 1,995 (1,409) (19,938) (2,773) (1,409) (19,938) (2,773)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) (5,759) 5,388 3,451 3,836 171 170 2,684 – 547 9,394 (3,839) (7,665) 1,426 (141) (1,866) 1,588 (284) (14) (2,150) 1,574 – (3,984) – (3,984)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) (5,759) 5,388 3,451 3,836 171 170 2,684 – 547 9,394 (3,839) (7,665) 1,426 (141) (1,866) 1,588 (284) (14) (2,150) 1,574 – (3,984) – (3,984)
			9,394 (7,665) (141)
			1,588 (14)
			1,574
			(3,984)
			(3,984)

— II-A-7 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

Cash flows from financing activities Repayment of loans and borrowings Interest paid Advances from fellow subsidiaries Advances from intermediate holding companies Net cash 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 the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (70,792) (14,771) (90,531) (9,899) (6,238) (4,669) 36,473 8,043 5,017 48,718 34,272 91,062 4,500 21,306 879 (502) – 101 503 1 1 1 1 102	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) (3,243) – (2,684) – 2,584 1,922 5,493 488 2,150 2,410 – – 1 102 1 102	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) (3,243) – (2,684) – 2,584 1,922 5,493 488 2,150 2,410 – – 1 102 1 102
			2,410 – 102
			102

— II-A-8 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

U N A U D I T E D S T A T E M E N T S O F C H A N G E S I N E Q U I T Y O F D I N G B I A N WANHESHUN

Balance at 1 January 2020 Profit for the year Dividend declared Appropriation to PRC statutory reserve Balance at 31 December 2020 and 1 January 2021 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2021 and 1 January 2022 Loss for the year Balance at 31 December 2022 and 1 January 2023 Profit for the period Appropriation to PRC statutory reserve Balance at 31 May 2023 Balance at 31 December 2021 and 1 January 2022 Loss for the period Balance at 31 May 2022	Paid-in capital RMB’000 (Unaudited) 995 – – 995 – – 995 – 995 – – 995 995 – 995	Statutory reserves RMB’000 (Unaudited) 3,404 – 774 4,178 – 427 4,605 – 4,605 – 404 5,009 4,605 – 4,605	Retained profits RMB’000 (Unaudited) 28,034 6,920 (28,075) (774) 6,105 4,929 (427) 10,607 (610) 9,997 4,041 (404) 13,634 10,607 (4,319) 6,288	Total RMB’000 (Unaudited) 32,433 6,920 (28,075) – 11,278 4,929 – 16,207 (610) 15,597 4,041 – 19,638 16,207 (4,319) 11,888

— II-A-9 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 11 August 2023, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Dingbian Wanheshun 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 Dingbian Wanheshun for a total consideration of approximately RMB607,000 (the “ First Disposal ”). Upon completion of the First Disposal, Dingbian Wanheshun will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of Dingbian Wanheshun for the years ended 31 December 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 financial statements of the Group for those respective year, which conform with Hong Kong Financial Reporting Standards (“ HKFRSs ”) (which include all HKFRSs, Hong Kong Accounting Standards (“ HKASs ”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”) and accounting principles generally accepted in Hong Kong. The Unaudited Financial Information has been prepared under the historical cost convention. The Unaudited Financial Information is presented in RMB and all values are rounded to the nearest thousand (RMB’000) except when otherwise indicated.

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

The Unaudited Financial Information of Dingbian Wanheshun 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 Dingbian Wanheshun had net current liabilities of RMB164,090,000 as at 31 May 2023. These conditions indicate the existence of a material certainty which may cast significant doubt on Dingbian Wangheshun’s ability to continue as a going concern and therefore Dingbian Wangheshun 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 Dingbian Wangheshun will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months from 31 May 2023 after taking into account the followings:

(i) the cash flow projection of Dingbian Wanheshun for the next twelve months from the reporting date, the directors are of the opinion that Dingbian Wanheshun is able to generate positive cash flows from its operation. In preparing the cash flow projection by the directors of Dingbian Wanheshun, 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, intermediate holding company and fellow subsidiaries of Dingbian Wanheshun has confirmed not to demand repayment of debt due from Dingbian Wanheshun until such time when the repayment will not affect Dingbian Wanheshun’s ability to repay other creditors in the normal course of business for twelve months after 31 May 2023 or up to the completion date of the First Disposal, whichever is earlier;

— II-A-10 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

(iii) The Company has confirmed to provide continuing financial support to Dingbian Wanheshun so as to enable Dingbian Wanheshun to meet its liabilities and obligations as and when they fall due and to continue its business for twelve months after 31 May 2023 or up to the completion date of the First Disposal, whichever is earlier; and
(iv) The Purchaser has agreed, conditionally upon the completion of the First Disposal to provide continuing financial support to Dingbian Wanheshun so as to enable Dingbian Wanheshun to meet its liabilities and obligations as and when they fall due and to continue its business after the completion of the First Disposal.

Should Dingbian Wanheshun 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. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2020, 2021 and 2022 and the five months ended 31 May 2022 and 2023, unaudited sales of electricity includes renewable energy subsidies amounting to RMB18,456,000, RMB18,547,000, RMB12,856,000, RMB2,197,000 and RMB6,403,000 respectively.

4. INCOME TAX (EXPENSE)/CREDIT

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）, Dingbian Wanheshun 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.

Pursuant to CaiShui 2020 No.23 Announcement of the Ministry of Finance, the State Taxation Administration and the National Development and Reform Commission on Continuing the Enterprise Income Tax Policies for Western Development Strategies, Dingbian Wanheshun was entitled to the preferential tax policy of the western development and was subject to the preferential enterprise income tax of 15%.

— II-A-11 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

5. SOLAR POWER PLANT

Cost At 1 January 2020 Additions At 31 December 2020 and 1 January 2021 Additions At 31 December 2021 and 1 January 2022 Additions At 31 December 2022 and 1 January 2023 Additions At 31 May 2023 Accumulated depreciation At 1 January 2020 Charged for the year At 31 December 2020 and 1 January 2021 Charged for the year At 31 December 2021 and 1 January 2022 Charged for the year At 31 December 2022 and 1 January 2023 Charged for the period At 31 May 2023 Net carrying amount At 31 December 2020 At 31 December 2021 At 31 December 2022 At 31 May 2023	RMB’000 (Unaudited) 219,494 –
	219,494 3,619
	223,113 12,023
	235,136 –
	235,136
	(29,706) (8,285)
	(37,991) (8,285)
	(46,276) (8,731)
	(55,007) (3,836)
	(58,843)
	181,503

	176,837

	180,129

	176,293

— II-A-12 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 102,773 133,927 156,397 21,715 14,404 2,861 124,488 148,331 159,258	As at 31 May 2023 RMB’000 (Unaudited) 164,076 2,847
		166,923

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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 3,321 4,757 7,265 6,262 8,990 8,143 11,959 17,551 7,062 26,104 21,542 31,298 55,127 81,087 102,629 102,773 133,927 156,397	As at 31 May 2023 RMB’000 (Unaudited) 7,683 7,576 16,211 20,920 111,686
		164,076

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

Not yet past due 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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 1,845 1,793 2,235 4,060 5,186 7,984 5,514 10,228 8,226 11,975 13,947 5,506 25,786 23,394 31,154 53,593 79,379 101,292 102,773 133,927 156,397	As at 31 May 2023 RMB’000 (Unaudited) 2,111 7,896 7,400 14,095 24,377 108,197
		164,076

— II-A-13 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

Dingbian Wanheshun’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 2020, 2021 and 2022 and 31 May 2023, the outstanding renewable energy subsidy amounted to RMB100,738,000, RMB125,696,000, RMB140,224,000 and RMB147,460,000 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 Dingbian Wanheshun 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.

7. LOANS AND BORROWINGS

Current Secured – other borrowings Non-current Secured – other borrowings Total loans and borrowings	As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 14,771 15,826 – 87,759 74,705 – 102,530 90,531 –	As at 31 May 2023 RMB’000 (Unaudited) – –
		–

Dingbian Wanheshun’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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 14,771 15,826 – 15,826 16,940 – 54,396 57,210 – 17,537 555 – 102,530 90,531 – 7.2% 6.5% –	As at 31 May 2023 RMB’000 (Unaudited) – – – –
		–

		–

As at 31 December 2020 and 2021, the loans and borrowings were secured by solar power plant, trade receivables, guarantee deposit, its 100% equity shares from its immediate holding company and guarantee provided by the Group.

— II-A-14 —

FINANCIAL INFORMATION OF THE FIRST PROJECT COMPANY

APPENDIX II-A

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

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

9. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Dingbian Wanheshun 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
			2020	2021	2022	2022	2023
			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	Intermediate	Management	794	794	794	331	331
(Kong Sun Yongtai Investment	holding company	service fee
Holdings Limited)
北京鑫泰綠能科技有限公司		Other repair and	–	–	1,062	–	–
(Beijing Xintai Green Energy		maintenance fee
Technology Co., Ltd.)
	Fellow subsidiary	Operation and	1,132	1,138	1,138	474	474
		maintenance fee

10. DIVIDEND

				For the five months	For the five months
	For the	year ended 31	December	ended 31 May
	2020	2021	2022	2022	2023
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Cash dividends declared but not
yet paid:
Final dividend	28,075	–	–	–	–

11. MAJOR NON-CASH TRANSACTIONS

During the year ended 31 December 2020, Dingbian Wanheshun had declared a dividend amounting to RMB28,075,000 to its immediate holding company. The amount was yet to settle up to 31 May 2023.

— II-A-15 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

R E P O R T O N R E V I E W O F F I N A N C I A L I N F O R M A T I O N O F H U A N G S H I HUANGYUAN PHOTOVOLTAIC POWER DEVELOPMENT LIMITED (“HUANGSHI HUANGYUAN”)

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information of Huangshi Huangyuan Photovoltaic Power Development Limited (“ Huangshi Huangyuan ”) set out on pages II-B-3 to II-B-15 which comprises the statements of financial position as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Huangshi Huangyuan 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 Huangshi Huangyuan 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 THE SECOND PROJECT COMPANY

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 Huangshi Huangyuan, which indicates that Huangshi Huangyuan had net current liabilities of RMB42,902,000 as at 31 May 2023. These conditions indicate the existence of a material uncertainty that may cast significant doubt about Huangshi Huangyuan’s ability to continue as a going concern.

BDO Limited

Certified Public Accountants Hong Kong, 31 August 2023

— II-B-2 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

Set out below is the unaudited financial information of Huangshi Huangyuan which comprises the unaudited statements of financial position of Huangshi Huangyuan as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Huangshi Huangyuan. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Huangshi Huangyuan 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 THE SECOND PROJECT COMPANY

APPENDIX II-B

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF HUANGSHI HUANGYUAN

Notes Revenue 3 Cost of sales Gross profit Other gains/(losses), net Administrative expenses Finance costs Profit before income tax Income tax expense 4 Profit for the year/period	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 25,004 28,372 26,504 (8,952) (9,866) (9,911) 16,052 18,506 16,593 15 (155) (123) (934) (1,024) (1,010) (12,248) (12,527) (9,615) 2,885 4,800 5,845 (57) (408) (586) 2,828 4,392 5,259	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 9,052 10,337 (3,950) (3,949) 5,102 6,388 (277) (71) (345) (347) (3,739) (3,318) 741 2,652 (93) (663) 648 1,989

— II-B-4 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

U N A U D I T E D S T A T E M E N T S O F F I N A N C I A L P O S I T I O N O F H U A N G S H I HUANGYUAN

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 5 Right-of-use assets Current assets Trade and other receivables 6 Amounts due from fellow subsidiaries 8 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payables Lease liabilities Loans and borrowings 7 Amounts due to fellow subsidiaries 8 Amount due to immediate holding company 8 Amounts due to intermediate holding company 8 Total current liabilities Net current liabilities Total assets less current liabilities	31 December 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 165 143 173,113 165,128 8,591 8,730 181,869 174,001 79,806 92,626 1,016 750 15 1,775 80,837 95,151 2,560 2,437 58 322 2,771 2,746 17,340 17,463 10,832 11,971 39,505 46,879 37,168 65,808 110,234 147,626 (29,397) (52,475) 152,472 121,526	2022 RMB’000 (Unaudited) 462 156,934 7,043 164,439 98,897 – 2,969 101,866 4,031 617 586 17,594 11,887 49,503 66,808 151,026 (49,160) 115,279	31 May 2023 RMB’000 (Unaudited) 444 153,607 6,411 160,462 105,612 88 4,556 110,256 3,383 227 654 17,643 11,962 50,481 68,808 153,158 (42,902) 117,560

— II-B-5 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

Notes Non-current liabilities Lease liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Paid-in capital Reserves Total equity	2020 RMB’000 (Unaudited) 5,438 93,293 98,731 53,741 50,000 3,741 53,741	31 December 2021 RMB’000 (Unaudited) 5,735 57,658 63,393 58,133 50,000 8,133 58,133	2022 RMB’000 (Unaudited) 5,609 46,278 51,887 63,392 50,000 13,392 63,392	31 May 2023 RMB’000 (Unaudited) 5,685 46,494
				52,179
				65,381

				50,000 15,381
				65,381

— II-B-6 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

UNAUDITED STATEMENTS OF CASH FLOWS OF HUANGSHI HUANGYUAN

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Amortisation of right-of-use assets (Gain)/Loss on disposal of solar power plant Written off of property, plant and equipment Loss on lease modification Write off of other payables 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 operating activities Tax paid Net cash generated from operating activities	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 2,885 4,800 5,845 25 22 19 6,983 7,639 7,621 351 352 519 (40) 172 279 30 – – – – – – – (150) 12,248 12,527 9,615 (11) (3) (6) 22,471 25,509 23,742 (16,304) (12,820) (6,271) (116) (125) 1,915 6,051 12,564 19,386 – (144) (291) 6,051 12,420 19,095	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 741 2,652 8 18 3,175 3,177 147 144 279 72 – – – 448 – – 3,739 3,318 (2) (1) 8,087 9,828 4,061 (6,715) (203) (648) 11,945 2,465 (291) (1,053) 11,654 1,412	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 741 2,652 8 18 3,175 3,177 147 144 279 72 – – – 448 – – 3,739 3,318 (2) (1) 8,087 9,828 4,061 (6,715) (203) (648) 11,945 2,465 (291) (1,053) 11,654 1,412
			9,828 (6,715) (648)
			2,465 (1,053)
			1,412

— II-B-7 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for purchase of solar power plant Payments for purchase of right-of-use assets Proceeds from disposal of solar power plant Interest received Repayments from fellow subsidiaries Advances to fellow subsidiaries Net cash (used in)/generated from investing activities Cash flows from financing activities Proceed from loans and borrowings Repayment of loans and borrowings Interest paid Payments of lease liabilities Advances from fellow subsidiaries Advances from immediate holding company Advances from intermediate holding company Repayments to fellow subsidiaries Repayments to immediate holding company 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 the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) – – (338) (3,391) (54) (171) (446) (491) – 163 230 294 11 3 6 – 266 1,082 (45) – (332) (3,708) (46) 541 – – – (18,702) (35,512) (11,249) (11,789) (12,255) (9,306) – – (1,427) 383 1,139 542 – 7,374 2,624 20,700 28,640 1,000 – – (626) (1,023) – – (10,431) (10,614) (18,442) (8,088) 1,760 1,194 8,103 15 1,775 15 1,775 2,969	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) – – – – – – 294 78 2 1 – – (332) (88) (36) (9) – 265 (11,249) – (3,547) (3,134) – – 542 75 854 978 40 2,000 – – – – (13,360) 184 (1,742) 1,587 1,775 2,969 33 4,556	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) – – – – – – 294 78 2 1 – – (332) (88) (36) (9) – 265 (11,249) – (3,547) (3,134) – – 542 75 854 978 40 2,000 – – – – (13,360) 184 (1,742) 1,587 1,775 2,969 33 4,556
			(9)
			265 – (3,134) – 75 978 2,000 – –
			184 1,587 2,969
			4,556

— II-B-8 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

U N A U D I T E D S T A T E M E N T S O F C H A N G E S I N E Q U I T Y O F H U A N G S H I HUANGYUAN

Balance at 1 January 2020 Profit for the year Dividend declared Appropriation to statutory reserves Balance at 31 December 2020 and 1 January 2021 Profit for the year Appropriation to statutory reserves Balance at 31 December 2021 and 1 January 2022 Profit for the year Appropriation to statutory reserves Balance at 31 December 2022 and 1 January 2023 Profit for the period Appropriation to statutory reserves Balance at 31 May 2023 Balance at 31 December 2021 and 1 January 2022 Profit for the period Appropriation to statutory reserves Balance at 31 May 2022	Paid-in capital RMB’000 (Unaudited) 50,000 – – – 50,000 – – 50,000 – – 50,000 – – 50,000 50,000 – – 50,000	Statutory reserves RMB’000 (Unaudited) 762 – – 283 1,045 – 480 1,525 – 526 2,051 – 199 2,250 1,525 – 65 1,590	Retained profits RMB’000 (Unaudited) 7,977 2,828 (7,826) (283) 2,696 4,392 (480) 6,608 5,259 (526) 11,341 1,989 (199) 13,131 6,608 648 (65) 7,191	Total RMB’000 (Unaudited) 58,739 2,828 (7,826) –
				53,741 4,392 –
				58,133 5,259 –
				63,392 1,989 –
				65,381

				58,133 648 –
				58,781

— II-B-9 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 11 August 2023, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Huangshi Huangyuan 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 Huangshi Huangyuan at a total consideration of approximately RMB40,529,000 (the “ Second Disposal ”). Upon completion of the Second Disposal, Huangshi Huangyuan will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of Huangshi Huangyuan for the years ended 31 December 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Huangshi Huangyuan 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 Huangshi Huangyuan had net current liabilities of RMB42,902,000 as at 31 May 2023. This condition indicates the existence of a material certainty which may cast significant doubt on Dingbian Wangheshun’s ability to continue as a going concern and therefore Dingbian Wangheshun 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 Dingbian Wangheshun will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months from 31 May 2023 after taking into account the followings:

(i) the cash flow projection of Huangshi Huangyuan for the next twelve months from the reporting date, the directors are of the opinion that Huangshi Huangyuan is able to generate positive cash flows from its operation. In preparing the cash flow projection by the directors of Huangshi Huangyuan, 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, intermediate holding company and fellow subsidiaries of Huangshi Huangyuan has confirmed not to demand repayment of debt due from Huangshi Huangyuan until such time when the repayment will not affect Huangshi Huangyuan’s ability to repay other creditors in the normal course of business for twelve months after 31 May 2023 or up to the completion date of the Second Disposal, whichever is earlier;

— II-B-10 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

(iii) The Company has confirmed to provide continuing financial support to Huangshi Huangyuan so as to enable Huangshi Huangyuan to meet its liabilities and obligations as and when they fall due and to continue its business for twelve months after 31 May 2023 or up to the completion date of the Second Disposal, whichever is earlier; and
(iv) The Purchaser has agreed, conditionally upon the completion of the Second Disposal to provide continuing financial support to Huangshi Huangyuan so as to enable Huangshi Huangyuan to meet its liabilities and obligations as and when they fall due and to continue its business after the completion of the Second Disposal.

Should Huangshi Huangyuan 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. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2020, 2021 and 2022 and the five months ended 31 May 2022 and 2023, unaudited sales of electricity includes renewable energy subsidies amounting to RMB14,648,000, RMB17,688,000, RMB14,933,000, RMB4,947,000 and RMB5,953,000 respectively.

4. 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）, Huangshi Huangyuan 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.

Pursuant to CaiShui 2020 No.23 Announcement of the Ministry of Finance, the State Taxation Administration and the National Development and Reform Commission on Continuing the Enterprise Income Tax Policies for Western Development Strategies, Huangshi Huangyuan was entitled to the preferential tax policy of the western development and was subject to the preferential enterprise income tax of 15%.

— II-B-11 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

5. SOLAR POWER PLANT

Cost At 1 January 2020 Additions Disposal At 31 December 2020 and 1 January 2021 Additions Disposal At 31 December 2021 and 1 January 2022 Disposal At 31 December 2022 and 1 January 2023 Disposal At 31 May 2023 Accumulated depreciation At 1 January 2020 Charged for the year Disposal At 31 December 2020 and 1 January 2021 Charged for the year Disposal At 31 December 2021 and 1 January 2022 Charged for the year Disposal At 31 December 2022 and 1 January 2023 Charged for the period Disposal At 31 May 2023 Net carrying amount At 31 December 2020 At 31 December 2021 At 31 December 2022 At 31 May 2023	RMB’000 (Unaudited) 200,069 783 (143)
	200,709 56 (501)
	200,264 (728)
	199,536 (194)
	199,342
	(20,633) (6,983) 20
	(27,596) (7,639) 99
	(35,136) (7,621) 155
	(42,602) (3,177) 44
	(45,735)
	173,113

	165,128

	156,934

	153,607

— II-B-12 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 58,471 74,866 91,105 21,335 17,760 7,792 79,806 92,626 98,897	As at 31 May 2023 RMB’000 (Unaudited) 97,817 7,795
		105,612

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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 4,587 5,129 4,517 4,567 5,027 5,672 8,137 7,670 7,863 14,120 15,860 16,842 27,060 41,180 56,211 58,471 74,866 91,105	As at 31 May 2023 RMB’000 (Unaudited) 7,962 5,648 9,938 16,940 57,329
		97,817

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

Not yet past due 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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 1,470 2,316 1,929 4,342 4,721 4,325 4,754 4,701 5,613 7,614 6,934 7,518 13,633 15,903 16,355 26,658 40,291 55,365 58,471 74,866 91,105	As at 31 May 2023 RMB’000 (Unaudited) 2,777 6,529 5,388 10,518 16,598 56,007
		97,817

— II-B-13 —

FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

APPENDIX II-B

Huangshi Huangyuan’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 2020, 2021 and 2022 and 31 May 2023, the outstanding renewable energy subsidy amounted to RMB57,040,000, RMB74,241,000, RMB90,286,000 and RMB96,638,000 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 Huangshi Huangyuan 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.

7. LOANS AND BORROWINGS

Current Secured – other borrowings Non-current Secured – other borrowings Total loans and borrowings	As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 17,340 17,463 17,594 93,293 57,658 46,278 110,633 75,121 63,872	As at 31 May 2023 RMB’000 (Unaudited) 17,643 46,494
		64,137

Huangshi Huangyuan’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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 17,340 17,463 17,594 17,463 17,594 17,747 53,237 40,064 28,531 22,593 – – 110,633 75,121 63,872 9.8% 13.2% 13.4%	As at 31 May 2023 RMB’000 (Unaudited) 17,643 17,778 28,716 –
		64,137

		11.8%

As at 31 December 2020, 2021 and 2022 and 31 May 2023, the loans and borrowings were secured by solar power plant, trade receivables, guarantee deposit, 100% equity shares from its immediate holding company and guarantee provided by the Group.

— II-B-14 —

APPENDIX II-B FINANCIAL INFORMATION OF THE SECOND PROJECT COMPANY

8. 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.

9. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Huangshi Huangyuan 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
			2020	2021	2022	2022	2023
			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	Management	794	794	794	331	331
(Kong Sun Yongtai Investment	company	service fee
Holdings Limited)
北京鑫泰綠能科技有限公司	Fellow subsidiary	Operation and	1,132	1,178	1,132	472	472
(Beijing Xintai Green Energy		maintenance fee
Technology Co., Ltd.)
陝西億潤新能源科技有限公司	Fellow subsidiary	Maintenance fee	–	20	132	–	–
(Shaanxi Yirun New Energy
Technology Co., Ltd.)

10. DIVIDEND

				For the five months	For the five months
	For the	year ended 31	December	ended 31 May
	2020	2021	2022	2022	2023
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Cash dividends declared but not
yet paid:
Final dividend	7,826	-	-	-	-

11. MAJOR NON-CASH TRANSACTIONS

During the year ended 31 December 2020, Huangshi Huangyuan had declared a dividend amounting to RMB7,826,000 to its immediate holding company. The amount was yet to settle up to 31 May 2023.

— II-B-15 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

REPORT ON REVIEW OF FINANCIAL INFORMATION OF YULIN ZHENGXIN ELECTRICITY LIMITED (“YULIN ZHENGXIN”)

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information of Yulin Zhengxin Electricity Limited (“ Yulin Zhengxin ”) set out on pages II-C-3 to II-C-15 which comprises the statements of financial position as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Yulin Zhengxin 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 Yulin Zhengxin 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 THE THIRD PROJECT COMPANY

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 Yulin Zhengxin, which indicates that Yulin Zhengxin had net current liabilities of RMB60,832,000 as at 31 May 2023. These conditions indicate the existence of a material uncertainty that may cast significant doubt about Yulin Zhengxin’s ability to continue as a going concern.

BDO Limited

Certified Public Accountants Hong Kong, 31 August 2023

— II-C-2 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

Set out below is the unaudited financial information of Yulin Zhengxin which comprises the unaudited statements of financial position of Yulin Zhengxin as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Yulin Zhengxin. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Yulin Zhengxin 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 THE THIRD PROJECT COMPANY

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF YULIN ZHENGXIN

Notes Revenue 3 Cost of sales Gross profit Other gains/(losses), net Administrative expenses Finance costs Profit/(Loss) before income tax Income tax expense 4 Profit/(Loss) for the year/ period	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 32,178 27,429 26,255 (10,119) (11,065) (11,666) 22,059 16,364 14,589 9 (179) – (3,847) (5,132) (3,389) (8,308) (11,873) (11,370) 9,913 (820) (170) (758) – – 9,155 (820) (170)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 11,445 10,878 (4,344) (4,714) 7,101 6,164 – – (1,339) (1,212) (3,748) (3,618) 2,014 1,334 (504) (334) 1,510 1,000

— II-C-4 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF YULIN ZHENGXIN

Notes ASSETS AND LIABILITIES Non-current assets Solar power plant 5 Right-of-use assets Current assets Trade and other receivables 6 Tax receivables Amounts due from fellow subsidiaries 8 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payables Loans and borrowings 7 Amount due to immediate holding company 8 Amounts due to fellow subsidiaries 8 Amounts due to intermediate holding company 8 Total current liabilities Net current liabilities Total assets less current liabilities	31 December 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 171,139 162,034 6,409 6,095 177,548 168,129 119,292 126,960 – 72 53,384 54,500 34 19 172,710 181,551 2,499 1,412 352 – 14,516 15,558 112,546 119,950 223 3,720 80,659 82,889 210,795 223,529 (38,085) (41,978) 139,463 126,151	2022 RMB’000 (Unaudited) 165,394 5,784 171,178 130,585 – 63,749 48 194,382 12,656 – 16,657 126,967 2,200 94,375 252,855 (58,473) 112,705	31 May 2023 RMB’000 (Unaudited) 161,791 5,654 167,445 138,996 – 67,586 3,189 209,771 12,673 – 17,217 128,809 2,303 109,601 270,603 (60,832) 106,613

— II-C-5 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

Notes Non-current liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Paid-in capital Reserves Total equity	2020 RMB’000 (Unaudited) 79,253 79,253 60,210 60,000 210 60,210	31 December 2021 RMB’000 (Unaudited) 66,761 66,761 59,390 60,000 (610) 59,390	2022 RMB’000 (Unaudited) 53,485 53,485 59,220 60,000 (780) 59,220	31 May 2023 RMB’000 (Unaudited) 46,393
				46,393
				60,220

				60,000 220
				60,220

— II-C-6 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

UNAUDITED STATEMENTS OF CASH FLOWS OF YULIN ZHENGXIN

Cash flows from operating activities Profit/(Loss) before income tax Adjustments for: Depreciation of solar power plant Amortisation of right-of-use assets Interest expense Operating profit before working capital changes Decrease/(Increase) in trade and other receivables (Decrease)/Increase in trade and other payables Cash generated from operating activities Tax (paid)/refunded Net cash generated from/(used in) operating activities Cash flows from investing activities Payments for purchase of solar power plant Advances to fellow subsidiaries Net cash used in from investing activities	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 9,913 (820) (170) 8,081 8,081 8,040 314 314 311 8,308 11,873 11,370 26,616 19,448 19,551 999 (7,668) (3,625) (711) 4,100 3,230 26,904 15,880 19,156 (405) (424) 72 26,499 15,456 19,228 (331) (1,097) (5) (44,319) (1,116) (9,249) (44,650) (2,213) (9,254)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 2,014 1,334 3,367 3,603 130 130 3,748 3,618 9,259 8,685 (652) (8,412) (798) 18 7,809 291 (77) (334) 7,732 (43) – – (4,190) (3,837) (4,190) (3,837)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 2,014 1,334 3,367 3,603 130 130 3,748 3,618 9,259 8,685 (652) (8,412) (798) 18 7,809 291 (77) (334) 7,732 (43) – – (4,190) (3,837) (4,190) (3,837)
			8,685 (8,412) 18
			291 (334)
			(43)
			– (3,837)
			(3,837)

— II-C-7 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

Cash flows from financing activities Repayment of loans and borrowings Interest paid Advances from immediate holding company Advances from intermediate holding company Advances from fellow subsidiaries Repayments to fellow subsidiaries 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 the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (79,400) (14,516) (15,558) (8,308) (11,873) (11,370) 38,566 7,404 7,017 66,221 2,230 11,486 127 3,497 1,726 – – (3,246) 17,206 (13,258) (9,945) (945) (15) 29 979 34 19 34 19 48	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) (6,076) (6,532) (3,748) (3,618) 1,923 1,842 9,780 15,226 – 103 (3,246) – (1,367) 7,021 2,175 3,141 19 48 2,194 3,189	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) (6,076) (6,532) (3,748) (3,618) 1,923 1,842 9,780 15,226 – 103 (3,246) – (1,367) 7,021 2,175 3,141 19 48 2,194 3,189
			7,021 3,141 48
			3,189

— II-C-8 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF YULIN ZHENGXIN

Balance at 1 January 2020 Profit for the year Dividend declared Appropriation to statutory reserves Balance at 31 December 2020 and 1 January 2021 Loss for the year Balance at 31 December 2021 and 1 January 2022 Loss for the year Balance at 31 December 2022 and 1 January 2023 Profit for the period Appropriation to statutory reserves Balance at 31 May 2023 Balance at 31 December 2021 and 1 January 2022 Profit for the period Appropriation to statutory reserves Balance at 31 May 2022	Paid-in capital RMB’000 (Unaudited) 60,000 – – – 60,000 – 60,000 – 60,000 – – 60,000 60,000 – – 60,000	Statutory reserves Retained profits/ (Accumulated losses) RMB’000 RMB’000 (Unaudited) (Unaudited) 210 25,386 – 9,155 – (34,541) 915 (915) 1,125 (915) – (820) 1,125 (1,735) – (170) 1,125 (1,905) – 1,000 100 (100) 1,225 (1,005) 1,125 (1,735) – 1,510 151 (151) 1,276 (376)	Total RMB’000 (Unaudited) 85,596 9,155 (34,541) –
			60,210 (820)
			59,390 (170)
			59,220 1,000 –
			60,220

			59,390 1,510 –
			60,900

— II-C-9 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 11 August 2023, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Yulin Zhengxin 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 Yulin Zhengxin at a total consideration of approximately RMB52,858,000 (the “ Third Disposal ”). Upon completion of the Third Disposal, Yulin Zhengxin will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of Yulin Zhengxin for the years ended 31 December 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Yulin Zhengxin 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 Yulin Zhengxin had net current liabilities of RMB60,832,000 as at 31 May 2023. This condition indicates the existence of a material certainty which may cast significant doubt on Yulin Zhengxin’s ability to continue as a going concern and therefore Yulin Zhengxin 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 Yulin Zhengxin will have sufficient cash resources to satisfy its future working capital and other financing requirements in the next twelve months from 31 May 2023 after taking into account the followings:

(i) the cash flow projection of Yulin Zhengxin for the next twelve months from the reporting date, the directors are of the opinion that Yulin Zhengxin is able to generate positive cash flows from its operation. In preparing the cash flow projection by the directors of Yulin Zhengxin, 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 and intermediate holding company of Yulin Zhengxin has confirmed not to demand repayment of debt due from Yulin Zhengxin until such time when the repayment will not affect Yulin Zhengxin’s ability to repay other creditors in the normal course of business for twelve months after 31 May 2023 or up to the completion date of the Third Disposal, whichever is earlier;

— II-C-10 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

(iii) The Company has confirmed to provide continuing financial support to Yulin Zhengxin so as to enable Yulin Zhengxin to meet its liabilities and obligations as and when they fall due and to continue its business for twelve months after 31 May 2023 or up to the completion date of the Third Disposal, whichever is earlier; and
(iv) The Purchaser has agreed, conditionally upon the completion of the Third Disposal to provide continuing financial support to Yulin Zhengxin so as to enable Yulin Zhengxin 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 Yulin Zhengxin 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. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2020, 2021 and 2022 and the five months ended 31 May 2022 and 2023, unaudited sales of electricity includes renewable energy subsidies amounting to RMB22,340,000, RMB18,334,000, RMB17,499,000, RMB7,682,000 and RMB7,464,000 respectively.

4. 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）, Yulin Zhengxin 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.

Pursuant to CaiShui 2020 No.23 Announcement of the Ministry of Finance, the State Taxation Administration and the National Development and Reform Commission on Continuing the Enterprise Income Tax Policies for Western Development Strategies, Yulin Zhengxin was entitled to the preferential tax policy of the western development and was subject to the preferential enterprise income tax of 15%.

— II-C-11 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

5. SOLAR POWER PLANT

Cost At 1 January 2020 Additions At 31 December 2020 and 1 January 2021 Written off At 31 December 2021 and 1 January 2022 Additions At 31 December 2022 and 1 January 2023 Additions At 31 May 2023 Accumulated depreciation At 1 January 2020 Charged for the year At 31 December 2020 and 1 January 2021 Charged for the year At 31 December 2021 and 1 January 2022 Charged for the year At 31 December 2022 and 1 January 2023 Charged for the period At 31 May 2023 Net carrying amount At 31 December 2020 At 31 December 2021 At 31 December 2022 At 31 May 2023	RMB’000 (Unaudited) 207,287 –
	207,287 (1,024)
	206,263 11,400
	217,663 –
	217,663
	(28,067) (8,081)
	(36,148) (8,081)
	(44,229) (8,040)
	(52,269) (3,603)
	(55,872)
	171,139

	162,034

	165,394

	161,791

— II-C-12 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 90,057 102,020 112,309 29,235 24,940 18,276 119,292 126,960 130,585	As at 31 May 2023 RMB’000 (Unaudited) 120,720 18,276
		138,996

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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 5,654 4,953 5,359 6,775 5,413 4,683 12,980 11,462 10,555 26,203 25,409 20,717 38,445 54,783 70,995 90,057 102,020 112,309	As at 31 May 2023 RMB’000 (Unaudited) 7,546 7,085 9,577 20,085 76,427
		120,720

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

Not yet past due 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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 1,771 2,955 2,460 6,508 3,325 4,674 6,414 6,235 4,783 12,577 11,492 10,525 25,772 25,499 21,052 37,015 52,514 68,815 90,057 102,020 112,309	As at 31 May 2023 RMB’000 (Unaudited) 2,174 7,655 6,223 10,277 20,105 74,286
		120,720

— II-C-13 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

Yulin Zhengxin’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 2020, 2021 and 2022 and 31 May 2023, the outstanding renewable energy subsidy amounted to RMB89,913,000, RMB100,249,000, RMB111,365,000 and RMB119,800,000 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 Yulin Zhengxin 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.

7. LOANS AND BORROWINGS

Current Secured – other borrowings Non-current Secured – other borrowings Total loans and borrowings	As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 14,516 15,558 16,657 79,253 66,761 53,485 93,769 82,319 70,142	As at 31 May 2023 RMB’000 (Unaudited) 17,217 46,393
		63,610

Yulin Zhengxin’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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 14,516 15,558 16,657 15,558 16,657 17,805 53,500 49,555 35,680 10,195 549 – 93,769 82,319 70,142 12.9% 13.5% 14.9%	As at 31 May 2023 RMB’000 (Unaudited) 17,217 18,417 27,976 –
		63,610

		13.0%

As at 31 December 2020, 2021 and 2022 and 31 May 2023, loans and other borrowings were secured by solar power plant, trade receivables, guarantee deposit, 100% equity interests of its immediate holding company, and guarantee provided by the Group.

— II-C-14 —

APPENDIX II-C

FINANCIAL INFORMATION OF THE THIRD PROJECT COMPANY

8. 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.

9. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Yulin Zhengxin 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
			2020	2021	2022	2022	2023
			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	Management	794	794	794	331	331
(Kong Sun Yongtai Investment	company	service fee
Holdings Limited)
北京鑫泰綠能科技有限公司	Fellow subsidiary	Other repair and	–	–	1,062	–	–
(Beijing Xintai Green Energy		maintenance fee
Technology Co., Ltd.)
		Operation and	1,132	1,138	1,138	474	474
		maintenance fee
陝西億潤新能源科技有限公司	Fellow subsidiary	Maintenance fee	–	184	–	–	–
(Shaanxi Yirun New Energy
Technology Co., Ltd.)

10. DIVIDEND

				For the five months	For the five months
	For the	year ended 31	December	ended 31 May
	2020	2021	2022	2022	2023
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Cash dividends declared but not
yet paid:
Final dividend	34,541	–	–	–	–

11. MAJOR NON-CASH TRANSACTIONS

During the year ended 31 December 2020, Yulin Zhengxin had declared a dividend amounting to RMB34,541,000 to its immediate holding company. The amount was yet to settle up to 31 May 2023.

— II-C-15 —

FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

APPENDIX II-D

REPORT ON REVIEW OF FINANCIAL INFORMATION OF SHENGZHOU YIHUI PHOTOVOLTAIC POWER GENERATION LIMITED (“SHENGZHOU YIHUI”)

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information of Shengzhou Yihui Photovoltaic Power Generation Limited (“ Shengzhou Yihui ”) set out on pages II-D-3 to II-D-14 which comprises the statements of financial position as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Shengzhou Yihui 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 Shengzhou Yihui 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 —

APPENDIX II-D FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

Conclusion

BDO Limited

Certified Public Accountants Hong Kong, 31 August 2023

— II-D-2 —

FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

APPENDIX II-D

Set out below is the unaudited financial information of Shengzhou Yihui which comprises the unaudited statements of financial position of Shengzhou Yihui as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Shengzhou Yihui. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Shengzhou Yihui 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 THE FOURTH PROJECT COMPANY

APPENDIX II-D

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF SHENGZHOU YIHUI

Notes Revenue 3 Cost of sales Gross profit Other gains/(losses), net Administrative expenses Finance costs Profit before income tax Income tax expense 4 Profit for the year/period	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 19,562 20,344 21,101 (7,522) (7,703) (8,462) 12,040 12,641 12,639 3 3 9 (687) (705) (679) (9,615) (8,364) (6,721) 1,741 3,575 5,248 (218) (400) (1,314) 1,523 3,175 3,934	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 7,860 8,688 (3,156) (3,187) 4,704 5,501 3 (3) (280) (384) (2,640) (2,954) 1,787 2,160 (449) (540) 1,338 1,620

— II-D-4 —

FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

APPENDIX II-D

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF SHENGZHOU YIHUI

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plant 5 Right-of-use assets Current assets Trade and other receivables 6 Amounts due from intermediate holdings companies 8 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payables Lease liabilities Loans and borrowings 7 Amounts due to fellow subsidiaries 8 Amount due to immediate holding company 8 Amounts due to intermediate holding companies 8 Total current liabilities Net current (liabilities)/assets Total assets less current liabilities	31 December 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 6 6 130,958 125,001 9,012 8,554 139,976 133,561 77,707 87,182 – – 611 4,007 78,318 91,189 371 211 – 261 2,912 – 12,302 12,404 1,155 1,937 17,861 17,861 66,975 94,293 101,576 126,967 (23,258) (35,778) 116,718 97,783	2022 RMB’000 (Unaudited) 6 119,312 8,095 127,413 36,515 – 28,423 64,938 257 9 – – 1,363 17,861 115,017 134,507 (69,569) 57,844	31 May 2023 RMB’000 (Unaudited) 6 116,785 7,904
			124,695
			27,960 44,110 1,280
			73,350
			1,775 188 – 400 1,756 17,861 6,880
			28,860
			44,490
			169,185

— II-D-5 —

FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

APPENDIX II-D

Notes Non-current liabilities Lease liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Paid-in capital Reserves Total equity	2020 RMB’000 (Unaudited) 6,817 66,351 73,168 43,550 40,000 3,550 43,550	31 December 2021 RMB’000 (Unaudited) 6,811 44,247 51,058 46,725 40,000 6,725 46,725	2022 RMB’000 (Unaudited) 7,185 – 7,185 50,659 40,000 10,659 50,659	31 May 2023 RMB’000 (Unaudited) 7,306 109,600
				116,906
				52,279

				40,000 12,279
				52,279

— II-D-6 —

FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

APPENDIX II-D

UNAUDITED STATEMENTS OF CASH FLOWS OF SHENGZHOU YIHUI

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Depreciation of solar power plant Amortisation of right-of-use assets Interest expense Interest income Operating profit before working capital changes (Increase)/Decrease 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 Payments for purchase of solar power plant Interest received Advances to intermediate holding company Net cash generated from/(used in) investing activities	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 1,741 3,575 5,248 23 – – 5,957 5,957 5,957 462 458 459 9,615 8,364 6,721 (3) (3) (9) 17,795 18,351 18,376 (11,788) (9,476) 50,668 43 (159) (56) 6,050 8,716 68,988 (372) (139) (1,566) 5,678 8,577 67,422 – – (167) 3 3 9 – – – 3 3 (158)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 1,787 2,160 – – 2,483 2,527 191 191 2,640 2,954 (3) (5) 7,098 7,827 (3,007) 8,555 823 1,527 4,914 17,909 (6) (361) 4,908 17,548 – (9) 3 5 – (44,110) 3 (44,114)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 1,787 2,160 – – 2,483 2,527 191 191 2,640 2,954 (3) (5) 7,098 7,827 (3,007) 8,555 823 1,527 4,914 17,909 (6) (361) 4,908 17,548 – (9) 3 5 – (44,110) 3 (44,114)
			7,827 8,555 1,527
			17,909 (361)
			17,548
			(9) 5 (44,110)
			(44,114)

— II-D-7 —

FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

APPENDIX II-D

Cash flows from financing activities Proceeds from loans and borrowings Repayment of loans and borrowings Interest paid Payments of lease liabilities Advances from fellow subsidiaries Repayments to fellow subsidiaries Advances from intermediate holding companies Repayments to intermediate holding companies Net cash 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 the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) – – – (13,287) (22,002) (56,651) (9,038) (7,975) (6,347) – (3,307) – 792 782 369 – – (943) 15,113 27,318 20,724 – – – (6,420) (5,184) (42,848) (739) 3,396 24,416 1,350 611 4,007 611 4,007 28,423	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) – 110,000 (7,825) – (2,487) (2,833) – – 369 393 – – 1,093 – – (108,137) (8,850) (577) (3,939) (27,143) 4,007 28,423 68 1,280	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) – 110,000 (7,825) – (2,487) (2,833) – – 369 393 – – 1,093 – – (108,137) (8,850) (577) (3,939) (27,143) 4,007 28,423 68 1,280
			(577) (27,143) 28,423
			1,280

— II-D-8 —

FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

APPENDIX II-D

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF SHENGZHOU YIHUI

Balance at 1 January 2020 Profit for the year Dividend declared Appropriation to statutory reserves Balance at 31 December 2020 and 1 January 2021 Profit for the year Appropriation to statutory reserves Balance at 31 December 2021 and 1 January 2022 Profit for the year Appropriation to statutory reserves Balance at 31 December 2022 and 1 January 2023 Profit for the period Appropriation to statutory reserves Balance at 31 May 2023 Balance at 31 December 2021 and 1 January 2022 Profit for the period Appropriation to statutory reserves Balance at 31 May 2022	Paid-in capital RMB’000 (Unaudited) 40,000 – – – 40,000 – – 40,000 – – 40,000 – – 40,000 40,000 – – 40,000	Statutory reserves RMB’000 (Unaudited) 1,989 – – 152 2,141 – 313 2,454 – 394 2,848 – 162 3,010 2,454 – 134 2,588	Retained profits RMB’000 (Unaudited) 17,898 1,523 (17,860) (152) 1,409 3,175 (313) 4,271 3,934 (394) 7,811 1,620 (162) 9,269 4,271 1,338 (134) 5,475	Total RMB’000 (Unaudited) 59,887 1,523 (17,860) –
				43,550 3,175 –
				46,725 3,934 –
				50,659 1,620 –
				52,279

				46,725 1,338 –
				48,063

— II-D-9 —

FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

APPENDIX II-D

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 11 August 2023, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Shengzhou Yihui entered into the agreement (the “ Forth Agreement ”), pursuant to which the Vendor agreed to sell, and the Purchaser agreed to acquire, the entire equity interest in Shengzhou Yihui at a total consideration of approximately RMB38,501,000 (the “ Forth Disposal ”). Upon completion of the Forth Disposal, Shengzhou Yihui will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of Shengzhou Yihui for the years ended 31 December 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Forth Disposal.

3. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2020, 2021 and 2022 and the five months ended 31 May 2022 and 2023, unaudited sales of electricity includes renewable energy subsidies amounting to RMB12,176,000, RMB12,663,000, RMB13,135,000, RMB4,892,000 and RMB5,408,000 respectively.

— II-D-10 —

FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

APPENDIX II-D

4. 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）, Shengzhou Yihui 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.

5. SOLAR POWER PLANT

Cost At 1 January 2020 Additions At 31 December 2020 and 1 January 2021 Additions At 31 December 2021 and 1 January 2022 Additions At 31 December 2022 and 1 January 2023 Additions At 31 May 2023 Accumulated depreciation At 1 January 2020 Charged for the year At 31 December 2020 and 1 January 2021 Charged for the year At 31 December 2021 and 1 January 2022 Charged for the year At 31 December 2022 and 1 January 2023 Charged for the period At 31 May 2023 Net carrying amount At 31 December 2020 At 31 December 2021 At 31 December 2022 At 31 May 2023	RMB’000 (Unaudited) 157,519 –
	157,519 –
	157,519 268
	157,787 –
	157,787
	(20,604) (5,957)
	(26,561) (5,957)
	(32,518) (5,957)
	(38,475) (2,527)
	(41,002)
	130,958

	125,001

	119,312

	116,785

— II-D-11 —

APPENDIX II-D FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 67,176 79,006 31,015 10,531 8,176 5,500 77,707 87,182 36,515	As at 31 May 2023 RMB’000 (Unaudited) 27,960 –
		27,960

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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 3,486 3,962 3,401 3,964 4,313 5,080 6,804 6,753 6,923 14,042 13,759 14,310 38,880 50,219 1,301 67,176 79,006 31,015	As at 31 May 2023 RMB’000 (Unaudited) 6,335 4,970 8,389 8,266 –
		27,960

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

Not yet past due 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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 1,312 1,904 1,487 3,278 3,520 3,255 4,412 3,996 5,133 6,112 6,425 6,713 29,702 13,802 13,942 22,360 49,359 485 67,176 79,006 31,015	As at 31 May 2023 RMB’000 (Unaudited) 2,357 5,513 4,151 9,114 6,825 –
		27,960

— II-D-12 —

FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

APPENDIX II-D

Shengzhou Yihui’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 2020, 2021 and 2022 and 31 May 2023, the outstanding renewable energy subsidy amounted to RMB66,681,000, RMB78,288,000, RMB30,453,000 and RMB27,069,000 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 Shengzhou Yihui 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.

7. LOANS AND BORROWINGS

Current Secured – other borrowings Non-current Secured – other borrowings Total loans and borrowings	As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 12,302 12,404 – 66,351 44,247 – 78,653 56,651 –	As at 31 May 2023 RMB’000 (Unaudited) 400 109,600
		110,000

Shengzhou Yihui’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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 12,302 12,404 – 12,404 12,515 – 37,874 31,732 – 16,073 – – 78,653 56,651 – 10.6% 11.8% –	As at 31 May 2023 RMB’000 (Unaudited) 400 400 43,680 65,520
		110,000

		12.4%

As at 31 December 2020 and 2021, and 31 May 2023, the loans and borrowings were secured by solar power plant, trade receivables, guarantee deposit, its 100% equity shares from its immediate holding company and guarantee provided by the Group.

— II-D-13 —

APPENDIX II-D FINANCIAL INFORMATION OF THE FOURTH PROJECT COMPANY

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

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

9. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Shengzhou Yihui 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
			2020	2021	2022	2022	2023
			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	Intermediate	Management	667	667	667	278	278
(Kong Sun Yongtai Investment	holding company	service fee
Holdings Limited)
北京鑫泰綠能科技有限公司	Fellow subsidiary	Other repair and	–	–	616	–	–
(Beijing Xintai Green Energy		maintenance fee
Technology Co., Ltd.)
		Operation and	747	758	1,363	311	311
		maintenance fee
陝西億潤新能源科技有限公司	Fellow subsidiary	Maintenance fee	–	19	113	11	11
(Shaanxi Yirun New Energy
Technology Co., Ltd.)

10. DIVIDEND

				For the five months	For the five months
	For the	year ended 31	December	ended 31 May
	2020	2021	2022	2022	2023
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Cash dividends declared but not
yet paid:
Final dividend	17,860	–	–	–	–

11. MAJOR NON-CASH TRANSACTIONS

During the year ended 31 December 2020, Shengzhou Yihui had declared a dividend amounting to RMB17,860,000 to its immediate holding company. The amount was yet to settle up to 31 May 2023.

— II-D-14 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

REPORT ON REVIEW OF FINANCIAL INFORMATION OF DINGBIAN JINGYANG ELECTRICITY COMPANY LIMITED (“DINGBIAN JINGYANG”)

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information of Dingbian Jingyang Electricity Company Limited (“ Dingbian Jingyang ”) set out on pages II-E-3 to II-E-13 which comprises the statements of financial position as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Dingbian Jingyang 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 Dingbian Jingyang 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 THE FIFTH PROJECT COMPANY

APPENDIX II-E

Conclusion

BDO Limited

Certified Public Accountants Hong Kong, 31 August 2023

— II-E-2 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

Set out below is the unaudited financial information of Dingbian Jingyang which comprises the unaudited statements of financial position of Dingbian Jingyang as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Dingbian Jingyang. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Dingbian Jingyang in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” and with reference to Practice Note 750 “Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal” issued by the Hong Kong Institute of Certified Public Accountants.

— II-E-3 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF DINGBIAN JINGYANG

Notes Revenue 3 Cost of sales Gross profit/(loss) Other gains, net Administrative expenses Profit/(Loss) before income tax Income tax expense 4 Profit/(Loss) for the year/ period	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 31,147 27,598 14,001 (11,487) (12,570) (11,997) 19,660 15,028 2,004 25 105 109 (4,472) (9,269) (3,052) 15,213 5,864 (939) (1,220) (162) – 13,993 5,702 (939)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 231 11,951 (5,781) (5,075) (5,550) 6,876 – – (1,196) (1,153) (6,746) 5,723 – (1,431) (6,746) 4,292

— II-E-4 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF DINGBIAN JINGYANG

Notes ASSETS AND LIABILITIES Non-current assets Solar power plant 5 Right-of-use assets Current assets Inventories Trade and other receivables 6 Amount due from intermediate holding company 7 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payables Amounts due to fellow subsidiaries 7 Amount due to immediate holding company 7 Amount due to intermediate holding company 7 Total current liabilities Net current assets Total assets less current liabilities Net asset Equity Paid-in capital Reserves Total equity	2020 RMB’000 (Unaudited) 181,834 10,918 192,752 – 126,850 144,691 6,926 278,467 36,516 535 110,994 51,700 5,996 205,741 72,726 265,478 265,478 245,351 20,127 265,478	31 December 2021 RMB’000 (Unaudited) 177,014 10,322 187,336 195 151,917 128,208 32 280,352 26,944 286 111,582 51,700 5,996 196,508 83,844 271,180 271,180 245,351 25,829 271,180	2022 RMB’000 (Unaudited) 180,648 9,797 190,445 195 165,911 117,248 32 283,386 27,065 – 118,829 51,700 5,996 203,590 79,796 270,241 270,241 245,351 24,890 270,241	31 May 2023 RMB’000 (Unaudited) 176,783 9,579
				186,362
				195 171,217 108,332 32
				279,776
				11,613 1,345 120,951 51,700 5,996
				191,605
				88,171
				274,533
				274,533

				245,351 29,182
				274,533

— II-E-5 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

UNAUDITED STATEMENTS OF CASH FLOWS OF DINGBIAN JINGYANG

Cash flows from operating activities Profit/(Loss) before income tax Adjustments for: Depreciation of solar power plant Amortisation of right-of-use assets Write off of other payables Interest income Operating profit/(loss) before working capital changes Increase in inventories Increase 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 Payments for purchase of solar power plant Interest received Advances to intermediate holding company Net cash (used in)/generated from investing activities	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 15,213 5,864 (939) 8,316 8,316 8,624 596 596 525 – – (150) (25) (7) – 24,100 14,769 8,060 – (195) – (19,341) (25,067) (13,994) (2,832) 1,817 (2,214) 1,927 (8,676) (8,148) (1,241) (411) (286) 686 (9,087) (8,434) (8,233) (14,885) – 25 7 – – 16,483 1,187 (8,208) 1,605 1,187	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) (6,746) 5,723 3,466 3,865 248 218 – – – – (3,032) 9,806 – – (546) (5,306) 331 656 (3,247) 5,156 – (86) (3,247) 5,070 – (16,108) – – 449 8,916 449 (7,192)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) (6,746) 5,723 3,466 3,865 248 218 – – – – (3,032) 9,806 – – (546) (5,306) 331 656 (3,247) 5,156 – (86) (3,247) 5,070 – (16,108) – – 449 8,916 449 (7,192)
			9,806 – (5,306) 656
			5,156 (86)
			5,070
			(16,108) – 8,916
			(7,192)

— II-E-6 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

Cash flows from financing activities Advances from fellow subsidiaries Advances from 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 the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 6,680 588 7,247 867 – – 7,547 588 7,247 25 (6,894) – 6,901 6,926 32 6,926 32 32	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 2,798 2,122 – 2,798 2,122 – – 32 32 32 32	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 2,798 2,122 – 2,798 2,122 – – 32 32 32 32
			2,122
			– 32
			32

— II-E-7 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF DINGBIAN JINGYANG

Balance at 1 January 2020 Profit for the year Dividend declared Appropriate to PRC statutory reserve Balance at 31 December 2020 and 1 January 2021 Profit for the year Appropriate to PRC statutory reserve Balance at 31 December 2021 and 1 January 2022 Loss for the year Balance at 31 December 2022 and 1 January 2023 Profit for the period Appropriate to PRC statutory reserve Balance at 31 May 2023 Balance at 31 December 2021 and 1 January 2022 Loss for the period Balance at 31 May 2022	Paid-in capital RMB’000 (Unaudited) 245,351 – – – 245,351 – – 245,351 – 245,351 – – 245,351 245,351 – 245,351	Statutory reserves RMB’000 (Unaudited) 6,640 – – 1,399 8,039 – 570 8,609 – 8,609 – 429 9,038 8,609 – 8,609	Retained profits RMB’000 (Unaudited) 20,194 13,993 (20,700) (1,399) 12,088 5,702 (570) 17,220 (939) 16,281 4,292 (429) 20,144 17,220 (6,746) 10,474	Total RMB’000 (Unaudited) 272,185 13,993 (20,700) –
				265,478 5,702 –
				271,180 (939)
				270,241 4,292 –
				274,533

				271,180 (6,746)
				264,434

— II-E-8 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 11 August 2023, the Vendor, an indirect wholly owned subsidiary of the Company, the Purchaser and Dingbian Jingyang 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 Dingbian Jingyang for a total consideration of approximately RMB256,185,000 (the “ Fifth Disposal ”). Upon completion of the Fifth Disposal, Dingbian Jiangyang will cease to be a subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of Dingbian Jingyang for the years ended 31 December 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2020, 2021 and 2022 and the five months ended 31 May 2022 and 2023, unaudited sales of electricity includes renewable energy subsidies amounting to RMB19,832,000, RMB18,507,000, RMB8,926,000, Nil and RMB8,132,000 respectively.

— II-E-9 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

4. 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）, Dingbian Jingyang 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.

Pursuant to CaiShui 2020 No.23 Announcement of the Ministry of Finance, the State Taxation Administration and the National Development and Reform Commission on Continuing the Enterprise Income Tax Policies for Western Development Strategies, Dingbian Jingyang was entitled to the preferential tax policy of the western development and was subject to the preferential enterprise income tax of 15%.

5. SOLAR POWER PLANT

Cost At 1 January 2020 Additions At 31 December 2020 and 1 January 2021 Additions At 31 December 2021 and 1 January 2022 Additions At 31 December 2022 and 1 January 2023 Additions At 31 May 2023 Accumulated depreciation At 1 January 2020 Charged for the year At 31 December 2020 and 1 January 2021 Charged for the year At 31 December 2021 and 1 January 2022 Charged for the year At 31 December 2022 and 1 January 2023 Charged for the period At 31 May 2023 Net carrying amount At 31 December 2020 At 31 December 2021 At 31 December 2022 At 31 May 2023	RMB’000 (Unaudited) 220,321 –
	220,321 3,496
	223,817 12,258
	236,075 –
	236,075
	(30,171) (8,316)
	(38,487) (8,316)
	(46,803) (8,624)
	(55,427) (3,865)
	(59,292)
	181,834

	177,014

	180,648

	176,783

— II-E-10 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

6. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables, prepayments and deposits	As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 115,982 147,024 162,845 10,868 4,893 3,066 126,850 151,917 165,911	As at 31 May 2023 RMB’000 (Unaudited) 169,099 2,118
		171,217

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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 8,268 4,907 7,298 8,918 9,162 7,990 16,746 17,116 533 25,603 33,932 31,185 56,447 81,907 115,839 115,982 147,024 162,845	As at 31 May 2023 RMB’000 (Unaudited) 11,411 9,124 15,187 20,743 112,634
		169,099

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

Not yet past due 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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 2,852 1,916 1,733 8,902 5,276 6,026 8,543 10,332 4,099 15,413 16,513 3,963 25,358 32,859 34,037 54,914 80,128 112,987 115,982 147,024 162,845	As at 31 May 2023 RMB’000 (Unaudited) 2,383 11,823 8,878 12,785 24,493 108,737
		169,099

— II-E-11 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

Dingbian Jingyang’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 2020, 2021 and 2022 and 31 May 2023, the outstanding renewable energy subsidy amounted to RMB105,844,000, RMB126,756,000, RMB136,842,000 and RMB146,032,000 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 Dingbian Jingyang 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.

7. 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.

8. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Dingbian Jingyang 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
			2020	2021	2022	2022	2023
			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	Intermediate	Management	794	794	794	331	331
(Kong Sun Yongtai Investment	holding company	service fee
Holdings Limited)
北京鑫泰綠能科技有限公司	Fellow subsidiary	Other repair and	–	–	1,157	–	–
(Beijing Xintai Green Energy		maintenance fee
Technology Co., Ltd.)
		Operation and	1,132	1,138	1,043	474	474
		maintenance fee
陝西億潤新能源科技有限公司	Fellow subsidiary	Maintenance fee	–	184	–	–	–
(Shaanxi Yirun New Energy
Technology Co., Ltd.)

— II-E-12 —

FINANCIAL INFORMATION OF THE FIFTH PROJECT COMPANY

APPENDIX II-E

9. DIVIDEND

				For the five months	For the five months
	For the	year ended 31	December	ended 31 May
	2020	2021	2022	2022	2023
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Cash dividends declared but not
yet paid:
Final dividend	20,700	–	–	–	–

10. MAJOR NON-CASH TRANSACTIONS

During the year ended 31 December 2020, Dingbian Jingyang had declared a dividend amounting to RMB20,700,000 to its immediate holding company. The amount was yet to settle up to 31 May 2023.

— II-E-13 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

REPORT ON REVIEW OF FINANCIAL INFORMATION OF DINGBIAN COUNTY ZHIXINDA NEW ENERGY LIMITED (“DINGBIAN COUNTY ZHIXINDA”)

TO THE BOARD OF DIRECTORS OF KONG SUN HOLDINGS LIMITED

Introduction

We have reviewed the unaudited financial information of Dingbian County Zhixinda New Energy Limited (“ Dingbian County Zhixinda ”) set out on pages II-F-3 to II-F-14 which comprises the statements of financial position as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Dingbian County Zhixinda 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 Dingbian County Zhixinda 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 THE SIXTH PROJECT COMPANY

APPENDIX II-F

Conclusion

BDO Limited

Certified Public Accountants Hong Kong, 31 August 2023

— II-F-2 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

Set out below is the unaudited financial information of Dingbian County Zhixinda which comprises the unaudited statements of financial position of Dingbian County Zhixinda as at 31 December 2020, 2021 and 2022 and 31 May 2023 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 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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 Dingbian County Zhixinda. The Company’s auditor, BDO Limited, has reviewed the Unaudited Financial Information of Dingbian Country Zhixinda 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 THE SIXTH PROJECT COMPANY

APPENDIX II-F

UNAUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF DINGBIAN COUNTY ZHIXINDA

Notes Revenue 3 Cost of sales Gross profit Other gains, net Administrative expenses Finance cost Profit before income tax Income tax expense 4 Profit for the year/period	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 48,426 44,009 43,002 (19,501) (17,147) (22,519) 28,925 26,862 20,483 270 195 – (5,755) (7,213) (4,838) – – – 23,440 19,844 15,645 (1,772) (1,194) (1,646) 21,668 18,650 13,999	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 19,598 17,835 (10,196) (7,066) 9,402 10,769 – – (1,962) (1,977) – (3,261) 7,440 5,531 (648) (850) 6,792 4,681

— II-F-4 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

UNAUDITED STATEMENTS OF FINANCIAL POSITION OF DINGBIAN COUNTY ZHIXINDA

Notes ASSETS AND LIABILITIES Non-current assets Solar power plant 5 Right-of-use assets Current assets Trade and other receivables 6 Amounts due from intermediate holding companies 8 Amounts due from fellow subsidiaries 8 Cash and cash equivalents Total current assets Current liabilities Trade and other payables Tax payables Loans and borrowings 7 Amount due to intermediate holding company 8 Amount due to immediate holding company 8 Amounts due to fellow subsidiaries 8 Total current liabilities Net current assets Total assets less current liabilities	31 December 2020 2021 RMB’000 RMB’000 (Unaudited) (Unaudited) 288,241 275,611 14,768 14,033 303,009 289,644 116,765 128,126 257,421 256,530 – 103 2,898 1,958 377,084 386,717 79,633 77,025 425 464 – – 157,387 135,502 60,926 60,926 3,285 5,357 301,656 279,274 75,428 107,443 378,437 397,087	2022 RMB’000 (Unaudited) 258,565 13,297 271,862 57,076 180,063 153 31 237,323 1,535 45 – 31,902 60,926 3,691 98,099 139,224 411,086	31 May 2023 RMB’000 (Unaudited) 253,352 12,991
			266,343
			60,441 413,036 153 1,531
			475,161
			4,844 – 6,000 – 60,926 3,867
			75,637
			399,524
			665,867

— II-F-5 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

Notes Non-current liabilities Loans and borrowings 7 Total non-current liabilities Net assets Equity Paid-in capital Reserves Total equity	2020 RMB’000 (Unaudited) – – 378,437 350,000 28,437 378,437	31 December 2021 RMB’000 (Unaudited) – – 397,087 350,000 47,087 397,087	2022 RMB’000 (Unaudited) – – 411,086 350,000 61,086 411,086	31 May 2023 RMB’000 (Unaudited) 250,100
				250,100
				415,767

				350,000 65,767
				415,767

— II-F-6 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

UNAUDITED STATEMENTS OF CASH FLOWS OF DINGBIAN COUNTY ZHIXINDA

Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of solar power plant Amortisation of right-of-use assets Write off property, plant and equipment Interest expense Operating profit before working capital changes (Increase)/Decrease 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 Payments for purchase of solar power plant Advances to intermediate holding companies Repayments from intermediate holding companies Advances to fellow subsidiaries Net cash (used in)/generated from investing activities	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 23,440 19,844 15,645 12,853 12,630 12,511 735 735 736 71 – – – – – 37,099 33,209 28,892 (14,538) (11,361) 71,050 6,831 3 (70,955) 29,392 21,851 28,987 (1,346) (1,155) (2,065) 28,046 20,696 26,922 (142,207) (2,611) – (15,498) – – – 891 76,467 – (103) (50) (157,705) (1,823) 76,417	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 7,440 5,531 5,262 5,213 307 306 – – – 3,261 13,009 14,311 (3,701) (3,365) 285 48 9,593 10,994 (1,112) (895) 8,481 10,099 – – – (232,973) 434 – (50) – 384 (232,973)	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) 7,440 5,531 5,262 5,213 307 306 – – – 3,261 13,009 14,311 (3,701) (3,365) 285 48 9,593 10,994 (1,112) (895) 8,481 10,099 – – – (232,973) 434 – (50) – 384 (232,973)
			14,311 (3,365) 48
			10,994 (895)
			10,099
			– (232,973) – –
			(232,973)

— II-F-7 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

Cash flows from financing activities Proceed from loans and borrowings Advances from fellow subsidiaries Repayments to fellow subsidiaries Advances from intermediate holding companies Repayments to intermediate holding companies Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) – – – 2,139 2,072 2,932 – – (4,598) 130,321 – – – (21,885) (103,600) 132,460 (19,813) (105,266) 2,801 (940) (1,927) 97 2,898 1,958 2,898 1,958 31	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) – 256,100 – 176 (4,598) – – – (6,100) (31,902) (10,698) 224,374 (1,833) 1,500 1,958 31 125 1,531	For the five months ended 31 May 2022 2023 RMB’000 RMB’000 (Unaudited) (Unaudited) – 256,100 – 176 (4,598) – – – (6,100) (31,902) (10,698) 224,374 (1,833) 1,500 1,958 31 125 1,531
			224,374 1,500 31
			1,531

— II-F-8 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

UNAUDITED STATEMENTS OF CHANGES IN EQUITY OF DINGBIAN COUNTY ZHIXINDA

Balance at 1 January 2020 Profit for the year Dividend declared Appropriation to PRC statutory reserve Balance at 31 December 2020 and 1 January 2021 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2021 and 1 January 2022 Profit for the year Appropriation to PRC statutory reserve Balance at 31 December 2022 and 1 January 2023 Profit for the period Appropriation to PRC statutory reserve Balance at 31 May 2023 Balance at 31 December 2021 and 1 January 2022 Profit for the period Appropriation to PRC statutory reserve Balance at 31 May 2022	Paid-in capital RMB’000 (Unaudited) 350,000 – – – 350,000 – – 350,000 – – 350,000 – – 350,000 350,000 – – 350,000	Statutory reserves RMB’000 (Unaudited) 9,307 – – 2,167 11,474 – 1,865 13,339 – 1,400 14,739 – 468 15,207 13,339 – 679 14,018	Retained profits RMB’000 (Unaudited) 28,088 21,668 (30,626) (2,167) 16,963 18,650 (1,865) 33,748 13,999 (1,400) 46,347 4,681 (468) 50,560 33,748 6,792 (679) 39,861	Total RMB’000 (Unaudited) 387,395 21,668 (30,626) –
				378,437 18,650 –
				397,087 13,999 –
				411,086 4,681 –
				415,767

				397,087 6,792 –
				403,879

— II-F-9 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

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

On 11 August 2023, the Vendor, an indirect wholly-owned subsidiary of the Company, the Purchaser and Dingbian County Zhixinda 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 Dingbian County Zhixinda at a total consideration of approximately RMB369,348,000 (the “ Sixth Disposal ”). Upon completion of the Sixth Disposal, Dingbian County Zhixinda will cease to be the subsidiary of the Company.

2. BASIS OF PREPARATION OF THE UNAUDITED FINANCIAL INFORMATION

The Unaudited Financial Information of Dingbian County Zhixinda for the years ended 31 December 2020, 2021 and 2022 and for the five months ended 31 May 2022 and 2023 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. REVENUE

Revenue represents income from sales of electricity (including renewable energy subsidies). During the years ended 31 December 2020, 2021 and 2022 and the five months ended 31 May 2022 and 2023, unaudited sales of electricity includes renewable energy subsidies amounting to RMB29,540,000, RMB26,730,000, RMB26,813,000, RMB11,896,000 and RMB11,211,000 respectively.

— II-F-10 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

4. 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）, Dingbian County Zhixinda 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.

Pursuant to CaiShui 2020 No.23 Announcement of the Ministry of Finance, the State Taxation Administration and the National Development and Reform Commission on Continuing the Enterprise Income Tax Policies for Western Development Strategies, Dingbian County Zhixinda was entitled to the preferential tax policy of the western development and was subject to the preferential enterprise income tax of 15%.

5. SOLAR POWER PLANT

Cost At 1 January 2020 Addition At 31 December 2020 and 1 January 2021 Addition At 31 December 2021 and 1 January 2022 Written off At 31 December 2022 and 1 January 2023 Additions At 31 May 2023 Accumulated depreciation At 1 January 2020 Charged for the year At 31 December 2020 and 1 January 2021 Charged for the year At 31 December 2021 and 1 January 2022 Charged for the year At 31 December 2022 and 1 January 2023 Charged for the period At 31 May 2023 Net carrying amount At 31 December 2020 At 31 December 2021 At 31 December 2022 At 31 May 2023	RMB’000 (Unaudited) 332,130 –
	332,130 –
	332,130 (4,535)
	327,595 –
	327,595
	(31,036) (12,853)
	(43,889) (12,630)
	(56,519) (12,511)
	(69,030) (5,213)
	(74,243)
	288,241

	275,611

	258,565

	253,352

— II-F-11 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

6. TRADE AND OTHER RECEIVABLES

As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) Trade receivables 99,283 118,288 53,291 Other receivables, prepayments and deposits 17,482 9,838 3,785 116,765 128,126 57,076 Ageing analysis of trade receivables, based on invoice dates, are as follows:	As at 31 May 2023 RMB’000 (Unaudited) 58,340 2,101
	60,441

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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 9,589 7,852 7,903 7,889 8,141 7,466 17,629 16,175 16,282 33,655 33,612 21,640 30,521 52,508 – 99,283 118,288 53,291	As at 31 May 2023 RMB’000 (Unaudited) 13,348 10,394 14,562 20,036
		58,340

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

Not yet past due 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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 4,071 4,637 3,647 8,062 5,202 6,891 8,607 9,313 7,670 16,366 15,719 16,117 33,337 32,907 18,966 28,840 50,510 – 99,283 118,288 53,291	As at 31 May 2023 RMB’000 (Unaudited) 4,144 12,453 9,213 15,642 16,888 –
		58,340

— II-F-12 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

Dingbian County Zhixinda’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 2020, 2021 and 2022 and 31 May 2023, the outstanding renewable energy subsidy amounted to RMB97,788,000, RMB116,326,000, RMB51,939,000 and RMB56,861,000 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 Dingbian County Zhixinda 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.

7. LOANS AND BORROWINGS

Current Secured – other borrowings Non-current Secured – other borrowings Total loans and borrowings	As at 31 December 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) – – – – – – – – –	As at 31 May 2023 RMB’000 (Unaudited) 6,000 250,100
		256,100

Dingbian County Zhixinda’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 2020 2021 2022 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) – – – – – – – – – – – – – – – – – –	As at 31 May 2023 RMB’000 (Unaudited) 6,000 6,000 100,000 144,100
		256,100

		5.40%

As at 31 May 2023, loans and other borrowings were secured by solar power plant, trade receivables, 100% equity shares from its immediate holding company and guarantee provided by the Group.

— II-F-13 —

FINANCIAL INFORMATION OF THE SIXTH PROJECT COMPANY

APPENDIX II-F

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

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

9. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in the Unaudited Financial Information, Dingbian County Zhixinda 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
			2020	2021	2022	2022	2023
			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	Intermediate	Management	1,043	1,043	1,043	435	435
(Kong Sun Yongtai Investment	holding company	service fee
Holdings Limited)
北京鑫泰綠能科技有限公司	Fellow subsidiary	Other repairment	–	–	1,931	61	–
(Beijing Xintai Green Energy		and maintenance
Technology Co., Ltd.)		fee
		Operation and	1,887	1,821	1,821	759	759
		maintenance fee
陝西億潤新能源科技有限公司	Fellow subsidiary	Maintenance fee	377	19	–	–	–
(Shaanxi Yirun New Energy
Technology Co., Ltd.)

10. DIVIDEND

				For the five months	For the five months
	For the	year ended 31	December	ended 31 May
	2020	2021	2022	2022	2023
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Cash dividends declared but not
yet paid:
Final dividend	30,626	–	–	–	–

11. MAJOR NON-CASH TRANSACTIONS

During the year ended 31 December 2020, Dingbian County Zhixinda had declared a dividend amounting to RMB30,626,000 to its immediate holding company. The amount was yet to settle up to 31 May 2023.

— II-F-14 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Introduction

The unaudited pro forma financial information of the Remaining Group (the “ Unaudited Pro Forma Financial Information ”) presented below is prepared to illustrate (a) the financial position of the Remaining Group as if the Disposals had been completed on 31 December 2022; and (b) the results and cash flows of the Remaining Group for the year ended 31 December 2022 as if the Disposals had been completed on 1 January 2022. 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 2022 or at any future date had the Disposals been completed on 31 December 2022; or (ii) the results and cash flows of the Remaining Group for the year ended 31 December 2022 or for any future period had the Disposals been completed on 1 January 2022.

The Unaudited Pro Forma Financial Information is prepared based on the consolidated statement of financial position of the Group as at 31 December 2022, consolidated statement of profit or loss, consolidated statement of other comprehensive income and consolidated statement of cash flows of the Group for the year ended 31 December 2022 as set out in the published annual report of the Company for the year ended 31 December 2022, 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 Disposals 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 2022 and other financial information included elsewhere in this circular.

— III-1 —

UNAUDITED PRO FORMA FINANCIAL

APPENDIX III

INFORMATION OF THE REMAINING GROUP

statement of	financial	position of	the Remaining	Group as at	31 December	2022	RMB’000			20,393	1,013,913	180,448	193,710	–	107,318			760,194	176,234	11,955	119,576	2,583,741		1,728	2,437,558	126	287,489	1,824	2,728,725
							RMB’000	(Note 12)		–	–	–	–	–	–			–	–	–	–			–	–	126	–	–
							RMB’000	(Note 11)		–	–	–	–	–	–			–	–	–	–			–	–	–	–	–
							RMB’000	(Note 8)		–	–	–	–	–	–			–	–	–	–			–	–	–	(3,800)	–
							RMB’000	(Note 3)		–	–	–	–	(547)	–			–	–	–	–			–	758,028	–	–	–
						Pro forma adjustments	RMB’000 RMB’000	(Note 2(v)) (Note 2(vi))		– –	(176,783) (253,352)	– –	– –	– –	(9,579) (12,991)			– –	– –	– –	– –			(195) –	(100,902) (408,837)	– –	(32) (1,531)	– –
							RMB’000	(Note 2(iv))		(6)	(116,785)	–	–	–	(7,904)			–	–	–	–			–	(45,573)	–	(1,280)	–
							RMB’000	(Note 2(iii))		–	(161,791)	–	–	–	(5,654)			–	–	–	–			–	34,131	–	(3,189)	–
							RMB’000	(Note 2(ii))		(444)	(153,607)	–	–	–	(6,411)			–	–	–	–			–	25,551	–	(4,556)	–
							RMB’000	(Note 2(i))		–	(176,293)	–	–	–	(7,435)			–	–	–	–			–	150,495	–	(102)	–
Consolidated	statement of	financial	position of the	Group as at	31 December	2022	RMB’000	(Note 1)		20,843	2,052,524	180,448	193,710	547	157,292			760,194	176,234	11,955	119,576	3,673,323		1,923	2,024,665	–	301,979	1,824	2,330,391
									Non-current assets	Property, plant and equipment	Solar power plants	Interests in associates	Interest in a joint venture	Goodwill	Right-of-use assets	Financial assets measured at fair	value through other	comprehensive income	Loan receivables	Deferred tax assets	Loan to an associate		Current assets	Inventories	Trade, bills and other receivables	Tax recoverable	Cash and cash equivalents	Loan to an associate	Total current assets

— III-2 —

UNAUDITED PRO FORMA FINANCIAL

APPENDIX III

INFORMATION OF THE REMAINING GROUP

statement of	financial	position of	the Remaining	Group as at	31 December	2022	RMB’000			339,781	27,881	12,756	351,411	8,933	–	740,762	1,987,963		4,571,704		103,582	1,189,161	6,863	1,299,606	3,272,098		6,486,588	(3,302,540)		3,184,048	88,050	3,272,098
							RMB’000	(Note 12)		–	–	–	–	–	126						–	–	–				–	–			–
							RMB’000	(Note 11)		–	27,881	–	–	–	–						–	–	–				–	(27,881)			–
							RMB’000	(Note 8)		–	–	–	–	–	–						–	–	–				–	(3,800)			–
							RMB’000	(Note 3)		–	–	–	–	–	–						–	–	–				746,346	11,135			–
						Pro forma adjustments	RMB’000 RMB’000	(Note 2(v)) (Note 2(vi))		(11,613) (4,844)	– –	– –	– (6,000)	– –	(1,345) –						– –	– (250,100)	– –				(245,351) (350,000)	(29,182) (65,767)			– –
							RMB’000	(Note 2(iv))		(1,775)	–	–	(400)	–	(188)						(7,306)	(109,600)	–				(40,000)	(12,279)			–
							RMB’000	(Note 2(iii))		(12,673)	–	–	(17,217)	–	–						–	(46,393)	–				(60,000)	(220)			–
							RMB’000	(Note 2(ii))		(3,383)	–	(654)	(17,643)	–	(227)						(5,685)	(46,494)	–				(50,000)	(15,381)			–
							RMB’000	(Note 2(i))		(12,364)	–	–	–	–	(1,333)						–	–	–				(995)	(18,643)			–
Consolidated	statement of	financial	position of the	Group as at	31 December	2022	RMB’000	(Note 1)		386,433	–	13,410	392,671	8,933	2,967	804,414	1,525,977		5,199,300		116,573	1,641,748	6,863	1,765,184	3,434,116		6,486,588	(3,140,522)		3,346,066	88,050	3,434,116
									Current liabilities	Trade and other payables	Provisions	Lease liabilities	Loans and borrowings	Corporate bonds	Tax payable	Total current liabilities	Net current assets	Total assets less current	liabilities	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 —

UNAUDITED PRO FORMA FINANCIAL

APPENDIX III

INFORMATION OF THE REMAINING GROUP

statement of	profit or loss	of the	Remaining	Group for the	year ended	31 December	2022	RMB’000		423,573	(217,551)	206,022	(47,734)	(166,443)		(99,828)		(28,029)		(135,411)		(430)	(153,706)		(7,196)	14,988	(6,290)	(424,057)	(10,657)	(434,714)		(439,273)	4,559	(434,714)
								RMB’000	(Note 11)	–	–		(27,881)	–		–		–		–		–	–		–	–	–		–			(27,881)	–
								RMB’000	(Note 8)	–	–		–	(3,800)		–		–		–		–	–		–	–	–		–			(3,800)	–
								RMB’000	(Note 7)	18,594	(7,635)		–	(10,959)		–		–		–		–	–		–	–	–		–			–	–
								RMB’000	(Note 5)	–	–		–	–		(91,241)		–		–		–	–		–	–	–		–			(91,241)	–
							Pro forma adjustments	RMB’000 RMB’000	(Note 4(v)) (Note 4(vi))	(14,001) (43,002)	11,997 22,519		(109) –	3,052 4,838		– –		– –		– –		– –	– –		– –	– –	– –		– 1,646			939 (13,999)	– –
								RMB’000	(Note 4(iv))	(21,101)	8,462		(9)	679		–		–		–		–	6,721		–	–	–		1,314			(3,934)	–
								RMB’000	(Note 4(iii))	(26,255)	11,666		–	3,389		–		–		–		–	11,370		–	–	–		–			170	–
								RMB’000	(Note 4(ii))	(26,504)	9,911		123	1,010		–		–		–		–	9,615		–	–	–		586			(5,259)	–
								RMB’000	(Note 4(i))	(19,885)	13,567		(100)	2,359		–		–		–		–	4,669		–	–	–		–			610	–
Consolidated	statement of	profit or loss	of the Group	for the	year ended	31 December	2022	RMB’000	(Note 1)	555,727	(288,038)	267,689	(19,758)	(167,011)		(8,587)		(28,029)		(135,411)		(430)	(186,081)		(7,196)	14,988	(6,290)	(276,116)	(14,203)	(290,319)		(294,878)	4,559	(290,319)
										Revenue	Cost of sales	Gross profit	Other (losses)/gain, net	Administrative expenses	Losses on disposal of subsidiaries,	net	Impairment loss on solar power	plants	Impairment losses on trade and	other receivables, net	Impairment loss on loan to an	associate	Finance costs	Impairment losses on interests in	associates	Share of profits of associates	Share of loss of a joint venture	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

APPENDIX III

INFORMATION OF THE REMAINING GROUP

statement	of other	comprehensive	income of the	Remaining	Group for the	year ended	31 December	2022	RMB’000		(434,714)						(23,685)					(13,714)		(37,399)		(472,113)			(476,672)	4,559	(472,113)
									RMB’000	(Note 11)	(27,881)						–					–							(27,881)	–
									RMB’000	(Note 8)	(3,800)						–					–							(3,800)	–
									RMB’000	(Note 7)	–						–					–							–	–
									RMB’000	(Note 5)	(91,241)						–					–							(91,241)	–
								Pro forma adjustments	RMB’000 RMB’000	(Note 4(v)) (Note 4(vi))	939 (13,999)						– –					– –							939 (13,999)	– –
									RMB’000	(Note 4(iv))	(3,934)						–					–							(3,934)	–
									RMB’000	(Note 4(iii))	170						–					–							170	–
									RMB’000	(Note 4(ii))	(5,259)						–					–							(5,259)	–
									RMB’000	(Note 4(i))	610						–					–							610	–
Consolidated	statement	of other	comprehensive	income of the	Group for the	year ended	31 December	2022	RMB’000	(Note 1)	(290,319)						(23,685)					(13,714)		(37,399)		(327,718)			(332,277)	4,559	(327,718)
											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	*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 —

UNAUDITED PRO FORMA FINANCIAL

APPENDIX III

INFORMATION OF THE REMAINING GROUP

statement of	cash flows	of the	Remaining	Group for the	year ended	31 December	2022	RMB’000				(424,057)			5,592	79,486		28,029	21,484		8,384		316	(397)	99,828		22		393	637	6,290	(14,988)		(328)		(91)		7,196	153,706	(5,736)		135,411		430	8,416	(6,242)
								RMB’000	(Note 11)			(27,881)			–	–		–	–		–		–	–	–		–		–	–	–	–		–		–		–	–	–		–		–	–	–
								RMB’000	(Note 10)			–			–	–		–	–		–		–	–	–		–		–	–	–	–		–		–		–	–	–		–		–	–	–
								RMB’000	(Note 9)			–			–	–		–	–		–		–	–	–		–		–	–	–	–		–		–		–	–	–		–		–	–	–
								RMB’000	(Note 8)			(3,800)			–	–		–	–		–		–	–	–		–		–	–	–	–		–		–		–	–	–		–		–	–	–
								RMB’000	(Note 5)			(91,241)			–	–		–	–		–		–	–	91,241		–		–	–	–	–		–		–		–	–	–		–		–	–	–
							Pro forma adjustments	RMB’000 RMB’000	(Note 6(v)) (Note 6(vi))			939 (15,645)			– –	(8,624) (12,511)		– –	(525) (736)		– –		– –	– –	– –		– –		– –	– –	– –	– –		– –		– –		– –	– –	– –		– –		– –	– –	150 –
								RMB’000	(Note 6(iv))			(5,248)			–	(5,957)		–	(459)		–		–	–	–		–		–	–	–	–		–		–		–	(6,721)	9		–		–	–	–
								RMB’000	(Note 6(iii))			170			–	(8,040)		–	(311)		–		–	–	–		–		–	–	–	–		–		–		–	(11,370)	–		–		–	–	–
								RMB’000	(Note 6(ii))			(5,845)			(19)	(7,621)		–	(519)		–		–	–	–		–		(279)	–	–	–		–		–		–	(9,615)	6		–		–	–	150
								RMB’000	(Note 6(i))			610			–	(8,731)		–	(407)		–		–	–	–		–		–	–	–	–		–		–		–	(4,669)	–		–		–	–	–
Consolidated	statement of	cash flows	of the Group	for the	year ended	31 December	2022	RMB’000	(Note 1)			(276,116)			5,611	130,970		28,029	24,441		8,384		316	(397)	8,587		22		672	637	6,290	(14,988)		(328)		(91)		7,196	186,081	(5,751)		135,411		430	8,416	(6,542)
										Cash flows from operating	activities	Loss before income tax	Adjustments for:	Depreciation of property, plant and	equipment	Depreciation of solar power plants	Impairment loss on a solar power	plant	Amortisation of right-of-use assets	Impairment losses on right-of-use	assets	Equity-settled share-based payment	expenses	Foreign exchange gains, net	Loss on disposal of subsidiaries, net	Loss on disposal of property, plant	and equipment	Loss on disposal of solar power	plants	Write-down of inventories	Share of loss of a joint venture	Share of profits of associates	Gain on deemed acquisition of an	associate	Gain on deemed disposal of an	associate	Impairment loss on interests in	associates	Interest expense	Interest income	Impairment loss on trade and other	receivables, net	Impairment loss on loan to an	associate	Write-off of other receivables	Write-back of other payables

— III-6 —

UNAUDITED PRO FORMA FINANCIAL

APPENDIX III

INFORMATION OF THE REMAINING GROUP

statement of	cash flows	of the	Remaining	Group for the	year ended	31 December	2022	RMB’000			103,781	(1,621)		106,771	216,086	27,881	452,898	(17,775)		435,123			(2,604)		(1,077)		451	(200,000)	(18)				402,500	5,736		829,317	173,664	(121,830)		1,086,139
								RMB’000	(Note 11)					–	–	27,881		–					–		–		–	–	–				–	–		–	–	–
								RMB’000	(Note 10)			–		–	–	–		–					–		–		–	–	–				–	–		425,514	–	–
								RMB’000	(Note 9)			–		–	–	–		–					–		–		–	–	–				–	–		–	173,664	–
								RMB’000	(Note 8)			–		–	–	–		–					–		–		–	–	–				–	–		–	–	–
								RMB’000	(Note 5)			–		–	–	–		–					–		–		–	–	–				–	–		–	–	–
							Pro forma adjustments	RMB’000 RMB’000	(Note 6(v)) (Note 6(vi))			– –		12,807 (147,467)	2,214 70,955	– –		286 2,065					– –		– –		– –	– –	– –				– –	– –		– –	– –	– –
								RMB’000	(Note 6(iv))			–		(50,668)	56	–		1,566					–		167		–	–	–				–	(9)		–	–	–
								RMB’000	(Note 6(iii))			–		12,874	(3,230)	–		(72)					–		5		–	–	–				–	–		–	–	–
								RMB’000	(Note 6(ii))			–		5,521	(1,915)	–		291					338		171		(294)	–	–				–	(6)		–	–	–
								RMB’000	(Note 6(i))			–		10,927	(15)	–		290					–		2,773		–	–	–				–	–		–	–	–
Consolidated	statement of	cash flows	of the Group	for the	year ended	31 December	2022	RMB’000	(Note 1)		247,280	(1,621)		262,777	148,021	–	656,457	(22,201)		634,256			(2,942)		(4,193)		745	(200,000)	(18)				402,500	5,751		403,803	–	(121,830)		483,816
										Operating profit before working	capital changes	Increase in inventories, net	Decrease in trade, bills and other	receivables	Increase in trade and other payables	Increase in provisions	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	Payments for construction of solar	power plants	Proceeds from sale of solar power	plants	Capital injection on a joint venture	Capital injection on financial assets	Proceeds from reduction in	investment in financial assets	measured at fair value through	other comprehensive income	Interests received	Proceeds from disposal of	subsidiaries, net of cash disposed	Repayments from Disposal Companies	Increase in loan to an associate	Net cash generated from investing	activities

— III-7 —

UNAUDITED PRO FORMA FINANCIAL

APPENDIX III

INFORMATION OF THE REMAINING GROUP

statement of	cash flows	of the	Remaining	Group for the	year ended	31 December	2022	RMB’000				40,000		(1,102,771)	(16,317)		(151,746)		113,013	(161,374)	(71,289)	(1,350,484)		170,778		694,350		624		865,752
								RMB’000	(Note 11)			–		–	–		–		–	–	–			–		–		–		–
								RMB’000	(Note 10)			–		–	–		–		–	–	–			425,514		–		–		425,514
								RMB’000	(Note 9)			–		–	–		–		–	–	–			173,664		–		–		173,664
								RMB’000	(Note 8)			–		–	–		–		–	–	–			(3,800)		–		–		(3,800)
								RMB’000	(Note 5)			–		–	–		–		–	–	–			–		–		–		–
							Pro forma adjustments	RMB’000 RMB’000	(Note 6(v)) (Note 6(vi))			– –		– –	– –		(7,247) (2,932)		– 108,198	– –	– –			– 1,927		(32) (1,958)		– –		(32) (31)
								RMB’000	(Note 6(iv))			–		56,651	–		(21,093)		943	6,347	–			(24,416)		(4,007)		–		(28,423)
								RMB’000	(Note 6(iii))			–		15,558	–		(20,229)		3,246	11,370	–			(29)		(19)		–		(48)
								RMB’000	(Note 6(ii))			–		11,249	1,427		(4,166)		626	9,306	–			(1,194)		(1,775)		–		(2,969)
								RMB’000	(Note 6(i))			–		90,531	–		(96,079)		–	4,669	–			(101)		(1)		–		(102)
Consolidated	statement of	cash flows	of the Group	for the	year ended	31 December	2022	RMB’000	(Note 1)			40,000		(1,276,760)	(17,744)		–		–	(193,066)	(71,289)	(1,518,859)		(400,787)		702,142		624		301,979
										Cash flows from financing activities	Proceed from new loans and	borrowings	Repayment of loans and	borrowings	Repayments of lease liabilities	Repayments to Disposal	Companies	Advances from Disposal	Companies	Interest paid	Repayment of corporate bonds	Net cash used in financing activities	Net (decrease)/increase in cash and	cash equivalents	Cash and cash equivalents at	beginning of year	Effect of foreign exchange rate	changes	Cash and cash equivalents at	end of year

— III-8 —

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 2022 as set out in the published annual report of the Group for the year ended 31 December 2022.
2) (i) The adjustment reflects the exclusion of assets and liabilities of Dingbian Wanheshun as at 31 May 2023 as if the Disposals had been completed on 31 December 2022. The amounts are extracted from the unaudited financial information of Dingbian Wanheshun set out in Appendix II to this circular.
(ii) The adjustment reflects the exclusion of assets and liabilities of Huangshi Huangyuan as at 31 May 2023 as if the Disposals had been completed on 31 December 2022. The amounts are extracted from the unaudited financial information of Huangshi Huangyuan set out in Appendix II to this circular.
(iii) The adjustment reflects the exclusion of assets and liabilities of Yulin Zhengxin as at 31 May 2023 as if the Disposals had been completed on 31 December 2022. The amounts are extracted from the unaudited financial information of Yulin Zhengxin set out in Appendix II to this circular.
(iv) The adjustment reflects the exclusion of assets and liabilities of Shengzhou Yihui as at 31 May 2023 as if the Disposals had been completed on 31 December 2022. The amounts are extracted from the unaudited financial information of Shengzhou Yihui set out in Appendix II to this circular.
(v) The adjustment reflects the exclusion of assets and liabilities of Dingbian Jingyang as at 31 May 2023 as if the Disposals had been completed on 31 December 2022. The amounts are extracted from the unaudited financial information of Dingbian Jingyang set out in Appendix II to this circular.
(vi) The adjustment reflects the exclusion of assets and liabilities of Dingbian County Zhixinda as at 31 May 2023 as if the Disposals had been completed on 31 December 2022. The amounts are extracted from the unaudited financial information of Dingbian County Zhixinda set out in Appendix II to this circular.

— III-9 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

3) The adjustment represents the pro forma loss on Disposals as if the Disposals had been completed on 31 December 2022, which is calculated as follows:

Notes Total consideration (a) Less:_Share of net assets of the Disposal Companies as at 31 May 2023 (b) _Less:_Net amounts due to group companies as at 31 December 2022 (c) _Less:_Goodwill of the Disposal Companies as at 31 December 2022 (d)_ Estimated loss on Disposal	RMB’000 1,470,848 (887,818) (712,820) (547)
	(130,337)

(a) In accordance with the Disposal Agreements, the Group agreed to dispose of its 100% equity interest in the Project Companies, together with the amounts due to group companies and owed by the Project Companies, to the Purchaser, which is an independent third party. The total consideration for the Disposals amounts to RMB1,470,848,000, which is comprised a cash consideration of RMB758,028,000 for the transfer of the entire equity interest in the Project Companies and assignment of net amounts due to group companies as at 31 December 2022 of RMB712,820,000 (note 3(c)).
(b) This amount represents the net assets of the Project Companies amounting to approximately RMB887,818,000 as at 31 May 2023.

Net assets of the Project Companies as at 31 May 2023 is determined as follows:

– Dingbian Wanheshun – Huangshi Huangyuan – Yulin Zhengxin – Shengzhou Yihui – Dingbian Jingyang – Dingbian County Zhixinda	RMB’000 19,638 65,381 60,220 52,279 274,533 415,767
	887,818

— III-10 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(c) The amount represents net amounts due by the Project Companies to the Group of approximately RMB712,820,000 (note 3(a)) as at 31 December 2022. Pursuant to the terms of the Disposal Agreements, the Company would assign these amounts due from the Project Companies to the Purchaser upon the completion of the Disposals.

Amounts due to/(from) group companies of the Project Companies as at 31 December 2022 is as extracted from the unaudited financial information in Appendix II to this circular:

– Dingbian Wanheshun – Huangshi Huangyuan – Yulin Zhengxin – Shengzhou Yihui – Dingbian Jingyang – Dingbian County Zhixinda	RMB’000 315,008 128,198 159,793 134,241 59,277 (83,697)
	712,820

(d) This amount represents goodwill allocated to the Project Companies as at 31 December 2022 as follows:

– Dingbian Wanheshun – Huangshi Huangyuan – Dingbian Jingyang	RMB’000 150 221 176
	547

— III-11 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

4) The following adjustments are not expected to have a continuing effect on the unaudited pro forma consolidated statement of profit or loss and unaudited pro forma consolidated statement of other comprehensive income of the Remaining Group.
(i) The adjustment is to exclude each line item of Dingbian Wanheshun 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 2022 as if the Disposals had been completed on 1 January 2022.
(ii) The adjustment is to exclude each line item of Huangshi Huangyuan 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 2022 as if the Disposals had been completed on 1 January 2022.
(iii) The adjustment is to exclude each line item of Yulin Zhengxin 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 2022 as if the Disposals had been completed on 1 January 2022.
(iv) The adjustment is to exclude each line item of Shengzhou Yihui 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 2022 as if the Disposals had been completed on 1 January 2022.
(v) The adjustment is to exclude each line item of Dingbian Jingyang 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 2022 as if the Disposals had been completed on 1 January 2022.
(vi) The adjustment is to exclude each line item of Dingbian County Zhixinda 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 2022 as if the Disposals had been completed on 1 January 2022.

— III-12 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

5) The adjustments represents the pro forma loss on the Disposals as if the Disposals had been completed on 1 January 2022, which is calculated as follows:

Notes Total consideration (a) Less:_Share of net assets of the Disposal Companies as at 1 January 2022 (b) _Less:_Net amounts due to group companies as at 1 January 2022 (c) _Less:_Goodwill of the Disposal Companies as at 1 January 2022 (d)_ Estimated loss on Disposal	RMB’000 1,353,237 (848,722) (595,209) (547)
	(91,241)

(a) In accordance with the Disposal Agreements, the Group agreed to dispose of its 100% equity interest in the Project Companies, together with the amounts due to group companies and owed by the Project Companies, to the Purchaser, which is an independent third party. The total consideration for the Disposals amounts to RMB1,353,237,000, which comprised a cash consideration of RMB758,028,000 for the transfer of the entire equity interest in the Project Companies and assignment of amounts due to group companies as at 1 January 2022 of RMB595,209,000 (note 5(c)).
(b) This amount represents the net assets of the Project Companies amounting to approximately RMB848,722,000 as at 1 January 2022 as extracted from the unaudited financial information in Appendix II.

Net assets of the Project Companies as at 1 January 2022 is determined as follows:

– Dingbian Wanheshun – Huangshi Huangyuan – Yulin Zhengxin – Shengzhou Yihui – Dingbian Jingyang – Dingbian County Zhixinda	RMB’000 16,207 58,133 59,390 46,725 271,180 397,087
	848,722

— III-13 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(c) The amount represents net amounts due by the Project Companies to the Group of approximately RMB595,209,000 (note 5(a)) as at 1 January 2022. Pursuant to the terms of the Disposal Agreements, the Company would assign these amounts due from the Project Companies to the Purchaser upon the completion of the Disposals.

Amounts due to/(from) group companies of the Project Companies as at 1 January 2022 as extracted from the unaudited financial information in Appendix II to this circular is as follows:

– Dingbian Wanheshun – Huangshi Huangyuan – Yulin Zhengxin – Shengzhou Yihui – Dingbian Jingyang – Dingbian County Zhixinda	RMB’000 218,929 123,908 152,059 114,091 41,070 (54,848)
	595,209

(d) This amount represents goodwill allocated to the Project Companies as at 1 January 2022 as follows:

– Dingbian Wanheshun – Huangshi Huangyuan – Dingbian Jingyang	RMB’000 150 221 176
	547

— III-14 —

UNAUDITED PRO FORMA FINANCIAL

APPENDIX III

INFORMATION OF THE REMAINING GROUP

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 Dingbian Wanheshun that has been incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2022 as if the Disposals had been completed on 1 January 2022.
(ii) The adjustment is to exclude the cash flows from Huangshi Huangyuan that has been incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2022 as if the Disposals had been completed on 1 January 2022.
(iii) The adjustment is to exclude the cash flows from Yulin Zhengxin that has been incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2022 as if the Disposals had been completed on 1 January 2022.
(iv) The adjustment is to exclude the cash flows from Shengzhou Yihui that has been incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2022 as if the Disposals had been completed on 1 January 2022.
(v) The adjustment is to exclude the cash flows from Dingbian Jingyang that has been incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2022 as if the Disposals had been completed on 1 January 2022.
(vi) The adjustment is to exclude the cash flows from Dingbian County Zhixinda that has been incorporated in the consolidated statement of cash flows of the Group for the year ended 31 December 2022 as if the Disposals had been completed on 1 January 2022.

— III-15 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

7) The adjustment represents the reversal of elimination of the intercompany transactions between the Project Companies and the Remaining Group, which were reflected in the consolidated financial statements of the Group for the year ended 31 December 2022, as if the Disposals had been completed on 1 January 2022 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 to this circular as follows:

RMB’000

Management fee charged by Kong Sun Yongtai Investment Holdings Limited, a subsidiary of the Remaining Group during the year ended 31 December 2022 attributable to: – Dingbian Wanheshun – Huangshi Huangyuan – Yulin Zhengxin – Shenzhou Yihui – Dingbian Jingyang – Dingbian County Zhixinda Operation and maintenance fee charged by Beijing Xintai Green Energy Technology Co., Ltd, a subsidiary of the Remaining Group during the year ended 31 December 2022 attributable to: – Dingbian Wanheshun – Huangshi Huangyuan – Yulin Zhengxin – Shenzhou Yihui – Dingbian Jingyang – Dingbian County Zhixinda	794 794 794 667 794 1,043
	4,886

	RMB’000 1,138 1,132 1,138 1,363 1,043 1,821
	7,635

— III-16 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Other repair and maintenance fee charged by Beijing Xintai Green Energy Technology Co., Ltd, a subsidiary of the Remaining Group during the year ended 31 December 2022 attributable to: – Dingbian Wanheshun – Yulin Zhengxin – Shenzhou Yihui – Dingbian Jingyang – Dingbian County Zhixinda Maintenance fee charged by Shaanxi Yirun New Energy Technology Co., Ltd., a subsidiary of the Remaining Group during the year ended 31 December 2022 attributable to: – Huangshi Huangyuan – Shengzhou Yihui	RMB’000 1,062 1,062 616 1,157 1,931
	5,828

	RMB’000 132 113
	245

8) The amount represents the professional fees in connection with the Disposals, such as fee incurred for legal and professional service and valuation service, amounting to approximately RMB3,800,000 and assumed to be fully settled by cash.
9) The amount represents the receipt of amounts due to group companies within one year, amounting to approximately RMB173,664,000.

— III-17 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

10) This adjustment represents the estimated net cash inflow from the Disposals as if the Disposals had been completed on 1 January 2022 calculated as follows:

Consideration for transfer to equity interest in the Project Companies expected to be received within a year Sum of note (a)(i), (c)(i), (e)(i), (g)(i)(ii), (i)(i)(ii),(k)(i)(ii)(iv) Cash and cash equivalents disposed of Note Net cash inflows arising from disposal of subsidiaries	RMB’000 433,306 (7,792)
	425,514

Note: Cash and cash equivalents disposed of as at 1 January 2022 – Dingbian Wanheshun – Huangshi Huangyuan – Yulin Zhengxin – Shengzhou Yihui – Dingbian Jingyang – Dingbian County Zhixinda	RMB’000 1 1,775 19 4,007 32 1,958
	7,792

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

Disposal of Dingbian Wanheshun (the “First Disposal”)

(a) RMB607,000, being the cash consideration for the transfer of the entire equity interest in Dingbian Wanheshun, shall be settled in the following manner:
(i) RMB200,000 shall be payable to the Group within five (5) business days after the date of issuing the new business license of Dingbian Wanheshun in respect of the transfer of the equity interest (the “ First Completion Date ”); and
(ii) RMB407,000 shall be payable to the Group within fifteen (15) business days after Dingbian Wanheshun having passed the relevant verification process and becoming included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority.

— III-18 —

UNAUDITED PRO FORMA FINANCIAL

APPENDIX III

INFORMATION OF THE REMAINING GROUP

(b) Approximately RMB312,945,000, being the amounts due to group companies as at Reference Date, shall be settled in the following manner:
(i) RMB50,618,000 shall be payable to the Group within five (5) business days after the issue of the official transition period audit report;
(ii) RMB3,015,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed within six (6) months after the First Completion Date;
(iii) RMB14,022,000 shall be payable to the Group within ten (10) business days after the issue of the transition period audit report and within ten (10) business days Dingbian Wanheshun received the subsidies receivable after the First Completion Date;
(iv) RMB212,849,000 shall be payable to the Group within fifteen (15) business days after Dingbian Wanheshun having passed the relevant verification process and becoming included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority; and
(v) RMB32,441,000 shall be payable to the Group within fifteen (15) business days after Dingbian Wanheshun having included in the list of projects qualified for state renewable energy subsidies as published by the relevant authority.

Disposal of Huangshi Huangyuan (the “Second Disposal”)

(c) RMB40,529,000, being the cash consideration for the transfer of the entire equity interest in Huangshi Huangyuan, shall be settled in the following manner:
(i) RMB1,000,000 shall be payable to the Group within five (5) business days after the date of issuing the new business license of Huangshi Huangyuan in respect of the transfer of the equity interest (the “ Second Completion Date ”);
(ii) RMB8,507,000 shall be payable to the Group within ten (10) business days upon receipt by Huangshi Huangyuan of the subsidies receivable; and

— III-19 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(iii) RMB31,022,000 shall be payable to the Group within fifteen (15) business days after (i) Huangshi Huangyuan having been included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority and the on-grid electricity price is RMB0.88 per kwh (excluding regional subsidies), or (ii) Huangshi Huangyuan having received the first batch of state renewable energy subsidies.
(d) Approximately RMB128,538,000, being the amounts due to group companies as at Reference Date, shall be settled in the following manner:
(i) RMB29,222,000 shall be payable to the Group within five (5) business days the issue of the official transition period audit report;
(ii) RMB6,174,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed within six (6) months after the Second Completion Date; and
(iii) RMB93,142,000 shall be payable to the Group within fifteen (15) business days after (i) Huangshi Huangyuan having been included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority and the on-grid electricity price is RMB0.88 per kwh (excluding regional subsidies), or (ii) Huangshi Huangyuan having received the first batch of state renewable energy subsidies.

Disposal of Yulin Zhengxin (the “Third Disposal”)

(e) RMB52,858,000, being the cash consideration for the transfer of the entire equity interest in Yulin Zhengxin, shall be settled in the following manner:
(i) RMB1,000,000 shall be payable to the Group within five (5) business days after the date of issuing the new business license of Yulin Zhengxin in respect of the transfer of the equity interest (the “ Third Completion Date ”);
(ii) RMB11,136,000 shall be payable to the Group within ten (10) business days after the issue of the transition period audit report and within ten (10) business days Yulin Zhengxin receives the subsidies receivable after the Third Completion Date; and
(iii) RMB40,722,000 shall be payable to the Group within fifteen (15) business days after Yulin Zhengxin having passed the relevant verification process and becoming included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority.

— III-20 —

UNAUDITED PRO FORMA FINANCIAL

INFORMATION OF THE REMAINING GROUP

APPENDIX III

(f) Approximately RMB157,218,000, being the amounts due to group companies as at Reference Date, shall be settled in the following manner:
(i) RMB3,762,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed within six (6) months after the Third Completion Date; and
(ii) RMB153,456,000 shall be payable to the Group within fifteen (15) business days after Yulin Zhengxin having been included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority.

Disposal of Shengzhou Yihui (the “Forth Disposal”)

(g) RMB38,501,000, being the cash consideration for the transfer of the entire equity interest in Shengzhou Yihui, shall be settled in the following manner:
(i) RMB23,100,000 shall be payable to the Group within five (5) business days after the date of issuing the new business license of Shengzhou Yihui in respect of the transfer of the equity interest (the “ Fourth Completion Date ”);
(ii) RMB13,611,000 shall be payable to the Group within five (5) business days after the handover of the deliverable items including but not limited to the company seal, licenses, financial information, contract information, various equipment and facilities related to Shengzhou Yihui; and
(iii) RMB1,790,000 shall be payable to the Group within ten (10) business days after the issue of the transition period audit report and within ten (10) business days Shengzhou Yihui receives the subsidies receivable after the Fourth Completion Date.
(h) Approximately RMB142,023,000 being the amounts due to group companies as at Reference Date, shall be settled in the following manner:
(i) RMB136,786,000 shall be payable to the Group within five (5) business days the issue of the official transition period audit report; and
(ii) RMB5,237,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed within six (6) months after the Fourth Completion Date.

— III-21 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Disposal of Dingbian Jingyang (the “Fifth Disposal”)

(i) RMB256,185,000, being the cash consideration for the transfer of the entire equity interest in Dingbian Jingyang, shall be settled in the following manner:
(i) RMB17,652,000 shall be payable to the Group within five (5) business days after the date of issuing the new business license of Dingbian Jingyang in respect of the transfer of the equity interest (the “ Fifth Completion Date ”);
(ii) RMB11,768,000 shall be payable to the Group within five (5) business days after the handover of the deliverable items including but not limited to the company seal, licenses, financial information, contract information, various equipment and facilities related to Dingbian Jingyang;
(iii) RMB13,685,000 shall be payable to the Group within ten (10) business days after the issue of the transition period audit report and within ten (10) business days Dingbian Jingyang receives the subsidies receivable after the Fifth Completion Date; and
(iv) RMB213,080,000 shall be payable to the Group within fifteen (15) business days after Dingbian Jingyang having passed the relevant verification process and becoming included in the list of projects qualified for state renewable energy subsidies as published by the relevant PRC authority.
(j) Approximately RMB55,603,000 being the amounts due to group companies as at Reference Date, shall be settled in the following manner:
(i) RMB52,514,000 shall be payable to the Group within five (5) business days after the issue of the official transition period audit report; and
(ii) RMB3,089,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed within six (6) months after the Fifth Completion Date.

— III-22 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Disposal of Dingbian County Zhixinda (the “Sixth Disposal”)

(k) RMB369,348,000, being the cash consideration for the transfer of the entire equity interest in Dingbian County Zhixinda, shall be settled in the following manner:
- (i) RMB43,546,000 shall be payable to the Group within five (5) business days after the date of issuing the new business license of Dingbian County Zhixinda in respect of the transfer of the equity interest (the “ Sixth Completion Date ”);
- (ii) RMB314,825,000 shall be payable to the Group within five (5) business days after the issue of the official transition period audit report;
- (iii) RMB4,373,000 shall be payable to the Group within ten (10) business days after the issue of the transition period audit report and within ten (10) business days Dingbian County Zhixinda receives the subsidies receivable after the Sixth Completion Date; and
- (iv) RMB6,604,000 shall be payable to the Group within ten (10) business days upon completion of certain rectification works items which shall be completed within six (6) months after the Sixth Completion Date
(l) Approximately RMB54,825,000, being the amounts due to group companies as at Reference Date, shall be payable to the Group upon the issue of the transition period audit report which will be issued within twenty (20) business days of completion of the Sixth Disposal.
11) The amount represents the estimated expense for rectification works in connection with the Disposals, amounting to approximately RMB27,881,000 and assumed to be fully settled by cash.
12) The amount represents the reallocation from tax payable to tax recoverable after adjustment on the exclusion of tax payable from the Project Companies.
13) The adjustments in respect of the unaudited pro forma consolidated statement of profit or loss and unaudited pro forma consolidated statement of 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 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

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 2022, 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 2022 and related notes as set out on pages III-1 to III-23 of Appendix III of the circular dated 31 August 2023 (the “ Circular ”) in connection to the proposed disposal of entire equity interests in 定邊縣萬和順新能源發電有限公司 (Dingbian Wanheshun New Energy Power Generation Limited) (“ Dingbian Wanheshun ”),黃石黃源光伏電力開發有限公司 (Huangshi Huangyuan Photovoltaic Power Development Limited) (“ Huangshi Huangyuan ”), 榆林正信電力有限公司 (Yulin Zhengxin Electricity Limited) (“ Yulin Zhengxin ”), 嵊州懿暉光伏發電有限公司 (Shengzhou Yihui Photovoltaic Power Generation Limited) (“ Shengzhou Yihui ”), 定邊縣晶陽電力有限公司 (Dingbian Jingyang Electric Co., Ltd.) (“ Dingbian Jingyang ”), and 定邊縣智信達新能源有限公司 (Dingbian County Zhixinda New Energy Limited) (“ Dingbian County Zhixinda ”) (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 Disposals on the Group’s financial position as at 31 December 2022 and the Group’s financial performance and cash flows for the year ended 31 December 2022 as if the Disposals had taken place at 31 December 2022 and 1 January 2022, 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 2022, on which an independent auditor’s report for the year ended 31 December 2022 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 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 ”).

— III-24 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

PROFESSIONAL ETHICS AND QUALITY MANAGEMENT

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 Management (HKSQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements issued by the HKICPA, which requires the firm to design, implement and operate a system of quality management including policies or 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 Disposals as at 31 December 2022 or 1 January 2022 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, 31 August 2023

— 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 the Project Companies as at 30 April 2023.

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Date: 31 August 2023

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 定邊縣萬和順新能源發電有限公司，黃石黃源光伏電力開發有限公司，榆林正信電力有限公司，嵊州懿暉光伏發電有限公司，定邊縣晶陽電力有限公司 and 定邊縣智信達新能源有限公司 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 定邊縣萬和順新能源發電有限公司，黃石黃源光伏電力開發有限公司，榆林正信電力有限公司，嵊州懿暉光伏發電有限公司，定邊縣晶陽電力有限公司 and 定邊縣智信達新能源有限公司 for circular reference as at the valuation date (30 April 2023).

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.

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-1 —

VALUATION REPORT

APPENDIX IV

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 in 定邊縣萬和順新能源發電有限公司 (translated as Dingbian Wanheshun New Energy Power Generation Limited and hereinafter referred to as the “ First Project Company ”), 黃石黃源光伏電力開發有限公司 (translated as Wangshi Wangyuan Photovoltaic Power Development Limited and hereinafter referred to as the “ Second Project Company ”), 榆林正信電力有限公司 (translated as Yulin Zhengxin Electricity Limited and hereinafter referred to as the “ Third Project Company ”), 嵊州懿暉光伏發電有限公司(translated as Shengzhou Yihui Photovoltaic Power Generation Limited and hereinafter referred to as the “ Fourth Project Company ”), 定邊縣晶陽電力有限公司 (translated as Dingbian Jingyang Electric Co., Ltd. and hereinafter referred to as the “ Fifth Project Company ”) and 定邊縣智信達新能源有限公司 (translated as Dingbian County Zhixinda New Energy Limited and hereinafter referred to as the “ Sixth Project Company ”) (collectively the “ Equity Interests ”) for circular reference as at 30 April 2023 (the “ Valuation Date ”). The First Project Company, the Second Project Company, the Third Project Company, the Fourth Project Company, the Fifth Project Company and the Sixth 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.

The Project Companies are established in the People’s Republic of China (the “ PRC ”) with limited liability and principally engaged in solar power generation.

— IV-2 —

VALUATION REPORT

APPENDIX IV

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 2022 (“ IVS 2022 ”) issued by International Valuation Standards Council (“ IVSC ”), Equitable Value is defined as “ is 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 2022.

5. BASIS OF OPINION

The valuation was conducted in accordance with IVS 2022 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.

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;

— IV-3 —

VALUATION REPORT

APPENDIX IV

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:

Management accounts of the Project Companies as at 31 December 2022 and 30 April 2023;
IVS 2022 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 ”);
2021 Edition of the Stout Restricted Stock Study Companion Guide;
Navigating Valuations in the World of COVID-19 compiled by PwC China (the “ PwC China Report ”);
Control Premium Study, 4th Quarter 2020, FactSet Mergerstat, LLC (the “ Control Premium Study ”);
Business Valuation Update, May 2021, Vol. 27, No. 5, Business Valuation Resources, LLC (the “ Business Valuation Update ”);
From emergency response to long-term COVID-19 disease management: sustaining gains made during the COVID-19 pandemic dated 3 May 2023, World Health Organization (the “ WHO Report ”);

— IV-4 —

VALUATION REPORT

APPENDIX IV

Annual reports, quarterly reports and announcements of GCL New Energy Holdings Limited (451:HK), GCL-Poly Energy Holdings Limited (3800:HK), Beijing Energy International Holding Co., Ltd. (686:HK), Shunfeng International Clean Energy Limited (1165: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, 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.

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.

— IV-5 —

VALUATION REPORT

APPENDIX IV

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.

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.

— IV-6 —

VALUATION REPORT

APPENDIX IV

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 is price-to-book ratio (“ PB Ratio ”). Only PB Ratio was adopted under guideline transactions method because not all the Project Companies are profitable in 2022 and price-to-earnings ratio which is another common valuation metrics is not applicable.

Under guideline publicly-traded method, the valuation metrics adopted is PB Ratio. Only PB Ratio was adopted under guideline publicly-traded method because not all the Project Companies have positive earnings before interest and taxes in 2022 and enterprise value-to-earnings before interest and taxes ratio which is another common valuation metrics is not applicable.

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;

— IV-7 —

VALUATION REPORT

APPENDIX IV

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;
The Project Companies will retain competent management, key personnel and technical staff for its operation and the relevant shareholders will support its ongoing operation; and
For the majority of comparable transactions, the considerations were paid in instalments, subject to various conditions. These conditions for consideration payments are assumed to be normal market conditions which have already been factored in the considerations/prices of the comparable transactions.

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;
Transactions of solar power plants which are located in the PRC and are in operation (instead of in development and construction) with known/deduced installed capacity;
Connected transactions and sale and leaseback transactions are excluded; and
The announcement dates of transactions are within the period from 1 May 2021 to 30 April 2023.

— IV-8 —

VALUATION REPORT

APPENDIX IV

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

Transaction: 1 Listed Company: GCL-Poly Energy Holdings Limited (3800:HK), GCL New Energy Holdings Limited (451:HK) 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) PB Ratio: 1.41 Transaction: 2 Listed Company: GCL New Energy Holdings Limited (451:HK) Announcement Date: 5 July 2021 Target Company: 峨山永鑫光伏發電有限公司 Installed Capacity: 50MW Consideration: RMB43,100,000 Equity Interest: 100% Net Asset: RMB7,473,193 (31 December 2020) PB Ratio: 5.77 Transaction: 3 Listed Company: GCL New Energy Holdings Limited (451:HK) Announcement Date: 21 July 2021 Target Company: 阜寧縣鑫源光伏電力有限公司，灌雲縣協鑫光伏電力有限公司，東海縣協鑫光伏電力有限公司，沛縣鑫日光伏電力有限公司，徐州鑫輝光伏電力有限公司，淮安鑫源光伏電力有限公司，淮安融高光伏發電有限公司，鎮江鑫利光伏電力有限公司，鎮江鑫龍光伏電力有限公司，張家港協鑫光伏電力有限公司，南通協鑫新能源有限公司，連雲港鑫眾光伏電力有限公司，新沂鑫日光伏電力有限公司，句容信達光伏發電有限公司，南京鑫日光伏發電有限公司，寶應協鑫光伏電力有限公司 Installed Capacity: 301MW Consideration: RMB475,983,100 Equity Interest: 100% Net Asset: RMB526,478,046 (28 February 2021) PB Ratio: 0.90

— IV-9 —

VALUATION REPORT

APPENDIX IV

Transaction:	4
Listed Companies:	GCL-Poly Energy Holdings Limited (3800:HK),
	GCL New Energy Holdings Limited (451:HK)
Announcement Date:	30 August 2021
Target Company:	神木市平元電力有限公司，神木市平西電力有限
	公司，神木縣晶登電力有限公司，西咸新區協鑫
	光伏電力有限公司
Installed Capacity:	271MW
Consideration:	RMB297,707,700
Equity Interest:	100%
Net Asset:	RMB276,957,001 (30 April 2021)
PB Ratio:	1.07
Transaction:	5
Listed Company:	Shunfeng International Clean Energy Limited
	(1165:HK)
Announcement Date:	24 August 2021
Target Company:	保山長山順風尚德新能源有限公司，疏附縣浚鑫
	科技光伏發電有限公司，克州百事德新能源開發
	有限公司，麥蓋提金壇正信新能源科技有限公司，
	烏什龍柏電力投資有限公司，英吉沙縣融信天和
	新能源有限責任公司，疏附縣中建材新能源光伏
	發電有限公司
Installed Capacity:	190MW
Consideration:	RMB138,200,000
Equity Interest:	100%
Net Asset:	RMB264,550,000 (30 June 2021)
PB Ratio:	0.52
Transaction:	6
Listed Company:	GCL New Energy Holdings Limited (451:HK)
Announcement Date:	13 September 2021
Target Company:	神木市晶富電力有限公司，神木市晶普電力有限
	公司
Installed Capacity:	198MW
Consideration:	RMB236,858,900
Equity Interest:	100%
Net Asset:	RMB366,656,603 (30 April 2021)
PB Ratio:	0.65

— IV-10 —

VALUATION REPORT

APPENDIX IV

Transaction: 7 Listed Company: Shunfeng International Clean Energy Limited (1165:HK) Announcement Date: 6 October 2021 Target Company: 河北三龍電力科技有限公司，尚義縣順能光伏電力有限公司 Installed Capacity: 93MW Consideration: RMB170,000,000 Equity Interest: 100% Net Asset: RMB86,835,000 (30 June 2021) PB Ratio: 1.96 Transaction: 8 Listed Company: Shunfeng International Clean Energy Limited (1165:HK) Announcement Date: 28 December 2021 Target Company: 陽原聚格光電科技有限公司 Installed Capacity: 50MW Consideration: RMB13,689,500 Equity Interest: 100% Net Asset: RMB25,555,000 (30 June 2021) PB Ratio: 0.54 Transaction: 9 Listed Company: Shunfeng International Clean Energy Limited (1165:HK) Announcement Date: 3 January 2022 Target Company: 海南州鑫昇新能源科技有限公司，通威太陽能且末有限公司，新疆普新誠達能源科技有限公司，新疆天利恩澤太陽能科技有限公司 Installed Capacity: 132MW Consideration: RMB160,230,000 Equity Interest: 100% Net Asset: RMB219,027,000 (30 June 2021) PB Ratio: 0.73 Transaction: 10 Listed Company: GCL New Energy Holdings Limited (451:HK) Announcement Date: 25 January 2022 Target Company: 寧夏鑫墾簡泉光伏電力有限公司 Installed Capacity: 30MW Consideration: RMB6,520,000 Equity Interest: 100% Net Asset: RMB6,346,120 (31 August 2021) PB Ratio: 1.03

— IV-11 —

VALUATION REPORT

APPENDIX IV

Transaction: 11 Listed Company: GCL New Energy Holdings Limited (451:HK) Announcement Date: 21 March 2022 Target Company: 寧夏盛景太陽能科技有限公司 Installed Capacity: 30MW Consideration: RMB135,052,000 Equity Interest: 100% Net Asset: RMB139,443,271 (31 December 2021) PB Ratio: 0.97 Transaction: 12 Listed Company: Shunfeng International Clean Energy Limited (1165:HK) Announcement Date: 4 July 2022 Target Company: 新疆普新誠達能源科技有限公司 Installed Capacity: 70MW Consideration: RMB527,952,900 Equity Interest: 100% Net Asset: RMB26,922,000 (30 June 2022) PB Ratio: 19.61 Transaction: 13 Listed Company: Jiawei Renewable Energy Co., Ltd. (300317:CH) Announcement Date: 9 March 2022 Target Company: 金昌珈偉新能源電力 Installed Capacity: 75MW Consideration: RMB3,889,700 Equity Interest: 100% Net Asset: RMB961,100 (28 February 2022) PB Ratio: 4.05

Valuation Metrics for Guideline Transactions Method

The valuation metrics adopted for guideline transactions method is PB Ratio.
Consideration of comparable transactions was taken as numerator in calculating the PB Ratio of comparable transactions.
Net asset of comparable transactions was taken as denominator in calculating the PB Ratio of comparable transactions.
Installed capacity of comparable transactions was taken as the weighting factor in calculating the weighted PB Ratio of comparable transactions.

— IV-12 —

VALUATION REPORT

APPENDIX IV

Since the PB Ratios of transactions 2, 12 and 13 are abnormally high when compared to PB Ratios of other comparable transactions, these transactions are considered outliers and excluded from the calculation of weighted average PB Ratio.
The weighted average PB Ratio of remaining comparable transactions was calculated to be 0.92.
Net asset of the First Project Company as at 30 April 2023 is RMB16,186,000, as per management accounts of the First Project Company as at 30 April 2023.
The value of 100% equity interest in the First Project Company calculated by applying PB Ratio under guideline transactions method is RMB14,968,000.
Net asset of the Second Project Company as at 30 April 2023 is RMB63,942,000, as per management accounts of the Second Project Company as at 30 April 2023.
The value of 100% equity interest in the Second Project Company calculated by applying PB Ratio under guideline transactions method is RMB59,130,000.
Net asset of the Third Project Company as at 30 April 2023 is RMB73,094,000, as per management accounts of the Third Project Company as at 30 April 2023.
The value of 100% equity interest in the Third Project Company calculated by applying PB Ratio under guideline transactions method is RMB67,593,000.
Net asset of the Fourth Project Company as at 30 April 2023 is RMB52,885,000, as per management accounts of the Fourth Project Company as at 30 April 2023.
The value of 100% equity interest in the Fourth Project Company calculated by applying PB Ratio under guideline transactions method is RMB48,905,000.
Net asset of the Fifth Project Company as at 30 April 2023 is RMB275,370,000, as per management accounts of the Fifth Project Company as at 30 April 2023.
The value of 100% equity interest in the Fifth Project Company calculated by applying PB Ratio under guideline transactions method is RMB254,647,000.
Net asset of the Sixth Project Company as at 30 April 2023 is RMB388,299,000, as per management accounts of the Sixth Project Company as at 30 April 2023.
The value of 100% equity interest in the Sixth Project Company calculated by applying PB Ratio under guideline transactions method is RMB359,078,000.

— IV-13 —

VALUATION REPORT

APPENDIX IV

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.

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.

— IV-14 —

VALUATION REPORT

APPENDIX IV

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

Company Description

Stock Code Company Name Company Description 451:HK GCL New Energy “GCL New Energy Holdings Limited is an Holdings Limited investment holding company mainly engaged in the electricity business. The Company is engaged in the development, construction, operation and management of solar power plants. The Company is also engaged the distribution of electricity. In addition, the Company is engaged in the provision of solar energy related services.” (Source: HKEX)

686:HK Beijing Energy “Beijing Energy International Holding International Holding Co., Ltd., formerly Panda Green Energy Co., Ltd. Group Ltd, is an 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, H u b e i , X i n j i a n g , G a n s u , Y u n n a n , Shandong, Jiangsu, Hebei, Guangdong and other places.” (Source: HKEX)

— IV-15 —

VALUATION REPORT

APPENDIX IV

1165:HK Shunfeng International “Shunfeng International Clean Energy Clean Energy Limited Limited is a China-based company principally involved in the provision of c l e a n e n e r g y a n d l o w - c a r b o n energy-saving integrated solutions. The Company operates two segments: Solar Power Generation in China segment and Manufacturing and Sales of Light Emitting Diode (LED) Products segments. Its products mainly include power, LED chips, LED packages and other LED products. The Company mainly conducts its businesses in Mainland China.” (Source: HKEX) 3868:HK Xinyi Energy Holdings “Xinyi Energy Holdings Limited is a Limited China-based 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 Energy “CECEP Solar Energy Co., Ltd., formerly 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-16 —

VALUATION REPORT

APPENDIX IV

Valuation Metrics for Guideline Publicly-Traded Method

The valuation metrics adopted for guideline publicly-traded method is PB Ratio.
Market capitalization of comparable companies as at 28 April 2023 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 average PB Ratio of comparable companies was calculated to be 0.85.

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 the PwC China Report, 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. According to the WHO Report, by May 2023, the number of weekly reported deaths is at its lowest since the COVID-19 pandemic began, and in most countries, life has returned to “normal”. In view of the above, the control premium is expected to be reverted to the normal and a control premium of 20% has been applied in this valuation exercise, taking account of 24.6% overall median equity control premium in the Control Premium Study and approximately 19% median equity control premium of the utilities sector in the Business Valuation Update.

— IV-17 —

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 2021 Edition of the Stout Restricted Stock Study Companion Guide, the Stout Restrict Stock Study have examined 763 private placement transactions of unregistered common stock, with and without registration rights, issued by publicly traded companies from July 1980 through December 2020. For the First Project Company, the Second Project Company, the Third Project Company and the Fourth Project Company, a DLOM of 42.9% has been adopted in this valuation exercise, which is with reference to 42.9% median discount for the 5th quintile of these 763 transactions. The median discount in the 5th quintile has been with reference to because the median book value of equity in the 5th quintile is US$6.8 million, which is comparable to the book values of the First Project Company, the Second Project Company, the Third Project Company and the Fourth Project Company. For the Fifth Project Company and the Sixth Project Company, a DLOM of 15.8% has been adopted in this valuation exercise, which is with reference to 15.8% overall median discount of these 763 transactions. A lower DLOM has been adopted for the Fifth Project Company and the Sixth Project Company because the book values of these two Project Companies are much larger than the other four Project Companies.

Values Estimated by Guideline Publicly-Traded Method

Values of the Project Companies under the guideline publicly-traded method were calculated by multiplying the average PB Ratio of comparable companies by the respective net asset values of the Project Companies as at 30 April 2023, then adjusting for the control premium and DLOM.
The value of 100% equity interest in the First Project Company calculated by applying PB Ratio under guideline publicly-traded method is RMB9,482,000.
The value of 100% equity interest in the Second Project Company calculated by applying PB Ratio under guideline publicly-traded method is RMB37,459,000.
The value of 100% equity interest in the Third Project Company calculated by applying PB Ratio under guideline publicly-traded method is RMB42,821,000.

— IV-18 —

VALUATION REPORT

APPENDIX IV

The value of 100% equity interest in the Fourth Project Company calculated by applying PB Ratio under guideline publicly-traded method is RMB30,982,000.
The value of 100% equity interest in the Fifth Project Company calculated by applying PB Ratio under guideline publicly-traded method is RMB237,885,000.
The value of 100% equity interest in the Sixth Project Company calculated by applying PB Ratio under guideline publicly-traded method is RMB335,441,000.

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-19 —

VALUATION REPORT

APPENDIX IV

13. RISK FACTORS

Economic, political and social considerations

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. 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.

Inflation

The supply shortage brought about by recent outbreak of COVID-19, pose a significant risk of inflation, which may erode the profitability of the Project Companies.

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-20 —

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 2023 , the total Equitable Value of 100% equity interests in the Project Companies is RMB749,197,000 (RENMINBI SEVEN HUNDRED FORTY NINE MILLION ONE HUNDRED NINETY SEVEN THOUSAND), with breakdown as follows:

Guideline
Guideline Publicly-traded
Transactions Comparable
Subject Method Method Equitable Value 100% Equity Interest in the RMB14,968,000 RMB9,482,000 RMB12,225,000 First Project Company
100% Equity Interest in the RMB59,130,000 RMB37,459,000 RMB48,295,000 Second Project Company
100% Equity Interest in the RMB67,593,000 RMB42,821,000 RMB55,207,000 Third Project Company
100% Equity Interest in the RMB48,905,000 RMB30,982,000 RMB39,944,000 Fourth Project Company
100% Equity Interest in the RMB254,647,000 RMB237,885,000 RMB246,266,000 Fifth Project Company
100% Equity Interest in the RMB359,078,000 RMB335,441,000 RMB347,260,000 Sixth Project Company

Total

RMB804,321,000 RMB694,070,000 RMB749,197,000

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 around 15 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-21 —

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.

— IV-22 —

VALUATION REPORT

APPENDIX IV

Valor have made no investigation of and assumed no responsibility for the title to or any liabilities against the asset appraised.
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-23 —

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 the SFO), or as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) in the Listing Rules were as follows:

Interest in underlying Shares of the Company

		Number of		Approximate
		Shares held/		percentage of
Name of Director	Nature of interest	interested in	Total	shareholding
Executive Director
Xian He	Beneficial owner	1,650,000	7,125,000	0.05%
	Interest of spouse(1)	5,475,000

Note:

(1) 5,475,000 Shares are held by Ms. He Xiang, who is the wife of Mr. Xian He. Therefore, Mr. Xian He is deemed to be interested in a long position of an aggregate of 5,475,000 Shares held by Ms. He Xiang under the SFO.

Save as disclosed above, as at the Latest Practicable 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 the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he is taken or deemed to have under such provisions of the 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-1 —

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(3)	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.

None of the Directors or proposed Directors was a director or an employee of a company which had an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as at the Latest Practicable Date.

3. DIRECTORS’ SERVICE CONTRACTS

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

— V-2 —

GENERAL INFORMATION

APPENDIX V

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 2022 (being the date to which the latest published audited consolidated financial statements of the Group were made up), up to the Latest Practicable Date, been acquired or disposed of by or leased to, any member of the Group or are proposed to be acquired or disposed of by, or leased to, any member of the Group.

5. D I R E C T O R S ’ I N T E R E S T I N C O N T R A C T O R A R R A N G E M E N T O F SIGNIFICANCE

No Director and/or his/her respective close associates had a material interest, either directly or indirectly, in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Group.

6. COMPETING INTERESTS

As at the Latest Practicable Date, as far as the Directors are aware, none of the Directors, the proposed 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, arbitration or claim of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

8. MATERIAL CONTRACTS

The following material contracts (not being contracts entered into 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 finance lease agreement dated 28 April 2023 entered into between 宿州旭強新能源工程有限公司 (Suzhou Xuqiang New Energy Engineering Limited) (“ Suzhou Xuqiang* ”) and Hebei Financial Leasing, pursuant to which Hebei Financial Leasing agreed to purchase all the photovoltaic power generating equipment and ancillary facilities regarding the 20MW photovoltaic power plant located in Suzhou City, Anhui Province, the PRC from Suzhou Xuqiang for a total consideration of RMB80,000,000 and lease such assets to Suzhou Xuqiang for a term of 10 years for the total estimated aggregate lease payments of approximately RMB105,766,000;

— V-3 —

GENERAL INFORMATION

APPENDIX V

(b) the finance lease agreement dated 28 April 2023 entered into between the Second Project Company and Hebei Financial Leasing, pursuant to which Hebei Financial Leasing agreed to purchase certain photovoltaic power generating equipment and ancillary facilities regarding the 30MW photovoltaic power plant located in Huangshi City, Hubei Province, the PRC from the Second Project Company for a total consideration of RMB90,000,000 and lease such assets to the Second Project Company for a term of 10 years for the total estimated aggregate lease payments of approximately RMB120,010,000;
(c) the finance lease agreement dated 28 April 2023 entered into between 肥西中暉光伏發電有限公司 (Feixi Zhonghui Photovoltaic Power Limited) (“ Feixi Zhonghui* ”) and Hebei Financial Leasing, pursuant to which Hebei Financial Leasing agreed to purchase all the photovoltaic power generating equipment and ancillary facilities regarding the 20MW photovoltaic power plant located in Hefei City, Anhui Province, the PRC from Feixi Zhonghui for a total consideration of RMB100,000,000 and lease such assets to Feixi Zhonghui for a term of 10 years for the total estimated aggregate lease payments of approximately RMB133,251,000;
(d) the finance lease agreement dated 12 April 2023 entered into between 合肥綠聚源光伏發電有限公司 (Hefei Lvjuyuan Photovoltaic Power Generation Limited), an indirect wholly owned subsidiary of the Company (“ Hefei Lvjuyuan ”), and CDB Leasing, pursuant to which CDB Leasing agreed to purchase certain photovoltaic power generating equipment and ancillary facilities regarding two of the 20MW photovoltaic power plants located in Hefei City, Anhui Province, the PRC from Hefei Lvjuyuan for a total consideration of RMB200,000,000 and lease such assets to Hefei Lvjuyuan for a term of 12 years for the total estimated aggregate lease payments of approximately RMB280,260,000, together with the agreement dated 12 April 2023 entered into by and among CDB Leasing, 大唐融資租賃有限公司 (Datang Finance Leasing Limited) (“ Datang Finance Leasing ”) and Hefei Lvjuyuan in relation to the settlement of the outstanding amount due from Hefei Lvjuyuan to Datang Finance Leasing under the existing finance lease arrangement between Hefei Lvjuyuan and Datang Finance Leasing, and the relevant agreements relating to the pledges executed in relation to the finance lease agreement;
(e) the finance lease agreement dated 27 February 2023 entered into between the Sixth Project Company and Huadian Financial Leasing pursuant to which Huadian Financial Leasing agreed to purchase certain photovoltaic power generating equipment and ancillary facilities regarding a 50MW photovoltaic power plant located in Yulin City, Shaanxi Province, the PRC from Dingbian County for a total consideration of RMB260,000,000 and lease such assets to Dingbian County for a term of 10 years for the total estimated aggregate lease payments of approximately RMB349,842,000;

— V-4 —

APPENDIX V

GENERAL INFORMATION

(f) the finance lease agreement dated 12 December 2022 entered into between 大同市皖銅新能源有限公司 (Datong Wantong New Energy Co., Ltd.), an indirect non-wholly owned subsidiary of the Company (“ Datong Wantong* ”), and Hebei Financial Leasing, pursuant to which Hebei Financial Leasing agreed to purchase certain photovoltaic power generating equipment and ancillary facilities regarding a 20MW photovoltaic power plant located in Datong City, Shanxi Province, the PRC from Datong Wantong for a total consideration of RMB80,000,000 and lease such assets to Datong Wantong for a term of 10 years for the total estimated aggregate lease payments of approximately RMB108,387,000;
(g) the partnership agreement dated 11 November 2022 entered into by and among Kong Sun Yongtai, 上海仟榮臻投資諮詢有限公司 (Shanghai Qianrongzhen Investment Consultancy Co., Ltd.) and 西藏玄彤投資有限公司 (Xizang Xuantong Investment Co., Ltd.) as limited partners,深圳市前海燊泰新能源投資管理有限公司(Shenzhen Shenzhen Shentai New Energy Investment Management Co., Ltd.) as a general partner and 霍爾果斯江山華飛利如股權投資有限公司 (Khorgos Jiangshan Huafei Liru Investment Equity Management Co., Ltd.) as a general partner and executive partner in relation to the formation of 北京紅楓新能源合夥企業（有限合夥）(Beijing Hong Kong New Energy Investment Partnership (Limited Partnership)*), pursuant to which a capital commitment of RMB200,000,000 was to be contributed by Kong Sun Yongtai, representing approximately 90.10% of the total capital contribution in such limited partnership;
(h) the loan agreement dated 1 November 2022 entered into between Kong Sun Yongtai as the lender and 江山寶源國際融資租賃有限公司 (Kong Sun Baoyuan International Financial Leasing Limited*), an associate of the Company which is indirectly owned as to 37.6% equity interest by BD Technology Limited, a wholly-owned subsidiary of the Company, as the borrower, pursuant to which Kong Sun Yongtai agreed to grant the loan in the principal amount of RMB120,000,000 to the borrower at an interest rate of 9% per annum for a term of 36 months;
(i) the equity transfer agreement dated 25 March 2022 entered into by and among 中原新華水利水電投資有限公司 (Zhongyuan Xinhua Water Resources and Hydropower Investment Limited) (“ Zhongyuan Xinhua ”), Kong Sun Yongtai and 濟源大峪江山光伏發電有限公司 (Jiyuan Dayu Jiangshan Photovoltaic Power Generation Limited) (“ Jiyuan Dayu Jiangshan ”) in relation to the disposal of the entire equity interests of Jiyuan Dayu Jiangshan for a total consideration of RMB34,400,000;
(j) the equity transfer agreement dated 25 March 2022 entered into by and among Kong Sun Yongtai, Zhongyuan Xinhua and 寶豐縣鑫泰光伏電力科技開發有限公司 (Baofeng Xintai Photovoltaic Power Technology Development Limited) (“ Baofeng Xintai* ”) in relation to the disposal of 50% equity interests of Baofeng Xintai held by Kong Sun Yongtai and the rights of Kong Sun Yongtai as the ultimate beneficial owner of Baofeng Xintai for a total consideration of RMB84,275,000;

— V-5 —

GENERAL INFORMATION

APPENDIX V

(k) the disposal agreements dated 2 November 2021 entered into between, among others, Kong Sun Yongtai, 新疆誠石易盛商貿有限公司 (Xinjiang Chengshi Yisheng Trading Co., Ltd.) (“ Xinjiang Chengshi ”) and 新華電力發展投資有限公司 (Xinhua Electricity Development Investment Limited) (“ Xinhua Electricity* ”) in relation to the disposals of seven project companies from Kong Sun Yongtai and Xinjiang Chengshi to Xinhua Electricity for a total consideration of RMB242,130,000.

9. EXPERTS AND CONSENTS

The following is the qualification of the experts who have given opinion or advice which is contained in this circular:

Name Qualifications Valor Appraisal & Advisory Independent valuer Limited BDO Limited Certified Public Accountants

As at the Latest Practicable Date, each of the experts above (i) had no shareholding in any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group; (ii) had no direct or indirect interest in any assets which had been, since 31 December 2022 (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.

10. MISCELLANEOUS

(a) The company secretary of the Company is Mr. Ching Kin Wai, who is a member of the Hong Kong Institute of Certified Public Accountants;
(b) The registered office and the principal place of business of the Company is at Unit 803-4, 8/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong;
(c) The share registrar of the Company is Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong; and
(d) This circular has been prepared in both English and Chinese. In the case of any discrepancies, the English texts shall prevail over their respective Chinese texts.

— V-6 —

GENERAL INFORMATION

APPENDIX V

11. DOCUMENTS ON DISPLAY

Copies of the following documents will be available on display online on the Stock Exchange’s website (www.hkexnews.hk) and on the Company’s website (www.kongsun.com) for a period of 14 days from the date of this circular:

(a) the Disposal Agreements;
(b) the annual reports of the Group for the three years ended 31 December 2020, 2021 and 2022;
(c) the unaudited consolidated financial information of the Project Companies, the texts of which are set out in Appendix II-A to Appendix II-F 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; and
(f) the written consents referred to in the paragraph headed “Experts and consents” in this appendix.

— V-7 —

NOTICE OF THE EGM

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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)

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 Wednesday, 20 September 2023 at 11:00 a.m. for the purposes of considering and, if thought fit, passing, with or without amendments, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

Words and expressions that are not expressly defined in this notice shall bear the same meaning as that defined in the circular dated 31 August 2023 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. Jiang Hengwen Chairman and non-executive Director

Hong Kong, 31 August 2023

— 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 one executive Director, Mr. Xian He, one non-executive Director, Mr. Jiang Hengwen, and three independent non-executive Directors, Ms. Tang Yinghong, Ms. Wu Wennan and Mr. Xu Xiang.

— EGM-2 —

AI assistant

Novautek Technologies Group Limited — Proxy Solicitation & Information Statement 2023

49267_rns_2023-08-31_6db287f6-95b1-4bdd-9ccd-e17ad92d2d88.pdf

KONG SUN HOLDINGS LIMITED 江 山 控 股 有 限 公 司

VERY SUBSTANTIAL DISPOSAL DISPOSALS OF SIX SUBSIDIARIES INVOLVING PROVISION OF GUARANTEE AND FINANCIAL ASSISTANCE AND NOTICE OF EXTRAORDINARY GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

KONG SUN HOLDINGS LIMITED 江 山 控 股 有 限 公 司

VERY SUBSTANTIAL DISPOSAL DISPOSALS OF SIX SUBSIDIARIES INVOLVING PROVISION OF GUARANTEE AND FINANCIAL ASSISTANCE

INTRODUCTION

THE DISPOSALS

(A) The First Agreement

Subject matter

Consideration

Repayment of the First Debts

Default in payment

Conditions Precedent

Arrangements during the Transition Period

(B) The Second Agreement

Subject matter

Consideration

LETTER FROM THE BOARD

Repayment of the Second Debts

Default in payment

Conditions Precedent

Arrangements during the Transition Period

Release of the Second Guarantee

(C) The Third Agreement

Subject matter

Consideration

Repayment of the Third Debts

Default in payment

Conditions Precedent

Arrangements during the Transition Period

Release of the Third Guarantee

(D) The Fourth Agreement

Subject matter

Consideration

Repayment of the Fourth Debts

Default in payment

Conditions Precedent

LETTER FROM THE BOARD

Arrangements during the Transition Period

Release of the Fourth Guarantee

(E) The Fifth Agreement

Subject matter

Consideration

Repayment of the Fifth Debts

Default in payment

Conditions Precedent

Arrangements during the Transition Period

Release of the Fifth Guarantee

(F) The Sixth Agreement

Subject matter

Consideration

Repayment of the Sixth Debts

Default in payment

Conditions Precedent

Arrangements during the Transition Period

Release of the Sixth Guarantee

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

(D) The Fourth Project Company

(E) The Fifth Project Company

(F) The Sixth Project Company

INFORMATION ON THE PARTIES

The Company

Tianhao New Energy

Kong Sun Yongtai

Changshu Honglue

Novautek Technologies Group Limited Proxy Solicitation & Information Statement 2023

KONG SUN HOLDINGS LIMITED 江山控股有限公司

KONG SUN HOLDINGS LIMITED 江山控股有限公司