Novautek Technologies Group Limited - Proxy Solicitation & Information Statement 2024

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)

(1) VERY SUBSTANTIAL DISPOSAL – AMENDMENTS TO FINANCE LEASE AGREEMENT II AND FINANCE LEASE AGREEMENT III AND (2) NOTICE OF EXTRAORDINARY GENERAL MEETING

A letter from the Board is set out on pages 5 to 15 of this circular.

A notice convening the extraordinary general meeting of the Company to be held at Unit 803-4, 8/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong on Tuesday, 5 November 2024 at 10:00 a.m. 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.

21 October 2024

CONTENTS

		Pages
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		5
APPENDIX I	— FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . .	I-1
APPENDIX II-A — UNAUDITED PROFIT AND LOSS STATEMENTS ON
	THE IDENTIFIABLE NET INCOME STREAM OF
	THE LEASED ASSETS II. . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-A-1
APPENDIX II-B — UNAUDITED PROFIT AND LOSS STATEMENTS ON
	THE IDENTIFIABLE NET INCOME STREAM OF
	THE LEASED ASSETS III. . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-B-1
APPENDIX III	— UNAUDITED PRO FORMA FINANCIAL INFORMATION OF
	THE REMAINING GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV	— GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
NOTICE OF THE EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		EGM-1

— i —

DEFINITIONS

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

“Amended and Restated Finance Lease Agreements”
collectively, Amended and Restated Finance Lease Agreement II and Amended and Restated Finance Lease Agreement III
“Amended and Restated Finance Lease Agreement II”
the Amended and Restated Finance Lease Agreement II dated 9 September 2024 entered into by Huangshi Huangyuan, as lessee, and Hebei Financial Leasing, as lessor in relation to the amendments of the terms and conditions of the Finance Lease Agreement II
“Amended and Restated Finance Lease Agreement III”
the Amended and Restated Finance Lease Agreement III dated 9 September 2024 entered into by Feixi Zhonghui, as lessee, and Hebei Financial Leasing, as lessor, in relation to the amendments of the terms and conditions of the Finance Lease Agreement III
“Amendments”
the amendments to the terms and conditions of Finance Lease Agreement II and Finance Lease Agreement III as set out in the Amended and Restated Finance Lease Agreements
“Board” board of Directors
“close associate(s)” has the meaning ascribed to it under the Listing Rules
“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
“Director(s)” director(s) of the Company “EGM” the extraordinary general meeting of the Company to be convened for the purpose of considering and, if thought fit, approve the Finance Lease Arrangements

“Feixi Zhonghui” 肥西中暉光伏發電有限公司(Feixi Zhonghui Photovoltaic Power Limited*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company

— 1 —

DEFINITIONS

“Finance Lease Agreement II” the finance lease agreement dated 28 April 2023 entered into between Huangshi Huangyuan, as lessee, and Hebei Financial Leasing, as lessor, in respect of the Leased Assets II
“Finance Lease Agreement III” the finance lease agreement dated 28 April 2023 entered into between Feixi Zhonghui, as lessee, and Hebei Financial Leasing, as lessor, in respect of the Leased Assets III
“Finance Lease Arrangements” the transactions contemplated under the Amended and Restated Finance Lease Agreement II and Amended and Restated Finance Lease Agreement III and the Pledges II and Pledges III
“Group” the Company and its subsidiaries
“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
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Huangshi Huangyuan” 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 an indirect wholly-owned subsidiary of the Company
“Independent Third Party(ies)” party(ies) who are independent of the Company and connected persons of the Company
“Jinan Tianguan” 濟南天冠能源科技有限公司 (Jinan Tianguan Energy Technology Co., Ltd.*), a company established in the PRC and a wholly-owned subsidiary of Kong Sun Yongtai
“Kong Sun Yongtai” 江山永泰投資控股有限公司 (Kong Sun Yongtai Investment Holding Co., Ltd.*), a company established in the PRC and an indirect wholly-owned subsidiary of the Company
“Latest Practicable Date”
18 October 2024, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular
“Leased Assets”
collectively, Leased Assets II and Leased Assets III

— 2 —

DEFINITIONS

“Leased Assets II”	certain photovoltaic power generating equipment and
	ancillary facilities regarding the 30MW photovoltaic power
	plant located in Huangshi City, Hubei Province, the PRC
“Leased Assets III”	all the photovoltaic power generating equipment and
	ancillary facilities regarding the 20MW photovoltaic power
	plant located in Hefei City, Anhui Province, the PRC
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“LPR”	the loan prime rate for loans with a maturity of above 5
	years as promulgated by the National Interbank Funding
	Centre under the authority of the People’s Bank of China
“MW”	megawatts
“Pledges II”	collectively, (a) a pledge on all income arising from the
	Leased Assets II including electricity bill receivables and
	government subsidies receivables by Huangshi Huangyuan
	(in the approximate amount of RMB106,776,000 as at 31
	December 2023); and (b) a pledge of the entire equity
	interest in Huangshi Huangyuan
“Pledges III”	collectively, (a) a pledge on all income arising from the
	Leased Assets III including electricity bill receivables and
	government subsidies receivables by Feixi Zhonghui (in the
	approximate amount of RMB63,833,000 as at 31 December
	2023); and (b) a pledge of the entire equity interest in Feixi
	Zhonghui
“PRC”	the People’s Republic of China
“PRC GAAP”	the generally accepted accounting principles of the PRC
“Proposed Disposal”	the proposed disposal of the Leased Assets
“Remaining Group”	the Group immediately upon completion of the Proposed
	Disposal
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	the Securities and Futures Ordinance (Cap. 571 of the laws
	of Hong Kong)
“Shareholder(s)”	holder(s) of the Shares

— 3 —

DEFINITIONS

“Shares” ordinary share(s) in the share capital of the Company “State Grid Companies” State Grid Corporation of China “Stock Exchange” The Stock Exchange of Hong Kong Limited “%” per cent.

* For identification purposes only

— 4 —

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: Mr. Tang Jian Ms. Tang Yinghong Ms. Wu Wennan

21 October 2024

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL – AMENDMENTS TO FINANCE LEASE AGREEMENT II AND FINANCE LEASE AGREEMENT III

INTRODUCTION

References are made to the announcement of the Company dated 28 April 2023 and the circular of the Company dated 25 May 2023 in relation to, among other matters, the Finance Lease Agreement II and Finance Lease Agreement III and the transactions contemplated thereunder, and the poll results announcement of the Company dated 13 June 2023 in relation to, among other matters, the approval of the Finance Lease Agreement II and Finance Lease Agreement III and the transactions contemplated thereunder by the shareholders of the Company.

References are also made to the announcements of the Company dated 9 September 2024 and 30 September 2024 in relation to the amendments of the Finance Lease Agreement II and Finance Lease Agreement III.

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LETTER FROM THE BOARD

BACKGROUND

On 28 April 2023, (i) Huangshi Huangyuan, as lessee, and Hebei Financial Leasing, as lessor entered into the Finance Lease Agreement II in respect of the Leased Assets II; and (ii) Feixi Zhonghui, as lessee, and Hebei Financial Leasing, as lessor entered into the Finance Lease Agreement III in respect of the Leased Assets III.

As the Company’s financial needs regarding Finance Lease Agreement II and Finance Lease Agreement III were delayed due to the completion of the Company’s other financing activities such as disposals of certain subsidiaries and other finance lease arrangements, completion of the Finance Lease Agreement II and Finance Lease Agreement III has not taken place at the material time after the Finance Lease Agreement II and Finance Lease Agreement III were approved at the extraordinary general meeting of the Company on 13 June 2023. As such, the Leased Assets were not disposed of or subject to sale and leaseback arrangement at the material time and Huangshi Huangyuan and Feixi Zhonghui have retained ownership in the Leased Assets II and Leased Assets III respectively. The fact that the Finance Lease Agreements were not completed did not constitute a breach of the Finance Lease Agreements on the part of Huangshi Huangyuan or Feixi Zhonghui, as the non-completion was due to non-fulfillment of conditions precedent (c), (d) and (e) under the Finance Lease Agreement II and Finance Lease Agreement III respectively and there is no time limit for such conditions precedent to be fulfilled or the consequences for non-fulfillment.

On 9 September 2024, the respective parties to the Finance Lease Agreement II and Finance Lease Agreement III entered into the Amended and Restated Finance Lease Agreement II and the Amended and Restated Finance Lease Agreement III respectively.

THE AMENDED AND RESTATED FINANCE LEASE AGREEMENT II

On 9 September 2024, Huangshi Huangyuan, as lessee, and Hebei Financial Leasing, as lessor, entered into the Amended and Restated Finance Lease Agreement II.

Reference is made to the circular of the Company dated 31 August 2023 in relation to, among other things, the disposal of Huangshi Huangyuan. As at the Latest Practicable Date, the disposal of Huangshi Huangyuan has not been completed. The proposed disposal of Huangshi Huangyuan, which is expected to be completed in March 2025, shall not affect the completion of the Amended and Restated Finance Lease Agreement II as the purchaser of Huangshi Huangyuan is aware of the finance lease arrangement in respect of the Leased Assets II. As the financial lease is an ordinary course of business of Huangshi Huangyuan and is permitted under the agreement in respect of disposal of Huangshi Huangyuan, Huangshi Huangyuan does not need to obtain consent from the purchaser to complete the Amended and Restated Finance Lease Agreement II.

A summary of the principal terms of the Amended and Restated Finance Lease Agreement II is set out below:

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LETTER FROM THE BOARD

Sale and purchase arrangements and consideration

Pursuant to the Amended and Restated Finance Lease Agreement II, Hebei Financial Leasing would purchase the Leased Assets II from Huangshi Huangyuan for a total consideration of RMB90,000,000. The consideration would be payable in cash by Hebei Financial Leasing to Huangshi Huangyuan, which was determined after arm’s length negotiations between parties to the Amended and Restated Finance Lease Agreement II by reference to the unaudited book value of the Leased Assets II and the loan-to-value ratio of approximately 60.2%.

The total consideration would be payable by Hebei Financial Leasing in full after the fulfillment of certain conditions precedent as set out in the Amended and Restated Finance Lease Agreement II.

Conditions precedent

Under the Amended and Restated Finance Lease Agreement II, the total consideration would be payable by Hebei Financial Leasing to Huangshi Huangyuan after fulfillment of the following conditions precedent, which are waivable by Hebei Financial Leasing (save for the condition in (a) below):

(a) Huangshi Huangyuan having obtained and produced the internal approvals documents (including approval by the Shareholders and the Board) for the Amended and Restated Finance Lease Agreement II and the transactions contemplated thereunder in accordance with its articles of association;
(b) Huangshi Huangyuan or other guarantors having executed the security documents for the Amended and Restated Finance Lease Agreement II and completed the relevant registration procedures (if necessary);
(c) Hebei Financial Leasing, with the assistance of Huangshi Huangyuan, having completed the relevant registration procedures of the Amended and Restated Finance Lease Agreement II and the transactions contemplated thereunder at the relevant competent PRC authorities;
(d) Hebei Financial Leasing having received all relevant documentary evidence showing that the Leased Assets II have been insured in accordance with the requirements under the Amended and Restated Finance Lease Agreement II;
(e) Hebei Financial Leasing having received from Huangshi Huangyuan the relevant payment application specifying the payment details; and
(f) other conditions considered necessary by Hebei Financial Leasing.

As at the Latest Practicable Date, only condition precedent (d) of the above has been satisfied and the Company does not foresee any difficulties for the remaining conditions precedent to be satisfied. The Company expects to complete the Amended and Restated Finance Lease Agreement II before 31 December 2024.

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LETTER FROM THE BOARD

Lease back arrangements

Pursuant to the Amended and Restated Finance Lease Agreement II, Hebei Financial Leasing agreed to lease the Leased Assets II back to Huangshi Huangyuan for a term of 12 years.

Lease payments

Pursuant to the Amended and Restated Finance Lease Agreement II, the total estimated aggregate lease payments payable by Huangshi Huangyuan to Hebei Financial Leasing shall be approximately RMB123,718,000 in 48 quarterly instalments, being the principal lease cost of RMB90,000,000 plus the estimated aggregate interest of approximately RMB33,718,000. The estimated interests are calculated at a rate of 5.45% determined with reference to the LPR on 22 July 2024 (which is the same as the LPR on the date of the Amended and Restated Finance Lease Agreement II) at 3.85% plus 160 basis point, which was determined after arm’s length negotiations between the parties to the Amended and Restated Finance Lease Agreement II. The Directors consider that the interest rate is fair and reasonable as it is lower than the Group’s average cost of borrowing. The lease interest rate shall be adjusted in July of each calendar year during the lease period by reference to the corresponding change of the most recent LPR before the adjustment date. Huangshi Huangyuan intends to finance the total lease payments by using the Group’s internal resources.

The obligations of Huangshi Huangyuan under the Amended and Restated Finance Lease Agreement II shall be secured by a corporate guarantee from Kong Sun Yongtai and the Pledges II in favour of Hebei Financial Leasing.

Ownership of the Leased Assets II

During the lease period, the legal ownership of the Leased Assets II under the Amended and Restated Finance Lease Agreement II will be vested in Hebei Financial Leasing and Huangshi Huangyuan will have the rights to use the Leased Assets II. At the end of the lease period and subject to payments by Huangshi Huangyuan of all amounts due under the Amended and Restated Finance Lease Agreement II, the legal ownership of the Leased Assets II will be vested in Huangshi Huangyuan at nil consideration.

The estimated aggregate lease payments under the Amended and Restated Finance Lease Agreement II were determined after arm’s length negotiations between the parties to the Amended and Restated Finance Lease Agreement II with reference to the principal amounts of the lease or the consideration for the Leased Assets II under the Amended and Restated Finance Lease Agreement II and the prevailing market interest rate for finance lease of comparable assets.

Pledges II

As a collateral security for due and punctual payment and performance of, amongst other things, the obligations of Huangshi Huangyuan under the Amended and Restated Finance Lease Agreement II, (i) Huangshi Huangyuan entered into a receivables pledge agreement with Hebei Financial Leasing on 9 September 2024 under which Huangshi Huangyuan pledges to Hebei Financial Leasing on all income arising from the Leased Assets II including electricity bill receivables and government subsidies receivables by Huangshi Huangyuan; and (ii) Kong Sun Yongtai entered into an equity interest pledge agreement with Hebei Financial Leasing on 9 September 2024 under which Kong Sun Yongtai pledges to Hebei Financial Leasing the entire equity interest in Huangshi Huangyuan.

— 8 —

LETTER FROM THE BOARD

AMENDED AND RESTATED FINANCE LEASE AGREEMENT III

On 9 September 2024, Feixi Zhonghui, as lessee, and Hebei Financial Leasing, as lessor, entered into Amended and Restated Finance Lease Agreement III.

A summary of the principal terms of the Amended and Restated Finance Lease Agreement III is set out below:

Sale and purchase arrangements and consideration

Pursuant to the Amended and Restated Finance Lease Agreement III, Hebei Financial Leasing would purchase the Leased Assets III from Feixi Zhonghui for a total consideration of RMB95,000,000. The consideration would be payable in cash by Hebei Financial Leasing to Feixi Zhonghui, which was determined after arm’s length negotiations between parties to the Amended and Restated Finance Lease Agreement III by reference to the unaudited book value of the Leased Assets III and the loan-to-value ratio of approximately 89.2%.

The total consideration would be payable by Hebei Financial Leasing in two tranches after the fulfillment of certain conditions precedent as set out in the Amended and Restated Finance Lease Agreement III. The Directors consider that the payment of the consideration for the Amended and Restated Finance Lease Agreement III in two tranches is fair and reasonable as the Company is required to repay the existing loan in respect of the Leased Assets III and release the existing charge with the advance payment of the first tranche of the consideration. As Hebei Financial Leasing is a reputable financial institution with strong shareholders background, the Company considers that Hebei Financial Leasing has sufficient financial strength to honour its obligations under the Amended and Restated Finance Lease Agreement III.

Conditions precedent

Under the Amended and Restated Finance Lease Agreement III, the first tranche of the consideration in the amount of not exceeding RMB30,000,000 would be payable by Hebei Financial Leasing to Feixi Zhonghui after fulfillment of the following conditions precedent, which are waivable by Hebei Financial Leasing (save for the condition in (a) below):

(a) Feixi Zhonghui having obtained and produced the internal approvals documents (including approval by the Shareholders and the Board) for the Amended and Restated Finance Lease Agreement III and the transactions contemplated thereunder in accordance with its articles of association;
(b) Feixi Zhonghui or other guarantors having executed the security documents for the Amended and Restated Finance Lease Agreement III and completed the relevant registration procedures (if necessary);
(c) Hebei Financial Leasing, with the assistance of Feixi Zhonghui, having completed the relevant registration procedures of the Amended and Restated Finance Lease Agreement III and the transactions contemplated thereunder at the relevant competent PRC authorities;
(d) Hebei Financial Leasing having received all relevant documentary evidence showing that the Leased Assets III have been insured in accordance with the requirements under the Amended and Restated Finance Lease Agreement III; and

— 9 —

LETTER FROM THE BOARD

(e) Hebei Financial Leasing having received from Feixi Zhonghui the relevant payment application specifying the payment details.

Under the Amended and Restated Finance Lease Agreement III, the remaining consideration would be payable by Hebei Financial Leasing to Feixi Zhonghui after fulfillment of the following conditions precedent, which are waivable by Hebei Financial Leasing:

(a) Hebei Financial Leasing having received from Feixi Zhonghui the relevant payment application specifying the payment details;
(b) there being no non-compliance with the asset transfer agreement or the Amended and Restated Finance Lease Agreement III by Feixi Zhonghui or any other circumstances which would have entitled Hebei Financial Leasing to early terminate the Amended and Restated Finance Lease Agreement III; and
(c) other conditions considered necessary by Hebei Financial Leasing.

As at the Latest Practicable Date, only condition precedent (d) for the first tranche of the consideration has been satisfied and the Company does not foresee any difficulties for the remaining conditions precedent to be satisfied. The Company will use its best endeavour to fulfill the conditions precedent in respect of the second tranche of the consideration for the release of the remaining consideration by Hebei Financial Leasing. The Company expects to complete the Amended and Restated Finance Lease Agreement III before 31 December 2024.

Lease back arrangements

Pursuant to the Amended and Restated Finance Lease Agreement III, Hebei Financial Leasing agreed to lease the Leased Assets III back to Feixi Zhonghui for a term of 12 years.

Lease payments

Pursuant to the Amended and Restated Finance Lease Agreement III, the total estimated aggregate lease payments payable by Feixi Zhonghui to Hebei Financial Leasing shall be approximately RMB130,591,000 in 48 quarterly instalments, being the principal lease cost of RMB95,000,000 plus the estimated aggregate interest of approximately RMB35,591,000. The estimated interests are calculated at a rate of 5.45% determined with reference to the LPR on 22 July 2023 (which is the same as the LPR on the date of the Amended and Restated Finance Lease Agreement III) at 3.85% plus 160 basis point, which was determined after arm’s length negotiations between the parties to the Amended and Restated Finance Lease Agreement III. The Directors consider that the interest rate is fair and reasonable as it is lower than the Group’s average cost of borrowing. The lease interest rate shall be adjusted in July of each calendar year during the lease period by reference to the corresponding change of the most recent LPR before the adjustment date. Feixi Zhonghui intends to finance the total lease payments by using the Group’s internal resources.

— 10 —

LETTER FROM THE BOARD

The obligations of Feixi Zhonghui under the Amended and Restated Finance Lease Agreement III shall be secured by a corporate guarantee from Kong Sun Yongtai and the Pledges III in favour of Hebei Financial Leasing.

Ownership of the Leased Assets III

During the lease period, the legal ownership of the Leased Assets III under the Amended and Restated Finance Lease Agreement III will be vested in Hebei Financial Leasing and Feixi Zhonghui will have the rights to use the Leased Assets III. At the end of the lease period and subject to payments by Feixi Zhonghui of all amounts due under the Finance Lease Agreement III, the legal ownership of the Leased Assets III will be vested in Feixi Zhonghui at nil consideration.

The estimated aggregate lease payments under the Amended and Restated Finance Lease Agreement III were determined after arm’s length negotiations between the parties to the Amended and Restated Finance Lease Agreement III with reference to the principal amounts of the lease or the consideration for the Leased Assets III under the Amended and Restated Finance Lease Agreement III and the prevailing market interest rate for finance lease of comparable assets.

Pledges III

As a collateral security for due and punctual payment and performance of, amongst other things, the obligations of Feixi Zhonghui under the Amended and Restated Finance Lease Agreement III, (i) Feixi Zhonghui entered into a receivables pledge agreement with Hebei Financial Leasing on 9 September 2024 under which Feixi Zhonghui pledges to Hebei Financial Leasing on all income arising from the Leased Assets III including electricity bill receivables and government subsidies receivables by Feixi Zhonghui; and (ii) Jinan Tianguan entered into an equity interest pledge agreement with Hebei Financial Leasing on 9 September 2024 under which Jinan Tianguan pledges to Hebei Financial Leasing the entire equity interest in Feixi Zhonghui.

The revised consideration under the Amended and Restated Finance Lease Agreement III was determined after arm’s length negotiations between parties to the Amended and Restated Finance Lease Agreement III by reference to, among others, the latest financial needs of the Group, the recent financial position of the Group and the prevailing market terms and practices.

The revised interest rate under the Amended and Restated Finance Lease Agreements was determined after arm’s length negotiations between parties to the Amended and Restated Finance Lease Agreements by reference to, among others, the recent financial position of the Group, the market interest rate and condition of the Leased Assets.

REASONS FOR AND BENEFITS OF THE AMENDMENTS

The Finance Lease Arrangements and the transactions contemplated thereunder are common in the industry and have been agreed under normal commercial terms and after arm’s length negotiations between the relevant parties and provide the Group with general working capital for repayment of existing loans including instalment repayment and interest due.

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LETTER FROM THE BOARD

The amendments to the Finance Lease Agreement II and the Finance Lease Agreement III were determined after arm’s length negotiations between the parties with reference to, among others, the latest financial needs of the Group, the recent financial position of the Group and the prevailing market terms and practices. Among others, a decrease in the interest rate would reduce the financing cost of the Group while a longer repayment term would better suit the Group’s objectives in cashflow management. The Directors therefore consider that the amendments to the Finance Lease Agreement II and the Finance Lease Agreement III and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

INFORMATION ON THE LEASED ASSETS

As at 31 December 2023, the unaudited book value (prepared under the PRC GAAP) of the Leased Assets II was approximately RMB149,564,000. On this basis, the loan-to-value ratio under the Amended and Restated Finance Lease Agreement II is approximately 60.2%. Taking into account the funding needs of the Group, the interest rate under the Amended and Restated Finance Lease Agreement II and the commercial negotiations with Hebei Financial Leasing, the Board takes the view that such loan-to-value ratio is fair and reasonable.

	For the year ended 31 December	For the year ended 31 December
	2023	2022
	(unaudited)	(unaudited)
	(RMB’000)	(RMB’000)
The profit before tax attributable to
the Leased Assets II	4,508	5,797
The profit after tax attributable to
the Leased Assets II	3,257	5,211

As at 31 December 2023, the unaudited book value (prepared under the PRC GAAP) of the Leased Assets III was approximately RMB106,505,000. On this basis, the loan-to-value ratio under the Amended and Restated Finance Lease Agreement III is approximately 89.2%. Taking into account the funding needs of the Group, the interest rate under the Amended and Restated Finance Lease Agreement III and the commercial negotiations with Hebei Financial Leasing, the Board takes the view that such loan-to-value ratio is fair and reasonable.

	For the year ended 31 December	For the year ended 31 December
	2023	2022
	(unaudited)	(unaudited)
	(RMB’000)	(RMB’000)
The profit before tax attributable to
the Leased Assets III	2,939	3,406
The profit after tax attributable to
the Leased Assets III	2,197	647

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LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE AMENDMENTS

It is expected that according to the Hong Kong Financial Reporting Standards, the transactions contemplated under the Finance Lease Arrangements shall be accounted for as financing arrangements and therefore would not give rise to any gain or loss. As the interest rate of the Finance Lease Arrangements is lower than the Group’s average cost of borrowing, the reduction of finance cost will be beneficial to the Group and the Shareholders as a whole. Upon the Amendments becoming effective, after deducting the incidental costs attributable to the Finance Lease Arrangements, the Group will receive net disposal proceeds of approximately RMB184,000,000 in aggregate under the Finance Lease Arrangements. It is expected that the net disposal proceeds will be used for repayment of existing loans including instalment repayment and interest due, by 30 June 2025 with principal and interest in the amount of approximately RMB124,000,000 and RMB60,000,000 respectively. There will be no remaining disposal proceeds after repayment of existing loans.

The consideration of the Leased Assets II in the amount of RMB90,000,000 is approximately RMB59,564,000 lesser than its unaudited book value as at 31 December 2023 of approximately RMB149,564,000. The consideration of the Leased Assets III in the amount of RMB95,000,000 is approximately RMB11,505,000 lesser than its unaudited book value as at 31 December 2023 of approximately RMB106,505,000.

INFORMATION ON THE COMPANY, JINAN TIANGUAN AND THE LESSEES

The Company is principally engaged in the investment in and operation of solar power plants, provision of financial services and asset management, construction of Digital and Intelligent Traditional Chinese Medicine (“ DI-TCM ”) health management and service system and provision of DI-TCM diagnosis and treatment equipment, and provision of solar power plant operation and maintenance services.

Jinan Tianguan is a company established in the PRC and an indirect wholly-owned subsidiary of the Company, which is principally engaged in investment in and operation of solar power plants. As at the Latest Practicable Date, Jinan Tianguan was wholly-owned by Kong Sun Yongtai.

Huangshi Huangyuan is a company established in the PRC and an indirect wholly-owned subsidiary of the Company, which is principally engaged in solar power generation. As at the Latest Practicable Date, Huangshi Huangyuan was wholly-owned by Kong Sun Yongtai.

Feixi Zhonghui is a company established in the PRC and an indirect wholly-owned subsidiary of the Company, which is principally engaged in solar power generation. As at the Latest Practicable Date, Feixi Zhonghui was wholly-owned by Jinan Tianguan which was wholly-owned by Kong Sun Yongtai.

— 13 —

LETTER FROM THE BOARD

INFORMATION ON HEBEI FINANCIAL LEASING

Hebei Financial Leasing is principally engaged in the finance leases and factoring businesses. As at the Latest Practicable Date, Hebei Financial Leasing was held as to approximately 21.43%, 15.31%, 15.31%, 11.32%, 7.04%, 6.63%, 6.5%, 5.74%, 5.74% and 4.98% by 河北建設投資集團有限責任公司 (Hebei Construction & Investment Group Co., Ltd.), 新奧控股投資股份有限公司 (ENN Holdings Investment Co., Ltd.), 石家莊國控城市發展投資集團有限責任公司 (Shijiazhuang Guokong Urban Development Investments Group Co., Ltd.), 新奧集團股份有限公司 (ENN Group Co., Ltd.), 冀南鋼鐵集團有限公司 (Ji’nan Steel Group Co., Ltd.), 河北省資產管理有限公司 (Hebei Asset Management Co., Limited), 唐山國控集團有限公司 (Tangshan Guokong Group Co., Ltd.), 西安金匯汽車服務有限公司 (Xi’an Jinhui Automobile Service Co., Ltd.), 上海德力西集團有限公司 (Shanghai Delixi Group Co., Ltd.) and 華美現代流通發展有限公司 (Huamei Modern Circulation Development Co., Ltd.*), respectively.

As at the Latest Practicable Date, the ultimate beneficial owners of Hebei Financial Leasing were 河北省人民政府國有資產監督管理委員會 (the State-owned Assets Supervision and Administration Commission of the People’s Government of Hebei Province), 王玉鎖 (Wang Yusuo), 石家莊市人民政府國有資產監督管理委員會 (the State-owned Assets Supervision and Administration Commission of Shijiazhuang Municipal People’s Government), 王樹華 (Wang Shuhua), 唐山市人民政府國有資產監督管理委員會 (State-owned Assets Supervision and Administration Commission of TangShan Municipal People’s Government), 徐敏俊 (Xu Minjun), 胡成中 (Hu Chengzhong) and 張文中 (Zhang Wenzhong), with effective interest of 28.06%, 26.63%, 15.31%, 7.04%, 6.5%, 5.74%, 5.74% and 4.98%, respectively.

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, Hebei Financial Leasing and its ultimate beneficial owners are Independent Third Parties.

IMPLICATIONS UNDER THE LISTING RULES

Under the Amended and Restated Finance Lease Agreements, the legal ownership of the Leased Assets II and the Leased Assets III will be transferred to Hebei Financial Leasing and thus will constitute a disposal of assets. As the highest applicable percentage ratio exceeds 75%, such transactions under the Amended and Restated Finance Lease Agreements constitute a very substantial disposal of the Company which is subject to the reporting, announcement, circular and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

EGM

Set out on pages EGM-1 to EGM-2 of this circular is a notice of the EGM to be held at Unit 803-4, 8/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong on Tuesday, 5 November 2024 at 10:00 a.m., at which ordinary resolutions will be proposed to approve the Finance Lease Arrangements.

— 14 —

LETTER FROM THE BOARD

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 is 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 Finance Lease Arrangements and his/her/its close associates is/are required to abstain from voting on the relevant resolutions at the EGM.

As at the Latest Practicable Date, insofar as the Company is aware, no Shareholder has any material interest in the Finance Lease Arrangements. Hence, no Shareholder is required to abstain from voting on the resolutions in relation to the Finance Lease Arrangements at the EGM. As none of the Director is interested in the Finance Lease Arrangements, no Director has abstained from voting on the relevant Board resolutions approving the Finance Lease Arrangements.

RECOMMENDATION

The Directors consider that the terms of the Finance Lease Arrangements and the transactions contemplated thereunder 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 resolutions to be proposed at the EGM to approve the Finance Lease Arrangements 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

— 15 —

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 2021, 2022 and 2023 and the six months ended 30 June 2024 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 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

The audited consolidated financial statements of the Group for the year ended 31 December 2023 have been set out on pages 95 to 200 of the 2023 annual report of the Company published on 29 April 2024. Please also see below the link to the 2023 annual report:

https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0429/2024042903839.pdf

The unaudited consolidated financial statements of the Group for the six months ended 30 June 2024 have been set out on pages 23 to 62 of the 2024 interim report of the Company published on 20 September 2024. Please also see below the link to the 2024 interim report:

https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0920/2024092000367.pdf

2. WORKING CAPITAL

The Directors, after due and careful consideration and taking into account the proceeds from the Finance Lease Arrangements, 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.

— I-1 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. STATEMENT OF INDEBTEDNESS

As at the close of business on 31 August 2024, being the latest practicable date for the purpose of this statement of indebtedness, the Group’s indebtedness includes secured loans and borrowings amounted to approximately RMB1,582,472,000, secured loans from an associate amounted to approximately RMB26,100,000, unsecured corporate bonds amounted to approximately RMB16,656,000 and lease liabilities amounted to approximately RMB138,944,000.

The Group’s loans and borrowings and loans from an associate 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 August 2024, the Group’s lease liabilities amounted to approximately RMB138,944,000 in relation to the remaining lease terms of certain lease contracts, which is unsecured and unguaranteed.

The Directors confirm that, as of 31 August 2024, 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. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Upon the amendments to the Finance Lease Agreement II and the Finance Lease Agreement III, the Remaining Group will continue to be principally engaged in investment in and the operation of solar power plants, provision of financial services and asset management, construction of Digital and Intelligent Traditional Chinese Medicine (“ DI-TCM ”) health management and service system and provision of DI-TCM diagnosis and treatment equipment, and provision of solar power plant operation and maintenance services. Set out below is the management discussion and analysis on the Remaining Group for each of the three financial years ended 31 December 2021, 2022 and 2023, and the six months ended 30 June 2024. 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 2021, 2022 and 2023, and the condensed consolidated financial statements of the Company for the six months ended 30 June 2024.

For the year ended 31 December 2021

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 liquefied natural gas (“ LNG ”) and asset management.

— I-2 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Revenue

The revenue of the Remaining Group decreased by approximately 32.8% from approximately RMB1,478,209,000 for the year ended 31 December 2020 to approximately RMB992,756,000 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.

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 34.9% from approximately RMB1,375,490,000 for the year ended 31 December 2020 to approximately RMB895,825,000 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 1,189,413MWh for the year ended 31 December 2021, representing a decrease of approximately 34.5% as compared to 1,815,522MWh 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.

— I-3 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Gross profit and gross profit margin

The gross profit of the Remaining Group decreased by approximately 37.0% from approximately RMB921,248,000 for the year ended 31 December 2020 to approximately RMB580,398,000 for the year ended 31 December 2021. The gross profit margin of the Remaining Group decreased from approximately 62.3% for the year ended 31 December 2020 to approximately 58.5% 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.

Other gains, net

The other gains, net of the Remaining Group increased by approximately 90.7% from approximately RMB18,202,000 for the year ended 31 December 2020 to approximately RMB34,708,000 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 11.2% from approximately RMB297,030,000 for the year ended 31 December 2020 to approximately RMB263,628,000 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.

— I-4 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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.

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 32.2% from approximately RMB735,344,000 for the year ended 31 December 2020 to approximately RMB498,295,000 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 RMB2,844,751,000 (2020: RMB5,346,495,000) 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 529.8MW (2020: 1,178.8MW) 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.

— I-5 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Right-of-use Assets

As at 31 December 2021, the Remaining Group’s right-of-use assets amounted to approximately RMB191,566,000 (2020: RMB274,361,000). The decrease is mainly contributed by the disposals of subsidiaries during the year ended 31 December 2021.

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 26.3% from approximately RMB3,561,766,000 as at 31 December 2020 to approximately RMB2,626,491,000 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-6 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Trade and Other Payables

Trade and other payables decreased by approximately 52.3% from approximately RMB1,060,610,000 as at 31 December 2020 to approximately RMB506,230,000 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 RMB699,574,000 (2020: RMB168,947,000), which included an amount of bank balances of approximately RMB689,139,000 (2020: RMB167,743,000) 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 0.79 (2020: 1.36).

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 RMB11,377,000 (2020: RMB26,149,000), respectively.

Loans and Borrowings

As at 31 December 2021, the Remaining Group’s total loans and borrowings was approximately RMB3,587,727,000 representing a decrease of approximately 42.9% compared to approximately RMB6,285,578,000 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 RMB1,036,281,000 (2020: RMB1,878,078,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2021, out of the total borrowings, approximately RMB1,812,740,000 (2020: RMB2,576,645,000) was repayable within one year and approximately RMB1,774,987,000 (2020: RMB3,708,933,000) was repayable after one year. For details, please refer to note 30 to the financial statements of the 2021 annual report.

— I-7 —

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 RMB145,238,000 (2020: RMB182,228,000). 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-8 —

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 RMB2,054,066,000 (2020: RMB3,324,494,000), approximately RMB923,394,000 (2020: RMB1,190,157,000), 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 plant projects from transferring the equity interests of solar power plant projects before such solar power plants were connected to the power grid. Therefore, these subsidiaries may be subject to fines or other adverse consequences imposed by the relevant PRC government authorities 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 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-9 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 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.

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

— I-10 —

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 44.0% from approximately RMB992,756,000 for the year ended 31 December 2021 to approximately RMB555,727,000 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 56.9% from approximately RMB895,925,000 for the year ended 31 December 2021 to approximately RMB385,695,000 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 511,840MWh for the year ended 31 December 2022, representing a decrease of approximately 57.0% as compared to 1,189,413MWh 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-11 —

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 53.9% from approximately RMB580,398,000 for the year ended 31 December 2021 to approximately RMB267,689,000 for the year ended 31 December 2022. The gross profit margin of the Remaining Group decreased from approximately 58.5% for the year ended 31 December 2021 to approximately 48.2% 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 RMB34,557,000 for the year ended 31 December 2021 to net losses of approximately RMB19,758,000 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 36.6% from approximately RMB263,628,000 for the year ended 31 December 2021 to approximately RMB167,011,000 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-12 —

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 62.7% from approximately RMB498,295,000 for the year ended 31 December 2021 to approximately RMB186,081,000 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 RMB2,049,134,000 (2021: RMB2,844,751,000) 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-13 —

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 RMB157,292,000 (2021: RMB191,566,000). 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-14 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Trade, bills and other receivables

Trade, bills and other receivables decreased by approximately 16.2% from approximately RMB2,626,491,000 as at 31 December 2021 to approximately RMB2,200,899,000 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 23.7% from approximately RMB506,230,000 as at 31 December 2021 to approximately RMB386,433,000 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 RMB301,979,000 (2021: RMB699,574,000), which included an amount of bank balances of approximately RMB299,525,000 (2021: RMB689,139,000) 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 0.52 (2021: 0.79).

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 RMB87,040,000 (2021: RMB11,377,000), respectively.

— I-15 —

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 RMB2,034,419,000 representing a decrease of approximately 43.3% compared to approximately RMB3,587,727,000 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 RMB467,178,000 (2021: RMB2,551,446,000) and approximately RMB1,567,241,000 (2021: RMB1,036,281,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2022, out of the total borrowings, approximately RMB392,671,000 (2021: RMB1,812,740,000) was repayable within one year and approximately RMB1,641,748,000 (2021: RMB1,774,987,000) 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-16 —

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 RMB129,983,000 (2021: RMB145,238,000). 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 RMB998,866,000 (2021: RMB2,054,066,000), approximately RMB439,125,000 (2021: RMB923,394,000) 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.

— I-17 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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. Therefore, these subsidiaries may be subject to fines or other adverse consequences imposed by the relevant PRC government authorities 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.

— I-18 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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.

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-19 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the year ended 31 December 2023

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 and asset management, and construction of Digital and Intelligent Traditional Chinese Medicine (DI-TCM) health management and service system and provision of DI-TCM diagnosis and treatment equipment.

Revenue

The revenue of the Remaining Group decreased by approximately 14.6% from approximately RMB555,727,000 for the year ended 31 December 2022 to approximately RMB474,793,000 for the year ended 31 December 2023. 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 25.8% from approximately RMB385,695,000 for the year ended 31 December 2022 to approximately RMB286,256,000 for the year ended 31 December 2023 due to the decrease in aggregate volume of electricity generated by the Remaining Group’s grid-connected solar power plants as a results of the disposal of subsidiaries. The solar power plants owned by the Remaining Group generated electricity in an aggregate volume of 401,352 MWh for the year ended 31 December 2023, representing a decrease of approximately 21.6% as compared to 511,840 MWh for the year ended 31 December 2022.

The Remaining Group’s revenue from provision of solar power plant operation and maintenance services increased by approximately 4.2% from approximately RMB116,991,000 for the year ended 31 December 2022 to approximately RMB121,856,000 for the year ended 31 December 2023 mainly due to the commencement of certain solar power plant operation and maintenance services contracts.

Revenue from provision of financial services

The Remaining Groups’ revenue from provision of financial services increased by approximately 25.7% from approximately RMB53,041,000 for the year ended 31 December 2022 to approximately RMB66,681,000 for the year ended 31 December 2023 due to more loans have been made to customers during the year.

— I-20 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Gross profit and gross profit margin

The gross profit of the Remaining Group decreased by approximately 17.9% from approximately RMB267,689,000 for the year ended 31 December 2022 to approximately RMB219,648,000 for the year ended 31 December 2023. The gross profit margin of the Remaining Group decreased from approximately 48.2% for the year ended 31 December 2022 to approximately 46.3% for the year ended 31 December 2023 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 2023.

Other gains/(losses), net

The other gains/(losses), net of the Remaining Group changed from net losses of approximately RMB19,758,000 for the year ended 31 December 2022 to net gains of approximately RMB30,295,000 for the year ended 31 December 2023. The change was mainly due to (i) the increase in interest income from a former subsidiary and an associate of approximately RMB17,146,000; (ii) the increase in dividend income from financial assets measured of fair value through other comprehensive income of approximately RMB20,250,000; and (iii) the decrease of solar power plant rectification expense of approximately RMB28,537,000, offset by (i) the decrease in rental income of approximately RMB10,809,000; and (ii) the increase in write-off of other receivables of approximately RMB7,326,000.

Administrative expenses

Administrative expenses of the Remaining Group increased by approximately 15.8% from approximately RMB167,011,000 for the year ended 31 December 2022 to approximately RMB193,473,000 for the year ended 31 December 2023. The increase was mainly attributable to the increase in total employee benefit expenses of approximately RMB54,189,000 during the year ended 31 December 2023.

Losses on disposal of subsidiaries, net

During the year ended 31 December 2023, the Remaining Group disposed of certain subsidiaries and recorded net losses on disposal of subsidiaries of approximately RMB33,770,000 (2022: RMB8,587,000).

Impairment loss on a solar power plant

— I-21 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Impairment losses on a disposal group classified as held for sale

On 11 August 2023, the Remaining Group entered into sale and purchase agreements with an independent third party to dispose of the entire equity interests in four solar power projects in the PRC, for a total equity consideration of approximately RMB350,179,000.

An impairment loss of approximately RMB61,444,000, representing the sale proceeds less the carrying amount of the net assets as at 31 December 2023 of 黃石黃源光伏電力開發有限公司 (Huangshi Huangyuan Photovoltaic Power Development Limited) (“ Huangshi Huangyuan ”), 定邊縣晶陽電力有限公司 (Dingbian Jingyang Electricity Limited) (“ Dingbian Jingyang ”), 定邊縣萬和順新能源發電有限公司 (Dingbian Wanheshun New Energy Power Generation Limited) (“ Dingbian Wanheshun ”) and 榆林正信電力有限公司 (Yulin Zhengxin Electricity Limited) (“ Yulin Zhengxin ”), the disposals of which have not been taken place as at 31 December 2023, was charged to profit or loss during the year ended 31 December 2023.

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 2023, impairment losses of approximately RMB156,276,000 (2022: RMB135,411,000) 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 11.7% from approximately RMB186,081,000 for the year ended 31 December 2022 to approximately RMB164,240,000 for the year ended 31 December 2023, which was mainly due to the decrease in finance costs related to borrowings as the Remaining Group’s loans and borrowings decreased during the year ended 31 December 2023.

Impairment loss on goodwill

During the year ended 31 December 2023, impairment loss of approximately RMB4,019,000 on goodwill was recorded as a result of the impairment test performed in respect of the newly acquired health management services business.

Solar power plants

As at 31 December 2023, the Remaining Group had a net carrying amount of approximately RMB939,706,000 (2022: RMB2,049,134,000) and approximately RMB3,390,000 (2022: RMB3,390,000) in completed solar power plants and solar power plants under construction, respectively. As at 31 December 2023, the Remaining Group had a total of 290 MW (2022: 359.8 MW) installed capacity of completed solar power plants.

— I-22 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Interest in associates

As at 31 December 2023, the net carrying amount of associates was approximately RMB218,533,000 (2022: RMB180,448,000).

Interest in joint ventures

As at 31 December 2023, the net carrying amount of joint ventures was approximately RMB209,748,000 (2022: RMB193,710,000).

Goodwill

As at 31 December 2022, the Remaining Group had a total amount of approximately RMB547,000 in respect of goodwill on the acquisition of subsidiaries in previous years. No such amount was recorded for the year ended 31 December 2023.

Right-of-use Assets

As at 31 December 2023, the right-of-use assets amounted to approximately RMB127,197,000 (2022: RMB157,292,000). The decrease is mainly contributed by the disposals of subsidiaries during the year ended 31 December 2023.

Financial assets measured of fair value through other comprehensive income

Financial assets measured of fair value through other comprehensive income decreased by approximately 21.6% from approximately RMB760,194,000 as at 31 December 2022 to approximately RMB595,942,000 as at 31 December 2023. The decrease is mainly due to fair value loss which amounted to approximately RMB164,252,000. The investments are held for long-term investment purpose and hence are classified as financial assets measured at fair value through other comprehensive income in the consolidated statement of financial position.

Loans to an associate

As at 31 December 2023, the Remaining Group had a loans to an associate of approximately RMB125,498,000 (2022: RMB121,400,000). The Remaining Group entered into a loan agreement with an associate, 江山寶源國際融資租賃有限公司 (Kong Sun Baoyuan International Financial Leasing Limited*) 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.

Trade, bills and other receivables

Trade, bills and other receivables decreased by approximately 12.5% from approximately RMB2,200,899,000 as at 31 December 2022 to approximately RMB1,925,878,000 as at 31 December 2023. The decrease was mainly due to disposals of subsidiaries during the year ended 31 December 2023.

— I-23 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Trade and other payables

Trade and other payables increased by approximately 73.0% from approximately RMB386,433,000 as at 31 December 2022 to approximately RMB668,397,000 as at 31 December 2023. The increase was mainly due to disposals of subsidiaries during the year ended 31 December 2023, in which an amount due to previous subsidiaries become other payable of the Remaining Group after the disposals.

Liquidity and Capital Resources

As at 31 December 2023, cash and cash equivalents of the Remaining Group was approximately RMB254,778,000 (2022: RMB301,979,000), which included an amount of bank balances of approximately RMB244,839,000 (2022: RMB299,525,000) 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 2023, the Remaining Group’s net debt ratio (or gearing ratio), which was calculated by the total loans and borrowings and corporate bonds minus total cash and cash equivalents, over total equity, was approximately 0.48 (2022: 0.52).

Capital expenditure

During the year ended 31 December 2023, the Remaining Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB906,000 (2022: RMB2,942,000) and approximately RMB1,279,000 (2022: RMB87,040,000), respectively.

Loans and borrowings

As at 31 December 2023, the Remaining Group’s total loans and borrowings was approximately RMB1,659,216,000 representing a decrease of approximately 18.4% compared to approximately RMB2,034,419,000 as at 31 December 2022. The decrease in the Remaining Group’s total loans and borrowings was mainly due to disposals of subsidiaries, whereby the loans and borrowings of these subsidiaries were 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 2023, loans and borrowings of approximately RMB1,172,530,000 (2022: RMB1,567,241,000) and approximately RMB486,686,000 (2022: RMB467,178,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2023, out of the total borrowings, approximately RMB1,026,803,000 (2022: RMB392,671,000) was repayable within one year and approximately RMB632,413,000 (2022: RMB1,641,748,000) was repayable after one year.

— I-24 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Corporate bonds

As at 31 December 2023, corporate bonds denominated in Hong Kong dollar with an aggregate principal amount of HK$19,000,000 (equivalent to approximately RMB17,218,000) (2022: HK$19,000,000 (equivalent to approximately RMB16,972,000)) remained outstanding with certain independent third parties. The corporate bonds bear interest rates ranging from 3% to 6% (2022: 3% to 6%) per annum, and will mature on the date immediately following 36 to 96 months (2022: 36 to 96 months) after their issuance.

During the year ended 31 December 2023 and 2022, the Remaining Group did not issue any corporate bonds.

During the year ended 31 December 2023, the Remaining Group did not repay any corporate bonds. During the year ended 31 December 2022, the Remaining Group repaid HK$83,000,000 (equivalent to approximately RMB71,289,000) 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 at 10.40% (2022:10.40%) per annum. Imputed interest of approximately HK$785,000 (equivalent to approximately RMB707,000) (2022: HK$2,432,000 (equivalent to approximately RMB2,089,000)) in respect of the corporate bonds was recognised in profit or loss during the year ended 31 December 2023.

Lease liabilities

As at 31 December 2023, the lease liabilities amounted to approximately RMB147,299,000 (2022: RMB129,983,000). The increase is mainly contributed by the acquisition of subsidiaries during the year ended 31 December 2023.

Foreign Exchange Risk

The Remaining Group primarily operates its business in the PRC and during the year ended 31 December 2023, 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 2023, the Remaining Group had charged solar power plants, trade receivables and unlisted equity investments with net book value of approximately RMB382,345,000 (2022: RMB998,866,000), approximately RMB300,336,000 (2022: RMB439,125,000) and approximately RMB129,543,000 (2022: RMB276,626,000), respectively, to secure bank loans and other loans facilities granted to the Remaining Group.

— I-25 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save as disclosed above, as at 31 December 2023, the Remaining Group had 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. Therefore, these subsidiaries may be subject to fines or other adverse consequences imposed by the relevant PRC government authorities 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.

Save as disclosed above, as at 31 December 2022 and 2023, the Remaining Group has no other significant contingent liabilities.

Employees and Remuneration Policy

As at 31 December 2023, the Remaining Group had approximately 1,375 (2022: 769) 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 2023, the total employee benefit expenses (including directors’ emoluments) were approximately RMB234,962,000 (2022: RMB173,094,000). 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, and when occasion requires.

Significant investments

During the year ended 31 December 2023 and as at 31 December 2023, the Remaining Group did not have any significant investments with a value of 5% more of the Company’s total assets.

— I-26 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Material Acquisitions and disposals of subsidiaries, joint ventures and associated companies

On 11 August 2023, the Remaining Group entered into six equity transfer agreements with 新華電力發展投資有限公司 (Xinhua Electricity Development Investment Limited) to dispose of the entire equity interests in the following six subsidiaries engaged in solar power generation in the PRC: (i) Dingbian Wanheshun, (ii) Huangshi Huangyuan, (iii) Yulin Zhengxin, (iv) 嵊州懿暉光伏發電有限公司 (Shengzhou Yihui Photovoltaic Power Generation Limited) (“ Shengzhou Yihui ”), (v) Dingbian Jingyang and (vi) 定邊縣智信達新能源有限公司 (Dingbian County Zhixinda New Energy Limited) (“ Dingbian County Zhixinda* ”), for a total consideration of approximately RMB758,028,000. The disposals constituted a very substantial disposal of the Company under Chapter 14 of the Listing Rules and was approved by the Company’s shareholders on 20 September 2023. The disposals of the entire equity interest in Shengzhou Yihui and Dingbian Country Zhixinda were completed on 18 October 2023 and 20 October 2023 respectively. Details of the disposals are set out in the Company’s announcement dated 11 August 2023 and the Company’s circular dated 31 August 2023.

On 28 December 2023, the Remaining Group entered into an equity transfer agreement with 江山金投控股有限公司 (Jiangshan Financial Investment Holdings Co., Ltd.) in relation to the acquisition of 69.45% equity interest in Beijing Eagle Eye for a total consideration of RMB6,000,000 (the “ Beijing Eagle Eye Acquisition* ”). Beijing Eagle Eye is a national high-tech enterprise focusing on digital Chinese medicine full life cycle health management services and the construction and operation of a comprehensive health ecosystem. The Beijing Eagle Eye Acquisition constituted a connected transaction of the Company under Chapter 14A of the Listing Rules and was completed on 29 December 2023. For details of the Beijing Eagle Eye Acquisition, please refer to the Company’s announcement dated 28 December 2023.

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 2023 and 2022. The Remaining Group had no definite plans for material investments and capital assets.

— I-27 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the six months ended 30 June 2024

Business Review

The Company is an investment holding company with its subsidiaries mainly engaged in the investment in and the operation of solar power plants, provision of financial services and asset management, construction of Digital and Intelligent Traditional Chinese Medicine (“ DI-TCM ”) health management and service system and provision of DI-TCM diagnosis and treatment equipment, and provision of solar power plant operation and maintenance services.

Revenue

The Remaining Group’s revenue decreased by approximately 1.5% from approximately RMB232,658,000 for the six months ended 30 June 2023 to approximately RMB229,087,000 for the six months ended 30 June 2024. The decrease was due to the decrease in revenue from sales of electricity during the period with the disposal of two solar power plants in the second half of 2023.

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 15.3% from approximately RMB153,548,000 for the six months ended 30 June 2023 to approximately RMB130,030,000 for the six months ended 30 June 2024. As at 30 June 2024, the Remaining Group had a total of 290 MW (31 December 2023: 290 MW) installed capacity of solar power plants. The solar power plants owned by the Remaining Group have generated electricity in an aggregate volume of approximately 164,173 MWh for the six months ended 30 June 2024, representing a decrease of approximately 22.3% as compared to approximately 211,330 MWh for the six months ended 30 June 2023.

The Remaining Group’s revenue from provision of solar power plant operation and maintenance services decreased by approximately 25.1% from approximately RMB50,590,000 for the six months ended 30 June 2023 to approximately RMB37,871,000 for the six months ended 30 June 2024. With the completion of the disposal of 60% interests of the solar power plant operation and maintenance services business on 17 April 2024, it is expected that there will not be any more revenue from this business contribute to the Remaining Group in the second half of 2024. For details, please refer to the Company’s announcement dated 29 January 2024 and the Company’s circular dated 20 March 2024.

Revenue from provision of financial services

The Remaining Group’s revenue from the provision of financial services increased by approximately 95.8% from approximately RMB28,520,000 for the six months ended 30 June 2023 to approximately RMB55,837,000 for the six months ended 30 June 2024.

— I-28 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Revenue from health management services

The Remaining Group’s revenue from health management services was approximately RMB5,349,000 for the six months ended 30 June 2024. No such amount was recorded for the six months ended 30 June 2023.

Gross profit and gross profit margin

The gross profit of the Remaining Group increased by approximately 22.4% from approximately RMB96,864,000 for the six months ended 30 June 2023 to approximately RMB118,550,000 for the six months ended 30 June 2024. The gross profit margin of the Remaining Group increased from approximately 41.6% for the six months ended 30 June 2023 to approximately 51.7% for the six months ended 30 June 2024 mainly due to start of some loans in provision of financial services, which has a higher gross profit margin affecting the overall gross profit margin of the Remaining Group.

Other (Losses)/Gains, Net

The other losses, net of the Remaining Group for the six months ended 30 June 2024 was approximately RMB2,687,000, compared to other gains, net of approximately RMB41,915,000 for the six months ended 30 June 2023. The change was mainly due to (i) the decrease in dividend income of approximately RMB20,250,000; (ii) the decrease in rental income of approximately RMB5,910,000; and (iii) the increase in solar power plant rectification expenses of approximately RMB9,963,000.

Administrative Expenses

Administrative expenses of the Remaining Group increased by approximately 83.3% from approximately RMB96,667,000 for the six months ended 30 June 2023 to approximately RMB177,210,000 for the six months ended 30 June 2024. The increase was mainly attributable to the increase in employee benefit expense and research and development expenses during the six months ended 30 June 2024.

Loss on disposal of subsidiaries, net

During the six months ended 30 June 2024, the Remaining Group disposed of 60% interests of the solar power plant operation and maintenance services, and recorded net loss on such disposals of approximately RMB3,307,000. No such amount was recorded for the six months ended 30 June 2023.

Impairment loss on a disposal group classified as held for sale.

During the six months ended 30 June 2024, the Remaining Group has recorded an impairment loss on a disposal group classified as held for sale of approximately RMB1,443,000 for the reason set out below.

— I-29 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

An impairment loss of approximately RMB1,443,000, representing difference between net asset value of 黃石黃源光伏電力開發有限公司 (Huangshi Huangyuan Photovoltaic Power Development Limited), 定邊縣晶陽電力有限公司 (Dingbian Jingyang Electricity Limited), 定邊縣萬和順新能源發電有限公司 (Dingbian Wanheshun New Energy Power Generation Limited) and 榆林正信電力有限公司 (Yulin Zhengxin Electricity Limited) as at 31 December 2023 and 30 June 2024, was charged to profit or loss during the six months ended 30 June 2024.

No such amount was recorded for the six months ended 30 June 2023.

Impairment loss on trade and other receivables, net

During the six months ended 30 June 2024, impairment loss regarding certain trade and other receivables, net amounting to approximately RMB20,543,000 (six months ended 30 June 2023: RMB7,390,000) was recorded based on the lifetime expected credit losses.

Finance costs

Finance costs of the Remaining Group decreased by approximately 27.4% from approximately RMB79,991,000 for the six months ended 30 June 2023 to approximately RMB58,039,000 for the six months ended 30 June 2024. As the Remaining Group’s average total loans and borrowings decreased as compared to the corresponding period last year, the finance costs related to these borrowings also decreased.

Solar power plants

As at 30 June 2024, the Remaining Group had a net carrying value of approximately RMB906,236,000 (31 December 2023: RMB939,706,000) and approximately RMB3,390,000 (31 December 2023: RMB3,390,000) in completed solar power plants and solar power plants under construction, respectively. As at 30 June 2024, the Remaining Group had a total of 290 MW (31 December 2023: 290 MW) installed capacity of completed solar power plants.

Interest in associates

As at 30 June 2024, the net carrying amount of associates was approximately RMB225,722,000 (31 December 2023: RMB218,533,000).

Interest in joint ventures

As at 30 June 2024, the net carrying amount of joint ventures was approximately RMB175,674,000 (31 December 2023: RMB209,748,000).

— I-30 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Right-of-use Assets

As at 30 June 2024, the right-of-use assets amounted to approximately RMB101,809,000 (31 December 2023: RMB127,197,000).

Financial assets measured at fair value through other comprehensive income decreased by approximately 3.5% from approximately RMB595,942,000 as at 31 December 2023 to approximately RMB575,333,000 as at 30 June 2024. The decrease was due to the fair value loss of approximately RMB20,609,000. The investments are held for long-term investment purpose and hence are classified as financial assets measured at fair value through other comprehensive income in the condensed consolidated statement of financial position.

Intangible assets

As at 30 June 2024, the intangible assets amounted to approximately RMB14,537,000 (31 December 2023: RMB10,639,000).

Trade and other receivables

Trade and other receivables decreased by approximately 6.2% from approximately RMB1,925,878,000 as at 31 December 2023 to approximately RMB1,806,438,000 as at 30 June 2024.

Loan to an Associate

As at 30 June 2024, the Remaining Group had a loan to an associate of approximately RMB130,562,000 (31 December 2023: RMB125,498,000). The Remaining Group entered into a loan agreement with an associate, 江山寶源國際融資租賃有限公司 (Kong Sun Baoyuan International Financial Leasing Limited*) on 1 November 2022 for a loan period of 3 years. The loan is secured and interest-bearing, which carries interest rate of 9.0% per annum.

Trade and other payables

Trade and other payables decreased by approximately 6.2% from approximately RMB668,397,000 as at 31 December 2023 to approximately RMB626,997,000 as at 30 June 2024.

Lease Liabilities

As at 30 June 2024, the lease liabilities amounted to approximately RMB119,550,000 (31 December 2023: RMB147,299,000).

— I-31 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Liquidity and Capital Resources

As at 30 June 2024, cash and cash equivalents of the Remaining Group was approximately RMB69,708,000 (31 December 2023: RMB254,778,000), which included an amount of bank balances of approximately RMB67,219,000 (31 December 2023: RMB244,839,000) denominated in RMB placed with banks in the PRC. The remaining balance of the Remaining Group’s cash and cash equivalents consisted primarily of cash on hand and bank balances which were primarily denominated in Hong Kong dollar and placed with banks in Hong Kong.

As at 30 June 2024, the Remaining Group’s net debt ratio (or gearing ratio), which was calculated by the total loans and borrowings and corporate bonds minus total cash and cash equivalents, over total equity, was approximately 0.54 (31 December 2023: 0.48).

Capital Expenditure

During the six months ended 30 June 2024, the Remaining Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB2,974,000 (six months ended 30 June 2023: RMB374,000) and approximately RMB64,000 (six months ended 30 June 2023: RMB1,335,000), respectively.

Loans and Borrowings

As at 30 June 2024, the Remaining Group’s total loans and borrowings was approximately RMB1,532,263,000, representing a decrease of approximately 7.7% as compared to approximately RMB1,659,216,000 as at 31 December 2023. All loans and borrowings of the Remaining Group were denominated in RMB, the functional currency of the Company’s major subsidiaries in the PRC. As at 30 June 2024, loans and borrowings of approximately RMB1,075,050,000 (31 December 2023: RMB1,172,530,000) and approximately RMB457,213,000 (31 December 2023: RMB486,686,000) bear fixed interest rate and floating interest rate, respectively.

As at 30 June 2024, out of the total borrowings, approximately RMB1,013,352,000 (31 December 2023: RMB1,026,803,000) was repayable within one year and approximately RMB518,911,000 (31 December 2023: RMB632,413,000) was repayable after one year.

Corporate Bonds

As at 30 June 2024, corporate bonds denominated in Hong Kong dollar with an aggregate principal amount of HK$19,000,000 (equivalent to approximately RMB17,341,000 (31 December 2023: HK$19,000,000 (equivalent to approximately RMB17,218,000)) remained outstanding with certain independent third parties. The corporate bonds bear interest rates ranging from 3% to 6% (31 December 2023: 3% to 6%) per annum, and will mature on the date immediately following 36 to 96 months (31 December 2023: 36 to 96 months) after their issuance.

— I-32 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

During the six months ended 30 June 2024 and 2023, the Remaining Group did not issue and repay any corporate bonds.

The corporate bonds are measured at amortised cost using effective interest method by applying an effective interest rate at 10.40% (six months ended 30 June 2023: 10.40% per annum). Imputed interest of approximately HK$403,000 (equivalent to approximately RMB367,000) (six months ended 30 June 2023: HK$385,000 (equivalent to approximately RMB341,000)) in respect of the corporate bonds was recognised in profit or loss during the six months ended 30 June 2024.

Foreign exchange rate risk

The Remaining Group primarily operates its business in the PRC and during the six months ended 30 June 2024, 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 of the Company (the “ Directors ”) expect that any future exchange rate fluctuation will not have any material effect on the Remaining Group’s business. The Remaining Group did not use any financial instruments for hedging purposes, but will continue to monitor foreign exchange changes to best preserve the Remaining Group’s cash value.

Charge on Assets

As at 30 June 2024, the Remaining Group had charged solar power plants, trade receivables and unlisted equity investments with net book value of approximately RMB725,476,000 (31 December 2023: RMB382,345,000), approximately RMB394,530,000 (31 December 2023: RMB300,336,000) and approximately RMB120,183,000 (31 December 2023: RMB129,543,000), respectively, to secure bank loans and other loans facilities granted to the Remaining Group. Save as disclosed above, as at 30 June 2024, the Remaining Group had no other charges on assets.

Contingent liabilities

— I-33 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

the inspection results on the development of the Remaining Group’s solar power plants in a timely manner. Save as disclosed above, as at 30 June 2024, the Remaining Group had no other significant contingent liabilities.

Employees and remuneration policy

As at 30 June 2024, the Remaining Group had approximately 737 employees (31 December 2023: 1,375) in Hong Kong and in the PRC. Compensation for the employees includes basic wages, variable wages, bonuses and other staff benefits. For the six months ended 30 June 2024, the total employee benefit expenses (including directors’ emoluments) were approximately RMB119,214,000 (six months ended 30 June 2023: RMB101,807,000). The remuneration policy of the Remaining Group is to provide remuneration packages, including basic salary, short-term bonuses and long-term rewards, so as to attract and retain top quality staff. The remuneration committee of the Company reviews such packages annually, or when occasion requires. The Remaining Group also puts ongoing efforts to provide adequate trainings and development resources to the employees so that they can keep abreast of the latest development of the market and the industry and, at the same time, improve their performance and self-fulfillment in their positions.

Significant investments and material acquisition and disposal

On 29 January 2024, 揚州啓星新能源發展有限公司 (Yangzhou Qixing New Energy Development Limited) (“ Yangzhou Qixing ”), an indirect wholly-owned subsidiary of the Company, as the vendor and 北京億鑫豐泰科技合夥（有限合夥）(Beijing Yixin Fengtai Technology Partnership (Limited Partnership)) (“ Beijing Yixin ”) as the purchaser entered into an agreement, pursuant to which Yangzhou Qixing conditionally agreed to sell, and Beijing Yixin conditionally agreed to acquire, 60% equity interests in 陝西億潤新能源科技有限公司 (Shaanxi Yirun New Energy Technology Co., Ltd.) for a total consideration of RMB4,200,000 (the “ Disposal* ”). Completion of the Disposal took place on 17 April 2024. For details, please refer to the Company’s announcements dated 29 January 2024 and 9 April 2024 and the Company’s circular dated 20 March 2024.

Save as disclosed above, the Remaining Group did not have any other significant investments in an investee company with a value of 5% or more of the Company’s total assets, other material acquisition or disposal during the six months ended 30 June 2024, and there was no plan authorised by the Board for other material investments or additions of capital assets up to the date of the 2024 interim report.

— I-34 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group is mainly engaged in investment in and the operation of solar power plants, provision of financial services and asset management, construction of Digital and Intelligent Traditional Chinese Medicine (“ DI-TCM ”) health management and service system and provision of DI-TCM diagnosis and treatment equipment and provision of solar power plant operation and maintenance services.

In the long run, the Group will continue to implement the strategies on the operation of solar power plants, optimize asset allocation efficiency and step up to improve the efficiency of the equipment at the power stations, and continue to develop its green finance and inclusive finance business.

It is expected that by entering into the Finance Lease Arrangements and the Amended and Restated Finance Lease Agreements, the Group will be able to recycle capital, reduce its finance costs and mitigate the pressure on project financing.

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.

6. 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 2023, being the date to which the latest audited consolidated financial statements of the Company were made up.

— I-35 —

UNAUDITED PROFIT AND LOSS STATEMENTS ON THE IDENTIFIABLE NET INCOME STREAM OF THE LEASED ASSETS II

APPENDIX II-A

The Leased Assets II are currently being used for solar power generation, and are classified as revenue-generating assets under the Listing Rules.

In accordance with Rule 14.68(2)(b)(i) of the Listing Rules, the unaudited profit and loss statements on the identifiable net income stream of the Leased Assets II for the years ended 31 December 2021, 2022 and 2023 and for the six months ended 30 June 2024 (the “ Unaudited Profit and Loss Statement ”) are set out below.

In the opinion of the Directors, such information has been properly compiled and derived from the underlying books and records of the Group, prepared using accounting policies materially consistent with those of the Group, and taken into consideration of certain adjustments identified by the Group to reflect the business performance of the Leased Assets, in relation to the allocation of certain costs and expenses, including finance costs and income tax expense, from the Group.

Set out below is the unaudited financial information of the Leased Assets II which comprises the unaudited statements of profit or loss for the years ended 31 December 2021, 2022 and 2023 and for the six months ended 30 June 2024 (altogether referred to as “ Unaudited Financial Information ”).

— II-A-1 —

UNAUDITED PROFIT AND LOSS STATEMENTS ON THE IDENTIFIABLE NET INCOME STREAM OF THE LEASED ASSETS II

APPENDIX II-A

(I) UNAUDITED STATEMENTS OF PROFIT OR LOSS OF THE LEASED ASSETS II

Revenue Cost of sales Gross profit Other gains/(losses), net Administrative expenses Finance costs Profit/(loss) before income tax Income tax expense Profit/(loss) for the year/period	For the year ended 31 December 2021 2022 2023 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 28,372 26,504 24,399 (9,866) (9,911) (10,055) 18,506 16,593 14,344 (155) (123) (69) (1,024) (1,010) (848) (12,575) (9,663) (8,919) 4,752 5,797 4,508 (408) (586) (1,251) 4,344 5,211 3,257	For the six months ended 30 June 2024 RMB’000 (Unaudited) 9,411 (5,474) 3,937 – (435) (4,280) (777) (27) (804)

The Unaudited Financial Information has been prepared in accordance with the same accounting policies as those adopted by the Group in preparation of the annual reports of the Group for the financial years 2021, 2022 and 2023 and in the interim report of the Group for the six months ended 30 June 2024 as published on the websites of the Group and the Stock Exchange, 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.

In accordance with paragraph 14.68(2)(b)(i) of the Listing Rules, the Directors have engaged BDO Limited, the auditor of the Group, to perform certain factual finding procedures in accordance with Hong Kong Standard on Related Services 4400 “Engagements to Perform Agreed Upon Procedures Regarding Financial Information” issued by the Hong Kong Institute of Certified Public Accountants. The auditor has agreed the Unaudited Financial Information of Huangshi Huangyuan to the records provided by the management of the Group and reported the factual findings to the Directors. Since the said agreed-upon procedures were agreed between the Directors and the auditor, they should not be used or relied on by any other parties for any purpose. In the opinion of the Directors, such information has been properly complied.

— II-A-2 —

UNAUDITED PROFIT AND LOSS STATEMENTS ON THE IDENTIFIABLE NET INCOME STREAM OF THE LEASED ASSETS II

APPENDIX II-A

Pursuant to Rule 14.68(2)(b)(i) of the Listing Rules, Company has engaged BDO Limited, the reporting accountants, to perform certain agreed upon procedures and report their factual finding in respect of the Unaudited Profit and Loss Statement in accordance with Hong Kong Standard on Related Services 4400 (Revised) “Agreed-Upon Procedures Engagements” issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”).

The reporting accountants have performed procedures in accordance with the agreed-upon procedures set out in the relevant engagement letter between the Company and the reporting accountants and reported their factual findings as follows:

(a) agreed the Unaudited Profit and Loss Statement to the underlying books and records of the Group and found the amounts to be in agreement; and
(b) checked the arithmetical accuracy of the Unaudited Profit and Loss Statement and found the amounts to be arithmetically accurate.

Based on the above, the Directors are of the opinion that the Unaudited Profit and Loss Statement have properly compiled and derived from the underlying books and records. The findings on the agreed-upon procedures were reported solely for the information of the Directors of the Company in order to comply with the requirements under Rule 14.68(2)(b)(i) of the Listing Rules and should not be used or relied upon by any other parties for any other purposes.

The work performed by the reporting accountants did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA and consequently no opinion or assurance conclusion has been expressed by the reporting accountants on the Unaudited Profit and Loss Statement. Had the reporting accountants performed additional procedures other matters might have come to the their attention that would have been reported to the Directors.

— II-A-3 —

UNAUDITED PROFIT AND LOSS STATEMENTS ON THE IDENTIFIABLE NET INCOME STREAM OF THE LEASED ASSETS III

APPENDIX II-B

The Leased Assets III are currently being used for solar power generation, and are classified as revenue-generating assets under the Listing Rules.

In accordance with Rule 14.68(2)(b)(i) of the Listing Rules, the unaudited profit and loss statements on the identifiable net income stream of the Leased Assets III for the years ended 31 December 2021, 2022 and 2023 and for the six months ended 30 June 2024 (the “ Unaudited Profit and Loss Statement ”) are set out below.

Set out below is the unaudited financial information of the Leased Assets III which comprises the unaudited statements of profit or loss for the years ended 31 December 2021, 2022 and 2023 and for the six months ended 30 June 2024 (altogether referred to as “ Unaudited Financial Information ”).

— II-B-1 —

UNAUDITED PROFIT AND LOSS STATEMENTS ON THE IDENTIFIABLE NET INCOME STREAM OF THE LEASED ASSETS III

APPENDIX II-B

(I) UNAUDITED STATEMENTS OF PROFIT OR LOSS OF THE LEASED ASSETS III

Revenue Cost of sales Gross profit Other gains/(losses), net Administrative expenses Finance costs Profit before income tax Income tax expense Profit for the year/period	For the year ended 31 December 2021 2022 2023 *RMB’000* *RMB’000* *RMB’000* (Unaudited) (Unaudited) (Unaudited) 22,702 19,454 17,666 (7,740) (8,413) (7,887) 14,962 11,041 9,779 (15) 48 (3) (1,161) (1,055) (1,001) (10,121) (6,628) (5,836) 3,665 3,406 2,939 (312) (2,759) (742) 3,353 647 2,197	For the six months ended 30 June 2024 *RMB’000* (Unaudited) 8,880 (5,340) 3,540 – (494) (2,788) 258 (193) 65

— II-B-2 —

UNAUDITED PROFIT AND LOSS STATEMENTS ON THE IDENTIFIABLE NET INCOME STREAM OF THE LEASED ASSETS III

APPENDIX II-B

In accordance with paragraph 14.68(2)(b)(i) of the Listing Rules, the Directors have engaged BDO Limited, the auditor of the Group, to perform certain factual finding procedures in accordance with Hong Kong Standard on Related Services 4400 “Engagements to Perform Agreed Upon Procedures Regarding Financial Information” issued by the Hong Kong Institute of Certified Public Accountants. The auditor has agreed the Unaudited Financial Information of Feixi Zhonghui to the records provided by the management of the Group and reported the factual findings to the Directors. Since the said agreed-upon procedures were agreed between the Directors and the auditor, they should not be used or relied on by any other parties for any purpose. In the opinion of the Directors, such information has been properly complied.

(a) agreed the Unaudited Profit and Loss Statement to the underlying books and records of the Group and found the amounts to be in agreement; and
(b) checked the arithmetical accuracy of the Unaudited Profit and Loss Statement and found the amounts to be arithmetically accurate.

— II-B-3 —

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 Group (the “ Unaudited Pro Forma Financial Information ”) presented below is prepared to illustrate (a) the financial position of the Group as if the Finance Lease Arrangements had been completed on 30 June 2024; and (b) the results of the Group for the year ended 31 December 2023 as if the Finance Lease Arrangements had been completed on 1 January 2023. 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 Group as at 30 June 2024 or at any future date had the Finance Lease Arrangements been completed on 30 June 2024; or (ii) the results of the Group for the year ended 31 December 2023 or for any future period had the Finance Lease Arrangements been completed on 1 January 2023.

The Unaudited Pro Forma Financial Information is prepared based on the consolidated statement of financial position of the Group as at 30 June 2024 as set out in the published interim report of the Company as of 30 June 2024 and consolidated statement of profit or loss of the Group for the year ended 31 December 2023 as set out in the annual report of the Company for the year ended 31 December 2023, 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 Finance Lease Arrangements and factually supportable. The Unaudited Pro Forma Financial Information is prepared in accordance with Rules 4.29 and 14.68(2)(b)(i) 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 interim report of the Company as of 30 June 2024 and annual report of the Company for the year ended 31 December 2023 and other financial information included elsewhere in this circular.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(A) Unaudited Pro Forma Consolidated Statement of Financial Position of the Remaining Group

Non-current assets Property, plant and equipment Solar power plants Interests in associates Interests in joint ventures Right-of-use assets Financial assets measured at fair value through other comprehensive income Intangible assets Trade receivables Deferred tax assets Loans to an associate Current assets Inventories Trade and other receivables Loans to an associate Cash and cash equivalents Assets of disposal groups classified as held for sale Total current assets	Consolidated statement of financial position of the Group as at 30 June 2024 RMB’000 (Note 1) 29,136 909,626 225,722 175,674 101,809 575,333 14,537 274,404 13,466 124,892 2,444,599 17,039 1,532,034 5,670 69,708 1,624,451 1,290,951 2,915,402	Pro forma adjustments RMB’000 (Note 2) – – – – – – – – – – – – – – 94,718 94,718 89,732 184,450	Unaudited pro forma Consolidated statement of financial position of the Remaining Group as at 30 June 2024 RMB’000 29,136 909,626 225,722 175,674 101,809 575,333 14,537 274,404 13,466 124,892
			2,444,599
			17,039 1,532,034 5,670 164,426
			1,719,169
			1,380,683
			3,099,852

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Current liabilities Trade and other payables Lease liabilities Loans and borrowings Loans from an associate Corporate bonds Tax payable Liabilities of disposal groups classified as held for sale Total current liabilities Net current assets Total assets less current liabilities Non-current liabilities Lease liabilities Loans and borrowings Corporate bonds Net assets	Consolidated statement of financial position of the Group as at 30 June 2024 RMB’000 (Note 1) 626,997 30,508 1,013,352 26,100 9,127 5,536 1,711,620 277,488 1,989,108 926,294 3,370,893 89,042 518,911 7,482 615,435 2,755,458	Pro forma adjustments RMB’000 (Note 2) – – 5,996 – – – – 89,732 97,782 88,722 88,722 – 88,722 – 79,988 –	Unaudited pro forma Consolidated statement of financial position of the Remaining Group as at 30 June 2024 RMB’000 626,997 30,508 1,019,348 26,100 9,127 5,536
			1,717,616
			367,220
			2,084,836
			1,015,016
			3,459,615
			89,042 607,633 7,482
			704,157
			2,755,458

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(B) Unaudited Pro Forma Consolidated Statement of Profit or Loss of the Remaining Group

Revenue Cost of sales Gross profit Other gains, net Administrative expenses Losses on disposal of subsidiaries, net Impairment losses on a disposal group classified as held for sale Impairment losses on trade and other receivables, net Impairment loss on loans to an associate Finance costs Impairment loss on interest in a joint venture Impairment loss on goodwill Share of profits of associates Share of profits of joint ventures Loss before income tax Income tax expense Loss for the year Loss for the year attributable to: Owners of the Company Non-controlling interests	Consolidated statement of profit or loss of the Group for the year ended 31 December 2023 RMB’000 (Note 1) 474,793 (255,145) 219,648 30,295 (193,473) (33,770) (61,444) (156,276) (684) (164,240) (6,780) (4,019) 44,903 11,818 (314,022) (14,627) (328,649) (335,800) 7,151 (328,649)	Pro forma adjustments RMB’000 (Note 3)) – – – – – – – – – (10,066) – – – – (10,066) – (10,066) (10,066) – (10,066)	Unaudited pro forma consolidated statement of profit or loss of the Remaining Group for the year ended 31 December 2023 RMB’000 474,793 (255,145) 219,648 30,295 (193,473) (33,770) (61,444) (156,276) (684) (174,306) (6,780) (4,019) 44,903 11,818 (324,088) (14,627) (338,715) (345,866) 7,151 (338,715)

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

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

1) The amounts are extracted from the unaudited consolidated statement of financial position of the Group as at 30 June 2024 as set out in the published interim report of the Company for the six months ended 30 June 2024 and audited consolidated statement of profit or loss of the Group for the year ended 31 December 2023 as set out in the published annual report of the Group for the year ended 31 December 2023.
2) The adjustment reflects the cash proceeds received of RMB185,000,000 less the transaction costs of RMB550,000 that are directly attributable and the related liabilities arise as if the Finance Lease Arrangements had been completed on 30 June 2024 as follow:

Notes Cash proceeds received attributable to: – Feixi Zhonghui – Huangshi Huangyuan (a) Liabilities attributable to: – Feixi Zhonghui – current portion (b) – non-current portion (b) (c) – Huangshi Huangyuan (a), (c) Transaction costs attributable to: – Feixi Zhonghui – Huangshi Huangyuan (c)	RMB’000 95,000 90,000
	185,000
	5,996 88,722
	94,718 89,732
	185,000
	282 268
	550

(a) Assets and liabilities of Huangshi Huangyuan is presented as disposal group classified as held for sale as at 31 December 2023 following the sale and purchase agreements dated 11 August 2023 entered into between the Group and the purchaser which is an independent third party. Accordingly, the cash proceeds received net of transaction cost and related liabilities arise are recognised as “assets of disposal groups classified as held for sale” under current assets and “liabilities of disposal groups classified as held for sale” under current liabilities respectively.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(b) Liabilities attributable to Feixi Zhonghui is classified under current and non-current liabilities according to the repayment schedule stated in the Amended and Restated Finance Lease Agreement III entered into by Feixi Zhonghui and Hebei Financial Leasing.
(c) The amount represents the transaction costs directly attributable to the Finance Lease Arrangements, such as fee incurred for legal and professional service and valuation service, amounting to approximately RMB550,000 and assumed to be fully settled by cash on completion of Finance Lease Arrangements. The amount is proportionate between the Amended and Restated Finance Lease Agreement II and the Amended and Restated Finance Lease Agreement III based on the cash proceeds received and deducted from the related liabilities upon their initial recognition.
3) The amount represents the finance cost incurred for the year under effective interest method amounting to approximately RMB10,066,000 calculated based on the terms stated in the Amended and Restated Financial Lease Arrangement III entered into by Feixi Zhonghui and Amended and Restated Finance Lease Agreement II entered into by Hungshi Huangyuen and Hebei Financial Leasing respectively as if the Finance Lease Arrangements had been completed on 1 January 2023.
4) The directors of the Company consider the tax effects of adjustments is immaterial.
5) Apart from the notes above, no adjustment has been made to reflect any trading or other transactions of the Group entered into subsequent to 30 June 2024 for the purpose of the preparation of the unaudited pro forma consolidated statement of financial position of the Group as at 30 June 2024 and no adjustment has been made to reflect any trading or other transactions of the Group entered into subsequent to 1 January 2023 for the purpose of the preparation of the unaudited pro forma consolidated statement of profit or loss of the Group for the year ended 31 December 2023.

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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 30 June 2024, the unaudited pro forma consolidated statement of profit or loss for the year ended 31 December 2023 and related notes as set out on pages III-1 to III-6 of Appendix III of the circular dated 21 October 2024 (the “ Circular ”) in connection to the finance lease arrangements held by Huangshi Huangyuan Photovoltaic Power Development Limited and Feixi Zhonghui Photovoltaic Power Limited (the “ Lessees ”) (collectively, the “ Finance Lease Arrangements ”). 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-6 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 Finance Lease Arrangements on the Group’s financial position as at 30 June 2024 and the Group’s financial performance for the year ended 31 December 2023 as if the Finance Lease Arrangements had taken place at 30 June 2024 and 1 January 2023, respectively. As part of this process, information about the Group’s financial position and financial performance has been extracted by the directors of the Company from the Company’s consolidated financial statements for the year ended 30 June 2024 and 31 December 2023 respectively, on which an interim report of the Company for the six months ended 30 June 2024 and an annual report of the Group for the year ended 31 December have 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 ”).

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

PROFESSIONAL ETHICS AND QUALITY MANAGEMENT

We have complied with the ethical requirements of the HKICPA’s Code of Ethics for Professional Accountants (the “ Code ”) and the independence requirements in Part 4A, Chapter A of the Code.

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 Finance Lease Arrangements as at 30 June 2024 or 1 January 2023 would have been as presented.

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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 21 October 2024

— III-9 —

GENERAL INFORMATION

APPENDIX IV

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.

— IV-1 —

GENERAL INFORMATION

APPENDIX IV

Save as disclosed above, as at the Latest Practical Date, none of the Directors and chief executive of the Company, or their respective associate, had any interests or short positions in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of 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.

(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[(2)] shareholding[(1)] Xiang Jun Beneficial owner 756,831,000 (L) 5.06%

Notes:

(1) 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.

(2) 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.

— IV-2 —

GENERAL INFORMATION

APPENDIX IV

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).

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 2023 (being the date to which the latest published audited consolidated financial statements of the Group were made up), up to the Latest Practicable Date, been acquired or disposed of by or leased to, any member of the Group or are proposed to be acquired or disposed of by, or leased to, any member of the Group.

5. DIRECTORS’ INTEREST IN CONTRACT OR ARRANGEMENT OF SIGNIFICANCE

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 or 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.

— IV-3 —

GENERAL INFORMATION

APPENDIX IV

8. EXPERT

The following is the qualification of the expert who has given opinions or advice, which are contained or referred to in this circular:

Name

Qualification

BDO Limited

Certified public accountants

The above expert has confirmed that, as of the Latest Practicable Date, it: (i) did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and (ii) had no interests, direct or indirect, in any assets which had been, since 31 December 2023 (being the date to which the latest published audited consolidated financial statements of the Company were made up) acquired or disposed of by or leased to any of member of the Group, or are proposed to be acquired or disposed of by or leased to any of member of the Group.

The above expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion therein of its report and reference to its name in the form and context in which it appears.

9. 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) Amended and Restated Finance Lease Agreements and the agreements related to the Pledges II and Pledges III;
(b) the investment agreement dated 15 August 2024 entered into among 深圳市江天永健科技有限公司 (Shenzhen Jiangtian Yongjian Technology Company Limited), QUBOT Holdings Limited, 北京思博慧醫科技有限公司 (the “ Target Company ”), 北京思博慧众科技发展中心（有限合夥）, 北京聚胜科技发展中心（有限合夥）, Mr. Fan Donggan （范棟干）and 北京柏康企業管理中心（有限合夥）in relation to the subscription of equity interest (the “ Subscription* ”) representing 20% of the total equity interest of the Target Company immediately after the Subscription and the acquisition of the 10% of the total equity interest of the Target Company immediately after the Subscription for a total consideration of RMB50,000,000;

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GENERAL INFORMATION

APPENDIX IV

(c) the equity transfer agreement dated 29 January 2024 entered into between 北京億鑫豐泰科技合夥企業（有限合夥）(Beijing Yixin Fengtai Technology Partnership (Limited Partnership)) and 揚州啓星新能源發展有限公司 (Yangzhou Qixing New Energy Development Limited), an indirect wholly-owned subsidiary of the Company in relation to the disposal of 60% equity interests in 陝西億潤新能源科技有限公司 (Shaanxi Yirun New Energy Technology Co., Ltd.*) for a consideration of RMB4,200,000;
(d) the equity transfer agreement dated 28 December 2023 entered into between 揚州啓星新能源發展有限公司 (Yangzhou Qixing New Energy Development Limited), an indirect wholly-owned subsidiary of the Company, as purchaser, and 江山金投控股有限公司 (Jiangshan Financial Investment Holdings Co., Ltd.) as vendor, in relation to the acquisition of 69.45% equity interests in 北京鷹之眼智能健康科技有限公司 (Beijing Eagle Eye Intelligent Health Technology Co., Ltd.*) for a total consideration of RMB6,000,000;
(e) the finance lease agreement dated 27 September 2023 entered into between 靈璧永基新能源科技有限公司 (Lingbi Yongji New Energy Technology Co., Ltd.) (“ Lingbi Yongji ”), an indirect wholly-owned subsidiary of the Company, as lessee, and 中集融資租賃有限公司 (CIMC Capital Ltd.) (“ CIMC Capital ”), as lessor, pursuant to which CIMC Capital agreed to purchase certain photovoltaic power generating equipment and ancillary facilities regarding the 20MW photovoltaic power plant located in Suzhou City, Anhui Province, the PRC, from Lingbi Yongji for a total consideration of RMB67,000,000 and lease such assets to Lingbi Yongji for a term of 13 years for the total estimated aggregate lease payments of approximately RMB96,329,000;
(f) the finance lease agreement dated 27 September 2023 entered into between 強茂能源鄂爾多斯市有限責任公司 (Qiangmao Energy Ordos City Co., Ltd.) (“ Qiangmao Energy* ”), an indirect wholly-owned subsidiary of the Company, as lessee, and CIMC Capital as lessor, pursuant to which CIMC Capital agreed to purchase certain photovoltaic power generating equipment and ancillary facilities regarding the 10MW photovoltaic power plant located in Ordos City, Inner Mongolia Autonomous Region, from Qiangmao Energy for a total consideration of RMB60,000,000 and lease such assets to Qiangmao Energy for a term of 13 years for the total estimated aggregate lease payments of approximately RMB86,265,000;
(g) the equity transfer agreement dated 11 August 2023 entered into by and among 新華電力發展投資有限公司 (Xinhua Electricity Development Investment Limited) (“ Xinhua Electricity ”), 常州市金壇區天昊新能源有限公司 (Changzhou City Jintan Tianhao New Energy Co., Ltd.) (“ Tianhao New Energy ”), a company established in the PRC and an indirect wholly-owned subsidiary of the Company, and 定邊縣萬和順新能源發電有限公司 (Dingbian Wanheshun New Energy Power Generation Limited) (“ Dingbian Wanheshun* ”) in relation to the disposal of the entire equity interests in Dingbian Wanheshun for a consideration of approximately RMB607,000;

— IV-5 —

GENERAL INFORMATION

APPENDIX IV

(h) the equity transfer agreement dated 11 August 2023 entered into by and among Xinhua Electricity, Kong Sun Yongtai and 黃石黃源光伏電力開發有限公司 (Huangshi Huangyuan Photovoltaic Power Development Limited) (“ Huangshi Huangyuan* ”) in relation to the disposal of the entire equity interests in Huangshi Huangyuan for a consideration of approximately RMB40,529,000;
(i) the equity transfer agreement dated 11 August 2023 entered into by and among Xinhua Electricity, Kong Sun Yongtai and Yulin Zhengxin in relation to the disposal of the entire equity interests in Yulin Zhengxin for a consideration of approximately RMB52,858,000;
(j) the equity transfer agreement dated 11 August 2023 entered into by and among Xinhua Electricity, 常熟宏略光伏電站開發有限公司 (Changshu Honglue Photovoltaic Power Plants Development Co., Ltd) (“ Changshu Honglue ”), a company established in the PRC and an indirect wholly-owned subsidiary of the Company, and 嵊州懿暉光伏發電有限公司 (Shengzhou Yihui Photovoltaic Power Generation Limited) (“ Shengzhou Yihui ”) in relation to the disposal of the entire equity interests in Shengzhou Yihui for a consideration of approximately RMB38,501,000;
(k) the equity transfer agreement dated 11 August 2023 entered into by and among Xinhua Electricity, Changshu Honglue and 定邊縣晶陽電力有限公司 (Dingbian Jingyang Electric Co., Ltd.) (“ Dingbian Jingyang* ”) in relation to the disposal of the entire equity interests in Dingbian Jingyang for a consideration of approximately RMB256,185,000;
(l) the equity transfer agreement dated 11 August 2023 entered into by and among Xinhua Electricity, Changshu Honglue and 定邊縣智信達新能源有限公司 (Dingbian County Zhixinda New Energy Limited) (“ Dingbian County Zhixinda* ”) in relation to the disposal of the entire equity interests in Dingbian County Zhixinda for a consideration of approximately RMB369,348,000;
(m) the finance lease agreement dated 27 July 2023 entered into between 榆林正信電力有限公司 (Yulin Zhengxin Electricity Limited) (“ Yulin Zhengxin* ”) and CIMC Capital, pursuant to which CIMC Capital agreed to purchase certain photovoltaic power generating equipment and ancillary facilities regarding a 30MW photovoltaic power plant located in Shaanxi Province, the PRC, from Yulin Zhengxin for a total consideration of RMB150,000,000 and lease such assets to Yulin Zhengxin for a term of 13 years for the total estimated aggregate lease payments of approximately RMB215,662,000;

— IV-6 —

GENERAL INFORMATION

APPENDIX IV

(n) 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 河北省金融租賃有限公司 (Hebei Financial Leasing Co., Ltd.) (“ 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;
(o) the finance lease agreement dated 28 April 2023 entered into between Huangshi Huangyuan 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 Huangshi Huangyuan for a total consideration of RMB90,000,000 and lease such assets to Huangshi Huangyuan for a term of 10 years for the total estimated aggregate lease payments of approximately RMB120,010,000;
(p) 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;
(q) 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 國銀金融租賃股份有限公司 (China Development Bank Financial Leasing Co., Ltd.) (“ 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;

— IV-7 —

GENERAL INFORMATION

APPENDIX IV

(r) the finance lease agreement dated 7 March 2023 entered into between 嵊州懿暉光伏發電有限公司 (Shengzhou Yihui Photovoltaic Power Generation Limited), an indirect wholly owned subsidiary of the Company (“ Shengzhou Yihui* ”), and CDB Leasing, pursuant to which CDB Leasing agreed to purchase certain photovoltaic power generating equipment and ancillary facilities regarding a 19.8MW photovoltaic power plant located in Sanjie Town, Shaoxing City, Zhejiang Province, the PRC from Shengzhou Yihui for a total consideration of RMB110,000,000 and lease such assets to Shengzhou Yihui for a term of 12 years for the total estimated aggregate lease payments of approximately RMB153,486,000;
(s) the finance lease agreement dated 27 February 2023 entered into between 定邊縣智信達新能源有限公司 (Dingbian County Zhixinda New Energy Limited), an indirect wholly owned subsidiary of the Company (“ Dingbian County ”), and 華電融資租賃有限公司 (Huadian Financial Leasing Co., Ltd.) (“ 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;
(t) 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;
(u) 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; and

— IV-8 —

GENERAL INFORMATION

APPENDIX IV

(v) 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.

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.

11. DOCUMENTS ON DISPLAY

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:

(1) Amended and Restated Finance Lease Agreements and the agreements related to the Pledges II and Pledges III;
(2) the report on the unaudited pro forma financial information of the Remaining Group, the text of which is set out in appendix III to this circular; and
(3) the written consent referred to in the paragraph headed “Expert” in this appendix.

— IV-9 —

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 Tuesday, 5 November 2024 at 10:00 a.m. for the purposes of considering and, if thought fit, passing, with or without amendments, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

Words and expressions that are not expressly defined in this notice shall bear the same meaning as that defined in the circular dated 21 October 2024 of the Company.

“ THAT :
(i) the Amended and Restated Finance Lease Agreement II and the relevant agreements relating to the Pledges II (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 Amended and Restated Finance Lease Agreement II, the relevant agreements relating to the Pledges II and the transactions contemplated thereunder.”
“ THAT :
(i) the Amended and Restated Finance Lease Agreement III and the relevant agreements relating to the Pledges III (copies of which have been tabled at the meeting marked “B” 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

— EGM-1 —

NOTICE OF THE EGM

(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 Amended and Restated Finance Lease Agreement III, the relevant agreements relating to the Pledges III and the transactions contemplated thereunder.”

By Order of the Board Kong Sun Holdings Limited Mr. Jiang Hengwen Chairman and non-executive Director

Hong Kong, 21 October 2024

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, Mr. Tang Jian, Ms. Tang Yinghong and Ms. Wu Wennan.

— EGM-2 —

AI assistant

Novautek Technologies Group Limited — Proxy Solicitation & Information Statement 2024

49267_rns_2024-10-21_4d12023a-f241-4a03-99ee-0b8e1535d220.pdf

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

(1) VERY SUBSTANTIAL DISPOSAL – AMENDMENTS TO FINANCE LEASE AGREEMENT II AND FINANCE LEASE AGREEMENT III AND (2) NOTICE OF EXTRAORDINARY GENERAL MEETING

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

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

(Stock Code: 295)

VERY SUBSTANTIAL DISPOSAL – AMENDMENTS TO FINANCE LEASE AGREEMENT II AND FINANCE LEASE AGREEMENT III

INTRODUCTION

BACKGROUND

THE AMENDED AND RESTATED FINANCE LEASE AGREEMENT II

Sale and purchase arrangements and consideration

Conditions precedent

Lease back arrangements

Lease payments

Ownership of the Leased Assets II

Pledges II

AMENDED AND RESTATED FINANCE LEASE AGREEMENT III

Sale and purchase arrangements and consideration

Conditions precedent

Lease back arrangements

Lease payments

LETTER FROM THE BOARD

Ownership of the Leased Assets III

Pledges III

REASONS FOR AND BENEFITS OF THE AMENDMENTS

LETTER FROM THE BOARD

INFORMATION ON THE LEASED ASSETS

FINANCIAL EFFECT OF THE AMENDMENTS

INFORMATION ON THE COMPANY, JINAN TIANGUAN AND THE LESSEES

INFORMATION ON HEBEI FINANCIAL LEASING

IMPLICATIONS UNDER THE LISTING RULES

EGM

LETTER FROM THE BOARD

RECOMMENDATION

ADDITIONAL INFORMATION

1. SUMMARY OF THE FINANCIAL INFORMATION OF THE GROUP

2. WORKING CAPITAL

3. STATEMENT OF INDEBTEDNESS

4. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

For the year ended 31 December 2021

Business review

Revenue

Revenue from trading of liquefied natural gas

Gross profit and gross profit margin

Other gains, net

Administrative expenses

Losses on disposal of subsidiaries, net

Impairment losses on a disposal group classified as held for sale

Finance costs

Solar power plants

Interest in associates

Goodwill

Right-of-use Assets

Financial assets measured of fair value through other comprehensive income

Financial assets measured of fair value through profit or loss

Trade, bills and other receivables

Structured bank deposits

Trade and Other Payables

Liquidity and Capital Resources

Capital Expenditure

Loans and Borrowings

Corporate bonds

Lease Liabilities

Foreign Exchange Risk

Charge on Assets

Contingent Liabilities

Employees and Remuneration Policy

Significant Investments and Material Acquisition and Disposal

For the year ended 31 December 2022

Business review

Revenue

Gross profit and gross profit margin

Other (losses)/gains, net

Administrative expenses

Losses on disposal of subsidiaries, net

Novautek Technologies Group Limited Proxy Solicitation & Information Statement 2024

KONG SUN HOLDINGS LIMITED 江山控股有限公司

KONG SUN HOLDINGS LIMITED 江山控股有限公司