RoboSense Technology Co., Ltd - Capital/Financing Update 2017

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

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(1) SUPPLEMENTAL AGREEMENTS IN RELATION TO VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS; (2) ADJUSTMENT IN ALLOCATION OF PROCEEDS IN THE PROPOSED A SHARE PLACING; AND

(3) SITUATION OF CURRENT RETURN DILUTION BY THE REORGANISATION AND THE RELEVANT REMEDIAL MEASURES

Financial adviser to the Company

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(1) THE SUPPLEMENTAL AGREEMENTS

On 3 August 2017, the SASAC of the State Council granted the approval of the filing of the three valuation reports of the Target Companies for the Reorganisation. Based on the filing results of the said valuation reports, on 7 August 2017, the Company convened the 32[nd] meeting of the eighth session of the Board (the “ Board Meeting ”) to approve, among other things, the entering into of three supplemental sale and purchase agreements (the “ Supplemental SP Agreements ”) by the Company on 7 August 2017 with each of (i) CLFG and Hefei High-Tech (the “ First Supplemental SP Agreement ”); (ii)

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Huaguang Group, Bengbu Institute and International Engineering (the “ Second Supplemental SP Agreement ”); and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration (the “ Third Supplemental SP Agreement ”), in order to amend the relevant terms including, among other things, the final consideration of each of the Proposed Acquisitions and the number of consideration shares to be issued under the respective Proposed Acquisitions Agreements.

Apart from the Supplemental SP Agreements, the Board Meeting also approved, among other things, the entering into of three supplemental profit guarantee indemnity agreements (the “ Supplemental PG Indemnity Agreements ”) by the Company on 7 August 2017 with each of (i) CLFG and Hefei High-Tech (the “ First Supplemental PG Indemnity Agreement ”); (ii) Huaguang Group, Bengbu Institute and International Engineering (the “ Second Supplemental PG Indemnity Agreement ”); and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration (the “ Third Supplemental PG Indemnity Agreement ”), in order to confirm the Profit Guarantee amounts under the respective Profit Guarantee Indemnity Agreements.

(2) ADJUSTMENT IN ALLOCATION OF PROCEEDS

At the Board Meeting, the Board also proposed to amend the allocation of proceeds to be raised from the Proposed A Share Placing that the proceeds to be raised will not exceed RMB511,865,700 and such proceeds, excluding the relevant transaction expenses, tax and issue expenses, are expected to be used as to: (i) approximately RMB410,000,000 of the proceeds for the development cost of Hefei New Energy oxy-combustion new photovoltaic cover material phase II production line project; and (ii) approximately RMB90,000,000 of the proceeds for the development cost of Tongcheng New Energy high transparent double photovoltaic glass component further processing with an annual output of 4 million square meters project. The allocation of the proceeds to be raised from the Proposed A Share Placing is based on the capital requirement of the projects of Hefei New Energy and Tongcheng New Energy.

The Company will make further announcement(s) in relation to the Proposed A Share Placing in accordance with the requirements of the Takeovers Code and the Listing Rules as and when appropriate.

Completion of the Proposed Acquisitions and the Proposed A Share Placing may or may not proceed. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares.

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(3) S I T U A T I O N O F C U R R E N T R E T U R N D I L U T I O N B Y T H E REORGANISATION AND THE RELEVANT REMEDIAL MEASURES

According to the relevant laws and regulations including the “Opinion of the General Office of the State Council on Further Strengthening the Protection of Legal Rights and Interests of Small and Medium Investors in the Capital Market (國務院辦公廳關於進一步加強資本市場中小投資者合法權益保護工作的意見)” (Guo Ban Fa [2013] No. 110), the “Certain Opinion of the State Council on Further Promoting the Healthy Development of the Capital Market (國務院關於進一步促進資本市場健康發展的若干意見)” (Guo Fa [2014] No. 17) and the “Guiding Opinion on Matters Concerning Current Return Dilution by IPO, Refinancing and Significant Asset Restructuring (關於首發及再融資、重大資產重組攤薄即期回報有關事項的指導意見)” (China Securities Regulatory Commission Announcement [2015] No. 31), and rules and requirements under the guidelines published by the CSRC, in order to protect the interests of small and medium investors, the Board conducted careful analysis on the impacts of the Reorganisation on return dilution in the current period, and the Directors and senior management of the Company provided undertaking in relation to current return dilution by the Reorganisation and the relevant remedial measures. The relevant remedial measures will be subject to the approval by the Independent Shareholders at the EGM.

References are made to the announcements of Luoyang Glass Company Limited (the “ Company ”) dated (i) 7 February 2017 in relation to its (a) very substantial acquisitions and connected transactions; (b) the Proposed A Share Placing (together with the very substantial acquisitions and connected transactions, the “ Transactions ”); and (c) application for whitewash waiver (the “ Announcement* ”); (ii) 24 February 2017 in relation to, among other things, the update of the Proposed A Share Placing; (iii) 28 February 2017 in relation to the delay in despatch of the circular; (iv) 23 March 2017, 25 April 2017, 24 May 2017 and 28 July 2017 in relation to the update of the Transactions; and (v) 21 June 2017 in relation to the status update of the Transactions and the further delay in despatch of the circular. Unless otherwise specified, capitalised terms used herein shall have the same meaning as those defined in the Announcement.

This announcement is made by the Company pursuant to Rule 14.36 of the Listing Rules.

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(1) THE SUPPLEMENTAL AGREEMENTS

The Supplemental SP Agreements

On 3 August 2017, the SASAC of the State Council granted the approval of the filing of the three valuation reports of the Target Companies for the Reorganisation. Based on the filing results of the said valuation reports, on 7 August 2017, the Company convened the Board Meeting to approve, among other things, the entering into of the three Supplemental SP Agreements by the Company on 7 August 2017 with each of (i) CLFG and Hefei High-Tech; (ii) Huaguang Group, Bengbu Institute and International Engineering; and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration, in order to amend the relevant terms including, among other things, the final consideration of each of the Proposed Acquisitions and the number of consideration shares to be issued under the respective Proposed Acquisitions Agreements.

Amendments to the Proposed Acquisitions Agreements – the Revised Consideration and the Revised Consideration Shares

On 7 August 2017, the Company entered into the three Supplemental SP Agreements with the relevant parties, and agreed on the following principal amendments to the principal terms of the respective Proposed Acquisitions Agreements.

As disclosed in the Announcement, the consideration of each of the Proposed Acquisitions was determined on arm’s length negotiations with reference to the initial indicative valuation of the equity interest of the respective Target Companies as at 31 October 2016 as appraised by the Valuer by using income approach valuation method. Such consideration is subject to adjustment from the filing result of the valuation report of the Valuer with the SASAC of the State Council.

Based on the results in the valuation reports of the Target Companies issued by the Valuer and filed with the SASAC of the State Council, and pursuant to the Supplemental SP Agreements, the Company and the relevant parties to the Proposed Acquisitions have agreed to amend the consideration of each of the Proposed Acquisitions (the “ Revised Consideration ”) and the number of new A Shares to be allotted and issued by the Company as consideration shares (the “ Revised Consideration Shares ”) as further described below.

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Valuation of the Target Companies

Pursuant to the valuation reports of the Target Companies, the valuation of the respective Target Companies as at 31 October 2016, being the valuation base date, are as follows:

100% equity interest in the Target Companies

100% equity interest in the Target Companies Valuation (Approximately RMB) Hefei New Energy 307,824,982 Tongcheng New Energy 221,651,109 Yixing New Energy 345,238,267

The Revised Consideration and the Revised Consideration Shares

On 7 August 2017, the Company entered into (i) the First Supplemental SP Agreement with CLFG and Hefei High-Tech, pursuant to which the Company has conditionally agreed to purchase, and CLFG and Hefei High-Tech have conditionally agreed to sell an aggregate of 100% equity interest in Hefei New Energy at a total consideration of RMB307,825,000 which shall be settled by the Company by allotment and issue of 13,126,864 new A Shares; (ii) the Second Supplemental SP Agreement with Huaguang Group, Bengbu Institute and International Engineering, pursuant to which the Company has conditionally agreed to purchase, and Huaguang Group, Bengbu Institute and International Engineering have conditionally agreed to sell an aggregate of 100% equity interest in Tongcheng New Energy at a total consideration of RMB221,651,200 which shall be settled by the Company by allotment and issue of 9,452,076 new A Shares; and (iii) the Third Supplemental SP Agreement with Triumph Group, Yixing Environmental Technology and GCL System Integration, pursuant to which the Company has conditionally agreed to purchase, and Triumph Group, Yixing Environmental Technology and GCL System Integration have conditionally agreed to sell an aggregate of 70.99% equity interest in Yixing New Energy at a total consideration of RMB245,089,500 which shall be settled by the Company by allotment and issue of 10,451,576 new A Shares.

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The issue price of the Revised Consideration Shares under the Supplemental SP Agreements remains the same as the issue price of the Consideration Shares under the Proposed Acquisitions Agreements. Given the issue price of the Revised Consideration Shares is RMB23.45 (equivalent to approximately HK$26.50) per Revised Consideration Share, details of the Revised Consideration and number of the Revised Consideration Shares to be issued to the respective sellers pursuant to each of the Supplemental SP Agreements are shown below:

Name of Seller *The First Supplemental SP* *Agreement* CLFG Hefei High-Tech Total *The Second Supplemental SP* *Agreement* Huaguang Group Bengbu Institute International Engineering Total *The Third Supplemental SP* *Agreement* Triumph Group Yixing Environmental Technology GCL System Integration Total	Consideration under the Proposed Acquisitions Agreements RMB 263,189,538 78,956,862 342,146,400 166,834,989 61,893,890 18,537,221 247,266,100 177,274,899 44,318,725 25,150,876 246,744,500	Revised Consideration RMB 236,788,461.54 71,036,538.46 307,825,000.00 149,552,144.41 55,482,150.65 16,616,904.94 221,651,200.00 176,085,855.41 44,021,463.85 24,982,180.74 245,089,500.00	Consideration Shares to be issued under the Proposed Acquisitions Agreements Number of Shares 11,223,434 3,367,030 14,590,464 7,114,498 2,639,398 790,499 10,544,395 7,559,697 1,889,924 1,072,532 10,522,153	Revised Consideration Shares to be issued Number of Shares 10,097,588 3,029,276 13,126,864 6,377,490 2,365,976 708,610 9,452,076 7,508,991 1,877,247 1,065,338 10,451,576	Percentage of the Revised Consideration Shares to the total issued share capital of the Company as at the date of this announcement Approximately 1.92% 0.58%
					2.49%

					1.21% 0.45% 0.13%
					1.79%

					1.43% 0.36% 0.20%
					1.98%

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The aggregate number of the Revised Consideration Shares to be issued by the Company is 33,030,516 new A Shares, representing approximately 6.27% of the total issued share capital of the Company as at the date of this announcement and approximately 5.90% of the total issued share capital of the Company as enlarged by issue of such Revised Consideration Shares (but before the Proposed A Share Placing).

The Supplemental PG Indemnity Agreements

On 7 August 2017, the Company also entered into the three Supplemental PG Indemnity Agreements with each of (i) CLFG and Hefei High-Tech; (ii) Huaguang Group, Bengbu Institute and International Engineering; and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration, in order to confirm the Profit Guarantee amounts under the respective Profit Guarantee Indemnity Agreements.

As disclosed in the Announcement, the Profit Guarantee amounts for the relevant financial years for each of the Target Companies under the respective Profit Guarantee Indemnity Agreements shall be determined upon the valuation reports of the Target Companies have been issued and approved by the SASAC Authorised Office(s).

Based on the results in the valuation reports of the Target Companies issued by the Valuer and filed with the SASAC of the State Council, and pursuant to the Supplemental PG Indemnity Agreements, the Company and the relevant parties to the Proposed Acquisitions have agreed on the Profit Guarantee amounts as further described below.

The Profit Guarantee amounts

Pursuant to the First Supplemental PG Indemnity Agreement, each of CLFG and Hefei High-Tech has undertaken to the Company that the net profit attributable to equity holders of Hefei New Energy after deduction of extraordinary profit or loss as shown in the audited accounts of Hefei New Energy (excluding gains from the use of proceeds pursuant to the Proposed A Share Placing) for the financial period ending (i) 31 December 2017 shall not be less than RMB39,730,400; (ii) 31 December 2018 shall not be less than RMB61,678,800; and (iii) 31 December 2019 shall not be less than RMB69,394,900.

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Pursuant to the Second Supplemental PG Indemnity Agreement, each of Huaguang Group, Bengbu Institute and International Engineering has undertaken to the Company that the net profit attributable to equity holders of Tongcheng New Energy after deduction of extraordinary profit or loss as shown in the audited accounts of Tongcheng New Energy (excluding gains from the use of proceeds pursuant to the Proposed A Share Placing) for the financial period ending (i) 31 December 2017 shall not be less than RMB26,214,000; (ii) 31 December 2018 shall not be less than RMB26,367,100; and (iii) 31 December 2019 shall not be less than RMB26,719,900.

Pursuant to the Third Supplemental PG Indemnity Agreement, each of Triumph Group, Yixing Environmental Technology and GCL System Integration has undertaken to the Company that the net profit attributable to equity holders of Yixing New Energy after deduction of extraordinary profit or loss as shown in the audited accounts of Yixing New Energy for the financial period ending (i) 31 December 2017 shall not be less than RMB12,797,400; (ii) 31 December 2018 shall not be less than RMB33,370,300; and (iii) 31 December 2019 shall not be less than RMB41,245,000.

In the event that the Proposed Acquisitions cannot complete by 31 December 2017, the period for the Profit Guarantee provided by the relevant parties under the Proposed Acquisitions Agreements will start from 1 January 2018 and end on 31 December 2020 (instead of starting from 1 January 2017 and ending on 31 December 2019), with the Profit Guarantee for the financial period ending 31 December 2020 to be: (i) the net profit attributable to equity holders of Hefei New Energy after deduction of extraordinary profit or loss as shown in the audited accounts of Hefei New Energy shall not be less than RMB74,155,600; (ii) the net profit attributable to equity holders of Tongcheng New Energy after deduction of extraordinary profit or loss as shown in the audited accounts of Tongcheng New Energy shall not be less than RMB27,072,700; and (iii) the net profit attributable to equity holders of Yixing New Energy after deduction of extraordinary profit or loss as shown in the audited accounts of Yixing New Energy shall not be less than RMB47,147,500.

The audited accounts of the Target Companies will be prepared in accordance with the PRC Accounting Standards for Business Enterprises.

As the profit guarantee amounts under the Supplemental PG Indemnity Agreements (the “Profit Guarantee Amounts”) are unaudited and according to Rule 10 of the Takeovers Code, they are regarded as profit forecasts and the Company’s reporting accountant and financial adviser are required to report on the Profit Guarantee Amounts, of which the related letters are set out in Appendix II to this announcement.

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Save for the aforesaid, other principal terms of the Proposed Acquisitions Agreements and the Profit Guarantee Indemnity Agreements as disclosed in the Announcement remain unchanged.

The Directors (excluding the independent non-executive Directors whose views will be rendered upon having received the advice of the independent financial adviser of the Company) are of the view that the terms of the Supplemental SP Agreements and the Supplemental PG Indemnity Agreements are on normal commercial terms and in the ordinary and usual course of business of the Group, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Effect of the Completion of the Proposed Acquisitions on the shareholding structure of the Company

The following sets out the shareholding structure of the Company (i) as at the date of this announcement; and (ii) immediately after completion of the Proposed Acquisitions (but before the Proposed A Share Placing):

			(ii) Immediately after completion	(ii) Immediately after completion	(ii) Immediately after completion
			of the Proposed Acquisitions
	(i) As at the date of		(but before the Proposed
Shareholders	this announcement		A Share Placing)
	Number of Shares	_Approximate % _	Number of Shares	Approximate %
CNBMG and parties acting in
concert
CLFG	105,018,242	19.94	115,115,830		20.56
Bengbu Institute	69,000,000	13.10	71,365,976		12.75
Huaguang Group	–	–	6,377,490		1.14
International Engineering	–	–	708,610		0.13
Triumph Group	–	–	7,508,991		1.34
Sub-total of CNBMG and parties
acting in concert	174,018,242	33.04	201,076,897		35.92
Yixing Environmental Technology	–	–	1,877,247		0.34
GCL System Integration	–	–	1,065,338		0.19
Hefei High-Tech	–	–	3,029,276		0.54
Other A Shareholders	102,748,633	19.51	102,748,633		18.35
Sub-total	276,766,875	52.54	309,797,391		55.34

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			(ii) Immediately after completion
			of the Proposed Acquisitions
	(i) As at the date of		(but before the Proposed
Shareholders	this announcement		A Share Placing)
	Number of Shares	_Approximate % _	Number of Shares Approximate %
H Shares
HKSCC (Nominees) Limited_(Note)_	248,600,699	47.19	248,600,699 44.41
Public H Shareholders	1,399,301	0.27	1,399,301 0.25
Sub-total	250,000,000	47.46	250,000,000 44.66
Total	526,766,875	100	559,797,391 100

Notes:

(1) To the best knowledge of the Company, HKSCC (Nominees) Limited holds the H Shares as nominee of public H Shareholders.
(2) As at the date of this announcement, none of the Directors is interested in any Shares.

(2) ADJUSTMENT IN ALLOCATION OF PROCEEDS

At the Board Meeting, the Board also proposed to amend the allocation of proceeds to be raised from the Proposed A Share Placing that the proceeds to be raised will not exceed RMB511,865,700 and such proceeds, excluding the relevant transaction expenses, tax and issue expenses, are expected to be used as to: (i) approximately RMB410,000,000 of the proceeds for the development cost of Hefei New Energy oxy-combustion new photovoltaic cover material phase II production line project, and (ii) approximately RMB90,000,000 of the proceeds for the development cost of Tongcheng New Energy high transparent double photovoltaic glass component further processing with an annual output of 4 million square meters project. The allocation of the proceeds to be raised from the Proposed A Share Placing is based on the capital requirement of the projects of Hefei New Energy and Tongcheng New Energy.

The Company will make further announcement(s) in relation to the Proposed A Share Placing in accordance with the requirements of the Takeovers Code and the Listing Rules as and when appropriate.

Completion of the Proposed Acquisitions and the Proposed A Share Placing may or may not proceed. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares.

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Profit Forecast Requirements under the Takeovers Code and the Listing Rules

Beijing Pan-China Assets Appraisal Company Limited (the “ Valuer ”) was engaged by the Company to conduct valuation of the Target Companies for the purpose of the Proposed Acquisitions. The valuation of each of the Target Companies was prepared by the Valuer based on income approach (the “ Valuation ”). Pursuant to Rule 14.61 of the Listing Rules and Rule 11.1(a) of the Takeovers Code, any valuation of assets (other than land and buildings) acquired by a listed issuer based on discounted cash flows or projections of profits, earnings or cash flows will normally be regarded as a profit forecast. Accordingly, the Valuation constitutes a profit forecast under Rule 14.61 of the Listing Rules and Rule 11.1(a) of the Takeovers Code (the “ Profit Forecast ”), and therefore, the Company is required to comply with Rules 14.60A and 14.62 of the Listing Rules and Rules 10 and 11 of the Takeovers Code.

Pursuant to Rules 14.60A and 14.62 of the Listing Rules and Rule 10 of the Takeovers Code, financial advisers must satisfy themselves that the forecast has been prepared by the directors with due care and consideration, and auditors or reporting accountants must satisfy themselves that the forecast, so far as the accounting policies and calculations are concerned, has been properly compiled on the basis of the assumptions made.

For the purpose of complying with the requirements under Rule 14.62 of the Listing Rules and Rule 10 of the Takeovers Code, the Profit Forecast has been reported on in accordance with the Listing Rules and the Takeovers Code and the requisite reports from WUYIGE Certified Public Accountants LLP (“ WUYIGE ”), the auditor of the Company, and Veda Capital Limited (“ Veda Capital ”), the financial adviser of the Company, have been lodged with the Stock Exchange and the Executive and included in Appendix II to this announcement.

The following are the principal assumptions, including commercial assumptions of the Valuation, prepared by the Directors, endorsed by the Valuer and reviewed by WUYIGE and Veda Capital pursuant to Rule 10.2 of the Takeovers Code, and set out in the valuation reports summary set forth as Appendices I(A) to (C) to this announcement.

Assumptions of Valuation

(I) General assumptions:
Transaction assumption: all assets to be valued are assumed to be in the transaction process and valuers conduct the valuation according to simulated market conditions such as transaction conditions of the assets to be valued.

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Open market assumption: open market assumption is an assumption about conditions of a market into which assets are proposed to be entered and effects of such market conditions on assets. An open market means a well-developed, comprehensive and competitive market with willing buyers and willing sellers acting voluntarily and rationally at arms’ length, having sufficient opportunities and time to obtain market information and under no compulsion or restrictions to buy or sell.
Continuous use assumption: continuous use assumption is an assumption made on the conditions of the market where the assets are intended to enter into as well as the status of the assets in such market conditions. It is first assumed that the assets to be appraised are in use, and it is further assumed that the assets that are in use will be used continuously. Under continuous use assumption, no consideration is given to the conversion of the use of the assets or utilisation of the assets under the best condition. Thus, the valuation results are subject to a restricted scope of applicability.
Going concern assumption: it is an assumption made by taking the whole assets of an enterprise as the appraised entity. In this way, the enterprise operates continually in pursuit of its operation objective under its external environment as the main operating entity. The management of the enterprise is responsible for and capable of taking responsibility. The enterprise operates legally and makes appropriate profits to maintain the capability of going concern.
(II) Valuation assumptions under the income approach:
There is no significant change in the relevant existing laws, regulations and policies of the country, or in the macroeconomic conditions of the country. There is no significant change in the political, economic and social environment in which the parties to this transaction are situated, and there are no material adverse impacts arising from other unforeseeable factors or force majeure.
Assuming the company to operate as a going concern based on the actual status of the assets as at the valuation base date.
Assuming the management of the company to be responsible and have the capability to take on their duties.
Assuming the company to comply with all related laws and regulations unless otherwise stated.
Assuming the accounting policy to be adopted by the company in the future to be fundamentally consistent in all material aspects with the one adopted when compiling the valuation report.

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Assuming the company to maintain the existing business scope and mode on the basis of the present management mode and level.
There will be no material changes to the interest rates, exchange rates, tax bases, tax rates and policy charges.
There will be no material adverse impacts on the enterprise arising from other force majeure or unforeseeable factors.
Assuming the estimated annual cash flows of the company to be generated during the period.
Assuming the products and services of the enterprise maintain existing competitive status in the market subsequent to the valuation base date.
11 Hefei New Energy obtained the high and new technology enterprise qualification certificate (高新技術企業資格證書) on 5 December 2016 for a validity period of three years. It is assumed that Hefei New Energy will continue to obtain such certificate upon expiry of the validity period.
Assuming the “Notice on “1+3+8” Policy System (Trial) for Fostering Industry Development in Tongcheng issued by the Tongcheng Municipal People’s Government (桐城市人民政府關於印發桐城市扶持產業發展「1+3+8」政策體系（試行）的通知)” (Tong Zheng Fa [2016] No. 42) in the file of the Tongcheng Municipal People’s Government and its policy for refund of land use tax will continue to be in force, Tongcheng New Energy is able to enjoy the refund of land use tax on a perpetual basis.

WUYIGE has reviewed the accounting policies and calculations adopted in arriving at the Valuation and is of the opinion that, so far as the accounting policies and calculations are concerned, the Valuation has been properly compiled in accordance with the assumptions made by the Directors set out above and is presented on a basis consistent in all material respects with the accounting policies adopted in preparing the financial statements of the Group for the year ended 31 December 2016.

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The Valuation has been prepared by the Valuer. The Valuer has reviewed the financial information of the respective Target Companies as of May 2017 provided by the auditor, the explanatory materials and forecast information of the respective Target Companies, and obtained confirmation from the respective Target Companies on realization of the forecast operating information, and confirms that there was no material change in the assumptions, basis, accounting policies and methods of the Valuation adopted in the valuation reports during the period from 31 October 2016 to 31 May 2017. Accordingly, there was no material change in the appraised value of the respective Target Companies as at 31 May 2017 as compared to those set out in the valuation reports. The Valuer will also review the then current valuation of the respective Target Companies or may update the valuation in accordance with Rule 11.4 of the Takeovers Code in the circular to be despatched to the Shareholders.

The Valuation has also been reported on by Veda Capital in accordance with Rule 11.1(b) of the Takeovers Code. On the basis of the review work conducted by it which includes reasonableness checks to assess the relevant experience and expertise of the Valuer, review and discussion with the Valuer of the qualifications, experience, expertise and relevant track records of the Valuer, Veda Capital is satisfied that the Valuer has the qualifications and experience to compile the Valuation.

Veda Capital has reviewed the reports of the Valuation and discussed with the Directors, the management of the Company and the Valuer regarding the reports of the Valuation, including, in particular, the valuation approach, basis and assumptions. On the basis of the aforesaid work done by Veda Capital, Veda Capital is of the opinion that the basis and assumptions set out therein have been prepared by the Directors with due care and consideration and objectivity, and on a reasonable basis.

A letter from WUYIGE and a letter from Veda Capital are included in Appendix II to this announcement for the purpose of Rule 14.62 of the Listing Rules.

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The qualifications of the experts who have given their statements in this announcement are as follows:

Name	Qualification
Beijing Pan-China	an independent valuer engaged by the Company
Assets Appraisal	to conduct a fair value estimate of the valuation
Company Limited	of each of the Target Companies as at 31 October
	2016. It is established in the PRC to provide
	intermediary consultation and appraisal services.
WUYIGE	Certified Public Accountants
Veda Capital	a corporation licensed to carry on business in Type
	6 (advising on corporate finance) regulated activity
	under the SFO

To the best of the Directors’ knowledge, information and belief and after having made all reasonable enquiries, each of the Valuer, WUYIGE and Veda Capital is a third party independent of the Group and is not a connected person of the Group. As at the date of this announcement, neither the Valuer, WUYIGE nor Veda Capital has any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Each of the Valuer, WUYIGE and Veda Capital has given and has not withdrawn its respective written consent to the issue of this announcement with inclusion of its name, statements and all references to its name (including its qualification) in the form and context in which it appears in this announcement.

Takeovers Code Implications and Application for the Whitewash Waiver

As at the date of this announcement, CNBMG is deemed to be interested in 174,018,242 A Shares, representing approximately 33.04% of the total issued share capital of the Company, and after completion of the issue of the Revised Consideration Shares but before the Proposed A Share Placing, CNBMG will indirectly hold 201,076,897 A Shares, representing approximately 35.92% of the issued share capital of the Company as enlarged by the issue of the Revised Consideration Shares. In the absence of the Whitewash Waiver, CNBMG and parties acting in concert with it would be obliged to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by it and parties acting in concert with it pursuant to the Takeovers Code as a result of the issue of the Revised Consideration Shares.

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An application to the Executive for the Whitewash Waiver will be made by CNBMG and parties acting in concert with it pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted, would be subject to, among other things, the approval of the Independent Shareholders taken by way of a poll at the EGM. Since CNBMG is the ultimate controlling Shareholder of the Company, CNBMG and parties acting in concert with it and Shareholders who are interested in or involved in the Proposed Acquisitions Agreements (as supplemented by the Supplemental SP Agreements) and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing will abstain from voting on the relevant resolution(s) to approve the Proposed Acquisitions Agreements (as supplemented by the Supplemental SP Agreements) and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing at the EGM and the Class Meetings. Save for CNBMG and parties acting in concert with it, there is no other Shareholder who is interested or involved in the Proposed Acquisitions Agreements (as supplemented by the Supplemental SP Agreements) and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing.

The Executive may or may not grant the Whitewash Waiver. The granting of the Whitewash Waiver is a non-waivable condition precedent to the respective Proposed Acquisitions Agreements (as supplemented by the Supplemental SP Agreements). If the Whitewash Waiver is granted by the Executive and approved by the Independent Shareholders, CNBMG and parties acting in concert with it will not be required to make a mandatory general offer which would otherwise be required as a result of the acquisition of the Revised Consideration Shares. If the Whitewash Waiver is not granted by the Executive or the resolutions in respect of the Proposed Acquisitions Agreements (as supplemented by the Supplemental SP Agreements) and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver are not approved by the Independent Shareholders, the Proposed Acquisitions Agreements (as supplemented by the Supplemental SP Agreements) will be terminated and the Reorganisation will not proceed.

(3) S I T U A T I O N O F C U R R E N T R E T U R N D I L U T I O N B Y T H E REORGANISATION AND THE RELEVANT REMEDIAL MEASURES

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關於進一步促進資本市場健康發展的若干意見)” (Guo Fa [2014] No.17) and the “Guiding Opinion on Matters Concerning Current Return Dilution by IPO, Refinancing and Significant Asset Restructuring (關於首發及再融資、重大資產重組攤薄即期回報有關事項的指導意見)” (China Securities Regulatory Commission Announcement [2015] No.31), and rules and requirements under the guidelines published by the CSRC, in order to protect the interests of small and medium investors, the Board conducted careful analysis on the impacts of the Reorganisation on return dilution for the current period, and the Directors and senior management of the Company provided undertaking in relation to current return dilution by the Reorganisation and the relevant remedial measures. The relevant remedial measures will be subject to the approval by the Independent Shareholders at the EGM. Details of situation of current return dilution by the Reorganisation and the relevant remedial measures will be provided in the circular to be despatched to the Shareholders.

By order of the Board Luoyang Glass Company Limited* Zhang Chong Chairman

Luoyang, the PRC 7 August 2017

As at the date of this announcement, the Board comprises four executive Directors: Mr. Zhang Chong, Mr. Ni Zhisen, Mr. Wang Guoqiang and Mr. Ma Yan; one non-executive Director: Mr. Xie Jun; and four independent non-executive Directors: Mr. Jin Zhanping, Mr. Liu Tianni, Mr. Ye Shuhua and Mr. He Baofeng.

For the purpose of this announcement, all amounts denominated in RMB have been translated (for information only) into HK$ using the exchange rate of RMB1: HK$1.13. No representation is made that any amounts in RMB or HK$ can be or could have been converted at the relevant dates at the above rate or any other rates at all.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this announcement and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

For identification purposes only

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APPENDIX I(A) – SUMMARY OF THE VALUATION REPORT OF HEFEI NEW ENERGY

The following is an English translation of the summary of the valuation report in respect of Hefei New Energy, which is prepared by the Valuer, Beijing Pan-China Assets Appraisal Co., Ltd. (“ Beijing Pan-China ”), for the purpose of inclusion in this announcement. Such report is prepared in Chinese and this English translation is provided for your reference only.

Beijing Pan-China holds the PRC domestic assets appraisal qualification jointly granted by the China Securities Regulatory Commission and the Ministry of Finance of the PRC.

Unless otherwise stated, the figures contained in this report are denominated in Renminbi.

SUMMARY OF VALUATION REPORT

Valuation report in relation to the entire equity interests in

CNBM (Hefei) New Energy Company Limited involved in the proposed significant assets restructuring and issuance of shares for the acquisition of assets and fund raising by Luoyang Glass Company Limited

Tianxing Ping Bao Zi (2016) No. 1276

I. VALUATION SUBJECT

The appraised entity is the entire equity interests in CNBM (Hefei) New Energy Company Limited* as at the valuation base date.

II. VALUATION SCOPE

The entire assets of CNBM (Hefei) New Energy Company Limited*, including all assets and relevant liabilities.

III. TYPE OF VALUE

The type of value under this valuation is market value.

IV. VALUATION BASE DATE

The valuation base date is 31 October 2016.

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V. VALUATION ASSUMPTIONS

(I) General assumptions:

Transaction assumption: all assets to be valued are assumed to be in the transaction process and valuers conduct the valuation according to simulated market conditions such as transaction conditions of the assets to be valued.
Open market assumption: open market assumption is an assumption about conditions of a market into which assets are proposed to be entered and effects of such market conditions on assets. An open market means a well-developed, comprehensive and competitive market with willing buyers and willing sellers acting voluntarily and rationally at arms’ length, having sufficient opportunities and time to obtain market information and under no compulsion or restrictions to buy or sell.
Continuous use assumption: continuous use assumption is an assumption made on the conditions of the market where the assets are intended to enter into as well as the status of the assets in such market conditions. It is first assumed that the assets to be appraised are in use, and it is further assumed that the assets that are in use will be used continuously. Under continuous use assumption, no consideration is given to the conversion of the use of the assets or utilisation of the assets under the best condition. Thus, the valuation results are subject to a restricted scope of applicability.
Going concern assumption: it is an assumption made by taking the whole assets of an enterprise as the appraised entity. In this way, the enterprise operates continually in pursuit of its operation objective under its external environment as the main operating entity. The management of the enterprise is responsible for and capable of taking responsibility. The enterprise operates legally and makes appropriate profits to maintain the capability of going concern.

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(II) Valuation assumptions under the income approach:

There is no significant change in the relevant existing laws, regulations and policies of the country, or in the macroeconomic conditions of the country. There is no significant change in the political, economic and social environment in which the parties to this transaction are situated, and there are no material adverse impacts arising from other unforeseeable factors or force majeure.
Assuming the company to operate as a going concern based on the actual status of the assets as at the valuation base date.
Assuming the management of the company to be responsible and have the capability to take on their duties.
Assuming the company to comply with all related laws and regulations unless otherwise stated.
Assuming the accounting policy to be adopted by the company in the future to be fundamentally consistent in all material aspects with the one adopted when compiling the valuation report.
Assuming the company to maintain the existing business scope and mode on the basis of the present management mode and level.
There will be no material changes to the interest rates, exchange rates, tax bases, tax rates and policy charges.
There will be no material adverse impacts on the enterprise arising from other force majeure or unforeseeable factors.
Assuming the estimated annual cash flows of the company to be generated during the period.
Assuming the products and services of the enterprise maintain existing competitive status in the market subsequent to the valuation base date.
The appraised entity obtained the high and new technology enterprise qualification certificate (高新技術企業資格證書) on 5 December 2016 for a validity period of three years. It is assumed that the appraised entity will continue to obtain such certificate upon expiry of the validity period.

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VI. VALUATION METHOD

(I) Selection of valuation methods

The asset-based approach is the valuation method by which the value of the appraised entity is determined by reasonably assessing the values of every assets and liabilities items, both on and off balance sheet, on the basis of the balance sheet. Taking into account the circumstances of this valuation, the appraised entity can provide and the valuers can collect externally the information required by the asset-based approach, so that thorough investigation and valuation can be conducted on the assets and liabilities of the appraised entity. Therefore, the asset-based approach is applicable to this valuation.

The income approach is based on the expected utility theory of economics. In other words, from the perspective of the investors, the enterprise value lies in the future income expected to be generated for the enterprise. Despite the absence of the direct use of comparable in the actual market for stating the prevailing fair market value of the appraised entity, the income approach assesses the value of an asset by its expected profitability, which is the essential basis for determining the prevailing fair market value of the asset. As such, it can completely reflect the overall value of an enterprise and its valuation conclusion is more reliable and convincing. From the perspective of applicable conditions of the income approach, since the enterprise is profitable in its own right and the management of the appraised entity has provided the profit forecast for the future years, according to the historical operating data of the enterprise and the internal and external operating environment, the future level of profit of the enterprise can be reasonably forecasted. In addition, the risk of future income can be reasonably quantified. Therefore, the income approach has been adopted in this valuation.

The market approach determines the prevailing fair market value of the appraised entity by referring to comparables in the market. This approach is direct in terms of valuation perspective and valuation methods, and the valuation process is intuitive. The data for the valuation is from market, making the result convincing. Given the lack of a fully-developed and active capital market in China, it is difficult to accurately quantify and rectify the degree of similarity between the comparable listed companies and the transaction cases with the appraised entity. As such, the accuracy of the result of valuation under the market approach is difficult to be measured in a precise manner. Further, valuation under the market approach is based on one point of time on the valuation reference date in the capital market, without regard to the cyclical fluctuation of the market. As such, the market approach is not adopted for this valuation.

Accordingly, the asset-based approach and the income approach have been selected for this valuation.

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(II) Introduction of the Specific Valuation Methods

I) Asset-based Approach

The asset-based approach, which is a method for appraising enterprise values, refers to the method for determining the value of the appraised entity based on the reasonable valuation of the value of assets and liabilities of an enterprise on the basis of the balance sheet of the appraised entity as of the valuation base date. The process of valuation of different types of assets and liabilities is as follows:

1. Valuation of Current Assets and Liabilities

Current assets of the appraised entity include cash and cash equivalent, notes receivable, accounts receivable, prepayments, other receivables, inventories, and other current assets; while liabilities include current liabilities and non-current liabilities, current liabilities include short term borrowings, notes payable, accounts payable, receipts in advance, staff remuneration payable, tax payable, interest payable, other payables and non-current liabilities due within one year, and non-current liabilities include long-term borrowings.

(1) cash and cash equivalent: it includes cash on hand, bank deposits and other cash equivalent. The appraised value of which was determined as the verified book value which was arrived at after checking cash inventory and the verification of bank reconciliation statements, bank confirmations, and other proofs of cash and bank balances. Funds denominated in foreign currencies are translated into RMB at the exchange rate by the State Administration of Foreign Exchange as at the valuation base date.
(2) Notes receivable: notes receivable refer to the bankers’ acceptance received by enterprises for selling products or rendering services, etc. All notes receivable in the scope of valuation are bankers’ acceptance (or include bankers’ acceptance and commercial acceptance). For notes receivable, the valuer checked the book records and the register of notes receivable, and took inventories of and verified the notes receivable. Corresponding sales contracts and delivery orders (shipping orders) as well as other original records were also checked for certain notes receivable of large amount. The appraised value was then determined at the verified book value after verification.

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(3) Accounts receivable and other receivables: the appraised value shall be determined based on the recoverable amount of each account receivable provided that the amount of each of the accounts receivable is duly verified. If there is a good reason to believe that all the amount can be recovered, the appraised value shall be calculated at the total amount of all accounts receivable; for the partial amount which is probably irrecoverable, in the event that it is difficult to confirm the amount of irrecoverable receivables, historical information and on-site investigation are used to provide details of the situation, specifically analyze the amount, time and reasons of loans, recovery of the amounts, as well as the debtor’s capital, credit and current situation of operating management to estimate the partial amount which is probably irrecoverable in accordance with the aging analysis method as the appraised value calculated after deduction of the loss from risk; with regard to those which have conclusive evidences proving that the receivable cannot be recovered, the appraised value will be nil.
(4) Prepayments: the appraised value shall be determined based on the value of assets or rights from corresponding goods that can be recovered. For recoverable goods or rights, the verified book value is taken as the appraised value.
(5) Inventories:

Purchased inventories: refer to raw materials. Its appraised value shall be calculated by adding the prevailing market prices with reasonable freight and miscellaneous charges, then deducting relevant wear and tear. The purchase date of the raw materials and those materials in transit at the warehouse included in this valuation is close to the valuation base date with slight movements in prices. Thus, the verified book value is taken as the appraised value in this valuation.

Finished goods: valuation methods applicable for finished goods include cost approach and market approach, whereas the market approach was adopted in this valuation. By market method, finished goods are valued by reference to their total costs plus the likely amount of profits to be arising from their sales, or the finished goods are valued below cost, depending on the market conditions of the particular finished goods. For fast moving products, appraised values were determined according to their factory selling price less

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operating expenses and all taxes; for products with normal sales, appraised values were determined according to their factory selling price less operating expenses, all taxes and appropriate amounts of net profit after tax; for products with poor marketability, appraised values are determined according to their factory selling price less operating expenses, all taxes and net profit after tax.

Goods in process: for the goods in process and semi-finished goods with a lower degree of finishing, the verified book value is taken as the appraised value given the short time inputs in terms of labor and material expenses as well as the slight change in value.

(6) Other current assets: refer to the input tax amount to be deducted. On the basis of verifying correctness conducted by the valuers, the book value after verification is recognised as the appraised value.
(7) Liabilities: the appraised value of liabilities shall be determined based on the liability items and amounts actually to be assumed by the appraised entities (realized based on the valuation purpose) provided that such liabilities were duly checked and verified.

2. Valuation of buildings and structures

Given the specific purpose of this valuation and the characteristics of each building to be valued, the cost method was adopted for valuation of building assets based on their different functions, structural characteristics and nature of use.

Appraised value = full replacement price (tax exclusive) × newness rate

(1) Full replacement price (tax exclusive)

Full replacement = construction and installation cost + price (tax preliminary cost and other cost + capital exclusive) cost – value-added tax deductible

A. Construction and installation cost

As for buildings and structures with higher value, the valuers select typical projects in accordance with the specific conditions of the appraised buildings and collect information

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including final account for completion, completion acceptance, and construction drawings of the typical projects to verify the construction workload. Cost of civil projects and various installation costs, and in turn the total construction and installation cost are calculated under the local quota standard and relevant charging document. The construction and installation cost for low-valued and simple buildings and structures is calculated by the per-square-meter cost method. For buildings lacking final accounts for completion or other information, the construction and installation cost is calculated through the re-budgeting method or the simulation approach to adjust and confirm the direct expenses. The construction cost of each of the major and typical buildings as at valuation base date is calculated in accordance with the quota and relevant charging standards in the project budget report issued by Bengbu Design & Research Institute for Glass Industry* (蚌埠玻璃工業設計研究院), 2009 Pricing Quota and Consolidated Unit Price for “Construction, Decoration and Installation Project of Anhui Province (Commonly-Used Handbook)” (2009“安徽省建築、裝飾裝修工程及安裝工程(常用冊)” 計價定額綜合單價), Notice on the Adjustment of the Prevailing Basis of Computing Prices in Anhui Province to Implement Valueadded Tax and to Replace Business Tax in the Construction Industry (關於建築業營業稅改增值稅調整我省現行計依據的通知) (Jian Biao [2016] No. 67), Zao Jia [2016] No. 11 Implementation Opinion on the Adjustment of the Prevailing Basis of Computing Prices to Implement Value-added Tax and to Replace Business Tax (關於營業稅改徵增值稅調整現行計價依據的實施意見) issued by Department of Housing and Urban-Rural Development of Anhui Province and Information on Construction Project Cost of Hefei (合肥市建設工程造價信息) on the valuation base date as well as the price adjustment documents and market price of various materials.

B. Preliminary cost and construction-related expenses

Preliminary cost and other cost include management cost of the contractor, cost of feasibility research, cost of engineering investigation and design and cost of construction supervision. Preliminary cost and other cost are determined in accordance with industrial standards and the charging regulation of the relevant national authorities.

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C. Capital cost

Capital cost: capital cost refers to the loan interest of the construction investment during the construction period, interest rate adopted in the calculation is the interest rate released by the People’s Bank of China on the valuation base date and a construction period is based on the normal work cycles, assuming capital will be equally injected:

= Capital cost (construction and installation cost + preliminary cost and other cost) × reasonable construction period × loan interest × 50%

D. Value-added tax deductible

The value-added tax valuation method was adopted for calculation of the construction and installation cost of buildings to be valuated, the corresponding value-added tax deductible was calculated at the rate of 11%; for preliminary cost (other than management cost of the contractor which are not deductible), the value-added tax deductible will be calculated at the rate of 6%.

Value-added tax = total construction and installation deductible cost/1.11 × 11% + preliminary cost (other than management cost of the contractor)/1.06 × 6%

(2) Determination of Newness rate

The method used to calculate the newness rate of buildings and structures varies with their types and value. For important and high-valued buildings and structures, the calculation adopts the comprehensive newness rate approach which uses both the inspected newness rate and the theoretical newness rate for calculation. The comprehensive newness rate is the weighted average of the two results. For common buildings and structures, life-based method is used and adjustment will be made depending on the specific inspection situation.

Calculation formula:

Newness rate = inspected newness rate × 0.6 + theoretical newness rate × 0.4

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Inspected newness rate

There are three major factors that can affect the newness rate of a building (structure, decoration and equipment). A standard score is given to each factor based on its impact on the construction cost of the buildings and structures. Separate score based on inspection conditions are used to calculate the inspected newness rate.

Calculation of theoretical newness rate

Theoretical = (1 – life in use/economic useful life) × newness rate 100%

(3) Determination of appraised value

= Appraised value full replacement price (tax exclusive) × newness rate

3. Valuation of assets in the equipment class

Valuation of machineries and equipment mainly adopts the cost method, which is used to determine the appraised value of machineries and equipment through estimating the updated replacement cost of brand new machineries and equipment, with the deduction of the actual depreciation, functional depreciation, and economic depreciation on the basis of its determined comprehensive newness rate. The calculation formula adopted in the valuation is as follows:

= Appraised value full replacement value × newness rate

In which: replacement value of equipment generally consists of all reasonable direct and indirect costs required for repurchasing or constructing brand new assets of the same functions with the appraised entity, such as purchase price, transportation and miscellaneous cost, equipment foundation cost, installation and testing cost, preliminary cost and other cost as well as capital cost.

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Pursuant to the “Provisional Regulations of the PRC on Value-Added Tax (中華人民共和國增值稅暫行條例)” (Order No. 538 of the State Council of the PRC), starting from 1 January 2009, companies in relevant industries shall adopt consumption value-added tax system to replace production value-added tax system. Under the new system, value-added tax contained in the fixed assets purchased by a company will be deductible in the incremental value-added tax paid for the sale of the company’s products or can be carried forward to next year if not deductible in current year. Therefore, the full replacement price is calculated based on the tax exclusive price in this valuation.

(1) Determination of full replacement price
A. Self-made equipment and non-standard equipment

The full replacement price of equipment is determined in accordance with the information of original construction project and finance settlement, and based on the raw materials cost, equipment cost, tools and spare parts cost on the base date, current labor cost price, specialized production cost as well as the corresponding capital cost, tax and profit.

B. Equipment purchased

The full replacement price of equipment with higher value mainly includes purchase price of equipment (tax exclusive) (prevailing price of non-standard equipment), transportation and miscellaneous cost, installation and testing cost and capital cost; for general equipment with lower value and transportation cost and not requiring installation, the full replacement price is determined by reference to the prevailing market purchase price or prevailing price of non-standard equipment.

a. Determination of purchase price of equipment

Purchase price of equipment is mainly determined by making inquiries to manufacturers or trading companies, or by reference to the “2016 Quotations Catalog for Electromechanical Products (2016年機電產品報價目錄)” and other price information, as well as the recent contract price for similar equipment. For the equipment whose purchase price is not available, the purchase price is calculated using the change rate of price of equipment of the same type in the same year.

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b. Determination of transportation and miscellaneous cost

Transportation and miscellaneous cost of equipment includes loading and unloading fee, transportation fee, custody fee, insurance fee and other related fees incurred from the place of delivery to the installation site of the equipment, including short-distance transportation fee for shipping equipment to railway stations and docks. Transportation fee with actual calculation basis are determined according to the actual basis or are otherwise determined based on the purchase price of equipment (tax exclusive) by reference to the “Manual of Data and Parameters Commonly Used in Assets Valuation (資產評估常用數據與參數手冊)”. If the supplier is responsible for transportation (included in the purchase price) according to the delivery conditions, the transportation and miscellaneous cost shall not be considered.

c. Determination of installation and testing cost

Installation and testing cost include fees incurred in post-processing of equipment foundation, and installation and testing. According to the equipment characteristics and industry practices of the appraised entity, the installation and testing cost is determined by reference to the “Manual of Data and Parameters Commonly Used in Assets Valuation (資產評估常用數據與參數手冊)”; For small-sized equipment not requiring installation, the installation and testing cost shall not be considered.

d. Other costs of project construction

Other costs of the project construction consist of management cost of the contractor, construction supervision cost, environmental appraisal cost, project proposal cost and feasibility research cost, investigation and design cost, agent service cost for bidding and joint trial operation cost.

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e. Capital cost

= Capital cost equipment replacement costs × reasonable construction period (year) × loan interest rate per annum × 1/2

According to scale of installed capacity of this project, the reasonable construction period is determined as two years.

C. Vehicles

The prices of vehicles as at the valuation base date are determined by making reference to recent vehicle market price information including market and online information on vehicles. On such basis, capitalized expenses including vehicle purchase tax and license fees will be calculated according to the “Interim Regulations on purchase tax of vehicles of the People’s Republic of China (中華人民共和國車輛購置稅暫行條例)” and the provisions of the relevant local departments, in order to determine the replacement costs:

Replacement cost

= current purchase price (tax exclusive) + vehicle purchase tax + license fees
= Current purchase price (tax inclusive)/(1+17%) × (1+10%) + license fees

Where: 10% represents the tax rate of vehicle purchase tax, and 17% represents the tax rate of value-added tax (VAT).

① Determination of vehicle purchase price: The determination is made by making reference to the market prices of the latest transactions of comparable models of vehicles in places where the vehicles are located. Other costs are determined in accordance with the standards for fees charged by the management department of vehicles.

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② D e t e r m i n a t i o n o f v e h i c l e p u r c h a s e t a x : T h e determination is made according to the relevant provisions of the Notice of the State Administration of Taxation, Ministry of Finance and People’s Bank of China on Relevant Issues Concerning the Administration of Collection of Vehicle Purchase Tax (國家稅務總局財政部中國人民銀行關於車輛購置稅徵繳管理有關問題的通知) (Guo Shui Fa [2009] No. 127).

= Vehicle purchase tax taxable price × 10%

Of which the taxable price does not include VAT price.

③ Determination of license fees: The determination is made according to the relevant provisions of the places where the vehicles are located, and on the basis of the substance and amount of such expenses.

Some vehicles are valuated using the market approach. For very old vehicles or vehicles of out-of-production models, and those irreplaceable models, the appraised value is determined by making reference to recent second-hand vehicle market quotations and prices.

(2) Valuation of newness rate

The comprehensive newness rate is appraised by way of the technically assessed grading approach in combination with the theoretical newness rate determined using service life approach.

A. Major production equipment and large-scale equipment

Newness rate = (economic service life – serviced life)/ determined economic service life × 100% using service life approach

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Newness rate determined using on-site inspection approach： The newness rate is determined by conducting the on-site inspection of various components of the equipment by the valuers and appraising each part of the equipment.

Newness rate = newness rate under the service life approach × 40% + newness rate under the technically assessed approach × 60%
B. The theoretical newness rate for ancillary equipment and electronic equipment with lower value is mainly determined using the service life approach, based on which adjustments are then made according to the utilization rate, loading, maintenance and service as well as original manufacturing quality of the equipment.

Theoretical = (economic service life – serviced life)/ newness rate economic service life × 100%

C. Vehicles

In accordance with the Provisions on the Standards for Compulsory Retirement of Motor Vehicles (機動車強制報廢標準規定) with effect from 1 May 2013, some motor vehicles are subject to compulsory retirement standards in service life and recommended retirement standards in driving mileage, while the compulsory retirement regulation in service life was cancelled for certain motor vehicles, for which there is no limitation on service life.

Vehicles have economic service life as impacted by vehicle emission environmental policy, together with the gradually increased maintenance costs in the later period of their service life. The newness rate adopted in the valuation of vehicles is the lower of the newness rate under the service life approach and mileage-based newness rate calculated based on the specified driving mileage.

Newness rate = (1 – serviced life ÷ economic service under the life) × 100% service life approach

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Mileage-based	=	(1 – mileage travelled ÷ mandatory
newness rate		driving mileage) × 100%
Newness rate	=	Min (Newness rate under the service
		life approach, Mileage-based newness
		rate)

Finally, the newness rate is adjusted in consideration of the conditions such as the appearance, overall structure, engine structure, circuit system, braking performance and exhaust emission of the vehicles upon on-site inspection.

4. Valuation of the project under construction

Within the scope of the valuation, the cost approach was adopted as the valuation method of the project under construction. In terms of the project under construction which is undergoing normal construction and has not been completed, the enterprise shall make payment according to the progress of the project and the terms of contracts. Upon investigation and verification of the project’s image progress and provided that the reasonableness of the project budget is confirmed, the appraised value is determined by the verified and adjusted book value plus the re-measured cost of capital. The financing cost (interest) and other costs included in the book value are appraised as zero.

Calculation formula:

= Appraised value book value × comprehensive adjustment coefficient + re-measured cost of capital

5. Valuation of land use right

The approach applicable for valuation of the land use right of the valuation target is selected upon analysis according to the features and specific conditions of the valuation target and actual conditions of the project, in accordance with the “Regulations for Valuation of Urban Lands (城鎮土地估價規程)” and in view of the land market in the regions where the valuation target is located and the relevant information gathered by the land valuers.

If the valuation target is for industrial purpose, the standard floorprice coefficient correction approach, market comparison approach and cost approximation approach can be adopted for valuation, while the residual approach and income approach are not suitable.

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As the benchmark land premium of the land parcel entrusted for valuation was published earlier, it is not suitable for adoption of standard floor-price coefficient correction approach in the valuation.

As there are recent transaction cases in the market of the region where the land parcel entrusted for valuation is located, the market comparison approach can be adopted for valuation.

As the parameters such as land expropriation compensation standard and relevant tax standard in the region where the land parcel entrusted for valuation is located, are available, the cost approximation approach can be adopted for valuation.

In view of the above, the market comparison approach and cost approximation approach are adopted for the valuation.

6. Valuation of other intangible assets

The valuation methods for patented technology mainly include the market approach, cost approach and income approach.

The market approach is a common and effective method for countries and regions with relatively developed technological and capital markets. Under this valuation method, the same or similar patented and proprietary technologies in the market are selected as references, and comparison and adjustment are made in relation to the price difference between the patented and proprietary technologies with the references through stimulation taken into account of various factors affecting the value such as the functions of the patented and proprietary technologies. By analyzing the results of various adjustments, the value of the patented and proprietary technologies was determined.

The market approach is used to valuate patented and proprietary technologies on the condition that the relatively public market data and the comparable references are available, and such references have clear influential factors on value which can be quantified. Functional simulation method is largely used in the market approach. As China’s patented and proprietary technologies market is still under development at present, the environment for protection of such technologies is also less regulated. Meanwhile, the piracies of products based on patented and proprietary technologies make it relatively difficult to collect fair transaction data of such products. Therefore, it is rather difficult to apply the market approach in the valuation of patented and proprietary technologies in China at present.

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The cost approach is the most mature method to valuate the value of patented and proprietary technologies application. As there is no explicit socialized market for self-use patented and proprietary technologies within some enterprises and industry or their market capacity or demand is low, it is usually difficult to determine the value of products based on the patented and proprietary technologies by reference to the sale of such products (the revenue of products based on the dedicated or self-use patented and proprietary technologies are mostly implied in the overall benefits of the enterprise or industry). Therefore, the adoption of cost approach for valuation is relatively objective and feasible. In addition, for products based on patented and proprietary technologies which have not been launched on the market, the adoption of cost approach for valuation is more persuasive. To give less consideration of the creative value of products based on patented and proprietary technologies is the disadvantage of cost approach. Therefore, the accuracy of forecast about the maintenance cost of such products will have certain effect on the value of patented and proprietary technologies.

The present earning value approach is the most common method for the valuation of technological intangible assets. As the technological development itself is the investment for the future and its value is finally presented by the future return. The key of present earning value approach is to define the future earnings generated from the technology entrusted for valuation, which is usually conducted through earning sharing approach. In the application of earning sharing approach, there are two kinds of specific calculation methods, namely the net earning sharing approach and sales revenue sharing approach, with reference to the matching relation between the sharing base and sharing ratio in the international trade. Upon the comprehensive analysis, the sales revenue sharing approach was adopted for the valuation of the technologies of CNBM (Hefei) New Energy Company Limited* to calculate the appraised value of the appraised entity for the following reasons:

The technology royalty is usually calculated based on sales revenue of products produced using the technology in a technology contract. As the sales revenue is based on the sales contract and evidenced by the sales invoice, it is easier to be verified, while the accounting profit is determined based on the revenue net of various costs and taxes. The reasonableness of various costs is controlled by the technology implementing party with a relatively complicated process of calculation, which can easily cause disputes between the technology owner and licensed implementing party, thus adding the cost of verification.

– 35 –

From the perspective of valuation of technological intangible assets, it is not appropriate to calculate the technology sharing based on the net accounting profit. The net accounting profit is determined based on revenue net of various costs and taxes, which represents an accounting treatment in compliance with the requirement of the accounting principle, on the premise of ongoing concern and upon applying the principle of prudence. In particular, the research and development expense of self-created technological intangible assets can be recognized as the expense in the profit or loss when it satisfies the requirement of the above principle. Therefore, the asset valuation is required for the technological intangible assets entrusted for valuation which have a book value of zero.

Moreover, the valuers are of the view that the achievement of technological results is conditional on the input of these technological development expenses. Such research and development investment may fall within the definition of assets during asset valuation of technological results. The technological development is a creative activity and there is great uncertainty as to whether it succeeds, which usually generate a weak correspondence between the technological results and technological investment.

More importantly, the core technology of high technology industry has become the necessary condition for the survival and progress of the industry. The value of the technology is partially represented in the cost of products produced, which is widely accepted in the practical operation of technology. For a specific enterprise, the value of technology depends on the operating profit brought about to the enterprise by application of relevant technology to a certain extent. However, in respect of the value of technology itself, it is not proportional to the profit of enterprise. Therefore, another method, namely sales revenue sharing approach, is usually more commonly used in the practice. On the one hand, the selling price or sales revenue is comparatively more public information which can be easily accessed; on the other hand and more importantly, the selling price covers cost and profit and represents a comprehensive value category. Therefore, the method is more commonly used in the technological asset valuation is by virtue of its widely-accepted reasonableness and feasibility.

– 36 –

the revenue share each year with an appropriate opportunity cost of capital (being the discount rate), the sum of the present value generated accordingly serves as the appraised present value of the technology entrusted for valuation. Its basic formula is as follow:

Of which: P – Appraised value of intangible assets

K – Sharing ratio of sales revenue of intangible assets

Ri – Sales revenue of the technological products for the phase i n – term of the earning

r – discount rate

7. Valuation of other non-current assets

The valuers at first check the general ledger, the detailed accounts, the accounting statements and the valuation list. The relevant goods purchased with such amount have been delivered before the valuers conduct an on-site inspection. The valuers inspect the fixed assets and adopt the book value as the appraised value upon verification.

II) Income Approach

The discounted cash flow (DCF) approach has been adopted for this income approach valuation, while free cashflow of the entity has been selected. The value of the entire equity interests is obtained indirectly through the valuation of the overall value of the entity.

This valuation is based on free net cashflow of the entity for certain years in the future. The value of overall operating assets of the entity, calculated through adding up the discounted values with the adoption of an appropriate discount rate, is added to surplus assets and non-operating assets less interest-bearing liabilities in order to derive the value of the entire equity interests.

1. Calculation model

E = V – D Formula 1 V = P + C + C + E[’] Formula 2 1 2

E = V – D

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In the above formulas:

E: Value of the entire equity interests;
V: Overall value of entity;
D: Appraised value of interest-bearing liabilities;
P: Appraised value of operating assets;
C1: Appraised value of surplus assets;
C2: Appraised value of non-operating assets;
E’: Appraised value of long-term equity investment (not considered in cashflow).

In which, P , the appraised value of operating assets in Formula 2, is calculated with the formula as follows:

==> picture [364 x 32] intentionally omitted <==

The first half of the above formula is the value of explicit forecast period while the other half is the value of perpetual period (final value)

In Formula 3:

Rt: Free cashflow of entity of the t-th explicit forecast period;

t: Number of explicit forecast period 1, 2, 3,..., n;
r: Discount rate;
Rn+1: Free cashflow of entity in perpetual period;
g: Growth rate of perpetual period, g = 0 in this valuation;
n: The last year of explicit forecast period.

2. Determination of key parameters in the model

1 ） Determination of expected income

Free cashflow of entity is taken as the quantitative indicator of the expected income of the entity in this valuation.

– 38 –

Free cashflow of entity refers to the total of all cashflow after payment of operating expenses and income tax and before cash payment to those who claim against the company. Its calculation formula is as follows:

Free cashflow of = net profit after tax + depreciation and entity amortisation + interest expense × (1 – tax rate T) – capital expenditure – working capital movement

2 ） Determination of income period

Income period in appraising enterprise value normally refers to the number of years in the future in which the enterprise can obtain income. To derive a reasonable forecast of future income, the income period of an enterprise can be categorised as definite and indefinite according to the characteristics of production and operation of an enterprise and relevant laws, regulations, contracts and agreements.

The perpetual period is adopted as the income period in this valuation. Of which, the first phase is the period from 1 November 2016 to 31 December 2021, during which the income is changing based on the operation status and planning of the appraised entity; the second phase starting from 1 January 2022 is the phase of perpetual operation, during which the profitability of the appraised entity will remain stable.

3 ） Determination of discount rate

There are various methods and ways to determine discount rate. Based on the principle of consistency between income amount and discount rate, the income amount is valued using the free cashflow of the entity in this valuation, and thus the weighted average cost of capital (WACC) is selected to determine the discount rate.

4 ） Determination of appraised value of interest-bearing liabilities

The interest-bearing liabilities include long-term and short-term borrowings of the enterprise, which are determined based on the market value.

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5 ） Determination of appraised value of surplus assets and nonoperating assets (liabilities)

Surplus assets refer to assets that are not directly related to the income of the enterprise and in excess of the amount needed to operate such enterprise, which generally refer to excess cash and cash equivalent and financial assets held for trading, etc. Nonoperating assets refer to assets that are not directly related to the income of the enterprise and not profit-generating. Separate valuation is carried out for such assets.

VII. BASIS OF VALUATION

The basis of economic activities, basis of laws and regulations, basis of valuation standards, basis of asset ownership and basis of price selection, on which this valuation was conducted, are set out as follows:

(I) Basis of economic activities

The documents of the board of directors of China National Building Materials Group Corporation, “the Resolutions of the Fifth Meeting of the First Session of the Board of Directors of China National Building Materials Group Corporation” (CNBMG Yi Dong Hui Jue Zi No. 05);
The resolutions of the General Manager’s Work Meeting of Triumph Technology Group Company* dated 6 January 2017;
The resolutions of the 34th meeting of the second session of Board of Directors of China Luoyang Float Glass (Group) Company Limited* held in November 2016;
The minutes of the 22nd meeting of eighth session of the Board of Directors of Luoyang Glass Company Limited*;
The minutes of the 28th meeting of Hefei High-Tech Construction Investment Group Company in 2016;
The minutes of the 14th Director Meeting of Administration Committee of Hefei State Hi-tech Industry Development Zone (合肥高新區管委會) in 2016.

– 40 –

(II) Basis of laws and regulations

Law of the People’s Republic of China on the State-Owned Assets of Enterprises (《中華人民共和國企業國有資產法》);
Asset Appraisal Law of the People’s Republic of China (Presidential Decree No. 46 passed by the 12th Session of Standing Committee of the National People’s Congress) (《中華人民共和國資產評估法》(主席令12屆第46號));
Company Law of the People’s Republic of China (《中華人民共和國公司法》);
Securities Law of the People’s Republic of China (《中華人民共和國證券法》);
Property Law of the People’s Republic of China (《中華人民共和國物權法》);
Urban Real Estate Administration Law of the People’s Republic of China (《中華人民共和國城市房地產管理法》);
Enterprise Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法》);
Administrative Measures for Assessment of State-owned Assets (State Council Decree [1991] No. 91) (《國有資產評估管理辦法》(國務院 1991年91號令));
Detailed Rules for the Implementation of the Administrative Measures for State-Owned Assets Assessment (Guo Zi Ban Fa [1992] No. 36) ( 《國有資產評估管理辦法實施細則》 ( 國資辦發 [1992] 第 36 號 )) issued by the former State Administration of State-owned Assets;
Circular in Relation to the Opinions on Reforming the Administration and Management of Appraisal of State-owned Assets and Strengthening the Supervision and Management of Asset Appraisal (Guo Ban Fa [2001] No. 102) (《關於改革國有資產評估行政管理方式加強資產評估監督管理工作意見的通知》(國辦發[2001]102號));
Rules on Certain Issues Relating to the Appraisal of State-owned Assets (No. 14 Order from Ministry of Finance) (《國有資產評估管理若干問題的規定》(財政部第14號令));

– 41 –

Interim Regulation on the Supervision and Administration of Stateowned Assets of Enterprises (2003 No. 378 Order from State Council) (《企業國有資產監督管理暫行條例》(國務院2003年378號令));
Interim Measures for Management of the Transfer of the State-owned Property Right of Enterprises (2003 No. 3 Order from SASAC and the Ministry of Finance) (《企業國有產權轉讓管理暫行辦法》(2003年國資委、財政部第3號令));
Interim Measures for the Administration of Assessment of State-owned Assets of Enterprises (No. 12 Order from SASAC of the State Council 2005) (《企業國有資產評估管理暫行辦法》(2005年國務院國資委第 12號令));
The Measures on the Supervision and Management of the Transactions of State-owned Assets of the Enterprises) (2016 Order No. 32 from SASAC and the Ministry of Finance)(《企業國有資產交易監督管理辦法》(2016年國務院國資委、財政部令第32號))；
Notice on Issues concerning the Strengthening Management of Evaluation of State-Owned Assets in Enterprises (Guo Zi Wei Chan Quan [2006] No. 274) (《關於加強企業國有資產評估管理工作有關問題的通知》(國資委產權[2006]274號));
Notice on Issues concerning the Audit of Valuation Report for Stateowned Assets of Enterprises (Guo Zi Chan Quan [2009] No. 941) (《關於企業國有資產評估報告審核工作有關事項的通知》 ( 國資產權 [2009]941號));
Guidelines for the Filing for Recordation of the Valuation Projects of State-owned Assets of Enterprises (Guo Zi Fa Chan Quan [2013] No. 64) ( 《企業國有資產評估項目備案工作指引》 ( 國資發產權 [2013]64號));
Decision on Amending the Administration Measures on Significant Assets Restructurings of Listed Companies (Revised) (Order No. 127 from CSRC, 8 September 2016)(《關於修改〈上市公司重大資產重組管理辦法〉的決定》(修訂)(中國證券監督管理委員會令第127號， 2016年9月8日));
Regulations for the Implementation of the Land Administration Law of the People’s Republic of China (《中華人民共和國土地管理法實施條例》);

– 42 –

Provisional Regulations on Urban Land Use Tax of the People’s Republic of China(《中華人民共和國城鎮土地使用稅暫行條例》);
Regulations for the Implementation of the Enterprise Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法實施條例》);
Provisional Regulations on Value-added Tax of the People’s Republic of China (《中華人民共和國增值稅暫行條例》);
Regulations for the Implementation of the Provisional Regulations on Value-added Tax of the People’s Republic of China (《中華人民共和國增值稅暫行條例實施細則》);
Other relevant laws and regulations.

(III) Basis of valuation standards

Asset Valuation Standards – Basic Standards (Cai Qi [2004] No. 20) (《資產評估準則－基本準則》(財企[2004]20號));
Asset Valuation Professional Ethical Standards – Basic Standards (Cai Qi [2004] No. 20) (《資產評估職業道德準則－基本準則》(財企 [2004]20號));
Asset Valuation Professional Ethical Standards – Independence (Zhong Ping Xie [2012] No. 248) (《資產評估職業道德準則－獨立性》(中評協[2012]248號));
Asset Valuation Standards – Valuation Report (Zhong Ping Xie [2011] No. 230) (《資產評估準則－評估報告》(中評協[2011]230號));
Asset Valuation Standards – Valuation Procedures (Zhong Ping Xie [2007] No. 189)(《資產評估準則－評估程序》(中評協[2007]189號));
Asset Valuation Standards – Engagement Letter (Zhong Ping Xie [2011] No. 230)(《資產評估準則－業務約定書》(中評協[2011]230號));
Asset Valuation Standards – Working Papers (Zhong Ping Xie [2007] No. 189) (《資產評估準則－工作底稿》(中評協[2007]189號));
Asset Valuation Standards – Real Estate (Zhong Ping Xie [2007] No. 189) (《資產評估準則－不動產》(中評協[2007]189號));

– 43 –

Asset Valuation Standards – Machinery and Equipment (Zhong Ping Xie [2007] No. 189) (《資產評估準則－機器設備》(中評協[2007]189 號));
Asset Valuation Standards – Intangible Assets (Zhong Ping Xie [2008] No. 217) (《資產評估準則－無形資產》(中評協[2008]217號));
Asset Valuation Standards – Enterprise Value (Zhong Ping Xie [2011] No. 227) (《資產評估準則－企業價值》(中評協[2011]227號));
Asset Valuation Standards – Using Experts to Work (Zhong Ping Xie [2012] No. 244) (《資產評估準則－利用專家工作》(中評協 [2012]244號));
The Guidelines for the State-owned Asset Valuation Reports of Enterprises (Zhong Ping Xie [2011] No. 230) (《企業國有資產評估報告指南》(中評協[2011]230號));
Guidelines on Quality Control of Business Operations of Valuation Institutions (Zhong Ping Xie [2010] No. 214) (《評估機構業務質量控制指南》(中評協[2010]214號));
The Guiding Opinions on Types of Value in Asset Valuation (Zhong Ping Xie [2007] No. 189) (《資產評估價值類型指導意見》(中評協 [2007]189號));
Guiding Opinions on Attention of Certified Public Valuers on Legal Ownership of Appraised entities (Kuai Xie [2003] No. 18) (《資產評估師關注評估對象法律權屬指導意見》(會協[2003]18號));
Guidelines for Internal Governance of Valuation Institutions (Zhong Ping Xie [2010] No. 121) (《評估機構內部治理指引》(中評協 [2010]121號)).

(IV) Basis of asset ownership

Business licenses for the legal entity, articles of association;
Land use right certificates, real estate ownership certificates;
Grant contracts of land use right;
Construction land planning permits, construction works planning permits and construction works commencement permits;

– 44 –

Motor vehicles license and registration certificate;
Contracts and invoices for acquisition of major equipment as well as relevant agreements, contracts and other documents;
Patent certificates;
Other ownership documents.

(V) Basis for price selection in the valuation

The asset valuation declaration sheet and income forecast statement provided by the appraised entities;
Bank deposit and lending benchmark rates and foreign exchange rates on the valuation base date;
“Regulations on the Administration of Charging of Construction Survey and Design Fees” (Ji Jia Ge [2002] No. 10 document from the State Planning Commission and Ministry of Construction) (《工程勘察設計收費管理規定》(國家計委、建設部計價格(2002)10號文));
Circular of the Ministry of Finance on Issuing “Regulations on Financial Administration of Basic Construction” (Cai Jian [2002] No. 394)(《財政部關於印發〈基本建設財務管理規定〉的通知》(財建 [2002]394號));
Circular of the National Development and Reform Commission and the Ministry of Construction on “Regulations on the Administration of Construction Projects Supervision and Charging of Related Service Fees” (Fa Gai Jia Ge [2007] No. 670) (《國家發展改革委、建設部關於〈建設工程監理與相關服務收費管理規定〉的通知》(發改價格 [2007]670號));
Circular of the State Planning Commission on Issuing “Interim Regulations on the Charging Administration of Bidding Agency Services” (Ji Jia Ge [2002] No. 1980)(《國家計委關於印發〈招標代理服務收費管理暫行辦法〉的通知》(計價格[2002]1980號));
Circular of the State Planning Commission on Issuing “Interim Regulations on the Consultation Fees for Preliminary Works of Construction Projects” (Ji Jia Ge [1999] 1283)(《國家計委關於印發〈建設項目前期工作諮詢收費暫行規定〉的通知》 ( 計價格 [1999]1283));

– 45 –

Circular of the State Planning Commission and State Administration of Environmental Protection on “Issues concerning the Regulation of Consultation Fee on Environmental Impact” (Ji Jia Ge [2002] No. 125) (《國家計委、國家環境保護總局<關於規範環境影響諮詢收費有關問題>的通知》(計價格[2002]125號));
Pricing Quota and Consolidated Unit Price for Construction, Decoration and Installation Project of Anhui Province (2009) (《安徽省建築、裝飾裝修工程及安裝工程計價定額綜合單價》(2009));
Notice on the Adjustment of the Prevailing Basis of Computing Construction Prices in Anhui Province to Implement Value-added Tax and to Replace Business Tax in the Construction Industry, (Anhui Department of Housing and Urban-Rural Development Jian Biao (2016) No. 67) (《關於建築業營業稅改增值稅調整我省現行計依據的通知》 (安徽省住房城鄉建設廳建標[2016]67號));
Implementation Opinion on the Adjustment of the Prevailing Basis of Computing Prices to Implement Value-added Tax and to Replace Business Tax (Zao Jia (2016) No. 11) (《關於營業稅改徵增值稅調整現行計價依據的實施意見》(造價[2016]11號));
Information on Construction Project Cost of Hefei (October 2016) (《合肥市建設工程造價信息》(2016年10月));
Project budget report issued by Bengbu Design & Research Institute for Glass Industry* (蚌埠玻璃工業設計研究院);
Provisions on the Standards for Compulsory Retirement of Motor Vehicles (Decree (2012) No. 12) issued by Ministry of Commerce, National Development and Reform Commission, Ministry of Public Security, Ministry of Environmental Protection(《機動車強制報廢標準規定》(商務部、發改委、公安部、環境保護部令2012年第12號));
Manual of Quotation of Electromechanical Products(《機電產品報價手冊》);
Notice of the Ministry of Land and Resources on the Implementation of the “Regulations for Urban Land Gradation and Classification” and the “Regulations for Urban Land Valuation” in Strict Accordance with National Standards (Guo Tu Zi Ting Fa [2015] No. 12) (國土資源部關於嚴格按國家標準實施《城鎮土地分等定級規程》和《城鎮土地估價規程》的通知（國土資廳發[2015]12號));

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Information on budgets and final accounts of relevant construction projects provided by the enterprise;
Financial statements, audit reports and other related financial information provided by the enterprise;
Future operation plans, profit forecast and other information provided by the enterprise;
Other related valuation information recorded and collected by valuers from on-site survey;
Other information related to this asset valuation;
The primal accounting statements, information in the aspect of financial accounting management, as well as financial information including the relevant agreements, contracts and invoices which are provided by the appraised entities;
The statistics, technical standards information as well as price information released by the State’s relevant departments, together with the relevant price inquiry information and price determination parameter data collected by our company.

VIII. VALUATION CONCLUSION

(I) Valuation conclusion based on the asset-based approach

Upon valuation based on the asset-based approach, the book value and the appraised value of total assets of CNBM (Hefei) New Energy Company Limited* were RMB1,147,282,200 and RMB1,148,333,600, respectively, representing an appreciation of RMB1,051,400 or 0.09%; the book value and the appraised value of its liabilities were RMB972,802,200 and RMB972,802,200, respectively, without any movements; and the book value and the appraised value of its net assets were RMB174,480,000 and RMB175,531,400, respectively, representing an appreciation of RMB1,051,400 or 0.60%.

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The summary of valuation results is set out below:

Summary of Asset Valuation Results

Unit: RMB0,000

Item Current assets Non-current assets Including: Fixed assets Project under construction Intangible assets Land use right Others Total assets Current liabilities Non-current liabilities Total liabilities Net assets	Book value 29,916.95 84,811.27 70,046.24 4,413.89 9,840.77 9,831.65 510.37 114,728.22 74,504.22 22,776.00 97,280.22 17,448.00	Appraised value Appreciation/ depreciation 30,651.91 734.96 84,181.45 -629.82 68,171.59 -1,874.65 4,253.09 -160.80 11,246.40 1,405.63 10,521.53 689.88 510.37 – 114,833.36 105.14 74,504.22 – 22,776.00 – 97,280.22 – 17,553.14 105.14	Appreciation rate % 2.46 -0.74 -2.68 -3.64 14.28 7.02 –
			0.09

			– –
			–

			0.60

Note: For detailed information of the valuation results, please refer to the statement of asset valuation.

(II) The valuation results based on the income approach

Upon valuation based on the income approach, the value of the entire equity interest in CNBM (Hefei) New Energy Company Limited* was RMB307,825,000, representing an appreciation of RMB133,345,000 or 76.42% over the book value of net assets of RMB174,480,000.

(III) Finalization of the valuation results

The asset-based approach, which appraises the fair market value of the assets from the perspective of the asset replacement, can only reflect the intrinsic value of assets of the entity, and cannot fully and reasonably demonstrate the comprehensive profitability of various assets and corporate growth. It also cannot cover the value of the intangible assets, including contract performance, customer resources, patents, goodwill and human resources.

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The income approach, which appraises the corporate value by discounting the expected income, taking into account of not only the assets of the entity measured based on the accounting principles, but also the resources actually possessed or controlled by the entity which cannot be presented in the balance sheets, which include contract performance, customer resources, sales network, potential projects, corporate qualifications, human resources and strong R&D capability, while the contribution arising from the above resources is reflected in the net cash flow of the entity. Therefore, the valuation conclusion arrived at by using the income approach can better demonstrate the overall growth and profitability of the entity.

We believe that the asset value is normally not based on the costs for reacquisition and re-construction of such assets but the expectation for future income by market participants. Upon investigation on the financial position of the appraised entity and analysis on the operation situation, and considering the appraised entity, valuation purpose and applicable value types, the valuers, after comparison and analysis, are of the opinion that the valuation conclusion based on the income approach can reflect the embedded value of the entity more comprehensively and reasonably. As such, the valuation results arrived at using the income approach were adopted as the final valuation conclusion.

(IV) Finalisation of the valuation results

Upon valuation and under the assumptions of this report, the market value of the entire equity interest in CNBM (Hefei) New Energy Company Limited* was RMB307,825,000 (RMB Three Hundred and Seven Million, Eight Hundred and Twenty Five Thousand) as at 31 October 2016, the valuation base date.

XI. NOTES ON SPECIAL ISSUES

The valuation and estimation of the following issues are beyond the practicing capacity and capability of our Company’s valuers. However, these issues may actually affect the valuation conclusion. Thus, users of this valuation report should pay particular attention to the followings:

(I) The “appraised value” referred to herein is a fair valuation presented for the purpose set out expressly herein on the assumption that the assets entrusted for valuation maintain their uses on a going concern basis with conditions and external economic environments on the valuation base date, which shall bear no liability for any other purposes.

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(II) The valuation conclusion in the report reflects the fair value of the appraised entity for the purpose of the valuation set out herein under the principle of an open market, and does not include any fees or taxes that shall be borne in the ownership registration or change of such assets or makes no tax adjustments for the value addition of the assets valuation. The valuation conclusion shall not be deemed as a guaranteed realizable price of the appraised entity.
(III) Premiums or discounts caused by factors such as controlling interest and minority interest have not been taken into consideration in the valuation results, nor has the effect of the liquidity of the equity interest entrusted for valuation on the valuation results.
(IV) Where there are any changes in the number of assets and price standards within the effective term after the valuation base date and up to 30 October 2017, proper adjustments shall be made to the valuation conclusion instead of direct utilisation.
(V) Incompleteness or defects in the ownership documents:

The building ownership certificates of certain buildings of CNBM (Hefei) New Energy Company Limited* included in the valuation scope have not been obtained (note) . In this valuation, the gross floor area of these buildings based on the construction drawings and the on-site measurement results conducted by the valuers and the asset management staff of the entity were taken as basis of valuation calculation. Upon obtaining the building ownership certificates, the entity shall consider to conduct adjustment to the valuation results according to the floor area recorded in the certificates.

As for the aforesaid issues, the entity has presented a declaration that the ownership are possessed by CNBM (Hefei) New Energy Company Limited* without any property rights dispute. Therefore, the valuation was conducted on the premises that the ownerships of the relevant buildings are free from any dispute.

note: According to the PRC legal opinion prepared by a qualified PRC legal adviser Beijing Kang Da Law Firm dated 7 August 2017, which confirmed that despite certain buildings of CNBM (Hefei) New Energy Company Limited have not obtained building ownership certificates, CNBM (Hefei) New Energy Company Limited enjoys and exercises the actual possession, use and income rights of such certain buildings, such that the production and operations of CNBM (Hefei) New Energy Company Limited has not been affected by such matter. The PRC legal adviser confirmed that such certain buildings are free from third party claims in relation to the rights of possession and there was no dispute happened between CNBM (Hefei) New Energy Company Limited and other third parties in this regard. The PRC legal adviser confirmed that such matter will not have a material legal impediment with respect to the significant assets restructuring by Luoyang Glass Company Limited*.

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(VI) Limitations on the valuation procedures:
I) In this valuation, the asset valuers did not conduct any technical testing for all kinds of equipment in respect of their technology parameters and performance as at the valuation base date, and only make conclusions through on-site inspection on the assumption that all related technical information and the track records provided by the appraised entity are true and valid.
II) In this valuation, the asset valuers did not conduct any technical testing for various buildings (structures) in respect of their concealed works and internal structure (other than the observable parts with unaided eyes). The valuation conclusion on buildings and structures is made through on-site survey without any testing instrument aid and assuming that the relevant construction information provided by the appraised entity is true and valid.

(VII) Others

The appraised entity had 10 real estates in the process of application for real estate ownership certificates as of the valuation base date and obtained the real estate ownership certificates on 20 January 2017. Please refer to the valuation schedule for details.
The appraised entity had 3 utility model patents under examination as of the valuation base date and obtained the corresponding certificates after the valuation base date and before the issue date of this report. Details of which are set out below:

			Status of application			Status of
		Application			Type of	patent
No.	Application No.	Date	Name of invention	Applicant	patent	protection
1	201620526213.2	2016/5/27	A simple and efficient device for	CNBM (Hefei)	Utility model	Granted on 7
			rapid moving of water bags at	New Energy		December
			the neck of glass furnace (一	C o m p a n y		2016
			種簡便高效的玻璃窯爐卡脖	Limited*
			水包快速移動裝置)
2	201620526288.0	2016/5/27	A device for counting defects of		Utility model	Granted on 18
			high transparent glass used in			January 2017
			solar photovoltaic panels (用
			於統計太陽能光伏用高透玻
			璃缺陷數量的記數裝置)

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			Status of application			Status of
		Application			Type of	patent
No.	Application No.	Date	Name of invention	Applicant	patent	protection
3	201620500263.3	2016/5/23	A new type of wedge-shaped		Utility model	Granted on 7
			device used as sidewalk bricks			December
			for rolled production (一種新			2016
			型楔形壓延生產擋邊磚裝置)

Pursuant to the “Notice on the Relevant Policies on the Abolition and Regulation of Certain Administrative Fees (關於清理規範一批行政事業性收費有關政策的通知)” (Cai Shui [2017] No. 20), from 1 April 2017 onwards, the administrative fees in relation to termite control charges have been abolished. The effects of such post-period changes were taken into consideration in this valuation.
Pursuant to the “Notice on the Relevant Policies on the Cancellation, Adjustment of Certain Governmental Funds (關於取消、調整部分政府性基金有關政策的通知)” (Cai Shui [2017] No. 18), from 1 April 2017 onwards, the special fund for modern wall materials has been cancelled. The effects of such post-period change were taken into consideration in this valuation.

Beijing Pan-China Assets Appraisal Co., Ltd. Asset valuers: Dong Yulu (董雨露), Qin Xianghong (秦向紅)

10 April 2017

Contact method for Beijing Pan-China Assets Appraisal Co., Ltd.: Address: 23F, Yuetan Building, No. 2 Yuetan North Street, Xi Cheng District, Beijing Telephone number: (8610) 6808 3972 Fax: (8610) 6808 1109

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APPENDIX I(B) – SUMMARY OF THE VALUATION REPORT OF TONGCHENG NEW ENERGY

The following is an English translation of the summary of the valuation report in respect of Tongcheng New Energy, which is prepared by the Valuer, Beijing PanChina Assets Appraisal Co., Ltd. (“ Beijing Pan-China ”), for the purpose of inclusion in this announcement. Such report is prepared in Chinese and this English translation is provided for your reference only.

Beijing Pan-China holds the PRC domestic assets appraisal qualification jointly granted by the China Securities Regulatory Commission and the Ministry of Finance of the PRC.

Unless otherwise stated, the figures contained in this report are denominated in Renminbi.

SUMMARY OF VALUATION REPORT

Valuation report in relation to the entire equity interests in CNBM (Tongcheng) New Energy Company Limited involved in the proposed significant assets restructuring and issuance of shares for the acquisition of assets and fund raising by Luoyang Glass Company Limited

Tianxing Ping Bao Zi (2016) No. 1275

I. VALUATION SUBJECT

The appraised entity is the entire equity interests in CNBM (Tongcheng) New Energy Company Limited* as at the valuation base date.

II. VALUATION SCOPE

The entire assets of CNBM (Tongcheng) New Energy Company Limited*, including all assets and relevant liabilities.

III. TYPE OF VALUE

The type of value under this valuation is market value.

IV. VALUATION BASE DATE

The valuation base date is 31 October 2016.

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V. VALUATION ASSUMPTIONS

(I) General assumptions:

Transaction assumption: all assets to be valued are assumed to be in the transaction process and valuers conduct the valuation according to simulated market conditions such as transaction conditions of the assets to be valued.
Open market assumption: open market assumption is an assumption about conditions of a market into which assets are proposed to be entered and effects of such market conditions on assets. An open market means a well-developed, comprehensive and competitive market with willing buyers and willing sellers acting voluntarily and rationally at arms’ length, having sufficient opportunities and time to obtain market information and under no compulsion or restrictions to buy or sell.
Continuous use assumption: continuous use assumption is an assumption made on the conditions of the market where the assets are intended to enter into as well as the status of the assets in such market conditions. It is first assumed that the assets to be appraised are in use, and it is further assumed that the assets that are in use will be used continuously. Under continuous use assumption, no consideration is given to the conversion of the use of the assets or utilisation of the assets under the best condition. Thus, the valuation results are subject to a restricted scope of applicability.
Going concern assumption: it is an assumption made by taking the whole assets of an enterprise as the appraised entity. In this way, the enterprise operates continually in pursuit of its operation objective under its external environment as the main operating entity. The management of the enterprise is responsible for and capable of taking responsibility. The enterprise operates legally and makes appropriate profits to maintain the capability of going concern.

(II) Valuation assumptions under the income approach:

There is no significant change in the relevant existing laws, regulations and policies of the country, or in the macroeconomic conditions of the country. There is no significant change in the political, economic and social environment in which the parties to this transaction are situated, and there are no material adverse impacts arising from other unforeseeable factors or force majenre.

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Assuming the company to operate as a going concern based on the actual status of the assets as at the valuation base date.
Assuming the management of the company to be responsible and have the capability to take on their duties.
Assuming the company to comply with all related laws and regulations unless otherwise stated.
Assuming the accounting policy to be adopted by the company in the future to be fundamentally consistent in all material aspects with the one adopted when compiling the valuation report.
Assuming the company to maintain the existing business scope and mode on the basis of the present management mode and level.
There will be no material changes to the interest rates, exchange rates, tax bases, tax rates and policy charges.
There will be no material adverse impacts on the enterprise arising from other force majeure or unforeseeable factors.
Assuming the estimated annual cash flows of the company to be generated during the period.
Assuming the products and services of the enterprise maintain existing competition status in the market subsequent to the valuation base date.
Assuming the Notice on “1+3+8” Policy System(Trial) for Fostering Industry Development in Tongcheng issued by the Tongcheng Municipal People’s Government (桐城市人民政府關於印發桐城市扶持產業發展「1+3+8」政策體系（試行）的通知)” (Tong Zheng Fa [2016] No. 42) in the file of the Tongcheng Municipal People’s Government and its policy for refund of land use tax will continue to be in force, the appraised entity is able to enjoy the refund of land use tax on a perpetual basis.

VI. VALUATION METHOD

(I) Selection of valuation methods

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The income approach is based on the expected utility theory of economics. In other words, from the perspective of the investors, the enterprise value lies in the future income expected to be generated for the enterprise. Despite the absence of the direct use of comparable in the actual market for stating the prevailing fair market value of the appraised entity, the income approach assesses the value of an asset by its expected profitability, which is the essential basis for determining the prevailing fair market value of the asset. As such, it can completely reflect the overall value of an enterprise and its valuation conclusion is more reliable and convincing. From the perspective of applicable conditions, since the enterprise is profitable in its own right and the management of the appraised entity has provided the profit forecast for the future years, according to the historical operating data of the enterprise and the internal and external operating environment, the future level of profit of the enterprise can be reasonably forecasted. In addition, the risk of future income can be reasonably quantified. Therefore, the income approach has been adopted in this valuation.

Accordingly, the asset-based approach and the income approach have been selected for this valuation.

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(II) Introduction of the Specific Valuation Methods

I) Asset-based Approach

1. Valuation of Current Assets and Liabilities

Current assets of the appraised entity include cash and cash equivalent, notes receivable, accounts receivable, prepayments, other receivables, inventories, and other current assets; while liabilities include short term borrowings, notes payable, accounts payable, receipts in advance, staff remuneration payable, tax payable, interest payable, and other payables.

(A) Cash and cash equivalent: it includes cash on hand, bank deposits. The appraised value of which was determined as the verified book value which was arrived at after checking cash inventory and the verification of bank reconciliation statements, bank confirmations.
(B) Notes receivable: notes receivable refer to the bills received by enterprises for selling products or rendering services, etc. All notes receivable in the scope of valuation are bankers’ acceptance. For notes receivable, the valuer checked the book records and the register of notes receivable, and took inventories of and verified the notes receivable. Corresponding sales contracts and delivery orders (shipping orders) as well as other original records were also checked for certain notes receivable of large amount. The appraised value was then determined at the verified book value after verification.

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(C) Accounts receivable and other receivables: the appraised value shall be determined based on the recoverable amount of each account receivable provided that the amount of each of the accounts receivable is duly verified. If there is a good reason to believe that all the amount can be recovered, the appraised value shall be calculated at the total amount of all accounts receivable; for the partial amount which is probably irrecoverable, in the event that it is difficult to confirm the amount of irrecoverable receivables, historical information and on-site investigation are used to provide details of the situation, specifically analyze the amount, time and reasons of loans, recovery of the amounts, as well as the debtor’s capital, credit and current situation of operating management to estimate the partial amount which is probably irrecoverable in accordance with the aging analysis method as the appraised value calculated after deduction of the loss from risk; with regard to those which have conclusive evidences proving that the receivable cannot be recovered, the appraised value will be nil. The provision for bad debts on the accounts shall be accounted for as zero.
(D) Prepayments: the appraised value shall be determined based on the value of assets or rights from corresponding goods that can be recovered. For recoverable goods or rights, the verified book value is taken as the appraised value. Where there is conclusive evidence that the corresponding goods cannot be recovered, or the corresponding assets or interests cannot be formed, the appraised value of such prepayments will be nil.
(E) Inventories

Purchased inventories: mainly include raw materials and turnover materials. For the purchased inventories with short inventory period, high marketability and stable market price, the verified book value is taken as the appraised value; for the purchased inventories with long inventory period, low marketability and fluctuating market price, the appraised value shall be determined at the prevailing price in the public market on the valuation base date plus any normal purchase cost.

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Finished goods: valuation methods applicable for finished goods include cost approach and market approach, whereas this valuation adopted the market approach. By market method, finished goods are valued by reference to their total costs plus the likely amount of profits to be arising from their sales, or the finished goods are valued below cost, depending on the market conditions of the particular finished goods. For fast moving products, appraised values were determined according to their factory selling price less operating expenses and all taxes; for products with normal sales, appraised values were determined according to their factory selling price less operating expenses, all taxes and appropriate amounts of net profit after tax; for products with poor marketability, appraised values are determined according to their factory selling price less operating expenses, all taxes and net profit after tax; for products that are slow-moving, overstocked and sold with discounts, the appraised values shall be determined according to their net realizable values.

Goods in process: after the verification, the carrying-forward of the costs of goods in process which is accounted for at the actual costs (comprising raw materials for production, manufacture cost, auxiliary material and labor cost and other costs), was timely and complete with accurate amounts, and the production cycle was short. Valuers are of opinion that, as the book value of the goods in process is basically able to reflect its present value upon verifying the composition of its cost and the accounting situation, the book value after verification is recognised as the appraised value.

(F) Other current assets: on the basis of verifying correctness, the valuers verified the company’s tax forms by checking the tax types, tax rates, tax amounts and payment rates applicable to the enterprise, and ascertained the correctness and truthfulness of the amounts declared by reviewing the tax vouchers. As verified, the tax amounts are consistent with those declared. Therefore, the book value after verification is recognised as the appraised value.
(G) Liabilities: the appraised value of liabilities shall be determined based on the liability items and amounts actually to be assumed by the appraised entities (realized based on the valuation purpose) provided that such liabilities were duly checked and verified. Those liability items not actually to be assumed shall be calculated as zero.

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2. Valuation of buildings and structures

= Appraised value full replacement price (tax exclusive) × newness rate

(1) Full replacement price (tax exclusive)

Full replacement = construction and installation cost + price (tax preliminary cost and other cost + capital exclusive) cost – value-added tax deductible

A. Construction and installation cost

As for buildings and structures with higher value, the valuers select typical projects in accordance with the specific conditions of the appraised buildings and collect information including final account for completion, completion acceptance, and construction drawings of the typical projects to verify the construction workload. Cost of civil projects and various installation costs, and in turn the total construction and installation cost are calculated under the local quota standard and relevant charging document. The construction and installation cost for low-valued and simple buildings and structures is calculated by the per-square-meter cost method. For buildings lacking final accounts for completion or other information, the construction and installation cost is calculated through the re-budgeting method or the comparison approach to adjust and confirm the direct expenses. The construction cost of each of the major and typical buildings as at valuation base date is calculated in accordance with the quota and relevant charging standards in the project budget report issued by Bengbu Design & Research Institute for Glass Industry*, 2009 Pricing Quota and Consolidated Unit Price for Construction, Decoration and Installation Project of Anhui Province (Commonly-Used Handbook)” (2009「安徽省建築、裝飾裝修工程及安裝工程（常用冊)」計價定額綜合單價), Notice on the Adjustment of the Prevailing Basis of Computing Prices in Anhui Province to Implement Valueadded Tax and to Replace Business Tax in the Construction Industry (《關於建築業營業稅改增值稅調整我省現行計依據的通知》) (Jian Biao [2016] No. 67), Zao Jia [2016] No. 11 Implementation Opinion on the Adjustment of the

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Prevailing Basis of Computing Prices to Implement Valueadded Tax and to Replace Business Tax (關於營業稅改徵增值稅調整現行計價依據的實施意見) issued by Department of Housing and Urban-Rural Development of Anhui Province and Information on Construction Project Cost of Anqing (安慶市建設工程造價信息) on the valuation base date as well as the price adjustment documents and market price of various materials.

B. Preliminary cost and construction-related expenses

C. Capital cost

= Capital cost (construction and installation cost + preliminary cost and other cost) × reasonable construction period × loan interest × 50%

D. Value-added tax deductible

Value-added tax = total construction and installation deductible cost/1.11 × 11% + preliminary cost (other than management cost of the contractor)/1.06 × 6%

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(2) Determination of Newness rate

Calculation formula:

Newness rate = inspected newness rate × 0.6 + theoretical newness rate × 0.4

Inspected newness rate

Calculation of theoretical newness rate

Theoretical = (1 – life in use/economic useful life) × newness rate 100%

(3) Determination of appraised value

= Appraised value full replacement price × newness rate

3. Valuation of assets in the equipment class

Valuation of machineries and equipment mainly adopts the cost method, which is used to determine the appraised value of machineries and equipment through estimating the updated replacement cost of brand new machineries and equipment, with the deduction of the actual depreciation, functional depreciation, and economic depreciation or on the basis of its determined comprehensive newness rate. The calculation formula adopted in the valuation is as follows:

= Appraised value full replacement price × newness rate

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(1) Determination of full replacement price
A. Self-made equipment and non-standard equipment

B. Equipment purchased

– 63 –

a. Determination of purchase price of equipment

b. Determination of transportation and miscellaneous cost

c. Determination of installation and testing cost

For small-sized equipment not requiring installation, the installation and testing cost shall not be considered.

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d. Other costs of project construction

e. Capital cost
=
Capital cost equipment replacement costs × reasonable construction period (year) × loan interest rate per annum × 1/2

According to the scale of this project, the reasonable construction period is determined as two years.

C. Vehicles

The prices of vehicles as at the valuation base date are determined by making reference to recent vehicle market price information including market and online information on vehicles. On such basis, capitalized expenses including vehicle purchase tax and license fees will be calculated according to the “Interim Regulations on purchase tax of vehicles of the People’s Republic of China (《中華人民共和國車輛購置稅暫行條例》)” and the provisions of the relevant local departments, in order to determine the replacement costs:

Replacement cost

= current purchase price (tax exclusive) + vehicle purchase tax + license fees = Current purchase price (tax inclusive)/ (1 + 17%) × (1 + 10%) + license fees

Where: 10% represents the tax rate of vehicle purchase tax, and 17% represents the tax rate of value-added tax (VAT).

① Determination of vehicle purchase price: the determination is made by making reference to the market prices of the latest transactions of comparable models of vehicles in places where the vehicles are located. Other costs are determined in accordance with the standards for fees charged by the management department of vehicles.

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② Determination of vehicle purchase tax: the determination is made according to the relevant provisions of the Notice of the State Administration of Taxation, Ministry of Finance and People’s Bank of China on Relevant Issues Concerning the Administration of Collection of Vehicle Purchase Tax (Guo Shui Fa [2009] No. 127) (《國家稅務總局財政部中國人民銀行關於車輛購置稅徵繳管理有關問題的通知》(國稅發[2009])127號文).

Vehicle purchase tax = taxable price × 10%

Of which the taxable price does not include VAT price.

③ Determination of license fees: The determination is made according to the relevant provisions of the places where the vehicles are located, and on the basis of the substance and amount of such expenses.

(2) Valuation of newness rate

The comprehensive newness rate is appraised by way of the technically assessed grading approach in combination with the theoretical newness rate determined using service life approach.

A. Major production equipment and large-scale equipment

Newness rate = (economic service life – serviced life)/ determined economic service life × 100% using service life approach

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Newness rate = newness rate under the service life approach × 40% + newness rate under the technically assessed approach × 60%
B. The theoretical newness rate for ancillary equipment and electronic equipment with lower value is mainly determined using the service life approach, based on which adjustments are then made according to the utilization rate, loading, maintenance and service as well as original manufacturing quality of the equipment.

Theoretical = (economic service life – serviced life)/ newness rate economic service life ×100%.

C. Vehicles

In accordance with the Provisions on the Standards for Compulsory Retirement of Motor Vehicles (《機動車強制報廢標準規定》) with effect from 1 May 2013, some motor vehicles are subject to compulsory retirement standards in service life and recommended retirement standards in driving mileage, while the compulsory retirement regulation in service life was cancelled for certain motor vehicles, for which there is no limitation on service life.

Newness rate = (1 – serviced life ÷ economic service under the life) ×100% service life approach = Mileage-based (1 – mileage travelled ÷ mandatory newness rate driving mileage) ×100%

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Newness rate

= Min (Newness rate under the service life approach, Mileage-based newness rate)

4. Valuation of the project under construction

The project under construction-equipment installation project within the scope of valuation represents the equipment of the testing center under construction. As at the valuation base date, it referred to certain payments for equipment prepaid by the enterprise. Upon verification, it is less than half year from its commencement date to the valuation base date. According to the reported amount for the project under construction and upon checking the account and the physical assets, the verified book value is adopted as the appraised value, after confirming that there is no duplicate calculation between the project under construction and the associated asset items.

5. Valuation of land use right

The approach applicable for valuation of the land use right of the valuation target is selected upon analysis according to the features and specific conditions of the valuation target and actual conditions of the project, in accordance with the “Regulations for Valuation of Urban Lands (《城鎮土地估價規程》)” and in view of the land market in the regions where the valuation target is located and the relevant information gathered by the land valuers.

As there are recent transaction cases in the market of the region where the land parcel entrusted for valuation is located, the market comparison approach can be adopted for valuation.

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In view of the above, the market comparison approach and cost approximation approach are adopted for the valuation.

6. Valuation of intangible assets – patented and proprietary technologies

(1) Externally purchased intangible assets

For externally purchased intangible assets, the valuers learned about the main functions and features of the above intangible assets, verified the purchase contracts, invoices, payment vouchers and other information of the intangible assets, and made inquiries to the software suppliers. The contracts, invoices and title documents of the software intangible assets are complete and there is no title dispute.

For the software purchased externally which was available on the market and without upgrade version as at the valuation base date, its appraised value was determined based on the market price of the software of the same type on the valuation base date. For the software purchased externally which is available on the market but in the form of an upgraded version, its appraised value is determined by deducting the software upgrade cost from the prevailing market price.

(2) Non-patented technology, patents and others

The valuation methods for patented technology mainly include the market approach, cost approach and income approach.

The market approach is a common and effective method for countries and regions with relatively developed technological and capital markets. Under this valuation approach, the same or similar patented and proprietary technologies in the market are selected as references, and comparison and adjustment are made in relation to the price difference between the patented and proprietary technologies with the references through analogy of various factors affecting the value such as the functions of the patented and proprietary technologies. By analyzing the results of various adjustments, the value of the patented and proprietary technologies was determined.

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The market approach is used to valuate patented and proprietary technologies on the condition that the relatively public market data and the comparable references are available, and such references have clear influential factors on value which can be quantified. Functional analogy method is largely used in the market approach. As China’s patented and proprietary technologies market is still under development at present, the environment for protection of such technologies is also less regulated. Meanwhile, the piracies of products based on patented and proprietary technologies make it relatively difficult to collect fair transaction data of such products. Therefore, it is rather difficult to apply the market approach in the valuation of patented and proprietary technologies in China at present.

The present earning value approach is the most common method for the valuation of technological intangible assets. As the technological development itself is the investment for the future, its value is finally presented by the future return. The key of present earning value approach is to define the future earnings generated from the technology entrusted for valuation, which is usually conducted through earning sharing approach. In the application of earning sharing approach, there are two kinds of specific calculation methods, namely the net earning sharing approach and sales revenue sharing approach, with reference to the matching relation between the sharing base and sharing ratio in the international trade. Upon the comprehensive analysis, the

– 70 –

sales revenue sharing approach was adopted for the valuation of the technologies of CNBM (Tongcheng) New Energy Company Limited* to calculate the appraised value of appraised entity for the following reasons:

The technology royalty is usually calculated based on sales revenue of products produced using the technology in a technology contract. As the sales revenue is based on the sales contract and evidenced by the sales invoice, it is easier to be verified, while the accounting profit is determined based on the revenue net of various costs and taxes. The reasonableness of various costs is controlled by the technology implementing party with a relatively complicated process of calculation, which can easily cause disputes between the technology owners and licensed implementing party, thus adding the cost of verification.

Moreover, the valuers are of the view that the achievement of technological results is conditional on the input of these technological development expenses. Such research and development investment may fall within the definition of assets during asset valuation of technological results. The technological development is a creative activity and there is a great uncertainty as to whether it succeeds, which usually generate a weak correspondence between the technological results and technological investment.

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profit brought about to the enterprise by application of relevant technology to a certain extent. However, in respect of the value of technology itself, it is not proportional to the profit of enterprise. Therefore, another method, namely sales revenue sharing approach, is usually more commonly used in the practice. On the one hand, the selling price or sales revenue is comparatively more public information which can be easily accessed; on the other hand and more importantly, the selling price covers cost and profit and represents a comprehensive value category. Therefore, this method is more commonly used in the technological asset valuation by virtue of its widely-accepted reasonableness and feasibility.

The process of the earning sharing approach in this valuation is as follows: firstly, to forecast the sales revenue generated each year by the technological products produced using the technology entrusted for valuation within the economic life of technology in future; then to multiply an appropriate technology sharing ratio of the technology entrusted for valuation in the sales revenue; and thirdly, to discount the revenue share each year with an appropriate opportunity cost of capital (being the discount rate), the sum of the present value generated accordingly serves as the appraised present value of the technology entrusted for valuation. Its basic formula is as follow:

Of which: P – Appraised value of intangible assets

K – Sharing ratio of sales revenue of intangible assets Ri – Sales revenue of the technological products for the phase i

n – term of the earning

r – discount rate

7. Valuation of deferred income tax assets

Deferred income tax assets are recognized by the enterprise based on the calculation results of the temporary difference and the applicable income tax rate. The accounting content includes a deductible temporary difference arising from the book value of assets which is lower than its tax base. The valuers investigated and learned about the reasons and generation of such difference. For those generated due to provision for bad debts of receivables, the appraised value is determined based on the re-verified and calculated amount.

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8. Valuation of other non-current assets

The valuers have reviewed the relevant contracts and bookkeeping vouchers and confirmed the authenticity of other non-current assets and the truthfulness and accuracy of the carrying amounts. The appraised value was determined in accordance with the book value thereof.

II) INCOME APPROACH

1. Valuation model

DCF approach has been adopted for this valuation, i.e. the free cashflow of the entity is the quantitative indicator for the enterprise’s expected income, and the corresponding Weighted Average Cost of Capital (WACC) model has been adopted for calculating the discount rate.

2. Calculation formula

E = V – D Formula 1 V = P + C1 + C2 + E[’] Formula 2

In the above formulas:

E: Value of the entire equity interests;
V: Value of entity;
D: Appraised value of interest-bearing liabilities;
P: Appraised value of operating assets;
C1: Appraised value of surplus assets;
C2: Appraised value of non-operating assets; E’: Appraised value of long-term equity investment.

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In which, P, the appraised value of operating assets in Formula 2, is calculated with the formula as follows:

==> picture [372 x 32] intentionally omitted <==

The first half of the above formula is the value of explicit forecast period while the other half is the value of perpetual period (final value)

In Formula 3:

Rt: Free cashflow of entity of the t-th explicit forecast period;

t: Number of explicit forecast period 1, 2, 3,..., n;

r: Discount rate;
Rn+1: Free cashflow of entity in perpetual period;
g: Growth rate of perpetual period, g = 0 in this valuation;
n: The last year of explicit forecast period.

3. Determination of income period

4. Determination of expected income

Free cashflow of entity is taken as the quantitative indicator of the expected income of the entity in this valuation.

Free cashflow of = net profit after tax + depreciation and entity amortisation + interest expense × (1 – tax rate T) – capital expenditure – working capital movement

– 74 –

5. Determination of discount rate

6. Determination of value of interest-bearing liabilities

The interest-bearing liabilities include long-term and short-term borrowings of the enterprise, which are determined based on the market value.

7. Determination of value of surplus assets and non-operating assets

Surplus assets refer to assets that are not directly related to the income of the enterprise and in excess of the amount needed to operate such enterprise, which generally refer to excess cash and cash equivalent and financial assets held for trading, etc. Non-operating assets refer to assets that are not directly related to the income of the enterprise and not profit-generating. Separate valuation is carried out for such assets.

VII. BASIS OF VALUATION

A. Basis of economic activities

The documents of the board of directors of China National Building Materials Group Corporation, “the Resolutions of the Fifth Meeting of the First Session of the Board of Directors of China National Building Materials Group Corporation” (CNBMG Yi Dong Hui Jue Zi No. 05)
The resolutions of the General Manager’s Work Meeting of Triumph Technology Group Company* dated 6 January 2017
The resolutions of the 34th meeting of the second session of Board of Directors of China Luoyang Float Glass (Group) Company Limited* held in November 2016

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The minutes of the 22nd meeting of eighth session of the Board of Directors of Luoyang Glass Company Limited*
The documents of China National Building Materials Corporation, “the Reply on Approval of Transfer of 7.5% equity interest in CNBM (Tongcheng) New Energy Company Limited by China Triumph International Engineering Co., Ltd.” (CNBM Tou Fa (2016) No. 644)
The minutes of the 29th meeting of the second session of Board of Directors of Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd.
The minutes of the ninth meeting of Bengbu Design & Research Institute for Glass Industry* in 2016.

B. Basis of laws and regulations

Law of the People’s Republic of China on the State-Owned Assets of Enterprises (《中華人民共和國企業國有資產法》);
Asset Appraisal Law of the People’s Republic of China (Presidential Decree No.46 passed by the 12th Session of Standing Committee of the National People’s Congress) (《中華人民共和國資產評估法》(主席令 12屆第46號));
Company Law of the People’s Republic of China (《中華人民共和國公司法》);
Securities Law of the People’s Republic of China (《中華人民共和國證券法》);
Property Law of the People’s Republic of China (《中華人民共和國物權法》);
Urban Real Estate Administration Law of the People’s Republic of China (《中華人民共和國城市房地產管理法》);
Enterprise Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法》);
Administrative Measures for Assessment of State-owned Assets (State Council Decree [1991] No. 91)(《國有資產評估管理辦法》(國務院 1991年91號令));

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Detailed Rules for the Implementation of the Administrative Measures for State-Owned Assets Assessment (Guo Zi Ban Fa [1992] No. 36) ( 《國有資產評估管理辦法實施細則》 ( 國資辦發 [1992] 第 36 號 )) issued by the former State Administration of State-owned Assets;
Circular in Relation to the Opinions on Reforming the Administration and Management of Appraisal of State-owned Assets and Strengthening the Supervision and Management of Asset Appraisal (Guo Ban Fa [2001] No. 102) (《關於改革國有資產評估行政管理方式加強資產評估監督管理工作意見的通知》(國辦發[2001]102號));
Rules on Certain Issues Relating to the Appraisal of State-owned Assets (No. 14 Order from Ministry of Finance) (《國有資產評估管理若干問題的規定》(財政部第14號令));
Interim Regulation on the Supervision and Administration of Stateowned Assets of Enterprises (2003 No. 378 Order from State Council) (《企業國有資產監督管理暫行條例》(國務院2003年378號令));
Interim Measures for Management of the Transfer of the State-owned Property Right of Enterprises (2003 No. 3 Order from SASAC and the Ministry of Finance) (《企業國有產權轉讓管理暫行辦法》(2003年國資委、財政部第3號令));
Interim Administration Measures of Assessment of State-owned Assets of Enterprises (No.12 Order from SASAC of the State Council 2005) (《企業國有資產評估管理暫行辦法》(2005年國務院國資委第12號令));
Notice on Issues concerning the Strengthening Management of Evaluation of State-Owned Assets in Enterprises (Guo Zi Wei Chan Quan [2006] No. 274) (《關於加強企業國有資產評估管理工作有關問題的通知》(國資委產權[2006]274號));
Notice on Issues concerning the Audit of Valuation Report for Stateowned Assets of Enterprises (Guo Zi Chan Quan [2009] No. 941) (《關於企業國有資產評估報告審核工作有關事項的通知》 ( 國資產權 [2009]941號));
Guidelines for the Filing for Recordation of the Valuation Projects of State-owned Assets of Enterprises (Guo Zi Fa Chan Quan [2013] No. 64) (《企業國有資產評估項目備案工作指引》(國資發產權[2013]64 號));

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Administrative Measures on Significant Assets Restructuring of Listed Companies (Order No. 109 of the China Securities Regulatory Commission) (《上市公司重大資產重組管理辦法》(中國證券監督管理委員會第109號令))；
Regulations for the Implementation of the Land Administration Law of the People’s Republic of China (《中華人民共和國土地管理法實施條例》);
Provisional Regulations on Urban Land Use Tax of the People’s Republic of China(《中華人民共和國城鎮土地使用稅暫行條例》);
Regulations for the Implementation of the Enterprise Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法實施條例》);
Provisional Regulations on Value-added Tax of the People’s Republic of China (《中華人民共和國增值稅暫行條例》);
Regulations for the Implementation of the Provisional Regulations on Value-added Tax of the People’s Republic of China (《中華人民共和國增值稅暫行條例實施細則》);
Other relevant laws and regulations.

C. Basis of valuation standards

Asset Valuation Standards – Basic Standards (Cai Qi [2004] No. 20) (《資產評估準則－基本準則》(財企[2004]20號));
Asset Valuation Professional Ethical Standards – Basic Standards (Cai Qi [2004] No. 20) (《資產評估職業道德準則－基本準則》(財企 [2004]20號));
Asset Valuation Professional Ethical Standards – Independence (Zhong Ping Xie [2012] No. 248) (《資產評估職業道德準則－獨立性》(中評協[2012]248號));
Asset Valuation Standards – Valuation Report (Zhong Ping Xie [2011] No. 230) (《資產評估準則－評估報告》(中評協[2011]230號));
Asset Valuation Standards – Valuation Procedures (Zhong Ping Xie [2011] No. 230)(《資產評估準則－評估程序》(中評協[2011]230號));

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Asset Valuation Standards –Engagement Letter (Zhong Ping Xie [2011] No. 230)(《資產評估準則－業務約定書》(中評協[2011]230號));
Asset Valuation Standards – Working Papers (Zhong Ping Xie [2011] No. 230) (《資產評估準則－工作底稿》(中評協[2011]230號));
Asset Valuation Standards – Real Estate (Zhong Ping Xie [2011] No. 230) (《資產評估準則－不動產》(中評協[2011]230號));
Asset Valuation Standards – Machinery and Equipment (Zhong Ping Xie [2011] No. 230) (《資產評估準則－機器設備》(中評協[2011]230 號));
Asset Valuation Standards – Intangible Assets (Zhong Ping Xie [2008] No. 217) (《資產評估準則－無形資產》(中評協[2008]217號));
Asset Valuation Standards – Enterprise Value (Zhong Ping Xie [2011] No. 227) (《資產評估準則－企業價值》(中評協[2011]227號));
Asset Valuation Standards – Using Experts to Work (Zhong Ping Xie [2012] No. 244) (《資產評估準則－利用專家工作》(中評協 [2012]244號));
The Guiding Opinions on Types of Value in Asset Valuation (Zhong Ping Xie [2011] No. 230) (《資產評估價值類型指導意見》(中評協 [2011]230號));
Guiding Opinions on Attention of Certified Public Valuers on Legal Ownership of Appraised Entity (Kuai Xie [2003] No. 18) (《資產評估師關注評估對象法律權屬指導意見》(會協[2003]18號));
Guiding Opinions on Patent Asset Appraisal (Zhong Ping Xie [2008] No. 217)(《專利資產評估指導意見》(中評協[2008]217號));
Experts Operation Tips for Asset Assessment-Report Disclosure for Assessment of Significant Assets Restructuring of Listed Companies (Zhong Ping Xie [2012] No. 246)(《資產評估操作專家提示－上市公。

司重大資產重組評估報告披露》(中評協[2012]246 號))

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D. Basis of asset ownership

Business licenses for the legal entity, articles of association;
Real estate ownership certificates;
Grant contracts of land use right;
Construction land planning permits, construction works planning permits and construction works commencement permits;
Motor vehicles license and registration certificate;
Contracts and invoices for acquisition of major equipment as well as relevant agreements, contracts and other documents;
Patent certificates;
Other ownership documents.

E. Basis for price selection in the valuation

The asset valuation declaration sheet and income forecast statement provided by the appraised entities;
Regulations on the Administration of Charging of Construction Survey and Design Fees (Ji Jia Ge (2002) No. 10 document from the State Planning Commission and Ministry of Construction) (《工程勘察設計收費管理規定》(國家計委、建設部計價格(2002)10號文));
Circular of the Ministry of Finance on Issuing “Regulations on Financial Administration of Basic Construction” (Cai Jian [2002] No. 394)(《財政部關於印發〈基本建設財務管理規定〉的通知》(財建 [2002]394號));
Circular of the National Development and Reform Commission and the Ministry of Construction on “Regulations on the Administration of Construction Projects Supervision and Charging of Related Service Fees” (Fa Gai Jia Ge [2007] No. 670) (《國家發展改革委、建設部關於〈建設工程監理與相關服務收費管理規定〉的通知》(發改價格 [2007]670號));

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Circular of the State Planning Commission on Issuing “Interim Regulations on the Charging Administration of Bidding Agency Services” (Ji Jia Ge [2002] No. 1980)(《國家計委關於印發〈招標代理服務收費管理暫行辦法〉的通知》(計價格[2002]1980號));
Circular of the State Planning Commission on Issuing “Interim Regulations on the Consultation Fees for Preliminary Works of Construction Projects” (Ji Jia Ge [1999] 1283)(《國家計委關於印發〈建設項目前期工作諮詢收費暫行規定〉的通知》 ( 計價格 [1999]1283));
Circular of the State Planning Commission and State Administration of Environmental Protection on “Issues concerning the Regulation of Consultation Fee on Environmental Impact” (Ji Jia Ge [2002] No. 125) (《國家計委、國家環境保護總局〈關於規範環境影響諮詢收費有關問題〉的通知》(計價格[2002]125號));
Project budget report issued by Bengbu Design & Research Institute for Glass Industry* (蚌埠玻璃工業設計研究院)
Pricing Quota and Consolidated Unit Price for Construction, Decoration and Installation Project of Anhui Province [2009] (《2009年“安徽省建築、裝飾裝修工程及安裝工程(常用冊)”計價定額綜合單價》);
Notice on the Adjustment of the Prevailing Basis of Computing Construction Prices in Anhui Province to Implement Value-added Tax and to Replace Business Tax in the Construction Industry, Jian Biao (2016) No. 67 (安徽省住房城鄉建設廳《關於建築業營業稅改增值稅調整我省現行計依據的通知》(建標[2016]67號));
Implementation Opinion on the Adjustment of the Prevailing Basis of Computing Prices to Implement Value-added Tax and to Replace Business Tax, Zao Jia [2016] No. 11 (造價[2016]11號《關於營業稅改徵增值稅調整現行計價依據的實施意見》);
Information on Construction Project Cost of Anqing (《安慶市建設工程造價信息》) on the valuation base date;
Provisions on the Standards for Compulsory Retirement of Motor Vehicles (Decree [2012] No. 12 issued by Ministry of Commerce, National Development and Reform Commission, Ministry of Public Security, Ministry of Environmental Protection) (《機動車強制報廢標準規定》(商務部、發改委、公安部、環境保護部令2012年第12號));

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Notice of the Ministry of Land and Resources on the Implementation of the “Regulations for Urban Land Gradation and Classification” and the “Regulations for Urban Land Valuation” in Strict Accordance with National Standards (Guo Tu Zi Ting Fa [2015] No. 12) (國土資源部關於嚴格按國家標準實施《城鎮土地分等定級規程》和《城鎮土地估價規程》的通知（國土資廳發[2015]12號))；
Bank deposit and lending benchmark rates and foreign exchange rates on the valuation base date;
Damage Level of Building and Evaluation Standard (Cheng Zhu Zi [1984] No. 678) (《房屋完損等級及評定標準》(城住字[1984]第678 號))；
Manual of Quotation of Electromechanical Products(《機電產品報價手冊》);
Information on budgets and final accounts of relevant construction projects provided by the enterprise;
Statistics of payment progress of project under construction and related evidences of payment provided by the enterprise;
Financial statements, audit reports and other related financial information provided by the enterprise;
Future operation plans, profit forecast and other information provided by the enterprise;
Information provided by the enterprise such as feasibility study report of projects, project investment estimate and design estimate;
Raw material purchase contracts entered into between the enterprise and relevant companies;
Engineering contracts entered into between the enterprises and relevant companies;
Other related valuation information recorded and collected by valuers from on-site survey;
Other information related to this asset valuation;

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The primal accounting statements, information in the aspect of financial accounting management, as well as financial information including the relevant agreements, contracts and invoices which are provided by the appraised entity;
The statistics, technical standards information as well as price information released by the State’s relevant departments, together with the relevant price inquiry information and price determination parameter data collected by our company.

VIII. VALUATION CONCLUSION

(I) Valuation conclusion based on the asset-based approach

On the premises of the going concern assumption as at the valuation base date, upon valuation based on the asset-based approach, the book value and the appraised value of total assets of CNBM (Tongcheng) New Energy Company Limited* were RMB472,687,100 and RMB471,959,000, respectively, representing a depreciation of RMB728,100 or 0.15%; the book value and the appraised value of its liabilities were RMB262,597,100 and RMB262,597,100, respectively, without any movements; and the book value and the appraised value of its net assets were RMB210,090,000 and RMB209,361,900, respectively, representing a depreciation of RMB728,100 or 0.35%.

The summary of valuation results is set out below:

Summary of Valuation Results based on the Asset-Based Approach

Unit: RMB0,000

Item Current assets Non-current assets Including: Fixed assets Project under construction Intangible assets Others Total assets	Book value 15,614.91 31,653.80 26,187.81 107.41 5,280.12 78.46 47,268.71	Appraised value Appreciation/ depreciation 15,745.82 130.91 31,450.08 -203.72 25,059.72 -1,128.09 107.41 – 6,204.49 924.37 78.46 – 47,195.90 -72.81	Appreciation rate % 0.84 -0.64 -4.31 – 17.51 – -0.15

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Item Current liabilities Non-current liabilities Total liabilities Net assets	Book value 26,259.71 – 26,259.71 21,009.00	Appraised value Appreciation/ depreciation 26,259.71 – – – 26,259.71 – 20,936.19 -72.81	Appreciation rate % – – -0.35

Note: For detailed information of the valuation results, please refer to the statement of asset valuation.

(II) The valuation results based on the income approach

Upon valuation based on the income approach, the value of the entire equity interest in CNBM (Tongcheng) New Energy Company Limited* was RMB221,651,100, representing an appreciation of RMB11,561,100 or 5.50%.

(III) Finalization of the valuation results

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We believe that the asset value is normally not based on the costs for re- acquisition and re-construction of such assets but the expectation for future income by market participants. Upon investigation on the financial position of the appraised entity and analysis on the operation situation, and considering the appraised entity, valuation purpose and applicable value types, the valuers, after comparison and analysis, are of opinion that the valuation conclusion based on the income approach can reflect the embedded value of the entity more comprehensively and reasonably. As such, the valuation results arrived at using the income approach were adopted as the final valuation conclusion.

(IV) Finalisation of the valuation results

Upon valuation and under the assumptions of this report, the market value of the entire equity interest in CNBM (Tongcheng) New Energy Company Limited* was RMB221,651,100 (RMB Two Hundred Twenty-one Million, Six Hundred and Fifty-one Thousand and One Hundred) as at 31 October 2016, the valuation base date.

XI. NOTES ON SPECIAL ISSUES

The valuation and estimation of the following issues are beyond the practicing capacity and capability of our company’s valuers. However, these issues may actually affect the valuation conclusion. Thus, users of this valuation report should pay particular attention to the followings:

(I) The “appraised value” referred to herein is a fair valuation presented for the purpose set out expressly herein on the assumption that the assets entrusted for valuation maintain their uses on a going concern basis with conditions and external economic environments on the valuation base date, which shall bear no liability for any other purposes.
(II) The valuation conclusion in the report reflects the fair value of the appraised entity for the purpose of the valuation set out herein under the principle of an open market, and does not include any fees or taxes that shall be borne in the ownership registration or change of such assets or makes no tax adjustments for the value addition of the assets valuation. The valuation conclusion shall not be deemed as a guaranteed realizable price of the appraised entity.
(III) Premiums or discounts caused by factors such as controlling interest and minority interest have not been taken into consideration in the valuation results, nor has the effect of the liquidity of the equity interest entrusted for valuation on the valuation results.

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(IV) Where there are any changes in the number of assets and price standards within the effective term after the valuation base date and up to 30 October 2017, proper adjustments shall be made to the valuation conclusion instead of direct utilisation.
(V) Quotation of the report conclusions issued by other institutions:

The book values of various assets and liabilities as at the valuation base date set out in the valuation report are the audit results from WUYIGE Certified Public Accountants LLP. Save for the above, there is no quotation of report from other institutions.

(VI) Incompleteness or defects in the ownership documents (note) :

CNBM (Tongcheng) New Energy Company Limited* has not yet obtained the building ownership certificate for one real estate included in the valuation scope. In this valuation, the gross floor area of the building based on the construction drawings and the on-site measurement results conducted by the valuers and the asset management staff of the entity were taken as basis of valuation calculation. Upon obtaining the building ownership certificate, the entity shall consider to conduct adjustment to the valuation results according to the floor area recorded in the certificate.

As for the aforesaid issues, the entity has presented a declaration that the ownership are possessed by CNBM (Tongcheng) New Energy Company Limited* without any property rights dispute. Therefore, the valuation was conducted on the premises that the ownership of the relevant building is free from any dispute.

note: According to the PRC legal opinion prepared by a qualified PRC legal adviser Beijing Kang Da Law Firm dated 7 August 2017, which confirmed that despite the building of CNBM (Tongcheng) New Energy Company Limited has not obtained building ownership certificate, CNBM (Tongcheng) New Energy Company Limited enjoys and exercises the actual possession, use and income rights of such building, such that the production and operations of CNBM (Tongcheng) New Energy Company Limited has not been affected by such matter. The PRC legal adviser confirmed that such building is free from third party claims in relation to the rights of possession and there was no dispute happened between CNBM (Tongcheng) New Energy Company Limited and other third parties in this regard. The PRC legal adviser confirmed that such matter will not have a material legal impediment with respect to the significant assets restructuring by Luoyang Glass Company Limited*.

(VII) Limitations on the valuation procedures:

I) In this valuation, the asset valuers did not conduct any technical testing for all kinds of equipment in respect of their technology parameters and performance as at the valuation base date, and only make conclusions through on-site inspection on the assumption that all related technical information and the track records provided by the appraised entity are true and valid.

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II) In this valuation, the asset valuers did not conduct any technical testing for various buildings (structures) in respect of their concealed works and internal structure (other than the observable parts with unaided eyes). The valuation conclusion on buildings and structures is made through on-site survey without any testing instrument aid and assuming that the relevant construction information provided by the appraised entity is true and valid.

(VIII) Others

Pursuant to the “Notice on the Relevant Policies on the Abolition and Regulation of Certain Administrative Fees (關於清理規範一批行政事業性收費有關政策的通知)” (Cai Shui [2017] No. 20), from 1 April 2017 onwards, the administrative fees in relation to termite control charges have been abolished. The effects of such post-period changes were taken into consideration in this valuation.
Pursuant to the “Notice on the Relevant Policies on the Cancellation, Adjustment of Certain Governmental Funds (關於取消、調整部分政府性基金有關政策的通知)” (Cai Shui [2017] No. 18), from 1 April 2017 onwards, the special fund for modern wall materials has been cancelled. The effects of such post-period change were taken into consideration in this valuation.

Beijing Pan-China Assets Appraisal Co., Ltd. Asset valuers: Dong Yulu (董雨露), Qin Xianghong (秦向紅) 10 April 2017

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APPENDIX I(C) – SUMMARY OF THE VALUATION REPORT OF YIXING NEW ENERGY

The following is an English translation of the summary of the valuation report in respect of Yixing New Energy, which is prepared by the Valuer, Beijing Pan-China Assets Appraisal Co., Ltd. (“ Beijing Pan-China ”), for the purpose of inclusion in this announcement. Such report is prepared in Chinese and this English translation is provided for your reference only.

Beijing Pan-China holds the PRC domestic assets appraisal qualification jointly granted by the China Securities Regulatory Commission and the Ministry of Finance of the PRC.

Unless otherwise stated, the figures contained in this report are denominated in Renminbi.

SUMMARY OF VALUATION REPORT

Valuation report in relation to the entire equity interests in

CNBM (Yixing) New Energy Company Limited involved in the proposed significant assets restructuring and issuance of shares for the acquisition of assets and fund raising by Luoyang Glass Company Limited

Tianxing Ping Bao Zi (2016) No. 1274

I. VALUATION SUBJECT

The appraised entity is the entire equity interests in CNBM (Yixing) New Energy Company Limited* as at the valuation base date.

II. VALUATION SCOPE

The entire assets of CNBM (Yixing) New Energy Company Limited*, including all assets and relevant liabilities.

III. TYPE OF VALUE

The type of value under this valuation is market value.

IV. VALUATION BASE DATE

The valuation base date is 31 October 2016.

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V. VALUATION ASSUMPTIONS

(I) General assumptions:

Transaction assumption: all assets to be valued are assumed to be in the transaction process and valuers conduct the valuation according to simulated market conditions such as transaction conditions of the assets to be valued.
Open market assumption: open market assumption is an assumption about conditions of a market into which assets are proposed to be entered and effects of such market conditions on assets. An open market means a well-developed, comprehensive and competitive market with willing buyers and willing sellers acting voluntarily and rationally at arms’ length, having sufficient opportunities and time to obtain market information and under no compulsion or restrictions to buy or sell.
Continuous use assumption: the continuous use assumption is an assumption made on the conditions of the market where the assets are intended to enter into as well as the status of the assets in such market conditions. It is first assumed that the assets to be appraised are in use, and it is further assumed that the assets that are in use will be used continuously. Under continuous use assumption, no consideration is given to the conversion of the use of the assets or utilisation of the assets under the best condition. Thus, the valuation results are subject to a restricted scope of applicability.
Going concern assumption: it is an assumption made by taking the whole assets of an enterprise as the appraised entity. In this way, the enterprise operates continually in pursuit of its operation objective under its external environment as the main operating entity. The management of the enterprise is responsible for and capable of taking responsibility. The enterprise operates legally and makes appropriate profits to maintain the capability of going concern.

(II) Valuation assumptions under the income approach:

There is no significant change in the relevant existing laws, regulations and policies of the country, or in the macroeconomic conditions of the country. There is no significant change in the political, economic and social environment in which the parties to this transaction are situated, and there are no material adverse impacts arising from other unforeseeable factors or force majenre.

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Assuming the company to operate as a going concern based on the actual status of the assets as at the valuation base date.
Assuming the management of the company to be responsible and have the capability to take on their duties.
Assuming the company to comply with all related laws and regulations unless otherwise stated.
Assuming the accounting policy to be adopted by the company in the future to be fundamentally consistent in all material aspects with the one adopted when compiling the valuation report.
Assuming the company to maintain the existing business scope and mode on the basis of the present management mode and level.
There will be no material changes to the interest rates, exchange rates, tax bases, tax rates and policy charges.
There will be no material adverse impacts arising from other force majeure or unforeseeable factors.
Assuming the estimated annual cash flows of the company to be generated during the period.
Assuming the products and services of the enterprise maintain existing competition status in the market subsequent to the valuation base date.

VI. VALUATION METHOD

(I) Selection of valuation methods

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Accordingly, the asset-based approach and the income approach have been selected for this valuation.

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I) Asset-Based Approach

1. Valuation of Current Assets and Liabilities

Current assets of the appraised entity include cash and cash equivalent, inventories and other current assets; while liabilities include short term borrowings, accounts payable, receipts in advance and other payables.

(1) Cash and cash equivalent: includes bank deposits. The appraised value of which was determined as the verified book value which was arrived at after the verification of bank reconciliation statements, bank confirmations.
(2) Inventories

Purchased inventories: refer to raw materials and materials in transit at the warehouse. Its appraised value shall be calculated by adding the prevailing market prices with reasonable freight and miscellaneous charges, then deducting relevant wear and tear. The raw materials and those materials in transit at the warehouse included in this valuation are the inventories newly purchased as at the valuation base date. The book value is recognized as the appraised value after the valuers confirm the correctness of quantities and fairness of unit prices on the books.

Finished goods: all finished goods were newly purchased from Far East Optoelectronics Company Limited* (遠東光電股份有限公司) at the end of October 2016. The book value is recognized as the appraised value after the valuers confirm the correctness of quantities and fairness of unit prices on the books.

– 92 –

(3) Other current assets: On the basis of verifying correctness, the valuers verified the company’s tax forms by checking the tax types, tax rates, tax amounts and payment rates applicable to the enterprise, and ascertained the correctness and truthfulness of the amounts declared by reviewing the tax vouchers. As verified, the tax amounts are consistent with those declared. Therefore, the book value after verification is recognised as the appraised value.
(4) Liabilities: the appraised value of liabilities shall be determined based on the liability items and amounts actually to be assumed by the appraised entities (realized based on the valuation purpose) provided that such liabilities were duly checked and verified. Those liability items not actually to be assumed shall be calculated as zero.

2. Valuation of buildings and structures

Appraised value = full replacement price (tax exclusive) × newness rate

(1) Full replacement price

Full replacement = construction and installation cost + price (tax preliminary cost and other cost + capital exclusive) cost – value-added tax deductible

A. Construction and installation cost

– 93 –

method or the comparison approach to adjust and confirm the direct expenses. The construction cost of each of the major and typical buildings as at valuation base date is calculated in accordance with Jiangsu Construction and Decoration Project Pricing Quota (2014)(《江蘇省建築與裝飾工程計價定額 (2014)》), Jiangsu Installation Project Pricing Quota (2014) (《江蘇省安裝工程計價定額(2014)》), Jiangsu Province Construction Project Charge Quota (2014)(《江蘇省建設工程費用定額(2014)》), Notice of Jiangsu Housing&UrbanRural Development Department on the Adjustment of the Prevailing Basis of Computing Construction Prices in Jiangsu Province to Implement Value-added Tax and to Replace Business Tax in the Construction Industry (Su Jian Jia (2016) No. 154) (《省住房城鄉建設廳關於建築業實施營改增後江蘇省建設工程計價依據調整的通知》(蘇建價[2016]154號)) and Circular of Jiangsu Housing & Urban-Rural Development Department on Unit Labor Cost of Construction Work (Su Jian Han Jia (2016) No. 570) (《省住房城鄉建設廳關於發佈建設工程人工工資指導價的通知》(蘇建函價[2016]570號), and other relevant charging standards and price adjustment documents as well as with Information on Construction Project Cost of Wuxi (無錫市建設工程造價信息) on the valuation base date.

B. Preliminary cost and construction-related expenses

C. Capital cost

– 94 –

Capital cost

= (construction and installation cost + preliminary cost and other cost) × reasonable construction period × loan interest × 50%

D. Value-added tax deductible

Value-added tax = total construction and installation deductible cost/1.11×11% + preliminary cost (other than management cost of the contractor)/1.06 × 6%

(2) Determination of Newness rate

Calculation formula:

Newness rate = inspected newness rate × 0.6 + theoretical newness rate × 0.4

– 95 –

Inspected newness rate

Calculation of theoretical newness rate

Theoretical = (1 – life in use/economic useful life) × newness rate 100%

(3) Determination of appraised value

= Appraised value full replacement price (tax exclusive) × newness rate

3. Valuation of equipment

Valuation of machineries and equipment mainly adopts the cost method, which is used to determine the appraised value of machineries and equipment through estimating the updated replacement cost of brand new machineries and equipment, with the deduction of the actual depreciation, functional depreciation, and economic depreciation or on the basis of its determined comprehensive newness rate. The calculation formula adopted in the valuation is as follows:

= Appraised value full replacement price × newness rate

– 96 –

will be deductible in the incremental value-added tax paid for the sale of the company’s products or can be carried forward to next year if not deductible in current year. Therefore, the full replacement price is calculated based on the tax exclusive price in this valuation.

Valuation of machineries and equipment

(1) Determination of full replacement price of machineries and equipment

= Full replacement p u r c h a s e p r i c e o f e q u i p m e n t + price transportation and miscellaneous cost + equipment foundation cost + installation and testing cost + preliminary and other costs + capital cost – input value-added tax deductible

For separately-purchased small equipment and equipment not requiring installation, full replacement price = purchase price of equipment + transportation and miscellaneous cost – input valueadded tax deductible. If transportation and miscellaneous cost and installation cost are contained in purchase price of equipment, the replacement value equals the purchase price (tax exclusive).

A. Purchase price of equipment

Purchase price of equipment still in circulation on the market is determined directly by its prevailing market price; for equipment that is obsolete, with discontinued production or not in circulation in the market, the purchase price of the equipment to be appraised is analyzed and determined after taking into comprehensive consideration of the differences in performance, technical parameters and useful functions relative to similar equipment.

B. Transportation and miscellaneous cost

Transportation and miscellaneous cost of domestic equipment refers to transportation cost incurred from the place of production or distribution to the installation site of equipment. In this valuation, transportation and miscellaneous cost is calculated by different rates depending on the distance between the manufacturer and the location of the equipment as well as the equipment’s weight, shape and size.

– 97 –

C. Equipment foundation cost

The equipment foundation cost is calculated by different installation rates depending on the features of the equipment on the basis of the purchase price and with reference to the Methods for Preparation of Estimates of Construction Projects and Indexes for Estimates in the Machinery Industry (機器工業建設項目概算編制辦法及各項概算指標), but it is no longer considered in the calculation of full replacement price of equipment if separate equipment foundation is not needed or unified foundations have been built when constructing the factories.

D. Installation and testing cost

The charge is calculated on the basis of the purchase price on different installation rates depending on the features, weights and difficulty in installation of the equipment.

For small equipment not requiring installation, installation and testing cost shall not be considered.

E. Preliminary and other costs

Preliminary and other costs include management cost of the contractor, cost of engineering surveying and design, cost of construction supervision, management cost of bidding, preliminary consultation cost of construction project and environmental evaluation cost.

The calculation method is to multiply the project cost or purchase price of equipment by corresponding rates which are calculated under the regulations in Charging Standards for Project Investigation (工程勘察取費標準) (Fa Gai Jia Ge [2007] No. 670) issued by National Development and Reform Commission and Ministry of Construction, Charging Standards for Project Design (工程設計取費標準) (Ji Jia Ge [2002] No. 10), Charging Standards for Bidding Agency (招標代理取費標準) (Ji Jia Ge [2002] No. 1980) and Document (Ji Jia Ge [2002] No. 125) issued by State Planning Commission and Ministry of Construction. Preliminary and other cost are not considered in this valuation.

– 98 –

F. Capital cost

The capital cost was calculated evenly over the construction period according to the reasonable construction period of the project and based on the loan interest rate applicable on the valuation base date. For large and medium-sized equipment with a reasonable construction period of more than 6 months, the capital cost shall be calculated according to the following formula:

=
Capital cost (purchase price of equipment + Transportation and miscellaneous cost + Installation and testing cost + foundation cost + other cost) ×loan interest rate × construction period × 1/2

The construction period is calculated based on normal construction cycles, assuming capital will be equally injected.

The corresponding loan interest rate shall be determined in accordance with the length of reasonable construction period.

(2) Determination of comprehensive newness rate
A. For large and key equipment, the newness rate was determined based on both the inspected newness rate and the theoretical newness rate according to the weight:
- =
- Comprehensive inspected newness rate × 0.6 + newness rate theoretical newness rate × 0.4
- ① Inspected newness rate

The Inspected newness rate is determined mainly according to the actual conditions of the equipment of the enterprise, by on-site inspection and scoring various aspects of the equipment one by one, including technical conditions, the operating circumstance thereunder and maintenance of the equipment.

– 99 –

② Theoretical newness rate

Theoretical newness rate is determined by reference to the economic service life (or remaining service life) and the serviced life of the equipment.

Theoretical = (economic service life – serviced life)/ newness economic service life × 100% rate

For equipment whose serviced life were longer than the economic service life, the following formula was applied:

Theoretical = remaining service life/(serviced life + newness remaining service life) × 100% rate

B. For equipment of lower value with light and simple structure and normal use, the newness rate was determined by means of service life approach based on the service time with consideration of its maintenance condition.
(3) Calculation of the appraised value

= The appraised full replacement price × comprehensive value newness rate

Valuation of Electronic and Office Equipment

(1) Determination of full replacement price for electronic equipment

Electronic equipment represents mostly office equipment of the enterprise such as air conditioners, TV sets, computerbased printing and invoicing system, water heaters, viscometers, computers and others. The distributors of the electronic equipment undertake the delivery, installation and setup of such equipment. Their replacement cost are determined by direct reference to their purchase price (tax exclusive).

(2) Determination of newness rate

For electronic and office equipment, the comprehensive newness rate is determined mainly according to the economic service life. For large electronic equipment, when determining the newness rate, the valuers also comprehensively consider other factors

– 100 –

including the work environment surrounding the equipment and the operating conditions of the equipment.

(3) Determination of appraised value

Appraised value = full replacement price × newness rate

4. Intangible assets – valuation of land use rights

The approach applicable for valuation of the land use right of the valuation target is selected upon analysis according to the features and specific conditions of the valuation target and actual conditions of the project, in accordance with the “Regulations for Valuation of Urban Lands (《城鎮土地估價規程》)” and in view of the land market in the regions where the valuation target is located and the relevant information gathered by the land valuers.

According to the “Regulations for Valuation of Urban Lands (《城鎮土地估價規程》)”, the valuation approaches include market comparison approach, income capitalization approach, residual approach, cost approximation approach and standard floor-price coefficient correction approach. Technical specifications for land price valuation shall be observed in selecting a valuation approach and a proper one will be determined in the light of the respective applicability and practicality of each approach and in consideration of the detailed features and valuation purposes. Therefore, upon the on-site survey by the valuers, based on the features of the valuation target, the valuation purpose, the region where the land parcel is located and other conditions, standard floor-price coefficient correction approach and market comparison approach were adopted in this valuation to calculate the price of the land parcel entrusted for valuation.

5. Valuation of project under construction

As the project under construction entrusted for valuation was the contribution to CNBM (Yixing) New Energy Company Limited by Far East Optoelectronics Company Limited in the form of a package comprising the photovoltaic glass production line and its corresponding complementary assets and liabilities as at 28 October 2016, Zhongjing

– 101 –

Minxin (Beijing) Assets Evaluation Co., Ltd. (中京民信（北京）資產評估有限公司) had valuated such physical assets and issued the Jing Xin Ping Bao Zi (2016) No. 276 Valuation Report (京信評報字 (2016)第276號評估報告), and the valuation base date of which was 30 April 2016. Such valuation report had been filed with China National Building Material Group Corporation and the financial personnel of CNBM (Yixing) New Energy Company Limited had recorded the corresponding book value based on the appraised value therein.

The equipment charges and capital cost under the project under construction were calculated again in this valuation.

II) Income Approach

1. Valuation model

DCF approach has been adopted for this valuation, i.e. the free cashflow of the entity is the quantitative indicator for the expected income of the entity, and the corresponding Weighted Average Cost of Capital (WACC) model has been adopted for calculating the discount rate.

2. Calculation formula

E = V – D Formula 1 V = P + C1 + C2 + E[’] Formula 2

– 102 –

In the above formulas:

E: Value of the entire equity interests;
V: Value of entity;
D: Appraised value of interest-bearing liabilities;
P: Appraised value of operating assets;
C1: Appraised value of surplus assets;
C2: Appraised value of non-operating assets;
E’: Appraised value of long-term equity investment.

In which, P, the appraised value of operating assets in Formula 2, is calculated with the formula as follows:

==> picture [372 x 33] intentionally omitted <==

The first half of the above formula is the value of explicit forecast period while the other half is the value of perpetual period (final value)

In Formula 3:

Rt: Free cashflow of entity of the t-th explicit forecast period;
t: Number of explicit forecast period 1, 2, 3,..., n;
r: Discount rate;
Rn+1: Free cashflow of entity in perpetual period;
g: Growth rate of perpetual period, g = 0 in this valuation;
n: The last year of explicit forecast period.

3. Determination of income period

4. Determination of expected income

Free cashflow of entity is taken as the quantitative indicator of the expected income of the entity in this valuation.

– 103 –

Free cashflow of = net profit after tax + depreciation and entity amortisation + interest expense × (1 – tax rate T) – capital expenditure – working capital movement.

5. Determination of discount rate

6. Determination of value of interest-bearing liabilities

The interest-bearing liabilities include long-term and short-term borrowings of the enterprise, which are determined based on the market value.

7. Determination of value of surplus assets and non-operating assets

Surplus assets refer to assets that are not directly related to the income of the enterprise and in excess of the amount needed to operate such enterprise, which generally refer to excess cash and cash equivalent and financial assets held for trading, etc. Non-operating assets refer to assets that are not directly related to the income of the enterprise and not profit-generating. Separate valuation is carried out for such assets.

VII. BASIS OF VALUATION

(I) Basis of economic activities

The documents of the board of directors of China National Building Materials Group Corporation, “the Resolutions of the Fifth Meeting of the First Session of the Board of Directors of China National Building Materials Group Corporation” (CNBMG Yi Dong Hui Jue Zi No. 05);
The resolutions of the General Manager’s Work Meeting of Triumph Technology Group Company* dated 6 January 2017;

– 104 –

The resolutions of the 34th meeting of the second session of Board of Directors of China Luoyang Float Glass (Group) Company Limited* held in November 2016;
The minutes of the 22nd meeting of eighth session of the Board of Directors of Luoyang Glass Company Limited*;
Resolutions of the shareholders of Yixing Environmental Technology Innovation Venture Investment Company Limited* dated 6 February 2017;
Decision on Acquisition of 7.24% Equity Interest in CNBM (Yixing) New Energy Company Limited by Luoyang Glass Company Limited from GCL System Integration Technology Co., Ltd. through Issuance of Shares (Document No. 20170204) issued by GCL System Integration Technology Co., Ltd..

(II) Basis of laws and regulations

Law of the People’s Republic of China on the State-Owned Assets of Enterprises (《中華人民共和國企業國有資產法》);
Asset Appraisal Law of the People’s Republic of China (Presidential Decree No.46 passed by the 12th Session of Standing Committee of the National People’s Congress) (《中華人民共和國資產評估法》(主席令 12屆第46號));
Company Law of the People’s Republic of China (《中華人民共和國公司法》);
Property Law of the People’s Republic of China (《中華人民共和國物權法》);
Urban Real Estate Administration Law of the People’s Republic of China (《中華人民共和國城市房地產管理法》);
Enterprise Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法》);
Administrative Measures for Assessment of State-owned Assets (State Council Decree [1991] No. 91) (《國有資產評估管理辦法》(國務院 1991年91號令));

– 105 –

Detailed Rules for the Implementation of the Administrative Measures for State-Owned Assets Assessment (Guo Zi Ban Fa [1992] No. 36) ( 《國有資產評估管理辦法實施細則》 ( 國資辦發 [1992] 第 36 號 )) issued by the former State Administration of State-owned Assets;
Circular in Relation to the Opinions on Reforming the Administration and Management of Appraisal of State-owned Assets and Strengthening the Supervision and Management of Asset Appraisal (Guo Ban Fa [2001] No. 102) (《關於改革國有資產評估行政管理方式加強資產評估監督管理工作意見的通知》(國辦發[2001]102號));
Rules on Certain Issues Relating to the Appraisal of State-owned Assets (No.14 Order from Ministry of Finance) (《國有資產評估管理若干問題的規定》(財政部第14號令));
Notice on Strengthening Management of Evaluation of State-Owned Assets in Enterprises (Guo Zi Fa Chan Quan [2006] No. 274) (《關於加強企業國有資產評估管理工作有關問題的通知》(國資發產權 [2006]274號));
Interim Regulation on the Supervision and Administration of Stateowned Assets of Enterprises (2003 No. 378 Order from State Council) (《企業國有資產監督管理暫行條例》(國務院2003年378號令));
Interim Administration Measures of Assessment of State-owned Assets of Enterprises (No.12 Order from SASAC of the State Council 2005) (《企業國有資產評估管理暫行辦法》(2005年國務院國資委第12號令));
Notice on Issues concerning the Strengthening Management of Evaluation of State-Owned Assets in Enterprises (Guo Zi Wei Chan Quan [2006] No. 274) (《關於加強企業國有資產評估管理工作有關問題的通知》(國資委產權[2006]274號));
Notice on Issues concerning the Audit of Valuation Report for Stateowned Assets of Enterprises (Guo Zi Chan Quan [2009] No. 941) (《關於企業國有資產評估報告審核工作有關事項的通知》 ( 國資產權 [2009]941號));
Guidelines for the Filing for Recordation of the Valuation Projects of State-owned Assets of Enterprises (Guo Zi Fa Chan Quan [2013] No. 64) (《企業國有資產評估項目備案工作指引》(國資發產權[2013]64 號));

– 106 –

Decision on Amending the Administrative Measures on Significant Assets Restructuring of Listed Companies (Revised) (Order No. 127 from CSRC, 8 September 2016)(《關於修改〈上市公司重大資產重組管理辦法〉的決定》(修訂)(中國證券監督管理委員會令第127號， 2016年9月8日));
Regulations for the Implementation of the Enterprise Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法實施條例》);
Provisional Regulations on Value-added Tax of the People’s Republic of China (《中華人民共和國增值稅暫行條例》);
Regulations for the Implementation of the Provisional Regulations on Value-added Tax of the People’s Republic of China (《中華人民共和國增值稅暫行條例實施細則》);
Other relevant laws and regulations.

(III) Basis of valuation standards

Asset Valuation Standards – Basic Standards (Cai Qi [2004] No. 20) (《資產評估準則－基本準則》(財企[2004]20號));
Asset Valuation Professional Ethical Standards – Basic Standards (Cai Qi [2004] No. 20) (《資產評估職業道德準則－基本準則》(財企 [2004]20號));
Asset Valuation Professional Ethical Standards – Independence (Zhong Ping Xie [2012] No. 248) (《資產評估職業道德準則－獨立性》(中評協[2012]248號));
Asset Valuation Standards – Valuation Report (Zhong Ping Xie [2011] No. 230) (《資產評估準則－評估報告》(中評協[2011]230號));
Asset Valuation Standards – Valuation Procedures (Zhong Ping Xie [2007] No. 189)(《資產評估準則－評估程序》(中評協[2007]189號));
Asset Valuation Standards – Engagement Letter (Zhong Ping Xie [2011] No.230)(《資產評估準則－業務約定書》(中評協[2011]230號));
Asset Valuation Standards – Working Papers (Zhong Ping Xie [2007] No.189) (《資產評估準則－工作底稿》(中評協[2007]189號));

– 107 –

Asset Valuation Standards – Real Estate (Zhong Ping Xie [2007] No.189) (《資產評估準則－不動產》(中評協[2007]189號));
Asset Valuation Standards – Machinery and Equipment (Zhong Ping Xie [2007] No.189) (《資產評估準則－機器設備》(中評協[2007]189 號));
Asset Valuation Standards – Enterprise Value (Zhong Ping Xie [2011] No.227) (《資產評估準則－企業價值》(中評協[2011]227號));
The Guidelines for the State-owned Asset Valuation Reports of Enterprises (Zhong Ping Xie [2011] No. 230) (《企業國有資產評估報告指南》(中評協[2011]230號));
Guidelines on Quality Control of Business Operations of Valuation Institutions (Zhong Ping Xie [2010] No. 214) (《評估機構業務質量控制指南》(中評協[2010]214號));
The Guiding Opinions on Types of Value in Asset Valuation (Zhong Ping Xie [2007] No. 189) (《資產評估價值類型指導意見》(中評協 [2007]189號));
Guiding Opinions on Attention of Certified Public Valuers on Legal Ownership of Appraised Entity (Kuai Xie [2003] No. 18) (《資產評估師關注評估對象法律權屬指導意見》(會協[2003]18號));
Guidelines for Internal Governance of Valuation Institutions (Zhong Ping Xie [2010] No. 121) (《評估機構內部治理指引》(中評協 [2010]121號)).

(IV) Basis of asset ownership

Business licenses for the legal entity, articles of association;
Real estate ownership certificates;
Contracts and invoices for acquisition of major equipment;
Other ownership documents.

(V) Basis for price selection in the valuation

The asset valuation declaration sheet and income forecast statement provided by the appraised entities;

– 108 –

Bank deposit and lending benchmark rates and foreign exchange rates on the valuation base date;
Jiangsu Construction and Decoration Project Pricing Quota (2014) (《江蘇省建築與裝飾工程計價定額(2014)》);
Jiangsu Installation Project Pricing Quota (2014)(《江蘇省安裝工程計價定額(2014)》);
Jiangsu Province Construction Project Charge Quota (2014)(《江蘇省建設工程費用定額(2014)》);
Notice of Jiangsu Housing&Urban-Rural Development Department on the Adjustment of the Prevailing Basis of Computing Construction Prices in Jiangsu Province to Implement Value-added Tax and to Replace Business Tax in the Construction Industry (Su Jian Jia [2016] No. 154) (江蘇省住房和城鄉建設廳《省住房城鄉建設廳關於建築業實施營改增後江蘇省建設工程計價依據調整的通知》 ( 蘇建價 [2016]154號));
Circular of Jiangsu Housing&Urban-Rural Development Department on Unit Labor Cost of Construction Work (Su Jian Han Jia [2016] No. 570) (《省住房城鄉建設廳關於發佈建設工程人工工資指導價的通知》(蘇建函價[2016]570號);
Information on Construction Project Cost of Wuxi (《無錫市建設工程造價信息》;
Manual of Quotation of Electromechanical Products(《機電產品報價手冊》);
Statistics of payment progress of project under construction and related evidences of payment provided by the enterprise;
Financial statements, audit reports and other related financial information provided by the enterprise;
Future operation plans, profit forecast and other information provided by the enterprise;
Feasibility study report of projects and other related information provided by the enterprise;
Other related valuation information recorded and collected by valuers from on-site survey;

– 109 –

Other information related to this asset valuation;
The primal accounting statements, information in the aspect of financial accounting management, as well as financial information including the relevant agreements, contracts and invoices which are provided by the appraised entities;
The statistics, technical standards information as well as price information released by the State’s relevant departments, together with the relevant price inquiry information and price determination parameter data collected by our company.

VIII. VALUATION CONCLUSION

(I) Valuation conclusion based on the asset-based approach

On the premises of the going concern assumption as at the valuation base date, the book value and the appraised value of total assets of CNBM (Yixing) New Energy Company Limited* were RMB628,598,900 and RMB615,856,900, respectively, representing a depreciation of RMB12,742,000 or 2.03%; the book value and the appraised value of its liabilities were RMB308,122,100 and RMB308,122,100, respectively, without any movements; and the book value and the appraised value of its net assets were RMB320,476,800 and RMB307,734,800, respectively, representing a depreciation of RMB12,742,000 or 3.98%. The summary of valuation results is set out below:

The summary of valuation results is set out below:

Summary of Valuation Results based on the Asset-Based Approach

Unit: RMB0,000

		Appraised	Appreciation/	Appreciation
Item	Book value	value	depreciation	rate
				%
Current assets	26,110.90	26,110.90	–	–
Non-current assets	36,748.99	35,474.79	-1,274.20	-3.47
Including: Fixed assets	18,432.65	16,587.95	-1,844.70	-10.01
Project under
construction	12,740.08	13,296.54	556.46	4.37
Intangible assets	5,576.26	5,590.30	14.04	0.25
Land use right	5,576.26	5,590.30	14.04	0.25

– 110 –

Item Others Total assets Current liabilities Non-current liabilities Total liabilities Net assets	Book value – 62,859.89 30,812.21 – 30,812.21 32,047.68	Appraised value Appreciation/ depreciation – – 61,585.69 -1,274.20 30,812.21 – – – 30,812.21 – 30,773.48 -1,274.20	Appreciation rate % -2.03 – – -3.98

(II) The valuation conclusion based on the income approach

Upon valuation based on the income approach, the value of the entire equity interest in CNBM (Yixing) New Energy Company Limited* was RMB345,238,300, representing an appreciation of RMB24,761,500 or 7.73%.

(III) Finalization of the valuation results

The income approach, which appraises the corporate value by discounting the expected income, takes account of not only the assets measured based on the accounting principles, but also the resources actually possessed or controlled by the entity which cannot be presented in the balance sheets, which include contract performance, customer resources, sales network, potential projects, corporate qualifications, human resources and strong R&D capability, while the contribution arising from the above resources is reflected in the net cash flow of the entity. Therefore, the valuation conclusion arrived at by using the income approach can better demonstrate the overall growth and profitability of the entity.

– 111 –

(IV) Finalisation of the valuation results

Upon valuation and under the assumptions of this report, the market value of the entire equity interest in CNBM (Yixing) New Energy Company Limited* was RMB345,238,300 (RMB Three Hundred and Forty-five Million, Two Hundred and Thirty-eight Thousand and Three Hundred) as at 31 October 2016, the valuation base date.

XI. NOTES ON SPECIAL ISSUES

The valuation and estimation of the following matters are beyond the practicing capacity and capability of our company’s valuers. However, these issues may actually affect the valuation conclusion. Thus, users of this valuation report should pay particular attention to the followings:

(I) The “appraised value” referred to herein is a fair valuation presented for the purpose set out expressly herein on the assumption that the assets entrusted for valuation maintain their uses on a going concern basis with conditions and external economic environments on the valuation base date, which shall bear no liability for any other purposes.
(II) The valuation conclusion in the report reflects the fair value of the appraised entity for the purpose of the valuation set out herein under the principle of an open market, and does not include any fees or taxes that shall be borne in the ownership registration or change of such assets or makes no tax adjustments for the value addition of the assets valuation. The valuation conclusion shall not be deemed as a guaranteed realizable price of the appraised entity.
(III) Premiums or discounts caused by factors such as controlling interest and minority interest have not been taken into consideration in the valuation results, nor has the effect of the liquidity of the equity interest entrusted for valuation on the valuation results.

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(IV) Where there are any changes in the number of assets and price standards within the effective term after the valuation base date and up to 30 October 2017, proper adjustments shall be made to the valuation conclusion instead of direct utilisation.
(V) References to reports issued by other institutions:

None.

(VI) Limitations on the valuation procedures:
I) In this valuation, the asset valuers did not conduct any technical testing for all kinds of equipment in respect of their technology parameters and performance as at the valuation base date, and only make conclusions through on-site inspection on the assumption that all related technical information and the track records provided by the appraised entity are true and valid.
II) In this valuation, the asset valuers did not conduct any technical testing for various buildings (structures) in respect of their concealed works and internal structure (other than the observable parts with unaided eyes). The valuation conclusion on buildings is made through onsite survey without any testing instrument aid and assuming that the relevant construction information provided by the appraised entity is true and valid.

(VII) Others

(1) On 28 October 2016, Far East Optoelectronics Company Limited made a contribution to CNBM (Yixing) New Energy Company Limited by way of a package including the photovoltaic glass production lines and corresponding complementary assets and liabilities. The physical assets have been appraised by Zhongjing Minxin (Beijing) Assets Evaluation Co., Ltd.* (中京民信（北京）資產評估有限公司) which issued the valuation report (Jing Xin Ping Bao Zi (2016) No. 276) with the valuation base date being 30 April 2016. The financial personnel of the appraised entity had recorded the corresponding book value based on the appraised value therein.
(2) As of the valuation base date, 8 buildings included in the valuation scope were in the process of application of ownership change for new real estate ownership certificates. The most updated real estate ownership certificates thereof were obtained on 16 November 2016, details of which are set out in the valuation table.

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(3) The real estate ownership certificates of certain buildings entrusted for valuation have not been obtained, among which, the land use right of the land parcel where the power distribution room is located belongs to Jiangsu Hongyuan Cable Materials Company Limited* (江蘇宏遠電纜材料有限公司) for which real estate ownership certificate cannot be obtained (note) . The expanded area of the new office building arising from expansion of the first floor and adding of the 10th floor is not contained in the area of the new office building, thus no property right certificate was issued therefor. The appraised entity undertakes that such buildings are actually possessed, controlled and utilized by itself and are free from any legal dispute as of 31 October 2016, the valuation base date. In the event of any real estate dispute derived from relevant property right and land use right of lands occupied by relevant buildings as well as any corresponding legal consequence, all liabilities shall be assumed by the appraised entity and not be related to the valuation institution. The details of the buildings are set out below:
note: According to the PRC legal opinion prepared by a qualified PRC legal adviser Beijing Kang Da Law Firm dated 7 August 2017, which confirmed that despite certain buildings of CNBM (Yixing) New Energy Company Limited have not obtained building ownership certificates, CNBM (Yixing) New Energy Company Limited enjoys and exercises the actual possession, use and income rights of such certain buildings, such that the production and operations of CNBM (Yixing) New Energy Company Limited has not been affected by such matter. The PRC legal adviser confirmed that such certain buildings are free from third party claims in relation to the rights of possession and there was no dispute happened between CNBM (Yixing) New Energy Company Limited and other third parties in this regard. The PRC legal adviser confirmed that such matter will not have a material legal impediment with respect to the significant assets restructuring by Luoyang Glass Company Limited*.

			Completion	Gross Floor
No.	Name of Building	Structure	Date	Area (m2)	Remarks
1	3rd floor additional to the eastern	Framework	2013–06	474.56	Included in the joint
	end of the joint factory				workshop numbered 1
					in the buildings, being a
					connected workshop, new
					property right certificate
					of which was under
					application
2	Addition of lifting arch at the	Framework	2013–06	1606.2
	west end of the joint factory
3	Floor additional to the storeroom	Framework	2012–06	179.4
	(next to chimney)
4	Workshop for raw materials	Framework	2012–06	1747.6
5	Power distribution rooms	Framework	2012–06	378.00
6	Expansion of office building	Framework	2011–11	771.83
Total				5157.59

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(4) The land use right of 5 land parcels included in the valuation scope is in the process of application of ownership change for new land use right certificates as at the valuation base date and the most updated real estate ownership certificates have been obtained on 16 November 2016. The site area of the above land parcels amounts to 127,136.20 square meters in aggregate with book value of RMB55,762,572.30. This valuation is based on the changed and most updated ownership certificates and the relevant information is set out below:

Unit: RMB

	Land Use Right				Type of	Development
No.	Certificate No.	Location	Expiry Date	Nature	Use Right	Level	Area	Book Value
							(m2)
1	Su (2016) Yixing	Fandao Agricultural	2054–1-14	Industrial	Transfer	Five Connections	14,827.20	6,449,832.00
	Real Estate No.	& Forest Farm,				and one leveling
	0009784	Gao Cheng Town,
		Yixing
2	Su (2016) Yixing	Fandao Agricultural	2056–12–24	Industrial	Transfer	Five Connections	13,333.40	5,933,363.00
	Real Estate No.	& Forest Farm,				and one leveling
	0009782	Gao Cheng Town
3	Su (2016) Yixing	Fandao Agricultural	2056–12–24	Industrial	Transfer	Five Connections	24,927.70	11,092,826.50
	Real Estate No.	& Forest Farm,				and one leveling
	0009783	Gao Cheng Town
4	Su (2016) Yixing	Fandao Agricultural	2054–1-14	Industrial	Transfer	Five Connections	28,617.80	9,658,653.00
	Real Estate No.	& Forest Farm,				and one leveling		2,809,332.00
	0009785	Gao Cheng Town,
		Yixing

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Land Use Right Type of Development No. Certificate No. Location Expiry Date Nature Use Right Level Area Book Value (m[2] )

5 Su (2016) Yixing Fandao Agricultural 2054–1-14 Industrial Transfer Five Connections 45,430.10 8,225,902.80 Real Estate No. & Forest Farm and one leveling 11,592,663.00 0009786 Gao Cheng Town, Yixing

Total

127,136.20 55,762,572.30

(5) Pursuant to the “Notice on the Relevant Policies on the Abolition and Regulation of Certain Administrative Fees (關於清理規範一批行政事業性收費有關政策的通知)” (Cai Shui [2017] No. 20), from 1 April 2017 onwards, the administrative fees in relation to termite control charges have been abolished. The effects of such post-period changes were taken into consideration in this valuation.
(6) Pursuant to the “Notice on the Relevant Policies on the Cancellation, Adjustment of Certain Governmental Funds (關於取消、調整部分政府性基金有關政策的通知)” (Cai Shui [2017] No. 18), from 1 April 2017 onwards, the special fund for modern wall materials has been cancelled. The effects of such post-period change were taken into consideration in this valuation.

Beijing Pan-China Assets Appraisal Co., Ltd. Asset valuers: Dong Yulu (董雨露), Qin Xianghong (秦向紅)

10 April 2017

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APPENDIX II – LETTERS FROM WUYIGE AND VEDA CAPITAL ON THE PROFIT FORECASTS

A. LETTER FROM WUYIGE

The following is the text of a report received from the reporting accountant of the Company, WUYIGE Certified Public Accountants LLP, addressed to the Directors and for the sole purpose of inclusion in this announcement.

7 August 2017

The Board of Directors No. 9 Tang Gong Zhong Lu Xigong District Luoyang Municipal Henan Province The PRC

Report on the discounted future cash flows and profit guarantee figures in connection with the business valuations of (1) CNBM (Hefei) New Energy Company Limited (中建材（合肥）新能源有限公司) (“Hefei New Energy”); (2) CNBM (Tongcheng) New Energy Company Limited (中國建材桐城新能源材料有限公司) (“Tongcheng New Energy”); and (3) CNBM (Yixing) New Energy Company Limited* (中建材（宜興）新能源有限公司) (“Yixing New Energy”)

To the Board of Directors of Luoyang Glass Company Limited (the “ Company ”)

We have reviewed the accounting policies adopted and arithmetical calculations of (i) the discounted future estimated cash flows; and (ii) the profit guarantee amounts of (a) Hefei New Energy; (b) Tongcheng New Energy; and (c) Yixing New Energy for the financial years ending 31 December 2017, 2018, 2019 and 2020 (the “ Profit Guarantee Figures ”), on which the valuation (the “ Valuation ”) prepared by Beijing Pan-China Assets Appraisal Co. Ltd. (北京天健興業資產評估有限公司) dated 10 April 2017 in respect of the three target companies, namely, Hefei New Energy, Tongcheng New Energy, and Yixing New Energy (the “ Target Companies ”) as at 31 October 2016 is based. The Target Companies were incorporated in the PRC with limited liability. The Valuation is prepared based in part on the discounted future cash flows and is regarded as a profit forecast under paragraph 14.61 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and Rule 11.1(a) of the Code on Takeovers and Mergers issued by the Securities and Futures Commission (the “ Takeovers Code ”). We also understand that the Profit Guarantee Figures are required to be reported on under Rule 10 of the Takeovers Code.

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Directors’ Responsibilities for the Discounted Future Estimated Cash Flows and the Profit Guarantee Figures

The directors of the Company (the “ Directors ”) are responsible for the preparation of the discounted future estimated cash flows and the Profit Guarantee Figures in accordance with the accounting policies, bases and assumptions determined by the Directors and as set out in the Valuation (the “ Assumptions ”). This responsibility includes carrying out appropriate procedures relevant to the preparation of the discounted future estimated cash flows and the Profit Guarantee Figures for the Valuation and applying an appropriate basis of preparation, and making estimates that are reasonable in the circumstances.

Reporting Accountants’ Responsibilities

It is our responsibility to form an opinion on the accounting policies and arithmetical accuracy of the calculations of the discounted future estimated cash flows and the Profit Guarantee Figures on which the Valuation is based and to report solely to the Directors as required by Rule 14.62(2) of the Listing Rules and Rule 10.3(b) of the Takeovers Code, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Our engagement was conducted in accordance with Hong Kong Standard on Assurance Engagements 3000, “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information”. We examined the consistency of accounting policies adopted and the arithmetical accuracy of the discounted future estimated cash flows and the Profit Guarantee Figures under the Valuation. Our work has been undertaken solely to assist the Directors in evaluating whether the Assumptions, so far as the accounting policies and calculations are concerned, has been properly compiled in accordance with the Assumptions made by the Directors. We have re-performed the arithmetical calculations and compared the compilation of the discounted future cash flows and the Profit Guarantee Figures with the bases and assumptions.

We are not reporting on the appropriateness and validity of the bases and assumptions on which the discounted future cash flows and the Profit Guarantee Figures are based and our work does not constitute any valuation of the Target Companies or an expression of an audit or review opinion on the Valuation.

The Assumptions include hypothetical assumptions about future events and management actions which cannot be confirmed and verified in the same way as past results and these may or may not occur. Even if the events and actions anticipated do occur, actual results are still likely to be different from the Valuation and the variation may be material. Accordingly, we have not reviewed, considered or conducted any work on the reasonableness and validity of the Assumptions and do not express any opinion whatsoever thereon.

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Opinion

Based on the foregoing, in our opinion, the discounted future cash flows and the Profit Guarantee Figures, so far as the accounting policies and arithmetical calculations are concerned, have been properly compiled in all material respects, in accordance with the Assumptions.

WUYIGE Certified Public Accountants Beijing

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B. LETTER FROM VEDA CAPITAL

The following is the text of a letter received from the financial adviser of the Company, Veda Capital, addressed to the Directors and prepared for the sole purpose of inclusion in this announcement.

==> picture [138 x 39] intentionally omitted <==

Veda Capital Limited

Room 1106, 11/F Wing On Centre 111 Connaught Road Central Hong Kong

7 August 2017

The Board of Directors No. 9 Tang Gong Zhong Lu Xigong District Luoyang Municipal Henan Province The PRC

Dear Sirs,

We refer to the announcement of Luoyang Glass Company Limited (the “ Company ”) dated 7 August 2017 in relation to, amongst other things, the Proposed Acquisitions (the “ Announcement ”) and the valuation reports dated 10 April 2017 prepared by 北京天健興業資產評估有限公司 (Beijing Pan-China Assets Appraisal Co. Ltd.) (the “ Valuation Reports ”), the independent valuer of the Company (the “ Valuer ”), in respect of the business valuation of each of the Target Companies (the “ Valuation ”), we have reviewed the Valuation Reports and understood that the Valuer has applied the discounted cash flow method to implement the Valuation and the Valuation also comprises profit guarantee amounts of the Target Companies for the financial period ending 31 December 2017, 2018, 2019 and 2020 (the “ Profit Guarantee Figures ”). Each of the Valuation constitutes a profit forecast (the “ Forecast ”) under Rule 14.61 of the Listing Rules and Rule 10 of the Takeovers Code. The Profit Guarantee Figures are also regarded as profit estimates under Rule 10 of the Takeovers Code. Unless otherwise specified, capitalised terms used herein shall have the same meaning as those defined in the Announcement.

Furthermore, our report on the qualifications and experience of the Valuer to prepare the Valuation Reports is required under Rule 11.1(b) of the Takeovers Code and this letter also constitutes such report from us.

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We have reviewed the Valuation Reports and discussed with the directors and the management of the Company and the Valuer regarding the Valuation Reports, including, in particular, the valuation approach, bases and assumptions. We have also considered, and relied upon, the letter dated 7 August 2017 addressed to yourselves from WUYIGE Certified Public Accountants LLP regarding the accounting policies adopted and the arithmetical accuracy of the Forecast and the Profit Guarantee Figures, which stated that the Forecast and the Profit Guarantee Figures, so far as the accounting policies and calculations are concerned, has been properly compiled in accordance with the assumptions made by the Directors and the accounting policies adopted by the Group.

With regard to the qualifications and experience of the Valuer, based on the review work conducted by us, which includes reasonableness checks to assess the relevant experience and expertise of the Valuer, review and discussion with the Valuer of the qualifications, experience, expertise and relevant track records of the Valuer, we are satisfied that the Valuer has the qualifications and experience to compile the Valuation Reports.

On the basis of the foregoing, we are satisfied that the Forecast and the Profit Guarantee Figures including the bases and assumptions, for which the Directors are solely responsible, have been made after due care and consideration and objectivity, and on a reasonable basis.

Yours faithfully, for and on behalf of

Veda Capital Limited Julisa Fong Managing Director

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AI assistant

RoboSense Technology Co., Ltd — Capital/Financing Update 2017

50628_rns_2017-08-07_d1c44474-e26b-4fc9-b126-dbecc3782430.pdf

(1) SUPPLEMENTAL AGREEMENTS IN RELATION TO VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS; (2) ADJUSTMENT IN ALLOCATION OF PROCEEDS IN THE PROPOSED A SHARE PLACING; AND

(3) SITUATION OF CURRENT RETURN DILUTION BY THE REORGANISATION AND THE RELEVANT REMEDIAL MEASURES

Financial adviser to the Company

(1) THE SUPPLEMENTAL AGREEMENTS

(2) ADJUSTMENT IN ALLOCATION OF PROCEEDS

(3) S I T U A T I O N O F C U R R E N T R E T U R N D I L U T I O N B Y T H E REORGANISATION AND THE RELEVANT REMEDIAL MEASURES

(1) THE SUPPLEMENTAL AGREEMENTS

The Supplemental SP Agreements

Amendments to the Proposed Acquisitions Agreements – the Revised Consideration and the Revised Consideration Shares

Valuation of the Target Companies

100% equity interest in the Target Companies

The Revised Consideration and the Revised Consideration Shares

The Supplemental PG Indemnity Agreements

The Profit Guarantee amounts

Save for the aforesaid, other principal terms of the Proposed Acquisitions Agreements and the Profit Guarantee Indemnity Agreements as disclosed in the Announcement remain unchanged.

Effect of the Completion of the Proposed Acquisitions on the shareholding structure of the Company

(2) ADJUSTMENT IN ALLOCATION OF PROCEEDS

Completion of the Proposed Acquisitions and the Proposed A Share Placing may or may not proceed. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares.

Profit Forecast Requirements under the Takeovers Code and the Listing Rules

Assumptions of Valuation

Takeovers Code Implications and Application for the Whitewash Waiver

APPENDIX I(A) – SUMMARY OF THE VALUATION REPORT OF HEFEI NEW ENERGY

SUMMARY OF VALUATION REPORT

I. VALUATION SUBJECT

II. VALUATION SCOPE

III. TYPE OF VALUE

IV. VALUATION BASE DATE

V. VALUATION ASSUMPTIONS

(I) General assumptions:

(II) Valuation assumptions under the income approach:

VI. VALUATION METHOD

(I) Selection of valuation methods

(II) Introduction of the Specific Valuation Methods

I) Asset-based Approach

2. Valuation of buildings and structures

C. Capital cost

D. Value-added tax deductible

(2) Determination of Newness rate

Calculation of theoretical newness rate

3. Valuation of assets in the equipment class

B. Equipment purchased

C. Vehicles

4. Valuation of the project under construction

5. Valuation of land use right

6. Valuation of other intangible assets

7. Valuation of other non-current assets

II) Income Approach

1. Calculation model

2. Determination of key parameters in the model

VII. BASIS OF VALUATION

(I) Basis of economic activities

(II) Basis of laws and regulations

(III) Basis of valuation standards

(IV) Basis of asset ownership

(V) Basis for price selection in the valuation

VIII. VALUATION CONCLUSION

(I) Valuation conclusion based on the asset-based approach

Summary of Asset Valuation Results

(II) The valuation results based on the income approach

(III) Finalization of the valuation results

(IV) Finalisation of the valuation results

XI. NOTES ON SPECIAL ISSUES

(VII) Others

Beijing Pan-China Assets Appraisal Co., Ltd. Asset valuers: Dong Yulu (董雨露), Qin Xianghong (秦向紅)

APPENDIX I(B) – SUMMARY OF THE VALUATION REPORT OF TONGCHENG NEW ENERGY

SUMMARY OF VALUATION REPORT

I. VALUATION SUBJECT

II. VALUATION SCOPE

III. TYPE OF VALUE

IV. VALUATION BASE DATE

V. VALUATION ASSUMPTIONS

(I) General assumptions:

(II) Valuation assumptions under the income approach:

VI. VALUATION METHOD

(I) Selection of valuation methods

(II) Introduction of the Specific Valuation Methods

I) Asset-based Approach

RoboSense Technology Co., Ltd Capital/Financing Update 2017