RoboSense Technology Co., Ltd - Proxy Solicitation & Information Statement 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Luoyang Glass Company Limited *, you should at once hand this circular and the forms of proxy to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to their accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. This circular is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares of the Company.

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(1) VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS;

(2) PROPOSED ISSUANCE AND PLACING OF A SHARES; (3) APPLICATION FOR WHITEWASH WAIVER; AND

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

Financial adviser to the Company

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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A letter from the Board is set out on pages 13 to 65 of this circular. A letter from the Independent Financial Adviser containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 68 to 126 of this circular and a letter from the Independent Board Committee is set out on pages 66 to 67 of this circular.

The EGM originally scheduled to be held at 9:00 a.m. on Tuesday, 26 September 2017 was further postponed to 9:00 a.m. on Friday, 27 October 2017; the A Shares Class Meeting originally scheduled to be held at 9:30 a.m. on Tuesday, 26 September 2017 (or immediately after the EGM) was further postponed to 9:30 a.m. on Friday, 27 October 2017 (or immediately after the EGM as postponed); and the H Shares Class Meeting originally scheduled to be held at 10:00 a.m. on Tuesday, 26 September 2017 (or immediately after the A Shares Class Meeting) was further postponed to 10:00 a.m. on Friday, 27 October 2017 (or immediately after the A Shares Class Meeting as postponed). The notices and supplemental notices for convening the EGM and the H Shares Class Meeting, both to be held at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC, are set out on pages XVII-1 to XX-3 of this circular.

The forms of proxy for use at the EGM and the H Shares Class Meeting were despatched to the Shareholders and published on the website of The Stock Exchange of Hong Kong Limited (http://www.hkexnews.hk) on 7 August 2017, which are valid proxy forms for use at the postponed EGM and H Shares Class Meeting. Supplemental forms of proxy for use at the postponed EGM and H Shares Class Meeting are enclosed. Whether or not you are able to attend the EGM and/or the H Shares Class Meeting in person, you are requested to complete and return the forms of proxy in accordance with the instructions printed thereon to the Company’s share registrar in Hong Kong, Hong Kong Registrars Limited, at Shops 1712–1716, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, or to the Company’s registered address at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC as soon as possible and in any event not less than 24 hours before the time appointed for holding of the EGM and/or the H Shares Class Meeting or any adjournment thereof. Completion and return of the forms of proxy will not preclude you from attending and voting in person at the EGM and/or the H Shares Class Meeting or any adjournment thereof should you so wish.

11 October 2017

* For identification purposes only

CONTENTS

DEFINITIONS . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			. . . . . . . . . . . . .	13
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . .			. . . . . . . . . . . . .	66
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . .			. . . . . . . . . . . . .	68
APPENDIX I	—	FINANCIAL INFORMATION OF THE GROUP . . . . .		I-1
APPENDIX II	—	FINANCIAL INFORMATION OF
		HEFEI NEW ENERGY . . . . . . . . . . . . . .	. . . . . . . . . . .	II-1
APPENDIX III	—	FINANCIAL INFORMATION OF
		TONGCHENG NEW ENERGY . . . . . . .	. . . . . . . . . . .	III-1
APPENDIX IV	—	FINANCIAL INFORMATION OF
		YIXING NEW ENERGY. . . . . . . . . . . . .	. . . . . . . . . . .	IV-1
APPENDIX V	—	PROPERTY VALUATION REPORT
		OF THE GROUP . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	V-1
APPENDIX VI	—	PROPERTY VALUATION REPORT
		OF THE TARGET COMPANIES . . . . . .	. . . . . . . . . . .	VI-1
APPENDIX VII	—	SUMMARY OF VALUATION REPORT
		OF HEFEI NEW ENERGY . . . . . . . . . .	. . . . . . . . . . .	VII-1
APPENDIX VIII	—	SUMMARY OF VALUATION REPORT
		OF TONGCHENG NEW ENERGY . . . .	. . . . . . . . . . .	VIII-1
APPENDIX IX	—	SUMMARY OF VALUATION REPORT
		OF YIXING NEW ENERGY . . . . . . . . .	. . . . . . . . . . .	IX-1
APPENDIX X	—	LETTERS FROM THE REPORTING
		ACCOUNTANT AND THE FINANCIAL
		ADVISER OF THE COMPANY ON
		THE PROFIT FORECASTS OF
		THE TARGET COMPANIES . . . . . . . . .	. . . . . . . . . . .	X-1
APPENDIX XI	—	MANAGEMENT DISCUSSION AND
		ANALYSIS OF HEFEI NEW ENERGY	. . . . . . . . . . .	XI-1
APPENDIX XII	—	MANAGEMENT DISCUSSION AND
		ANALYSIS OF TONGCHENG NEW ENERGY . . . . .		XII-1

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CONTENTS

APPENDIX	XIII	—	MANAGEMENT DISCUSSION AND
			ANALYSIS OF YIXING NEW ENERGY	. . . . . . . . . .	XIII-1
APPENDIX	XIV	—	UNAUDITED PRO FORMA FINANCIAL
			INFORMATION OF THE ENLARGED GROUP . . . .		XIV-1
APPENDIX	XV	—	GENERAL INFORMATION . . . . . . . . . . .	. . . . . . . . . . .	XV-1
APPENDIX	XVI	—	EXPLANATIONS ON SITUATION OF
			CURRENT RETURN DILUTION AND
			THE REMEDIAL MEASURES IN
			THE ACQUISITION OF ASSETS AND
			SUPPORTING FUNDS RAISING BY
			ISSUANCE OF SHARES AND
			RELATED PARTY TRANSACTIONS . .	. . . . . . . . . . .	XVI-1
APPENDIX	XVII	—	NOTICE OF THE 2017 THIRD
			EXTRAORDINARY GENERAL MEETING . . . . . . . .		XVII-1
APPENDIX	XVIII	—	NOTICE OF THE 2017 FIRST
			H SHARE CLASS MEETING . . . . . . . .	. . . . . . . . . . .	XVIII-1
APPENDIX	XIX	—	SUPPLEMENTAL NOTICE OF THE 2017
			THIRD EXTRAORDINARY GENERAL
			MEETING . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	XIX-1
APPENDIX	XX	—	SUPPLEMENTAL NOTICE OF THE 2017
			FIRST H SHARE CLASS MEETING . .	. . . . . . . . . . .	XX-1

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DEFINITIONS

In this circular, unless the context otherwise requires, the following terms have the meanings set out below:

“A Share(s)”

domestic ordinary share(s) with a par value of RMB1.00 each in the share capital of the Company which are listed on the SSE and traded in RMB

“A Shareholder(s)” holder(s) of the A Share(s)
“A Shares Class Meeting”

the class meeting of the A Shareholders to be held at 9:30 a.m. on Friday, 27 October 2017 (or immediately after the EGM) for the A Shareholders to consider and, if thought fit, approve, among other things, each of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Proposed A Share Placing and the Triumph Group A Share Placing

“Assets Impairment Indemnity”
the assets impairment indemnity under the Profit Guarantee Indemnity Agreements
“associate(s)”
has the same meaning as ascribed to it under the Listing Rules
“Bengbu Institute”
Bengbu Design & Research Institute for Glass Industry (蚌埠玻璃工業設計研究院), a company incorporated in the PRC with limited liability, the substantial Shareholder of the Company and a wholly-owned subsidiary of Triumph Group
“Board” the board of the Directors
“Class Meetings” the A Shares Class Meeting and the H Shares Class Meeting
“CLFG”
China Luoyang Float Glass (Group) Company Limited* (中國洛陽浮法玻璃集團有限責任公司), a company incorporated in the PRC with limited liability and the substantial Shareholder of the Company holding 105,018,242 Shares, representing approximately 19.94% of the total issued share capital of the Company as at the Latest Practicable Date

– 1 –

DEFINITIONS

“CNBMG”
“Company”
“connected person(s)”
“Consideration Share(s)”
“CSRC”
“Director(s)”

“EGM”

China National Building Materials Group Corporation (中國建材集團有限公司), a wholly state-owned enterprise incorporated in the PRC and the ultimate controlling Shareholder of the Company

Luoyang Glass Company Limited* (洛陽玻璃股份有限公司), a joint stock company incorporated in the PRC with limited liability, the H Shares and the A Shares of which are listed on the main board of the Stock Exchange (stock code: 1108) and the SSE (stock code: 600876) respectively
has the same meaning as ascribed to it under the Listing Rules
a total of 33,030,516 new A Shares, representing approximately 6.27% of the total issued share capital of the Company as at the Latest Practicable Date, to be allotted and issued by the Company to (i) CLFG and Hefei High-Tech pursuant to the First SP Agreement to settle the consideration of the acquisition of 100% equity interest in Hefei New Energy; (ii) Huaguang Group, Bengbu Institute and International Engineering pursuant to the Second SP Agreement to settle the consideration of the acquisition of 100% equity interest in Tongcheng New Energy; and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration pursuant to the Third SP Agreement to settle the consideration of the acquisition of 70.99% equity interest in Yixing New Energy

China Securities Regulatory Commission

director(s) of the Company

the extraordinary general meeting of the Company to be convened and held at 9:00 a.m. on Friday, 27 October 2017 for the Shareholders to consider and, if thought fit, approve, among other things, each of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing

– 2 –

DEFINITIONS

“Enlarged Group”
“Executive”
“First Announcement”
“First Consideration A Shares”
“First PG Indemnity Agreement”
“First SP Agreement”
“First Supplemental PG Indemnity Agreement”

the Company and its subsidiaries upon completion of the Proposed Acquisitions

the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

the announcement of the Company dated 7 February 2017 in relation to, among others, (i) very substantial acquisitions and connected transactions; (ii) proposed issuance and placing of A shares; and (iii) application for whitewash waiver

13,126,864 new A Shares to be allotted and issued by the Company to CLFG and Hefei High-Tech pursuant to the First SP Agreement to settle the consideration of the acquisition of 100% equity interest in Hefei New Energy
the profit guarantee indemnity agreement dated 7 February 2017 (as supplemented by the First Supplemental PG Indemnity Agreement) entered into among the Company, CLFG and Hefei High-Tech in respect of the Profit Guarantee and the Assets Impairment Indemnity
the sale and purchase agreement dated 7 February 2017 (as supplemented by the First Supplemental SP Agreement) entered into among the Company, 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 a total of 100% equity interest in Hefei New Energy with consideration to be settled by the Company by allotment and issue of the First Consideration A Shares

the supplemental profit guarantee indemnity agreement dated 7 August 2017 entered into among the Company, CLFG and Hefei High-Tech in respect of the confirmation of the respective Profit Guarantee amounts

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DEFINITIONS

“First Supplemental SP Agreement”
the supplemental sale and purchase agreement dated 7 August 2017 entered into among the Company, CLFG and Hefei High-Tech in relation to the amendment of the consideration and the number of new A Shares to be allotted and issued as consideration shares under the First SP Agreement
“GCL System Integration”
GCL System Integration Technology Co., Ltd. (協鑫集成科技股份有限公司), a joint stock company incorporated in the PRC with limited liability and the shares of which are listed on the Shenzhen Stock Exchange
“Group”
the Company and its subsidiaries
“Guarantors”
including (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
“H Share(s)”
overseas listed foreign share(s) with a par value of RMB1.00 each in the share capital of the Company, listed on the main board of the Stock Exchange and traded in Hong Kong dollars
“H Shareholder(s)” holder(s) of the H Share(s)
“H Shares Class Meeting”
the class meeting of the H Shareholders to be held at 10:00 a.m. on Friday, 27 October 2017 (or immediately after the A Shares Class Meeting) for the H Shareholders to consider and, if thought fit, approve, among other things, each of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Proposed A Share Placing and the Triumph Group A Share Placing
“Hefei High-Tech”
Hefei High-Tech Construction Investment Group Company* (合肥高新建設投資集團公司), an enterprise under ownership of the whole people incorporated in the PRC
“Hefei New Energy”
CNBM (Hefei) New Energy Company Limited* (中建材(合肥)新能源有限公司), a company incorporated in the PRC with limited liability in 2011 which is owned as to 76.92% by CLFG and 23.08% by Hefei High-Tech as at the Latest Practicable Date

– 4 –

DEFINITIONS

“HK$”

“Hong Kong”

“Huaguang Group”
“Independent Board Committee”
“Independent Financial Adviser” or “KGI Capital Asia”
“Independent Shareholders”
“Independent Third Party(ies)”

Hong Kong dollars, the lawful currency of Hong Kong Hong Kong Special Administrative Region of the PRC

Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. (安徽華光光電材料科技集團有限公司), a company incorporated in the PRC with limited liability

an independent committee of the Board comprising all independent non-executive Directors, namely Mr. Jin Zhanping, Mr. Liu Tianni, Mr. Ye Shuhua and Mr. He Baofeng, established by the Company to advise the Independent Shareholders on, among other things, each of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing
KGI Capital Asia Limited, a corporation licensed to carry out type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO, and acting as the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing
Shareholders other than (i) CNBMG and its associate(s); (ii) parties acting in concert with CNBMG; and (iii) all other parties (if any) who are interested or involved in the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing
any person(s) or company(ies) and their respective ultimate beneficial owner(s) whom, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of the Company and its connected persons

– 5 –

DEFINITIONS

“International Engineering”
“Last Trading Day”
“Latest Practicable Date”
“Listing Rules”
“Non-connected Shareholders”
“Other Qualified Investors”
“Placing Issue Price”
“PRC”
“Pricing Base Date”
China Triumph International Engineering Co., Ltd. (中國建材國際工程集團有限公司), a company incorporated in the PRC with limited liability
6 February 2017, being the last trading day of H Shares prior to the date of the First Announcement
6 October 2017, being the latest practicable date for the purpose of ascertaining certain information contained in this circular prior to its publication
the Rules Governing the Listing of Securities on the Stock Exchange
Shareholders other than the connected shareholders (has the meaning ascribed to it under rule 10.2.2 of the listing rules of the SSE)
Qualified Investors except for Triumph Group
the issue price per new A Shares to be issued by the Company under the Proposed A Share Placing, details of which are set out in the sub-section “Terms of the Proposed A Share Placing” under the section “(2) THE PROPOSED A SHARE PLACING AND THE TRIUMPH GROUP A SHARE PLACING” in the Letter form the Board contained in this circular
The People’s Republic of China, which for the purpose of this circular excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

the pricing base date of the new A Shares to be issued by the Company under the Proposed A Share Placing, details of which are set out in the sub-section “Terms of the Proposed A Share Placing” under the section “(2) THE PROPOSED A SHARE PLACING AND THE TRIUMPH GROUP A SHARE PLACING” in the Letter form the Board contained in this circular

– 6 –

DEFINITIONS

“Profit Guarantee”
“Profit Guarantee Indemnity Agreements”
“Profit Guarantee Period”
“Proposed A Share Placing”
“Proposed Acquisitions”
“Proposed Acquisitions Agreements”
“Proposed Acquisitions Conditions Precedent”

the profit guarantee provided by the respective Vendors under the Proposed Acquisitions Agreements to the Company in respect of the net profit attributable to equity holders of the respective Target Companies after deduction of extraordinary profit or loss during each of the three financial years ending 31 December 2017, 31 December 2018 and 31 December 2019 (or, as the case may be, 31 December 2018, 31 December 2019 and 31 December 2020), details of which are set out in the subsection headed “Profit Guarantee” under the section “(1) THE PROPOSED ACQUISITIONS” in the Letter from the Board contained in this circular

the First PG Indemnity Agreement, the Second PG Indemnity Agreement and the Third PG Indemnity Agreement, as supplemented by the respective Supplemental PG Indemnity Agreements
the guarantee period under the Profit Guarantee

the proposed placing of new A Shares by the Company to not more than 10 Qualified Investors, of which the gross amount of funds to be raised shall not exceed RMB511,865,700

the proposed acquisitions by the Company of (i) 100% equity interest in Hefei New Energy from CLFG and Hefei High-Tech; (ii) 100% equity interest in Tongcheng New Energy from Huaguang Group, Bengbu Institute and International Engineering; and (iii) 70.99% equity interest in Yixing New Energy from Triumph Group, Yixing Environmental Technology and GCL System Integration
the First SP Agreement, the Second SP Agreement and the Third SP Agreement, as supplemented by the respective Supplemental SP Agreements
the conditions precedent under the Proposed Acquisitions as set out in the sub-section “Conditions Precedent” under the section “(1) THE PROPOSED ACQUISITIONS” in the Letter from the Board contained in this circular

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DEFINITIONS

“Qualified Investors”

Triumph Group (an indirect Shareholder of the Company as at the Latest Practicable Date), and other independent specific investors for the Proposed A Share Placing

“Relevant Period”

the period commencing six months preceding the Last Trading Day and ending on the Latest Practicable Date

“Reorganisation”
the transactions contemplated under the Proposed Acquisitions Agreements and the Proposed A Share Placing
“RMB”
Renminbi, the lawful currency of the PRC
“SASAC Authorised Office(s)”
the authorised management office(s) of the State-owned Assets Supervision and Administration Commission of the PRC
“SASAC of the State Council”
the State-owned Assets Supervision and Administration Commission of the State Council of the PRC
“Second Consideration A Shares” 9,452,076 new A Shares to be allotted and issued by the Company to Huaguang Group, Bengbu Institute and International Engineering pursuant to the Second SP Agreement as the consideration of the acquisition of 100% equity interest in Tongcheng New Energy
“Second PG Indemnity Agreement”
the profit guarantee indemnity agreement dated 7 February 2017 (as supplemented by the Second Supplemental PG Indemnity Agreement) entered into among the Company, Huaguang Group, Bengbu Institute and International Engineering, in respect of the Profit Guarantee and the Assets Impairment Indemnity
“Second SP Agreement”
the sale and purchase agreement dated 7 February 2017 (as supplemented by the Second Supplemental SP Agreement) entered into among the Company, 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 a total of 100% equity interest in Tongcheng New Energy with consideration to be settled by the Company by allotment and issue of the Second Consideration A Shares

– 8 –

DEFINITIONS

“Second Supplemental PG Indemnity Agreement”
“Second Supplemental SP Agreement”
“SFC”
“SFO”
“Share(s)”
“Shareholder(s)”
“Specific Mandates”
“SSE”
“Stock Exchange”
“Supplemental Announcement”
“Supplemental PG Indemnity Agreements”

the supplemental profit guarantee indemnity agreement dated 7 August 2017 entered into among the Company, Huaguang Group, Bengbu Institute and International Engineering in respect of the confirmation of the respective Profit Guarantee amounts

the supplemental sale and purchase agreement dated 7 August 2017 entered into among the Company, Huaguang Group, Bengbu Institute and International Engineering in relation to the amendment of the consideration and the number of new A Shares to be allotted and issued as consideration shares under the Second SP Agreement

the Securities and Futures Commission of Hong Kong

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended from time to time

ordinary share(s) of RMB1.00 each in the share capital of the Company, including the A Share(s) and the H Share(s)

holder(s) of the Share(s)

the specific mandate to be sought from the Independent Shareholders for the allotment and issuance of the Consideration Shares and the specific mandate to be sought from Independent Shareholders for the allotment and issuance of the new A Shares under the Proposed A Share Placing

the Shanghai Stock Exchange

The Stock Exchange of Hong Kong Limited

the announcement of the Company dated 7 August 2017 with respect to the Supplemental SP Agreements and the Supplemental PG Indemnity Agreements

the First Supplemental PG Indemnity Agreement, the Second Supplemental PG Indemnity Agreement and the Third Supplemental PG Indemnity Agreement

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DEFINITIONS

“Supplemental SP Agreements” the First Supplemental SP Agreement, the Second Supplemental SP Agreement and the Third Supplemental SP Agreement
“Supplemental Triumph Group Subscription Agreement”
the supplemental subscription agreement dated 24 February 2017 entered into between the Company and Triumph Group in respect of the amendment of the issue price per A Share and the pricing base date under the Triumph Group Subscription Agreement
“Takeovers Code”
the Hong Kong Code on Takeovers and Mergers
“Target Companies”
Hefei New Energy, Tongcheng New Energy and Yixing New Energy
“Third Consideration A Shares”
10,451,576 new A Shares to be allotted and issued by the Company to Triumph Group, Yixing Environmental Technology and GCL System Integration pursuant to the Third SP Agreement as the consideration of the acquisition of 70.99% equity interest in Yixing New Energy
“Third PG Indemnity Agreement” the profit guarantee indemnity agreement dated 7 February 2017 (as supplemented by the Third Supplemental PG Indemnity Agreement) entered into among the Company, Triumph Group, Yixing Environmental Technology and GCL System Integration in respect of the Profit Guarantee and Assets Impairment Indemnity
“Third SP Agreement”
the sale and purchase agreement dated 7 February 2017 (as supplemented by the Third Supplemental SP Agreement) entered into among the Company, 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 a total of 70.99% equity interest in Yixing New Energy with consideration to be settled by the Company by allotment and issue of the Third Consideration A Shares

– 10 –

DEFINITIONS

“Third Supplemental PG Indemnity Agreement”
“Third Supplemental SP Agreement”
“Tongcheng New Energy”
“Triumph Group”
“Triumph Group A Share Placing”
“Triumph Group Subscription Agreement”
“Triumph Placing Shares”

the supplemental profit guarantee indemnity agreement dated 7 August 2017 entered into among the Company, Triumph Group, Yixing Environmental Technology and GCL System Integration in respect of the confirmation of the respective Profit Guarantee amounts

the supplemental sale and purchase agreement dated 7 August 2017 entered into among the Company, Triumph Group, Yixing Environmental Technology and GCL System Integration in relation to the amendment of the consideration and the number of new A Shares to be allotted and issued as consideration shares under the Third SP Agreement
CNBM (Tongcheng) New Energy Materials Company Limited* (中國建材桐城新能源材料有限公司), a company incorporated in the PRC with limited liability in 2010 which was owned as to 67.47% by Huaguang Group, 25.03% by Bengbu Institute and 7.5% by International Engineering as at the Latest Practicable Date

Triumph Technology Group Company* (凱盛科技集團公司), an enterprise under ownership of the whole people incorporated in the PRC and an indirect controlling Shareholder of the Company

the proposed issue of new A Shares to Triumph Group by the Company under the Proposed A Share Placing
the subscription agreement dated 7 February 2017 (as supplemented by the Supplemental Triumph Group Subscription Agreement) entered into between the Company and Triumph Group, pursuant to which the Company has conditionally agreed to issue, and Triumph Group has conditionally agreed to subscribe for 10% of the total amount of proceeds that could be raised, i.e. the new A Shares that could be placed, under the Proposed A Share Placing

the new A Shares to be issued to Triumph Group by the Company under the Proposed A Share Placing

– 11 –

DEFINITIONS

“Update Announcement”
“Valuer”
“Vendors”
“Whitewash Waiver”
“WUYIGE”
“Yixing Environmental Technology”
“Yixing New Energy”
“%”

the update announcement of the Company dated 24 February 2017 with respect to the adjustment of certain proposed terms of the Proposed A Share Placing and the Supplemental Triumph Group Subscription Agreement

Beijing Pan-China Assets Appraisal Co. Ltd., an independent professional valuer in the PRC engaged by the Company for the purpose of the Proposed Acquisitions

including CLFG, Hefei High-Tech, Huaguang Group, Bengbu Institute, International Engineering, Triumph Group, Yixing Environmental Technology and GCL System Integration
a waiver from the Executive pursuant to Note 1 on the dispensations from Rule 26 of the Takeovers Code in respect of the obligations of CNBMG, CLFG, Bengbu Institute, Huaguang Group, International Engineering and Triumph Group to make a mandatory general offer under Rule 26 of the Takeovers Code for all the securities of the Company not already owned or agreed to be acquired by CNBMG and parties acting in concert with it as a result of the issue of the Consideration Shares
WUYIGE Certified Public Accountants LLP (大信會計師事務所（特殊普通合夥）), the reporting accountants to the Company
Yixing Environmental Technology Innovation Venture Investment Company Limited* (宜興環保科技創新創業投資有限公司), a company incorporated in the PRC with limited liability and a wholly state-owned company
CNBM (Yixing) New Energy Company Limited (中建材 (宜興)新能源有限公司), a company incorporated in the PRC with limited liability in 2016 which was owned as to 51% by Triumph Group, 29.01% by Far East Optoelectronics Company Limited (遠東光電股份有限公司) (an Independent Third Party), 12.75% by Yixing Environmental Technology and 7.24% by GCL System Integration as at the Latest Practicable Date

per cent.

– 12 –

LETTER FROM THE BOARD

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Executive Directors

Mr. Zhang Chong (Chairman) Mr. Ni Zhisen Mr. Wang Guoqiang Mr. Ma Yan

Registered and principal office: No. 9 Tang Gong Zhong Lu Xigong District Luoyang Municipal Henan Province The PRC

Non-executive Director

Mr. Xie Jun

Independent non-executive Directors

Mr. Jin Zhanping

Mr. Liu Tianni

Mr. Ye Shuhua

Mr. He Baofeng

11 October 2017

To the Shareholders

Dear Sir or Madam,

(1) VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS;

(2) PROPOSED ISSUANCE AND PLACING OF A SHARES; (3) APPLICATION FOR WHITEWASH WAIVER; AND

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

INTRODUCTION

References are made to the First Announcement, the Update Announcement and the Supplemental Announcement.

On 7 December 2016, the Company entered into three significant assets restructuring framework agreements with all relevant parties to the transactions to reach preliminary intention in respect of the plan of the Reorganisation.

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On 7 February 2017, the Company entered into (i) the First SP Agreement (as supplemented by the First Supplemental SP Agreement on 7 August 2017) 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; (ii) the Second SP Agreement (as supplemented by the Second Supplemental SP Agreement on 7 August 2017) 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; and (iii) the Third SP Agreement (as supplemented by the Third Supplemental SP Agreement on 7 August 2017) 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.

On 7 February 2017, the Company also entered into three Profit Guarantee Indemnity Agreements (as supplemented by the three Supplemental PG Agreements on 7 August 2017 respectively) 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, pursuant to which (a) CLFG and Hefei High-Tech, (b) Huaguang Group, Bengbu Institute and International Engineering, and (c) Triumph Group, Yixing Environmental Technology and GCL System Integration respectively have agreed to provide the Profit Guarantee to the Company during the Profit Guarantee Period.

In respect of the Triumph Group A Share Placing, on 7 February 2017, the Company entered into the Triumph Group Subscription Agreement (as supplemented by the Supplemental Triumph Group Subscription Agreement on 24 February 2017) with Triumph Group, pursuant to which the Company has conditionally agreed to issue, and Triumph Group has conditionally agreed to subscribe for 10% of the total amount of proceeds that could be raised, i.e. the new A Shares that could be placed, under the Proposed A Share Placing. Triumph Group will not involve in the price inquiry process of the issue price of the Proposed A Share Placing and has undertaken to accept result of the price inquiry and the same subscription price of the Other Qualified Investors.

The purpose of this circular is to provide you with, among other things, (i) details of the Reorganisation, the Proposed Acquisitions Agreements and the Profit Guarantee Indemnity Agreements, the transactions contemplated thereunder, the Specific Mandates, the Proposed A Share Placing and the Triumph Group A Share Placing; (ii) details of the situation of current return dilution by the Reorganisation and the relevant remedial measures; (iii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders on the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing; (iv) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders on the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific

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Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing; (v) certain information of the Company, the Target Companies and the Enlarged Group; and (vi) summaries of valuation reports of the Target Companies.

(1) THE PROPOSED ACQUISITIONS

1. The Proposed Acquisitions Agreements

(i) Principal terms of the First SP Agreement

Date : 7 February 2017 (as supplemented by the First Supplemental SP Agreement on 7 August 2017) Parties : (1) The Company, as the purchaser; and (2) CLFG and Hefei High-Tech, as the sellers.

As at the Latest Practicable Date, CLFG is the substantial Shareholder of the Company and therefore is a connected person of the Company under Chapter 14A of the Listing Rules. To the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, Hefei High-Tech and its ultimate beneficial owners are Independent Third Parties.

Pursuant to the First SP Agreement (as supplemented by the First Supplemental SP Agreement on 7 August 2017), CLFG and Hefei High-Tech have conditionally agreed to sell 76.92% and 23.08% of the equity interest in Hefei New Energy respectively, representing the entire equity interest in Hefei New Energy, and the Company has conditionally agreed to purchase the equity interest in Hefei New Energy held by CLFG and Hefei High-Tech with an aggregate consideration of RMB307,825,000, which was determined on arm’s length negotiations with reference to the valuation of the entire equity interest of Hefei New Energy as at 31 October 2016 as appraised by the Valuer by using income approach valuation method. The valuation report of Hefei New Energy was filed with the SASAC of the State Council on 3 August 2017. Pursuant to the valuation report of Hefei New Energy, the valuation of 100% equity interest in Hefei New Energy as at 31 October 2016, being the valuation base date, is RMB307.8250 million. The aggregate consideration of RMB307,825,000 shall be settled by the Company by allotment and issue of 13,126,864 new A Shares to the respective parties, details of which are set out in the below section headed “ The Consideration Shares ”.

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(ii) Principal terms of the Second SP Agreement

Date : 7 February 2017 (as supplemented by the Second Supplemental SP Agreement on 7 August 2017)

Parties : (1) The Company, as the purchaser; and

(2) Huaguang Group, Bengbu Institute and International Engineering, as the sellers.

As at the Latest Practicable Date, Bengbu Institute is the substantial Shareholder of the Company and an indirect wholly-owned subsidiary of CNBMG, Huaguang Group is an indirect wholly-owned subsidiary of CNBMG and International Engineering is an associate of CNBMG. Therefore, each of Bengbu Institute, Huaguang Group and International Engineering is regarded as a connected person of the Company under Chapter 14A of the Listing Rules.

Pursuant to the Second SP Agreement (as supplemented by the Second Supplemental SP Agreement on 7 August 2017), Huaguang Group, Bengbu Institute and International Engineering have conditionally agreed to sell 67.47%, 25.03% and 7.5% of the equity interest in Tongcheng New Energy respectively, representing the entire equity interest in Tongcheng New Energy, and the Company has conditionally agreed to purchase the equity interest in Tongcheng New Energy held by Huaguang Group, Bengbu Institute and International Engineering with an aggregate consideration of RMB221,651,200, which was determined on arm’s length negotiations with reference to the valuation of the entire equity interest of Tongcheng New Energy as at 31 October 2016 as appraised by the Valuer by using income approach valuation method. The valuation report of Tongcheng New Energy was filed with the SASAC of the State Council on 3 August 2017. Pursuant to the valuation report of Tongcheng New Energy, the valuation of 100% equity interest in Tongcheng New Energy as at 31 October 2016, being the valuation base date, is RMB221.6511 million. The aggregate consideration of RMB221,651,200 shall be settled by the Company by allotment and issue of 9,452,076 new A Shares to the respective parties, details of which are set out in the below section headed “ The Consideration Shares ”.

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(iii) Principal terms of the Third SP Agreement

Date : 7 February 2017 (as supplemented by the Third Supplemental SP Agreement on 7 August 2017)

Parties : (1) The Company, as the purchaser; and

(2) Triumph Group, Yixing Environmental Technology and GCL System Integration, as the sellers.

As at the Latest Practicable Date, Triumph Group is a direct wholly-owned subsidiary of CNBMG. Therefore, Triumph Group is regarded as a connected person of the Company under Chapter 14A of the Listing Rules. To the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, each of Yixing Environmental Technology and GCL System Integration and their respective ultimate beneficial owners are Independent Third Parties.

Pursuant to the Third SP Agreement (as supplemented by the Third Supplemental SP Agreement on 7 August 2017), Triumph Group, Yixing Environmental Technology and GCL System Integration have conditionally agreed to sell 51%, 12.75% and 7.24% of the equity interest in Yixing New Energy respectively, representing an aggregate of 70.99% of the equity interest in Yixing New Energy, and the Company has conditionally agreed to purchase the equity interest in Yixing New Energy held by Triumph Group, Yixing Environmental Technology and GCL System Integration with an aggregate consideration of RMB245,089,500, which was determined on arm’s length negotiations with reference to the 70.99% of the valuation of the entire equity interest of Yixing New Energy as at 31 October 2016 as appraised by the Valuer by using income approach valuation method. The valuation report of Yixing New Energy was filed with the SASAC of the State Council on 3 August 2017. Pursuant to the valuation report of Yixing New Energy, the valuation of 100% equity interest in Yixing New Energy as at 31 October 2016, being the valuation base date, is RMB345.2383 million. The aggregate consideration of RMB245,089,500 shall be settled by the Company by allotment and issue of 10,451,576 new A Shares to the respective parties, details of which are set out in the below section headed “ The Consideration Shares ”.

The remaining 29.01% equity interest in Yixing New Energy is held by Far East Optoelectronics Company Limited* (遠東光電股份有限公司), an Independent Third Party, and it is its own commercial decision not to dispose its equity interest in Yixing New Energy to the Company.

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Profit Forecast Requirements under the Takeovers Code and the Listing Rules

Beijing Pan-China Assets Appraisal Co., Ltd. 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 (the “ Valuation ”) was prepared by the Valuer based on income approach. 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, 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 X to this circular.

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 summaries set forth as Appendices VII to IX to this circular.

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 the 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 a valuation 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 is able to make appropriate profits to maintain the capability of going concern.
(II) Valuation assumptions under the income approach:
There is no significant change in the relevant prevailing 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 fully comply with all the relevant laws and regulations unless otherwise stated.

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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 enterprise 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) (the “ HNTE Certificate ”) on 5 December 2016 for a validity period of three years. It is assumed that Hefei New Energy will continue to obtain the HNTE Certificate upon expiry of the validity period (Note 1) .
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 Tongcheng Municipal People’s Government and its policy (the “ Refund Policy ”) for refund of land use tax will continue to be in force, and that Tongcheng New Energy is able to enjoy the refund of land use tax on a perpetual basis (Note 2) .

Notes:

(1) According to the “Administrative Measures for Recognition of High and New Technology Enterprises 《高新技術企業認定管理辦法》( )” dated 29 January 2016 published by the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology of the PRC, in order to qualify for the high and new technology enterprise status, an enterprise must reach certain standards (the “ HNTE Requirements ”) including: (i) being established for over one year in the PRC; (ii) having acquired the intellectual property rights that technically support their main products and/or services by means of independent research and development or purchasing and transferring; (iii) operating within the specified fields stated in the ‘high-tech fields’ supported by the state; (iv) the technical personnel of enterprises engaged in research and development and related technological innovation activities

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accounting for no less than 10% of the total number of employees in that year; (v) research and development expenditure accounting for sales income for the past three financial years adhere to one of the following: (a) not less than 5% if latest annual sales income is less than RMB50 million in the last year; (b) not below 4% if the latest annual sales income is between RMB50 million and RMB200 million; and (c) not below 3% if the latest annual sales income is more than RMB200 million; (vi) research and development expenditure within the PRC being not less than 60%; (vii) the ratio of income from high-tech related operations against total income being not lower than 60%; (viii) the assessment of the ability of an enterprise to innovate meeting the relevant requirements; and (ix) no severe safety, quality incidents or severe environmental violation occurred within the previous year of the application by the enterprise.

According to the PRC legal opinion prepared by a qualified PRC legal adviser, Beijing Kang Da Law Firm, which confirmed that upon expiry of the three years validity period of the HNTE Certificate and subject to Hefei New Energy has satisfied the HNTE Requirements as set out above, it is expected that there is no material legal impediment to obtain the HNTE Certificate.

Hefei New Energy has achieved the HNTE Requirements and the HNTE Certificate has been granted to Hefei New Energy on 5 December 2016. Given the fact that Hefei New Energy is currently expanding its production scale and projects and strengthening its R&D department, i.e. recruiting more experienced technicians, and based on the financial forecast of Hefei New Energy, the Company is of the view that it is likely for Hefei New Energy to meet the HNTE Requirements as set out in the “Administrative Measures for Recognition of High and New Technology Enterprises (高新技術企業認定管理辦法)” upon the expiry of the three years validity period.

As the grant of the HNTE Certificate is only a matter in relation to a tax credit program imposed by the PRC Government, whether the HNTE Certificate is obtained does not have actual impact on the business operation of Hefei New Energy.

(2) The Refund Policy was adopted by Tongcheng Municipal People’s Government in 2016 and Tongcheng New Energy has received the land use tax refund from Tongcheng Municipal People’s Government for the year 2016 in July 2017. As at the Latest Practicable Date, the Company has not received any notice(s) from Tongcheng Municipal People’s Government that the Refund Policy will be amended or terminated. Therefore, it is assumed that the Refund Policy shall continue to be in force and Tongcheng New Energy will continue to enjoy the land use tax refund. As the Refund Policy is only a tax refund program adopted by Tongcheng Municipal People’s Government, whether Tongcheng New Energy can enjoy the Refund Policy does not have actual impact on the busienss operation of Tongcheng New Energy.

Specific assumptions:

The cash flow forecasts of Hefei New Energy are based on its existing production capacity, operation capacity and relationship with its existing business partners as well as the future trend of the PV glass market.
The estimated revenue of Hefei New Energy for 2017 will be approximately RMB576 million. In the period from 2018 to 2022, the increase in the revenue of Hefei New Energy will be in the range of 1%–4%, mainly due to the continuous release of production capacity and changes in product mix.

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The average discounting rate as determined by Hefei New Energy based on the traditional capital assets pricing model and model of weighted average cost of capital will be approximately 10.3%.
The cash flow forecasts of Tongcheng New Energy are based on its existing production capacity, operation capacity and relationship with its existing business partners as well as the future trend of the PV glass market.
The estimated revenue of Tongcheng New Energy for 2017 will be approximately RMB255 million. In the period from 2018 to 2022, the increase in the revenue of Tongcheng New Energy will be in the range of 0.3%–0.7%, mainly due to the continuous release of production capacity.
The average discounting rate as determined by Tongcheng New Energy based on the traditional capital assets pricing model and model of weighted average cost of capital will be approximately 10.2%.
The cash flow forecasts of Yixing New Energy are based on its existing production capacity, operation capacity and relationship with its existing business partners as well as the future trend of the PV glass market.
The estimated revenue of Yixing New Energy for 2017 will be approximately RMB274 million. In 2018, the increase in the revenue of Yixing New Energy will be 62%, mainly attributable to the fact that Phase II project will be put into production. In the period from 2019 to 2022, the increase in the revenue of Yixing New Energy will be in the range of 3%–8%, mainly due to the continuous release of production capacity.
The average discounting rate as determined by Yixing New Energy based on the traditional capital assets pricing model and model of weighted average cost of capital will be approximately 10.3%.

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 Company engaged the Valuer on the basis: (i) of the terms of engagement between the Company and the Valuer (including its independence); (ii) that the Valuer is an established professional asset valuer and it is authorized by the CSRC and the Ministry of Finance of the PRC to offer asset valuation services in the PRC; and (iii) that the responsible persons of the Valuer for this transaction, being Ms. Qin XiangHong and Mr. Dong Yulu, have over 10 years and 9 years of experience in asset appraisal practice in the PRC respectively and both have appraised various projects in relation to the glass industry in the PRC previously. Accordingly, the Company is of the view that the Valuer has the expertise to perform valuation with respect to the Target Companies.

The Valuation has been prepared by the Valuer. The Valuer has reviewed the financial information of the respective Target Companies as of July 2017 provided by the auditor and the respective Target Companies and 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 July 2017. Accordingly, there was no material change in the appraised value of the respective Target Companies as at 31 July 2017 as compared to those set out in the valuation reports.

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 X to this circular in accordance with Rule 14.62 of the Listing Rules and Rules 10 and 11 of the Takeovers Code.

Other principal terms of the three Proposed Acquisitions Agreements

Save for the differences in the parties and target assets clauses as well as clauses in relation to the consideration mentioned above, the terms of the three Proposed Acquisitions Agreements are substantially the same.

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Set out below is a summary of the other principal terms of the three Proposed Acquisitions Agreements:

The Consideration Shares

Pursuant to the Proposed Acquisitions Agreements, all the respective Vendors have agreed that the consideration for the Proposed Acquisitions would be settled by the allotment and issue of the Consideration Shares by the Company. Details of the number of the Consideration Shares to be issued to the respective Vendors under the Proposed Acquisitions Agreements are shown below:

Name of the Vendors The First SP Agreement CLFG Hefei High-Tech Total The Second SP Agreement Huaguang Group Bengbu Institute International Engineering Total The Third SP Agreement Triumph Group Yixing Environmental Technology GCL System Integration Total	Consideration (RMB) 236,788,461.54 71,036,538.46 307,825,000 149,552,144.41 55,482,150.65 16,616,904.94 221,651,200 176,085,855.41 44,021,463.85 24,982,180.74 245,089,500	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 to the total issued share capital of the Company as at the Latest Practicable Date (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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Pursuant to the Proposed Acquisitions Agreements, the issue price of the Consideration Shares is RMB23.45 (equivalent to approximately HK$26.50) per Consideration Share, which (i) shall not be less than 90% of the ratio of the total turnover over the total volume of the A Shares for the last 20 trading days of A Shares as quoted on the SSE prior to the announcement date of the Board meeting approving the Proposed Acquisitions i.e. 8 February 2017; and (ii) is subject to the approval of the EGM and the CSRC and adjustment in case of ex-rights or ex-dividend during the period from the announcement date of the Board meeting to the issue date in accordance with the relevant rules of the CSRC and the SSE. The issue price of the Consideration Shares was determined in accordance with the “Administrative Measures on Significant Assets Restructuring of Listed Companies (上市公司重大資產重組管理辦法)” issued by the CSRC (the “ PRC Reorganisation Measures ”), which stipulates that the issue price of the consideration shares to be issued by a PRC listed company under the significant assets restructuring shall not be less than 90% of the market reference price, being the average trading price of the PRC listed shares (i.e. the ratio of the total turnover over the total volume) for either the last (i) 20 trading days, (ii) 60 trading days, or (iii) 120 trading days of the PRC listed shares prior to the announcement date of the board meeting approving the transactions contemplated under the significant assets restructuring. As trading in the A Shares has been suspended from 8 September 2016 to 9 March 2017, the issue price of the Consideration Shares was determined based on 90% of the ratio of the total turnover over the total volume of the A Shares for the last 20 trading days of A Shares prior to 8 September 2016. Such issue price of RMB23.45 represents:

(a) a premium of approximately 487.58% over the closing price of HK$4.51 per H Share as quoted on the Stock Exchange as at the Latest Practicable Date;
(b) a premium of approximately 397.19% over the closing price of HK$5.33 per H Share as quoted on the Stock Exchange on the Last Trading Day;
(c) a premium of approximately 403.80% over the average closing price of approximately HK$5.26 per H Share as quoted on the Stock Exchange for the last 5 trading days up to and including the Last Trading Day;
(d) a premium of approximately 402.56% over the average closing price of approximately HK$5.27 per H Share as quoted on the Stock Exchange for the last 10 trading days up to and including the Last Trading Day;
(e) a premium of approximately 412.54% over the average closing price of approximately HK$5.17 per H Share as quoted on the Stock Exchange for the last 30 trading days up to and including the Last Trading Day;

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(f) a discount of approximately 8.43% to the closing price of RMB25.61 (equivalent to approximately HK$28.94) per A Share as quoted on the SSE on 7 September 2016 (the last trading day before the suspension of the trading in A Shares); and
(g) a premium of approximately 2,245% over the unaudited net assets attributable to the Shareholders per Share of approximately RMB1.00 (equivalent to approximately HK$1.12), calculated based on the Company’s unaudited net assets attributable to the Shareholders of approximately RMB524,447,375.98 as at 30 June 2017 (as quoted from the interim report of the Company for the six months ended 30 June 2017 published on 22 September 2017).

The aggregate number of the Consideration Shares to be issued by the Company of 33,030,516 new A Shares represents approximately 6.27% of the total issued share capital of the Company as at the Latest Practicable Date and approximately 5.90% of the total issued share capital of the Company as enlarged by the issue of such Consideration Shares (before the Proposed A Share Placing).

The Consideration Shares shall rank pari passu among themselves and with the A Shares in issue. The issue of the Consideration Shares will be subject to the approval by the Independent Shareholders at the EGM, the A Shares Class Meeting and the H Shares Class Meeting.

The Consideration Shares will be issued by the Company under the Specific Mandates to be sought from the Independent Shareholders at the EGM.

Each of CLFG, Huaguang Group, Bengbu Institute, International Engineering, Triumph Group, Yixing Environmental Technology and GCL System Integration has undertaken that the respective Consideration Shares to be issued to them could not be transferred within 36 months after completion of the issue of the Consideration Shares. The above 36-month lock-up period is made in accordance with the PRC Reorganisation Measures, which requires that if (i) the consideration shares are obtained by any of the controlling shareholder or de facto controller of a PRC listed company or their related parties (applicable to CLFG, Huaguang Group, Bengbu Institute, International Engineering and Triumph Group, being the controlling shareholders of the Company or their related parties respectively); or (ii) the owner of the target company receiving the consideration shares of a PRC listed company within 12 months from the date on which such owner acquiring equity interest in the target company (applicable to Yixing Environmental Technology and GCL System Integration, which both acquired equity interest in Yixing New Energy on 28 October 2016), such consideration shares shall not be transferred within 36 months from the completion of the issue of the Consideration Shares (but

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can be repurchased by the Company to fulfill the compensation obligation (if applicable) under the Profit Guarantee Indemnity Agreements as further explained below). The 36-month lock-up period is not applicable to Hefei High-Tech as Hefei High-Tech is neither a related party of the Company nor acquired equity interest in Hefei New Energy for less than 12 months.

In addition, in accordance with the PRC Reorganisation Measures, any person who obtains shares of a PRC listed company through asset acquisition transaction shall not transfer such shares within 12 months from the completion of the issue. Therefore, Hefei High-Tech has undertaken that the Consideration Shares issued to it could not be transferred within 12 months after completion of the issue of the Consideration Shares (but can be repurchased by the Company to fulfill the compensation obligation (if applicable) under the Profit Guarantee Indemnity Agreements as further explained below). Hefei High-Tech has further undertaken that after the 12-month lock-up period, it may transfer the Consideration Shares issued to it after fulfillment of the Profit Guarantee or its compensation obligation for the relevant financial year under the Profit Guarantee Indemnity Agreement, subject to the transfer restriction that it shall not transfer more than 25% of the Consideration Shares issued to it to any other party(ies) (however such 25% transfer restriction does not apply to the repurchase by the Company to fulfill the compensation obligation of Hefei High-Tech (if applicable) under the Profit Guarantee Indemnity Agreement as further explained below) for each of any 12 months within the Profit Guarantee Period. Such 25% transfer restriction was imposed to ensure Hefei High-Tech has sufficient number of Consideration Shares to fulfill its compensation obligation under the Profit Guarantee Indemnity Agreement during the Profit Guarantee Period.

Each of CLFG, Huaguang Group, Bengbu Institute, International Engineering and Triumph Group has also undertaken that if (i) the closing prices of the A Shares for 20 consecutive trading days are below the issue price of the Consideration Shares within the 6-month period from the completion date of the Proposed Acquisitions; or (ii) the closing price of the A Shares as at the end of the 6-month period after completion of the Proposed Acquisitions is below the issue price of the Consideration Shares, their 36-month lock-up period of the Consideration Shares will be automatically extended for at least 6 months. The above lock-up period of the Consideration Shares shall also be subject to the requirements of the CSRC and/or the SSE in respect of lock-up period, including but not limited to any additional requirement(s) on top of the lock-up period measures as mentioned in this circular that may be further imposed by the CSRC and/or the SSE and any amendments to the existing measures or imposition of new measures in respect to the lock-up period for PRC listed company.

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Conditions precedent

Each of the Proposed Acquisitions Agreements shall become effective after satisfaction of the Proposed Acquisitions Conditions Precedent set forth below. If any of the Proposed Acquisitions Conditions Precedent is not satisfied, the Proposed Acquisitions Agreements shall not become effective:

i. the approval of the transactions contemplated under the respective Proposed Acquisitions Agreements by the Board;
ii. the approval of the transactions contemplated under the respective Proposed Acquisitions Agreements by the Non-connected Shareholders at the EGM and the A Shares Class Meeting; and the approval of the waiver from the obligation of CLFG and parties acting in concert with it to make a mandatory general offer (according to the laws and regulations of the PRC) in respect of their acquisition of the Shares of the Company by the Non-connected Shareholders at the EGM;
iii. the approval of the transactions contemplated under the respective Proposed Acquisitions Agreements by the Independent Shareholders at the EGM and the H Shares Class Meeting; and the approval of the Whitewash Waiver by the Independent Shareholders at the EGM;
iv. the approval by the Stock Exchange of the circular to be despatched to the Shareholders in respect of the transactions contemplated under the respective Proposed Acquisitions Agreements and/or the Reorganisation, and that the transactions contemplated under the respective Proposed Acquisitions Agreements and/or the Reorganisation have not been regarded as a reverse takeover of the Company under the Listing Rules before or in the course of vetting the circular;
v. the filing of valuation results of the respective Target Companies as confirmed in the valuation reports of the respective Target Companies with the SASAC of the State Council;
vi. the approval of the transactions contemplated under the respective Proposed Acquisitions Agreements by the SASAC Authorised Office(s);
vii. the granting of the Whitewash Waiver by the Executive; and
viii. the approval of the transactions contemplated under the respective Proposed Acquisitions Agreements by the CSRC.

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The three Proposed Acquisitions Agreements are not inter-conditional upon each other. Each of the above Proposed Acquisitions Conditions Precedent is not waivable. As at the Latest Practicable Date, save for conditions (i), (iv) and (v) as set out above, none of the Proposed Acquisitions Conditions Precedent has been fulfilled.

If the Whitewash Waiver as mentioned in condition (vii) above is not granted, which is conditional on the approval by the Independent Shareholders at the EGM, by the Executive, the Proposed Acquisitions Agreements will be void and invalid and the Reorganisation will not proceed.

Regarding condition (iii) as set out above, resolution number 6 as stated in the Notice of the EGM dated 7 August 2017 as included in Appendix XVII to this circular and resolution numbers 14, 15 and 16 as stated in the Supplemental Notice of the EGM dated 11 October 2017 as included in Appendix XIX to this circular are proposed for the three Proposed Acquisitions Agreements respectively for the Independent Shareholders’ approval. As the amount of consideration of each of the Proposed Acquisitions Agreements is more than 20% of the total consideration amount thereunder, according to the PRC Reorganisation Measures and the relevant regulations, if either the abovementioned resolution numbers 6, 14, 15 or 16 is voted down at the EGM and either one of the three Proposed Acquisitions Agreements cannot proceed, such situation will constitute a major adjustment to the Reorganisation and the Company will have to (i) re-formulate the Reorganisation plan, including but not limited to, adjustment to the pricing base date of the Consideration Shares; (ii) obtain the relevant approval(s), including but not limited to, the Board approval and approval(s) from the relevant government departments in the PRC; and (iii) submit to the extraordinary general meeting of the Company again for the approval of the Independent Shareholders.

Profit Guarantee

Pursuant to the Proposed Acquisitions Agreements, each of the Vendors under the Proposed Acquisitions Agreements has undertaken to provide the Profit Guarantee to the Company during the Profit Guarantee Period and enter into the Profit Guarantee Indemnity Agreements to set out details of the Profit Guarantee. Details of the Profit Guarantee Indemnity Agreements are set out in the subsection headed “ Principal terms of the Profit Guarantee Indemnity Agreements ” below.

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Profit of the Target Companies during transitional period

Each of the respective parties under the three Proposed Acquisitions Agreements has agreed that upon completion of the Proposed Acquisitions, all the profit or loss (as the case may be) of each of the Target Companies (with respect to Yixing New energy, 70.99% of its profit or loss (as the case may be)) arising from or incurred during the period from 31 October 2016 to the completion date of the Proposed Acquisitions, as shown in each of the financial accounts of the Target Companies as prepared by the auditors of the Company, shall (in case of profit) belong to the Company or (in case of loss) be compensated by the respective Vendors under the three Proposed Acquisitions Agreements in cash pro-rata to their respective percentage of equity interest in the Target Companies, and there would not be a cap to the compensation amount during such period.

Completion of the Proposed Acquisitions

Pursuant to the Proposed Acquisitions Agreements, there is no specific deadline for the parties to satisfy the Proposed Acquisitions Conditions Precedent. However, each of the respective parties under the three Proposed Acquisitions Agreements has agreed that the transactions contemplated under the Proposed Acquisitions Agreements shall be completed within 12 months from the date of approval of the CSRC in respect of the Proposed Acquisitions. As at the Latest Practicable Date, there are no separate agreements entered into by the respective parties in relation to the aforementioned matter.

The Proposed A Share Placing shall be conditional upon the completion of the Proposed Acquisitions and the issue of the Consideration Shares, but whether the Proposed A Share Placing is implemented will not affect the implementation of the Proposed Acquisitions.

Principal terms of the Profit Guarantee Indemnity Agreements

On 7 February 2017, the Company entered into three Profit Guarantee Indemnity Agreements (as supplemented by the Supplemental PG Indemnity Agreements on 7 August 2017) respectively 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 (collectively, the “ Guarantors ”), pursuant to which the respective Guarantors have agreed to provide the Profit Guarantee to the Company for the net profit attributable to equity holders of the respective Target Companies after deduction of extraordinary profit or loss during the Profit Guarantee Period. According to the announcement of the CSRC [2008] No. 43, extraordinary profit or loss refers to profit or loss arising from various transactions and matters that has no direct relation with the ordinary course of

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business of a company, or that is related to the ordinary course of business but affects the reasonable judgment on the company’s operation performance and profitability due to the special and occasional nature of such transaction and matter. The relevant extraordinary profit or loss items will be determined with reference to the announcement of CSRC [2008] No. 43. The Profit Compensation Amount (as defined below) shall be determined by an independent auditor appointed by the Company, and the Company and each of the respective Guarantors shall agree with the respective Profit Compensation Amount.

Set out below is a summary of the principal terms of the three Profit Guarantee Indemnity Agreements (as supplemented by the Supplemental PG Indemnity Agreements on 7 August 2017):

Profit Guarantee indemnity

Pursuant to the First 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 (Note) ) 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.

Pursuant to the Second 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 (Note) ) 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.

Note: The reasons for excluding the profit or gains derived from investment of the proceeds from the Proposed A Share Placing in project(s) of Hefei New Energy and Tongcheng New Energy when calculating the Profit Guarantee of these two Target Companies are that: (i) the Proposed A Share Placing may or may not proceed; and (ii) the Profit Guarantee amounts of these two Target Companies will be determined without taking into account the Proposed A Share Placing and the effect of investment of proceeds therefrom in project(s) of these two Target Companies.

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LETTER FROM THE BOARD

Pursuant to the Third 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 Profit Guarantee amounts for each of the Target Companies for each of the financial periods ending 31 December 2017, 2018, 2019 and 2020 (if applicable) are based on arm’s length negotiation between the Company and the Vendors with reference to the forecasted net profit attributable to equity holders of the Target Companies after deduction of extraordinary profit or loss for each of the financial periods ending 31 December 2017, 2018, 2019 and 2020 as forecasted by the Valuer by using income approach valuation method, and therefore the Profit Guarantee amounts are consistent with the projections adopted under the valuation reports of the Target Companies. The valuation reports of each of the Target Companies was filed with the SASAC of the State Council on 3 August 2017.

For the purposes of the Profit Guarantee, the audited accounts of the Target Companies for the financial periods ending 31 December 2017, 2018, 2019 and 2020 (if applicable) as referred in the Profit Guarantee Indemnity Agreements will be prepared in accordance with the PRC Accounting Standards for Business Enterprises by the auditor of the Company or by a PRC accounting firm listed on the List of Approved Mainland Accounting Firms Eligible for Acting as Reporting Accountants and/or Auditors of Mainland Incorporated Companies Listed in Hong Kong of the Stock Exchange.

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As the profit guarantee amounts under the Profit Guarantee Indemnity Agreements (the “Profit Guarantee Amount”) 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 Amount, of which the related letters are set out in Appendix X to this circular.

Compensation for Profit Guarantee

If any of the net profit attributable to equity holders of the respective Target Companies after deduction of extraordinary profit or loss as shown in the audited accounts of the respective Target Companies (the “ Actual Net Profit ”) for the relevant financial year during the Profit Guarantee Period falls short of the Profit Guarantee for the relevant financial year, the relevant Guarantors shall compensate the Company for the deficiency.

The formula for calculating the annual compensation amount for the Profit Guarantee (the “ Profit Compensation Amount ”) is as follows:

The Profit = (the accumulated Profit Guarantee Amount as at Compensation the end of the relevant financial year of the Amount for the respective Target Companies – the accumulated relevant financial Actual Net Profit of the respective Target year Companies as at the end of the relevant financial year) ÷ the sum of the Profit Guarantee Amount for the respective Target Companies during the Profit Guarantee Period × the acquisition consideration for the respective Target Companies – the accumulated compensated amount
Note: If the Profit Compensation Amount calculated from the above formula is below zero (0), it shall be deemed as zero (0).

If the Actual Net Profit of the respective Target Companies can meet the Profit Guarantee in the first and/or second financial year(s) during the Profit Guarantee Period but fail to meet the Profit Guarantee in the subsequent financial year(s) (i.e. the second and/or third financial year(s)), and the accumulated Actual Net Profit (i.e. the accumulated Actual Net Profit for the first and second financial years or for all the three financial years (as the case may be)) exceeds or equals to the sum of the accumulated Profit Guarantee Amount (i.e. the accumulated Profit Guarantee Amount for the first and second financial years or for all the three financial years (as the case may be)) and the accumulated actual net losses (if any) (i.e. the accumulated actual net losses for the first and second financial years or for all the three financial years (as the case may be)), the respective Guarantors will not be required to compensate (i.e. the amount of Actual Net Profit which exceeds the Profit

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Guarantee Amount in the first and/or second financial year(s) (as the case may be) can be used to offset the shortfall in the subsequent year(s)).

To summarize, the Profit Compensation Amount for each of the Target Companies for the relevant financial year during the Profit Guarantee Period can be calculated as follows:

For the first financial (the Profit Guarantee Amount for the first financial year (the “ FY year – the Actual Net Profit for the first financial year Amount ”): (if any) + the actual net losses for the first financial year (if any)) ÷ the sum of the Profit Guarantee Amount during the Profit Guarantee Period × the acquisition consideration of the Target Company

If the FY Amount is positive, the relevant Guarantors will be required to compensate the Company with such amount.

For the second (the Profit Guarantee Amount for the second financial financial year (the year – the Actual Net Profit for the second financial “ SY Amount ”): year (if any) + the actual net losses for the second financial year (if any)) ÷ the sum of the Profit Guarantee Amount during the Profit Guarantee Period × the acquisition consideration of the Target Company

If the SY Amount is positive and the sum of the FY Amount and SY Amount is also positive, the relevant Guarantors will be required to compensate the Company with the SY Amount (plus the FY Amount if the FY Amount is negative).

For the third financial year (the “ TY Amount ”):

(the Profit Guarantee Amount for the third financial year – the Actual Net Profit for the third financial year (if any) + the actual net losses for the third financial year (if any)) ÷ the sum of the Profit Guarantee Amount during the Profit Guarantee Period × the acquisition consideration of the Target Company

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If the TY Amount is positive and the sum of the FY Amount, SY Amount and TY Amount is also positive, the relevant Guarantors will be required to compensate the Company with an amount of the sum of FY Amount, SY Amount and TY Amount minus the amount compensated in the previous financial year(s).

Note: The Actual Net Profit or the actual net losses for the respective financial year will be zero if the respective Target Companies record zero profit or loss for the respective financial year. In addition, the Actual Net Profit and the actual net losses will not occur simultaneously in any respective financial year.

For the avoidance of doubt, the Company will not return to the relevant Guarantors any Shares used to compensate the Profit Compensation Amount in previous year(s) (i.e. there will not be any reversal transfer of compensation Shares which have already been repurchased by the Company).

The above compensation mechanism is based on arm’s length negotiation between the Company and the respective Guarantors. The above mechanism, including terms of annual compensation and non-reversal transfer of compensation Shares, can protect the interests of the Company by safeguarding timely and promising compensation from the relevant Guarantors and at the same time, the accumulating calculation mechanism can motivate the respective Guarantors to achieve the Profit Guarantee. Hence, the compensation mechanism under the Profit Guarantee Indemnity Agreements provides a fair measurement of compensation for the Profit Guarantee over the Profit Guarantee Period for all parties therein and therefore is fair and in the interests of the Company and the Shareholders as a whole.

Assets Impairment Indemnity and compensation

Upon expiry of the Profit Guarantee Period, the Company shall engage an accounting firm with securities qualification to conduct impairment tests and issue an impairment test report on each of the Target Companies in accordance with the rules and requirements of the CSRC.

If the impairment amount of any of the Target Companies as at the end of the Profit Guarantee Period exceeds the accumulated Profit Compensation Amount(s) of the respective Target Companies, the relevant Guarantors under the Profit Guarantee Indemnity Agreements shall make further compensation to the Company (the “ Impairment Compensation Amount ”) calculated based on the following formula:

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The Impairment = the impairment amount of the respective Target Compensation Companies as at the end of the Profit Guarantee Amount Period – the paid accumulated Profit Compensation Amount for the respective Target Companies during the Profit Guarantee Period
Note: If the Impairment Compensation Amount calculated from the above formula is below zero (0), it shall be deemed as zero (0).

Compensation method and adjustment for the Profit Guarantee indemnity and the Assets Impairment Indemnity

The relevant Guarantors under the Profit Guarantee Indemnity Agreements shall first make compensation for the Profit Compensation Amount and the Impairment Compensation Amount with the Consideration Shares of the Company acquired in the Proposed Acquisitions. If the Consideration Shares are insufficient for compensation, the balance shall be settled by the relevant Guarantors in cash.

(1) Number of the compensation shares shall be calculated based on the following formula:
Number of the = Profit Compensation Amount or Impairment compensation Compensation Amount ÷ the issue price of the shares for the Consideration Shares relevant period
(2) During the Profit Guarantee Period, in the event of capitalization issue by conversion or bonus issue by the Company, the number of compensation shares shall be adjusted correspondingly based on the following formula:
Number of the = Number of the compensation shares for the compensation relevant period × (1 + proportion of shares (adjusted) capitalization issue by conversion or bonus issue)
(3) During the Profit Guarantee Period, if the Company distributes cash dividend, the cash dividend shall be correspondingly refunded based on the following formula:

Amount to be = Allocated cash dividend per share (after tax) × refunded Number of compensation shares for the relevant period

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LETTER FROM THE BOARD

The Company shall repurchase and cancel the Shares compensated by the relevant Guarantors under the Profit Guarantee Indemnity Agreements for the relevant period at a total consideration of RMB1.00. Resolution(s) for general mandate and renewal of the general mandate in respect of the abovementioned repurchase for any financial years will be proposed at the general meeting(s) of the Company (when necessary) for the Independent Shareholders’ approval.

The aggregate compensation of the Profit Compensation Amount and the Impairment Compensation Amount by each of the relevant Guarantors under the respective Profit Guarantee Indemnity Agreements shall not exceed 100% of the total consideration received by it under the respective Proposed Acquisitions Agreements.

After the end of each year during or upon expiry of the Profit Guarantee Period (as the case may be), if the relevant Guarantors under the Profit Guarantee Indemnity Agreements shall make compensation for the Profit Compensation Amount or the Impairment Compensation Amount, the Company shall, upon the Board’s approval on the number of compensation shares, issue a notice of the respective compensation shares (the “ Compensation Notice ”) to the relevant Guarantors within 10 working days from the issue date of the audited accounts or the impairment test report (as the case may be), and the relevant Guarantors under the Profit Guarantee Indemnity Agreements shall within 10 working days upon the receipt of the Compensation Notice, transfer the respective compensation shares to the dedicated securities account for the repurchase of the Company and for cancellation of the compensation shares by the Company in accordance with relevant laws and regulations.

In the event that the Consideration Shares of the relevant Guarantors under the respective Profit Guarantee Indemnity Agreements are insufficient for compensation for the Profit Compensation Amount or the Impairment Compensation Amount, the relevant Guarantors under the respective Profit Guarantee Indemnity Agreements shall settle the Profit Compensation Amount or the Impairment Compensation Amount by cash within 30 working days upon receipt of the Compensation Notice.

If there occurs compensation pursuant to the Profit Guarantee Indemnity Agreements, resulting in Shares repurchase and cancellation by the Company, the shareholding of CNBMG and parties acting in concert with it in the Company may increase or decrease (depending on which Target Company(ies) cannot meet the Profit Guarantee amount and the number of Shares to be repurchased by the Company). Nonetheless, it is expected that such repurchase and cancellation of the compensation shares by the Company pursuant to the Profit Guarantee Indemnity Agreement will not result in any obligation of CNBMG and parties acting in concert with it to make a mandatory general offer in accordance with Rule 26 of the Takeovers Code. The repurchase

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LETTER FROM THE BOARD

mechanism under the Profit Guarantee Indemnity Agreements falls within the definition of “exempt share buy-back” under the Share Buy-backs Code and shall not constitute an off-market share buy-back given that the repurchase of Shares by the Company will be conducted in accordance with the terms of the Proposed Acquisitions Agreements and the Profit Guarantee Indemnity Agreements, such that prior consent from the owners of the Shares for such repurchase by the Company will not be required. Conditions precedent to the Profit Guarantee Indemnity Agreements Each of the Profit Guarantee Indemnity Agreements shall become effective after satisfaction of (i) the Proposed Acquisitions Conditions Precedent and (ii) the condition that the Proposed Acquisitions Agreements becoming effective and completed. If any of the above conditions precedent is not satisfied, the Profit Guarantee Indemnity Agreements shall not become effective.

As at the Latest Practicable Date, save for conditions (i), (iv) and (v) of the Proposed Acquisitions Conditions Precedent, none of the conditions precedent to the Profit Guarantee Indemnity Agreements has been satisfied.

Information of the Target Companies

Hefei New Energy

Hefei New Energy is a company incorporated in the PRC with limited liability in 2011. As at the Latest Practicable Date, Hefei New Energy is owned as to 76.92% by CLFG and 23.08% by Hefei High-Tech. The original acquisition cost of such 76.92% equity interest by CLFG was approximately RMB138,270,841.

Hefei New Energy is principally engaged in the research and development, production and sales of solar photovoltaic glass and further processed glass. The audited net assets book value of Hefei New Energy was approximately RMB179,211,093 as at 31 May 2017. The table below sets out the audited financial information of Hefei New Energy for the years ended 31 December 2015 and 2016 and for the five months ended 31 May 2017:

		For the year	For the year
	For the five	ended	ended
	months ended	31 December	31 December
	31 May 2017	2016	2015
	(audited)	(audited)	(audited)
	RMB	RMB	RMB
	(approximately)	(approximately)	(approximately)
Revenue	239,296,806	505,711,315	14,505,906
Profit/(loss) before tax	8,057,485	18,909,802	(11,782,283)
Profit/(loss) after tax	6,819,955	17,832,643	(11,782,283)
Total assets	1,245,585,521	1,130,822,801	984,700,810

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Hefei New Energy was in the early development stage for the years ended 31 December 2014 and 2015, which as a result generated an insignificant amount of revenue. Hefei New Energy commenced full operation in February 2016.

For the year 2014, 2015 and 2016, the revenue and net profit of Hefei New Energy experienced a significant change, which was mainly attributable to the fact that the original glass production lines of Hefei New Energy had been put into commercial operation in December 2015 and the further processing lines had been put into commercial operation in February 2016. Since no revenue from the products relating to the production lines was recognized before commercial operations, yet the costs during the relevant period such as management fees continued to occur, resulting in fewer revenue and relatively lower net profit or loss in the year 2014 and 2015. Upon the production lines commenced commercial operations, the revenue and net profit improved considerably at a high rate in 2016.

Nature of the products of Hefei New Energy

As at the Latest Practicable Date, Hefei New Energy possesses a 650T/D furnace with five oxy-fuel combustion ultra-white photovoltaic glass production lines, eight coating production lines and four tempering production lines. The thickness of the glass products of Hefei New Energy ranges from 2.5mm to 4.0mm. The photovoltaic glass of Hefei New Energy has the characteristics of high solar transmittance, high mechanical strength, high flatness, low iron content and is considered to be one of the finest glass products for usage within the solar energy industry. The photovoltaic glass widely applies to the cover and back plate of the solar photovoltaic modules.

The target customers of Hefei New Energy are the solar energy PV modules enterprises and Hefei New Energy also exports its products to global market.

Tongcheng New Energy

Tongcheng New Energy is a company incorporated in the PRC with limited liability in 2010. As at the Latest Practicable Date, Tongcheng New Energy is owned as to 67.47% by Huaguang Group, 25.03% by Bengbu Institute and 7.5% by International Engineering. The original acquisition costs of such 67.47%, 25.03% and 7.5% equity interest by Huaguang Group, Bengbu Institute and International Engineering were approximately RMB97,640,000, RMB40,000,000 and RMB10,000,000 respectively.

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Tongcheng New Energy is principally engaged in the research and development, production and sales of solar photovoltaic glass and further processed glass. The audited net assets book value of Tongcheng New Energy was approximately RMB215,015,907 as at 31 May 2017. The table below sets out the audited financial information of Tongcheng New Energy for the years ended 31 December 2015 and 2016 and for the five months ended 31 May 2017:

		For the year	For the year
	For the five	ended	ended
	months ended	31 December	31 December
	31 May 2017	2016	2015
	(audited)	(audited)	(audited)
	RMB	RMB	RMB
	(approximately)	(approximately)	(approximately)
Revenue	106,906,230	233,072,834	69,275,702
Profit/(loss) before tax	7,864,828	35,304,332	843,442
Profit/(loss) after tax	5,892,996	29,929,273	809,311
Total assets	491,885,795	468,574,897	443,656,703

Tongcheng New Energy was in the early development stage for the year ended 31 December 2014, which as a result generated an insignificant amount of revenue. Tongcheng New Energy commenced full operation in October 2015.

For the year 2014, 2015 and 2016, the revenue and net profit of Tongcheng New Energy experienced a significant change, which was mainly attributable to the fact that the production lines of Tongcheng New Energy had been put into commercial operation in October 2015. Since no revenue from the products relating to the production lines was recognized before commercial operation, yet the costs during the relevant period such as management fees continued to occur, resulting in fewer revenue and relatively lower net profit or loss in the year 2014 and 2015. Upon the production line commenced commercial operation, the revenue and net profit improved considerably at a high rate in 2016.

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Nature of the products of Tongcheng New Energy

Tongcheng New Energy possesses a 320T/D ultra-white photovoltaic glass production line and several photovoltaic glass further processing production lines, and is principally producing ultra-white rolled glass, tempered ultra-white rolled glass, anti-reflective coated tempered rolled glass and rolled cover glass. The thickness of the glass products of Tongcheng New Energy ranges from 2.5mm to 4.0mm.

The photovoltaic glass of Tongcheng New Energy has the characteristics of low expansion rate, high compressive strength and anti-potential induced degradation effect.

The design, style and size of the photovoltaic glass of Tongcheng New Energy can be specialized according to the customer’s requirements. The target customers of Tongcheng New Energy are the solar energy PV modules enterprises.

Yixing New Energy

Yixing New Energy is a company incorporated in the PRC with limited liability in 2016. As at the Latest Practicable Date, Yixing New Energy is owned as to 51% by Triumph Group, 29.01% by Far East Optoelectronics Company Limited* (遠東光電股份有限公司) (an Independent Third Party), 12.75% by Yixing Environmental Technology and 7.24% by GCL System Integration. The original acquisition cost of such 51% equity interest by Triumph Group was approximately RMB160,000,000.

Yixing New Energy is principally engaged in the research and development, production and sales of solar photovoltaic glass and further processed glass.

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Yixing New Energy is in the early development stage. The audited net assets book value of Yixing New Energy was approximately RMB324,597,212 as at 31 May 2017. The table below sets out the audited financial information of Yixing New Energy for the year ended 31 December 2016 and for the five months ended 31 May 2017:

		From 28
		October 2016
		(date of
		incorporation)
	For the five	to 31
	months ended	December
	31 May 2017	2016
	(audited)	(audited)
	RMB	RMB
	(approximately)	(approximately)
Revenue	110,801,652	37,110,963
Profit/(loss) before tax	4,794,672	722,518
Profit/(loss) after tax	3,581,281	539,145
Total assets	668,177,822	497,887,949

Nature of the products of Yixing New Energy

Yixing New Energy possesses two 280T/D furnaces with four oxy-fuel combustion ultra-white photovoltaic glass production lines and four further processing lines and is principally producing ultra-white photovoltaic original glass, tempered photovoltaic glass and coated photovoltaic glass. The thickness of the glass products of Yixing New Energy ranges from 1.5mm to 4.0mm.

The target customers of Yixing New Energy are the solar energy PV modules enterprises.

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LETTER FROM THE BOARD

Shareholding Structure

Based upon the shares in issue for each of the companies identified below, the simplified shareholding structure of the relevant companies as at the Latest Practicable Date and after completion of the Proposed Acquisitions (but before the Proposed A Share Placing) will be as follows:

(1) the following chart reflects the simplified shareholding structure of the relevant companies as at the Latest Practicable Date:

==> picture [343 x 162] intentionally omitted <==

----- Start of picture text -----

91% (Note 1)
International Engineering CNBMG
100%
100%
Triumph Group
53.64% 19% Bengbu Institute
100%
CLFG
19.94%
13.10%
Huaguang Group The Company
----- End of picture text -----

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LETTER FROM THE BOARD

(2) the following chart reflects the simplified shareholding structure of the relevant companies upon completion of the Proposed Acquisitions (but before the Proposed A Share Placing):

==> picture [375 x 202] intentionally omitted <==

----- Start of picture text -----

91% (Note 1)
International Enginerring CNBMG
0.13%
100%
Triumph Group
100%
1.34% 53.64%
Hefei High-Tech0.54% Yixing Environmental Technology 0.34% Integration 0.19%GCL System CLFG 19% Bengbu Institute 100%
(Note 2) (Note 2) (Note 2)
20.56%
12.75%
The Company Huaguang Group
1.14%
100% 70.99%
(3) Yixing New Energy
(1) Tongcheng New Energy
(2) Hefei New Energy
----- End of picture text -----

Note 1 CNBMG is indirectly interested in 91% of the equity interest in International Engineering through its holding of 44.25% equity interests in China National Building Material Company Limited* (中國建材股份有限公司).
Note 2 Each of Hefei High-Tech, Yixing Environmental Technology and GCL System Integration is independent from and has no relationship with CNBMG and parties acting in concert with it.

Financial effects of the Proposed Acquisitions

Upon completion of the Proposed Acquisitions, Hefei New Energy and Tongcheng New Energy will be 100% owned by the Company and Yixing New Energy will be 70.99% owned by the Company, and their financial information will be consolidated into the financial statements of the Group.

Based on the pro forma financial information of the Enlarged Group as set out in Appendix XIV to this circular and the bases and assumptions taken into account in preparing such pro forma financial information, as a result of the Proposed Acquisitions, the Enlarged Group’s total assets and total liabilities would be increased from approximately RMB1,356,917,020.31 to approximately RMB3,747,053,630.50 and from approximately RMB833,647,603.35 to RMB2,504,960,002.30 respectively. The Enlarged Group would also record a net profit of approximately RMB59,817,125.02 as a result of the Proposed Acquisitions as compared to a net profit of the Group of approximately RMB11,516,063.78 for the year ended 31 December 2016. Details of the financial effects of the Proposed Acquisitions on the financial position and results of the Group together with the bases and assumptions taken into account in preparing the unaudited pro forma financial information of the Enlarged Group are set out, for illustrative purpose only, in Appendix XIV to this circular.

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LETTER FROM THE BOARD

(2) THE PROPOSED A SHARE PLACING AND THE TRIUMPH GROUP A SHARE PLACING

Pursuant to the Reorganisation, the Company plans to undertake the Proposed A Share Placing for placing of A Shares to not more than 10 Qualified Investors (including Triumph Group), generating gross proceeds of not more than RMB511,865,700. Save for Triumph Group, the Other Qualified Investors shall be specific investors in compliance with the requirements of the CSRC, including securities investment funds, insurance institutional investors, trust investment companies, finance companies, securities companies, qualified foreign institutional investors (QFII), natural persons and other qualified investors in compliance with the specific requirements of the Company. The Proposed A Share Placing shall be conditional upon and take place after the completion of the Proposed Acquisitions and the issue of the Consideration Shares. In accordance with the applicable PRC laws and regulations, the Proposed A Share Placing will be subject to the approval by the Independent Shareholders at the EGM, the A Shares Class Meeting and the H Shares Class Meeting.

As stated in the Update Announcement, on 17 February 2017, the CSRC promulgated the revised “Detailed Implementation Rules for Non-public Issuance of Stocks by Listed Companies” 《上市公司非公開發行股票實施細則》( ) (the “ Revised Detailed Implementation Rules ”) and issued the “Questions and Answers in respect of Issuance Regulation – Regulatory Requirements Regarding Guiding and Regulating Financing Activities of Listed Companies” (《發行監管問答 – 關於引導規範上市公司融資行為的監管要求》) (the “ Issuance Q&A ”). According to the Revised Detailed Implementation Rules and the Issuance Q&A, (i) the pricing base date for any non-public issuance of shares by a PRC listed company for fund raising purpose as mentioned in the “Measures for Issuance of Securities by Listed Companies (上市公司證券發行管理辦法)” issued by the CSRC (the “ PRC Issuance Measures ”) was revised to “the first date of the shares issuance period”; and (ii) certain guidelines for fund raising activities of PRC listed companies were imposed, including but not limited to restricting the number of A shares to be placed or issued under the fund raising activities of a PRC listed company to not more than 20% of the total share capital of the PRC listed company prior to the issuance of A shares (collectively, the “ CSRC’s Rule Amendments ”). Details of the Pricing Base Date and the Placing Issue Price per A Share under the Proposed A Share Placing are set out in the subsection “Terms of the Proposed A Share Placing” below.

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LETTER FROM THE BOARD

On 30 September 2017, the Company was informed by CNBMG, the ultimate controlling shareholder of the Company, that CNBMG has received the “Approval on Issues Relating to the Assets Restructuring and Supporting Funds Raising of Luoyang Glass Company Limited (關於洛陽玻璃股份有限公司資產重組及配套融資有關問題的批覆)” (Guo Zi Chan Quan [2017] No. [1029]) (the “ SASAC Approval* ”) from the SASAC of the State Council. According to the SASAC Approval, upon completion of the Reorganisation (after completion of the Proposed Acquisitions and the Proposed A Share Placing), the total share capital of the Company shall not exceed 581,625,352 Shares.

The final Placing Issue Price per A Shares under the Proposed A Share Placing will be subject to the approval of the Class Meetings and the EGM, and adjustment in case of ex-rights or ex-dividend during the period from the Pricing Base Date (as defined below) to the issue date of A Shares, and determined by the Board in accordance with the relevant laws, regulations and rules with reference to the bidding prices offered by target subscribers in the price inquiry process upon the Proposed A Share Placing being approved by the CSRC.

The final number of A Shares to be placed and issued under the Proposed A Share Placing will be subject to the final Placing Issue Price and the decision of the Board according to the actual situation at the time of issuance and within the issue amount approved by the CSRC, and adjustment in case of ex-rights or ex-dividend during the period from the Pricing Base Date to the issue date of A Shares.

As at the Latest Practicable Date, save for Triumph Group, the Company has not yet identified the Other Qualified Investors. The Proposed A Share Placing and the Triumph Group A Share Placing shall be conditional upon the completion of the Proposed Acquisitions and the issue of the Consideration Shares, but whether the Proposed A Share Placing is implemented will not affect the implementation of the Proposed Acquisitions.

Summary of the terms of the Proposed A Share Placing and principal terms of the Triumph Group Subscription Agreement

Terms of the Proposed A Share Placing

Type and nominal value : A Shares, with a nominal value of RMB1.00 each. of shares to be placed

Method of issue : Non-public issuance.

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LETTER FROM THE BOARD

Target subscribers : The Company will issue the new A Shares to not more than 10 Qualified Investors (including Triumph Group). Save for Triumph Group, the Other Qualified Investors shall be specific investors in compliance with the requirements of the CSRC, including securities investment funds, insurance institutional investors, trust investment companies, finance companies, securities companies, qualified foreign institutional investors (QFII), natural persons and other qualified investors in compliance with the specific requirements of the Company. Save for Triumph Group, being a connected person to the Company, the Other Qualified Investors and their ultimate beneficial owners shall not include connected persons or Shareholders of the Company and no Other Qualified Investors shall become substantial Shareholders as a result of the Proposed A Share Placing.

Lock-up period : The A Shares to be subscribed by the Other Qualified Investors are not transferable for a period of 12 months from the date of completion of the issue of the new A Shares under the Proposed A Share Placing. The A Shares to be subscribed by Triumph Group are not transferable for a period of 36 months from the date of completion of the issue of the new A Shares under the Proposed A Share Placing. The lock-up period under the Proposed A Share Placing was determined in accordance with the PRC Issuance Measures issued by the CSRC, which requires that any shares to be issued by a PRC listed company through non-public share placement shall not be transferred within 12 months (and 36 months, with respect to the controlling shareholder or de facto controlling shareholder and enterprises it controlled) from the completion of the issue.
Subscription method : All target subscribers will subscribe for the A Shares under the Proposed A Share Placing in cash.

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LETTER FROM THE BOARD

Amount of gross proceeds raised and number of A Shares to be issued

: The maximum amount of gross funds to be raised through the Proposed A Share Placing will not exceed 100% of the total consideration under the Proposed Acquisitions. In accordance with the PRC Reorganisation Measures and the relevant laws and regulations, the fund raising size in relation to the significant asset restructuring by a PRC listed company shall not be more than 100% of the transaction price of the assets proposed to be acquired where “the transaction price of the assets proposed to be acquired” means the total consideration under the Proposed Acquisitions excluding the amount of capital injection in the Target Companies in cash made by the Vendors under the Proposed Acquisitions Agreements within 6 months before and during suspension of trading in A Shares, i.e. RMB774,565,700 (the aggregated consideration of the Proposed Acquisitions) – RMB40,000,000 (the amount of the capital injection in cash by Bengbu Institute in Tongcheng New Energy in October 2016) – RMB222,700,000 (the total amount of the capital injection in cash by Triumph Group, Yixing Environmental Technology and GCL System Integration in Yixing New Energy in October 2016), which is RMB511,865,700. Accordingly, the gross amount of funds to be raised under the Proposed A Share Placing shall not exceed RMB511,865,700.

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LETTER FROM THE BOARD

Pursuant to the CSRC’s Rule Amendment, the maximum number of new A Shares that could be placed under the Proposed A Share Placing is 20% of the total issued share capital of the Company as at the Latest Practicable Date, i.e. 105,353,375 new A Shares. According to the SASAC Approval, the total share capital of the Company after the Proposed A Share Placing shall not exceed 581,625,352 Shares, and therefore, the maximum number of new A Shares that could be placed under the Proposed A Share Placing is 21,827,961 new A Shares, i.e. 581,625,352 Shares (the maximum total share capital of the Company after Proposed A Share Placing) – 559,797,391 Shares (the total share capital of the Company after completion of the Proposed Acquisitions but before the Proposed A Share Placing). The final number of A Shares to be placed and issued under the Proposed A Share Placing will be subject to the decision of the Board according to the actual situation at the time of issuance and within the issue amount approved by the CSRC and adjustment in case of ex-rights or ex-dividend during the period from the Pricing Base Date to the issue date of A Shares.

Pricing Base Date and : The Pricing Base Date shall be the first date of the Placing Issue Price shares issuance period for the A Shares to be placed under the Proposed A Share Placing. The Placing Issue Price per A Share shall be not less than 90% of the average share price for the last 20 trading days of A Shares as quoted on the SSE prior to the Pricing Base Date (the average trading prices of A Shares for the 20 trading days preceding the Pricing Base Date = the aggregate trading amount of A Shares for the 20 trading days preceding the A Share Pricing Base Date /the aggregate trading volume of A Shares for the 20 trading days preceding the A Share Pricing Base Date). On the basis of the aforesaid minimum issue price, the final Placing Issue Price will be determined by the Board with reference to the bidding prices offered by target subscribers in the price inquiry process upon the Proposed A Share Placing being approved by the CSRC.

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LETTER FROM THE BOARD

According to the Company Law of the PRC, a PRC joint stock company with limited liability can only issue new shares at or above par value but not below par value. Given that the par value per Share is RMB1.00, the Company will not proceed the Proposed A Share Placing if the Placing Issue Price is below RMB1.00 per A Share.

Place of listing

: The A Shares to be issued pursuant to the Proposed A Share Placing will be listed and traded on the SSE.

Use of proceeds

: The proceeds to be raised shall not exceed RMB511,865,700 through the Proposed A Share Placing and it is preliminarily expected that the proceeds, excluding the relevant transaction expenses, tax and issue expenses, will 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 module further processing with an annual output of 4 million square meters project. The allocation of the proceeds raised from the Proposed A Share Placing is based on the capital requirement of the projects of Hefei New Energy and Tongcheng New Energy.
Arrangement with : The new Shareholders after completion of the Proposed regard to the A Share Placing and the existing Shareholders will share undistributed the undistributed profits cumulated prior to the cumulated profits Proposed A Share Placing.
Period of validity of the : 12 months from the date of approval at the EGM and the resolution(s) in Class Meetings, which may be extended as and when relation to the necessary. Proposed A Share Placing

The new A Shares under the Proposed A Share Placing will be issued by the Company (conditional upon and after the issue of the Consideration Shares) under the Specific Mandates to be sought from the Independent Shareholders at the EGM.

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LETTER FROM THE BOARD

Principal terms of the Triumph Group Subscription Agreement

The terms of the Proposed A Share Placing and the Triumph Group Subscription Agreement are substantially the same. Set out below is a summary of the other principal terms of the Triumph Group Subscription Agreement:

Date : 7 February 2017 (as supplemented by the Supplemental Triumph Group Subscription Agreement on 24 February 2017) Parties : (1) The Company, as the issuer; and

(2) Triumph Group, as the subscriber.

Information on Triumph Group

As at the Latest Practicable Date, Triumph Group, a direct wholly-owned subsidiary of CNBMG, is principally engaged in glass sector, new materials sector, new energy sector, new equipment sector and project management sector, and is regarded as a connected person of the Company under the Listing Rules.

Number of A Shares to be subscribed by Triumph Group

Pursuant to the Triumph Group Subscription Agreement, Triumph Group will subscribe for 10% of the total amount of proceeds that could be raised, i.e. the new A Shares that could be placed, under the Proposed A Share Placing.

The number of A Shares to be subscribed by Triumph Group under the Triumph Group A Share Placing shall be determined upon the determination and finalization of the Placing Issue Price.

Conditions precedent to the Triumph Group Subscription Agreement

The Triumph Group Subscription Agreement shall become effective after satisfaction of the conditions set forth below. If any of the below conditions precedent is not satisfied, the Triumph Group Subscription Agreement shall not become effective:

(i) the approval of the transaction contemplated under the Triumph Group Subscription Agreement by the Board;

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LETTER FROM THE BOARD

(ii) the approval of the transaction contemplated under the Triumph Group Subscription Agreement by the Non-connected Shareholders at the EGM and the A Shares Class Meeting, and the approval of the waiver from the obligation of CLFG and parties acting in concert with it to make a mandatory general offer (according to the laws and regulations of the PRC) in respect of their acquisition of the Shares of the Company by the Non-connected Shareholders at the EGM;
(iii) the approval of the transaction contemplated under the Triumph Group Subscription Agreement by the Independent Shareholders at the EGM and the H Shares Class Meeting, and the approval of the Whitewash Waiver by the Independent Shareholders at the EGM;
(iv) the approval by the Stock Exchange of the circular to be despatched to the Shareholders in respect of the transactions contemplated under the respective Proposed Acquisitions Agreements and/or the Reorganisation, and that the transactions contemplated under the respective Proposed Acquisitions Agreements and/or the Reorganisation have not been regarded as a reverse takeover of the Company under the Listing Rules before or in the course of vetting the circular;
(v) the filing of valuation results of the respective Target Companies as confirmed in the valuation reports of the respective Target Companies with the SASAC of the State Council;
(vi) the approval of the transaction contemplated under the Triumph Group Subscription Agreement by the SASAC Authorised Office(s);
(vii) the granting of the Whitewash Waiver by the Executive;
(viii) the approval of the transaction contemplated under the Triumph Group Subscription Agreement by the CSRC; and
(ix) the Proposed Acquisitions Agreements becoming effective.

None of the above conditions is waivable. As at the Latest Practicable Date, save for conditions (i), (iv) and (v) above, none of the conditions precedent has been fulfilled.

If any term of the Proposed Acquisitions is adjusted or changed (e.g. adjustment to the final consideration) or any one of the three Proposed Acquisitions Agreements does not proceed such that the Whitewash Waiver is no longer required, the conditions precedent to the Triumph Group Subscription Agreement in relation to the Whitewash Waiver will not be required to be fulfilled.

The Proposed A Share Placing and the Triumph Group A Share Placing will be contemplated after the completion of the Proposed Acquisitions i.e. after the Consideration Share(s) are being issued to the Vendors.

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LETTER FROM THE BOARD

Subscription price under the Triumph Group Subscription Agreement

The Pricing Base Date for A Share under the Triumph Group Subscription Agreement shall be the first date of the shares issuance period for the A Shares to be placed under the Proposed A Share Placing and the Placing Issue Price per A Share under the Triumph Group Subscription Agreement shall be not less than 90% of the average share price (i.e. the ratio of the total turnover over the total volume of the A Shares) for the last 20 trading days of A Shares as quoted on the SSE prior to the Pricing Base Date.

The Placing Issue Price per A Share under the Triumph Group Subscription Agreement was determined in accordance with the Revised Detailed Implementation Rules and the Issuance Q&A.

The final Placing Issue Price of A Shares to be placed under the Triumph Group Subscription Agreement will be subject to the approval of the Class Meetings and the EGM, and adjustment in case of ex-rights or ex-dividend during the period from the Pricing Base Date to the issue date, and determined with reference to the bidding prices offered by target subscribers in the price inquiry process. The final Placing Issue Price per A Share may be different from the issue price per Consideration Share.

Pursuant to the Triumph Group Subscription Agreement, upon satisfaction of all the conditions precedent to the Triumph Group Subscription Agreement, the subscription price shall be paid by Triumph Group within 3 working days in full upon receipt of the payment notice from the Company.

Lock-up period

The A Shares to be subscribed by Triumph Group are not transferable for a period of 36 months from the date of completion of the issue of the new A Shares under the Triumph Group A Share Placing.

Listing Rules Implications

Triumph Group is regarded as a connected person of the Company and the Triumph Group A Share Placing will constitute a connected transaction of the Company subject to the reporting, announcement and the independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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LETTER FROM THE BOARD

EFFECT OF THE COMPLETION OF THE PROPOSED ACQUISITIONS AND THE PROPOSED A SHARE PLACING ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

The following sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately after completion of the Proposed Acquisitions (but before the Proposed A Share Placing); and (iii) immediately after completion of the Proposed Acquisitions and the Proposed A Share Placing, given that according to the SASAC Approval, upon completion of the Reorganisation, the total share capital of the Company shall not exceed 581,625,352 Shares:

Shareholders A Shares CNBMG and parties acting in concert CLFG Bengbu Institute Huaguang Group International Engineering Triumph Group Sub-total of CNBMG and parties acting in concert Yixing Environmental Technology GCL System Integration Hefei High-Tech Other Qualified Investors Other A Shareholders Sub-total of the number of A Shares H Shares HKSCC (Nominees) Limited_(Note)_ Other Public H Shareholders Sub-total of the number of H Shares Total	(i) As at the Latest Practicable Date Number of Shares Approximate % 105,018,242 19.94 69,000,000 13.10 – – – – – – 174,018,242 33.04 – – – – – – – – 102,748,633 19.51 276,766,875 52.54 248,600,699 47.19 1,399,301 0.27 250,000,000 47.46 526,766,875 100	(ii) Immediately after completion of the Proposed Acquisitions (but before the Proposed A Share Placing) Number of Shares Approximate % 115,115,830 20.56 71,365,976 12.75 6,377,490 1.14 708,610 0.13 7,508,991 1.34 201,076,897 35.92 1,877,247 0.34 1,065,338 0.19 3,029,276 0.54 – – 102,748,633 18.35 309,797,391 55.34 248,600,699 44.41 1,399,301 0.25 250,000,000 44.66 559,797,391 100	(iii) Immediately after completion of the Proposed Acquisitions and the Proposed A Share Placing *(Note 3)* Number of Shares Approximate % 115,115,830 19.79 71,365,976 12.27 6,377,490 1.10 708,610 0.12 9,691,787 1.67 203,259,693 34.95 1,877,247 0.32 1,065,338 0.18 3,029,276 0.52 19,645,165 3.38 102,748,633 17.67 331,625,352 57.02 248,600,699 42.74 1,399,301 0.24 250,000,000 42.98 581,625,352 100	(iii) Immediately after completion of the Proposed Acquisitions and the Proposed A Share Placing *(Note 3)* Number of Shares Approximate % 115,115,830 19.79 71,365,976 12.27 6,377,490 1.10 708,610 0.12 9,691,787 1.67 203,259,693 34.95 1,877,247 0.32 1,065,338 0.18 3,029,276 0.52 19,645,165 3.38 102,748,633 17.67 331,625,352 57.02 248,600,699 42.74 1,399,301 0.24 250,000,000 42.98 581,625,352 100
				34.95
				0.32 0.18 0.52 3.38 17.67
				57.02
				42.74 0.24
				42.98
				100

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LETTER FROM THE BOARD

Notes:

(1) To the best knowledge of the Company, HKSCC (Nominees) Limited holds the H Shares as the nominee of public H Shareholders.
(2) As at the Latest Practicable Date, none of the Directors is interested in any Shares.
(3) According to the SASAC Approval, upon completion of the Reorganisation (after completion of the Proposed Acquisitions and the Proposed A Share Placing), the total share capital of the Company shall not exceed 581,625,352 Shares.

REASONS FOR AND BENEFITS OF THE PROPOSED ACQUISITIONS

Upon reviewing the business nature of Hefei New Energy, Tongcheng New Energy and Yixing New Energy and with a view to expanding the Group’s business within the new energy glass sector in the glass industry, the Company considers that it is suitable and appropriate to acquire the equity interests in the Target Companies and expects that the Proposed Acquisitions would allow the Group to leverage its experience in operation and management and leading position established within the glass industry to further enhance the performance of the Target Companies and also enable the Group to expand its footprint within the glass industry and enrich the Group’s products relating to the new specialized functional glass sector, which can enhance the Company’s competitiveness and value to the Shareholders of the Company.

It is always the Group’s strategy to review from time to time the financial and operational performance of its members and associates and to explore potential business opportunities to enhance the Shareholders’ value. In recent years, the Group has been focusing on identifying suitable investments in the glass industry, especially for specialized functional glass, that have development opportunities and are able to provide a sustainable return to the Shareholders in the long run. Information display, photoelectricity, photothermal and new energy glasses are the main investment and development focuses of the Group, which could be demonstrated in the business reorganisation of the Company in 2015 (the “2015 Reorganisation ”).

After the 2015 Reorganisation, the Group concentrates on the production and sales of ultra-thin glass, thin glass and ultra-white and ultra-thin glass products. The shift in major products of the Group towards specialized functional glass business in relation to information display and photoelectricity lays the good foundation for the Company’s development. The Company is currently one of very few manufacturers capable of mass production of ultra-thin, ultra-white and ultra-thin float glass series of 0.15mm–2mm in the PRC.

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LETTER FROM THE BOARD

Despite each of the Target Companies is in different operation stage with different development history, they have similar business nature, engaging in the research and development, production and sales of solar photovoltaic glass. Nevertheless, each of the Target Companies possesses its own strengths and advantages in business development which are beneficial for the future development of the Company.

(1) Hefei New Energy

At present, Hefei New Energy has the largest production scale amongst the three Target Companies and therefore, Hefei New Energy has a comparatively higher degree of economy of scale which can effectively reduce unit production cost and is competitive in the industry.

(2) Tongcheng New Energy

Tongcheng New Energy is competitive in supply of customized products and business of double glass modules. Against traditional modules, double glass modules have merits including light-weight, higher weatherability and prolonged lifetime of the glass modules, as well as enhancing the efficiency of photovoltaic modules, which is considered as the future development trend of photovoltaic modules.

(3) Yixing New Energy

The time of establishment of Yixing New Energy is the shortest amongst the Target Companies. However, Yixing New Energy conducts research and development and produces thin glass products in line with the development trend of the photovoltaic glass industry by application of the most updated results of technology process in its production lines. Meanwhile, Yixing New Energy is located in Southern Jiangsu, the PRC, an area that lots of photovoltaic modules manufacturers are situated, such that Yixing New Energy is in a favorable geographical location which can lower transportation cost and respond to customers’ demand in a timely manner.

Given that the Company and the Target Companies are all engaged in glass business, upon completion of the Proposed Acquisitions, the Company can further enrich and optimize its product structure, expand market segments and product application scope, thereby enhancing the risk resistance capacity, market competitiveness and core competitiveness of the Company. In addition, the development strategies of the Company are: concentrating on new glass, new material and new energy markets, aiming to become a provider of specialized high-tech glass with considerable market influence through expansion of application fields and optimization of product mix. As the Target Companies are operating within the solar photovoltaic glass sector which is categorized as the new energy glass business, the Proposed Acquisitions are in line with the development strategies of the Company.

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LETTER FROM THE BOARD

On the other hand, the Company has accumulated extensive operation and management experience after decades of years of production and operation in the glass industry. Its product brand enjoys certain reputation and brand recognition in the international and domestic market. The Target Companies have certain similarities with the Company in respect of the production, operation and management of enterprises. Upon completion of the Proposed Acquisitions, the Company can, in particular, leverage on its advantages in brand, technology, talents, operation and management experiences, and improve the management level and operation efficiency of the Target Companies. At the same time, the Company can develop the new energy photovoltaic glass based on the existing electronic information display ultra-thin glass, thereby the Company can enlarge the Group’s glass-related businesses and diversify its product category in relation to the new type glass products with special functions, achieving a win-win situation.

The consideration for each of the Target Companies was determined by arm’s length negotiation between the Company and the Vendors with reference to the asset valuation results, which were prepared by the Valuer using income approach that took into consideration of the future prospect of the Target Companies, and have been filed with the SASAC of the State Council. Amongst the Target Companies, Yixing New Energy has the least established time. Despite Yixing New Energy is still in the early development stage, the production line project of Yixing New Energy includes two phases of development with similar production capacity. At present, Yixing New Energy mainly derives its revenue and profit from Phase I of the project. When the production lines of Phase II of the project proceed to stable production stage, Yixing New Energy will encounter a significant increase in its revenue and profit. The Phase II production lines have been launched, and it is expected to boost the operating results of Yixing New Energy for 2018 onwards. As such, the Valuer has taken into account the Phase II production lines when making the underlying forecast. Therefore, the valuation and pricing of Yixing New Energy are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

All in all, the consideration of the Target Companies have taken into account the current production scale and the future potential of each of the Target Companies regardless of the fact that each of the Target Companies has different development stage. Combined with the abovementioned advantages of the Proposed Acquisitions and the synergy effect brought by the prolonged experience of the Group within the glass industry in PRC, the Directors are of the view that the Proposed Acquisitions are consistent with the existing development strategy and principal glass business of the Group, which are in the interests of the Company and the Shareholders as a whole.

The terms of the Proposed Acquisitions Agreements and Profit Guarantee Indemnity Agreements (as supplemented by the Supplemental SP Agreements and the Supplemental PG Indemnity Agreements) were determined after arm’s length negotiations between the parties thereto. Accordingly, the Directors (excluding the independent non-executive Directors whose views are included in the Letter from the Independent Board Committee as set forth on pages 66 to 67 of this circular) are of the view that the terms of the Proposed Acquisitions Agreements and Profit Guarantee Indemnity Agreements (as supplemented by the

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LETTER FROM THE BOARD

Supplemental SP Agreements and the Supplemental PG Indemnity Agreements) and the transactions contemplated thereunder are on normal commercial terms or better 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.

REASONS FOR AND BENEFITS OF THE PROPOSED A SHARE PLACING AND THE TRIUMPH GROUP A SHARE PLACING

The Directors (including the independent non-executive Directors) consider that the Proposed A Share Placing (including the Triumph Group A Share Placing) represents an opportunity to raise additional capital for the Group to enhance the capital base of the Group and support the further development of Hefei New Energy and Tongcheng New Energy, which is in the interests of the Group.

The proceeds to be raised from the Proposed A Share Placing as to (excluding the relevant transaction expenses, tax and issue expenses) (i) approximately RMB410,000,000 intends to be used 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 intends to be used for the development cost of Tongcheng New Energy high transparent double photovoltaic glass module further processing with an annual output 4 million square meters project.

The Directors (including the independent non-executive Directors) consider that the terms of the Proposed A Share Placing are on normal commercial terms and are fair and reasonable based on the current market conditions and in the interests of the Company and the Shareholders as a whole.

The terms of the Triumph Group Subscription Agreement (as supplemented by the Supplemental Triumph Group Subscription Agreement) were determined after arm’s length negotiations between the parties thereto. The Directors (excluding the independent non-executive Directors whose views are included in the Letter from the Independent Board Committee as set forth on pages 66 to 67 of this circular) are of the view that the terms of the Triumph Group Subscription Agreement (as supplemented by the Supplemental Triumph Group Subscription Agreement) and the transaction contemplated thereunder are on normal commercial terms or better 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.

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company had not conducted any other fund raising exercise in the past 12 months immediately preceding the Latest Practicable Date.

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LETTER FROM THE BOARD

INFORMATION OF THE COMPANY, CLFG, HEFEI HIGH-TECH, HUAGUANG GROUP, BENGBU INSTITUTE, INTERNATIONAL ENGINEERING, TRIUMPH GROUP, YIXING ENVIRONMENTAL TECHNOLOGY AND GCL SYSTEM INTEGRATION

The Company is principally engaged in the production and sales of ultra-thin electronic glass.

CLFG, the substantial Shareholder of the Company holding 105,018,242 Shares, representing approximately 19.94% of the total issued share capital of the Company as at the Latest Practicable Date, is principally engaged in the production and sale of float glass, imports, exports and the domestic sale of processing technology of glass, design and subcontracting of engineering works, labour export and other businesses.

Hefei High-Tech, an Independent Third Party, is principally engaged in five major business sectors including construction of infrastructure, sales of real estate, sales of production facilities, leasing business and disposal of assets.

Huaguang Group, an indirect wholly-owned subsidiary of CNBMG, is principally engaged in manufacturing and sales of float glass, ITO conductive film glass and further processed glass products.

Bengbu Institute, the substantial Shareholder of the Company, holding 69,000,000 Shares, representing approximately 13.10% of the total issued share capital of the Company as at the Latest Practicable Date, and an indirect wholly-owned subsidiary of CNBMG, is principally engaged in engineering management and services sector, manufacture of equipment sector, new materials sector and new glass sector (including ITO conductive film glass, TFT-LCD glass and float glass).

International Engineering, an associate of CNBMG, is principally engaged in engineering technology research and service, which mainly includes general contracting business of glass, cement and new energy and engineering project design business.

Triumph Group, a direct wholly-owned subsidiary of CNBMG, is principally engaged in glass sector, new materials sector, new energy sector, new equipment sector and project management sector.

Yixing Environmental Technology, an Independent Third Party, is principally engaged in the business of investment venture.

GCL System Integration, an Independent Third Party, is principally a collective supplier for an integrated photovoltaic electricity station with a “Design + Products + Services” system with research and development in technology, optimization of design, collective system, support to financial services and operation and maintenance services.

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LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, CLFG, the substantial Shareholder of the Company, was interested in 105,018,242 A Shares, representing approximately 19.94% of the total issued share capital of the Company, and Bengbu Institute was interested in 69,000,000 A Shares, representing approximately 13.10% of the total issued share capital of the Company. Bengbu Institute directly holds 19.00% equity interest in CLFG and Bengbu Institute is an indirect wholly-owned subsidiary of CNBMG, a wholly state-owned enterprise incorporated in the PRC, which through its another wholly-owned subsidiary, indirectly holds approximately 53.64% interest in CLFG.

Therefore, CNBMG is the ultimate controlling Shareholder of the Company and deemed to be interested in 174,018,242 A Shares held by CLFG and Bengbu Institute by virtue of the SFO, representing approximately 33.04% of the total issued share capital of the Company.

As at the Latest Practicable Date, each of CLFG and Bengbu Institute is the substantial Shareholder of the Company and an indirect subsidiaries of CNBMG and each of Huaguang Group and Triumph Group is either a direct or indirect subsidiary of CNBMG and International Engineering is an associate of CNBMG. Therefore, each of CLFG, Huaguang Group, Bengbu Institute, Triumph Group and International Engineering is regarded as a connected person of the Company.

Accordingly, the Proposed Acquisitions also constitutes connected transactions of the Company under Chapter 14A of the Listing Rules, and are therefore subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

Since Triumph Group, being one of the Qualified Investors, is a connected person of the Company under Chapter 14A of the Listing Rules and the applicable percentage ratios of the Triumph Group A Share Placing are more than 5%, the Triumph Group A Share Placing also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

Mr. Zhang Chong, the executive Director of the Company, and Mr. Xie Jun, the non-executive Director of the Company, have abstained from voting in respect of the Proposed Acquisitions in the Board meeting(s) due to the fact that they have connected relationship with the substantial Shareholder(s) or indirect controlling shareholder(s) of the Company and are therefore not regarded as independent to make any recommendation to the Board.

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LETTER FROM THE BOARD

TAKEOVERS CODE IMPLICATIONS AND APPLICATION FOR WHITEWASH WAIVER

As mentioned above, as at the Latest Practicable Date, 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 Consideration Shares but before the Proposed A Share Placing, CNBMG will indirectly hold 201,076,897 A Shares, representing approximately 35.92% of the total issued share capital of the Company as enlarged by the issue of the 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 Consideration Shares.

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 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 resolutions to approve the Proposed Acquisitions 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 and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing.

As at the Latest Practicable Date, the Company does not believe that the Proposed Acquisitions (including the allotment and issue of the Consideration Shares) and the Triumph Group A Share Placing would give rise to any concerns in relation to compliance with other applicable rules or regulations (including the Listing Rules). The Company notes that the Executive may not grant the Whitewash Waiver if the Proposed Acquisitions (including the allotment and issue of the Consideration Shares) and the Triumph Group A Share Placing does not comply with other applicable rules and regulations.

As at the Latest Practicable Date, other than the Shares to be acquired under the Proposed Acquisitions Agreements and the Triumph Group Subscription Agreement and save for the 174,018,242 A Shares (representing approximately 33.04% of the total issued share capital of the Company) currently interested by CNBMG or parties acting in concert with it as disclosed in the section headed “Effect of the completion of the Proposed Acquisitions on the

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LETTER FROM THE BOARD

shareholding structure of the Company” in this circular, CNBMG or parties acting in concert with it confirm that:

(a) there is no holding of voting rights in the Company or rights over any Share which is owned, controlled or directed by CNBMG, the directors of CNBMG or any person acting in concert with CNBMG;
(b) none of CNBMG or parties acting in concert with it has received any irrevocable commitment in relation to voting of the resolutions in respect of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Proposed A Share Placing, the Triumph Group A Share Placing, the Specific Mandates and the Whitewash Waiver;
(c) there is no outstanding derivative in respect of the securities of the Company which has been entered into by any of CNBMG and parties acting in concert with it;
(d) CNBMG and parties acting in concert with it do not hold any outstanding options, warrants, derivatives or any securities that are convertible into Shares or any derivatives in respect of securities in the Company;
(e) there is no arrangement (whether by way of option, indemnity or otherwise) in relation to the shares of any of CNBMG and parties acting in concert with it or the Company and which might be material to the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Proposed A Share Placing, the Triumph Group A Share Placing, the Specific Mandates and the Whitewash Waiver;
(f) there is no agreement or arrangement to which any of CNBMG and parties acting in concert with it is a party which relates to circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Proposed A Share Placing, the Triumph Group A Share Placing, the Specific Mandates and the Whitewash Waiver;
(g) none of CNBMG or parties acting in concert with it has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company; and
(h) save for the completion of transfer of 69,000,000 A Shares between CLFG and Bengbu Institute as disclosed in the announcement of the Company dated 18 October 2016, CNBMG or parties acting in concert with it have not acquired or entered into any agreement or arrangement to acquire any voting rights in the Company, nor dealt in any Shares or convertible securities, warrants, options or derivatives of the Company during the Relevant Period.

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LETTER FROM THE BOARD

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. 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 Consideration Shares. If the Whitewash Waiver is not granted by the Executive or the resolutions in respect of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver are not approved by the Independent Shareholders, the Proposed Acquisitions Agreements will be terminated and the Reorganisation will not proceed.

SITUATION OF CURRENT RETURN DILUTION BY THE 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)” (CSRC 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. Explanations on situation of current return dilution and the remedial measures in the acquisition of assets and supporting funds raising by issuance of shares and related party transactions are set out in Appendix XVI to this circular. The relevant remedial measures will be subject to the approval by the Independent Shareholders at the EGM.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee, comprising all independent non-executive Directors, namely Mr. Jin Zhanping, Mr. Liu Tianni, Mr. Ye Shuhua and Mr. He Baofeng, has been established by the Company to advise the Independent Shareholders on the terms of the Proposed Acquisitions 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 non-executive Director, namely Mr. Xie Jun, is not included in the Independent Board Committee as he is senior management of the controlled entities of CNBMG and is therefore considered to have conflicts of interests in the Proposed Acquisitions 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 letter from the Independent Board Committee is set out on pages 66 to 67 of this circular.

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LETTER FROM THE BOARD

KGI Capital Asia has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing are fair and reasonable, and make recommendation on voting. Your attention is drawn to the advice of KGI Capital Asia to the Independent Board Committee and the Independent Shareholders as set out in the letter on pages 68 to 126 of this circular.

EGM AND CLASS MEETINGS

The EGM and the Class Meetings will be held to consider and, if thought fit, pass the resolutions in respect of (i) the Proposed Acquisitions Agreements and the transactions contemplated thereunder; (ii) the Specific Mandates; (iii) the Proposed A Share Placing; (iv) the Triumph Group A Share Placing; and (v) the Whitewash Waiver. The voting in relation to the Proposed Acquisitions Agreements, 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 will be conducted by way of poll. CNBMG and parties acting in concert with it and Shareholders who are interested or involved in the Proposed Acquisitions 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 resolutions to be proposed at the EGM and the Class Meetings for approving the Proposed Acquisitions 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 forms of proxy for use at the EGM and the H Shares Class Meeting were despatched to the Shareholders and published on the website of the Stock Exchange (http://www.hkexnews.hk) on 7 August 2017, which are valid proxy forms for use at the postponed EGM and H Shares Class Meeting. Supplemental forms of proxy for use at the postponed EGM and H Shares Class Meeting are enclosed. Whether or not you are able to attend the EGM and/or the H Shares Class Meeting in person, you are requested to complete and return the accompanying forms of proxy in accordance with the instructions printed thereon to the Company’s share registrar in Hong Kong, Hong Kong Registrars Limited, at Shops 1712-1716, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, or to the

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LETTER FROM THE BOARD

Company’s registered address at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC as soon as possible and in any event not less than 24 hours before the time appointed for holding of the EGM and/or the H Shares Class Meeting or any adjournment thereof. Completion and return of the forms of proxy will not preclude you from attending and voting in person at the EGM and/or the H Shares Class Meeting or any adjournment thereof should you so wish.

INTENTIONS REGARDING THE COMPANY AND ITS EMPLOYEES

As at the Latest Practicable Date, CNBMG intends to continue the existing business of the Company and the employment of the employees of the Group and save for the Proposed Acquisitions, does not intend to introduce any major changes to the existing operation and business of the Company or redeployment of any of the fixed assets of the Company other than in the ordinary course of business.

RECOMMENDATION

The Directors (excluding the independent non-executive Directors whose views are included in the letter from the Independent Board Committee as set forth on pages 66 to 67 of this circular) are of the view that the Proposed Acquisitions and the Whitewash Waiver are on normal commercial terms which are fair and reasonable and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (excluding those Directors in the Independent Board Committee, who will give their opinion based on the recommendations of the Independent Financial Adviser) recommend the Independent Shareholders to vote in favour of relevant resolutions to be proposed at the EGM and the Class Meetings.

The Directors consider that (1) the Specific Mandates, (2) the Proposed A Share Placing, (3) the Triumph Group A Share Placing and (4) the remedial measures in relation to situation of current return dilution in the Reorganisation, are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolutions to be proposed at the EGM and the Class Meetings.

OTHER INFORMATION

Your attention is drawn to other information set out in the Appendices to this circular.

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

For the purpose of this circular, 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.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter of advice from the Independent Board Committee setting out its recommendation to the Independent Shareholders for the purpose of inclusion in this circular.

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＊

11 October 2017

To the Independent Shareholders

Dear Sir or Madam,

(1) VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS; (2) PROPOSED ISSUANCE AND PLACING OF A SHARES; AND (3) APPLICATION FOR WHITEWASH WAIVER

We refer to the circular dated 11 October 2017 of the Company (the “ Circular ”) of which this letter forms a part. Terms defined in the Circular bear the same meanings herein unless the context otherwise requires.

We have been appointed to form the Independent Board Committee to consider (i) the Proposed Acquisitions Agreements and the transactions contemplated thereunder; (ii) the Specific Mandates; (iii) the Proposed A Share Placing; (iv) the Triumph Group A Share Placing; and (v) the Whitewash Waiver (collectively, the “ Proposed Transactions ”) and to advise the Independent Shareholders as to whether, in our opinion, the Proposed Transactions are fair and reasonable so far as the Independent Shareholders are concerned.

KGI Capital Asia has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Proposed Transactions.

We wish to draw your attention to the letter from the Board set out on pages 13 to 65 of the Circular which contains, among others, information on the Proposed Transactions as well as the letter from the Independent Financial Adviser set out on pages 68 to 126 of the Circular which contains its advice in respect of the Proposed Transactions.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the principal factors and reasons and the advice of the Independent Financial Adviser as set out in the letter from the Independent Financial Adviser, we consider that the Proposed Transactions are fair and reasonable, entered into on normal commercial terms, and in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM in respect of the Proposed Transactions.

Yours faithfully,

For and on behalf of

Independent Board Committee

Luoyang Glass Company Limited*

Mr. Jin Zhanping Mr. Liu Tianni Mr. Ye Shuhua Independent Independent Independent non-executive non-executive non-executive Director Director Director

Mr. He Baofeng Independent non-executive Director

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the full text of a letter of advice from KGI Capital Asia Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, which has been prepared for inclusion in this circular.

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41/F, Central Plaza 18 Harbour Road Wanchai, Hong Kong

11 October 2017

To the Independent Board Committee and the Independent Shareholders

Luoyang Glass Company Limited No.9 Tang Gong Zhong Lu Xigong District Luoyang Municipal Henan Province The PRC

Dear Sirs,

(1) VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS;

(2) PROPOSED ISSUANCE AND PLACING OF A SHARES; AND

(3) APPLICATION FOR WHITEWASH WAIVER

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of (i) the terms of the Proposed Acquisitions Agreements and the transaction contemplated thereunder (including the issue and allotment of the Consideration Shares under the Specific Mandates); (ii) the Proposed A Share Placing (including the Triumph Group A Share Placing and the issue and allotment of the new A Shares under the Specific Mandates); and (iii) the Whitewash Waiver. Details of which are set out in the “Letter from the Board” (the “ Letter ”) contained in the circular issued by the Company to the Shareholders dated 11 October 2017 (the “ Circular ”), of which this letter forms part. Unless the context otherwise requires, capitalised terms used in this letter shall have the same meanings as those defined in the Circular.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

On 7 December 2016, the Company entered into three significant assets restructuring framework agreements to reach preliminary intention in respect of the plan of Reorganisation. On 7 February 2017 and 7 August 2017, the Company entered into the Proposed Acquisitions Agreements and the Supplemental SP Agreements, pursuant to which (i) 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 approximately RMB307,825,000 which shall be settled by the Company by allotment and issue of 13,126,864 new A Shares; (ii) 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 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.

On 7 February 2017, the Company, pursuant to the Reorganisation, plans to undertake a proposed placing of A Shares to no more than 10 Qualified Investors (including Triumph Group), generating gross proceeds of not more than RMB573,457,000. On the same day, the Company entered into the Triumph Group Subscription Agreement with Triumph Group (as supplemented by the supplemental Triumph Group Subscription Agreement on 24 February 2017), pursuant to which Triumph Group has conditionally agreed to subscribe for 10% of the total amount of proceeds that could be raised, i.e. the new A Shares that could be placed under the Proposed A Share Placing. At the Board Meeting on 7 August 2017, the Board has resolved to amend the gross proceeds to be raised under the Proposed A Share Placing to not exceed RMB511,865,700.

As the highest applicable percentage ratio of the Proposed Acquisitions exceeds 100%, the Proposed Acquisitions constitute very substantial acquisitions of the Company under Chapter 14 of the Listing Rules. As at the Latest Practicable Date, CLFG, the substantial Shareholder of the Company, was interested in 105,018,242 A Shares, representing approximately 19.94% of the total issued share capital of the Company, and Bengbu Institute was interested in 69,000,000 A Shares, representing approximately 13.10% of the total issued share capital of the Company. Bengbu Institute directly holds 19.00% equity interest in CLFG and Bengbu Institute is an indirect wholly-owned subsidiary of CNBMG, a wholly state-owned enterprise incorporated in the PRC, which through its another wholly-owned subsidiary, indirectly holds approximately 53.64% interest in CLFG. Accordingly, the Proposed Acquisitions also constitutes connected transactions of the Company under Chapter 14A of the Listing Rules, and are therefore subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

As Triumph Group, being one of the Qualified Investors, is a connected person of the Company under Chapter 14A of the Listing Rules and the applicable percentage ratios of the Triumph Group A Share Placing are more than 5%, the Triumph Group A Share Placing also

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

As at the Latest Practicable Date, CNBMG was deemed to have 174,018,242 A Shares, representing approximately 33.04% of the total issued shares of the Company. Upon completion of the Proposed Acquisitions but before the Proposed A Share Placing, CNBMG will indirectly hold 201,076,897 A Shares, representing approximately 35.92% of the total issued shares of the Company as enlarged by the issue of the Consideration Shares. Accordingly, CNBMG and parties acting in concert, in the absence of the Whitewash Waiver, would be obligated to make a mandatory general offer under Rule 26 of the Takeovers Code for all the issued Shares and other equity securities of the Company not already owned or agreed to be acquired by them as a result of the issue and allotment of the Consideration Shares. Completion of the Proposed Acquisition is conditional upon, among other things, the Whitewash Waiver being granted by the Executives and approved by the Independent Shareholders. An application to the Executive for the Whitewash Waiver will be made by CNBMG 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. If the Whitewash Waiver is not granted by the Executive or the resolutions in respect of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver are not approved by the Independent Shareholders, the Proposed Acquisitions Agreements will be terminated and the Reorganisation will not proceed.

The Independent Board Committee, comprising all independent non-executive Directors, namely Mr. Jin Zhanping, Mr. Liu Tianni, Mr. Ye Shuhua and Mr. He Baofeng, has been established by the Company to advise the Independent Shareholders as to whether the terms of (i) the Proposed Acquisitions Agreements and the transactions contemplated thereunder; (ii) the Proposed A Share Placing (including the Triumph Group A Share Placing and the issue and allotment of the new A Shares under the Specific Mandate); and (iii) the Whitewash Waiver (collectively referred to as the “ Transactions ”) are on normal commercial terms or better 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. The non-executive Director, namely Mr. Xie Jun, is not included in the Independent Board Committee as he has connected relationship with the substantial Shareholder(s) of the Company and is therefore not regarded as independent to make any recommendations to the Transactions.

As at the Latest Practicable Date, we did not have any relationships with or interests in the Company, CNBMG, CLFG, Hefei High-Tech, Huaguang Group, Bengbu Institute, International Engineering, Triumph Group, Yixing Environmental Technology, GCL System Integration (collectively, the “ Vendors ”), the Target Companies and any parties acting, or presumed to be acting, in concert with any of them or company controlled by any of them that could reasonably be regarded as relevant to our independence. Apart from normal professional fees payable to us in connection with this engagement, no arrangement exists whereby we had received or will receive any fees or benefits from the Company, CNBMG, the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Vendors, the Target Companies, or any of their respective substantial shareholders, or any parties acting, or presumed to be acting, in concert with any of them or company controlled by any of them. Accordingly, we consider ourselves are qualified to give an independent advice in respect of the Transactions.

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have relied on (i) the information and facts contained or referred to in the Circular; (ii) the information supplied, and the opinions and representations expressed to us by the Company, the Directors and management of the Company, CNBMG, the Vendors, and the Target Companies and their advisers; and (iii) our review of the relevant public information. We have assumed that all the information provided and statements of belief, opinions, intention and representations expressed to us or contained or referred to in the Circular were true, accurate and complete in all respects at the date thereof and may be relied upon. We have no reason to doubt the truth, accuracy and completeness of such information and representations referred to in the Circular and provided to us by the Company, the Directors and management of the Company, CNBMG, the Vendors, and the Target Companies and their advisers. We have also sought and received confirmation from the Directors that no material facts have been withheld or omitted from the information provided to us and referred to in the Circular and that all information or representations regarding the Group, the Proposed Acquisitions Agreements, the Supplemental SP Agreements, the Proposed A Share Placing (including the Triumph Group Subscription Agreement), the transactions contemplated thereunder and the Whitewash Waiver provided to us by the Company, its Directors and management of the Company, for which they were solely and wholly responsible, were true, accurate, complete and not misleading in all respects at the time they were made and up to the Latest Practicable Date. We have also assumed that all statement of intention of the Company, its Directors and management of the Company as set out in the Circular will be capable of being implemented. Shareholders will be informed as soon as reasonably practicable if we become aware of any material change to the above.

We consider that we have reviewed sufficient information currently available to enable us to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information and representations provided to us by the management of the Company and the Directors, nor have we conducted any form of in-depth investigation into the businesses, affairs, operations, financial position or the future prospects of the Company, the Target Companies or any of their subsidiaries or associated companies.

Our opinion is necessarily based upon the financial, economic, market, regulatory and other conditions as they existed on, and the facts, information, representations and opinions made available to us as of, the Latest Practicable Date. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any shares or any other securities of the Company. In rendering this opinion, we have not provided legal, tax,

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

accounting or actuarial advice and accordingly we do not assume any responsibility or liability in respect thereof. We disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion expressed herein, which may come or be brought to our attention after the Latest Practicable Date. Except for its inclusion in the Circular, this letter is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purpose, without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendation in respect of the terms of the Proposed Acquisitions Agreements, the Supplemental SP Agreements and all transactions contemplated thereunder, we have taken into account the following principal factors and reasons:

1. Background and financial information of the Group

1.1 Information of the Group

The principal activities of the Group are production and sales of ultra-thin electronic glass. The scope of business includes manufacturing of glass and relevant further processing goods, mechanical equipment, electric appliances and accessories, sales of self-produced products, provision of technical consultancy and technical services. The Company is a joint stock company incorporated in the PRC with limited liability, and the H Shares and A Shares of which are listed on the main board of the Stock Exchange and the SSE respectively.

1.2 Historical financial information of the Group

Set out below are selected items in the consolidated financial statements of the Group for the two years ended 31 December 2015 and 2016 as extracted from the annual report of the Company for the year ended 31 December 2016 (the “ 2016 Annual Report ”) and for the six months ended 30 June 2016 and 2017 as extracted from the interim report of the Company for the six months ended 30 June 2017 (the “ Interim Report ”).

	For the	year ended	For the	six months
	31 December		ended 30 June
	2015	2016	2016	2017
	RMB’000	RMB’000	RMB’000	RMB’000
	(audited)	(audited)	(unaudited)	(unaudited)
Operating revenue	662,157	392,096	137,240	154,969
Net profit/(loss)
attributable to the
owners of the Company	(184,755)	11,516	(25,746)	1,178

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			As at
	As at 31 December		30 June
	2015	2016	2017
	RMB’000	RMB’000	RMB’000
	(audited)	(audited)	(unaudited)
Total assets	1,314,035	1,356,917	1,267,087
Total liabilities	1,035,690	833,648	742,640
Total equity attributable to
owners of the Company	278,345	523,269	524,447

As shown in the above table, the Group’s revenue decreased from approximately RMB662.2 million for the year ended 31 December 2015 to approximately RMB392.1 million for the year ended 31 December 2016, representing a decrease of approximately 40.8%, while the Group recorded net loss attributable to the owners of approximately RMB184.8 million for the year ended 31 December 2015 and net profit attributable to the owners of approximately RMB11.5 million for the year ended 31 December 2016. As set out in the 2016 Annual Report, the decrease in the Company’s revenue was mainly due to the transfer out of the segments of common glass and silica sand as a result of restructuring in December 2015, while the increase in net profit was mainly attributable to the increase in government subsidies and decrease in impairment loss on assets during the year ended 31 December 2016. Also, the Company had successfully developed and produced 0.15mm ultra-thin float electronic glass during the year ended 31 December 2016, which further enriched the Company’s high value-added product offerings and enhanced its core competitiveness.

As shown in the above table, the Group’s revenue increased from approximately RMB137.2 million for six months ended 30 June 2016 to approximately RMB155.0 million for the six months ended 30 June 2017, representing an increase of approximately 12.9% and the Group improved from net loss attributable to the owners of approximately RMB25.7 million for the six months ended 30 June 2016 to net profit attributable to owners of approximately RMB1.2 million for the six months ended 30 June 2017. As set out in the Interim Report, the increase in operating revenue was due to optimization of product mix and increase in selling prices of products during the six-month period ended 30 June 2017. The change from net loss to net profit was due to (i) the decrease in operating cost from enhancement of cost management and optimization of product mix; and (ii) the decrease in staff costs from decreased sales personnel, which net off the increase in administrative expenses and financial expenses during the six-month period ended 30 June 2017.

As shown in the above table, the Group’s total assets increased from approximately RMB1,314.0 million as at 31 December 2015 to approximately RMB1,356.9 million as at 31 December 2016, representing an increase of approximately 3.3%. As set out

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in the 2016 Annual Report, the increase in total assets was mainly due to the increase in bank balances and other receivables by approximately RMB55.2 million and RMB78.7 million, respectively, being partially offset by the decrease in inventories and fixed assets by approximately RMB62.9 million and RMB42.6 million, respectively.

As shown in the above table, the Group’s total asset decreased from approximately RMB1,356.9 million as at 31 December 2016 to approximately RMB1,267.1 million as at 30 June 2017, representing a decrease of approximately 6.6%. As set out in the Interim Report, the decrease was mainly due to the decrease in bank balances, other receivables and fixed assets by approximately RMB66.8 million, RMB77.4 million and RMB51.9 million, respectively, being partially offset by the increase in intangible assets, accounts receivables and construction in progress by approximately RMB55.1 million, RMB36.2 million and RMB7.6 million, respectively.

As shown in the above table, the Group’s total liabilities decreased from approximately RMB1,035.7 million as at 31 December 2015 to approximately RMB833.6 million as at 31 December 2016, representing a decrease of approximately 19.5%. As set out in the 2016 Annual Report, the decrease in total liabilities was mainly due to the decrease in guaranty loan and other payables by approximately RMB417.2 million and RMB124.0 million, being partially offset by the increase in non-current liabilities due within one year by approximately RMB390.2 million.

As shown in the above table, the Group’s total liabilities decreased from approximately RMB833.6 million as at 31 December 2016 to approximately RMB742.6 million as at 30 June 2017, representing a decrease of approximately 10.9%. As set out in the Interim Report, the decrease was mainly due to the decrease in non-current liabilities due within one year, bills payables, accounts payable by approximately RMB359.9 million, RMB40.0 million and RMB13.4 million, respectively, being partially offset by the increase in short-term borrowings by approximately RMB306.5 million.

2. Background on CNBMG and the Vendors

CNBMG, a wholly state-owned enterprise incorporated in the PRC and the ultimate controlling Shareholder, is a comprehensive building materials industry group. It is deemed to be interested in 174,018,242 A Shares, representing approximately 33.04% of the total issued share capital of the Company as at the Latest Practicable Date.

Triumph Group, an enterprise under ownership of the whole people incorporated in the PRC, an indirect controlling Shareholder and a direct wholly-owned subsidiary of CNBMG, is principally engaged in glass sector, new materials sector, new energy sector, new equipment sector and project management sector.

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Bengbu Institute, an enterprise under ownership of the whole people incorporated in the PRC, the substantial Shareholder, an indirect wholly-owned subsidiary of CNBMG and a wholly-owned subsidiary of Triumph Group, is principally engaged in engineering management and services sector, manufacture of equipment sector, new materials sector and new glass sector (including ITO conductive film glass, TFT-LCD glass and float glass).

CLFG, a company incorporated in the PRC with limited liability, the substantial shareholder and a non-wholly-owned subsidiary of Triumph Group, is principally engaged in the production and sale of float glass, imports, exports and the domestic sale of processing technology of glass, design and subcontracting of engineering works, labour export and other business.

Huaguang Group, a company incorporated in the PRC with limited liability, an indirect subsidiary of CNBMG and a wholly-owned subsidiary of Triumph Group, is principally engaged in manufacturing and sales of float glass, ITO conductive film glass and further glass products.

International Engineering, a company incorporated in the PRC with limited liability and an associate of CNBMG, is principally engaged in engineering technology research and service, which mainly includes general contracting business of glass, cement and new energy and engineering project design business.

Hefei High-Tech, an enterprise under ownership of the whole people incorporated in the PRC and an Independent Third Party, is principally engaged in five major business sectors including construction of infrastructure, sales of real estate, sales of production facilities, leasing business and disposal of assets.

GCL System Integration, a joint stock company incorporated in the PRC with limited liability and the shares of which are listed on the Shenzhen Stock Exchange and an Independent Third Party, is principally a collective supplier for an integrated photovoltaic electricity station with a “Design + Products + Services” system with research and development in technology, optimization of design, collective system, support to financial services and operation and maintenance services.

Yixing Environmental Technology, a company incorporated in the PRC with limited liability, a wholly state-owned company and an Independent Third Party, is principally engaged in the business of investment venture.

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3. Background and financial information on the Target Companies

3.1 Background information about the Target Companies

(i) Hefei New Energy

Hefei New Energy is a company incorporated in the PRC with limited liability. As at the Latest Practicable Date, it is owned as to 76.92% by CLFG and 23.08% by Hefei High-Tech. Hefei New Energy is principally engaged in the research and development, production and sales of solar photovoltaic glass and further processed glass.

Hefei New Energy possesses a 650T/D one furnace with five oxy-fuel combustion ultra-white photovoltaic glass production lines, eight coating production lines and four tempering production lines. The thickness of the glass products of Hefei New Energy ranges from 2.5mm to 4.0mm. Its photovoltaic glass has the characteristics of high solar transmittance, high mechanical strength, high flatness, low iron content and is considered to be one of the finest glass products for usage within the solar energy industry. The photovoltaic glass widely applies to the cover and back plate of the solar photovoltaic components. The target customers of Hefei New Energy are the solar energy photovoltaic modules enterprises and it also exports its products to global market.

(ii) Tongcheng New Energy

Tongcheng New Energy is a company incorporated in the PRC with limited liability. As at the Latest Practicable Date, it is owned as to 67.47% by Huaguang Group, 25.03% by Bengbu Institute and 7.50% by International Engineering. Tongcheng New Energy is principally engaged in the research and development, production and sales of solar photovoltaic glass and further processed glass.

Tongcheng New Energy possesses a 320T/D ultra-white photovoltaic glass production line and several photovoltaic glass further processing production lines. It mainly manufactures and sells ultra-white rolled glass, tempered ultra-white rolled glass, anti-reflective coated tempered rolled glass and rolled cover glass. The thickness of its glass products ranges from 2.5mm to 4.0mm. Its photovoltaic glass has the characteristics of low expansion rate, high compressive strength and anti-potential induced degradation effect. The target customers of Tongchang New Energy are the solar energy photovoltaic modules enterprises and it is able to offer specialized photovoltaic glass in different design, style and size according to the customer’s requirements.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iii) Yixing New Energy

Yixing New Energy is a company incorporated in the PRC with limited liability. As at the Latest Practicable Date, it is owned as to 51.00% by Triumph Group, 29.01% by Far East Optoelectronics Company Limited* (遠東光電股份有限公司), 12.75% by Yixing Environment Technology and 7.24% by GCL System Integration. Yixing New Energy is principally engaged in the research and development, production and sales of solar photovoltaic glass and further processed glass.

Yixing New Energy possesses two 280T/D furnaces with four oxy-fuel combustion ultra-white photovoltaic glass production lines and four further processing lines. The principal glass products which are offered by Yixing New Energy include ultra-white photovoltaic original glass, tempered photovoltaic glass and coated photovoltaic glass, which generally has a thickness of 1.5mm to 4.0mm. The target customers of Yixing New Energy are the solar energy photovoltaic modules enterprises.

Save for each of Far East Optoelectronics Company Limited, Hefei High-Tech, Yixing Environmental Technology and GCL System Integration being Independent Third Parties, other shareholders of the Target Companies and their ultimate beneficial owners are connected persons of the Company. For details of background information of CNBMG and the Vendors, please refer to the paragraph headed “2. Background on CNBMG and the Vendors” above.

3.2 Financial information of the Target Companies

Set out below are selected items in the consolidated financial statements of the Target Companies for the three years ended 31 December 2014, 2015 and 2016 and the five months ended 31 May 2017 as extracted from Appendix II, Appendix III and Appendix IV to the Circular, respectively.

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(i) Hefei New Energy

				For the
				five months
				ended
	For the year ended 31		December	31 May
	2014	2015	2016	2017
	RMB’000	RMB’000	RMB’000	RMB’000
	(audited)	(audited)	(audited)	(audited)
Revenue	–	14,505.91	505,711.32	239,296.81
Gross profit	–	516.41	101,213.98	49,162.26
Net profit/ (loss)
after tax	16,036.62	(11,782.28)	17,832.64	6,819.96
				As at
		As at 31 December		31 May
	2014	2015	2016	2017
	RMB’000	RMB’000	RMB’000	RMB’000
	(audited)	(audited)	(audited)	(audited)
Current assets	13,660.98	125,123.57	289,908.57	421,132.73
Current liabilities	540,103.88	590,387.32	738,546.66	863,924.43
Non-current assets	692,783.67	859,577.24	840,914.24	824,452.79
Non-current
liabilities	–	239,755.00	219,885.00	202,450.00
Total equity
attributable to
equity shareholder
of the Target
Group	166,340.78	154,558.49	172,391.14	179,211.09

As set out in the Letter, Hefei New Energy was in the early development stage for the years ended 31 December 2014 and 2015 and thus generated insignificant amount of revenue. The raw glass production line of Hefei New Energy commenced operation in December 2015 and recorded revenue of nil and approximately RMB14.51 million for the year ended 31 December 2014 and 2015, respectively. Leveraging on its excellent product quality and positive and thorough after-sales service, Hefei New Energy recorded orders for its products and expanding sales coverage since its commencement of operation in December 2015. As at the end of 2016, 14 photovoltaic modules enterprises have established cooperation with Heifei New Energy, of which four customers are among the top five module giants in the photovoltaic industry. As a result, Hefei New Energy recorded revenue of approximately RMB505.71 million and RMB239.30 million for the year ended 31 December 2016 and the five months ended 31 May 2017, respectively.

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Hefei New Energy recorded gross profit of nil, approximately RMB0.52 million, RMB101.21 million and RMB49.16 million for the year ended 31 December 2014, 2015 and 2016 and the five months ended 31 May 2017, respectively. While the gross profit margin of Hefei New Energy increased from approximately 3.56% for the year ended 31 December 2015 to approximately 20.01% for the year ended 31 December 2016 and remained relatively stable when compared to that for the five months ended 31 May 2017. The increase in gross profit and gross profit margin was mainly attributable to the increase in revenue as discussed above and the reduced average production costs as a result of mass production since 2016.

The net profit after tax of Hefei New Energy was approximately RMB16.04 million for the year ended 31 December 2014, mainly represented the government subsidies of approximately RMB27.61 million from the earmarked funds under 《合肥市承接產業轉移加快新型工業化發展若干政策（試行）》(the Polices of Hefei on Carrying on Relocated Industries and Expediting the Development of New Industrialization (Tentative)) and《合肥市承接產業轉移進一步推進自主創新若干政策措施（試行）》 the (Polices and Measures of Hefei on Carrying on Relocated Industries and Further Promoting Independent Innovation (Tentative)). Hefei New Energy made a net loss of approximately RMB11.78 million for the year ended 31 December 2015, mainly due to the (i) loss on disposal of non-current assets; and (ii) increase in staff costs as a result of business expansion, net off by the income from government subsidies. Hefei New Energy recorded net profit margin of nil, approximately negative 81.22%, approximately 3.53% and 2.85% as at 31 December 2014, 2015 and 2016 and 31 May 2017, respectively, which were relatively stable in latter years.

Hefei New Energy had current assets of approximately RMB13.66 million, RMB125.12 million, RMB289.91 million and RMB421.13 million as at 31 December 2014, 2015 and 2016 and 31 May 2017, respectively, representing an increase of approximately 8.16 times, 131.72% and 45.26% in respective years. Such increases were mainly attributable to the increase in notes receivables, accounts receivables and inventories, which were in line with its business growth. Hefei New Energy recorded current liabilities of approximately RMB540.10 million, RMB590.39 million, RMB738.55 million and RMB863.92 million as at the corresponding year/period end. The increasing trend in current liabilities was mainly due to the drawdown of bank and other borrowings for the development of production line and increase in bills payable as a result of business expansion.

The non-current assets of Hefei New Energy increased from approximately RMB692.78 million as at 31 December 2014 to approximately RMB859.58 million as at 31 December 2015, representing an increase of approximately 24.08%. Such increase was mainly attributable to the completion of production

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plant and the purchase of new production machineries in 2015. Hefei New Energy had non-current liabilities of nil, approximately RMB239.76 million, RMB219.89 million and RMB202.45 million as at 31 December 2014, 2015 and 2016 and 31 May 2017, respectively, which mainly represented long term borrowings for the construction of production plants, purchase of machineries and business expansion uses. As a result of the above, Hefei New Energy recorded gearing ratio of approximately 76.45%, 84.30%, 84.76% and 85.61% as at the corresponding year/period end.

(ii) Tongcheng New Energy

				For the
				five months
				ended
	For the year 31 December		ended	31 May
	2014	2015	2016	2017
	RMB’000	RMB’000	RMB’000	RMB’000
	(audited)	(audited)	(audited)	(audited)
Revenue	5,568.56	69,275.70	233,072.83	106,906.23
Gross profit/ (loss)	(215.63)	16,493.50	69,991.35	21,744.92
Net profit/ (loss)
after tax	(7,238.42)	809.31	29,929.27	5,893.00
				As at
	As	at 31 December		31 May
	2014	2015	2016	2017
	RMB’000	RMB’000	RMB’000	RMB’000
	(audited)	(audited)	(audited)	(audited)
Current assets	82,590.06	116,981.07	153,354.72	162,199.89
Current liabilities	279,432.05	367,463.06	259,451.99	276,869.89
Non-current assets	272,226.31	326,675.63	315,220.18	329,685.91
Non-current
liabilities	–	–	–	–
Total equity
attributable to
equity shareholder
of the Target
Group	75,384.33	76,193.64	209,122.91	215,015.91

Tongcheng New Energy commenced production in October 2015 and recorded revenue of approximately RMB5.57 million, RMB69.28 million, RMB233.07 million and RMB106.91 million for the year ended 31 December 2014, 2015 and 2016 and the five months ended 31 May 2017, respectively. As set out in the Letter, Tongcheng New Energy was in the early development stage for the year

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ended 31 December 2014, which as a result generated an insignificant amount of revenue. The significant increase in revenue of approximately RMB163.80 million or 236.44% from the year ended 31 December 2015 to the year ended 31 December 2016 was mainly attributable to (i) longer sales period in 2016; and (ii) the sales of newly developed anti-PID photovoltaic glass in 2016. Tongcheng New Energy record gross loss of approximately RMB0.22 million, gross profit of approximately RMB16.49 million, RMB69.99 million and RMB21.74 million for the corresponding years and periods. The gross loss and insignificant gross profit recorded by Tongcheng New Energy for the year ended 31 December 2014 and 2015 was mainly due to it was still in the early development stage, the gross profit increased by approximately RMB53.50 million or 324.36% to approximate RMB69.99 million for the year ended 31 December 2016, which was mainly attributable to the increase in revenue as discussed above and the reduced production costs as a result of mass production in 2016. Tongcheng New Energy recorded negative gross profit margin of approximately 3.87%, positive gross profit margin of approximately 23.81%, 30.03% and 20.34%.

Tongcheng New Energy recorded net loss after tax of approximately RMB7.24 million for the year ended 31 December 2014, was mainly attributable to the administrative expenses of approximately RMB9.50 million. It recorded net profit after tax of approximately RMB0.81 million, RMB29.93 million and RMB5.89 million for the year ended 31 December 2015 and 2016 and the five months ended 31 May 2017, respectively. The change from net loss after tax for the year ended 31 December 2014 to net profit after tax for year ended 31 December 2016 was mainly attributable to the increase in revenue as discussed above, net off by the increase in sales and marketing expenses which was in line with the revenue growth and the increase in interest expenses incurred from loans for the construction of production plants and purchase of production machineries. Tongcheng New Energy had negative net profit margin of approximately 129.99%, positive net profit margin of approximately 1.17%, 12.84% and 5.51% as at 31 December 2014, 2015 and 2016 and 31 May 2017, respectively.

The current assets of Tongcheng New Energy increased from approximately RMB82.59 million for the year ended 31 December 2014 to approximately RMB116.98 million for the year ended 31 December 2015, representing an increase of approximately RMB34.39 million or 41.64%. Such increase was mainly due to the increase in notes receivables and accounts receivables . Its current assets further increased by approximately RMB36.37 million or 31.09% to approximately RMB153.35 million as at 31 December 2016, was mainly attributable to the increase in inventory and increase in trade receivables which were in line with the revenue growth. Tongcheng New Energy’s current assets amounted to approximately RMB162.20 million as at 31 May 2017, which remained relatively stable when compared to that as at 31 December 2016.

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Tongcheng New Energy’s current liabilities mainly comprised of trade payables and other payables for the purchase of raw materials and production machineries; fluctuation in its current liabilities was in line with the fluctuations of trade and other payables. Toncheng New Energy’s non-current assets remained relatively stable, amounted to approximately RMB272.23 million, RMB326.68 million, RMB315.22 million and RMB329.69 million as at the corresponding year/period end. Its non-current assets mainly comprised of construction in progress and fixed assets. Tongcheng New Energy had no non-current liabilities. As a result of the above, Tongcheng New Energy recorded gearing ratio of approximately 78.75%, 82.83%, 55.37% and 56.29% as at the corresponding year/period end.

(iii) Yixing New Energy

Revenue Cost of goods sold Gross profit Research and development expenses Net profit after tax	For the two months ended 31 December 2016 (Note) RMB’000 (audited) 37,110.96 (32,710.08) 4,400.88 – 539.15	For the five months ended 31 May 2017
		RMB’000 (audited) 110,801.65 (90,346.69) 20,454.96 (4,400.92) 3,581.28

Note: Yixing New Energy was incorporated on 28 October 2016 and had not recorded revenue and profit for the ten months ended 31 October 2016.

Current assets Current liabilities Non current assets Non current liabilities Total equity attributable to equity shareholder of the Target Group	As at 31 December 2016 31 May 2017 RMB’000 RMB’000 (audited) (audited) 109,504.20 244,163.68 176,872.02 313,580.61 388,383.75 424,014.14 – 30,000.00 321,015.93 324,597.21	As at 31 December 2016 31 May 2017 RMB’000 RMB’000 (audited) (audited) 109,504.20 244,163.68 176,872.02 313,580.61 388,383.75 424,014.14 – 30,000.00 321,015.93 324,597.21
		RMB’000 (audited) 244,163.68 313,580.61 424,014.14 30,000.00 324,597.21

As shown from the table above, Yixing New Energy recognised revenue of approximately RMB37.11 million and RMB110.80 million for the two months

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ended 31 December 2016 and the five months ended 31 May 2017, respectively. Such increase represented a growth in revenue of approximately 198.57%, mainly attributable to (i) longer sales period noted in 2017 when compared to that in 2016; and (ii) the growth of business after incorporation as Yixing New Energy completed its trial production and formally put into production in November 2016. Yixing New Energy recorded cost of goods sold of approximately RMB32.71 million and RMB90.35 million for the corresponding period, respectively. As advised by the management of Yixing New Energy, such amount mainly represented the purchase costs of raw materials, including but not limited to, quartz sand, marble stone and limestone and utilities expenses incurred during the production process. Yixing New Energy recorded gross profit of approximately RMB4.40 million and RMB20.45 million for the two months ended 31 December 2016 and five months ended 31 May 2017, respectively. The gross profit margin increased from approximately 11.86% for the two months ended 31 December 2016 to 18.46% for the five months ended 31 May 2017, mainly due to (i) the increase in sales as discussed above; (ii) increase in unit selling price; and (iii) increase in sales of photovoltaic glass with higher gross profit margin. The research and development expenses of approximately RMB4.40 million recorded in the five months ended 31 May 2017 was mainly for the development of its ultra-thin photovoltaic glass. The net profit after tax of Yixing New Energy was further adversely affected by its transportation expenses and staff costs, amounted to approximately RMB1.32 million and RMB4.71 million in aggregate for the two months ended 31 December 2016 and the five months ended 31 May 2017, respectively, mainly due to the growth in business scale which led to more employees being hired and the increase in average employee compensation. As a result of the above, Yixing New Energy recorded net profit margin of approximately 1.45% and 3.23% as at 31 December 2016 and 31 May 2017, respectively.

As shown from the table above, Yixing New Energy had current assets of approximately RMB109.50 million and RMB244.16 million as at 31 December 2016 and 31 May 2017, respectively. The increase in current assets was mainly attributable to the increase in bills receivable and trade receivables which were in line with the growth in sales. Yixing New Energy recorded current liabilities of approximately RMB176.87 million and RMB313.58 million as at 31 December 2016 and 31 May 2017, respectively, representing an increase of approximately 77.29%. Such increase was mainly due to the drawdown of short-term bank borrowings of RMB75.00 million for supporting the working capital and the increase in trade payables as Yixing New Energy purchased more raw materials for production during the period. Yixing New Energy recorded an increase in non-current assets of approximately RMB35.63 million or 9.17%, mainly due to the increase in construction of its production facilities. While the increase in non-current liabilities was attributable to the drawdown of long-term bank borrowings of RMB30.00 million for the construction of

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Yixing New Energy’s new production facilities. As a result of the above, Yixing New Energy recorded gearing ratio of approximately 35.52% and 51.42% as at 31 December 2016 and 31 May 2017, respectively.

For details of management discussion and analysis of the Target Companies, please refer to Appendix XI, Appendix XII and Appendix XIII to the Circular.

4. Reasons for and benefits of the Proposed Acquisitions

As set out in the Letter, the Company intends to expand its business within the new energy glass sector and enrich the Group’s product offering in relation to the new specialised functional glass sector. A favourable regulatory environment, technology, and the growing awareness of the need for, and government support for, environmental protection in the PRC will continue to contribute to the growth of solar energy industry, and in turn promotes the photovoltaic industry in the PRC.

(i) Development and new trend of the photovoltaic industry in the PRC

Driven largely by economic and population growth, human activities are overloading the atmosphere with carbon dioxide and other global warming emissions. These global warming emissions steadily drive up the planet’s temperature and create significant and harmful impacts on human being’s health, the environment and the climate. According to the Intergovernmental Panel on Climate Change (“ IPCC ”), an international body set up and to provide policymakers with regular assessments of the scientific basis of climate change, its impacts and future risks, and options for adaptation and mitigation, electricity and heat production accounted for approximately 25% of today’s global warming emissions, with the majority generated by coal-fired power plants and natural gas-fired power plants. Nowadays, most countries heavily rely on coal, natural gas and crude oil to generate energy; however, these energy sources are non-renewable and the available fossil fuel reserves are diminishing. In contrast, renewable energy sources are becoming increasingly important due to the relatively lower global warming emissions and the capability to replenish. Solar energy, being one of the renewable energy sources, is safe and reliable to consume, non-toxic, pollution-free and capable of regeneration. Due to the unique advantages of solar energy, there is a great deal of opportunities for developing the photovoltaic systems and increasing their utilisation globally. A photovoltaic system is a power system designed to supply usable solar energy by means of photovoltaics. It uses solar panels to capture sunlight’s photons and convert them into electricity.

According to International Renewable Energy Agency (“ IRENA ”), an intergovernmental organisation that supports countries in their transition to a sustainable energy future, and serves as the principal platform for international cooperation on renewable energy, less than 2% of the global electricity was generated by solar energy in 2016. Notwithstanding the current low utilisation rate, the total photovoltaic power generation capacity is expected to reach between 1,760

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gigawatt (“ GW ”) to 2,500 GW in 2030, producing approximately 8% to 13% of the global power generation in 2030. The Joint Research Centre (“ JRC ”) of the European Commission, which employs scientists to carry out research in order to provide independent scientific advice and support to EU policy, foresaw that solar energy would contribute over 20% to the global electricity generation by 2050. Such promising future expansion of the solar energy industry was primarily driven by cost reductions and the supportive government measures.

The European debt crisis and regulatory changes in several countries caused problems for the global photovoltaic market in 2012. For instance, Italy and Germany tried to protect their photovoltaic system manufacturers which led to the introduction of protectionist measures such as anti-dumping regulations against the Chinese photovoltaic industry. Given the growth in emerging markets and the construction of several large photovoltaic projects in the PRC, India and the United States, opportunities arose for the global photovoltaic market to grow and diversify.

The table below sets out the global and China’s total photovoltaic power generation capacity from 2010 to 2016.

==> picture [283 x 198] intentionally omitted <==

----- Start of picture text -----

Power (GW)
350.0
Global 323.6
China
300.0
242.8
250.0
200.0 186.4
150.0 141.4
101.5
100.0
70.8 77.4
42.5 49.8
50.0 32.8
19.8
0.7 3.3 6.9
0.0
2010 2011 2012 2013 2014 2015 2016
----- End of picture text -----

Source: National Energy Administration of the PRC (“ NEA ”)

According to the NEA, which is under administration of the National Development and Reform Commission of the PRC and responsible for drafting national energy strategy, implementing energy policy, regulating energy sectors including coal, oil, gas, and nuclear power and managing the national oil reserve center and monitoring the international energy market in the PRC, the global total photovoltaic power generation capacity reached approximately 323.6 GW in 2016 from 42.5 GW in 2010, representing a compound annual growth rate (“ CAGR ”) of approximately 40.3%. The total photovoltaic power generation capacity in the PRC had experienced rapid growth and reached approximately 77.4 GW in 2016, representing

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a CAGR of approximately 119.1% from 2010 and approximately 4.7% of the total power generating capacity in operation in the PRC in 2016.

According to International Energy Agency (“ IEA ”), an intergovernmental organisation dedicated to responding to physical disruptions in the supply of oil, as well as serving as an information source on statistics about the international oil market and other energy sectors, solar energy would become one of the major energy sources for electricity generation by 2050. IEA expects that the global and China’s total photovoltaic power generation capacity will reach approximately 4,674 GW and 1,738 GW in 2050, respectively.

Taking into consideration of the above, the photovoltaic system manufacturing industry in the PRC is expected to grow and in turn, driving market demands for the whole photovoltaic value chain. According to the China Photovoltaic Industry Association, the actual production capacity of photovoltaic modules to generate power increased from 11 GW in 2010 to 53 GW in 2016, representing a CAGR of approximately 30.0%.

(ii) Promotion of the development of photovoltaic industry by the PRC government

According to the 《關於促進光伏產業健康發展的若干意見》 (Guidelines from the State Council on Encouraging Healthy Solar Industry Developments) released by the State Council of the People’s Republic of China (“ State Council* ”) in July 2013, the State Council put forward to actively explore the photovoltaic application market, make great efforts to explore the distributed photovoltaic power generation market, promote the construction of photovoltaic power station in an orderly manner, and enhance and explore international market. It also required accelerating the adjustment of industrial structure and technological advancement, controlling the blind expansion of photovoltaic production capacity, accelerating the promotion of enterprise merger and restructuring, accelerating the improvement of technologies and equipment, and actively carrying out the international cooperation.

We note that pursuant to 《能源發展戰略行動計劃 (2014-2020年)》 (The Strategic Plan of Energy Development (2014-2020)*) released by the State Council in June 2014, it aimed to reduce China’s high energy consumption per unit GDP ratio through a set of measures and mandatory targets, promoting a more efficient, self-sufficient, green and innovative energy production and consumption. It also stated that China targets to install a cumulative solar energy generation capacity of 100 GW by 2020.

According to the《關於進一步深化電力體制改革的若干意見》(Several Opinions on Further Deepening the Reform of Electric Power System*) issued jointly by the Central Committee of the Communist Party of China and the State Council in March 2015, it specified the basic principle and objective of adherence to energy

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conservation and emission reduction and promotion of energy structure optimisation to increase the proportion of renewable energy power generation in power supply. It also expounded the status quo of China’s electric power system and the urgent need to (i) release the restriction on the scientific development of the electric power industry; (ii) promote both quality and speed in developing the electric power industry; and (iii) drive the structural transformation and industrial upgrading.

The photovoltaic industry in the PRC continued its recovery in 2015. In June 2015, the Ministry of Industry and Information Technology (“ MIIT ”), NEA and the National Certification and Accreditation Administration jointly issued the《關於促進先進光伏技術產品應用和產業升級的意見》 (Opinions on Promoting the Application and Industrial Upgrading of Advanced Photovoltaic Products*). It stipulated more stringent market admission standards of the photovoltaic products and implemented the “Leader” initiative. In October 2015, the MIIT indicated its plan to promote mergers and reorganizations of the photovoltaic enterprises and to support innovations. These favourable policies and technology upgrades led to the addition of newly installed photovoltaic power generation capacity of approximately 17.0 GW across the nation, or more than one quarter of the world’s newly installed photovoltaic power generation capacity. As of the end of 2015, China ranked number one for installed photovoltaic power generation capacity in the world with the country’s accumulated installed photovoltaic capacity of approximately 49.8 GW.

In November 2015, the China’s National Development and Reform Commission (“ NDRC ”) issued six core supporting documents on system reform, of which the《關於有序放開發用電計劃的實施意見》 (Opinions on Implementation of Orderly Release of Power Generation and Utilisation*) further specified preferential arrangement of guaranteed power generation with renewable energy including wind power and solar power.

We note that pursuant to the《中華人民共和國國民經濟和社會發展第十三個五年規劃綱要》(The China’s Thirteenth Five-Year Plan) promulgated by the State Council in March 2016, solar energy is one of several renewable energy technologies that the PRC government will prioritise through 2020. The plan set out ambitious capacity expansion, cost reduction and R&D goals for solar energy development in the PRC. It implemented a general restructuring of the PRC’s fundamental approach to R&D, seeking both to bolster basic research to funnel the results of innovation into large scale commercialization. In addition to the overarching the China’s Thirteenth Five-Year Plan, a detailed implementation plan that focuses on solar energy development is set out in the 《可再生能源發展“十三五”規劃》 (The Thirteenth Five-Year Plan for Renewable Energy Development) promulgated by NDRC in December 2016, pursuant to which the PRC government promotes large-scale application of photovoltaic power generation and cost reductions, promote the industrialization of solar thermal power and continue to promote the use of solar

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thermal applications in urban and rural areas. The plan stipulated that China should have cumulative solar thermal power capacity of 110 GW by 2020, among which the majority should be photovoltaic power generation capacity. We also note that pursuant to the 《太陽能發展“十三五”規劃》 (Thirteenth Five Year Plan for Solar Energy Development*) issued by the NEA in December 2016, it laid out the goal of achieving large scale commercial production of solar cells in the PRC and its intention to reduce the cost of solar thermal power generation by half from its 2015 level by 2020.

The maturity of photovoltaic technology in the PRC has led to a decrease in manufacturing cost and has contributed to the sustainable development of the whole photovoltaic industry value chain.

(iii) Enhancing profitability and strengthening overall competitiveness of the Company

As advised by the management of the Company that the Group intends to actively engage in the photovoltaic business segment in view of the growing demand of the photovoltaic modules. Through the Proposed Acquisitions, the Group will be able to broaden its product range into photovoltaic glass and further processed glass for the renewable energy sector.

As stated in the Letter, the Target Companies are in different operation stage with different development history. They have similar business nature, engaging in the research and development, production and sales of solar photovoltaic glass. Nevertheless, each of the Target Companies possesses its own strengths and advantages in business development which are beneficial for the future development of the Company.

As advised by the management of the Company, (i) Hefei New Energy possesses the largest production scale amongst the three Target Companies and has relatively higher degree of economic of scale in production which can effectively reduce unit production cost and is competitive in the industry; (ii) Tongcheng New Energy is competitive in the supply of customised products and business of double glass modules. When compared to traditional modules, double glass modules are light-weighted, higher weatherability, prolonged lifetime of the glass modules and enhancing the efficiency of photovoltaic modules. The products of Tongcheng New Energy are considered as the future development trend of photovoltaic modules; and (iii) Yixing New Energy conducts research and development and produces thin glass products, which is in line with the development trend of photovoltaic glass industry. Moreover, Yixing New Energy is located in a geographical location which is surrounded by several photovoltaic modules manufacturers, thereby lowering transportation cost and response to customers’ demand in a timely manner.

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Given that the Company and the Target Companies are all engaged in glass business, upon completion of the Proposed Acquisitions, the Company can further enrich and optimize its product structure, expand market portion and product application scope, thereby enhance the risk resistance capacity, market competitiveness and core competitiveness of the Company. Leveraging on the Company’s strong and experienced research and development teams, together with its core glass production technology and technical knowhow, the management of the Company is of the view that the Company can fully utilise its existing advantages on talents, technology and brands, enhance its business scale and synergy effects, and in turn improve the Group’s profitability.

(iv) Protection to the Company given the short track record period of the Target Companies

The Directors advised that when entering into the Proposed Acquisitions Agreements, the Company had also entered into the PG Indemnity Agreements such that the potential risk raising from the relatively short track record period of the Target Companies can be reduced. As set out in the Letter, the Guarantors have undertaken the Profit Guarantee to the Company, details of which are set out in the paragraph headed “7. Principal terms of the Profit Guarantee Indemnity Agreements” below. We consider the Profit Guarantee provided by the Guarantors, which serves to compensate the Company for any shortfall in the actual net profits of any Target Company for the year ending 31 December 2017, 2018, 2019 and 2020 (if applicable) as compared to the relevant guarantee amount under the Profit Guarantee Indemnity Agreements, will be a favourable arrangement for the Company in the event that any of the Target Company fails to generate the level of profits as guaranteed in any of the corresponding years. We also consider that the Profit Guarantee provides protection to the Company given the short track record period of the Target Companies in the event that part of the forecasted net profit of the Target Companies fail to materialise after completion of the Proposed Acquisitions. Having considered the above and reviewed the terms of Profit Guarantee Indemnity Agreements, we concur with the view of the Directors that the Profit Guarantee provides short-term protection for the Company against the risk of acquiring the Target Companies with short track record period.

Having considered (i) the current production scale of the Target Companies; (ii) future potential growth of each of the Target Companies; (iii) the growth in the PRC’s photovoltaic glass manufacturing industry; (iv) the favorable government policies to promote the development of photovoltaic industry in the PRC; (v) the synergy effects amongst the Group and the Target Companies; and (vi) the Profit Guarantee provides protection to the Company given the short track record of the Target Companies, we are of the view that the Proposed Acquisitions offers the Company a good opportunity to broaden its product range and diversity its glass products into the renewable energy sector. As such, the Proposed Acquisitions are in the interests of the Company and the Shareholders as a whole.

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5. Principal terms of the Proposed Acquisitions Agreement and the Supplemental SP Agreements

Background of the First SP Agreement:

Date:

7 February 2017 (as supplemented by the First Supplemental SP Agreement on 7 August 2017)

Parties:

(i) The Company, as the purchaser; and
(ii) CLFG and Hefei High-Tech, as the sellers.

Subject matter:

CLFG and Hefei High-Tech have conditionally agreed to sell and the Company has conditionally agreed to buy 76.92% and 23.08% of the equity interest in Hefei New Energy, respectively, representing the entire equity interest in Hefei New Energy.

Consideration:

The aggregate consideration is RMB307,825,000, which was determined on arm’s length negotiations with reference to the valuation of the entire equity interest of Hefei New Energy as at 31 October 2016 as appraised by the Valuer by using income approach valuation method. The aggregate consideration of RMB307,825,000 shall be settled by the Company by allotment and issue of 13,126,864 new A Shares to the respective parties pursuant to the First SP Agreement and the First Supplemental SP Agreement, details of which are set out in the below subparagraph headed “ The Consideration Shares ” below.

Background of the Second SP Agreement:

Date:

7 February 2017 (as supplemented by the Second Supplemental SP Agreement on 7 August 2017)

Parties:

(i) The Company, as the purchaser; and
(ii) Huaguang Group, Bengbu Institute and International Engineering, as the sellers.

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Subject matter:

Huaguang Group, Bengbu Institute and International Engineering have conditionally agreed to sell and the Company has conditionally agreed to buy 67.47%, 25.03% and 7.5% of the equity interest in Tongcheng New Energy, respectively, representing the entire equity interest in Tongcheng New Energy.

Consideration:

The aggregate consideration is RMB221,651,200, which was determined on arm’s length negotiations with reference to the valuation of the entire equity interest of Tongcheng New Energy as at 31 October 2016 as appraised by the Valuer by using income approach valuation method. The aggregate consideration of RMB221,651,200 shall be settled by the Company by allotment and issue of 9,452,076 new A Shares to the respective parties pursuant to the Second SP Agreement and the Second Supplemental SP Agreement, details of which are set out in the below subparagraph headed “ The Consideration Shares ” below.

Background of the Third SP Agreement:

Date:

7 February 2017 (as supplemented by the Third Supplemental SP Agreement on 7 August 2017)

Parties:

(i) The Company, as the purchaser; and
(ii) Triumph Group, Yixing Environmental Technology and GCL System Integration, as the sellers.

Subject matter:

Triumph Group, Yixing Environmental Technology and GCL System Integration, have conditionally agreed to sell and the Company has conditionally agreed to buy 51%, 12.75% and 7.24% of the equity interest in Yixing New Energy, respectively, representing 70.99% of the equity interest in Yixing New Energy.

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Consideration:

The aggregate consideration is RMB245,089,500, which was determined on arm’s length negotiations with reference to the valuation of 70.99% of the entire equity interest of Yixing New Energy as at 31 October 2016 as appraised by the Valuer by using income approach valuation method. The aggregate consideration of RMB245,089,500 shall be settled by the Company by allotment and issue of 10,451,576 new A Shares to the respective parties pursuant to the Third SP Agreement and the Third Supplemental SP Agreement, details of which are set out in the below subparagraph headed “ The Consideration Shares ” below.

Aggregated consideration of the Target Companies

We obtained a list of the comparable companies (the “ Comparable Companies ”) from the announcement issued by the Company dated 9 March 2017 and noted that the Comparable Companies were selected based on the business nature and principal products and geographic location of operation. The Comparable Companies are set out in the table below and they (i) operate in the photovoltaic glass industry in the PRC; and (ii) are listed in the PRC (the “ Selection Basis ”). Given that the Target Companies are all engaged in photovoltaic glass industry and their substantial portion of the revenue were derived from the PRC, we consider that it is appropriate to identify the Comparable Companies based on the Selection Basis. To the best of our knowledge, we have identified the Comparable Companies based on our research conducted on Bloomberg, the websites of the Shanghai Stock Exchange and the Shenzhen Stock Exchange, and we consider they represent an exhaustive list based on the above Selection Basis. Details of the analysis of price-to-earnings ratio (“ P/E ratio ”) and price-to-book-value ratio (“ P/B ratio ”) of the Comparable Companies and the Target Companies are disclosed below.

				Net profit/(loss)
			Number of	attributable to
		Stock	outstanding	the		P/E ratio	P/B ratio
Comparable Companies	Stock code	price (1)	shares (2)	shareholders (2)	Net book value (2)	(times) (3)	(times) (3)
Avic Sanxin Co., Ltd.	002163.SZ	9.50	803,550,000	9,462,522.38	1,207,001,712	806.73x	6.32x
Changzhou Almaden Stock	002623.SZ	37.58	160,000,000	9,113,370.94	2,165,983,916	659.78x	2.78x
Co., Ltd.
CSG Holding Co., Ltd.	000012.SZ	9.88	2,075,335,560	776,950,973.00	7,812,335,004	26.39x	2.62x
Shenzhen Topray Solar Co.,	002218.SZ	4.48	618,171,052	108,636,020.57	2,703,829,862	25.49x	1.02x
Ltd.
Henan Ancai Hi-Tech Co.,	600207.SH	10.31	862,955,974	(219,662,052.70)	(490,650,768)	N/A	N/A
Ltd.
					Average	379.60x	3.19x

Notes:

Extracted from Bloomberg as of 7 February 2017, being the date of the Proposed Acquisitions Agreements.

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Extracted from respective audited financial reports for their latest financial period.
The P/E ratio represents the market capitalisation of the Comparable Companies as of 7 February 2017, divided by net profit per share attributable to the shareholders of the comparable companies. The P/B ratio represents the market capitalisation of the Comparable Companies as of 7 February 2017 divided by net book value of the comparable companies as at the end date of their respective latest financial period.

As mentioned in the sub-paragraph headed “Enhancing the competitiveness and value to the Shareholders” in this letter above, each of the Target Companies have similar business nature, engaging in the research and development, production and sales of solar photovoltaic glass, each of them are in different operation stage with different development history and possess its own strengths and advantages in business development in the photovoltaic glass industry. We note that Hefei New Energy and Tongcheng New Energy were in their early development stage in 2014 and commenced larger-scale of operation and production in December 2015 and October 2015, respectively, while Yixing New Energy was incorporated in October 2016 and was still at its early development stage. We also note that the P/E ratio and P/B ratio of each of the Target Companies were as follow:

	Hefei New	Tongcheng	Yixing New
Target Companies	Energy	New Energy	Energy(1)
Historical P/E ratio (for the year ended	17.26 times	7.41 times	106.74
31 December 2016)			times(2)
Historical P/E ratio (Annualised for	18.81 times	15.67 times	40.14
the five months ended 31 May 2017)(3)			times(2)
Forward P/E ratio (for the year ending	7.75 times	8.46 times	26.98
31 December 2017)(4)			times(2)
P/B ratio as at 31 May 2017	1.72 times	1.03 times	1.06 times(2)

Notes:

(1) For illustration purpose, the valuation of Yixing New Energy used for calculation was on 100% enlarged basis.
(2) For illustration purpose, the net profit after tax of Yixing New Energy was annualised for the calculation of the historical P/E ratio for the year ended 31 December 2016.
(3) For illustration purpose, the net profit after tax of the Target Companies was annualised for the calculation of the historical P/E ratio for the five months ended 31 May 2017.
(4) For illustration purpose, the amount of Profit Guarantee of each of the Target Companies for the year ending 31 December 2017 was used for calculation of the forward P/E ratio for the year ending 31 December 2017.
(5) Each of the consideration of the Target Companies under the Proposed Acquisitions has been used as the price for calculation of the P/E ratio and P/B ratio.

As shown from the table above, (i) the historical P/E ratio of Hefei New Energy for the year ended 31 December 2016 and annualized for the five months ended 31 May 2017 was

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approximately 17.26 times and 18.81 times, respectively, while the forward P/E ratio for the year ending 31 December 2017 decreased to approximately 7.75 times; (ii) the historical P/E ratio of Tongcheng New Energy for the year ended 31 December 2016 increased from approximately 7.41 times to historical P/E ratio annualized for the five months ended 31 May 2017 of approximately 15.67 times, while the forward P/E ratio for the year ending 31 December 2017 decreased to approximately 8.46 times, which is similar to the historical P/E for the year ended 31 December 2016; and (iii) the historical P/E ratio of Yixing New Energy annualised for the year ended 31 December 2016 decreased from approximately 106.74 times to historical P/E ratio annualized for the five months ended 31 May 2017 of approximately 40.14 times, while the forward P/E ratio for the year ending 31 December 2017 further decreased to approximately 26.98 times. We also note that the expected increase in the forecasted net profit, which is equivalent to the amount of Profit Guarantee, of Hefei New Energy, Tongcheng New Energy and Yixing New Energy from financial year ending 31 December 2017 to 31 December 2020, represented a CAGR of approximately 23.12%, 1.08% and 54.45%, respectively.

As confirmed by the management of the Company, given all of the Target Companies have less than three years of financial periods with full operation scale, in practically, Yixing New Energy has less than one full year of financial period, therefore historical P/E ratio and P/B ratio was not comparable with the Comparable Companies. Nevertheless, we also note that (i) all of the historical P/E ratio and the forward P/E ratio of each of the Target Companies as shown above are within the range and lower than the average of the P/E ratio of the Comparable Companies as shown above; (ii) all of the historical P/B ratio and the forward P/B ratio of each of the Target Companies as shown above are within the range and lower than the average of the P/B ratio of the Comparable Companies as shown above; (iii) the P/E ratio of Yixing New Energy shows that it is trending downwards from the historical P/E for the annualised P/E ratio in 2016 to the annualised P/E ratio in 2017 and further to the forward P/E ratio in 2017; and (iv) most of the P/E ratio and P/B ratio of the Comparable Companies were relatively high, which indicate that the general market considers the photovoltaic glass industry in the PRC is expecting to be fast growing in the future. Having considered the aforementioned and the analysis of the valuation of the aggregate consideration of the Target Companies which is set out in the paragraph headed “6. Valuation of the Target Companies” below, we consider the consideration of the Target Companies is fair and reasonable so far as the Company and the Independent Shareholders are concerned.

Having considered Yixing New Energy (i) focuses in research and develop thin glass products which in line with the development trend of photovoltaic glass industry by applying the most updated results of technology process in its production lines; (ii) located in a geographical location which is surrounded by several photovoltaic modules; (iii) is expected a significant boost in its operating results after the launching of the second phase of the production lines project which allows Yixing New Energy proceed to stable production stage; (iv) was still at its early development stage while Hefei New

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Energy and Tongcheng New Energy had already commenced larger-scale of operation and production for more than one year; (v) has a similar valuation-to-book value as at 31 May 2017 as compared to Tongcheng New Energy and lower than the Hefei New Energy; (vi) has the highest CAGR for the forecasted net profit from 2017 to 2020, which shows that Yixing New Energy’s operation scale is expected to expand at a faster rate than the other two Target Companies and is expected to be in a high growth development stage; and (vii) has a decreasing trend of P/E ratio from historical P/E ratio of 106.74 times for the year ended 31 December 2016 to the forward P/E ratio of 26.98 times for the year ending 31 December 2017 and the forward P/E ratio is expected to further decrease once Yixing New Energy commences its full operation and production for the year ending 31 December 2018, despite Yixing New Energy was still in the early development stage and recorded the lowest net profits among the Target Companies on pro-rata basis with highest consideration on 100% enlarged basis among the Target Companies, we concur with the Directors’ view that the consideration for Yixing New Energy is fair and reasonable so far as the Company and the Independent Shareholders are concerned.

The Consideration Shares

The aggregate number of Consideration Shares to be issued by the Company of 33,030,516 new A Shares represent approximately 6.27% of the total issued share capital of the Company as at the Latest Practicable Date and approximately 5.90% of the total issued share capital of the Company as enlarged by the issue of such Consideration Shares (before the Proposed A Share Placing). Details of the number of the Consideration Shares to be issued to the respective Vendors under the Proposed Acquisitions Agreements are shown below:

Name of the Vendors *The First Supplemental SP* *Agreement* CLFG Hefei High-Tech Total	Consideration (RMB) 236,788,461.54 71,036,538.46 307,825,000.00	Consideration Shares to be issued Percentage to the total issued share capital of the Company as at the Latest Practicable Date (Number of Shares) (approximately) 10,097,588 1.92% 3,029,276 0.58% 13,126,864 2.49%	Consideration Shares to be issued Percentage to the total issued share capital of the Company as at the Latest Practicable Date (Number of Shares) (approximately) 10,097,588 1.92% 3,029,276 0.58% 13,126,864 2.49%
			2.49%

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Name of the Vendors *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 (RMB) 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 Percentage to the total issued share capital of the Company as at the Latest Practicable Date (Number of Shares) (approximately) 6,377,490 1.21% 2,365,976 0.45% 708,610 0.13% 9,452,076 1.79% 7,508,991 1.43% 1,877,247 0.36% 1,065,338 0.20% 10,451,576 1.98%	Consideration Shares to be issued Percentage to the total issued share capital of the Company as at the Latest Practicable Date (Number of Shares) (approximately) 6,377,490 1.21% 2,365,976 0.45% 708,610 0.13% 9,452,076 1.79% 7,508,991 1.43% 1,877,247 0.36% 1,065,338 0.20% 10,451,576 1.98%
			1.79%

			1.43% 0.36% 0.20%
			1.98%

As set out in the Letter, the issue price of the Consideration Shares is RMB23.45 (equivalent to approximately HK$26.50) per Consideration Share, which (i) shall not be less than 90% of the ratio of the total turnover over the total volume of the A Shares for the last 20 trading days of A Shares as quoted on the SSE prior to the announcement date of the Board meeting approving the Proposed Acquisitions, i.e. 8 February 2017; and (ii) is subject to the approval of the EGM and the CSRC and adjustment in case of ex-rights or ex-dividend during the period from the announcement date of the Board meeting to the issue date in accordance with the relevant rules of the CSRC and the SSE. The issue price of the Consideration Shares was determined in accordance with the “Administrative Measures on Significant Assets Restructuring of Listed Companies (上市公司重大資產重組管理辦法)” issued by the CSRC (the “ PRC Reorganisation Measures ”), which stipulates that the issue price of the consideration shares to be issued by a PRC listed company under the significant assets restructuring shall not be less than 90% of the market reference price, being the average trading price of the PRC listed shares (i.e. the ratio of the total turnover over the total volume) for either the last (i) 20 trading days, (ii) 60 trading days, or (iii) 120 trading days prior to the announcement date of the board meeting approving the transactions contemplated under the significant assets restructuring. We note that the Company’s proposed Consideration share at 90% of the average trading price of A Shares for the last 20 trading days immediately preceding the

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date of the announcement on the relevant Board meeting is in line with the “Administrative Measures on Significant Assets Restructuring of Listed Companies (上市公司重大資產重組管理辦法)”. We were advised by the management of the Company that the discussion in relation to the First SP Agreement with CLFG and Hefei High-Tech, the Second SP Agreement with Huaguang Group, Bengbu Institute and International Engineering and the Third SP Agreement with Triumph Group, Yixing Environmental Technology and GCL System Integration took place concurrently but individually with each of the respective counterparties prior to the confirmation of the transaction terms and the signing of the agreements. Each of the relevant parties negotiated and agreed that the price of the Consideration Shares were set as the average trading price of the preceding 20 trading days as permissible under relevant rules and regulation. We also noted that 90% of the average trading price of the preceding 60 and 120 trading days was approximately RMB24.38 per A Share and RMB25.51 per A Share, representing approximately 3.97% and 8.78% higher than the issue price of the Consideration Shares, respectively.

As trading in the A Shares has been suspended from 8 September 2016 to 9 March 2017, the issue price of the Consideration Shares was determined based on 90% of the ratio of the total turnover over the total volume of the A Shares for the last 20 trading days of A Shares prior to 8 September 2016. The issue price of RMB23.45 per Consideration Share represents:

(a) a premium of approximately 487.58% over the closing price of HK$4.51 per H Share as quoted on the Stock Exchange as at the Latest Practicable Date;
(b) a premium of approximately 397.19% over the closing price of HK$5.33 per H Share as quoted on the Stock Exchange on the Last Trading Day;
(c) a premium of approximately 403.80% over the average closing price of approximately HK$5.26 per H Share as quoted on the Stock Exchange for the last 5 trading days up to and including the Last Trading Day;
(d) a premium of approximately 402.56% over the average closing price of approximately HK$5.27 per H Share as quoted on the Stock Exchange for the last 10 trading days up to and including the Last Trading Day;
(e) a premium of approximately 412.54% over the average closing price of approximately HK$5.17 per H Share as quoted on the Stock Exchange for the last 30 trading days up to and including the Last Trading Day;
(f) a discount of approximately 8.43% to the closing price of RMB25.61 (equivalent to approximately HK$28.94) per A Share as quoted on the SSE on 7 September 2016 (the last trading day before the suspension of the trading in A Shares); and

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(g) a premium of approximately 2,245.00% over the unaudited net assets attributable to the Shareholders per Share of approximately RMB1.00 (equivalent to approximately HK$1.12), calculated based on the Company’s unaudited net assets attributable to the Shareholders of approximately RMB524,447,375.98 as at 30 June 2017 (as quoted from the first Interim Report of the Company for the six months ended 30 June 2017 published on 22 September 2017).

In assessing the fairness and reasonable of the issue price of the Consideration Shares, we have considered the historical price performance of the A Shares and H Shares of the Company for one-year period prior to the Last Trading Day as such one-year period would be sufficient to smooth out the effects of any short-term fluctuations in the stock market and therefore can serve as a benchmark for accessing the issue price of the Consideration Shares. The chart below illustrates a comparison between the issue price of RMB23.45 per Consideration Share and (i) the daily closing prices of the H Shares (present in RMB equivalent based on an exchange rate of RMB1.00 to HK$1.13); and (ii) the daily closing prices of the A Shares from 4 January 2016 being approximately one year before the Last Trading Day, to 6 February 2017, being the Last Trading Day (the “ Review Period ”):

==> picture [391 x 265] intentionally omitted <==

----- Start of picture text -----

35
The last trading day,
being 7 September
2016, before the
suspension of the
30 trading in A Shares
Suspension of trading of
A Shares from 8
September 2016
25
Issue price at RMB23.45
per Consideration Share
20
15
The Last Trading Day, being
6 February 2017, prior to the
10 announcement of the
Proposed Acquisitions
5
0
4/1/2016 4/2/2016 4/3/2016 4/4/2016 4/5/2016 4/6/2016 4/7/2016 4/8/2016 4/9/2016 4/10/2016 4/11/2016 4/12/2016 4/1/2017 4/2/2017
H Shares (1108.hk) A Shares (600876.ch) Consideration Shares
Share Price (RMB)
----- End of picture text -----

Source: Bloomberg

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The respective closing price of the A Shares fluctuated between RMB20.50 per A Share to RMB35.35 per A Share during the Review Period, while the average closing price was approximately RMB27.05 per A Share during the same period. The closing price of the Shares was RMB25.61 per A Share on the Last Trading Day. The trading of A Shares had been suspended during the period since 8 September 2016 during the Review Period.

We note that the issue price of Consideration Shares was at significant premium over the RMB equivalents of the trading prices of the H Shares during the Review Period. Furthermore, the closing price of the A Share was at its highest premium of approximately 799.45% over the RMB equivalent of the closing price of HK$4.22 per H Share on 28 January 2016 and at lowest premium approximately 497.04% over the RMB equivalent of the closing price of HK$3.88 per H Share on 15 January 2016 during the Review Period.

Based on the price performance of the A Shares as illustrated above, we note that (i) the issue price of RMB23.45 per Consideration Share represents a discount of approximately 13.13% to the average closing price of RMB27.05 per A Share during the Review Period; and (ii) the issue price of Consideration Shares represents a discount of approximately 8.43% to the closing price of RMB25.61 per A Share on the Last Trading Day.

Notwithstanding the discount to the closing price on the Last Trading Day, we note that the issue price of RMB23.45 per Consideration Share represents a premium of approximately 2,245.00% over the unaudited net assets attributable to the Shareholders as at 31 March 2017 of approximately RMB1.00 per Share. In addition, the issue price of Consideration Shares also represents a premium of approximately 956.31% to the unaudited pro forma net asset value attributable to the then owners of the Company of approximately RMB2.05 per Share (based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix XIV to the Circular, on the assumption that the Proposed Acquisitions had taken place on 31 December 2016, divided by the number of issued Shares as enlarged by the issue of Consideration Shares).

Having considered that (i) the issue price of Consideration Shares was determined on arm’s length negotiations between the Company derived based on the PRC Reorganisation Measures; (ii) the issue price of the Consideration Shares is the same amongst the Vendors, which include Independent Third Parties; (iii) the Consideration Shares are subject to a lock-up period of 12 months (applicable to Hefei High-Tech) and 36 months (applicable to CLFG, Huaguang Group, Bengbu Institute, International Engineering, Triumph Group, Yixing Environmental Technology and GCL System Integration) from the date of issue; (iv) the issue price of Consideration Shares represents a premium over both the unaudited pro forma net asset value of the Enlarged Group attributable to the then owners of the Company (assuming the Proposed Acquisitions had taken place on 31 December 2016) and the unaudited net assets attributable to the Shareholders as at 31 March 2017; and (v) the issue price of Consideration Shares was at premium to RMB equivalents of the closing prices of the H Shares during the Review Period, we are of the view that the issue price of Consideration Share is fair and

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reasonable so far as the Company and the Independent Shareholders are concerned and is on normal commercial terms.

Lock-up Period

Each of CLFG, Huaguang Group, Bengbu Institute, International Engineering, Triumph Group, Yixing Environmental Technology and GCL System Integration has undertaken that the respective Consideration Shares to be issued to them could not be transferred within 36 months after completion of the issue of the Consideration Shares (but can be repurchased by the Company to fulfill the compensation obligation (if applicable) under the Profit Guarantee Indemnity Agreements as further explained below). The above 36-month lock-up period is made in accordance with the PRC Reorganisation Measures, which requires that if (i) the consideration shares are obtained by any of the controlling shareholder or de facto controller of a PRC listed company or their related parties (applicable to CLFG, Huaguang Group, Bengbu Institute, International Engineering and Triumph Group, being the controlling shareholders of the Company or their related parties respectively); or (ii) the owner of the target company receiving the consideration shares of a PRC listed company within 12 months from the date on which such owner acquiring equity interest in the target company (applicable to Yixing Environmental Technology and GCL System Integration, which both acquired equity interest in Yixing New Energy on 28 October 2016), such consideration shares shall not be transferred within 36 months from the completion of the issue of the Consideration Shares (but can be repurchased by the Company to fulfill the compensation obligation (if applicable) under the Profit Guarantee Indemnity Agreements as further explained below). The 36-month lock-up period is not applicable to Hefei High-Tech as Hefei High-Tech is neither a related party of the Company nor acquired equity interest in Hefei New Energy for less than 12 months.

Hefei High-Tech has undertaken that the Consideration Shares issued to it could not be transferred within 12 months after completion of the issue of the Consideration Shares (but can be repurchased by the Company to fulfill the compensation obligation (if applicable) under the Profit Guarantee Indemnity Agreements as further explained below). Hefei High-Tech has further undertaken that after the 12-month lock-up period, it may transfer the Consideration Shares issued to it after fulfillment of the Profit Guarantee or its compensation obligation for the relevant financial year under the Profit Guarantee Indemnity Agreement, subject to the transfer restriction that it shall not transfer more than 25% of the Consideration Shares issued to it to any other party(ies) (however such 25% transfer restriction does not apply to the repurchase by the Company to fulfill the compensation obligation of Hefei High-Tech (if applicable) under the Profit Guarantee Indemnity Agreements as further explained below) for each of any 12 months within the Profit Guarantee Period. Such 25% transfer restriction was imposed to ensure Hefei High-Tech has sufficient number of Consideration Shares to fulfill its compensation obligation under the Profit Guarantee Indemnity Agreement during the Profit Guarantee Period.

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For connected persons of the Company (i.e. CLFG, Huaguang Group, Bengbu Institute, International Engineering and Triumph Group), the above 36-month lock-up period of the Consideration Shares will be automatically extended for at least 6 months if (i) the closing prices of the A Shares for 20 consecutive trading days are below the issue price of the Consideration Shares within the 6-month period from the completion date of the Proposed Acquisitions; or (ii) the closing price of the A Shares as at the end of the 6-month period after completion of the Proposed Acquisitions is below the issue price of the Consideration Shares. The above lock-up period of the Consideration Shares shall also be subject to the requirements of the CSRC and/or the SSE in respect of lock-up period, including but not limited to any additional requirement(s) on top of the lock-up period measures as mentioned in this circular that may be further imposed by the CSRC and/or the SSE and any amendments to the existing measures or imposition of new measures in respect to the lock-up period for PRC listed company.

We are of the view that the lock-up arrangement ensures shareholders of the Consideration Shares to commit to a longer term view when holding the Consideration Shares. As such, it is in the interest of the Company and the Shareholders as a whole.

Profit Guarantee

Pursuant to the Proposed Acquisitions Agreements, each of the Vendors under the Proposed Acquisitions Agreements has undertaken to provide the Profit Guarantee to the Company during the Profit Guarantee Period and enter into the Profit Guarantee Indemnity Agreements to set out details of the Profit Guarantee. Details of the Profit Guarantee Indemnity Agreements are set out in the paragraph headed “7. Principal terms of the Profit Guarantee Indemnity Agreements” below.

6. Valuation of the Target Companies

6.1 Valuation reports of the Target Companies

As stated in the Letter, the aggregated consideration for the Proposed Acquisitions of the Target Companies was determined on arm’s length negotiations with reference to the valuations of the entire equity interest of Hefei New Energy and Tongcheng New Energy and 70.99% of the valuation of the entire equity interest of Yixing New Energy. The Company has engaged Beijing Pan-China Assets Appraisal Co., Ltd., an independent firm of qualified PRC values, to conduct business valuations on the Target Companies and a summary of respective valuation report for Hefei New Energy, Tongcheng New Energy and Yixing New Energy (the “ Valuation Reports ”) is set out in Appendix VII, Appendix VIII and Appendix IX to the Circular. According to the Valuation Reports, the entire equity interest of Hefei New Energy and Tongcheng New Energy and 70.99% of the entire equity interest of Yixing New Energy are valued at approximately RMB774,565,545 as at 31 October 2016. The Valuer has confirmed that there was no material change in the assumptions, basis, accounting policies and methods of the valuation of the Target

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Companies adopted in the valuation reports during the period from 31 October 2016 to 31 July 2017 and accordingly, no material change in the appraised value of the respective Target Companies as at 31 July 2017 as compared to those set out in the Valuation Reports. The aggregated consideration for the Proposed Acquisitions of RMB774,565,700 represents a slight premium of less than 0.01% over the aforesaid valuation.

We have interviewed with the Valuer and were given to understand that the Valuer is independent and has no prior relationship with the Company, the connected persons of the Company and other parties to the Proposed Acquisitions Agreements. We have reviewed and discussed with the Valuer their qualifications and the bases, assumptions and methodologies of the valuation of the Target Companies and have obtained the engagement letter of the Valuer to access the appropriateness of its scope of work and are of the view that they have the required skills and experience to undertake the valuation of the Target Companies competently. We therefore consider it appropriate to rely on their work and opinion.

In assessing the fairness and reasonableness of the valuation of the Target Companies, we have studied the valuation methodologies, bases of valuation and assumptions underlying the Valuation Reports.

i) Valuation methodology

We have reviewed and discussed with the Valuer the methodologies, basses and assumptions adopted for the valuations and adjustments made to arrive at the valuation of the Target Companies. The Valuer has also carried out physical inspections and made relevant enquiries for the purpose of estimating the market values of the Target Companies.

We observed from the Valuation Reports that the Valuer had considered three generally accepted valuation approaches, i.e. income approach, market approach and asset-based approach, and the valuation of the Target Companies has been carried out on the basis of fair value under the discounted cash flow method under the income approach for a set of two periods from 1 November 2016 to 31 December 2021 and a perpetual period starting from 1 January 2022. As set out in the Valuation Report, the discounted cash flow method used for the Valuations refer to the enterprise value lies in the future income expected to be generated for the enterprise and assess 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 stated in the Valuations Reports, the market approach determines the prevailing fair market value of the Target Companies by referring to comparables in the market based on one point of time on the valuation reference date in the capital market. According to the Valuation Reports, it is

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difficult to accurately quantify and rectify the degree of similarity between the comparable listed companies and the Target Companies given the lack of a fully-developed and active capital market in the PRC. In the absence of such market and incapable of capturing the cyclical fluctuation of the market, the market approach is not adopted for the valuation of the Target Companies.

As stated in the Valuation Reports, the asset-based approach is applicable due to thorough investigation and valuation can be conducted on the assets and liabilities of the appraised entity where the Target Companies can provide and the Valuer can collect externally for the information required.

We have discussed with the Valuer regarding the valuation methodology of the valuation of the Target Companies, the forecast of the future income prepared by the Target Companies which are mainly generated from sales of photovoltaic modules and glass based on the estimated future demand and production capacities and the underlying assumptions of the valuation as stated in the Valuation Reports. After discussion with the Valuer we understand that in the process of valuing the Target Companies, the Valuer has taken into consideration the operation and industry of the Company in which it is participating. Having considered the three general valuation methodologies, the Valuer believed that (i) asset-based approach can only reflect the intrinsic value of assets and cannot fully and reasonably demonstrate the comprehensive profitability of various assets and corporate growth and the value of the intangible assets; (ii) market approach is not appropriate as it is difficult to accurately quantify and rectify the degree of similarity between the comparable listed companies and the Target Companies; and (iii) income approach can reflect the assets presented in the balance sheets and also the contributions from resources off-balance sheet in the net cash flow of the entity and therefore can better demonstrate the overall growth and profitability of the Target Companies and is of the view that valuation based on the income approach can reflect the embedded value of the Target Companies more comprehensively and reasonably and therefore has adopted the income approach. Having considered the aforementioned, we concur with the view of the Valuer that the income approach is the most appropriate valuation methodology for the valuation of the Target Companies.

ii) Valuations of the Target Companies and its assumptions

Income approach

We have discussed with the Valuer regarding the factors taken into account in estimating the net cash flow and the determination of the discount rate under the discounted cash flow methodology adopted in such valuations. We have been advised that the value of the Target Companies were calculated on the basis of free cash flows from operation, capital expenditures, net change in

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working capital and discount rate by using the rate of weighted average cost of capital, which are calculated at an annual rate of 9% to 11% as estimated using Weighted Average Cost of Capital Pricing Model with consideration of the capital structure of the Company. We are advised by the Valuer that the cash flow forecasts of the Target Companies are based on their existing production capacity, operation capacity and relationship with their existing business partners as well as the future trend of the PV glass market. We have reviewed the forecast of the future income, being the major part of the value of the Target Companies, and the rate of increase of the estimated revenue of the Target Companies are in the range of 0.3% to 8.0% from 2018 to 2022, except for the forecasted revenue of Yixing New Energy increase by approximately 62.03% in 2018 as compare than that in 2017 which mainly attributable to completion of its phase II project which will be put into production and increase its production capacity, and concur with the Valuer that such forecast of the future income has been properly compiled in accordance with the assumptions made by the Directors which have been made with due care and consideration and made on objective and a reasonable basis. The value of each of the Target Companies was then arrived at by (i) adding the appraised value of operating assets, the value of surplus assets or non-operating assets and the value of long-term equity investment, and (ii) deducting the appraised value of interest-bearing liabilities.

We also understand that the discount rate applied to the value of the Target Companies is based on the cost of equity finance which is developed through the application of the Capital Asset Pricing Model (“ CAPM ”). The cost of equity, which represents the required rate of return of the Proposed Acquisition, is estimated by using the CAPM taking into account the average market risk premium, risk free rate of return, financial leverage risk premium and risk adjustment specific to the Target Companies. The risk adjustment specific to the Target Companies is determined as 3.5% and 4.5% with thorough consideration of production and operation scale, status of operation, financial position and liquidity.

Assumptions

We note from the Valuation Reports that the conclusions of valuation of the Target Companies are based on the following, amongst others, general assumptions:

(a) Transaction assumption: all assets to be valued are assumed to be in the transaction process and the Valuer conducted the valuation according to simulated market conditions such as the transaction conditions of the assets to be valued;

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(b) 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;
(c) 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; and
(d) Going concern assumption: it is a valuation 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 is able to make appropriate profits to maintain the capability of going concern.

In the course of our enquiry, we understand that the Valuer has made various general assumptions for the valuations of the Target Companies, including, amongst others, stable market condition, open market with no compulsion or restrictions to buy or see, the assets can be used continuously and the appraised entities can operate continuously. Based on our discussion with the Valuer, we concur with the Valuer that these assumptions are commonly adopted for valuation of business entity, and is consistent with normal market practice.

We also note from the Valuation Reports that the conclusions of the valuation of the Target Companies are based on the following, amongst others, assumptions under the income approach:

(a) There is no significant change in the prevailing 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;

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(b) Assuming the company to operate as a going concern based on the actual status of the assets as at the valuation base date;
(c) Assuming the management of the company to be responsible and have the capability to take on their duties;
(d) Assuming the company to fully comply with all the relevant laws and regulations unless otherwise stated;
(e) 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;
(f) Assuming the company to maintain the existing business scope and mode on the basis of the present management mode and level;
(g) There will be no material changes to the interest rates, exchange rates, tax bases, tax rates and policy charges;
(h) There will be no material adverse impacts on the enterprise arising from other force majeure or unforeseeable factors;
(i) Assuming the estimated annual cash flows of the enterprise to be generated during the period;
(j) Assuming the products and services of the enterprise maintain existing competitive status in the market subsequent to the valuation base date;
(k) Hefei New Energy obtained the high and new technology enterprise qualification certificate (高新技術企業資格證書) (the “ HNTE Certificate ”) on 5 December 2016 for a validity period of three years. It is assumed that Hefei New Energy will continue to obtain the HNTE Certificate upon expiry of the validity period; and
(l) 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) (the “ Refund Policy ”) for refund of land use tax will continue to be in force, and that Tongcheng New Energy is able to enjoy the refund of land use tax on a perpetual basis.

Based on our discussion with the management of the Company, the Target Companies and the Valuer, we understand that while it is the discretion of the Valuer in selecting the most appropriate methodologies in valuing the underlying

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business based on their professional judgment, the valuation approaches adopted by the Valuer as mentioned above are commonly used and accepted in the PRC and are in accordance with the relevant rules and regulations concerning valuation issued by the Ministry of Finance, the PRC and other relevant authorities in the PRC. Upon reviewing the Valuation Reports and discussing with the Valuer in respect of the fairness of the principal assumptions adopted in arriving the valuation of the Target Companies as well as taking into account (i) the independence, qualification and experience of the Valuer as reported by the financial adviser of the Company, Veda Capital Limited; (ii) the confirmation letter regarding the accounting policies adopted and arithmetical accuracy of the profit forecast and the Profit Guarantee reported on by the Reporting Accountant, WUYIGE, as set out in Appendix X to the Circular; (iii) the confirmation letter regarding the profit forecast and the Profit Guarantee, including the bases and assumptions which have been made by the Directors after due care and consideration and objectivity, and on a reasonable basis, as reported on by Veda Capital Limited; (iv) the filing of the Valuation Reports with the SASAC of the State Council on 3 August 2017; (v) our discussion with the management of the Target Companies regarding the assumptions under the income approach, in particularly, the assumption items (k) and (l) as set out above, and understood that (a) the Company has obtained PRC legal opinion from Beijing Kang Da Law Firm, a qualified PRC legal adviser, which considered the HNTE Certificate obtained by Hefei New Energy in 2016 is valid for a period of three years and expected there is no material legal impediment to obtain the renewal of the HNTE Certificate when it expires in 2019 as Hefei New Energy continues to comply with the HNTE Requirements, (b) Hefei New Energy is currently expanding its production scale and projects and strengthening its research and development department, i.e. recruiting more experienced technicians, (c) Tongcheng New Energy has received the land use tax refund from Tongcheng Municipal People’s Government for the year 2016 in July 2017, (d) the Company has not received any notice(s) from Tongcheng Municipal People’s Government that the Refund Policy will be amended or terminated; (vi) our review of the “Administrative Measures for Recognition of High and New Technology Enterprises” dated 29 January 2016 published by the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology of the PRC and the Refund Policy published by Tongcheng Municipal People’s Government; and (vii) pursuant to Rule 13.90(2) under the Listing Rules, there is no reason for us to believe any of the information in the Valuation Report is not true or omits a material fact, we concur with the view of the Directors that the assumption items k and l are reasonable as Hefei New Energy is likely, based on its financial forecast, to meet the HNTE Requirements as set out in the “Administrative Measures for Recognition of High and New Technology Enterprises” and the Refund Policy shall continue to be in force and Tongcheng New Energy will continue to enjoy the land use tax refund and the values of the Target Companies have been reasonably prepared and are normal in nature without any unusual assumption and the basis of the values of the Target Companies are fair and reasonable.

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As such, we consider the valuations of the Target Companies are good references for Independent Shareholders to assess the fairness and reasonableness of the consideration of the Proposed Acquisitions and having considered the fact that the Board has taken into account the valuations of the Target Companies when determining such consideration, we are of the opinion that the terms of the Proposed Acquisitions Agreements are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Independent Shareholders are advised to refer to the Valuation Reports prepared by the Valuer contained in Appendix VII, Appendix VIII and Appendix IX to the Circular for details of the basis and assumptions of the valuations of the Target Companies.

6.2 Property valuation report of the Target Companies

In compliance with Chapter 5 of the Listing Rules, three properties of the Target Companies (the “ Property ”) have been valued by Vigers Appraisal and Consulting Limited (“ Vigers ”), an independent firm of property valuer in Hong Kong. A summary of the property valuation report and the valuation certificate of the Property in respect of its capital value in existing state as at 30 June 2017 and 31 July 2017 is set out in Appendix VI to the Circular.

(i) Valuation methodology

As stated in the property valuation report of the Target Companies and also based on our discussion with Vigers, the depreciated replacement cost approach has been adopted in valuing the Property. As advised by Vigers, due to transaction of whole block of building was not common in the relevant region surrounding the Property, there was no sufficient comparable for comparison. Therefore, the Property has been valued using the depreciated replacement cost approach, which takes into account the current cost of replacement or reproduction cost of an asset less deductions for physical deterioration and all other relevant forms of obsolescence. In addition, Vigers has carried out physical inspections and made relevant enquiries in the course of conducting its valuation.

(ii) Factors to be considered in valuing the Property

In arriving at the market value of the Property, Vigers advised us that they assessed such value based on an estimate of the market value for the existing use of the land, plus the current gross replacement (reproduction) costs of the improvements, less allowances for physical deterioration and all relevant forms of obsolescence and optimization.

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The above methodology is, in our opinion, a reasonable approach in establishing the market value of the Property.

Having considered the valuation of the Target Companies was based on income approach but not the asset-based approach, we consider that the property valuation of the Target Companies has no material effect on the valuation and fairness of the consideration of the Proposed Acquisitions.

7. Principal terms of the Profit Guarantee Indemnity Agreements

As stated in the Letter, the Group has entered into the Profit Guarantee Indemnity Agreements as supplemented by the Supplemental PG Indemnity Agreements, pursuant to which the Vendors have agreed to provide the Profit Guarantee to the Company for the net profit attributable to equity holders of the respective Target Companies after deduction of extraordinary profit or loss during the Profit Guarantee Period. The extraordinary profit or loss, which will be determined with reference to the announcement of CSRC [2008] No. 43, refers to profit or loss arising from various transactions and matters that has no direct relation with the ordinary course of business of a company, or that is related to the ordinary course of business but affects the reasonable judgment on the company’s operation performance and profitability due to the special and occasional nature of such transaction and matter.

Pursuant to the Profit Guarantee Indemnity Agreements, net profit attributable to equity holders after deduction of extraordinary profit or loss undertaken to the Company (the “ Actual Net Profit ”) are set out as below:

First PG Indemnity Agreement:

(i) No less than RMB39,730,400 for financial period ending 31 December 2017;
(ii) No less than RMB61,678,800 for financial period ending 31 December 2018; and
(iii) No less than RMB69,394,900 for financial period ending 31 December 2019

Second PG Indemnity Agreement:

(i) No less than RMB26,214,000 for financial period ending 31 December 2017;
(ii) No less than RMB26,367,100 for financial period ending 31 December 2018; and
(iii) No less than RMB26,719,900 for financial period ending 31 December 2019

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Third PG Indemnity Agreement:

(i) No less than RMB12,797,400 for financial period ending 31 December 2017;
(ii) No less than RMB33,370,300 for financial period ending 31 December 2018; and
(iii) No less than RMB41,245,000 for financial period ending 31 December 2019

If the Proposed Acquisitions cannot complete by 31 December 2017, the above period will start from 1 January 2018 and end on 31 December 2020, with profit guarantees for financial periods ending 31 December 2018 and 2019 remain the same, while the profit guarantees of the Actual Net Profit for financial period ending 31 December 2020 are respectively set out as below:

First PG Indemnity Agreement: No less than RMB74,155,600

Second PG Indemnity Agreement: No less than RMB27,072,700 Third PG Indemnity Agreement: No less than RMB47,147,500

The Profit Guarantee are based on arm’s length negotiation between the Company and the Vendors with reference to the forecasted net profit attributable to equity holders of the Target Companies after deduction of extraordinary profit or loss for each of the financial year ending 31 December 2017, 2018, 2019 and 2020 as forecasted by the Valuer by using income approach valuation method, and therefore the Profit Guarantee are consistent with the projections adopted under the valuation reports of the Target Companies.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

If the impairment amount of any of the Target Companies as at the end of the Profit Guarantee Period exceeds the accumulated Profit Compensation Amount of the respective Target Companies, the relevant Guarantors under the Profit Guarantee Indemnity Agreements shall make further compensation to the Company. The impairment compensation amount is calculated as follows:

The impairment = the impairment amount of the respective Target Companies compensation as at the end of the Profit Guarantee Period – the paid amount accumulated Profit Compensation Amount for the respective Target Companies during the Profit Guarantee Period

Note: If the impairment compensation amount calculated from the above formula is below zero (0), it shall be deemed as zero (0).

Details of the compensation and adjustment method, please refer to the sub-paragraph headed “Compensation method and adjustment for the Profit Guarantee indemnity and the Assets Impairment Indemnity” in the Letter.

We have reviewed (i) the forecasted net profit attributable to equity holders of the Target Companies for each of the financial years ending 31 December 2017, 2018, 2019 and 2020 and (ii) the financial information of the Target Companies as set out as set out in Appendix II, Appendix III and Appendix IV to the Circular, and noted that (i) the amount of the Profit Guarantee are equivalent to the forecasted net profit attributable to equity holders of the Target Companies after deduction of extraordinary profit or loss for each of the financial years ending 31 December 2017, 2018, 2019 and 2020 and (ii) deducting extraordinary profit or loss from net profit attributable to equity holders for setting profit guarantee amount is required by the Frequently Asked Questions and Answers in relation to the “Administrative Measures on Significant Assets Restructuring of Listed Companies (上市公司重大資產重組管理辦法)” issued by CSRC and therefore consider the above Profit Guarantee provided by the Vendors, which serves to compensate the Company for any shortfall in the actual net profits of the Target Companies for the year ending 31 December 2017, 2018 and 2019, respectively, in the event that the Target Companies do not generate the level of profits as forecasted for the year ending 31 December 2017, 2018 and 2019, respectively, are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

8. Principal terms of the Proposed A Share Placing and Triumph Group Subscription Agreement

8.1 Details of the Proposed A Share Placing

The details of the Proposed A Share Placing are summarized and set out below:

Method of issue : Non-public issuance Target subscribers : The Company will issue the new A Shares to no more than 10 Qualified Investors (including Triumph Group).

Save for Triumph Group, the Other Qualified Investors shall be specific investors in compliance with the requirements of the CSRC, including securities investment funds, insurance institutional investors, trust investment companies, finance companies, securities companies, qualified foreign institutional investors (QFII), natural persons and other qualified investors in compliance with the specific requirements of the Company.

Pricing Base Date and : The Pricing Base Date shall be the first date of the Placing Issue Price shares issuance period for the A Shares to be placed under the Proposed A Share Placing. The Placing Issue Price per A Share shall be not less than 90% of the average share price (i.e. the ratio of the total turnover over the total volume of the A Shares) for the last 20 trading days of A Shares as quoted on the SSE prior to the Pricing Base Date. On the basis of the aforesaid minimum issue price, the final Placing Issue Price will be determined by the Board with reference to the bidding prices offered by target subscribers in the price inquiry process upon the Proposed A Share Placing being approved by the CSRC.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Number of A Shares to be : issued and amount of gross proceeds
The maximum amount of gross funds to be raised through the Proposed A Share Placing will not exceed 100% of the total consideration under the Proposed Acquisitions.

In accordance with the PRC Reorganisation Measures and the relevant laws and regulations, the fund raising size in relation to the significant asset restructuring by a PRC listed company shall not be more than 100% of the transaction price of the assets proposed to be acquired whereas “the transaction price of the assets proposed to be acquired” means the total consideration under the Proposed Acquisitions excluding the amount of capital injection in the Target Companies in cash made by the Vendors under the Proposed Acquisitions Agreements within 6 months before and during suspension of trading in A Shares, i.e. RMB774,565,700 (the aggregated consideration of the Proposed Acquisitions) – RMB40,000,000 (the amount of the capital injection in cash by Bengbu Institute in Tongcheng New Energy in October 2016) – RMB222,700,000 (the total amount of the capital injection in cash by Triumph Group, Yixing Environmental Technology and GCL System Integration in Yixing New Energy in October 2016), which is RMB511,865,700.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pursuant to the CSRC’s Rule Amendment, the maximum number of new A Shares that could be placed under the Proposed A Share Placing is 20% of the total issued share capital of the Company as at the Latest Practicable Date, i.e. 105,353,375 new A Shares. On 30 September 2017, the Company was informed by CNBMG, the ultimate controlling shareholder of the Company, that CNBMG has received the “Approval on Issues Relating to the Assets Restructuring and Supporting Funds Raising of Luoyang Glass Company Limited (關於洛陽玻璃股份有限公司資產重組及配套融資有關問題的批覆)” (Guo Zi Chan Quan [2017] No. [1029]) (the “ SASAC Approval* ”) from the SASAC of the State Council.

According to the SASAC Approval, upon completion of the Reorganisation (after completion of the Proposed Acquisitions and the Proposed A Share Placing), the total share capital of the Company shall not exceed 581,625,352 Shares. Therefore, the maximum number of new A Shares that could be placed under the Proposed A Share Placing is 21,827,961 new A Shares, i.e. 581,625,352 shares (the maximum total share capital of the Company after Proposed A Share Placing) – 559,797,391 shares (the total share capital of the Company after completion of the Proposed Acquisitions but before the Proposed A Share Placing). The final number of A Shares to be placed and issued under the Proposed A Share Placing will be subject to the decision of the Board according to the actual situation at the time of issuance and within the issue amount approved by the CSRC and adjustment in case of ex-rights or ex-dividend during the period from the Pricing Base Date to the issue date of A Shares.

Period of validity of the : 12 months from the date of approval at the EGM resolution(s) in relation to and the Class Meetings, which may be extended as the Proposed A Share and when necessary. Placing

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Proposed A Share Placing shall be conditional upon and take place after the completion of the Proposed Acquisitions and the issue of the Consideration Shares.

8.2 Details of the Triumph Group Subscription Agreement

As part of the Proposed A Share Placing, on 7 February 2017, the Company entered into the Triumph Group Subscription Agreement (as supplemented by the Supplemental Triumph Group Subscription Agreement on 24 February 2017) with Triumph Group, pursuant to which the Company has conditionally agreed to issue, and Triumph Group has agreed to subscribe for 10% of the total amount of proceeds that could be raised, i.e. the new A Shares that could be placed, under the Proposed A Share Placing. The terms of the Proposed A Share Placing and the Triumph Group Subscription Agreement are substantially the same. The number of A Shares to be subscribed by Triumph Group under the Triumph Group A Share Placing shall be determined upon the determination and finalization of the Placing Issue Price. For details of the conditions precedent of the Triumph Group Subscription Agreement, please refer to the sub-paragraph headed “Conditions precedent to completion of the Triumph Group Subscription Agreement” in the Letter.

8.3 Placing Issue Price and its basis

The Placing Issue Price per A Share shall be not less than 90% of the average share price (i.e. the ratio of the total turnover over the total volume of the A Shares) for the last 20 trading days of A Shares as quoted on the SSE prior to the Pricing Base Date (the “ Pricing Basis ”). The final issue price of A Shares to be placed under the Triumph Group Subscription Agreement will be subject to the approval of the Class Meetings and the EGM, and adjustment in case of ex-rights or ex-dividend during the period from the announcement date of the Board meeting to the issue date.

Triumph Group will not involve in the price inquiry process of the issue price of the Proposed A Share Placing and has undertaken to accept result of the price inquiry and the same subscription Price of the Other Qualified Investors.

As advised by the management of the Company, the Placing Issue Price was not determined as at the date of Triumph Group Subscription Agreement (as supplemented by the Supplemental Triumph Group Subscription Agreement) pursuant to relevant regulations in the PRC. We have obtained the revised “Detailed Implementation Rules for Non-public Issuance of Stocks by Listed Companies” (《上市公司非公開發行股票實施細則》) and the “Questions and Answers in respect of Issuance Regulation – Regulatory Requirements Regarding Guiding and Regulating Financing Activities of Listed Companies” (《發行監管問答發行關於引導規範上市公司融資行為的監管要求》), (collectively, the “ New CSRC Amendments ”) published by the CSRC on 17 February 2017. According to the New CSRC

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Amendments, (i) the pricing base date for any non-public issuance of shares by a PRC listed company for fund raising purpose as mentioned in the “Measures for Issuance of Securities by Listed Companies (上市公司證券發行管理辦法)” issued by the CSRC (the “ PRC Issuance Measures ”) was revised to “the first date of the shares issuance period”; and (ii) certain guidelines for fund raising activities of PRC listed companies were imposed, including but not limited to restricting the number of A shares to be placed or issued under the fund raising activities of a PRC listed company to not more than 20% of the total share capital of the PRC listed company prior to the issuance of A shares. Accordingly, we note that the Pricing Basis is in compliance with the regulations of the PRC.

Having considered that (i) the Placing Issue Price will reflect the then latest market prices of A Share; (ii) the Pricing Basis is in compliance with the New CSRC Amendments; and (iii) the Placing Issue Price will be the same to all subscribers (including Triumph Group), we concur with the Directors that it is acceptable that the Placing Issue Price was not fixed as at the date of the A Shares Subscription Agreement and the Latest Practicable Date and the basis for the determination of the Placing Issue Price is fair and reasonable so far as the Independent Shareholders are concerned.

8.4 Lock-up period

The A Shares to be subscribed by the Other Qualified Investors are not transferable for a period of 12 months from the date of completion of the issue of the new A Shares under the Proposed A Share Placing. The A Shares to be subscribed by Triumph Group are not transferable for a period of 36 months from the date of completion of the issue of the new A Shares under the Triumph Group A Share Placing. Trading of the Shares after the lock-up period shall be dealt with in accordance with the relevant regulations of Company Law of the PRC and the relevant requirement of the CSRC and Shanghai Stock Exchange. As set out in the Letter, the abovementioned lock-up period was determined in accordance with the PRC Issuance Measures. We have obtained the PRC Issuance Measures and noted that any shares to be issued by a PRC listed company through non-public share placement shall not be transferred within 36 months (for issuance to the controlling shareholder or de facto controlling shareholder and enterprises controlled by it) and 12 months (for issuance to other investors from the completion of the issue. Accordingly, the lock-up period under the Proposed A Share Placing and the Triumph Group Subscription Agreement is in compliance with the PRC Issuance Measures.

Having considered the above, we are of the view that the terms of the Triumph Group Subscription Agreement, being part of the Proposed A Share Placing, are fair and reasonable so far as the Independent Shareholders are concerned.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

9. Reasons for and benefits of the Proposed A Share Placing and Triumph Group Subscription Agreement and the use of proceeds

As set out in the Letter, the Directors consider that the Proposed A Share Placing (including the Triumph Group A Share Placing) represents an opportunity to raise additional capital for the Group to enhance the capital base of the Group and support the further development of Hefei New Energy and Tongcheng New Energy. The gross proceeds to be raised from the Proposed A Share Placing (including the Triumph Group A Share Placing) will be not exceed RMB511,865,700. The net proceeds (after deducting all relevant transaction expenses, tax and issue expenses) are intended to be used as to (i) approximately RMB410,000,000 of the proceeds will be used 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 will be used for the development cost of Tongcheng New Energy high transparent double photovoltaic glass module further processing with an annual output of 4 million square meters project. We note from the feasibility reports for the expansion plans of Hefei New Energy and Tongcheng New Energy that the capital requirement of the projects of Hefei New Energy and Tongcheng New Energy will be approximately RMB800.0 million and RMB114.3 million respectively.

As advised by the management of the Company, save for the Proposed A Share Placing (including the Triumph Group A Share Placing), the proceeds of which will be used for the purposes as mentioned above, the Company does not have any other specific fund raising plans for the next 12 months from the Latest Practicable Date.

Having considered that (i) to finance the abovementioned expansion plans of Hefei New Energy and Tongcheng New Energy, the Group is required to raise capital of about RMB914.3 million; (ii) the proceeds to be raised does not exceed the funding need of the specific purposes of the capital requirements as mentioned above; (iii) the capital raised from the Proposed A Share Placing (including the Triumph Group A Share Placing) would optimize the Company’s capital structure and reduce the Company’s debt-to-asset ratio; (iv) the proceeds are to be used in expansion plans of Hefei New Energy and Tongcheng New Energy are in line with the Enlarged Group’s principal business; and (v) the Triumph Group A Share Placing shows the support and confidence of the Controlling Shareholder in the Enlarged Group, we concur with the view of the Directors that the Proposed A Share Placing (including the Triumph Group A Share Placing) is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

10. Other financing alternatives available to the Group

As set out in the Letter, the Company had not conducted any other fund-raising exercise in the past 12 months immediately preceding the date of the Circular. As advised by the management of the Company, the Board has considered various fund raising methods such as debt financing (including convertible bonds), rights issue, and non-public offering of A Shares and H Shares. After the relevant analysis and comparison, the Directors consider, and we concur that, it is more appropriate to conduct non-public offering of A Shares at this time for the reasons as follow:

(i) In relation to debt financing, according to《中華人民共和國證券法》(The Securities Law of PRC*), the remaining quota for issuing bonds (including convertible bonds) ≤net assets x 40% deducted by the outstanding balance of the issued bonds. As at the Latest Practicable Date, the Company’s remaining quota for issuing bonds was relatively low (i.e. approximately RMB208.8 million based on net assets of the Group as at 31 March 2017 and outstanding balance of the issued bonds as at the Latest Practicable Date), the proceeds of which may not be able to fulfil Company’s capital funding needs of the development cost of Hefei New Energy oxy-combustion new photovoltaic cover material phase II production line project and Tongcheng New Energy high transparent double photovoltaic glass component further processing project. In addition, the debt financing may also increase the financing cost of the Company by way of interest payment, and increase the repayment liabilities of the Company;
(ii) The rights issue is targeted at the Company’s existing Shareholders and shall be implemented to the holders of A Shares and H Shares simultaneously at the same price. The average closing price of A Shares during the recent 12 months immediately before the date of the A Share Placing represented a premium of more than 50% over the average closing price of H Shares during the same period. Given the significant premium of the price of A Shares over the price of H Shares during the recent 12 months immediately before the date of the A Share Placing and the capital market environment of Hong Kong and the PRC are different, it is not practical to determine a price suitable for both classes of Shares, thus the Company did not consider rights issue as an appropriate fund raising method currently available for the Group;
(iii) As there is a significant premium of the price of A Shares over the price of H Shares, should the Company conduct a fund raising exercise by issuance of new H Shares with proceeds of not more than RMB511.9 million, assuming that a similar pricing basis is adopted to determine the benchmark price for the H Share issuance, the number of H Shares to be issued will be substantially more than that required under the proposed placing of A Shares, which will lead to a greater dilution effect on the shareholding of the existing shareholders;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iv) The Directors also advised that having considered the Enlarged Group mainly operate in the PRC with most of the transactions are denominated in RMB, it will be more convenient for the Company to issue new A Shares to obtain the funding directly in RMB. In the event that, the Company conducts fund raising activities by issuance of new H Shares in Hong Kong, the Company is required to convert the foreign currencies raised from such issue to RMB, as well as to go through relevant procedures and approvals as required by the relevant PRC rules and regulations to transfer the proceeds back to the PRC; and
(v) According to the《上市公司證券發行管理辦法》(Measures for Administration of the Issue of Securities by Listed Companies) and《上市公司非公開發行股票實施細則》 (the Implementation Rules for the Non-Public Issuance of Shares by Listed Companies) (Revised in 2017) issued by CSRC (the “ Measures ”), the non-public issuance of new A Shares is generally subject to a lock-up period of not less than 36 months period for the controlling shareholders or de facto controlling shareholder and enterprises controlled by it and 12 months period for the other investors from the date of completion of the proposed non-public issue of A shares. As set out in the Letter, the New A Shares subscribed by Triumph Group cannot be transferred within 36 months from the completion of the Proposed A Share Placing, while A Shares to be subscribed by other Qualified Investors shall not be transferred within 12 months from the completion of the Proposed A Share Placing. In light of the aforementioned, the Directors are of the view, and we concur, that the lock-up period would limit the negative impact of the issuance of new A Shares on the market price of the Shares.

Having considered the above, we are of the opinion that the Proposed A Share Placing (including the Triumph Group A Share Placing) is an appropriate fund raising method currently available for the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

11. Shareholding structure of the Company

The following table sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately after completion of the Proposed Acquisitions (but before the Proposed A Share Placing); and (iii) immediately after completion of the Proposed Acquisitions and the Proposed A Share Placing given that the total share of the Company shall not exceed 581,625,352 Shares upon completion of the Reorganisation according to the SASAC Approval:

Shareholders A Shares CNBMG and parties acting in concert CLFG Bengbu Institute Huaguang Group International Engineering Triumph Group Sub-total of CNBMG and parties acting in concert Yixing Environmental Technology GCL System Integration Hefei High-Tech Other Qualified Investors Other A Shareholders Sub-total of A Shares H Shares HKSCC (Nominees) Limited_(Note1)_ Public H Shareholders Sub-total of H Shares Total	(i) As at the Latest Practicable Date Number of Shares Approximate % 105,018,242 19.94 69,000,000 13.10 – – – – – – 174,018,242 33.04 – – – – – – – – 102,748,633 19.51 276,766,875 52.54 248,600,699 47.19 1,399,301 0.27 250,000,000 47.46 526,766,875 100.00	(ii) Immediately after completion of the Proposed Acquisitions (but before the Proposed A Share Placing) Number of Shares Approximate % 115,115,830 20.56 71,365,976 12.75 6,377,490 1.14 708,610 0.13 7,508,991 1.34 201,076,897 35.92 1,877,247 0.34 1,065,338 0.19 3,029,276 0.54 – – 102,748,633 18.35 309,797,391 55.34 248,600,699 44.41 1,399,301 0.25 250,000,000 44.66 559,797,391 100.00	(iii) Immediately after completion of the Proposed Acquisitions and the Proposed A Share Placing Number of Shares Approximate % 115,115,830 19.79 71,365,976 12.27 6,377,490 1.10 708,610 0.12 9,691,787 1.67 203,259,693 34.95 1,877,247 0.32 1,065,338 0.18 3,029,276 0.52 19,645,165 3.38 102,748,633 17.67 331,625,352 57.02 248,600,699 42.74 1,399,301 0.24 250,000,000 42.98 581,625,352 100.00	(iii) Immediately after completion of the Proposed Acquisitions and the Proposed A Share Placing Number of Shares Approximate % 115,115,830 19.79 71,365,976 12.27 6,377,490 1.10 708,610 0.12 9,691,787 1.67 203,259,693 34.95 1,877,247 0.32 1,065,338 0.18 3,029,276 0.52 19,645,165 3.38 102,748,633 17.67 331,625,352 57.02 248,600,699 42.74 1,399,301 0.24 250,000,000 42.98 581,625,352 100.00
				34.95
				0.32 0.18 0.52 3.38 17.67
				57.02
				42.74 0.24
				42.98
				100.00

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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 Latest Practicable Date, none of the Directors is interested in any Shares.
(3) According to the SASAC Approval, upon completion of the Reorganisation (being the Proposed Acquisitions and the Proposed A Share Placing), the total share capital of the Company shall not exceed 581,625,352 Shares.

As shown from the table above, the shareholding interests of the existing public A Shareholders (excluding the Vendors) and the shareholding interests of the existing public H Shareholders would be reduced by approximately 1.16% and 2.80% respectively immediately after completion of the Proposed Acquisitions (but before the Proposed A Share Placing), while the aggregate shareholding interests of CNBMG and parties acting in concert with it would be increased by approximately 2.88%. Immediately after the completion of the Proposed Acquisitions and the Proposed A Share Placing, the existing public A Shareholders (excluding the Vendors) and the shareholding interests of the existing public H Shareholders would be reduced by approximately 1.84% and 4.48% respectively. As stated in the New CSRC Amendments, the Pricing Base Date shall be the first date of the shares issuance period for the A Shares to be placed under the Proposed A Share Placing, as such it is not possible to determine the number of shares to be issued the Proposed A Share Placing as at the Latest Practicable Date. Moreover, the number of A shares to be placed or issued under the fund raising activities of the Company shall not be more than 20% of the total share capital of the PRC listed company prior to the issuance of A shares pursuant to the CSRC’s Rule Amendment and the total share capital of the Company shall not exceed 581,625,332 Shares upon completion of the Proposed Acquisitions and the Proposed A Share Placing according to the SASAC Approval, the above shareholding structure immediately after the completion of the Proposed Acquisitions and the Proposed A Share Placing sets out the maximum number of A Shares to be issued under the Proposed A Share Placing for illustration purpose only.

Notwithstanding the potential dilution effect to the shareholding interest of existing public shareholders of H Shares brought by the issue of Consideration Shares and the proposed placing of new A Shares, taking into account (i) the reasons for and benefits of the Proposed Acquisitions above; (ii) the reasons for and benefits of the Proposed A Share Placing and the proposed use of proceeds as set out above; (iii) the alternative fund raising methods available to the Company as set out above; and (iv) the analysis on the fairness and reasonableness of the basis of determining the issue price of the Consideration Shares and the issue price of the Proposed A Share Placing, we are of the view that the potential dilution on the shareholding interest of the existing public H Shareholders is acceptable so far as the Independent Shareholders are concerned.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

12. Financial effects of the Proposed Acquisitions and the Proposed A Share Placing

As disclosed in the Letter, Hefei New Energy and Tongcheng New Energy will be 100% owned by the Company and Yixing New Energy will be 70.99% owned by the Company upon completion of the Proposed Acquisitions, and therefore the financial information and results will be consolidated into the financial statements of the Group. Set out below is the analysis of the financial impact of the Proposed Acquisitions on the Group.

12.1 Effect on earnings

According to the accountants’ report on the Target Companies as set out in Appendix II, Appendix III and Appendix IV to the Circular, all of the Target Companies were profit making for the year/period ended 31 December 2016. Based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix XIV to the Circular (the “ Pro Forma Statements ”), as a result of the Proposed Acquisitions, the Enlarged Group would record a net profit of approximately RMB59.82 million as a result of the Proposed Acquisitions as compared to a net profit of the Group of approximately RMB11.52 million for the year ended 31 December 2016. The actual effect on earnings or losses of the Company will depend on future financial performance of the Target Companies.

As advised by the management of the Company, save for all relevant transaction costs and professional fees related to the Proposed A Share Placing, there will be no effect on earnings arising from the Proposed A Share Placing.

12.2 Effect on net asset value

According to the Pro Forma Statements, the unaudited pro forma net asset value of the Enlarged Group was approximately RMB1,242.09 million, representing an increase of approximately RMB718.82 million when compared to the audited consolidated net asset value of the Group as at 31 December 2016 of approximately RMB523.27 million. As noted above, it is expected to have a positive effect on the net asset value of the Group immediately following the Proposed Acquisitions.

We note that the audited net asset of the Group as at 31 December 2016 amount to RMB0.99 per Share (calculated based on 526,766,875 Shares in issue as at the Latest Practicable Date). Upon completion of the Proposed Acquisitions, the number of Share in issue will increase to 559,797,391 Shares and the Unaudited pro forma net asset of the Enlarged Group will increase to approximately RMB1,147.93 million. On such basis, the unaudited pro forma net asset value attributable to the then owners of the Company will be approximately RMB2.05 per Share as at 31 December 2016.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

However, Shareholders should note that the exact effects of the Proposed Acquisitions on the Group’s net asset value shall only be determined, and subject to audit, upon completion of the Proposed Acquisitions based on the then fair value of the consolidated net assets of the Target Companies and the then fair value of the consideration of the Proposed Acquisitions.

As set out in the Letter, the final issue price per A Shares and the final number of A Shares to be placed and issued under the Proposed A Share Placing will be subject to the decision of the Board according to the actual situation at the time of issuance and within the issue amount approved by the CSRC, and adjustment in case of ex-rights or ex-dividend during the period from the Pricing Base Date to the issue date of A Shares. Accordingly, the exact effect of the Proposed A Share Placing on the net asset value per Share shall only be determined, subject to audit, upon completion of the Proposed A Share Placing.

12.3 Effect on working capital position

As stated in the Letter, the consideration of the Proposed Acquisitions will be satisfied by the issue and allotment of a total of 33,030,516 Consideration Shares credited as fully paid at the issue price of RMB23.45 per A Share by the Company to the Vendors. Therefore, there will not be any cash flow burden of the Group arising from settlement of the consideration of the Proposed Acquisitions. As stated in the Letter, the gross amount of funds to be raised under the Proposed A Share Placing will not exceed RMB511,865,700. Despite the final number of new A Shares to be issued under the Proposed A Share Placing will be determined and calculated upon determination and finalization of the Placing Issue Price, the Proposed A Share Placing is expected to have a positive effect on the bank and cash balances of the Group upon completion.

We note from the Pro Forma Statements, the Enlarged Group would have cash and cash equivalent balance of approximately RMB228.26 million as at 31 December 2016 on unaudited consolidated pro forma basis and as set out in the sub-section headed “5. Working capital sufficiency of the Enlarged Group” in the Appendix I to the circular, the Directors are of the opinion that the Enlarged Group has sufficient working capital for its present requirements for the next 12 months from the date of this Circular taking into account the financial resources available including its existing cash and cash equivalents and cash flow from operations of the Enlarged Group. As advised by the management of the Company, the additional financing needs for the cash requirements for the new expansion projects of the Target Companies would be fulfilled by the Proposed A Share Placing and cash flow from operations and/or bank borrowings.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

12.4 Effect on net gearing ratio

Based on the Pro Forma Statements, the net gearing ratio, being measured on the basis of the total loans and borrowings net of cash and cash equivalent over the net assets, of the Enlarged Group decreased from approximately 97.78% of the Group as at 31 December 2016 to 73.58% due to increase in net assets from RMB523.27 million to RMB1,147.93 million, partially offset by (i) increase in bills payable from RMB90.00 million to RMB231.45 million; (ii) increase in long-term borrowings from RMB87.84 million to RMB320.29 million: and (iii) increase in non-current liabilities due within one year from RMB471.34 million to RMB521.21 million.

As the Proposed A Share Placing will have a positive effect on the Group’s bank and cash balances, as well as a positive effect on the Group’s net asset value attributable to owners of the Company, the Company’s net gearing ratio will be improved upon completion of the Proposed A Share Placing. Hence, it is expected to have a positive effect on the Group’s net gearing ratio.

12.5 Conclusion

Taking into account the effects on the Group’s earnings, net asset value, working capital position and net gearing ratio resulting from the Proposed Acquisitions and Proposed A Share Placing as discussed above, we concur with the Directors that the Proposed Acquisitions and the Proposed A Share Placing are in the interests of the Company and the Shareholders as a whole.

13. Takeovers Code implications and Whitewash Waiver

As at the Latest Practicable Date, 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 Consideration Shares but before the Proposed A Share Placing, CNBMG will indirectly hold 201,076,897 A Shares, representing approximately 35.92% of the total issued share capital of the Company as enlarged by the issue of the 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 Consideration Shares.

– 124 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Paragraph 3 of Schedule VI of the Takeovers Code provides that the Executive will not normally waive an obligation under Rule 26 if there occurs any disqualifying transaction for such a waiver. Disqualifying transactions include i) a situation where the person seeking a waiver or any person acting in concert with him has acquired voting rights in the relevant company in the six months immediately prior to the announcement of the proposals but subsequent to negotiations, discussions or the reaching of understandings or agreements with the directors of such company in relation to the relevant proposal and ii) any acquisitions or disposals of voting rights are made by such persons in the period between the announcement of the proposals and the completion of the subscription.

Save for the entering into of the Proposed Acquisitions Agreements and the Trumph Group Subscription Agreement and the completion of transfer of 69,000,000 A Shares between CLFG and Bengbu Institute, CNBMG and parties acting in concert with it confirm that they have not acquired any voting rights in the Company or dealt with any Shares or options to subscribe for Shares or other Relevant Securities in the six-month-period before the announcement of the Company dated 7 February 2017 (being the date of the Proposed Acquisitions Agreements) and up to and including the Latest Practicable Date.

– 125 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered (i) if the Whitewash Waiver is not approved by the Independent Shareholders at the EGM, the Proposed Acquisitions Agreements will be void and invalid and the Reorganisation will not proceed; (ii) issue of Consideration Shares to CNBMG and parties acting in concert with it is the most appropriate means of financing the Proposed Acquisitions; (iii) the fairness and reasonableness of the issue price of the Consideration Shares as discussed above; and (iv) that the dilution in the shareholding interests of the Independent Shareholders in the Company upon completion of the Proposed Acquisitions is acceptable, we are of the view that the Whitewash Waiver is fair and reasonable and in the interests of the Company and the Shareholders as a whole and we advise the Independent Board Committee to recommend, and we also recommend, the Independent Shareholders to vote in favour of the resolution to approve the Whitewash Waiver.

RECOMMENDATION

Taking into consideration of the principal factors and reasons discussed above, we consider that the Proposed Acquisitions, Proposed A Share Placing (including the Triumph Group A Share Placing) and the Whitewash Waiver are though not entered into in the ordinary course of business of the Group, are in line with the long-term business strategies of the Group and on normal commercial terms and the terms of the Proposed Acquisitions Agreements, the Supplemental SP Agreements, the Proposed A Share Placing and the Whitewash Waiver are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we also recommend, the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM in this regard.

Yours faithfully, For and on behalf of KGI Capital Asia Limited Ringo Kwan Head of Investment Banking

– 126 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

Details of the financial information of the Group for each of the three years ended 31 December 2014, 2015 and 2016 and for the six months ended 30 June 2017 are disclosed in the annual reports of the Company for the financial years ended 31 December 2014 (pages 81 to 184), 2015 (pages 73 to 172) and 2016 (pages 84 to 180) and in the interim report of the Company for the six months ended 30 June 2017 (pages 41 to 160), which have been published and are available on the website of the Stock Exchange (http://www.hkex.com.hk) and the website of the Company (http://www.zhglb.com/) as follows:

the 2014 Annual Report of the Company for the financial year ended 31 December 2014 published on 17 April 2015 (available on: http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0417/LTN20150417019.pdf);
the 2015 Annual Report of the Company for the financial year ended 31 December 2015 published on 29 August 2016 (available on: http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0829/LTN201608291110.pdf);
the 2016 Annual Report of the Company for the financial year ended 31 December 2016 published on 19 April 2017 (available on: http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0419/LTN20170419522.pdf); and
the 2017 Interim Report of the Company for the six months ended 30 June 2017 published on 22 September 2017 (available on: http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0922/LTN20170922695.pdf).

2. FINANCIAL SUMMARY

The following information was extracted from the audited annual reports of the Company for the three financial years ended 31 December 2014, 2015, and 2016 and the interim report of the Company for the six months ended 30 June 2017.

The auditors of the Company, WUYIGE Certified Public Accountants LLP (大信會計師事務所（特殊普通合夥）) for each of the three financial years ended 31 December 2014, 2015 and 2016 did not issue any qualified opinion on the consolidated financial statements of the Group for each of the three years ended 31 December 2014, 2015 and 2016.

No dividend was declared, distributed or paid by the Company during each of the years ended 31 December 2014, 2015 and 2016 and for the six months ended 30 June 2017.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For each of the three financial years ended 31 December 2014, 2015 and 2016 and for the six months ended 30 June 2017, the Group had no exceptional or extraordinary items because of size, nature or incidence.

Selected items from the consolidated statement of profit or loss and other comprehensive income

	For the six months ended	For the six months ended
	30 June 2017		For the	year ended 31 December
	2017	2016	2016	2015	2014
	RMB	RMB	RMB	RMB	RMB
Total operating revenue	154,969,277.04	137,239,714.63	392,095,626.14	662,156,635.13	660,058,269.97
Total operating costs	170,783,254.39	164,010,892.76	472,351,862.60	846,550,754.69	815,895,486.83
Operating profit/(loss)	3,935,160.93	(26,771,178.13)	(80,256,236.46)	(184,394,119.56)	(56,994,679.72)
Total profit	5,608,416.14	(22,582,878.74)	21,170,495.90	(184,931,091.61)	15,730,223.86
Net profit attributable to the
equity holders of the Company	1,177,959.02	(25,745,594.23)	11,516,063.78	(184,755,120.74)	21,159,211.92
Net profit attributable to minority
interests	–	–	–	(10,071,986.12)	(15,661,852.74)
Net profit/(loss)	1,177,959.02	(25,745,594.23)	11,516,063.78	(194,827,106.86)	5,497,359.18
Earnings per share
Basic earnings/(losses) per share
(RMB/share)	0.0022	(0.0491)	0.02	(0.36)	0.0411
Diluted earnings/(losses) per share
(RMB/share)	–	–	0.02	(0.36)	–

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. AUDITED FINANCIAL INFORMATION OF THE GROUP FOR THE YEAR ENDED 31 DECEMBER 2016

The following is the full text of the audited financial information of the Group for the year ended 31 December 2016, extracted from the 2016 Annual Report of the Company for the year ended 31 December 2016:

Consolidated Income Statement

Consolidated Income Statement Item Notes	Current Period	January December 2016 Unit: Yuan Currency: RMB Last Period
I. Total operating revenue Including: Operating revenue V (XXXIV) II. Total operating costs Including: Operating costs V (XXXIV) Taxes and surcharges V (XXXV) Selling expenses V (XXXVI) Administration expenses V (XXXVII) Finance expenses V (XXXVIII) Impairment loss on assets V (XXXIX) III. Operating profit (loss is represented by - ) Add: Non-operating income V (XXXX) Including: Ga in on disposal of non-current assets V (XXXX) Less: Non-operating expenses V (XXXXI) Including: Lo ss from disposal of non-current assets V (XXXXI) IV. Total profit (total loss is represented by - ) Less: Income tax expenses V (XXXXII) V. Net profit (net loss is represented by - ) Net profit attributable to the owners of the Company Profit or loss attributable to minority interests VI. Other comprehensive income net of tax VII. Total comprehensive income To tal comprehensive income attributable to owners of the parent company To tal comprehensive income attributable to minority interests VIII. Earnings per share: (I) Basic earnings per share_(RMB/share) (II) Diluted earnings per share(RMB/share)_	392,095,626.14 392,095,626.14 472,351,862.60 343,709,563.17 5,232,136.49 7,482,306.95 87,025,947.92 8,433,936.20 20,467,971.87 -80,256,236.46 105,878,607.94 254,968.93 4,451,875.58 15,875.60 21,170,495.90 9,654,432.12 11,516,063.78 11,516,063.78 11,516,063.78 11,516,063.78 0.02 0.02	662,156,635.13 662,156,635.13 846,550,754.69 633,653,570.97 4,094,122.28 29,168,969.27 122,170,107.57 8,666,023.10 48,797,961.50 -184,394,119.56 5,490,124.60 459,490.08 6,027,096.65 14,470.37 -184,931,091.61 9,896,015.25 -194,827,106.86 -184,755,120.74 -10,071,986.12 -194,827,106.86 -184,755,120.74 -10,071,986.12 -0.36 -0.36

Legal representative: Zhang Chong

Person in charge of accounting department: Chen Jing

Chief accountant: Ma Yan

– I-3 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

		Unit: Yuan Currency: RMB
Item Notes	Closing Balance	Opening Balance
Current assets: Bank balance and cash V (I) Notes receivable V (II) Accounts receivable V (III) Prepayments V (IV) Other receivables V (V) Inventory V (VI) Other current assets V (VII) Total current assets Non-current assets: Available-for-sale financial assets V (VIII) Long-term receivables V (IX) Fixed assets V (XI) Construction in progress V (XII) Intangible assets V (XIII) Long-term deferred expenses V (XV) Deferred income tax assets V (XVI) Total non-current assets Total assets Current liabilities: Short-term loans V (XVII) Notes payable V (XVIII) Accounts payable V (XIX) Payments received in advance V (XX) Staff remuneration payables V (XXI) Taxes payable V (XXII) Interest payable V (XXIII) Other payables V (XXV) Non-current liabilities due within one year V (XXVI) Total current liabilities	157,528,516.53 45,986,571.00 101,891,329.13 1,638,352.47 107,581,717.91 132,978,500.26 34,874,034.35 582,479,021.65 55,000,000.00 648,972,313.06 62,609,172.40 3,515,290.90 4,341,222.30 774,437,998.66 1,356,917,020.31 20,000,000.00 90,000,000.00 46,373,902.20 14,391,654.50 25,743,969.95 15,381,067.45 713,868.25 42,578,922.04 471,337,062.91 726,520,447.30	102,342,860.91 25,230,005.90 71,678,942.58 4,329,899.13 28,928,810.44 195,863,112.95 58,978,537.93 487,352,169.84 51,727,535.57 691,522,403.10 9,828,822.54 64,517,450.10 4,995,326.04 4,091,374.33 826,682,911.68 1,314,035,081.52 67,930,000.00 110,200,000.00 80,295,143.32 20,132,927.79 26,291,242.89 14,961,097.35 166,587,026.05 81,097,651.66 567,495,089.06

– I-4 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

		Unit: Yuan Currency: RMB
Item Notes	Closing Balance	Opening Balance
Non-current liabilities: Long-term loans V (XXVII) Deferred income V (XXIX) Total non-current liabilities Total liabilities Owners equity Share capital V (XXX) Capital reserve V (XXXI) Surplus reserve V (XXXII) Retained earnings V (XXXIII) Equity attributable to owners of the Company Total owners equity Total liabilities and owners equity	87,836,374.23 19,290,781.82 107,127,156.05 833,647,603.35 526,766,875.00 1,473,105,039.50 51,365,509.04 -1,527,968,006.58 523,269,416.96 523,269,416.96 1,356,917,020.31	459,170,134.47 9,024,861.99 468,194,996.46 1,035,690,085.52 515,018,242.00 1,251,445,315.32 51,365,509.04 -1,539,484,070.36 278,344,996.00 278,344,996.00 1,314,035,081.52

Legal representative: Chief accountant: Zhang Chong Ma Yan

Person in charge of accounting department: Chen Jing

– I-5 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

January December 2016 Unit: Yuan Currency: RMB

Consolidated Cash Flow Statement		January December 2016 Unit: Yuan Currency: RMB
Item Notes	Current Period	Last Period
I. Cash flows from operating activities: Cash received from sale of goods or rendering of services Other cash received from activities related to operation V (XXXXIII) Sub-total of cash inflow from operating activities Cash paid for goods purchased and services rendered Cash paid to and on behalf of employees Tax payments Other cash paid for activities related to operation V (XXXXIII) Sub-total of cash outflow from operating activities Net cash flow from operating activities II. Cash flow from investment activities: Ne t cash received from disposal of fixed assets, intangible assets and other long term assets Other cash received from activities related to investment V (XXXXIII) Sub-total of cash inflow from investment activities Ca sh paid for purchase and construction of fixed assets, intangible assets and other long-term assets Other cash paid for activities related to investment V (XXXXIII) Sub-total of cash outflow from investment activities Net cash flow from investment activities III. Cash flow from financing activities: Cash received from capital contributions Proceeds from loans Cash received from issuing bonds Other cash received from financing-related activities V (XXXXIII) Sub-total of cash inflow from financing activities Cash paid for repayment of loans Cash paid for dividends, profit or interest payments Other cash paid for financing-related activities V (XXXXIII) Sub-total of cash outflow from financing activities Net cash flow from financing activities IV. Ef fects of changes in exchange rate on cash and cash equivalents V. Net increase in cash and cash equivalents Add: Opening balance of cash and cash equivalents VI. Closing balance of cash and cash equivalents	136,730,044.67 115,177,751.23 251,907,795.90 100,904,584.34 75,241,190.93 21,684,812.32 23,524,286.36 221,354,873.95 30,552,921.95 322,732.92 9,930,000.00 10,252,732.92 56,177,058.27 104,992,752.67 161,169,810.94 -150,917,078.02 209,624,984.30 120,000,000.00 340,319,034.02 669,944,018.32 141,829,011.07 6,927,438.38 330,638,185.77 479,394,635.22 190,549,383.10 428.59 70,185,655.62 42,342,860.91 112,528,516.53	290,013,349.20 19,647,073.22 309,660,422.42 262,162,002.68 103,920,662.94 44,025,043.10 30,590,278.40 440,697,987.12 -131,037,564.70 6,232.00 96,430,259.30 96,436,491.30 26,034,865.12 662,305.05 26,697,170.17 69,739,321.13 166,645,153.57 571,928,695.56 738,573,849.13 91,639,032.28 3,952,160.79 577,126,786.26 672,717,979.33 65,855,869.80 7,344.49 4,564,970.72 37,777,890.19 42,342,860.91

Legal representative: Zhang Chong

Chief accountant: Ma Yan

Person in charge of accounting department: Chen Jing

– I-6 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

C	o	n	s	o	lid	a	t	e	d		t	a	t	e	m		e	nt	of			h	a	ng	e	s	i	n			q	u	it	y						January Unit: Yuan	January Unit: Yuan	December 2016 Currency: RMB	December 2016 Currency: RMB
		General	Surplus risk Retained Minority Total owners	reserve provisions earnings interest equity	51,365,509.04 -1,539,484,070.36 278,344,996.00	51,365,509.04 -1,539,484,070.36 278,344,996.00		11,516,063.78 244,924,420.96	11,516,063.78 11,516,063.78		233,408,357.18	209,624,984.30	23,783,372.88					51,365,509.04 -1,527,968,006.58 523,269,416.96			General	Surplus risk Retained Minority Total owners	reserve provisions earnings interest equity	51,365,509.04 -1,359,891,297.28 -88,788,534.35 -39,389,515.95		5,162,347.66 667,678,765.66		51,365,509.04 -1,354,728,949.62 -88,788,534.35 628,289,249.71		-184,755,120.74 88,788,534.35 -349,944,253.71	-184,755,120.74 -10,071,986.12 -194,827,106.86		98,860,520.47 -155,117,146.85	-582,759,624.04	98,860,520.47 427,642,477.19						51,365,509.04 -1,539,484,070.36 278,344,996.00	Person in charge of accounting department:	Chen Jing
			Special	reserve																		Special	reserve	456,157.74				456,157.74		-456,157.74			-456,157.74		-456,157.74
Current Period	Equity attributable to owners of the Company	Less: Other	Capital Treasury comprehensive	reserve stock income	1,251,445,315.32	1,251,445,315.32		221,659,724.18			221,659,724.18	197,876,351.30	23,783,372.88					1,473,105,039.50	Last Period	Equity attributable to owners of the Company	Less: Other	Capital Treasury comprehensive	reserve stock income	857,450,406.90		662,516,418.00		1,519,966,824.90		-268,521,509.58			-268,521,509.58	-597,759,624.04	329,238,114.46						1,251,445,315.32	Chief accountant:	Ma Yan
				Others																			Others
		Other equity instruments	Preferential Perpetual	shares bonds																	Other equity instruments	Preferential Perpetual	shares bonds
				Item Share capital	I. Balance at the end of last year 515,018,242.00	II. Balance at the beginning of the year 515,018,242.00	III. In crease/decrease in the year	(decrease is represented by - ) 11,748,633.00	(I) Total comprehensive income	(II) Ow ners contribution and	decrease in capital 11,748,633.00	1. Ordinary shares paid by shareholders 11,748,633.00	2. Others	(III) Profit distribution	(IV) Int ernal carry-forward of owners	equity transfer	(V) Special reserve	IV. Balance at the end of the year 526,766,875.00					Item Share capital	I. Balance at the end of last year 500,018,242.00	Add: Bu siness combination under	common control	Others	II. Balance at the beginning of the year 500,018,242.00	III. In crease/decrease in the year	(decrease is represented by - ) 15,000,000.00	(I) Total comprehensive income	(II) O wners contribution and decrease	in capital 15,000,000.00	1. Ordinary shares paid by shareholders 15,000,000.00	2. Others	(III) Profit distribution	(IV) In ternal carry-forward of owners	equity transfer	(V) Special reserve	(VI) Others	IV. Balance at the end of the year 515,018,242.00	Legal representative:	Zhang Chong

– I-7 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

I. Company Profile

1. Company Overview

Luoyang Glass Company Limited ( the Company ) was incorporated in the People s Republic of China ( the PRC ) as a joint stock limited company. The Company was solely promoted and established by China Luoyang Float Glass Group Company Limited ( CLFG ) on 6 April 1994. At the time of its establishment, the Company had a registered capital of RMB400,000,000.

The Company issued 250,000,000 H shares and 50,000,000 A shares on 29 June 1994 and 29 September 1995, respectively.

In June 2006, CLFG took its 21,000,000 shares in the Company as consideration to compensate tradable A-Share holders for the purpose of getting the circulation right to the Company s shares.

On 30 November 2006, CLFG took its 199,981,758 A-Shares in the Company to compensate for its debts to the Company. After the change, the Company s shares held by CLFG changed to 179,018,242 and the general capital of the Company changed to 500,018,242 shares.

On 3 September 2010, CLFG sold down the Company s 20,000,000 unrestricted tradable shares through Shang Stock Exchange Block Trading System, accounting for 4% of the Company s general capital. After this sell-down, CLFG held the Company s 159,018,242 unrestricted tradable shares, accounting for 31.8% of the Company s general capital.

In accordance with the resolution of 2015 First Extraordinary General Meeting held on 25 August 2015, and Reply for Approval of the Issuance of Shares by Luoyang Glass Company Limited to China Luoyang Float Glass (Group) Company Limited for Asset Acquisition and Raising of Supporting Funds Proceeds (ZJXK [2015] No. 2813) issued by CSRC on 4 December 2015, the Company issued 15,000,000 new shares to CLFG for the purpose of purchasing relevant assets in December 2015. On 26 January 2016, the Company issued 11,748,633 RMB-denominated ordinary shares of RMB1.00 each to specific investors at a fixed price. After this issuance, the Company s general capital is 526,766,875 shares.

On 17 October 2016, CLFG transferred its 69,000,000 shares in the Company to Bengbu Institute by way of agreement. Upon completion of the transfer by way of agreement, there was no change in the Company s de facto controller. CLFG held the Company s 105,018,242 shares, accounting for 19.94% of the Company s general capital. Bengbu Institute held the Company s 69,000,000 shares, accounting for 13.10% of the Company s general capital.

The principal activities of the Company and its subsidiaries ( the Group ) are manufacturing and sale of float sheet glass. The scope of business includes manufacturing of glass and relevant sophisticated processing goods, mechanical equipment, electric appliances and accessories, sale of self-produced products, provision of technical consultancy and technical services.

Registration Number/Unified Social Credit Codes: 914103006148088992 Legal representative: Zhang Chong Registered address and address of head office: No. 9, Tang Gong Zhong Lu, Xigong District, Luoyang

As at 31 December 2016, the Company s total share capital was 526,766,875 shares.

The financial statements were approved for disclosure by the Board of the Company.

– I-8 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

I. Company Profile (Continued)

2. Scope of Consolidated Financial Statements for the Year

No.	Name of subsidiary	Abbreviation
1	CLFG Longmen Glass Co. Ltd.	Longmen Company
2	CLFG Longhai Electronic Glass Limited	Longhai Company
3	Bengbu China National Building Materials Information Display	Bengbu Company
	Material Company*
4	Luoyang Luobo Furuida Commerce Co., Ltd.	Furuida

II. Basis of Preparation of Financial Statements

1. Basis of preparation

The financial statements of the Company have been prepared on a going concern basis in respect of the actual transactions and events in accordance with the requirements of the Accounting Standards for Business Enterprises Basic Standards and the detailed accounting standards (the Accounting Standards for Business Enterprises ) issued by the Ministry of Finance, and based on the following significant accounting policies and estimates.

2. Going concern

As at 31 December 2016, the business operations of the Group were in normal condition with smooth financing channels and its gearing ratio was 61.44%. Although the current liabilities of the Group reached RMB144,041,425.65, exceeding current assets, the directors of the Company have made estimation that the Group was expected to generate positive business activities cash flow in the future. Meanwhile, the de facto controller of the Company, China National Building Material Group Co., Ltd., and the controlling shareholder, CLFG, have respectively made undertakings to offer financial aid to the Company, which can meet the needs of settlement of debts and committed capital funds of the Group. The Directors of the Company believe that there is no problem about the Group s ability to continue operation. Therefore, the Company has prepared the financial statement based on continuing operations.

– I-9 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates

1. Declaration on compliance with Accounting Standards for Business Enterprises

The financial statements of the Company were prepared under the requirements of Accounting Standards for Business Enterprises, reflecting the Company s financial positions as of 31 December 2016, and operating results, cash flows and other relevant information for the year 2016 on a true and complete basis.

2. Accounting period

Accounting year of the Company is the calendar year from 1 January to 31 December.

3. Operating cycle

The normal operating cycle of the Company is 12 months in a year, and the operating cycle is determined as the classification criterion of the liquidity of assets and liabilities.

4. Measurement currency

The Company s reporting currency is the Renminbi ( RMB ).

5. The accounting treatment of business combination under common control and not under common control

1. Enterprise merger under common control

In case the consideration for the long-term equity investments formed in the enterprise merger under common control is paid by way of cash, transfer of non-cash assets or assumption of debts, the Company will regard the share of carrying amounts of the net assets of the merged party in the final controller s consolidated financial statements obtained as the initial investment cost of long-term equity investments as at the date of combination. In case the consideration for the combination is paid by issuance of equity instruments, the aggregate nominal value of shares issued will be deemed as the share capital. The difference between the initial investment cost of long-term equity investments and the carrying amount of consideration (or aggregate nominal value of shares issued) for the combination shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.

2. Enterprise merger not under common control

For this kind of enterprise merger, the acquisition cost is the aggregate fair value of assets paid, liabilities incurred or assumed and equity instruments issued by the acquirer in exchange for the control of the acquiree on the date of acquisition. The recognizable and identifiable assets, liabilities and contingent liabilities acquired or assumed, through enterprise merger not under common control shall be measured at fair values on the date of acquisition. When the cost of the enterprise merger exceeds the acquirer s interest in the fair value of the acquiree s identifiable net assets obtained, the difference shall be recognized as goodwill value. Where the cost of the enterprise merger is less than the acquirer s interest in the fair value of the acquiree s identifiable net assets, the difference shall be recognized in non-operating profits for the current period if it remains true after reassessment.

– I-10 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

6. Preparation method of consolidated financial statements

1. Scope of consolidated financial statements

The Company incorporated all of its subsidiaries (including the separate entities controlled by the Company) into the scope of consolidated financial statements, including the enterprises under the Company s control, divisible part in the investees and structured entities.

2. To unify the accounting policies, date of balance sheets and accounting periods of the parent company and subsidiaries

When preparing consolidated financial statements, adjustments are made if the subsidiaries accounting policies and accounting periods are different from that of the Company, in accordance with the Company s accounting policies and accounting periods.

3. Offset matters in the consolidated financial statements

The consolidated financial statements shall be prepared on the basis of the balance sheets of the parent company and subsidiaries, which offset the internal transactions incurred between the parent companies and subsidiaries and within subsidiaries. The owner s equity of the subsidiaries not attributable to the parent company shall be presented as minority equity under the owners equity item in the consolidated balance sheet. The long-term equity investment of the parent company held by the subsidiaries, deemed as treasury stock of the corporate group as well as the reduction of owners equity, shall be presented as Less: Treasury stock under the owners equity item in the consolidated balance sheet.

4. Accounting treatment of subsidiaries acquired from merger

For subsidiaries acquired under enterprise merger involving enterprises under common control, mergers were deemed to have taken place when the ultimate controller began to exercise control over them, the assets, liabilities, operating results and cash flows of the subsidiaries are included in the consolidated financial statements from the beginning of the financial year in which the combination took place. When preparing the consolidated financial statements, for the subsidiaries acquired from business combination not involving entities under common control, the identifiable net assets of the subsidiaries are adjusted on the basis of their fair values on the date of acquisition.

7. Classification of joint arrangements and accounting for joint operations

1. Classification of joint arrangements

Joint arrangements are divided into joint operations and joint ventures. Joint arrangements achieved not through separate entities are classified as joint operations. Separate entities refer to the entities with separate identifiable financial architecture including separate legal entities and legally recognized entities without the qualification of legal entity. Joint arrangements achieved through separate entities are generally classified as joint ventures. In case of changes in rights entitled to and obligations undertaken by the parties of joint venture under a joint arrangement due to the changes in relevant facts and circumstances, the parties of joint venture will re-assess the classification of joint arrangements.

– I-11 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

7. Classification of joint arrangements and accounting for joint operations (Continued)

2. Accounting treatment for joint operations

The parties of joint operation should recognize the following items in relation to their share of interest in joint operation, and proceed with accounting in accordance with the relevant provisions under the Accounting Standards for Business Enterprises: to recognize their separate assets or liabilities held, and recognize the assets or liabilities jointly held according to their respective shares; to recognize the income from the disposal of their output share under joint operation; to recognize the income from the disposal of output under joint operation according to their respective shares; to recognize the expenses incurred separately, and recognize the expenses incurred under joint operation according to their respective shares.

For the parties of a joint operation not under common control, if they are entitled to relevant assets and undertake relevant liabilities of the joint operation, accounting will be carried out with reference to the provisions of the parties of joint operation; otherwise, it should be subject to relevant Accounting Standards for Business Enterprises.

3. Accounting treatment for joint ventures

The parties of a joint venture should perform accounting for investments by the joint venture in accordance with the Accounting Standards for Business Enterprises No. 2 Long-term Equity Investments. The parties not under common control should carry out accounting depending on their influence on the joint venture.

8. Recognition standard for cash and cash equivalents

Cash presented in the cash flow statements represents the cash on hand and deposits available for payment at any time. Cash equivalents presented in the cash flow statements refer to short-term, highly liquid investments held that are readily convertible to known amounts of cash and which are subject to an insignificant risk on change in value.

9. Translation of foreign currency transactions and financial statements denominated in foreign currency

1. Translation of foreign currency transactions

Foreign currency transactions of the Company are recorded in the recording currency translated at the spot exchange rates on the transaction date. At the balance sheet date, foreign currency monetary items are translated to RMB using the spot exchange rate at that date. Exchange differences arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate used in initial recognition or on the last balance sheet date shall be recorded into the profit or loss for the current period, except for those arising from borrowings denominated in foreign currencies and used for financing the construction of qualifying assets, which are capitalized as cost of the related assets. Foreign currency non-monetary items measured at historical cost shall continue to be translated using the spot exchange rate at the date of transaction. Foreign currency non-monetary items measured at fair value shall be translated at the spot exchange rate on the date when the fair value is determined. The exchange difference arising therefrom shall be treated as the change in fair value (including the change in exchange rate), and included in profit or loss for the current period or recognized as other comprehensive income.

– I-12 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

9. Translation of foreign currency transactions and financial statements denominated in foreign currency (Continued)

2. Translation of financial statements denominated in foreign currency

If the functional currencies used as the bookkeeping base currency by the subsidiaries, joint ventures and associates under the control of the Company are different from that of the Company, their financial statements denominated in foreign currencies shall be translated to perform accounting and prepare the consolidated financial statements. The assets and liabilities in the balance sheet are translated into functional currency at the spot exchange rates at the balance sheet date. Except the item Retained earnings , the owner s equity items are translated into functional currency at the spot exchange rates. The income and expenses items in the income statement are translated into functional currency at the spot exchange rates at the transaction dates. The resulting exchange differences of the financial statements denominated in foreign currencies are presented under other comprehensive income of owner s equity item in the balance sheet. The cash flow of foreign currency which can be determined by the systematic and reasonable system shall be translated at the spot exchange rate at the transaction date. The effect of exchange movement on the cash shall be included separately in the cash flow statement. On disposal of foreign operations, exchange differences arising from the translation of financial statements denominated in foreign currencies related to the foreign operation shall be transferred to profit or loss for the current period either entirely or at the proportion of disposal of foreign operations.

10. Financial instruments

1. Classification and recognition of financial instruments

Financial instruments are classified as financial assets or financial liabilities. A financial asset or a financial liability is recognized when the Company becomes a contractual party of a financial instrument.

Upon initial recognition, financial assets are classified into financial assets at fair value through profit or loss, held-to-maturity investments, receivables and available-for-sale financial assets. Except for receivables, the classification of a financial asset is based on the purpose and capability of holding the financial asset of the Company and its subsidiaries. Upon initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities.

Financial assets at fair value through profit or loss include held-for-trading financial assets held for the purpose of selling in the short term and financial assets designated at fair value through profit or loss upon initial recognition; receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market; available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories at initial recognition; held-to-maturity investments are non-derivative financial assets with fixed maturity and fixed or determinable payments that management has the positive intention and ability to hold to maturity.

– I-13 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

10. Financial instruments (Continued)

2. Measurement of financial instruments

Financial assets and financial liabilities of the Company are initially recognized and measured at fair values. Subsequent measurement is dealt with based on different categories: financial assets at fair value through profit or loss, financial assets available for sale and financial liabilities at fair value through profit or loss are subsequently measured at fair values; held-to-maturity investments, loans and receivables and other financial liabilities are subsequently measured at amortized costs; derivative financial assets or liabilities linked to and which must be settled by delivery of an unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be measured reliably are subsequently measured at cost. Except for financial instruments held for hedging purposes, the gains or losses arising from the changes in fair values in subsequent measurements of the Company s financial assets or financial liabilities are accounted for as follows: The gains or losses resulting from the changes in fair values of the financial assets or financial liabilities which are measured at fair values through profit and loss for the current period are recorded as change in fair value in profit or loss. Changes in fair values of available-for-sale financial assets are recorded in other comprehensive income.

3. Recognition of the fair value of financial assets and financial liabilities by the Company

As for the financial assets or financial liabilities for which there is an active market, the quoted prices in the active market shall be used to recognize the fair values thereof. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques to determine its fair value. The value appraisal techniques mainly include market approach, income approach and cost approach.

4. Recognition and measurement of transfer of financial assets and liabilities

When the Company has transferred nearly all of the risks and rewards related to the ownership of a financial asset to the transferee, or neither transferred nor retained nearly all of the risks and rewards related to the ownership of the financial asset but given up the control of the financial asset, the financial asset shall be derecognized. When the criteria for derecognition of a financial asset are met, the difference between the carrying value of the transferred financial asset and the sum of the consideration received from the transfer and the accumulated fair value changes previously recorded in other comprehensive income are recorded in profit or loss for the current period. If the partial transfer satisfies the criteria for derecognition, the entire carrying value of the transferred financial asset shall proportionally allocated between the derecognized portion and the retained portion according to their respective relative fair value.

When all or part of the current obligation to a financial liability has been terminated, the entire or part of such financial liability shall be derecognized.

– I-14 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

10. Financial instruments (Continued)

5. Impairment of financial assets

When an impairment loss on a financial asset carried at amortized cost has occurred, the amount of loss is provided for at the difference between the asset s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of the financial asset recovered and the recovery is related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed and the amount of reversal is recognized in profit or loss for the current period.

When an impairment loss on a financial asset measured at cost has occurred, the amount of loss is provided for at the difference between the asset s carrying amount and the present value of its estimated future cash flows. The impairment loss on such financial asset is not reversed once it is recognized.

Where there is objective evidence that an impairment loss on available-for-sale financial assets occurs, the cumulative loss arising from the decline in fair value that had been recognized directly in equity is removed from equity and recognized in impairment loss. For an investment in debt instrument classified as available-for-sale on which impairment losses have been recognized, if, in a subsequent period, its fair value increases and the increase can be objectively related to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed and recognized in profit or loss for the current period. For an investment in an equity instrument classified as available-for-sale on which impairment losses have been recognized, the increase in its fair value in a subsequent period is recognized in equity directly.

For investments in equity instruments, the specific quantitative criteria for the Company to determine serious or not temporary decrease in their fair value, cost computing method, method for determining closing fair value, and basis for determining the continuous decrease period are set out below:

Specific quantitative criterion on Decrease in closing fair value relative to the cost has reached serious decrease in their or exceeded 50%. fair value

Specific quantitative criterion on not Fall for 12 consecutive months. temporary decrease in their fair value

Cost computing method

Consideration of payment at acquisition (net of cash dividends declared but not yet paid or due but unpaid interest on bonds) and the relevant transaction cost are recognized as the investment cost.

Method for determining closing fair value

As for a financial instrument for which there is an active market, the quoted prices in the active market shall be used to recognize the fair values thereof. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques to determine its fair value.

– I-15 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

10. Financial instruments (Continued)

5. Impairment of financial assets (Continued)

Basis for determining the continuous decrease period

The rebound in the continuous fall or the period with the continuous trend of fall is less than 20%. Rebound duration not more than six months is treated as continuous decrease period.

11. Receivables

The receivables of the Company mainly included account receivables, long-term receivables and other receivables. If there is objective evidence that receivables have been impaired at the balance sheet date, impairment loss shall be recognized base on the differences between the carrying values and the present value of estimated future cash flows.

(1) Receivables individually significant and with provision for bad debts on an individual basis

Basis and criteria for determining whether a Receivables with the book balance of over RMB5 receivable is individually significant million Provision policies of bad debt provision for To confirm according to the difference between the individually significant receivables carrying values and the present value of estimated future cash flows

(2) Receivables for which bad debt provision is made on group basis by similar credit risk characteristics:

Basis for group determination	Nature of receivables and risk characteristics
The group with provision for bad debts	Apart from those for which no provision has been
based on aging analysis methods	paid for bad debts, receivables which are unimpaired
	through separate test of impairment are divided into
	certain portfolios of credit risk in accordance with the
	aging analysis methods, and then the provision for bad
	debts is made in proportion to the balance of these
	receivable portfolios.
The group without provision for bad debts	(1) Various margins and deposits related to
	the production and operations that are fully
	recoverable upon maturity;
	(2) Receivables due from related parties with good
	financial position;
	(3) Other balances that have positive evidence
	indicating they are fully recoverable.

– I-16 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

11. Receivables (Continued)

(2) Receivables for which bad debt provision is made on group basis by similar credit risk characteristics: (Continued)

Provision methods for bad debts on group basis

The group with provision for bad debts Aging analysis methods based on aging analysis methods The group without provision for bad debts No provision for bad debts will be made

In the groups, the provision for bad debts based on aging analysis methods set out as follows

	Provision rate for	Provision rate for
Age	accounts receivable	other receivables
	(%)	(%)
Within 1 year (including 1 year)	0	0
Including: sub-items within 1 year
1 2 years	30	30
2 3 years	50	50
Over 3 years	100	100
3 4 years	100	100
4 5 years	100	100
Over 5 years

Individually insignificant receivables with provision for bad debts on an individual basis:

Basis for individual provision

Concrete evidence indicates that there is obvious difference in recoverability.

Provision method

For the provision for bad debts by using individual determination method, provisions are made for receivables due from related parties that are estimated to be fully unrecoverable.

– I-17 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

12. Inventories

1. Classification

Inventories means finished goods or merchandise held for sale in the ordinary course of business, unfinished products in the process of production, materials or supplies used in the process of production or rendering of services. Inventories mainly include raw materials, revolving materials, work in progress and finished goods.

2. Measurement for delivered inventories

Upon delivery of inventories, the actual cost of such inventories will be determined by using weighted average method.

3. Provision for impairment

At the end of the period, after a thorough inspection of the inventories, provision for decline in value of inventories will be made and adjusted at the lower of the cost and the net realizable value. Net realizable value of held-for-sale commodity stocks, such as products, goods-in-stock, and held-for-sale raw materials, during the normal course of production and operation, shall be determined by their estimated selling prices less the related selling expenses and taxes; the net realizable value of material inventories, which need to be processed, during the normal course of production and operation, shall be determined by the amount after deducting the estimated cost of completion, estimated selling expenses and relevant taxes from the estimated selling price of finished goods; the net realizable value of inventories held for execution of sales contracts or labor contracts shall be calculated on the ground of the contracted price. If an enterprise holds more inventories than the quantity stipulated in the sales contract, the net realizable value of the exceeding part shall be calculated on the ground of general selling price.

Decline in value of inventories is made on an item-by-item basis at the end of the period. For large quantity and low value items of inventories, provision may be made based on categories of inventories; for items of inventories relating to a product line that is produced and marketed in the same geographical area and with the same or similar end uses or purposes, which cannot be practicable evaluated separately from other items in that product line, provision for decline in value of inventories may be determined on an aggregate basis.

Should the factors causing any write-down of the inventories do not exist, the amount of write-down will be recovered and be reversed from the provision for diminution in value of inventories that has been made. The reversed amount will be included in the current profits and losses.

4. Inventory system

The Company adopts perpetual inventory system.

5. Amortization of low-value consumables and packaging materials

Low-value consumables are amortized using one-off write-off method. Packaging materials and other revolving materials are amortized using equal-split amortization method.

– I-18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

13. Recognition of assets held for sale

Non-current assets meeting the following criteria shall be recognized as assets held for sale: (i) The resolution has been made to dispose this non-current asset; (ii) there is an irrecoverable transfer agreement that has been made between the Company and the transferee; (iii) the whole transfer shall be completed within one year.

14. Long-term equity investments

1. Determination of initial investment cost

For a long-term equity investment obtained from business consolidation under common control, the initial cost is measured at the share of the carrying amount of the equity of the combined party; for a long-term equity investment obtained from business consolidation not under common control, the initial cost is the consolidation cost at the date of acquisition. For a long-term equity investment acquired by cash, the initial investment cost shall be the total purchase price. For a long-term equity investment acquired by the issue of equity securities, the initial investment cost shall be the fair value of the securities issued. For a long-term equity investment acquired by debt restructuring, the initial investment cost is recognized according to relevant requirements of Accounting Standards for Business Enterprises No.12 Debt Restructuring. For a long-term equity investment acquired by exchange of non-monetary assets, the initial investment cost is recognized according to relevant standards and regulations.

2. Subsequent measurement and profit or loss recognition

Where the investor has a control over the investee, long-term equity investments are measured using cost method. Long-term equity investments in associates and joint ventures are measured using equity method. Where part of the equity investments of an investor in its associates are held indirectly through venture investment institutions, common fund, trust companies or other similar entities including investment linked insurance funds, such part of equity investments indirectly held by the investor shall be measured at fair value through profit or loss according to relevant requirements of Accounting Standards for Business Enterprises No. 22 Recognition and measurement of Financial Instruments regardless whether the above entities have significant influence on such part of equity investments, while the remaining part shall be measured using equity method.

3. Basis of conclusion for common control and significant influence over the investee

Joint control over an investee refers to where the activities which have a significant influence on return on certain arrangement could be decided only by mutual consent of the investing parties sharing the control, which includes the sales and purchase of goods or services, management of financial assets, acquisition and disposal of assets, research and development activities and financing activities, etc.; Significant influence on the investee refers to that: significant influence over the investee exists when holding more than 20% but less than 50% of the shares with voting rights or even if the holding is below 20%, there is still significant influence if any of the following conditions is met: there is representative in the board of directors or similar governing body of the investee; participation in the investee s policy setting process; assigning key management to the investee; the investee relies on the technology or technical information of the investing company; or major transactions with the investee.

– I-19 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

15. Investment property

N/A

16. Fixed assets

(1) Recognition conditions

Fixed assets are tangible assets that are held for production, provision of services, leasing or administrative purposes, and have useful life of more than one financial year. Fixed asset are recognized when both of the following conditions are met: economic benefits in relation to the fixed assets are very likely to flow into the enterprise; and the cost of the fixed assets can be measured reliably.

(2) Depreciation methods

						Annual	Annual
		Depreciable		Residual		depreciation
Category	Depreciation methods		life	value rate			rate
		(year)		(%)			(%)
Buildings and structures	Straight-line method	3~~0~~	50	~~3~~	5	1.90 3.23
Machine and equipment	Straight-line method	~~4~~	28	~~3~~	5	3.3~~9~~	~~2~~4.25
Electronic equipment	Straight-line method		10		3		9.70
Transportation tools	Straight-line method	~~6~~	12	~~3~~	5	7.9~~2~~	~~1~~6.17
Other equipment	Straight-line method	~~4~~	28	~~3~~	5	3.3~~9~~	~~2~~4.25

17. Construction in progress

There are two types of construction in progress for the Company: self-construction and sub-contracting construction. Construction in progress is transferred to fixed assets when the project is completed and ready for its intended use. A fixed asset is ready for intended use if any of the following criteria is met: the construction of the fixed assets (including installation) has been completed or substantially completed; the fixed asset has been put to trial production or trial operation and it is evidenced that the asset can operate ordinarily or produce steadily qualified products; or the result of trial operation proves that it can run or operate normally; little or no expenditure will be incurred for construction of the fixed asset; or the fixed asset constructed has achieved or almost achieved the requirement of design or contract.

– I-20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

18. Borrowing costs

1. Basis for capitalization of borrowing costs

The Company s borrowing costs that are directly attributable to the acquisition or production of a qualifying asset are capitalized into the cost of relevant assets. Other borrowing costs are recognized as expenses in profit and loss for the current period when incurred. Qualifying assets include fixed assets, investment property and inventories that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.

2. Calculation of amount to be capitalized

The capital period refers to the period beginning from the commencement of capitalizing borrowing costs to the date of ceasing capitalization, excluding the period of suspension of capitalization. Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.

For designated borrowings, the capitalized amount shall be the actual interest expense incurred for the designated borrowings, less the interest income from the unused funds of the designated borrowings or investment income from the temporary investments; and for general borrowings, the weighted average of general borrowings occupied, based on the accumulated expenditure exceeding the capital expenditure from designated borrowings times the interest rate of the general borrowings so occupied. The interest rate is the weighted average rate of the general borrowings; and for borrowings with discount or premium, the discount or premium was amortized over the term of the borrowings to adjust the interest in every period using effective interest rate method.

The effective interest rate method is based on the effective interest rate of the borrowings to calculate the amortization of discount or premium or interest expense. The effective interest rate is the rate in discounting the estimated future cash flows to the carrying value of the borrowings.

– I-21 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

19. Intangible assets

(1) Measurement, useful life and impairment test

1. Measurement of intangible assets

Intangible assets are initially measured at costs. The actual costs of purchased intangible assets include the considerations and relevant expenses paid. The actual costs of intangible assets contributed by investors are the prices contained in the investment agreements or mutually agreed. If the price contained in the investment agreement or mutually is not a fair value, the fair value of the intangible asset is regarded as the actual cost. The cost of a self-developed intangible asset is the total expenditure incurred in brings the asset to its intended use.

Subsequent measurement of the Company s intangible assets: Intangible assets with finite useful lives are amortized on a straight-line basis over the useful lives of the intangible assets; at the end of each year, the useful lives and amortization policy are reviewed, and adjusted if there are variance with original estimates; Intangible assets with indefinite useful lives are not amortized and the useful lives are reviewed at the end of each year. If there is objective evidence that the useful life of an intangible asset is finite, the intangible asset is amortized using the straight line method according to the estimated useful life.

2. Determination basis of infinite useful life

An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for the Company or it has no definite useful life. The determination basis of intangible assets with infinite useful lives: derived from contractual rights or other legal rights and there are no explicit years of use stipulated in the contract or laws and regulations; useful life till could not be estimated after considering the industrial practices or relevant expert opinion.

At each year end date, the useful lives of the intangible assets with indefinite useful lives are reviewed. The assessment is performed by the departments that use the intangible assets, using the down-to-top approach, to determine if there are changes to the indefinite useful lives.

(2) Accounting policy regarding the expenditure on the internal research and development

Basis for research and development phases for internal research and development project and basis for capitalization of expenditure incurred in development stage

As for an internal research and development project, expenditure incurred in the research phase is recognized in profit or loss in the period as incurred. Expenses incurred in the development stage are recognized as intangible assets if all of the following conditions are met: (1) the technical feasibility of completing the intangible asset so that it will be available for use or for sale; (2) the intention to complete the intangible asset for use or for sale; (3) how the intangible asset will generate economic benefits including there is evidence that the products produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the intangible asset; (4) the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; (5) the expenditures attributable to the development of the intangible asset could be reliably measured.

– I-22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

19. Intangible assets (Continued)

(2) Accounting policy regarding the expenditure on the internal research and development (Continued)

Basis for distinguishing research phase and development phase of an internal research and development project: research stage is the activities carried out for the planned investigation and search of new technology and knowledge, which has the characteristics of planning and exploration; before commercial production or other uses, the application of new technologies and new knowledge obtained from the research phase to produce new or improved materials, equipment and products is regarded as development phase, which has the characteristics of very probable pinpointing and forming results.

20. Long-term asset impairment

Long-term equity investments, long-term assets such as fixed assets, construction in progress and intangible assets are tested for impairment if there is any indication that an asset may be impaired at the balance date. If the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount, a provision for impairment and an impairment loss are recognized for the amount by which the asset s carrying amount exceeds its recoverable amount.

The recoverable amount is the higher of an asset s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.

Once the impairment loss of such assets is recognized, it is not be reversed in any subsequent period.

21. Long-term deferred expenses

Long-term deferred expenses of the Company are expenses which have been paid but the benefit period is over one year (not including one year). Long-term deferred expenses are amortized over the benefit period. If a long-term deferred expense cannot benefit the future accounting period, the residue value of such project not amortized yet shall be transferred to the profit or loss in the current period.

– I-23 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

22. Employee benefits

(1) Accounting treatment of short-termed wages

Employees wages refer to remuneration or indemnification in various forms given to employees for the company s obtaining of service provided by employees or for dissolution of labor relationship with employees. Employees wages shall include short-term wages, after-service welfare, dismissal welfare and other long-term employees welfare.

1. Short-termed wages

During the accounting period in which an employee provides service, short-term wages are actually recognized as liabilities and charged to profit or loss, or if otherwise required or allowed by other accounting standards, to the related costs of assets for the current period. At the time of actual occurrence, The Company s employee benefits are recorded into the profits and losses of the current year or assets associated costs according to the actual amount. The non-monetary employee benefits are measured at fair value. Regarding to the medical and health insurance, industrial injury insurance, maternity insurance and other social insurances, housing fund and labor union expenditure and personnel education that the Company paid for employees, the Company should recognize corresponding employees benefits payable according to the appropriation basis and proportion as stipulated by relevant requirements and recognize the corresponding liabilities and include these expenses in the profits or losses of the current period or recognized as respective assets costs.

(2) Accounting treatment of off-service welfare

During the accounting period in which an employee provides service, the amount payable calculated under defined contribution scheme shall be recognized as a liability and recorded in profit and loss of the current period or in assets. In respect of the defined benefit scheme, the Company shall use the projected unit credit method and attribute the welfare obligations calculated using the formula stipulated by the defined benefit scheme to the service period of the employee, and record the obligation in the current profit and loss or related assets cost.

– I-24 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

22. Employee benefits (Continued)

(3) Accounting treatment of dismissal welfare

The Company recognizes a liability and expenses in the current profit or loss for termination benefits at the earlier of the following dates: when the Company can no longer withdraw the offer of those benefits; and when the Company recognizes costs for restructuring involving the payment of termination costs.

(4) Accounting treatment of other long-term employees welfare

The Company provides other long-term employee benefits to its employees. For those falling within the scope of defined contribution scheme, the Company shall account for them according to relevant requirements of the defined contribution scheme. In addition, the Company recognizes and measures the net liabilities or net assets of the other long-term employee benefits according to relevant requirements of the defined contribution scheme.

23. Estimated liability

If an obligation in relation to contingency is the present obligation of the Company and the performance of such obligation is likely to lead to the outflow of economic benefits and its amount can be reliably measured, such obligation shall be recognized as estimated liability. The best estimate of the expenditure from current obligation is initially recorded as accrued liability. When the necessary expenditures falls within a range and the probability of each result in the range are identical, the best estimate is the median of the range; if there are severable items involved, every possible result and relevant probability are taken into account for the best estimation.

At the balance sheet date, the carrying value of provision is reviewed. If there is objective evidence that the carrying value could not reflect the current best estimate, the carrying value is adjusted to the best estimated value.

24. Revenue

1. Sales of goods

Revenue from the sale of goods shall be recognized at the amount received or receivable from buyers based on contractual or agreed prices, only when all of the following conditions are satisfied: the significant risks and rewards of ownership of the goods have been passed to the buyer; the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the enterprise; the associated costs incurred or to be incurred can be measured reliably.

Specific method for revenue recognition: the sales revenue shall be recognized upon the goods are delivered, the client signs to acknowledge the receipt of such goods and the relevant papers such as invoices and bill of lading are handed to the purchasing client.

If there is deferred payment clause in the agreement or mutually agreed price, which in substance is a financing nature, the fair value of the receivables is recorded as sales amount.

– I-25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

24. Revenue (Continued)

2. Provision of labor services

At the balance sheet date, when the outcome of a transaction involving the rendering of services can be estimated reliably, revenue from provision of services shall be recognized using the percentage of completion method. The percentage of completion is determined by the Company based on the percentage of actual cost over estimated total cost. At the balance sheet date, when the outcome of the transaction involving the rendering of services cannot be estimated reliably, it shall be dealt with in the following ways: if the cost of services incurred is expected to be compensated, the revenue from the rendering of services is recognized to the extent of actual cost incurred to date, and the relevant cost is transferred to cost of service in profit or loss; if the cost of services incurred is not expected to be compensated, the cost incurred should be included in current profit or loss, and no revenue from the rendering of services may be recognized.

3. Alienating the right to use an asset

When the inflow of economic benefits from the alienating of assets is probable and the income can be measured reliably, the income from alienating the right to use an asset is recognized.

25. Government grants

(1) Accounting treatment for government grants related to assets

If the government grant received by the Company is used for construction or other project that forms a long term asset, it is regarded as asset-related government grant. Asset-related government grant is recognized as deferred income and is evenly amortized to profit or loss on a straight-line basis over the useful life of the relevant asset starting from the date the asset is available for use.

(2) Accounting treatment for government grants related to income

The government grants other than the government grants related to assets are recognized as government grants related to income. Government grants related to income shall be treated as follows: those used to compensate relevant expenses or losses to be incurred by the enterprise in subsequent periods are recognized as deferred income and recorded in profit and loss for the current period when such expenses are recognized; and those used to compensate relevant expenses or losses that have been incurred by the enterprise are recorded directly in profit or loss for the current period.

(3) Specific standards for differentiating governmental subsidy relating to asset from that relating to income

Where there is no express regulation on subsidy object in government documents, the criteria for differentiating governmental subsidy relating to asset from that relating to income is as below: government grant subject to a certain project shall be separated according to the proportion of expenditure budget and capitalization budget, and the proportion shall be reviewed and modified if necessary on the balance sheet date; government grant shall be categorized as related to income if its usage is just subject to general statement but specific project in relevant document.

– I-26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

26. Deferred tax assets/deferred tax liabilities

The deferred income tax assets and income tax liabilities shall be calculated and recognized at the applicable tax rate during which such asset are expected to be recovered or such liabilities can be settled, based on the difference between the carrying amount of assets and liabilities and their tax basis (for the items that have not been recognized as the assets and liabilities and whose taxable basis can be determined according to the tax law, the taxable basis can be determined as its difference).
The deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilized. At the balance sheet date, if there is positive evidence indicating that sufficient taxable profits can be obtained in the future period to a lawful deductible temporary differences, and the unrecognized deferred income tax asset in the previous accounting period shall be recognized. The carrying amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefit of the deferred tax asset to be utilized.
As for taxable temporary difference related to the investments of subsidiaries and associated enterprises, the deferred income tax liabilities are recognized unless the Company can control the time for the reversal of temporary differences and such differences are much likely not to be reversed in the foreseeable future. As for the deductible temporary difference related to investments of subsidiaries and associated enterprises, the deferred income tax assets shall be recognized when such temporary differences are much likely to be reversed in the foreseeable future and the taxable profit are available against which the deductible temporary difference can be utilized.

27. Lease

(1) Accounting treatment for operating leases

Lease expenditure for operating leases shall be recorded into the cost of the relevant asset or the current period s on a straight-line basis during the lease term.

(2) Accounting treatment for lease under financing

The lower of the fair value of the leased assets and the present value of the minimum lease payment shall be taken as the book value of the leased assets. The difference of the book value of the assets under lease and the minimum lease payment shall be the unrecognized financing expenses and shall be amortized according to the actual interest rate within the lease term. The balance derived from deducting the unrecognized financing expenses from the minimum lease payment shall be the long-term payables as shown.

– I-27 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

III. Important Accounting Policies and Estimates (Continued)

28. Changes in significant accounting policies and accounting estimates

  - _**(1) Changes in significant accounting policies**_

N/A

(2) Changes in significant accounting estimates

Details of and reasons for			Note (Financial
changes in accounting	Procedures for		statement items and
estimates	approval	Effective date	amounts affected)
Adjustments to the	The eighth meeting of	1 April 2016	A reduction of
depreciable life of fixed	the eighth session		RMB8,988,076.02
assets by Bengbu	of the Board		in its accumulated
Company	convened on 24		depreciation
	June 2016

Changes in useful life are as follows:

	Expected useful life	Expected useful	life
Category	before changes	after changes
	(Year)	(Year)
Buildings and structures	30		35
Special equipment	10	1~~0~~	~~1~~5
Office equipment	3		5
Transportation tools	4		8

– I-28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

IV. Taxes

1. Major categories of taxes and tax rates

Major categories of taxes and tax rates

Category	Tax basis	Tax		rate
Value added tax	Assessable value-added part of sales revenue and	13%	~~1~~7%
	labor services
City maintenance and	Value added tax and business tax paid	5~~%~~		7%
construction tax
Enterprise income tax	Taxable future profit	15%,	25%
Educational	Value added tax and business tax paid			3%
surcharges

Should there be any entity paying taxes being entitled to different enterprise income tax rate, the disclosure is explained below

Name of entity paying taxes	Income tax rate
The Company	25%
Longhai Company, Bengbu Company	15%
Other subsidiaries	25%

2. Preferential tax treatment

Longhai Company, a wholly-owned subsidiary of the Company, has been approved as a high-tech enterprise in December 2016 and paid the enterprise income tax at a tax rate of 15% in 2016.

Bengbu Company, a wholly-owned subsidiary of the Company, has been approved as a high-tech enterprise on 21 October 2016 by Anhui Provincial Department of Science and Technology, Anhui Provincial Department of Finance, Anhui Provincial Office, SAT and Anhui Local Taxation Bureau, and has been granted the High-tech Enterprise Certificate (No. GR201634000360) with a term of 3 years. Bengbu Company paid the enterprise income tax at a tax rate of 15% in 2016.

– I-29 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements

1. Monetary funds

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Cash on hand Deposits at banks Other monetary funds Total	95,219.74 112,433,296.79 45,000,000.00 157,528,516.53	43,940.18 42,298,920.73 60,000,000.00 102,342,860.91

Including: total overseas deposit

Other explanations

At the end of the period, the guarantee deposit for bank acceptance in the balance of the other monetary funds was RMB45,000,000.00.

2. Notes receivable

(1) Category of notes receivable

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Bank acceptance Trade acceptance Total	45,586,571.00 400,000.00 45,986,571.00	25,230,005.90 25,230,005.90

– I-30 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

2. Notes receivable (Continued)

  - _**(2) Notes receivable which were endorsed but were not yet discounted by the Company at the end of the period and not due as of the date of the balance sheet:**_

Unit: Yuan Currency: RMB

Derecognized Not-yet-derecognized amount at the end amount at the end Item of the period of the period Bank acceptance 218,099,344.74 Total 218,099,344.74

3. Accounts receivable

(1) Disclosed categorization of accounts receivable

Unit: Yuan Currency: RMB

==> picture [456 x 202] intentionally omitted <==

----- Start of picture text -----

Closing balance at the end of the period Opening balance at the beginning of the period
Carrying amount Provision for bad debts Carrying amount Provision for bad debts
Category Amount Ratio Amount Provision ratio Book value Amount Ratio Amount Provision ratio Book value
(%) (%) (%) (%)
Account receivables with significant single
amount and individual provision for bad
debts
Accounts receivable with provision for bad
debts pursuant to the group with credit
risk characteristics 156,466,612.01 100.00 54,575,282.88 34.88 101,891,329.13 125,374,455.66 100.00 53,695,513.08 42.83 71,678,942.58
Account receivables with insignificant
single amount and individual provision
for bad debts
Total 156,466,612.01 / 54,575,282.88 / 101,891,329.13 125,374,455.66 / 53,695,513.08 / 71,678,942.58
----- End of picture text -----

– I-31 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

3. Accounts receivable (Continued)

(1) Disclosed categorization of accounts receivable (Continued)

For the groups, the accounts receivable with provision for bad debts are calculated pursuant to the aging analysis method are as follows:

Unit: Yuan Currency: RMB

Aging	Closing balance at the end of the period Accounts receivable Provision for bad debts Provision ratio *(%)*	Closing balance at the end of the period Accounts receivable Provision for bad debts Provision ratio *(%)*	Closing balance at the end of the period Accounts receivable Provision for bad debts Provision ratio *(%)*
Within 1 year Sub-total within 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Above 5 years Total

	70,253,078.53
	1,880,549.56	564,164.86	30.00
	79,720.82	39,860.41	50.00
	605,589.30	605,589.30	100.00
	2,672,254.67	2,672,254.67	100.00
	50,693,413.64	50,693,413.64	100.00

	126,184,606.52	54,575,282.88	43.25

– I-32 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

3. Accounts receivable (Continued)

(1) Disclosed categorization of accounts receivable (Continued)

For the groups, the accounts receivable without provision for bad debts is as follows

Item	Amount at the end of the period	Amount at the beginning of the period
Group without provision for bad debts (related parties) Total	30,282,005.49 30,282,005.49	3,877,582.73 3,877,582.73

Provision for bad debts for the current period is RMB879,769.80.

(2) Provision for bad debts made, recovered or reversed for the current period:

Provision for bad debts for the current period is RMB879,769.80; the recovery or withholding of the provision for bad debts is RMB0.

(3) Top five largest accounts receivable at the end of the period by the balance collected regarding the party in default:

Company names Closing balance at the end of the period	Company names Closing balance at the end of the period	Ratio representing with respect to the total balance of accounts receivable at the end of the period *(%)*	Balance of provision for bad debts
Shenzhen Yongchangsheng New Materials Co., Ltd. ( ) Anhui Bengbu Huayi Conductive Film Glass Co., Ltd. ( ) Shenzhen Jinronghua Electronic Technology Co., Ltd. ( ) Shanghai Shunsheng Glass Sales Cooperation Company ( ) Shenzhen Mingzhida Glass Co., Ltd. ( ) Total
	40,719,334.97	26.02	261,691.73
	28,621,134.25	18.29
	12,236,362.66	7.82
	4,757,122.32	3.04
	3,423,061.27	2.19

	89,757,015.47	57.36	261,691.73

– I-33 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

4. Prepayments

(1) Aging analysis of prepayments

Unit: Yuan Currency: RMB

Aging	Closing balance at the end of the period Amount Ratio *(%)*	Closing balance at the end of the period Amount Ratio *(%)*	Opening balance at the beginning of the period Amount Ratio (%)	Opening balance at the beginning of the period Amount Ratio (%)
Within 1 year 1 to 2 years 2 to 3 years Above 3 years Total		96.64 1.88 0.19 1.29 100.00	4,083,207.96 201,553.73 7,867.24 37,270.20 4,329,899.13	94.31 4.65 0.18 0.86 100.00
	1,583,447.58
	30,737.65
	3,100.00
	21,067.24

	1,638,352.47

(2) Top five largest prepayments at the end of the period by the total balance collected regarding the party paying prepayments:

Name Closing balance at the end of the period	Name Closing balance at the end of the period	Percentage of total prepayments (%)
Luoyang Xinao Huayou Gas Company Limited* ( ) Triumph Technology Group Company Henan Electric Power Corporation Luoyang Power Supply Company Henan Changxing Industry Co. Ltd. Henan Zhongyuan Chemistry Co., Ltd Total	786,187.03 279,436.97 187,737.98 99,000.00 64,536.85 1,416,898.83	47.99 17.06 11.46 6.04 3.94 86.49

– I-34 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

5. Other receivables

(1) Disclosed categories of other receivables

Unit: Yuan Currency: RMB

Category	Carrying Amount	Closing balance at the end of the period amount Provision for bad debts Ratio Amount Provision Ratio *(%)* *(%)*	Closing balance at the end of the period amount Provision for bad debts Ratio Amount Provision Ratio *(%)* *(%)*	Closing balance at the end of the period amount Provision for bad debts Ratio Amount Provision Ratio *(%)* *(%)*	Book Value	Carrying Amount	Opening balance at the beginning of the period amount Provision for bad debts Ratio Amount Provision Ratio (%) (%)	Opening balance at the beginning of the period amount Provision for bad debts Ratio Amount Provision Ratio (%) (%)	Opening balance at the beginning of the period amount Provision for bad debts Ratio Amount Provision Ratio (%) (%)	Book Value
Other receivables with significant single amount and individual provision for bad debts Other receivable with provision for bad debts pursuant to the group with credit risk Other receivables with insignificant single amount and individual provision for bad debts Total						10,808,704.00 72,949,808.50 83,758,512.50	12.90 87.10 /	10,808,704.00 44,020,998.06 54,829,702.06	100.00 60.34 /	28,928,810.44 28,928,810.44
	10,808,704.00	6.86	10,808,704.00	100.00
	146,664,511.77	93.14	39,082,793.86	26.65	107,581,717.91


	157,473,215.77	/	49,891,497.86	/	107,581,717.91

Other receivables with significant single amount and individual provision for bad debts at the end of the period are set as follows

Unit: Yuan Currency: RMB

Other receivables (by unit)	Other receivables	Closing balance at Provision for bad debts	the end of the period Provision for bad debts Reason for making provision
Xili Sub-Branch, Zhengzhou of China Construction Bank Total	10,808,704.00 10,808,704.00		100.00% Full provision for bad debts due to failure of recovery / /
		10,808,704.00

		10,808,704.00

– I-35 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

5. Other receivables (Continued)

(1) Disclosed categories of other receivables (Continued)

For the groups, other receivables with provision for bad debts by using aging analysis method:

Unit: Yuan Currency: RMB

Aging	Closing balance at the end of the period Other receivables Provision for bad debts Provision Ratio *(%)*	Closing balance at the end of the period Other receivables Provision for bad debts Provision Ratio *(%)*	Closing balance at the end of the period Other receivables Provision for bad debts Provision Ratio *(%)*
Within 1 year Sub-total within 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Above 5 years Total

	634,542.06
	978,432.51	293,529.75	30.00
	879,072.00	439,536.00	50.00
	250,813.89	250,813.89	100.00
	202,850.27	202,850.27	100.00
	37,896,063.95	37,896,063.95	100.00

	40,841,774.68	39,082,793.86	95.69

In the group, other receivables with no provision for bad debts

Item	Amount at the end of the period	Amount at the beginning of the period
Group with no provision for bad debts (related party, spare fund, security deposit, etc.) Total	105,822,737.09 105,822,737.09	18,224,337.03 18,224,337.03

– I-36 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

5. Other receivables (Continued)

(2) Provision for bad debts made, recovered or reversed for the current period:

Provision for bad debts for the current period is RMB276,795.80. Provision for bad debts recovered or reversed for the current period is RMB5,215,000.00.

The significant provision for bad debt reversed or recovered for the current period:

Unit: Yuan Currency: RMB

Amount reversed Name or recovered Recovery method Luoyang Crane Factory Co., Ltd. 5,215,000.00 Receivables and creditor s rights transfer

Total 5,215,000.00 /

Note: The opening balance of original book value of receivables due from Luoyang Crane Factory Co., Ltd. was RMB10,430,000.00, for which the opening balance of provision for bad debts by aging analysis method was RMB5,215,000.00. The repayment received from Luoyang Crane Factory Co., Ltd. for the current period was RMB500,000.00, including corresponding provision for bad debts recovered of RMB250,000.00. In December 2016, the Company entered into the Creditor s Rights Transfer Agreement with CLFG, pursuant to which all the remaining creditor s rights of Luoyang Crane Factory Co., Ltd. of RMB9,930,000.00 was transferred to CLFG by the Company at appraised value of RMB9,930,000.00. In the same month, the Company received the consideration paid by CLFG, including corresponding provision for bad debts recovered of RMB4,965,000.00.

(3) Category of other receivables by nature of amount

Unit: Yuan Currency: RMB

Nature of amount	Carrying amount at the end of the period	Carrying amount at the beginning of the period
Performance committed compensation for assets acquisition Security deposit, deposit, reserve Current accounts Proceeds from disposal of property Provisional estimated input tax Total	23,783,372.88 79,974,572.99 53,715,269.90 157,473,215.77	16,385,035.53 55,283,558.44 10,430,000.00 1,659,918.53 83,758,512.50

– I-37 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

5. Other receivables (Continued)

  - _**(4) The top five largest other receivables at the end of the period by the balance collected regarding the party in default:**_

Unit: Yuan Currency: RMB

Name Nature of amount	Closing balance at the end of the period Aging Ratio representing with respect to the total balance of other receivables at the end of the period Balance of provision for bad debts at the end of the period (%)	Closing balance at the end of the period Aging Ratio representing with respect to the total balance of other receivables at the end of the period Balance of provision for bad debts at the end of the period (%)	Closing balance at the end of the period Aging Ratio representing with respect to the total balance of other receivables at the end of the period Balance of provision for bad debts at the end of the period (%)
Puyang Treasury Centralized Payment Center Security Deposit for land acquisition China Luoyang Float Glass (Group) Company Limited Performance committed compensation, rental and utilities International Far Eastern Leasing Co., Ltd. ( ) Security deposit Xili Sub-Branch, Zhengzhou of China Construction Bank Current accounts Taiping & Sinopec Financial Leasing Co., Ltd.* ( ) Security deposit Total /	55,000,000.00 Within 1 year 23,967,434.48 Within 1 year 13,636,363.00 1 to 2 years 10,808,704.00 More than 5 years 10,000,000.00 Within 1 year 113,412,501.48 /	34.93 15.22 8.66 6.86 6.35 72.02	10,808,704.00 10,808,704.00

– I-38 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

6. Inventories

(1) Category of inventories

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period Carrying amount Provision for depreciation Book value	Closing balance at the end of the period Carrying amount Provision for depreciation Book value	Closing balance at the end of the period Carrying amount Provision for depreciation Book value	Opening balance at the beginning of the period Carrying amount Provision for depreciation Book value	Opening balance at the beginning of the period Carrying amount Provision for depreciation Book value	Opening balance at the beginning of the period Carrying amount Provision for depreciation Book value
Raw materials Products in process Commodity inventories Circulation materials Consumable biological assets Outstanding assets completed under construction contracts Total			44,622,522.98 2,700,674.45 85,138,712.30 516,590.53 132,978,500.26	52,967,558.31 3,797,511.02 192,178,496.67 516,590.53 249,460,156.53	506,219.48 53,090,824.10 53,597,043.58	52,461,338.83 3,797,511.02 139,087,672.57 516,590.53 195,863,112.95
	45,997,542.78	1,375,019.80
	2,700,674.45
	117,910,829.68	32,772,117.38
	516,590.53



	167,125,637.44	34,147,137.18

(2) Provision for decreased price of inventories

Unit: Yuan Currency: RMB

Item	Opening balance at the beginning of the period	Increase for the current period Decrease for the current period Provision Others Reversal or write-off Others Closing balance at the end of the period	Increase for the current period Decrease for the current period Provision Others Reversal or write-off Others Closing balance at the end of the period	Increase for the current period Decrease for the current period Provision Others Reversal or write-off Others Closing balance at the end of the period
Raw materials Products in process Commodity inventories Circulation materials Consumable biological assets Outstanding assets completed under construction contracts Total	506,219.48 53,090,824.10 53,597,043.58
		1,375,019.80	506,219.48	1,375,019.80

		20,679,101.89	40,997,808.61	32,772,117.38




		22,054,121.69	41,504,028.09	34,147,137.18

Specific basis for recognizing net realizable value: during the normal course of production, the net realizable value is the amount after deducting the estimated cost of completion, estimated selling expenses and relevant taxes from the estimated selling price of inventories.

– I-39 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

7. Other current assets

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Tax to be verified and deducted Payment of Enterprise Income Tax in advance Total	33,708,996.77 1,165,037.58 34,874,034.35	57,910,038.63 1,068,499.30 58,978,537.93

8. Available-for-sale financial assets

(1) Available-for-sale financial assets

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period Carrying amount Provision for impairment Book value	Closing balance at the end of the period Carrying amount Provision for impairment Book value	Opening balance at the beginning Carrying amount Provision for impairment	Opening balance at the beginning Carrying amount Provision for impairment
Available-for-sale debt instruments: Available-for-sale equity instruments: Measured at cost Total			7,791,217.53 7,791,217.53 7,791,217.53	7,791,217.53 7,791,217.53 7,791,217.53

	7,791,217.53	7,791,217.53
	7,791,217.53	7,791,217.53

	7,791,217.53	7,791,217.53

– I-40 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

8. Available-for-sale financial assets (Continued)

(2) Available-for-sale financial assets measured per cost at the end of the period

Unit: Yuan Currency: RMB

Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*	Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*	Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*	Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*	Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*	Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*	Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*	Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*	Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*	Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*	Carrying amount Provision for impairment Shareholding ratio in the investee Cash dividend for the current period Investee At the beginning of the period Increase for the current period Decrease for the current period At the end of the period At the beginning of the period Increase for the current period Decrease for the current period At the end of the period *(%)*
1. Luoyang Luobo Glass Fibre Co., Ltd.(Note) 2. CLFG Luoyang Jingjiu Glass Products Company Limited_(Note) 3. CLFG New Lighting Company Limited(Note)_ Total	4,000,000.00 1,500,000.00 2,291,217.53 7,791,217.53			4,000,000.00 1,500,000.00 2,291,217.53 7,791,217.53	4,000,000.00 1,500,000.00 2,291,217.53 7,791,217.53			4,000,000.00 1,500,000.00 2,291,217.53 7,791,217.53	35.90 31.08 29.45 /

Note: The Company is of the view that, despite the Company s shareholding in the investees exceeds 20%, since the Company did not assign any management personnel to the investees, or participate in any formulation of the investees financial and operating policies, engage in any significant transactions with the investees, or provide any key technological information to the investees, Thus, the Company is of the view that it has no significant impact on the investees and classified as available-for-sale financial assets.

(3) Change in the impairment of available-for-sale financial assets during the Reporting Period

Unit: Yuan Currency: RMB

	Available-for-	Available-for-
Category of available-for-sale	sale equity	sale debt
financial assets	instruments	instruments	Total
Balance of provision for impairment at the
beginning of the period	7,791,217.53		7,791,217.53
Additions
Decrease
Balance of provision for impairment at the
end of the period	7,791,217.53		7,791,217.53

– I-41 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

9. Long-term receivables

(1) Long-term receivables:

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period Carrying amount Provision for bad debts Book value	Closing balance at the end of the period Carrying amount Provision for bad debts Book value	Opening balance at the beginning of the period Carrying amount Provision for bad debts Book value	Opening balance at the beginning of the period Carrying amount Provision for bad debts Book value	Range of discount rate
Receivables from disposal equity interest in the Industrial Company Including: Unrealized financing income Total			55,000,000.00 -3,272,464.43 51,727,535.57	55,000,000.00 -3,272,464.43 51,727,535.57	6.15% /
	55,000,000.00	55,000,000.00


	55,000,000.00	55,000,000.00

Note: In December 2013, The Company and Luoyang Tianyuan Property Company Limited have entered into the Equity Transfer Contract whereby 100% equity shares of Luoyang Luobo Industrial Co., Ltd. held by the Company were transferred to Tianyuan Property Company Limited at a consideration of RMB122,000,000. The Company had received the transfer price of RMB67,000,000 paid by Tianyuan Property Company Limited. The remaining transfer price of RMB55,000,000 will be paid with physical assets, the Company shall take it as long-term receivables of Tianyuan Property Company Limited subject to the bank s lending rate of 6.15% for the same period, with a term of 34 months for conducting discount. As of 31 December 2016, the long-term receivables have expired and it was expected that Luoyang Tianyuan Property Company Limited will deliver property with equivalent value to the Company in 2017.

10. Investment properties

N/A

– I-42 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

11. Fixed assets

(1) Fixed assets

Unit: Yuan Currency: RMB

				Transportation
Item		Buildings	Machinery	equipment	Others	Total
I. Original book value:
1.	Opening balance at the beginning of the period	266,547,539.08	767,940,819.66	4,121,659.45	1,465,715.59	1,040,075,733.78
2.	Increase for the current period		12,288,909.46		116,768.74	12,405,678.20
	(1) Purchase		717,782.49		116,768.74	834,551.23
	(2) Transferred from construction in progress		11,571,126.97			11,571,126.97
3.	Decrease for the current period		56,984.27			56,984.27
	(1) Disposal or retirement		56,984.27			56,984.27
4.	Closing balance at the end of the period	266,547,539.08	780,172,744.85	4,121,659.45	1,582,484.33	1,052,424,427.71
II. Accumulated depreciation
1.	Opening balance at the beginning of the period	51,709,147.38	288,327,602.07	2,972,713.80	469,585.58	343,479,048.83
2.	Increase for the current period	7,400,273.01	44,603,152.32	176,186.70	281,943.53	52,461,555.56
	(1) Provision	7,400,273.01	44,603,152.32	176,186.70	281,943.53	52,461,555.56
3.	Decrease for the current period		35,056.17			35,056.17
	(1) Disposal or retirement		35,056.17			35,056.17
4.	Closing balance at the end of the period	59,109,420.39	332,895,698.22	3,148,900.50	751,529.11	395,905,548.22
III. Provision for impairment
1.	Opening balance at the beginning of the period		5,074,281.85			5,074,281.85
2.	Increase for the current period		2,472,284.58			2,472,284.58
	(1) Provision		2,472,284.58			2,472,284.58
3.	Decrease for the current period
4.	Closing balance at the end of the period		7,546,566.43			7,546,566.43
IV. Book value
1.	Book value at the end of the period	207,438,118.69	439,730,480.20	972,758.95	830,955.22	648,972,313.06
2.	Book value at the beginning of the period	214,838,391.70	474,538,935.74	1,148,945.65	996,130.01	691,522,403.10

Note: Original value of the fixed assets continued to be used upon full provision for depreciation at the end of the period was RMB195,966,337.18.

– I-43 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

12. Construction in progress

(1) Construction in progress

Unit: Yuan Currency: RMB

Item	Opening balance at the beginning of the period Carrying amount Provision for impairment Book value	Opening balance at the beginning of the period Carrying amount Provision for impairment Book value
Longhai glass production line flue gas denitrification engineering Longhai Air compressor installation engineering Longbo desulfurization and denitrification project Total	3,312,126.40 66,111.41 6,450,584.73 9,828,822.54	3,312,126.40 66,111.41 6,450,584.73 9,828,822.54

13. Intangible Assets

(1) Intangible Assets

Unit: Yuan Currency: RMB

			Non-patent	Trademark
Item	Land use rights	patent right	technology	rights	Software	Total
I. Original book value
1. Opening balance at the beginning of the
period	71,449,612.50			6,000,000.00	435,897.46	77,885,509.96
2. Increase for the current period
3. Decrease for the current period	107,038.39					107,038.39
(1) Disposal	107,038.39					107,038.39
4. Closing balance at the end of the period	71,342,574.11			6,000,000.00	435,897.46	77,778,471.57
II. Accumulated amortization
1. Opening balance at the beginning of the
period	7,443,843.33			5,900,000.00	24,216.53	13,368,059.86
2. Increase for the current period	1,595,119.56			100,000.00	145,299.12	1,840,418.68
(1) Provision	1,595,119.56			100,000.00	145,299.12	1,840,418.68
3. Decrease for the current period	39,179.37					39,179.37
(1) Disposal	39,179.37					39,179.37
4. Closing balance at the end of the period	8,999,783.52			6,000,000.00	169,515.65	15,169,299.17
III. Provision for impairment
IV. Book value
1. Book value at the end of the period	62,342,790.59				266,381.81	62,609,172.40
2. Book value at the beginning of the period	64,005,769.17			100,000.00	411,680.93	64,517,450.10

The proportion of intangible assets created due to the Company s internal R&D in the balance of intangible assets at the end of current period is zero.

– I-44 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

13. Intangible Assets (Continued)

(2) Land use rights for incompletely processed ownership certificate:

Unit: Yuan Currency: RMB

		Reason for incompletely
		processed ownership
Item	Book value	certificate
		Still in the process of
Land of Development Zone	9,415,764.88	application

Other explanation: Land use rights among the Group s intangible assets were all for lands located in the PRC with a remaining use period ranging from 2 ~~8 4~~ 5 years.

14. Goodwill

N/A

15. Long-term deferred expenses

Unit: Yuan Currency: RMB

Item Opening balance at the beginning of the period	Item Opening balance at the beginning of the period	Increase for the current period Amortized amount for the current period	Increase for the current period Amortized amount for the current period	Other decreased amount	Closing balance at the end of the period
Reconstruction of the electrical circuit of the office Far East Leasing Service Fees Expense of Melting furnace Improvement Consultation service charge Total	378,000.00 3,499,095.91 1,118,230.13 4,995,326.04	1,200,000.00 1,200,000.00	108,000.00 1,420,471.68 1,010,340.78 33,333.33 2,572,145.79	107,889.35 107,889.35
					270,000.00
					2,078,624.23

					1,166,666.67

					3,515,290.90

– I-45 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

16. Deferred tax assets/deferred tax liabilities

(1) Deferred tax assets not being offset

Unit: Yuan Currency: RMB

Closing balance at the end of the period Opening balance at the beginning of the period Item Deductible temporary differences Deferred tax assets Deductible temporary differences Deferred tax assets	Closing balance at the end of the period Opening balance at the beginning of the period Item Deductible temporary differences Deferred tax assets Deductible temporary differences Deferred tax assets	Closing balance at the end of the period Opening balance at the beginning of the period Item Deductible temporary differences Deferred tax assets Deductible temporary differences Deferred tax assets	Closing balance at the end of the period Opening balance at the beginning of the period Item Deductible temporary differences Deferred tax assets Deductible temporary differences Deferred tax assets	Closing balance at the end of the period Opening balance at the beginning of the period Item Deductible temporary differences Deferred tax assets Deductible temporary differences Deferred tax assets
Provision for impairment of assets Deferred income Total		2,467,726.50 1,873,495.80 4,341,222.30	23,506,872.88 675,000.00 24,181,872.88	3,922,624.33 168,750.00 4,091,374.33
	16,451,510.01
	12,489,972.00

	28,941,482.01

(2) Breakdown of unrecognized deferred tax assets

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Deductible temporary differences Deductible losses Total	137,500,191.85 544,435,331.97 681,935,523.82	151,480,885.22 482,840,248.91 634,321,134.13

Note: Because it is uncertain whether sufficient taxable incomes can be obtained in the future, they are not recognized as deferred tax assets.

– I-46 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

16. Deferred tax assets/deferred tax liabilities (Continued)

(3) Deductible losses not yet recognized as deferred tax assets will expire in the following years indicated

Unit: Yuan Currency: RMB

Year	Amount at the end of the period	Amount at the beginning of the period Note
2016 2017 2018 2019 2020 2021 Total	10,589,070.12 36,614,485.92 21,894,490.75 372,641,647.21 102,695,637.97 544,435,331.97	11,523,112.57 10,589,070.12 36,614,485.92 21,894,490.75 402,219,089.55 482,840,248.91 /

17. Short-term loans

(1) Category of short-term loans

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Pledged loan Mortgage loan Guaranty loan Credit loan Total	20,000,000.00 20,000,000.00	50,000,000.00 17,930,000.00 67,930,000.00

Explanation of the category of short-term loans:

Note: On 31 December 2016, annual interest rate of short-term borrowing was 4.785%.

– I-47 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

18. Notes payable

Unit: Yuan Currency: RMB

Category	Closing balance at the end of the period	Opening balance at the beginning of the period
Bank acceptance Total	90,000,000.00 90,000,000.00	110,200,000.00 110,200,000.00

19. Accounts payable

(1) Accounts payable are shown as follows

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Within 1 year (including 1 year) Over 1 year Total	17,853,268.60 28,520,633.60 46,373,902.20	17,619,403.52 62,675,739.80 80,295,143.32

(2) Important accounts payable with the age over one year

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period Reasons for no repayment or no transfer
Anlu City Mingfa Industry & Trade Co., Ltd. Total	3,300,000.00 Unsettled 3,300,000.00 /

– I-48 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

20. Payments received in advance

(1) Payments received in advance are shown as follows

Unit: Yuan Currency: RMB

Item Closing balance at the end of the period	Item Closing balance at the end of the period	Opening balance at the beginning of the period
Within 1 year (including 1 year) Over 1 year Total	5,354,722.46 9,036,932.04 14,391,654.50	5,262,754.37 14,870,173.42 20,132,927.79

(2) Important payments received in advance with account receivable age above one year

Unit: Yuan Currency: RMB

Item Closing balance at the end of the period Reasons for no repayment or no transfer	Item Closing balance at the end of the period Reasons for no repayment or no transfer
Anhui Bengbu Huayi Conductive Film Glass Co., Ltd. Total	5,149,328.80 Goods undelivered 5,149,328.80 /

– I-49 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

21. Staff remuneration payables

(1) Staff remuneration payables are shown as follows:

Unit: Yuan Currency: RMB

Item	Opening balance at the beginning of the period	Increase for the current period	Decrease for the current period	Closing balance at the end of the period
I. Short-term remuneration II. A fter-service welfare defined provision plan III. Termination benefits IV. O ther benefits due within one year Total	25,950,868.95 340,373.94 26,291,242.89
		59,107,174.94	63,015,045.94	22,042,997.95
		15,117,944.59	11,757,346.53	3,700,972.00
		9,180,471.78	9,180,471.78


		83,405,591.31	83,952,864.25	25,743,969.95

(2) Short-term remuneration is shown as follows:

Unit: Yuan Currency: RMB

Item	Opening balance at the beginning of the period	Increase for the current period	Decrease for the current period	Closing balance at the end of the period
I. Salary, bonus, allowance and subsidy II. Staff s welfare III. Social insurance premium Including: Medical insurance Labor injury insurance Maternity insurance IV. Housing Provident fund V. Labor union expenses and employee education expenses VI. Short-period paid leave VII. Short-term profit sharing plan Total	9,378,333.05 1,334,739.89 1,208,085.52 73,636.58 53,017.79 7,466,456.43 7,771,339.58 25,950,868.95
		47,153,598.08	50,122,396.33	6,409,534.80
		4,058,879.41	4,058,879.41
		3,944,111.84	4,381,033.14	897,818.59
		3,346,426.72	3,790,136.44	764,375.80
		373,970.81	368,201.18	79,406.21
		223,714.31	222,695.52	54,036.58
		3,462,206.65	3,957,154.05	6,971,509.03
		488,378.96	495,583.01	7,764,135.53



		59,107,174.94	63,015,045.94	22,042,997.95

– I-50 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

21. Staff remuneration payables (Continued)

(3) Defined provision plan is shown as follows

Unit: Yuan Currency: RMB

Item	Opening balance at the beginning of the period	Increase for the current period	Decrease for the current period	Closing balance at the end of the period
1. Basic pension insurance 2. Unemployment insurance 3. Enterprise annuity Total	66,771.50 273,602.44 340,373.94
		14,476,656.89	11,025,548.41	3,517,879.98
		641,287.70	731,798.12	183,092.02


		15,117,944.59	11,757,346.53	3,700,972.00

22. Tax payable

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Value-added tax Business tax Enterprise income tax Individual income tax City maintenance tax Property tax Land-use tax Education surcharges Other tax and charges Total	2,959,777.00 75,649.29 9,106,452.20 154,688.43 294,378.96 1,238,632.92 1,278,844.52 207,513.24 65,130.89 15,381,067.45	1,054,652.51 134,257.61 9,133,823.53 216,587.00 261,316.84 1,600,260.25 1,393,474.23 1,145,855.33 20,870.05 14,961,097.35

– I-51 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

23. Interest payable

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Interest on long-term loan with periodic payments of interest and return of principal at maturity Interests payable for short-term borrowings Total	684,626.58 29,241.67 713,868.25

24. Dividend payable

N/A

25. Other payables

(1) Other payables by nature of amounts are shown as follows

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Announcement and intermediary fee Current accounts Amount for equity purchase Amount for engineering and equipment Accrued expense Total	5,617,787.84 36,961,134.20 42,578,922.04	25,550,840.93 46,441,902.17 91,244,227.75 878,145.68 2,471,909.52 166,587,026.05

– I-52 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

26. Non-current liabilities due within one year

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Long-term loans due within one year Bonds payable due within one year Long-term payable due within one year Total	471,337,062.91 471,337,062.91	81,097,651.66 81,097,651.66

27. Long-term loans

(1) Category of Long-term loans

Unit: Yuan Currency: RMB

Item	Closing balance at the end of the period	Opening balance at the beginning of the period
Pledged loan Mortgage loan Guaranty loan Credit loan Total	86,889,567.92 946,806.31 87,836,374.23	58,919,024.02 400,251,110.45 459,170,134.47

– I-53 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

27. Long-term loans (Continued)

(1) Category of Long-term loans (Continued)

Explanation on the category of long-term loans:

Note: 1.

In 2010, the Company concluded the debt restructuring agreements of interest free and delayed repayment of principal, respectively, with certain financial institutions, i.e. Bank of Communication Luoyang Branch, Bank of China Luoyang Xigong Sub-branch, China Construction Bank Luoyang Branch, Bank of Luoyang Kaidong Sub-branch and Industrial & Commercial Bank of China Luoyang Branch, under which interests are exempted from the period of 1 February 2010 to 31 January 2017 and repayment of principal can be delayed after the first two years. The principals will be paid in the following five years according to the agreed proportion. As of 31 December 2016, the balance of the interest-free long-term loans was RMB398,969,600.00.

With respect to the mortgaged loan: (1) in June 2015, Longhai Company used part of its production equipment (with the original book value of RMB54,437,104.51) to process the after-sale lease-back financing lease business with Far Eastern Leasing Company for a financing amount of RMB50,000,000 for a lease term of 36 months. CLFG and Triumph Technology Group Company provided guarantee for joint and several liability with respect to the foregoing financing leasing matter. Longhai Company believed that pursuant to the substance-over-form principle, for such transaction in reality, the Lessor (International Far Eastern Leasing Co., Ltd.) provided loan to the Lessee (Longhai Company) by taking the leased article as the mortgaged article. Under such transaction, the nominal selling price of the underlying asset (the leased article) of RMB50,000,000 was handled as long-term loan by Longhai Company and the underlying asset (the leased article) was book in at its original book value with provision made. As of 31 December 2016, the balance of such long-term loan was RMB25,896,799.15 of which, the long-term loan due within one year amounted to RMB16,998,580.25. (2) in June 2015, Longhai Company used part of its production equipment (with the original book value of RMB88,788,355.07) as collateral to obtain a 3-year loan of RMB63,636,363.00 in total, at annual interest rate of 6.44% issued by Bank of Shanghai, Pudong Branch, as entrusted by Far Eastern Leasing Company. As of 31 December 2016, the balance of such long-term loan was RMB32,981,507.38 of which, the long-term loan due within one year amounted to RMB21,656,826.36. (3) In December 2016, Bengbu Company conducted its sale and leaseback financial leasing business with part of its production equipment (with original book value of RMB120,372,692.36) with Taiping & Sinopec Financial Leasing Co., Ltd.* (

) for financing of RMB100,000,000.00 with a term of 3 years. Triumph Technology Group Company provided joint-liability guarantee for the foregoing financing leasing matter. Bengbu Company believed that, based on the principle of substance over form , the transaction actually was the Lessor (Taiping & Sinopec Financial Leasing Co., Ltd.* (

)) provided loans to the Lessee (Bengbu Company) with the leased property as the collateral. Under such transaction, the nominal selling price of the underlying asset (the leased property) of RMB100,000,000.00 was accounted as long-term loan by Bengbu Company and the underlying asset (the leased property) was accounted at its original book value with provision for depreciation. As of 31 December 2016, the balance of such long-term loan was RMB100,000,000.00, of which, the long-term loan due within one year amounted to RMB33,333,332.00.

28. Estimated liability

N/A

– I-54 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

29. Deferred income

Deferred income

Unit: Yuan Currency: RMB

Item Opening balance at the beginning of the period	Item Opening balance at the beginning of the period	Increase for the current period	Decrease for the current period	Closing balance at the end of the period Reasons of formation
Government grants Total	9,024,861.99 9,024,861.99			19,290,781.82 19,290,781.82 /
		15,602,667.74	5,336,747.91

		15,602,667.74	5,336,747.91

Projects involving government subsidy:

Unit: Yuan Currency: RMB

Projects with liabilities	Opening balance at the beginning of the period	New additional subsidy for the current period	Amount recorded in non-operating profits for the current period	Closing balance at the end of the period Related to assets/ related to income
Fiscal subsidy for ultra-thin and ultra-white glass production line Land-use subsidy for ultra-thin and ultra-white glass production line project 0.45mm E-glass technology research and application projects Special fund for ultra-thin production line Subsidy for stabilizing employment from the Social Security Bureau Special fund for innovative provincial construction of Anhui province of 2016 Special municipal supporting funds for major provincial technology projects of 2016 Technology projects construction funds Total	3,847,500.00 2,359,024.38 2,143,337.61 675,000.00 9,024,861.99		1,215,000.00 53,920.56 280,131.60 75,000.00 2,482,648.98 1,230,046.77 5,336,747.91	2,632,500.00 Related to assets 2,305,103.82 Related to assets 1,863,206.01 Related to income 600,000.00 Related to assets 70,018.76 Related to income 1,050,000.00 Related to income 2,000,000.00 Related to income 8,769,953.23 Related to income 19,290,781.82 /




		2,552,667.74
		1,050,000.00
		2,000,000.00
		10,000,000.00

		15,602,667.74

– I-55 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

30. Share capital

Unit: Yuan Currency: RMB

	Opening balance at the beginning of the period	New shares	Sub-total	Closing balance at the end of the period
Total number of shares	515,018,242.00	11,748,633.00	11,748,633.00
				526,766,875.00

Others:

Note: According to resolution made at the 2015 First Extraordinary General Meeting convened on 25 August 2015 and the Reply for Approval of the Issuance of Shares by Luoyang Glass Company Limited to China Luoyang Float Glass (Group) Company Limited for Asset Acquisition and Raising of Supporting Funds Proceeds (ZJXK [2015] No. 2813) issued by China Securities Regulatory Commission on 4 December 2015, the Company issued 11,748,633 RMB denominated ordinary shares to specific investors at a par value of RMB1.00 per share on 26 January 2016.

31. Capital reserve

Unit: Yuan Currency: RMB

Item	Opening balance at the beginning of the period	Increase for the current period	Closing balance at the end of the period
Capital premium (share capital premium) Other capital reserves Total	1,179,144,842.05 72,300,473.27 1,251,445,315.32
		221,659,724.18	1,400,804,566.23
			72,300,473.27

		221,659,724.18	1,473,105,039.50

Others (including explanations on increase/decrease in the amount of the current period and the reasons):

Note: 1. Capital reserves increased by RMB197,876,351.30 by issuance of 11,748,633 RMB-denominated ordinary shares to specific investors at a fixed premium price in January 2016.
Pursuant to the performance compensation commitment to Bengbu Company issued by CLFG in November 2015, since the performance of Bengbu Company in 2016 has not reached its committed amount, RMB23,783,372.88 of performance committed compensation payable by CLFG to the Company included in the capital reserve.

– I-56 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

32. Surplus reserve

Unit: Yuan Currency: RMB

Item	Opening balance at the beginning of the period	Closing balance at the end of the period
Statutory surplus reserve Total	51,365,509.04 51,365,509.04
		51,365,509.04

		51,365,509.04

33. Undistributed profit

Unit: Yuan Currency: RMB

Item	Current period	Previous period
Undistributed profit at the end of the previous year before adjustment Total undistributed profits at the beginning of the adjustment period (increase expressed with +, and decrease expressed with -) Undistributed profit at the beginning of the period after adjustment Add: N et profit attributable to owners of parent company during the period Undistributed profit at the end of the period	-1,539,484,070.36 -1,539,484,070.36 11,516,063.78 -1,527,968,006.58	-1,359,891,297.28 5,162,347.66 -1,354,728,949.62 -184,755,120.74 -1,539,484,070.36

34. Operating income and operating cost

Unit: Yuan Currency: RMB

Item	Amount for current period Income Cost	Amount for current period Income Cost	Amount for previous period Income Cost	Amount for previous period Income Cost
Principal operations Other operations Total		337,501,702.46 6,207,860.71 343,709,563.17	611,606,292.33 50,550,342.80 662,156,635.13	596,718,897.17 36,934,673.80 633,653,570.97
	380,091,217.36
	12,004,408.78

	392,095,626.14

– I-57 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

35. Tax and surcharges

Unit: Yuan Currency: RMB

Item	Amount for current period	Amount for previous period
Business tax City maintenance tax Education surcharges Resourse tax Property tax Land-use tax Others Total	5,741.68 1,692,633.65 275,385.63 1,382,796.18 1,710,769.63 164,809.72 5,232,136.49	187,976.80 1,039,059.56 979,727.01 1,883,220.51 4,138.40 4,094,122.28

Others:

Note: Pursuant to the Regulations for the Accounting Treatment of VAT (Cai Kuai [2016] No. 22) ( ( [2016]22 )), the relevant taxes such as property tax, land use tax, vehicle use tax and stamp duty used for calculation of administrative expenses occurred subsequent to 1 May 2016 were adjusted to be presented as items under the tax and surcharges .

36. Selling expenses

Unit: Yuan Currency: RMB

Item	Amount for current period	Amount for previous period
Staff s remuneration Depreciation expenses Transportation costs Handling charges Material consumption Other selling expenses Total	5,255,815.70 237,707.59 203,121.71 624,331.64 397,595.15 763,735.16 7,482,306.95	8,937,893.09 1,287,186.07 11,420,349.45 746,432.22 1,091,331.99 5,685,776.45 29,168,969.27

Note: The main reason for changes in selling expenses is that, expenses of transferred-out companies were no longer included for the current period after the completion of assets swap in December 2015.

– I-58 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

37. Administrative expenses

Unit: Yuan Currency: RMB

Item	Amount for current period	Amount for previous period
Staff s remuneration Depreciation of fixed assets Amortization of intangible assets Intermediary engagement fees Research and development fees Taxes Other expenses Total	37,479,187.08 2,612,502.24 1,840,418.68 7,864,025.28 21,276,277.57 2,282,801.22 13,670,735.85 87,025,947.92	41,578,920.35 17,415,326.30 4,396,166.82 19,774,656.06 14,218,171.78 8,848,342.78 15,938,523.48 122,170,107.57

Note: The main reason for changes in administrative expenses is that, expenses of transferred-out companies were no longer included for the current period after the completion of assets swap in December 2015.

38. Financial expenses

Unit: Yuan Currency: RMB

Item	Amount for current period	Amount for previous period
Interest expense Less: Interest income Exchange loss Less: Exchange income Handling charges (interests of discounted bill) Other expenses Total	9,207,506.10 -3,669,695.12 148,153.54 -34,209.89 1,091,289.81 1,690,891.76 8,433,936.20	6,697,222.45 -5,046,109.90 119,978.04 -246,238.32 5,952,063.36 1,189,107.47 8,666,023.10

– I-59 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

39. Assets impairment losses

Unit: Yuan Currency: RMB

Item	Amount for current period	Amount for previous period
I. Loss on bad debts II. Loss on inventory depreciation III. Impairment losses on available-for-sale financial assets IV. Held-to-maturity investment impairment losses V. Impairment losses on long-term equity investment VI. Impairment losses on investment real estate VII. Impairment losses on fixed assets VIII. Impairment losses on engineering materials IX. Impairment losses on construction in progress X. Impairment losses on productive biological assets XI. Impairment losses on oil and gas assets XII. Impairment losses on intangible assets XIII. Impairment losses on goodwill XIV. Others Total	-4,058,434.40 22,054,121.69 2,472,284.58 20,467,971.87	10,272,406.73 37,012,050.88 1,513,503.89 48,797,961.50

40. Non-operating income Non-operating income

Unit: Yuan Currency: RMB

Item	Amount for current period	Amount for previous period Amount recognized as non-recurring gain or loss of the current period	Amount for previous period Amount recognized as non-recurring gain or loss of the current period
Total gain on disposal of non-current assets Including: Gain on disposal of fixed assets Gains from disposal of intangible assets Income from debt restructuring Gains from non-monetary assets exchange Donations received Government subsidy Other gains Total	254,968.93 95.03 254,873.90 3,130,969.27 102,455,677.91 36,991.83 105,878,607.94	459,490.08 459,490.08 88,665.10 4,567,408.16 374,561.26 5,490,124.60
			254,968.93
			95.03
			254,873.90
			3,130,969.27


			102,455,677.91
			36,991.83

			105,878,607.94

– I-60 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

40. Non-operating income (Continued)

Government subsidy recognized as gain or loss of the current period

Unit: Yuan Currency: RMB

Subsidy Item	Amount for current period	Amount for previous period Related to assets/income
Supporting fund for the management committee of industrial cluster region in Puyang county Special guiding fund for new materials allocated by the Bureau of Finance of Longzihu District of Bengbu Subsidy issued by Treasury Payment Center of Yanshi (award funds for supporting enterprise-development) Fund for supporting enterprises issued by the Bureau of Finance of Longzihu District of Bengbu Subsidy for supporting enterprises and stabilizing employment issued by Social Security Funds Collecting Center of Bengbu Funds for construction of technology projects in Comprehensive Experimental Zone for Independent Innovation of Bengbu Fiscal subsidy for ultra-thin and ultra-white glass production line Subsidy for stabilizing enterprise employment allocated by Social Security Center of Luoyang Special subsidy for research and development of application technology Special fund for ultra-thin production line Land-use subsidy for ultra-thin and ultra-white glass production line project Apprentice training Subside for college students in practice base Training subsidy issued by Human Resources and Social Security Bureau of Bengbu Patent subsidy issued by Science and Technology Bureau of Yuhui District Funds for Book House Construction Project issued by Federation of Trade Unions of Bengbu 2015 Special fund for independent innovation issued by Science and Technology Bureau of Bengbu 2014 Annual Award for Little Giant Standard Enterprise of Luoyang Award and subsidy for atmosphere prevention and control industry and enterprise Others Total	66,474,750.00 17,000,000.00 10,322,700.00 2,500,000.00 2,482,648.98 1,230,046.77 1,215,000.00 540,880.00 280,131.60 75,000.00 53,920.56 280,600.00 102,455,677.91	Related to earnings Related to earnings 340,000.00 Related to earnings Related to earnings 255,094.00 Related to earnings Related to earnings 1,215,000.00 Related to assets 703,362.00 Related to earnings 280,131.60 Related to earnings 75,000.00 Related to assets 53,920.56 Related to assets 104,400.00 Related to earnings 19,500.00 Related to earnings 48,000.00 Related to earnings 3,000.00 Related to earnings 130,000.00 Related to earnings 800,000.00 Related to earnings 540,000.00 Related to earnings Related to earnings 4,567,408.16 /

– I-61 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

41. Non-operating expenses

Unit: Yuan Currency: RMB

Item	2016	2015	Amount recognized as non-recurring gain or loss of the current period
Total loss on disposal of non-current assets Including: Loss on disposal of fixed assets Losses on scrapping of assets Indemnities, liquidated damages and penalties Other expenses Total	15,875.60 15,875.60 4,431,441.73 4,558.25 4,451,875.58	14,470.37 14,470.37 25,514.21 4,039,106.78 1,948,005.29 6,027,096.65
			15,875.60
			15,875.60

			4,431,441.73
			4,558.25

			4,451,875.58

42. Income tax expenses

(1) The table for income tax expenses

Unit: Yuan Currency: RMB

Item	2016	2015
Income tax expenses for the current period Deferred income tax expenses Total	9,904,280.09 -249,847.97 9,654,432.12	9,493,658.32 402,356.93 9,896,015.25

– I-62 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

42. Income tax expenses (Continued)

(2) Reconciliation between accounting profit and income tax expenses:

Unit: Yuan Currency: RMB

Item	Amount for 2016
Total profit	21,170,495.90
Income tax expenses calculated at statutory/applicable tax rates	5,292,623.98
Effect of different tax rates applicable to subsidiaries	-5,662,799.08
Effect of costs, expenses and losses not deductible for tax purposes	3,152,807.74
Effect of utilization of deductible losses of unrecognized deferred income tax
assets in previous periods	-12,647,401.98
Effect of current deductible temporary differences or deductible loss of
unrecognized deferred income tax assets	22,178,736.16
Deduction of aggregate R&D expenses	-2,659,534.70
Income tax expenses	9,654,432.12

43. Consolidated Cash Flow Statement

(1) Other cash received from activities relating to operation

Unit: Yuan Currency: RMB

Item	2016	2015
Government grants Interest income Other current accounts Total	110,292,930.00 494,397.36 4,390,423.87 115,177,751.23	2,688,262.00 1,838,248.03 15,120,563.19 19,647,073.22

(2) Other cash paid for activities relating to operation:

Unit: Yuan Currency: RMB

Item	2016	2015
Including: Consultation and audit, assessment, legal fees, bulletin fees Travel expense Other current accounts and expenses Total	11,749,333.25 1,095,394.87 10,679,558.24 23,524,286.36	5,883,634.25 1,646,873.10 23,059,771.05 30,590,278.40

– I-63 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

43. Consolidated Cash Flow Statement (Continued)

(3) Other cash received from activities related to investment

Unit: Yuan Currency: RMB

Item	2016	2015
Transfer of the creditor s rights Funds for Longhao 650t-level environmental protection project Total	9,930,000.00 9,930,000.00	86,430,259.30 10,000,000.00 96,430,259.30

(4) Other cash paid for activities related to investment

Unit: Yuan Currency: RMB

Item	2016	2015
Intermediary fees for asset restructuring Amount for equity purchase Net cash for disposal of subsidiaries Total	14,263,037.36 90,729,715.31 104,992,752.67	662,305.05 662,305.05

(5) Other cash received from activities relating to financing activities

Unit: Yuan Currency: RMB

Item	2016	2015
Bill discount Bill deposit Triumph Technology Group Company CLFG Bengbu China National Building Materials Photovoltaic Materials Company Limited CNBM (Hefei) New Energy Company Limited China Building Materials International Engineering Company Limited Other current accounts Total	71,042,132.42 15,000,000.00 49,000,000.00 184,276,901.60 15,000,000.00 6,000,000.00 340,319,034.02	265,423,111.66 282,655,583.90 8,000,000.00 10,000,000.00 5,850,000.00 571,928,695.56

– I-64 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

43. Consolidated Cash Flow Statement (Continued)

(6) Other cash paid for activities relating to financing activities

Unit: Yuan Currency: RMB

Item	2016	2015
Repayment of matured bill Triumph Technology Group Company CLFG CNBM (Hefei) New Energy Company Limited* Bengbu China National Building Materials Photovoltaic Materials Company Limited Bengbu Glass Industry Design Institute Financing security deposits Bill deposit Far East service fees and security deposit Other current accounts Total	105,000,000.00 71,200,000.00 115,600,000.00 6,162,400.00 15,440,437.50 6,354,402.59 10,000,000.00 880,945.68 330,638,185.77	255,000,000.00 265,455,583.90 23,667,739.36 15,000,000.00 12,153,463.00 5,850,000.00 577,126,786.26

– I-65 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

44. Supplementary information of cash flow statement

(1) Supplementary information of cash flow statement

Unit: Yuan Currency: RMB

Supplementary information	2016	2015
1. Net profit adjusted to cash flow of operating activities: Net profit Add: Provision for impairment of assets De preciation of fixed assets, depletion of oil and gas assets, depreciation of productive biological assets Amortization of intangible assets Amortization of long-term deferred expenses Lo sses from disposal of fixed assets, intangible assets and other long-term assets ( - for gains) Losses on scrapping of fixed assets ( - for gains) Finance expenses ( - for gains) Investment losses ( - for gains) De crease in deferred income tax assets ( - for increase) Decrease in inventories ( - for increase) De crease in operating receivables ( - for increase) Increase in operating payables ( - for decrease) Net cash flow from operating activities 2. Si gnificant investing and financing activities that do not involve cash receipts and payment: 3. Net changes in cash and cash equivalents: Closing balance of cash Less: Opening balance of cash Net increase in cash and cash equivalents	11,516,063.78 20,467,971.87 52,461,555.56 1,840,418.68 2,572,145.79 -239,093.33 7,016,163.30 -249,847.97 41,175,096.14 -44,018,592.18 -61,988,959.69 30,552,921.95 112,528,516.53 42,342,860.91 70,185,655.62	-194,827,106.86 48,797,961.50 101,779,659.95 4,352,751.12 801,520.48 -445,019.71 25,514.21 9,618,708.15 402,356.93 -21,535,533.46 -84,014,815.23 4,006,438.22 -131,037,564.70 42,342,860.91 37,777,890.19 4,564,970.72

Note: Banker s acceptance bill of non-cash commodity sale summed up RMB283,285,854.17.

(2) Net cash acquired from subsidiaries for the current period

N/A

(3) Net gains on disposal of subsidiaries for the current period

N/A

– I-66 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

44. Supplementary information of cash flow statement (Continued)

(4) Constitution of cash and cash equivalents

Unit: Yuan Currency: RMB

	Closing balance	Opening balance
	at the end of	at the beginning of
Item	the period	the period
1. Cash	112,528,516.53	42,342,860.91
Including: Cash on hand	95,219.74	43,940.18
Bank deposit available for
payment at any time	112,433,296.79	42,298,920.73
2. Cash equivalents
3. Cash and cash equivalents at the end of period	112,528,516.53	42,342,860.91

45. Assets under restricted ownership or use right

Unit: Yuan Currency: RMB

Item	Book value at the end of the period Reasons for restriction
Monetary funds Fixed assets Total	45,000,000.00 Se curity for notes 174,093,824.18 Mortgage loan 219,093,824.18 /

– I-67 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

V. Notes to Significant Items of the Consolidated Financial Statements (Continued)

46. Monetary item in foreign currency

(1) Monetary item in foreign currency:

Unit: Yuan

	Balance of		Balance of
	foreign currency		RMB converted
	at the end of		at the end of
Item	the period	Exchange rate	the period
Monetary funds			6,647.27
Including: USD	33.80	6.9370	234.47
EURO	0.60	7.3000	4.38
HKD	7,164.17	0.8945	6,408.42
Other payables			4,508,123.03
Including: HKD	5,039,768.18	0.8945	4,508,123.03
Long-term loan			1,325,530.61
Including: USD
EURO	181,410.55	7.3068	1,325,530.61

(2) Details of the overseas entities for operations, including the principal place of business, functional currency and the basis of the decision and the reasons for the changes in the functional currency for major overseas entities for operations

N/A

VI. Change in the Scope of Merger

N/A

VII. Interests in other subsidiaries

1. Interests in subsidiaries

(1) The constitution of the Group

	Location of	Place of	Nature of	Shareholding	ratio (%)
Name of subsidiaries	principal business	Registration	business	Direct	Indirect	Obtained by
CLFG Longmen Glass Company Limited	Yanshi City	Yanshi City	Producing and selling	100		investment
CLFG Longhai Electronic Glass Co., Ltd.	Yanshi City	Yanshi City	Producing and selling	100		investment
Luoyang Luobo Furuida Commerce Co., Ltd.	Luoyang City	Luoyang City	Trading	100		investment
Bengbu CNBM Information Display	Bengbu City	Bengbu City	Producing and selling	100		bu siness combination
Material Co., Ltd.						under common
						control

– I-68 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

VIII. Risks Relating Financial Instruments

1. Financial risks

The business of the Group involves various financial risks: market risk (inclusive of foreign exchange risk and interest rate risk), credit risk and liquidity risk. The overall risk management procedure of the Group focus on unpredictable factors in financial market, and aims to seek methods to minimize potential negative effects that will affect the financial performance of the Group. Such kinds of risks still are limited by following financial management policies and practice of the Group.

1.1 Market risk

1.1.1 Foreign exchange risk

The exchange risk of the Group mainly comes from the account receivable, bank deposit and loan out of the range of recording currency. The main currencies that incur risks include U.S. dollar, Euro and HK dollar.

There have been very little foreign exchange transactions in 2016 by the Group. Therefore, the management of the Company anticipates there is no commercial transaction in the future that will incur major foreign exchange risks.

1.1.2 Interest rate risk

The interest rate risk of the Group mainly comes from bank and otherwise loan and bank deposit. Since most expenses and operating cash flow of the Group is not hugely relevant to the changes in market interest rates, fixed interest bank loan will not have sensitive reaction with the changes in market interest rates. The Group had never hedged potentially floating rate with any financial instrument before.

The Group s risk of changes in fair value of financial instruments resulted from the changes in interest rates was mainly associated with floating-rate bank loans, for which the Group aims to maintain those floating rates to eliminate fair value risks arising from changes in interest rate.

1.2 Credit risk

1.2.1 Account receivable

The credit risk of the Group mainly comes from the account receivable. The Group has made credit rating about all clients who request credit amount exceeding a certain amount. Such account receivable generally will become due for payment within 30 days from the date of billing. The debtor must pay off all unpaid balance before getting granted with other credits.

The credit risk that the Group faces will be mainly affected by individual characteristics of clients. The industry that its clients engage in and bad debt risk of the state will slightly affect credit risk. Therefore, the concentration of material credit risk is mainly due to the large account receivable of the Group payable by individual client. As of the balance sheet date, the account receivable of the Group payable by the top five clients has accounted for 54.46% of the total amount of account receivable of the Group (without deducting bad debt reserve).

– I-69 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

VIII. Risks Relating Financial Instruments (Continued)

1. Financial risks (Continued)

1.2 Credit risk (Continued)

1.2.2 Bank deposits

The Group reduces deposit risk by depositing in banking institutions with high credit ratings. Due to the high credit ratings of these banks, the management does not expect any risk of the banks being unable to fulfill the commitment.

1.3 Liquidity risk

Within the Group, each subsidiary is responsible for its own cash flow forecast. Based on the summary of the cash flow forecast of each subsidiary, the company s finance department should keep continuous monitoring of the short-term and long-term funding needs at the Group level in order to ensure that it maintains cash and cash equivalents of normal operations. Meanwhile, it should have access to the controlling shareholder and actual controller commitment to provide financial assistance to meet short-term and long-term funding needs. The management of the Group is responsible to monitor the usage of borrowings and ensures compliance with loan agreements.

Financial assets and financial liabilities held by the Group is analyzed dependent on maturity date of the undiscounted remaining contractual obligations:

Item	Within 1 year	1 to 2 years	2 to 3 years	Total
Monetary funds	157,528,516.53			157,528,516.53
Bills receivable	45,986,571.00			45,986,571.00
Accounts receivable	156,466,612.01			156,466,612.01
Other receivables	157,473,215.77			157,473,215.77
Long-term receivables	55,000,000.00			55,000,000.00
Total financial assets	572,454,915.31			572,454,915.31
Short-term loans	20,000,000.00			20,000,000.00
Bills payable	90,000,000.00			90,000,000.00
Accounts payable	46,373,902.20			46,373,902.20
Other payables	42,578,922.04			42,578,922.04
Other non-current liabilities due within one year	471,337,062.91			471,337,062.91
Long-term loan		53,934,956.22	33,901,418.01	87,836,374.23
Total financial liability	670,289,887.15	53,934,956.22	33,901,418.01	758,126,261.38

– I-70 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

IX. Fair Value

According to the input values which are significant to the overall in a fair value measurement, the fair value hierarchy could be divided into:

Level one: The (unadjusted) quoted prices in active markets for identical assets or liabilities.

Level two: Directly (e.g. taken from the prices) or indirectly (e.g. based on the current price projections) observable input values for the assets or liabilities other than the market quotes in the level one.

Level three: The (unobservable) input values for the assets or liabilities as determined by the variables other than observable market data.

As at 31 December 2016, the Group did not have any financial instruments that are accounted for by fair value measurements. For the year ended 31 December 2016, there were not any significant transfers between level one and level two financial instruments.

X. Related Party and Related Party Transactions

1. Parent company

Unit: Yuan Currency: RMB

Name of	Registered		Registered	Equity interest	Voting shares
Parent Company	address	Nature of business	capital	in the Company	in the Company
				(%)	(%)
China Luoyang Float Glass	Luoyang China	Production of glass, related raw materials	1,286,740,000.00	19.94	19.94
(Group) Company Limited		and complete sets of equipment

2. Subsidiaries

For details, please refer to VII. Interests in other subsidiaries .

– I-71 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

3. Other related parties

Relationship with the Company

Name of other related parties	Relationship with the Company
Triumph Technology Group Company	Other
CLFG (Beijing) International Engineering Co., Ltd.	Wholly owned subsidiary of the parent company
CLFG Luoyang Jingrun Coating Glass Co., Ltd.	Controlled subsidiary of the parent company
Luoyang New Jingrun Engineering Glass Co., Ltd.	Controlled subsidiary of the parent company
CLFG Luoyang Glass Engineering Design And Research Co., Ltd.	Wholly owned subsidiary of the parent company
CLFG Warehousing & Logistics Company Limited	Wholly owned subsidiary of the parent company
Luoyang Luobo Glass Fibre Co., Ltd.	Controlled subsidiary of the parent company
China Triumph International Engineering Co., Ltd.	Brother company of the Group
Anhui Bengbu Huayi Conductive Film Glass Co., Ltd.	Brother company of the Group
Henan Zhonglian Glass Co., Ltd.	Brother company of the Group
Bengbu Glass Industry Design Institute	Brother company of the Group
Triumph Science & Technology Co., Ltd	Brother company of the Group
CTIEC Shenzhen Scieno-tech Engineering Company Limited	Brother company of the Group
Triumph Bengbu Engineering and Technology Company Limited	Brother company of the Group
Jiangsu CTIEC Environmental Protection Research Institute Co., Ltd.	Brother company of the Group
Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery	Brother company of the Group
Company Limited
Anhui Huaguang Photoelectric Materials Technology Group Co., Ltd.	Brother company of the Group
Bengbu Chemical Engineering Machinery Making Co., Ltd.	Brother company of the Group
Bengbu China National Building Materials Photovoltaic Materials	Brother company of the Group
Company Limited
CNBM (Hefei) New Energy Company Limited*	Controlled subsidiary of the parent company
Dengfeng CLFG Silicon Co. Ltd.	Controlled subsidiary of the parent company
CNBM Triumph Robotics (Shanghai) Co., Ltd.	Brother company of the Group
Wonderful Sky Financial Group Limited	Other

– I-72 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

4. Related party transactions

(1) Purchase and sales of goods and provision and receiving of services

Purchasing of goods/receiving of services

Unit: Yuan Currency: RMB

	Content of related
Name of related party	party transaction	2016	2015
China Luoyang Float Glass (Group) Company Limited	Interest expense	1,009,966.91	554,227.78
Bengbu Glass Industry Design Institute	Raw material,
	electricity,
	maintenance	1,460,358.39	2,890,466.52
Bengbu Glass Industry Design Institute	Interest expense	211,458.34	402,986.11
Bengbu Glass Industry Design Institute	Guarantee fee		59,900.00
Triumph Bengbu Engineering and Technology	Raw material
Company Limited		35,017.09	70,743.60
Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery	Raw material
Company Limited		19,735.05	96,258.13
Bengbu Chemical Engineering Machinery Making Co., Ltd.	Raw material,
	maintenance	3,986,538.45	3,512,769.15
Triumph Technology Group Company	Raw material	15,232,131.66	5,284,202.20
Triumph Technology Group Company	Interest expense	14,811.32
Bengbu China National Building Materials Photovoltaic	Interest expense
Materials Company Limited		440,437.50
CNBM (Hefei) New Energy Company Limited*	Interest expense	162,400.00
Dengfeng CLFG Silicon Co. Ltd.	Raw material	2,992,250.98
Yinan Huasheng Mineral Products Industry Co., Ltd.	Raw material	82,096.24
CTIEC Shenzhen Scieno-tech Engineering Company Limited.	Raw material
Bengbu Branch		20,341.88
Wonderful Sky Financial Group Limited	Bulletin fees	2,404,865.49	3,004,987.58

– I-73 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

4. Related party transactions (Continued)

(1) Purchase and sales of goods and provision and receiving of services (Continued)

Sales of goods/provision of services

Unit: Yuan Currency: RMB

	Content of related
Name of related party	party transaction	2016	2015
Anhui Bengbu Huayi Conductive Film Glass Co., Ltd.	Float glass	85,980,878.54	18,656,866.95
China Triumph International Engineering Co., Ltd.	Technical Service Fee		1,132,075.48
China Luoyang Float Glass (Group) Company Limited	Shattered glass		2,061,598.72
China Luoyang Float Glass (Group) Company Limited	Float glass		17,752,459.99
China Luoyang Float Glass (Group) Company Limited	Tin		1,041,601.04
China Luoyang Float Glass (Group) Company Limited	Tenant and utilities	164,549.58
Triumph Science & Technology Co., Ltd	Float glass	1,469,883.78	1,664,246.52
Luoyang New Jingrun Engineering Glass Co., Ltd.	Float glass		2,156,379.88
Henan Zhonglian Glass Co., Ltd.	Silica sands		1,592,186.19
CLFG Longhao Glass Co. Ltd.	Technical services	1,679,245.29
CLFG Longhao Glass Co. Ltd.	Tin	8,107,000.00
CNBM (Bengbu) Guangdian Materials Company*	Technical services	377,358.48

(2) Related party guarantees

The Company as the guarantor

Unit: Yuan Currency: RMB

	Guarantee	Start date of	End date of	Guarantee
Guaranteed party	amount	guarantee	guarantee	fulfilled or not
Bengbu CNBM Information Display	20,000,000.00	27 May 2016	27 May 2017	No
Material Co., Ltd.

Note: Bengbu CNBM Information Display Material Co., Ltd. is a wholly-owned subsidiary of the Company.

– I-74 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

4. Related party transactions (Continued)

(2) Related party guarantees (Continued)

The Company as the guaranteed party

Unit: Yuan Currency: RMB

	Guarantee	Start date of	End date of	Guarantee
Guarantor	amount	guarantee	guarantee	fulfilled or not
China National Building Material Group Co., Ltd.	12,920,000.00	1 February 2010	31 January 2017	No
China National Building Material Group Co., Ltd.	72,093,600.00	1 February 2010	31 January 2017	No
China National Building Material Group Co., Ltd.	92,701,000.00	1 February 2010	31 January 2017	No
China National Building Material Group Co., Ltd.	107,882,000.00	1 February 2010	31 January 2017	No
China National Building Material Group Co., Ltd.	35,853,000.00	1 February 2010	31 January 2017	No
China National Building Material Group Co., Ltd.	32,300,000.00	1 February 2010	31 January 2017	No
China National Building Material Group Co., Ltd.	45,220,000.00	1 February 2010	31 January 2017	No
China National Building Material Group Co., Ltd.	45,000,000.00	8 August 2016	8 February 2017	No
China Luoyang Float Glass (Group) Company Limited,	50,000,000.00	19 June 2015	18 June 2018	No
Triumph Technology Group Company
China Luoyang Float Glass (Group) Company Limited,	63,636,363.00	23 June 2015	22 June 2018	No
Triumph Technology Group Company
Triumph Technology Group Company	100,000,000.00	9 December 2016	8 December 2017	No

(3) Remuneration of Key Management Personnel

Unit: Yuan Currency: RMB

Item			2016	2015
Remuneration of key	management	personnel	3,061,026.44	2,667,315.79

– I-75 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

4. Related party transactions (Continued)

(3) Remuneration of Key Management Personnel (Continued)
- (1) Remuneration of Directors and Supervisors

The remuneration of each director and supervisor in 2016 is as follows:

Name	Fees	Salary, allowance and benefit in kind	Defined contribution plan contribution	Total Note
Executive directors Ni Zhisen Ma Yan Wang Guoqiang Sun Lei Independent directors Jin Zhanping Liu Tianni Ye Shuhua He Baofeng Supervisors Ren Hongcan Qiu Mingwei Yan Mei Employee supervisors Wang Jian Ma Jiankang Total

		420,000.00	51,929.46	471,929.46
		240,000.00	35,858.40	275,858.40 Appointed in May 2016
		400,000.00	51,373.40	451,373.40
		85,272.00	24,292.00	109,564.00 Resigned in May 2016


	60,000.00			60,000.00
	60,000.00			60,000.00
	60,000.00			60,000.00
	60,000.00			60,000.00


		340,440.00	48,259.38	388,699.38
	30,000.00			30,000.00
	30,000.00			30,000.00


		161,298.00	49,246.86	210,544.86
		137,057.00	32,373.58	169,430.58

	300,000.00	1,784,067.00	293,333.08	2,377,400.08

– I-76 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

4. Related party transactions (Continued)

(3) Remuneration of Key Management Personnel (Continued)

(1) Remuneration of Directors and Supervisors (Continued)

The remuneration of each director and supervisor in 2015 is as follows:

Name	Fees	Bonus	Salary, allowance and benefit in kind	Defined contribution plan contribution	Total Note
Independent directors Ni Zhisen Xiejun Sun Lei Wang Guoqiang Independent directors Huang Ping Dong Jiachun Jin Zhanping Liu Tianni Ye Shuhua He Baofeng Supervisors Guo Hao Wang Ruiqin Ren Hongcan Qiu Mingwei Yan Mei Employee supervisors Wang Jian Ma Jiankang Total	40,000.00 40,000.00 40,000.00 40,000.00 1,480.00 1,480.00 20,000.00 740.00 740.00 184,440.00		398,436.00 21,701.00 247,044.00 385,270.00 122,058.00 330,000.00 172,589.00 111,717.00 1,788,815.00	45,614.82 3,621.20 94,809.68 45,109.82 42,402.72 60,407.28 42,412.18 31,762.93 366,140.63	444,050.82 25,322.20 Appointed as vice chairman on 24 December 2015 341,853.68 Resigned on 23 December 2015 430,379.82 Appointed on 23 December 2015 40,000.00 Resigned on 23 December 2015 40,000.00 Resigned on 23 December 2015 40,000.00 40,000.00 1,480.00 Appointed on 23 December 2015 1,480.00 Appointed on 23 December 2015 20,000.00 Resigned on 23 December 2015 164,460.72 Resigned on 23 December 2015 390,407.28 Appointed on 23 December 2015 740.00 Appointed on 23 December 2015 740.00 Appointed on 23 December 2015 215,001.18 143,479.93 2,339,395.63

– I-77 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

4. Related party transactions (Continued)

(3) Remuneration of Key Management Personnel (Continued)

(2) The five individuals whose remuneration are the highest

The five individuals whose remuneration were the highest during 2016, included two directors and one supervisor, whose remuneration has set out as above. The total remunerations paid to other two persons (2015: one) during the year are set out as below:

Item	2016	2015
Salary, allowance and benefit in kind Defined contribution, plan contribution Total	500,000.00 76,626.36 576,626.36	202,416.00 24,704.16 227,120.16

The range of remunerations of the two highest paid individuals (2015: one):

Item	2016	2015
Nil to HK$1,000,000.00	2	1

(4) Other connected transactions

(1) In December 2016, the Company entered into the Creditor s Rights Transfer Agreement with CLFG, pursuant to which, the creditor s rights of the Company (including all rights of the Company arising from the creditor s rights) in Luoyang Crane Factory Co., Ltd. would be transferred to CLFG at a consideration of RMB9,930,000. The consideration was determined based on the appraised value as at the appraisal base date (i.e.1 December 2016) appraised by China United Assets Appraisal Group Co., Ltd. The appraised value of the above creditor s rights was RMB9,930,000 based on the cost approach. As at 31 December 2016, the Company has received the payment of such creditor s rights transfer.

– I-78 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

4. Related party transactions (Continued)

(4) Other connected transactions (Continued)

(2) On 1 December 2016, Bengbu Company and Bengbu Glass Industry Design Institute entered into two technology development (delegate) agreements, pursuant to which Bengbu Company conducted research and development in respect of the project of production technology of industrialization of 0.2mm high strength electronic glass and the project of production technology of 3D wear-resistant glass substrate for Bengbu Glass Industry Design Institute, at contract prices of RMB8,800,000 and RMB7,500,000 respectively. In order to increase the accuracy of experimental data of the two contracted projects, the parties entered into individual supplemental agreements to the two technology development (delegate) agreement on 24 March 2017 to extend the terms of acceptance of the project and of the contract to 31 December 2018.
(3) On 1 December 2016, Bengbu Company and Bengbu China National Building Materials Photovoltaic Materials Company Limited entered into the Technology Services Agreement, pursuant to which Bengbu Company provided technical services and transferred the license for use of some patents and know-hows to Bengbu China National Building Materials Photovoltaic Materials Company Limited at a contract price of RMB5,000,000.
(4) Entrusted loans

As at 31 December 2016, the Company has furnished the entrusted loans of RMB205,000,000.00 to subsidiaries through the bank.

(5) Financial assistance from related parties

In 2016, Triumph Technology Group Company provided an aggregate fund of RMB49,000,000.00 on behalf of the Group, CLFG provided an aggregate fund of RMB189,173,393.60 directly to the Company, Bengbu China National Building Materials Photovoltaic Materials Company Limited furnished an aggregate fund of RMB15,000,000.00 on behalf of the Group, and CNBM (Hefei) New Energy Company Limited* provided an aggregate fund of RMB6,000,000.00 on behalf of the Group.

– I-79 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

5. Accounts receivable and payable of related parties

(1) Items of receivable

Unit: Yuan Currency: RMB

		Closing	balance	Opening	balance
		Carrying	Bad debt	Carrying	Bad debt
Item	Name of related party	balance	provision	balance	provision
Accounts receivable	Anhui Bengbu Huayi Conductive Film Glass Co., Ltd.	28,621,134.25		951,397.68
Accounts receivable	Anhui Huaguang Photoelectric Materials Technology
	Group Co., Ltd.	289,079.90		889,079.90
Accounts receivable	Luoyang New Jingrun Engineering Glass Co., Ltd.	1,349,753.33		1,349,753.33
Accounts receivable	Triumph Science & Technology Co., Ltd	22,038.01		687,351.82
Prepayments	Triumph Bengbu Engineering and Technology Company Limited	13,500.00		11,658.10
Prepayments	Triumph Technology Group Company	279,436.97		110,007.97
Prepayments	CNBM Triumph Robotics (Shanghai) Co., Ltd.	5,600.00
Other receivables	China Luoyang Float Glass (Group) Company Limited	23,982,714.48		22,795.40
Other receivables	China Triumph International Engineering Co., Ltd.	1,650,000.00		1,650,000.00
Other receivables	CLFG (Beijing) International Engineering Co., Ltd.	82,796.95		82,796.95
Other receivables	Luoyang Luobo Glass Fibre Co., Ltd.	150,738.92		150,738.92

– I-80 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

5. Accounts receivable and payable of related parties (Continued)

(2) Items of payable

Unit: Yuan Currency: RMB

		Closing	Opening
Item	Name of related party	carrying balance	carrying balance
Accounts payable	Bengbu Chemical Engineering Machinery Making Co., Ltd.	1,279,458.02	884,038.46
Accounts payable	Jiangsu CTIEC Environmental Protection Research Institute	3,544,508.91	3,017,684.73
	Co., Ltd.
Accounts payable	Triumph Technology Group Company	4,611,449.84	3,293,562.08
Accounts payable	Bengbu Glass Industry Design Institute	963,003.08
Accounts payable	Dengfeng CLFG Silicon Co. Ltd.	517,453.69
Accounts payable	Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery	135,400.00
	Company Limited
Accounts payable	Yinan Huasheng Mineral Products Industry Co., Ltd.	2,714.60
Payments received in advance	Triumph Science & Technology Co., Ltd		5,181,103.61
Payments received in advance	Anhui Bengbu Huayi Conductive Film Glass Co., Ltd.	5,496,513.80	347,185.00
Payments received in advance	Bengbu China National Building Materials Photovoltaic	1,800,000.00
	Materials Company Limited
Payments received in advance	Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery	6,552.00
	Company Limited
Other payables	China Luoyang Float Glass (Group) Company Limited	18,899,748.61	91,246,227.75
Other payables	Bengbu Glass Industry Design Institute	239,181.20	6,902,312.39
Other payables	China Triumph International Engineering Co., Ltd. Bengbu Branch	140,000.00	140,000.00
Other payables	Triumph Technology Group Company	9,000,000.00	31,200,000.00
Other payables	Bengbu Chemical Engineering Machinery Making Co., Ltd.	3,500.00
Other payables	Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery	1,600.00
	Company Limited
Other payables	Wonderful Sky Financial Group Limited	2,659,797.02	3,261,179.04

– I-81 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

X. Related Party and Related Party Transactions (Continued)

6. Commitments of related parties

During significant asset restructuring in 2015, considering performance of Bengbu Company during 201 ~~5~~ 2017, CLFG made a commitment regarding voluntary performance compensation: If the audited net profits of Bengbu Company realized in the years of 2015, 2016 and 2017, which belong to the owner of the parent company with the deduction of non-recurring profit and loss, were lower than the expected net profits of corresponding years given in the appraisal report represented by China United Assets Appraisal Group Co., Ltd. on 31 October 2015, it would make compensation to Luoyang Glass in cash on the following terms: amount of compensation of current year = expected net profit of current year actual net profit of current year. When the calculation result of the amount of compensation of current year is a negative value, it shall be taken as Zero.

For the year of 2016, the net profit of Bengbu Company estimated in the appraisal report was RMB58,954,400. As audited, the net profit of Bengbu Company in 2016 was RMB56,857,600, and the net profit with the deduction of non-recurring profit and loss was RMB35,171,000, which did not meet the performance commitment. Therefore, CLFG would make compensation for the differences of RMB23,783,400 to the Company in cash within six months after the date of 2016 audit report of Bengbu Company.

XI. Subsequent Events after the Date of Balance Sheet

1. Explanation of other subsequent events after the date of balance sheet

(1) Transaction Relating To Issuance Of Shares To Acquire Assets And Raise Supporting Funds

On 7 February 2017, the 22nd meeting of the eighth session of the Board considered and approve that, by taking 31 October 2016 as the valuation base date and by means of issuance of shares, the Company proposed to acquire an aggregate of 100% equity interest in CNBM (Hefei) New Energy Company Limited ( ) held by CLFG and Hefei High-Tech Construction Investment Group Company ( ), an aggregate of 100% equity interest in CNBM (Tongcheng) New Energy Materials Company Limited ( ) held by Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd ( ), Bengbu Glass Industry Design Institute ( ) and China Triumph International Engineering Co., Ltd. ( ), and an aggregate of 70.99% equity interest in CNBM (Yixing) New Energy Company Limited ( ) held by Triumph Technology Group Company ( ), Yixing Environmental Technology Innovation Venture Investment Company Limited ( ) and GCL System Integration Technology Co., Ltd. ( ), and issued shares to no more than 10 specific investors including Triumph Group to raise supporting funds of up to RMB573,457,000[(Note).]

Note: As stated in the Supplemental Announcement, maximum amount of supporting funds raised was adjusted to RMB511,865,700.

– I-82 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

XI. Subsequent Events after the Date of Balance Sheet (Continued)

1. Explanation of other subsequent events after the date of balance sheet (Continued)

(2) Changes in Matters Including Name and Registered Address of Our Subsidiary Furuida

On 14 February 2017, the 23rd meeting of the eighth session of the Board considered and approved to rename Furuida as CNBMG (Puyang) Photoelectric Material Co., Ltd.* ( ) ( Puyang Company ) and change its registered address from No. 18 Tanggong Middle Road, Xigong District, Luoyang to Industrial Cluster District of Puyang County, Henan Province with an aim to satisfy the demand of construction of Puyang ultra-white solar thermal material project. The Company proposes to make an additional capital contribution of RMB239,500,000 to Puyang Company. After the capital increase, the registered capital of Puyang Company increased from RMB500,000 to RMB240,000,000, and the newly added registered capital will be used in the construction of ultra-white solar thermal material project. Puyang Company has completed the business registration of changes on 1 March 2017.

(3) External Investment

On 14 February 2017, the 23rd meeting of the eighth session of the Board considered and approved the investment and construction of the Ultra-White Solar Thermal Material Project in the industrial cluster district of Puyang County, Henan Province (with Puyang Company as the investment entity) in compliance with the development strategies of the Company. The project newly built an ultra-white solar thermal material production line with a daily melting capacity of 400 tonnes, which could produce 14 million square meters of solar thermal power generation raw materials for glasses production and 2.80 million square meters of high-end auto windshield and dashboard glass materials annually, and an ancillary deep processing production line of solar thermal power generation reflector with an annual production capacity of 6.80 million square meters. The total investment amount of the project was RMB800,300,000.

XII. Other Significant Events

1. Correction of accounting errors in the previous period

N/A

2. Segment information

(1) Determination basis and accounting policy of reporting segment:

The Group s revenue mainly came from the sale of ultra-thin glass products, thus it is regarded as the only reportable segment. The management of the Group reviews the Group s performance based on such segment and regularly reviews its financial information to decide on resources allocation thereto and assess its performance.

– I-83 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

31 December 2016 Prepared by: Luoyang Glass Company Limited Unit: Yuan Currency: RMB

XII. Other Significant Events (Continued)

2. Segment information (Continued)

(2) Other explanations:

1. Geographic information

The following table sets out information about the geographical location of the Group s revenue from external customers and the Group s non-current assets (excluding financial assets and deferred income tax assets). The geographical location of customers is stated as the location at which goods were delivered to customers. The geographical location of fixed assets, construction in progress and lease prepayments under non-current assets is determined as the physical location of the assets; the geographical location of intangible assets and exploration and evaluation assets is determined as the location of relevant operations; the geographical location of interests in associates and other investments is determined as the location of their respective operations.

Item	Revenue from external customers 2016 2015	Revenue from external customers 2016 2015	Non-current assets 31 December 2016 31 December 2015	Non-current assets 31 December 2016 31 December 2015
China Total	392,095,626.14 392,095,626.14	662,156,635.13 662,156,635.13	774,437,998.66 774,437,998.66	826,682,911.68 826,682,911.68

2. Major customers

The Group has a concentrated group of major customers that the total sales to the top five customers accounted for over 50% of the Group s revenue in 2016.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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Consolidated Balance Sheet
2017 6 30
Prepared by: Luoyang Glass Company Limited 30 June 2017 Unit: Yuan Currency: RMB
Item Note Closing Balance Opening Balance
Current Assets:
Cash and cash equivalents 1 .1 90,688,037.20 157,528,516.53
Clearing settlement funds
Placements with banks and other financial
institutions
Financial assets at fair value through profit
or loss
Derivative financial assets
Bills receivables 2 .2 43,611,023.42 45,986,571.00
Accounts receivables 3 .3 138,102,959.21 101,891,329.13
Prepayments 4 .4 3,394,273.59 1,638,352.47
Premiums receivable
Receivables from reinsurers
Deposits receivable from reinsurance
contract
Interest receivable
Dividend receivable
Other receivables 5 .5 30,165,639.43 107,581,717.91
Purchases of resold financial assets
Inventories 6 .6 125,052,551.31 132,978,500.26
Assets classified as held for sale
Non-current assets due within one year
Other current assets 7 .7 25,249,726.39 34,874,034.35
Total current assets 456,264,210.55 582,479,021.65
Non-current assets:
Loans and advances granted
Available-for-sale financial assets
Held-to-maturity investment
Long-term receivables 9 .9 55,000,000.00 55,000,000.00
Long-term equity investment
Investment properties
Fixed assets 10 .10 616,035,578.26 648,972,313.06
Construction in progress 11 .11 14,085,910.61
Engineering materials
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets 12 .12 117,744,298.48 62,609,172.40
Development expenditures
Goodwill
Long-term deferred expenses 13 .13 4,926,055.07 3,515,290.90
Deferred income tax assets 14 .14 2,667,194.21 4,341,222.30
Other non-current assets 15 .15 364,102.58
Total non-current assets 810,823,139.21 774,437,998.66
Total assets 1,267,087,349.76 1,356,917,020.31
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet (Continued)

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2017 6 30
Prepared by: Luoyang Glass Company Limited 30 June 2017 Unit: Yuan Currency: RMB
Item Note Closing Balance Opening Balance
Current liabilities:
Short-term borrowings 16 .16 326,496,500.00 20,000,000.00
Borrowings from central bank
Deposit taking and deposit in inter-bank
market
Placements from banks and other financial
institutions
Financial liabilities at fair value through profit
or loss
Derivative financial liabilities
Bills payables 17 .17 50,000,000.00 90,000,000.00
Accounts payables 18 .18 32,946,511.78 46,373,902.20
Receipts in advance 19 .19 11,271,186.74 14,391,654.50
Disposal of repurchased financial assets
Handling charges and commissions payable
Employee compensation payable 20 .20 18,417,757.49 25,743,969.95
Taxes payable 21 .21 6,744,882.37 15,381,067.45
Interest payable 22 .22 1,717,967.40 713,868.25
Dividend payable
Other payables 23 .23 53,049,499.38 42,578,922.04
Reinsurance accounts payable
Deposits for insurance contracts
Customer deposits for trading in securities
Amounts due to issuer for securities
underwriting
Liabilities classified as held for sale
Non-current liabilities due within one year 24 .24 111,407,706.89 471,337,062.91
Other current liabilities
Total current liabilities 612,052,012.05 726,520,447.30
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet (Continued)

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2017 6 30
Prepared by: Luoyang Glass Company Limited 30 June 2017 Unit: Yuan Currency: RMB
Item Note Closing Balance Opening Balance
Non-current liabilities:
Long-term borrowings 25 .25 121,722,318.19 87,836,374.23
Bonds payable
Including: Preferential shares
Perpetual bonds
Long-term payables
Long-term employee compensation payable
Special payables
Accrued liability
Deferred income 26 .26 8,865,643.54 19,290,781.82
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 130,587,961.73 107,127,156.05
Total Liabilities 742,639,973.78 833,647,603.35
Owners equity
Share capital 27 .27 526,766,875.00 526,766,875.00
Other equity instruments
Including: Preferential shares
Perpetual bonds
Capital reserve 28 .28 1,473,105,039.50 1,473,105,039.50
Less: Treasury stock
Other comprehensive income
Special reserve
Surplus reserve 29 .29 51,365,509.04 51,365,509.04
General risk provisions
Undistributed profit 30 .30 -1,526,790,047.56 -1,527,968,006.58
Total owners equity attributable to owners of the
Company 524,447,375.98 523,269,416.96
Minority interests
Total owners equity 524,447,375.98 523,269,416.96
Total liabilities and owners equity 1,267,087,349.76 1,356,917,020.31
Legal representative: Person in charge of accounting: Person in charge of accounting department:
Zhang Chong Ma Yan Chen Jing
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet of the Company

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2017 6 30
Prepared by: Luoyang Glass Company Limited 30 June 2017 Unit: Yuan Currency: RMB
Item Note Closing Balance Opening Balance
Current Assets:
Cash and cash equivalents 70,744,724.85 109,837,249.29
Financial assets at fair value through profit
or loss
Derivative financial assets
Bills receivables 740,000.00 12,832,190.32
Accounts receivables 1 XI.1 206,785,944.80 207,658,323.10
Prepayments 692,465.64 58,700.86
Interest receivable
Dividend receivable
Other receivables 2 XI.2 24,603,318.97 82,751,723.72
Inventories
Assets classified as held for sale
Non-current assets due within one year
Other current assets 156,428.50 52,829.24
Total current assets 303,722,882.76 413,191,016.53
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investment
Long-term receivables 55,000,000.00 55,000,000.00
Long-term equity investment 3 XI.3 828,986,593.99 748,986,593.99
Investment properties
Fixed assets 2,688,202.10 2,878,637.33
Construction in progress
Engineering materials
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets 64,376,286.57 6,674,333.25
Development expenditures
Goodwill
Long-term deferred expenses 216,000.00 270,000.00
Deferred income tax assets
Other non-current assets
Total non-current assets 951,267,082.66 813,809,564.57
Total assets 1,254,989,965.42 1,227,000,581.10
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet of the Company (Continued)

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2017 6 30
Prepared by: Luoyang Glass Company Limited 30 June 2017 Unit: Yuan Currency: RMB
Item Note Closing Balance Opening Balance
Current liabilities:
Short-term borrowings 321,496,500.00
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Bills payable 60,000,000.00 90,000,000.00
Accounts payable 7,035,573.47 15,317,580.28
Receipts in advance 10,188,797.54 11,625,410.24
Employee compensation payable 5,744,367.17 8,015,791.49
Taxes payable 551,330.73 807,117.66
Interest payable
Dividend payable
Other payables 412,242,355.52 281,486,640.75
Liabilities classified as held for sale
Non-current liabilities due within one year 9,146,724.30 386,428,324.30
Other current liabilities
Total current liabilities 826,405,648.73 793,680,864.72
Non-current liabilities:
Long-term borrowings 826,297.19 946,806.31
Bonds payable
Including: Preferential shares
Perpetual bonds
Long-term payables
Long-term employee compensation payable
Special payables
Accrued liability
Deferred income
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 826,297.19 946,806.31
Total Liabilities 827,231,945.92 794,627,671.03
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet of the Company (Continued)

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2017 6 30
Prepared by: Luoyang Glass Company Limited 30 June 2017 Unit: Yuan Currency: RMB
Item Note Closing Balance Opening Balance
Owners equity:
Share capital 526,766,875.00 526,766,875.00
Other equity instruments
Including: Preferential shares
Perpetual bonds
Capital reserve 1,253,391,100.15 1,253,391,100.15
Less: Treasury stock
Other comprehensive income
Special reserve
Surplus reserve 51,365,509.04 51,365,509.04
Undistributed profit -1,403,765,464.69 -1,399,150,574.12
Total owners equity 427,758,019.50 432,372,910.07
Total liabilities and owners equity 1,254,989,965.42 1,227,000,581.10
Legal representative: Person in charge of accounting: Person in charge of accounting department:
Zhang Chong Ma Yan Chen Jing
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Income Statement

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2017 1 6
Prepared by: Luoyang Glass Company Limited Januar y June 2017 Unit: Yuan Currency: RMB
January Januar y
Item Note June 2017 June 2016
. I. Total operating revenue 154,969,277.04 137,239,714.63
Including: Operating revenue 31 .31 154,969,277.04 137,239,714.63
Interest income
Premium earned
Handling charges and
commission income
. II. Total operating costs 170,783,254.39 164,010,892.76
Less: Operating cost 31 .31 112,590,015.32 128,487,520.70
Interest expense
Handling charges and
commission expense
Surrender value
Net compensation expenses
Net amount of provisions for
insurance contract
Expenditures on policy dividend
Reinsurance expenses
Taxes and surcharges 32 .32 3,301,953.14 192,141.99
Selling expenses 33 .33 3,261,156.57 3,541,156.15
Administrative expenses 34 .34 37,112,773.42 27,468,430.63
Financial expenses 35 .35 13,663,932.39 3,217,323.22
Impairment losses of assets 36 .36 853,423.55 1,104,320.07
Add: Gains from changes in fair
- value (loss is represented
-
by )
- Investment income (loss is
-
represented by )
Including: Gains from investment
in associates and
joint ventures
- Exchange gain (loss is
-
represented by )
Other income 19,749,138.28
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– I-91 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Income Statement (Continued)

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2017 1 6
Prepared by: Luoyang Glass Company Limited Januar y June 2017 Unit: Yuan Currency: RMB
January Januar y
Item Note June 2017 June 2016
. - III. Operating profit (loss is 3,935,160.93 -26,771,178.13
-
represented by )
Add: Non-operating income 37 .37 1,909,633.82 4,328,879.61
Including: Gains on disposal of 37 .37 83,418.35 95.03
non-current assets
Less: Non-operating expense 38 .38 236,378.61 140,580.22
Including: Losses on disposal of
non-current assets
. - IV. Total profit (total loss is represented by - ) 5,608,416.14 -22,582,878.74
Less: Income tax expenses 39 .39 4,430,457.12 3,162,715.49
. - V. Net profit (net loss is represented by - ) 1,177,959.02 -25,745,594.23
Net profit attributable to the owners of 1,177,959.02 -25,745,594.23
the Company
Minority interests
. VI. Other comprehensive income, net of tax
. VII. Total comprehensive income 1,177,959.02 -25,745,594.23
Total comprehensive income attributable 1,177,959.02 -25,745,594.23
to owners of the Company
Total comprehensive income attributable
to minority interests
. VIII. Earnings per share:
(I) Basic earnings per share (RMB/share) 0.0022 -0.0491
(II) Diluted earnings per share (RMB/share)
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Legal representative: Person in charge of accounting: Zhang Chong Ma Yan

Person in charge of accounting department: Chen Jing

– I-92 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Income Statement of the Company

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2017 1 6
Prepared by: Luoyang Glass Company Limited Januar y June 2017 Unit: Yuan Currency: RMB
Item Note January J une 2017 January June 2016
. I. Operating revenue 4 XI.4 72,438,752.95 90,696,768.06
Less: Operating cost 4 XI.4 72,252,825.33 88,703,352.02
Taxes and surcharges 401,776.30 15,183.99
Selling expenses 218,657.97 337,516.41
Administrative expenses -1,139,669.58 10,410,987.82
Financial expenses 11,070,786.45 -905,799.95
Impairment losses of assets 600,521.20
Add: Gains from changes in fair value
- -
(loss is represented by )
Investment income (loss is 5 XI.5 5,515,364.92 5,533,462.50
- -
represented by )
Including: Gains from investment
in associates and
joint ventures
Other income
. - II. Operating profit (loss is represented by - ) -5,450,779.80 -2,331,009.73
Add: Non-operating income 1,036,395.35 65,836.27
Including: Gains on disposal of 95.03
non-current assets
Less: Non-operating expense 200,506.12
Including: Losses on disposal
of non-current
assets
. - III. Total profit (total loss is represented by - ) -4,614,890.57 -2,265,173.46
Less: Income tax expenses
. - IV. Net profit (net loss is represented by - ) -4,614,890.57 -2,265,173.46
. V. Other comprehensive income, net of tax
. VI. Total comprehensive income -4,614,890.57 -2,265,173.46
. VII. Earnings per share:
(I) Basic earnings per share (RMB/
share)
(II) Diluted earnings per share
(RMB/share)
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Legal representative: Zhang Chong

Person in charge of accounting: Person in charge of accounting department: Ma Yan Chen Jing

– I-93 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

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2017 1 6
Prepared by: Luoyang Glass Company Limited Januar y June 2017 Unit: Yuan Currency: RMB
Item Note January J une 2017 January J une 2016
. I. Cash flow from operating activities:
Cash received from sales of goods or 59,649,540.35 46,357,908.63
rendering of services
Tax refunds received
Other cash received related to operating 40 VI. 40 12,309,769.38 5,590,870.37
activities
Subtotal of cash inflows from operating 71,959,309.73 51,948,779.00
activities
Cash paid for purchase of goods or 31,980,948.60 60,010,928.46
rendering of services
Cash paid to and for employees 36,826,931.46 36,484,249.91
Cash paid for various taxes 18,026,778.16 15,594,521.33
Other cash payments related to 40 VI. 40 7,345,032.08 15,695,448.22
operating activities
Subtotal of cash outflows from operating 94,179,690.30 127,785,147.92
activities
Net cash flow from operating activities -22,220,380.57 -75,836,368.92
. II. Cash flow from investment activities:
Cash from recovery of investment
Cash received from return of investment
Net cash received from disposal of fixed 2,348,600.00
assets, intangible assets and other
long-term assets
Net cash received from disposal of
subsidiaries and other operating units
Other cash received from investment 40 VI. 40 23,798,268.89
activities
Subtotal of cash inflows from investment 26,146,868.89
activities
Cash paid for the acquisition and 5,295,506.51 148,134.20
construction of fixed assets, intangible
assets, and other long-term assets
Cash paid for investment
Net increase in pledged loans
Net cash paid for acquisition of
subsidiaries and other operating
entities
Other cash payments related to 40 VI. 40 90,729,715.31
investment activities
Subtotal of cash outflows from 5,295,506.51 90,877,849.51
investment activities
Net cash flow from investment activities 20,851,362.38 -90,877,849.51
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– I-94 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Cash Flow Statement (Continued)

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2017 1 6
Prepared by: Luoyang Glass Company Limited Januar y June 2017 Unit: Yuan Currency: RMB
Item Note January J une 2017 January J une 2016
. III. Cash flows from financing activities:
Cash received from investment 209,624,984.30
Including: cash received by subsidiaries
from investments of minority
interests
Proceeds from loans 335,904,000.00 15,000,000.00
Cash received from issuing bonds
Other cash received related to financing 40 VI. 40 271,257,432.90 81,055,772.70
activities
Subtotal of cash inflows from financing 607,161,432.90 305,680,757.00
activities
Cash paid for repayments of borrowings 347,464,266.99 54,238,626.83
Cash payment for distribution of 9,008,431.66 3,841,626.46
dividends and profits or repayment of
interest
Including: dividends and profits paid
by subsidiaries to minority
interests
Other cash payments related to 40 VI. 40 301,160,000.00 86,855,497.44
financing activities
Subtotal of cash outflows from financing 657,632,698.65 144,935,750.73
activities
Net cash flow from financing activities -50,471,265.75 160,745,006.27
. IV. E ffect of exchange rate changes on cash -195.39 128.15
and cash equivalents
. V. N et increase in cash and cash -51,840,479.33 -5,969,084.01
equivalents
Add: Opening balance of cash and 112,528,516.53 42,342,860.91
cash equivalents
. VI. Closing balance of cash and cash 60,688,037.20 36,373,776.90
equivalents
Legal representative: Person in charge of accounting: Person in charge of accounting department:
Zhang Chong Ma Yan Chen Jing
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– I-95 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Cash Flow Statement of the Company

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2017 1 6
Prepared by: Luoyang Glass Company Limited Januar y June 2017 Unit: Yuan Currency: RMB
Item Note January J une 2017 January June 2016
. I. Cash flow from operating activities:
Cash received from sales of goods or 37,301,455.04 31,355,222.82
rendering of services
Tax refunds received
Other cash received related to operating 37,206,581.02 139,387,525.74
activities
Subtotal of cash inflows from operating 74,508,036.06 170,742,748.56
activities
Cash paid for purchase of goods and 86,900.00 21,495,623.96
rendering of services
Cash paid to and for employees 6,977,169.55 12,015,636.74
Cash paid for various taxes 686,886.91 943,550.75
Other cash payments related to operating 83,702,867.49 165,597,696.70
activities
Subtotal of cash outflows from operating 91,453,823.95 200,052,508.15
activities
Net cash flow from operating activities -16,945,787.89 -29,309,759.59
. II. Cash flow from investment activities:
Cash from recovery of investment
Cash received from return of investment
Net cash received from disposal of fixed 400,000.00
assets, intangible assets and other long-
term assets
Net cash received from disposal of
subsidiaries and other operating units
Other cash received from investment 43,164,222.88
activities
Subtotal of cash inflows from investment 43,564,222.88
activities
Cash paid for the acquisition and construction 3,360,200.60
of fixed assets, intangible assets, and other
long-term assets
Cash paid for investment 80,000,000.00
Net cash paid for acquisition of subsidiaries
and other operating entities
Other cash payments related to investment 90,729,715.31
activities
Subtotal of cash outflows from investment 83,360,200.60 90,729,715.31
activities
Net cash flow from investment activities -39,795,977.72 -90,729,715.31
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– I-96 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Cash Flow Statement of the Company (Continued)

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2017 1 6
Prepared by: Luoyang Glass Company Limited Januar y June 2017 Unit: Yuan Currency: RMB
Item Note January J une 2017 January June 2016
. III. Cash flows from financing activities:
Cash received from investment 209,624,984.30
Proceeds from loans 235,904,000.00
Cash received from issuing bonds
Other cash received related to financing 534,383,680.49 34,555,772.70
activities
Subtotal of cash inflows from financing 770,287,680.49 244,180,757.00
activities
Cash paid for repayment of borrowings 290,582,396.18 21,703,058.86
Cash payment for distribution of dividends 5,815,847.75 17,046.53
and profits or interest repayment
Other cash payments related to financing 441,240,000.00 102,800,000.00
activities
Subtotal of cash outflows from financing 737,638,243.93 124,520,105.39
activities
Net cash flow from financing activities 32,649,436.56 119,660,651.61
. IV. Effects of changes in exchange rate on cash -195.39 128.15
and cash equivalents
. V. Net increase in cash and cash equivalents -24,092,524.44 -378,695.14
Add: Opening balance of cash and cash 64,837,249.29 422,236.77
equivalents
. VI. Closing balance of cash and cash equivalents 40,744,724.85 43,541.63
Legal representative: Person in charge of accounting: Person in charge of accounting department:
Zhang Chong Ma Yan Chen Jing
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– I-97 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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Prepared by: Luoyang Glass Company Limited*

Consolidated Statement of Changes in Owners Equity

2017 ~~1~~ 6 Januar ~~y~~ June 2017 Unit: Yuan Currency: RMB

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Current period
Attributable to owners of the Company
Other equity instruments
Other
Preferential Perpetual comprehensive General risk Undistributed Total
Item Share capital shares bonds Others Capital reserve Less: Treasury stock income Special reserve Surplus reserve provisions profit Minority interests owners equity
. I. Balance at the end of last year 526,766,875.00 1,473,105,039.50 51,365,509.04 -1,527,968,006.58 523,269,416.96
Add: Changes in accounting policies
Effects of correction of prior period errors
Business combination under common control
Others
. II. Balance at the beginning of the year 526,766,875.00 1,473,105,039.50 51,365,509.04 -1,527,968,006.58 523,269,416.96
. - III. Change for the period (decrease is indicated by - ) 1,177,959.02 1,177,959.02
(I) Total comprehensive income 1,177,959.02 1,177,959.02
(II) Capital contributed or reduced by owners
1. 1. Ordinary shares paid by shareholders
2. 2. C apital contributed by holders of other equity
instruments
3. 3. A mount of share-based payments recognised
in owners equity
4. 4. Others
(III) Profit distribution
1. 1. Transfer to surplus reserves
2. 2. Provision for general risk reserve
3. 3. Distribution to owners (or shareholders)
4. 4. Others
(IV) Internal carry-forward of owners equity
1. 1. T ransfer of capital reserve to capital (share
capital)
2. 2. T ransfer of surplus reserve to capital (share
capital)
3. 3. Surplus reserve making up for losses
4. 4. Others
(V) Special reserve
1. 1. Appropriation for the period
2. 2. Utilized in the period
(VI) Others
IV. Balance at the end of the period 526,766,875.00 1,473,105,039.50 51,365,509.04 -1,526,790,047.56 524,447,375.98
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– I-98 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Changes in Owners Equity (Continued)

2017 ~~1~~ 6 Prepared by: Luoyang Glass Company Limited* Januar ~~y~~ June 2017 Unit: Yuan Currency: RMB

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January June 2016
Attributable to owners of the Company
Other equity instruments
Other comprehensive General risk Undistributed Total
Item Share capital Preferential shares Perpetual bonds Others Capital reserve Less: Treasury stock income Special reserve Surplus reserve provisions profit Minority interests owners equity
. I. Balance at the end of last year 515,018,242.00 1,251,445,315.32 51,365,509.04 -1,539,484,070.36 278,344,996.00
Add: Changes in accounting policies
Effects of correction of prior period errors
Business combination under common control
Others
. II. Balance at the beginning of the year 515,018,242.00 1,251,445,315.32 51,365,509.04 -1,539,484,070.36 278,344,996.00
. - III. Change for the period (decrease is indicated by - ) 11,748,633.00 197,876,351.30 -25,745,594.23 183,879,390.07
(I) Total comprehensive income -25,745,594.23 -25,745,594.23
(II) Capital contributed or reduced by owners 11,748,633.00 197,876,351.30 209,624,984.30
1. 1. Ordinary shares paid by shareholders 11,748,633.00 197,876,351.30 209,624,984.30
2. 2. C apital contributed by holders of other equity
instruments
3. 3. A mount of share-based payments recognised
in owners equity
4. 4. Others
(III) Profit distribution
1. 1. Transfer to surplus reserves
2. 2. Provision for general risk reserve
3. 3. Distribution to owners (or shareholders)
4. 4. Others
(IV) Internal carry-forward of owners equity
1. 1. T ransfer of capital reserve to capital (share
capital)
2. 2. T ransfer of surplus reserve to capital (share
capital)
3. 3. Surplus reserve making up for losses
4. 4. Others
(V) Special reserve
1. 1. Appropriation for the period
2. 2. Utilized in the period
(VI) Others
IV. Balance at the end of the period 526,766,875.00 1,449,321,666.62 51,365,509.04 -1,565,229,664.59 462,224,386.07
Legal representative: Person in charge of accounting: Person in charge of accounting department:
Zhang Chong Ma Yan Chen Jing
----- End of picture text -----

– I-99 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Statement of Changes in Owners Equity of the Company

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----- Start of picture text -----

2017 1 6
Prepared by: Luoyang Glass Company Limited Januar y June 2017 Unit: Yuan Currency: RMB
January J une 2017
Other equity instruments Other
Less: comprehensive Undistributed Total
Item Share capital Preferential shares Perpetual bonds Others Capital reserve Treasury stock income Special reserve Surplus reserve profit owners equity
. I. Balance at the end of last year 526,766,875.00 1,253,391,100.15 51,365,509.04 -1,399,150,574.12 432,372,910.07
Add: Changes in accounting policies
Effects of correction of prior period errors
Others
. II. Balance at the beginning of the year 526,766,875.00 1,253,391,100.15 51,365,509.04 -1,399,150,574.12 432,372,910.07
. - III. Change for the period (decrease is indicated by - ) -4,614,890.57 -4,614,890.57
(I) Total comprehensive income -4,614,890.57 -4,614,890.57
(II) Capital contributed or reduced by owners
1. 1. Ordinary shares paid by shareholders
2. 2. C apital contributed by holders of other equity
instruments
3. 3. A mount of share-based payments
recognised in owners equity
4. 4. Others
(III) Profit distribution
1. 1. Transfer to surplus reserves
2. 3. Distribution to owners (or shareholders)
3. 3. Others
(IV) Internal carry-forward of owners equity
1. 1. T ransfer of capital reserve to capital (share
capital)
2. 2. T ransfer of surplus reserve to capital (share
capital)
3. 3. Surplus reserve making up for losses
4. 4. Others
(V) Special reserve
1. 1. Appropriation for the period
2. 2. Utilized in the period
(VI) Others
. IV. Balance at the end of the period 526,766,875.00 1,253,391,100.15 51,365,509.04 -1,403,765,464.69 427,758,019.50
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– I-100 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Statement of Changes in Owners Equity of the Company (Continued)

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----- Start of picture text -----

2017 1 6
Prepared by: Luoyang Glass Company Limited Januar y June 2017 Unit: Yuan Currency: RMB
January J une 2016
Other equity instruments Other
Less: comprehensive Undistributed Total
Item Share capital Preferential shares Perpetual bonds Others Capital reserve Treasury stock income Special reserve Surplus reserve profit owners equity
. I. Balance at the end of last year 515,018,242.00 1,030,115,828.84 51,365,509.04 -1,353,434,966.46 243,064,613.42
Add: Changes in accounting policies
Effects of correction of prior period errors
Others
. II. Balance at the beginning of the year 515,018,242.00 1,030,115,828.84 51,365,509.04 -1,353,434,966.46 243,064,613.42
. - III. Change for the period (decrease is indicated by - ) 11,748,633.00 197,876,351.30 -2,265,173.46 207,359,810.84
(I) Total comprehensive income -2,265,173.46 -2,265,173.46
(II) Capital contributed or reduced by owners 11,748,633.00 197,876,351.30 209,624,984.30
1. 1. Ordinary shares paid by shareholders 11,748,633.00 197,876,351.30 209,624,984.30
2. 2. C apital contributed by holders of other equity
instruments
3. 3. A mount of share-based payments
recognised in owners equity
4. 4. Others
(III) Profit distribution
1. 1. Transfer to surplus reserves
2. 3. Distribution to owners (or shareholders)
3. 3. Others
(IV) Internal carry-forward of owners equity
1. 1. T ransfer of capital reserve to capital (share
capital)
2. 2. T ransfer of surplus reserve to capital (share
capital)
3. 3. Surplus reserve making up for losses
4. 4. Others
(V) Special reserve
1. 1. Appropriation for the period
2. 2. Utilized in the period
(VI) Others
. IV. Balance at the end of the period 526,766,875.00 1,227,992,180.14 51,365,509.04 -1,355,700,139.92 450,424,424.26
Legal representative: Person in charge of accounting: Person in charge of accounting department:
Zhang Chong Ma Yan Chen Jing
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– I-101 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

1. II. Company Profile

1. Company overview

Luoyang Glass Company Limited* ( the Company ) was incorporated in the People s Republic of China ( the PRC ) as a joint stock limited company.

1994 4 6 400,000,000 400,000,000 1.00

199 4 6 29 250,000,000 H 3.65 H 1994 7 8

H 1995 9 29 5.03 40,000,000 A 10,000,000 A 40,000,000 A 10,000,000 A 1995 10 30 1996 5 10

2006 6 [2006]1232 2100 A 37,900

The Company forms part of the restructuring plan of China Luoyang Float Glass (Group) Company Limited ( CLFG ), a state-owned enterprise. Pursuant to the approvals from relevant PRC authorities including the State Restructuring Commission and the National Administrative Bureau of State-owned Assets, CLFG established the Company on 6 April 1994 with CLFG as the sole promoter. At the time of its establishment, the Company had a registered capital of RMB400,000,000, including 400,000,000 state-owned legal person shares of RMB1.00 each which was paid up in full by CLFG by way of transfer of its principal business undertakings and subsidiaries together with the relevant assets and liabilities.

On 29 June 1994, 250,000,000 H shares were issued at HK$3.65 per share, which were listed on the Stock Exchange of Hong Kong Limited on 8 July 1994.

According to the plan disclosed in the H shares prospectus and with the approval from the China Securities Regulatory Commission, the Company issued 40,000,000 A shares to the public in the PRC and 10,000,000 A shares to the employees of the Company on 29 September 1995 at RMB5.03 each, which were listed on the Shanghai Stock Exchange on 30 October 1995 and 10 May 1996, respectively.

In June 2006, as approved at the general meeting of the Company and approved by the document (Shang Zi Pi [2006] No. 1232) from the Ministry of Commerce of the PRC, CLFG enabled the shares it held in the Company to be tradable by transfer of 21,000,000 shares of the Company at nil consideration to the holders of tradable A shares in accordance with regulations of Provisions on Management of Share Reform Proposals of Listed Companies (

)issued by China Securities Regulatory Commission ( CSRC ) and Guidelines on Share Reform Proposals of Listed Companies ( )issued by Shanghai Stock Exchange. Upon the completion of the reform, CLFG reduced its shareholding in the Company to 379,000,000 shares.

– I-102 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

1.

2006 11 30 (2007) 18 32 199,981,758 A 629,942,543 2006 12 6 179,018,242 500,018,242

2010 9 3 20,000,000 4% 159,018,242 31.8%

2015 8 25 2015 2015 12 4 2015 2813 2015 12 15,000,000 2016 1 26 11,748,633 1.00 526,766,875

II. Company Profile (Continued)

1. Company overview (Continued)

According to the judgment (2007) Luo Zhi Zi No. 18-32 issued by the Intermediate People s Court of Luoyang, Henan Province on 30 November 2006, 199,981,758 A shares of the Company held by CLFG were used to offset the debts of RMB629,942,543 due to the Company. The transfer registration has been processed by China Securities Depository and Clearing Corporation Limited Shanghai Branch on 6 December 2006. Accordingly, CLFG reduced its shareholding in the Company to 179,018,242 shares and the Company s total share capital was changed to be 500,018,242 shares.

On 3 September 2010, CLFG sold 20,000,000 non-restricted circulating shares of the Company (representing 4% of the total share capital of the Company) via the Block Trading System of the Shanghai Stock Exchange. After the sale of the shares, CLFG holds 159,018,242 non-restricted circulating shares of the Company, representing 31.8% of the total share capital of the Company.

In accordance with the resolution of 2015 first extraordinary general meeting held on 25 August 2015, and the Approval of the Issuance of Shares by Luoyang Glass Company Limited* to China Luoyang Float Glass (Group) Company Limited for Asset Acquisition and Raising of Supporting Funds Proceeds (CSRC Permit [2015] No. 2813) ( ( [2015]2813 )) issued by CSRC on 4 December 2015, the Company issued 15,000,000 new shares to China Luoyang Float Glass (Group) Company Limited for the purpose of purchasing relevant assets in December 2015. On 26 January 2016, the Company issued 11,748,633 RMB denominated ordinary shares to specific investors at a par value of RMB1.00 per share. After this issuance, the Company s total share capital changed to 526,766,875 shares.

– I-103 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

1.

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2016 10 17 6,900 105,018,242 19.94% 69,000,000 13.10%

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II. Company Profile (Continued)

1. Company overview (Continued)

On 17 October 2016, CLFG transferred its 69,000,000 shares in the Company to Bengbu Institute by way of agreement. Upon completion of the transfer by way of agreement, there was no change in the Company s de facto controller. CLFG held the Company s 105,018,242 shares, accounting for 19.94% of the Company s total share capital. Bengbu Institute held the Company s 69,000,000 shares, accounting for 13.10% of the Company s total share capital.

914103006148088992

Registration Number/Unified Social Credit Codes:

Legal representative: Registered address and address of head office:

2017 6 30 526,766,875

==> picture [139 x 68] intentionally omitted <==

Zhang Chong

9 No. 9, Tang Gong Zhong Lu, Xigong District, Luoyang

As of 30 June 2017, the total share capital of the Company was 526,766,875 shares.

These financial statements are released subject to resolution and approval by the Board of the Company.

Scope of Consolidated Financial Statements

No. Name of	subsidiary	Abbreviation
1 CLFG Longmen Glass Co. Ltd. Longmen Company 2 CLFG Longhai Electronic Glass Limited Longhai Company 3 Bengbu China National Building Materials Information Display Materials Co., Ltd. Bengbu Company 4 CNBMG (Puyang) Photoelectric Material Co., Ltd. Puyang Company

– I-104 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

1. III. Basis of Preparation of Financial Statements

Basis of preparation

The financial statements of the Company have been prepared on a going-concern basis in respect of the actual transactions and events in accordance with the requirements of the Accounting Standards for Business Enterprises Basic Standards and the detailed accounting standards (the Accounting Standards for Business Enterprises ) issued by the Ministry of Finance, and based on the following significant accounting policies and estimates.

.

2.

2017 6 30 155,787,801.50

2. Going concern

As at 30 June 2017, the production and operation of the Group were normal. The Group s financing channels were unimpeded. Although the Group s current liabilities exceeded its current assets by RMB155,787,801.50, the Directors of the Company have evaluated that the Group is expected to record positive cash flow from operating activities in the future. Meanwhile, CNBMG, the de facto controller of the Company, and CLFG, the controlling shareholder of the Company made an undertaking in respect of provision of financial assistance to the Company, respectively, to satisfy the capital need for the Group s repayment of debts and capital commitment. The Directors of the Company believe that there exists no problem with the Group s continuing operating capability. As a result, the Company has prepared these financial statements on a going-concern basis.

IV. Major Accounting Policies and Accounting Estimates

Reminder about specific accounting policies and accounting estimates: accounting policies concerning the recognition and measurement of provisions for bad debts for receivables, measurement of inventories delivered, depreciation of fixed assets, amortisation of intangible assets, and revenue recognition and measurement of the Company are developed according to the characteristics of the Group s business operation. Please refer to the relevant notes for particulars.

2.

2017 6 30 2017 1 6

1 1 12
31
Declaration on compliance with Accounting Standards for Business Enterprises

The financial statements of the Company were prepared in compliance with the requirements of Accounting Standards for Business Enterprises, reflecting the Company s financial positions as at 30 June 2017, and operating results, cash flows and other relevant information for the first half of 2017 on a true and complete basis.

Accounting period

Accounting year of the Company is the calendar year from 1 January to 31 December.

– I-105 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

3.

4. IV. Major Accounting Policies and Accounting Estimates (Continued)

3. Operating cycle

The Company takes one year or 12 months as its normal operating cycle which shall act as the division standard for the liquidity of assets and liabilities.

4. Measurement currency

The Company s reporting currency is the Renminbi ( RMB ).

5. (1)

The accounting treatment of business combination under common control and not under common control

(1) Business combination under common control

As for the long-term equity investment combination formed from the business combination under common control, the party combining business shall take payment in cash, transfer of non-cash assets or undertaking of debts as the consideration of such combination, on the combination date, the Company shall take the share of the book value of the net asset of the combined party as stated in the consolidated financial statement of the ultimate controlling party to be the initial investment cost of long-term equity investment. Should the combining party takes the issuance of equity instrument as the consideration for the combination, the total face value of the issued shares shall be the share capital. The difference between the initial investment cost of long-term equity investment and the book value of the consideration paid (or aggregate nominal value of shares issued) for the combination shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.

– I-106 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(2)

IV. Major Accounting Policies and Accounting Estimates (Continued)

The accounting treatment of business combination under common control and not under common control (Continued)

(2) Business combination not under common control

For business combination not under common control, the acquisition cost is the sum of the fair value of assets paid, liabilities occurred or undertaken and equity bonds issued by the acquirer, in exchange of control of acquiree. The recognizable and identifiable assets, liabilities and contingent liabilities of the acquiree obtained in the business combination not under the common control shall be measured at fair value on the acquisition date. Where the cost of a business combination exceeds the acquirer s interest in the fair value of the acquiree s identifiable net assets, the difference shall be recognized as goodwill. Where the cost of combination is less than the acquirer s interest in the fair value of the acquiree s identifiable net assets, and upon review, the above situation remains undchanged, the difference shall be recognized as non-operating profit for the current period if it remains true after reassessment.

(1)
Preparation method of consolidated financial statements
(1) Scope of consolidated financial statements

The Company shall have all subsidiaries (including the individual entities controlled by the Company) incorporated into the scope of the consolidated financial statement(s), including such enterprises controlled by the Company, dispensable parts of the investee(s) and the structured subject(s).

(2)
(2) Centralization of the accounting policies, balance sheet date and accounting period of the parent company and subsidiaries

An adjustment of subsidiaries financial statements is necessary when preparing consolidated financial statements if the accounting policy and accounting period adopted by the Company and its subsidiaries are different.

– I-107 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

6. (3)

IV. Major Accounting Policies and Accounting Estimates (Continued)

Preparation method of consolidated financial statements (Continued)
(3) Items to be offset in consolidated financial statement(s)

Consolidated financial statement(s) shall take the balance sheet(s) of the parent company and of subsidiaries as the basis, having offsetting the internal transactions between the parent company and subsidiaries, and between subsidiaries. Such shares in the owners equity of subsidiaries, which are not attributable to the parent company, shall be the minority interests which shall be listed under the item of Minority interests under owners equity in the consolidated balance sheet(s). Such long-term equity investment of the parent company being held by subsidiaries shall be treated as the treasury shares of the Group which shall be the deduction item of owners equity and presented under Less: Treasury shares under owners equity in the consolidated balance sheet(s).

(4)

(4) Accounting treatment for subsidiaries acquired

For subsidiaries acquired under common control, the assets, liabilities, operating results and cash flow of acquired subsidiaries should be included in consolidated financial statements from the time when the ultimate controlling party commences the real-time control. For subsidiaries acquired from business combination not under common control, when preparing consolidated financial statements, subsidiaries individual financial statements should be adjusted on the basis of the fair value of identifiable net assets on the date of acquisition.

– I-108 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

7. (1)

(2)

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==> picture [117 x 81] intentionally omitted <==

IV. Major Accounting Policies and Accounting Estimates (Continued)

Category of joint venture arrangement and accounting treatment for joint operation
(1) Category of joint venture arrangement

Joint venture arrangement is divided into joint operation and a joint venture. Such joint venture arrangement yet to be achieved by an individual entity is regarded as joint operation. An individual entity refers to such entity having separate and distinguishable financial structure, including an individual entity of legal person and a subject which is not a legal person but is recognized by law. Such joint venture arrangement reached through an individual entity is usually treated as a joint venture. In the event that such rights enjoyed and obligations undertaken by the parties to the joint venture under the joint venture arrangement are changed as a result of the change in the relevant facts and situation, the parties to the joint venture shall re-evaluate the category of such joint arrangement.

(2) Accounting treatment for joint operation

Participants of the joint operation shall conform the following items related to such participants shares of interests in the joint operation and accounting treatment shall be implemented pursuant to the provisions of the relevant accounting standards for business enterprises: to confirm the assets or liabilities held separately and to confirm the assets or liabilities jointly held pursuant to such participant s shares; to confirm such revenue generated from the sale of such shares enjoyed in the joint operation; to confirm such revenue generated from any disposal of assets by the joint operation pursuant to such participant s shares; to confirm the expenses incurred individually and to confirm the expenses incurred in the joint operation pursuant to such participant s shares.

As for the participants of joint operation without the common control thereof, accounting treatment shall be implemented pursuant to the provisions of the participants to the joint operation if such participants are entitled to the relevant assets of the joint operation and are liable to the relevant liabilities of the joint operation. Otherwise, accounting treatment shall be implemented pursuant to the relevant accounting standards for business enterprises.

– I-109 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

8.

==> picture [139 x 117] intentionally omitted <==

==> picture [118 x 272] intentionally omitted <==

(1)

IV. Major Accounting Policies and Accounting Estimates (Continued)

Category of joint venture arrangement and accounting treatment for joint operation (Continued)
(3) Accounting treatment for a joint venture

Participants of a joint venture shall implement accounting treatment regarding investment of a joint venture with reference to the provisions of Accounting Standards for Business Enterprises No. 2 Long-term Equity Investments ( 2 ). Such participants who are not entitled to common control shall implement the accounting treatment pursuant to the extent of impact on the joint venture.

Recognition standard of cash and cash equivalents

In preparation of the cash flow statement, cash represents the Company s treasury cash and deposit withdrawn on demand. Cash equivalents defined in preparation of the cash flow statement by the Company refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk on change in value.

Translation of transactions in foreign currency and statements in foreign currency
(1) Translation of transactions in foreign currency

Foreign currency transactions of the Company are recorded in the recording currency translated at the spot exchange rates on the transaction date. At the balance sheet date, monetary items denominated in foreign currencies are translated to RMB using the spot exchange rate at that date. Exchange differences arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or on the last balance sheet date shall be recorded into the profit or loss for the period, other than the exchange difference of special borrowings denoted in foreign currency eligible for capitalization which shall be capitalized and recorded in the cost of relevant assets during the capitalization period. Non-monetary items denominated in foreign currency measured at historical cost shall continue to be translated at the spot exchange rate at the date of transaction with the amount of its functional currency unchanged. The non-monetary items denoted in foreign currency measured at fair value shall be translated into the amount in its bookkeeping base currency at the spot exchange rate on the date the fair value was determined, the exchange gains and losses arising therefrom shall be treated as the change in fair value (including the change in exchange rate), and included in the gains and losses for the current period or recognized as other comprehensive income.

– I-110 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

10. (2)

(1)

==> picture [118 x 296] intentionally omitted <==

IV. Major Accounting Policies and Accounting Estimates (Continued)

Translation of transactions in foreign currency and statements in foreign currency (Continued)
(2) Translation of statements in foreign currency

In the event that the controlling subsidiaries, joint ventures and associated ventures of the Company adopt such bookkeeping base currency different from that of the Company, accounting verification and preparation and reporting of consolidated financial statements shall be processed after the translation of financial statements denoted in foreign currency has been conducted. As for the items of under assets and liabilities in the balance sheet, the spot exchange rate on the date of the balance sheet shall be adopted. All the items under owners equity excluding the undistributed profit shall adopt the spot exchange rate at the time of occurrence. As for the income and expenses in the income statement, the spot exchange rate on the date of transaction shall be adopted. The difference of translation in the financial statement denoted in foreign currency resulted from the translation of foreign currency shall be listed under other comprehensive income of the owners equity in the balance sheet. The cash flow in foreign currency shall be recognized according to the systematic and reasonable method by adopting the spot exchange rate on the date of transaction. The amount of impact on cash due to the change in the exchange rate shall be listed separately in the cash flow statement. When overseas operation is disposed of, all of or such part of the difference of translation in the financial statement denoted in foreign currency related to the overseas operation, based on the ratio of the overseas operation disposed of, shall be recognized in current profit or loss.

10. Financial instruments

(1) Classification and recognition of financial instrument

Financial instrument is classified as financial asset or financial liability and equity instrument. When the Company becomes a party to a contract of financial instrument, such instrument is recognized as a financial asset or a financial liability, or an equity instrument.

In initial recognition, financial asset should be divided into financial assets at fair value through profit or loss, held-to-maturity investments, receivables and available-for-sale financial assets. Classification of financial asset other than receivables is based on the purpose and capability of financial asset held by the Company and its subsidiaries. In initial recognition, financial liability should be divided into financial liability at fair value through profit or loss and other financial liability.

– I-111 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

10. (1)

IV. Major Accounting Policies and Accounting Estimates (Continued)

10. Financial instruments (Continued)

(1) Classification and recognition of financial instrument (Continued)

Financial assets which are measured at fair value and are recognized in current profit or loss include such financial assets targeted to be sold in short term and financial assets designated at fair value through profit or loss upon initial recognition. Receivables refer to non-derivative financial assets which do not have price quotation nor fixed or confirmable recovered amount in the active market. Available-for-sale financial assets include such non-derivative and available-for-sale financial assets and financial assets not classified as others at the time of initial recognition. Held-for-maturity investment refers to such non-derivative financial assets with fixed maturity date, fixed or confirmable recovered amount and for which the management has express intent and capability to hold until the maturity.

(2)

(2) Measurement of financial instrument

Financial instrument of the Company should be measured at its fair value at initial recognition. Subsequent measurement shall be dealt with according to the classification: The financial assets measured at fair value through profit or loss, financial assets available for sale and financial liabilities measured at fair value through profit or loss shall be measured at fair value. The held-to-maturity investments, loans and receivables and other financial liabilities are measured at amortised cost. As for the equity instrument investment which do not have price quotation in the active market and its fair value cannot be reliably measured, and such derivative financial assets or derivative financial liabilities linked with the equity instrument and settled through delivery of the equity instrument shall be measured at cost. Such profit or loss resulted from the change in the fair value in the subsequent measurement of the financial assets or financial liabilities of the Company, except for those related to hedging, shall be dealt with according to the following methods: The gains or losses resulted from the change in the fair value of the financial assets or financial liabilities measured at fair values through profit and loss for the current period shall be included in the profit or loss of the change in fair value. The change in the fair value of available-for-sale financial assets shall be included in other comprehensive income.

– I-112 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

10. IV. Major Accounting Policies and Accounting Estimates (Continued)

Financial instruments (Continued)
(3) The Company s recognition method for the fair value of the financial instruments

Should there be financial instruments in the active market, the price quotation in the active market shall be used to recognize its fair value. Should there be no financial instruments in the active market, the valuation technique shall be adopted to recognize its fair value. Valuation technique mainly includes market approach, income approach and cost approach.

(4)
(4) Recognition and measurement of transfer of financial assets and liabilities

When the Company has transferred nearly all of the risks and rewards related to the ownership of the financial assets to the transferee, or neither transferred nor retained nearly all of the risks and rewards related to the ownership of the financial assets, but has given up control over the financial assets, it shall derecognize the financial assets. In the event that the financial assets are satisfied with the derecognization conditions, the book value of the financial assets to be transferred and the difference between the consideration received due to such transfer and the accumulative change in the fair value originally recognized in other comprehensive income shall be recognized in the current profit and loss. In the event that part of the financial assets to be transferred satisfied the derecognization conditions, the overall book value of the financial assets to be transferred shall be amortized pursuant to the respective fair values between the derecognized part and the non-derecognized part.

Should all or part of the current obligations for financial liabilities have been discharged, such financial liabilities or a part of such financial liabilities shall be derecognized.

– I-113 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

10. (5)

IV. Major Accounting Policies and Accounting Estimates (Continued)

Financial instruments (Continued)
(5) Impairment of financial assets

In case of impairment of the financial assets measured at amortized cost, provision for impairment will be made based on the difference between the present value of the expected future cash flow (excluding future credit loss which has not occurred) and the book value. Should any objective evidence indicates that the value of the financial assets has been restored and objectively is related to the events which occurred after the recognition of the loss, the impairment loss originally recognized shall be reversed and be recognized in current profit or loss.

In case of impairment of the financial assets measured at cost, provision for impairment will be made based on the difference between the present value of the expected future cash flow and the book value. Once the impairment loss incurred is recognized, it will no longer be reversed.

When the objective proof shows that impairment of the available-for-sale financial assets occurs, the accumulated loss originally recorded in the shareholders equity due to the fall of fair value is reversed and recorded in impairment loss. As for the available-for-sale debt instrument investment with recognized impairment loss, if the post-period fair value rises and objectively, it is related to the events which occurred after the recognition of the loss, the impairment loss originally recognized shall be reversed and recognized in current profit and loss. As for the available-for-sale equity instrument investment with recognized impairment loss, the post-period increase in fair value shall be recorded in shareholders equity.

– I-114 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

10.

(5)

IV. Major Accounting Policies and Accounting Estimates (Continued)

Financial instruments (Continued)
(5) Impairment of financial assets (Continued)

As for the equity instrument investment, it is in the Company s judgment that with respect to the serious or non-tentative drop in the fair value, the calculation method for the specific quantifying standard and cost, the method for recognization of period-end fair value, and the recognization basis during the period of continuous drop are:

50% 12

The specific quantifying Period-end fair value dropped standard for serious drop for 50% or more than 50% with in fair value respect to the cost. The specific quantifying T h e d r o p c o n t i n u e d f o r a standard for non-tentative consecutive period of 12 months. drop in fair value

Calculation method for cost When it is obtained, the sum of the consideration to be paid (after deducting the declared but not released cash dividend or the debenture interest upon maturity but not obtained yet) and the relevant trading fee shall be the investment cost.

Method for recognization of S h o u l d t h e r e b e f i n a n c i a l period-end fair value instruments in the active market, the price quotation in the active market shall be used to recognize their fair value. Should there be no financial instruments in the active market, the valuation technique shall be adopted to recognize their fair value.

20% 6

Recognization basis during During the continuous drop or the period of continuous the continuing period of falling drop trend, the degree of rebound is less than 20%. Should the continuing period of rebound last for less than 6 months, it should be treated as the period of continuous drop.

– I-115 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

IV. Major Accounting Policies and Accounting Estimates (Continued)

Accounts receivable

The receivables of the Company include accounts receivable, long-term receivables and other receivables. If there is objective evidence that they have been impaired, impairment loss shall be recognized based on the differences between book values and the present value of estimated future cash flows by the Company.

500.00

(1) Accounts receivable of which single amount is significant and is individually provided for bad debts:

Basis and criteria for Receivables with the book balance determining significant of over RMB5 million single amount

Provision for accounts Recognized at the difference receivable which single between the book value and the amount is significant and present value of the expected is individually provided for future cash flow bad debts

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(2) Receivables with provision for bad debts pursuant to the group of characteristics of credit risk:

Provision for bad debts pursuant to the group of characteristics of credit risk (aging analysis method, balance percentage method and other methods)

Basis for recognition of the Nature of amounts and group characteristics of risks

– I-116 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(2) (1) (2) (3)

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IV. Major Accounting Policies and Accounting Estimates (Continued)
Accounts receivable (Continued)
- (2) Receivables with provision for bad debts pursuant to the group of characteristics of credit risk: (Continued)

The group with provision Except for receivables without for bad debts based on provision for bad debts, such aging analysis receivables without impairment upon single test shall be divided into some credit risk groups pursuant to aging analysis method. Then, provision for bad debts is made based on the definite ratio of the balance of the receivables group.

The group without (1) Various margins and deposits provision for bad debts related to the production and operations that are fully recoverable upon maturity; (2) Accounts receivable incurred between the Company and related party which has good financial position; (3) Other amounts that have positive evidence indicating they are fully recoverable.

Methods of making provision for bad debts in group The group with provision Aging analysis for bad debts based on aging analysis The group without Without provision for bad debts provision for bad debts

– I-117 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

IV. Major Accounting Policies and Accounting Estimates (Continued)

Accounts receivable (Continued)
(2) Receivables with provision for bad debts pursuant to the group of characteristics of credit risk: (Continued)

In the group, the provision for bad debts based on aging analysis:

	Age Percentage of accounts receivable provided for Percentage of other receivables provided for (%) (%)
1 1 1 2 2 3 3 3 4 4 5 5	1 Within 1 year (including 1 year) 0 0 Including: sub-items within 1 year ~~1~~ ~~2~~years 30 30 ~~2~~ ~~3~~years 50 50 Above 3 years 100 100 ~~3~~ ~~4~~years 100 100 ~~4~~ ~~5~~years 100 100 Above 5 years 100 100

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(3) Accounts receivable of which single amount is not significant but individually provided for bad debts:
Reason of the individual Positive evidence indicates that provision for bad debts there is obvious difference in recoverability
Provision Method for bad For the provision for bad debts by debts using individual determination method, the accounts receivable from the related party shall be fully provided for bad debts in the event that it is estimated that it cannot be fully recovered.

– I-118 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

12.

1. IV. Major Accounting Policies and Accounting Estimates (Continued)

12. Inventories

1. Classification

Inventories mean finished goods or merchandise held for sale in the ordinary course of business, unfinished products in the process of production, and materials or supplies used in the process of production or rendering of services. Inventories mainly include raw materials, revolving materials, work in progress and finished goods.

2. 2. Measurement for delivered inventories

Upon delivery of inventories, the actual cost of such inventories will be determined by using weighted average method.

3. 3. Provision for impairment

At the end of the period, after a thorough inspection of the inventories, provision for decline in value of inventories will be made or adjusted at the lower of the cost and the net realizable value. Net realizable value of held-for-sale commodity stocks, such as finished goods, goods-in-stock, and held-for-sale raw materials, during the normal course of production and operation, shall be determined by their estimated selling prices less the related selling expenses and taxes; the net realizable value of material inventories, which need to be processed, during the normal course of production and operation, shall be determined by the amount after deducting the estimated cost of completion, estimated selling expenses and relevant taxes from the estimated selling price of finished goods; the net realizable value of inventories held for execution of sales contracts or labor contracts shall be calculated on the ground of the contracted price. If an enterprise holds more inventories than the quantity stipulated in the sales contract, the net realizable value of the exceeding part shall be calculated on the ground of general selling price.

– I-119 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

12.

3. IV. Major Accounting Policies and Accounting Estimates (Continued)

12. Inventories (Continued)

3. Provision for impairment (Continued)

Decline in value of inventories is made on an item-by-item basis at the end of the period. For large quantity and low value items of inventories, provision may be made based on categories of inventories; for items of inventories relating to a product line that is produced and marketed in the same geographical area and with the same or similar end uses or purposes, which cannot be evaluated separately from other items in that product line, provision for decline in value of inventories may be determined on an aggregate basis.

4. 4. Inventory system

The Company adopts perpetual inventory system.

5. 5. Amortization of low-value consumables and packaging materials

Low-value consumables are amortized using one-off write-off method. Packaging materials and other revolving materials are amortized using equal-split amortization method.

13. 13. Recognition of assets held for sale

– I-120 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1.

2. IV. Major Accounting Policies and Accounting Estimates (Continued)

14. Long-term equity investments

1. Determination of initial investment cost

For a long-term equity investment obtained from business consolidation under common control, the initial cost is measured at the share of the carrying amount of the equity of the combined party; for a long-term equity investment obtained from business consolidation not under common control, the initial cost is the consolidation cost at the date of acquisition. For a long-term equity investment acquired by cash, the initial investment cost shall be the actual purchase price. For a long-term equity investment acquired by the issue of equity securities, the initial investment cost shall be the fair value of the securities issued. For a long-term equity investment acquired by debt restructuring, the initial investment cost is recognized according to relevant requirements of Accounting Standards for Business Enterprises No.12 Debt Restructuring. For a long-term equity investment acquired by exchange of non-monetary assets, the initial investment cost is recognized according to relevant standards and regulations.

2. Subsequent measurement and profit or loss recognition

– I-121 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

15. (1)

20% 50% 20%

IV. Major Accounting Policies and Accounting Estimates (Continued)

Long-term equity investments (Continued)
Basis of conclusion for common control and significant influence over the investee

Joint control over an investee refers to where the activities which have a significant influence on return on certain arrangement could be decided only by mutual consent of the investing parties sharing the control, which includes the sales and purchase of goods or services, management of financial assets, acquisition and disposal of assets, research and development activities and financing activities, etc. Significant influence on the investee refers to that: significant influence over the investee exists when holding more than 20% but less than 50% of the shares with voting rights or even if the holding is below 20%, there is still significant influence if any of the following conditions is met: there is representative in the board of directors or similar governing body of the investee; participation in the investee s policy setting process; assigning key management to the investee; the investee relies on the technology or technical information of the investing company; or major transactions with the investee.

15. Fixed assets

(1) Recognition conditions

Fixed assets are tangible assets that are held for production, provision of services, leasing or administrative purposes, and have useful life of more than one financial year. Fixed assets are recognized when both of the following conditions are met: economic benefits in relation to the fixed assets are very likely to flow into the enterprise; and the cost of the fixed assets can be measured reliably.

– I-122 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

15. (2)

IV. Major Accounting Policies and Accounting Estimates (Continued)

Fixed assets (Continued)

(2) Depreciation methods

Main fixed assets held by the Company are buildings and structures, machine and equipment, electronic equipment and transportation tools etc. Depreciation is provided based upon the straight-line method. The Company determines the useful life and estimates net residual value of a fixed asset according to the nature and use pattern of the fixed asset. The Company, at the end of each year, has a review on the useful life, expected residual value and the depreciation method of the fixed assets. If it differs from its previous estimate, adjustment will be made accordingly. The Company provides depreciation for all its fixed assets other than fully depreciated fixed assets that are still in use and land individually accounted for.

			Category Depreciation method Depreciable life Residual value rate Annual depreciation rate (year) (%) (%)
			Buildings and structures Straight-line method 3~~0~~ ~~5~~0 ~~3~~ ~~5~~ 1.9~~0~~ ~~3~~.23 Machine and equipment Straight-line method ~~4~~ ~~2~~8 ~~3~~ ~~5~~ 3.39 24.25 Electronic equipment Straight-line method 10 3 9.70 Transportation tools Straight-line method ~~6~~ ~~1~~2 ~~3~~ ~~5~~ 7.92 16.17 Other equipment Straight-line method ~~4~~ ~~2~~8 ~~3~~ ~~5~~ 3.39 24.25

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(3) Recognition, measurement and depreciation of fixed assets under finance lease

As for the fixed assets under finance lease, it is a lease that actually involves the transfer of all risks and rewards related to the ownership of the asset. Initial price of the fixed assets under finance lease is taking the lower of the fair value of the leased asset on the inception date and present value of the minimum lease payment, as the book value. Subsequent calculation of the price of the fixed assets under finance lease shall adopt such depreciation policy for calculating depreciation and making provision for impairment whereas such policy is consistent with that for self-owned fixed assets.

– I-123 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

16. IV. Major Accounting Policies and Accounting Estimates (Continued)

16. Construction in progress

17. 17. Borrowing costs

– I-124 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

IV. Major Accounting Policies and Accounting Estimates (Continued)

Borrowing costs (Continued)

Calculation of amount to be capitalized

The capitalization period refers to the period beginning from the commencement of capitalizing borrowing costs to the date of ceasing capitalization, excluding the period of suspension of capitalization. Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.

For designated borrowings, the capitalized amount shall be the actual interest expense incurred for the designated borrowings, less the interest income from the unused funds of the designated borrowings or investment income from the temporary investments; and for general borrowings, the weighted average of general borrowings occupied, based on the accumulated expenditure exceeding the capital expenditure from designated borrowings times the capitalization rate of the general borrowings so occupied. The capitalization rate is the weighted average rate of the general borrowings; and for borrowings with discount or premium, the discount or premium was amortized over the term of the borrowings to adjust the interest in every period using effective interest rate method.

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– I-125 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

IV. Major Accounting Policies and Accounting Estimates (Continued)

Intangible assets
(1) Measurement, useful life and impairment test

Measurement of intangible assets

– I-126 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

IV. Major Accounting Policies and Accounting Estimates (Continued)

Intangible assets (Continued)
(1) Measurement, useful life and impairment test (Continued)

Determination basis of infinite useful life

An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for the Company or it has no definite useful life. The judgment basis of intangible assets with indefinite useful life: derived from the contractual rights or other legal rights but the contract or the law does not specify certain useful life; in light of the conditions of the competitors and the opinions of relevant experts, the specific period that intangible asset can generate economic benefits to the Company still can not be determined.

At the end of each year, the useful life shall be reviewed for those intangible assets with indefinite useful life by mainly using the bottom-up method. The relevant department that uses intangible asset will perform the basic review and evaluate whether there are changes in the basis for judgments of the indefinite useful life, etc.

– I-127 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

(2)

(1) (2) (3) (4) (5)

IV. Major Accounting Policies and Accounting Estimates (Continued)

Intangible assets (Continued)
(2) Accounting policy regarding the expenditure on the internal research and development

– I-128 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

19. IV. Major Accounting Policies and Accounting Estimates (Continued)

Long-term asset impairment

Should there be traces of impairment in long-term equity investment, property investment adopting cost-mode measurement, fixed assets, engineering in construction, productive biological assets adopting cost mode measurement, oil and gas assets, intangible assets, goodwill and other long-term assets on the balance sheet date, testing for impairment shall be conducted. The results of said testing for impairment show that should the recovered amount of assets be lower than their book value, provision for impairment regarding such difference shall be made and be recognized in profit and loss.

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Recovered amount is the higher of the net amount derived from deducting the disposal fee from the fair value of asset, and the present value of the expected cash flow of assets. Provision for asset impairment shall be calculated and recognized based on a single item of asset. If it is difficult to evaluate the recovered amount for a single item of asset, such recovered amount for the asset group can be recognized by the asset group belonged to such assets. Asset group is the smallest asset group that can independently generate cash flow.

As for the goodwill listed individually in the financial statement, regardless of the existence of traces of impairment, impairment test shall be conducted at least annually. When impairment test is being conducted, the book value of goodwill will be amortised to such asset group or asset group combination benefited from the synergic effect of the expected enterprise combination. Testing results show that should the recovered amount of such asset group or asset group combination of amortised goodwill is lower than its book value, the corresponding impairment loss is recognized. The impairment loss amount is firstly used to offset such amortised book value of the goodwill regarding such asset group or asset group combination. The book value of other assets shall be offset based on the ratio accounted by the book value of such other assets (excluding the goodwill) of such asset group or asset group combination.

Once the impairment loss of such assets is recognized, it is not be reversed in any subsequent period.

– I-129 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

20. IV. Major Accounting Policies and Accounting Estimates (Continued)

20. Long-term deferred expenses

Long-term deferred expenses of the Company are expenses which have been paid but the benefit period is over one year (not including one year). Long-term deferred expenses are amortized evenly over the estimated benefit period of the expense item. In the case that the long-term deferred expense cannot benefit the future accounting period, the residue value of such projects not amortized yet shall all be transferred to the profit or loss in the current period.

21. 21. Employee compensation

Employees compensation refers to remuneration or indemnification in various forms given to employees for the company s obtaining of service provided by employees or for dissolution of labor relationship with employees. Employees compensation shall include short-term wages, after-service welfare, dismissal welfare and other long-term employees welfare.

(1)

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(1) Accounting treatment of short-term compensation

During the accounting period for which employees provide their service to the Company, the short-term compensation actually incurred are recognized as liabilities and recognized in current profit and loss, except for being recognized in asset cost as required or allowed by other accounting standards. The employees welfare incurred shall be recognized in current profit and loss or relevant asset cost based on the actual amount incurred at the time of occurrence. Should the employees welfare be non-monetary welfare, it shall be measured at fair value. The Company shall pay for employees medical insurance, labor injury insurance, birth insurance and other social insurance premium and housing accumulation fund. Besides, the Company shall allocate labor union expenses and employee education expenses. During the accounting period for which employees provide their service, the amount of the corresponding employee s compensation shall be calculated and confirmed pursuant to the allocation basis and the ratio of allocation as stated; and the corresponding liabilities shall be recognized and recorded in current profit and loss or the relevant asset cost.

– I-130 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

21. (2)

IV. Major Accounting Policies and Accounting Estimates (Continued)

21. Employee compensation (Continued)

(2) Accounting treatment of off-service welfare

During the accounting period for which employees provide their service, the Company shall recognize the amount of deposit reserve calculated based on the Defined Contribution Plan as liabilities, and shall recognize it in current profit and loss or the relevant asset cost. According to the formula confirmed by the expected accumulated welfare unit method, the welfare obligations generated in Defined benefit plans shall be attributable to the period for which employees provide their service and shall be recognized in current profit and loss or the relevant asset cost.

(3)

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(3) Accounting treatment of dismissal welfare

When the Company provides employees with dismissal welfare, the employees compensation liabilities generated from the dismissal welfare is recognized and recorded in current profit and loss whichever of the following is earlier: when the Company cannot unilaterally revoke such dismissal welfare provided due to dissolution of labor relationship plan or suggested redundancy; when the Company recognizes such cost or fee involving the restructuring of payment for dismissal welfare.

(4) Accounting treatment of other long-term employees welfare

Other long-term employees welfare provided to employees by the Company, if in compliance with the conditions for the Defined Contribution Plan, shall be processed pursuant to the provisions of the Defined Contribution Plan. In addition, net liabilities or net assets of other long-term employees shall be recognized and measured pursuant to the relevant provisions of the Defined Benefits Plan.

– I-131 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

22. IV. Major Accounting Policies and Accounting Estimates (Continued)

22. Estimated liability

If an obligation in relation to contingency is the present obligation of the Company and the performance of such obligation is likely to lead to the outflow of economic benefits and its amount can be reliably measured, such obligation shall be recognized as estimated liability. The best estimate of the expenditure from current obligation is initially recorded as accrued liability. When the necessary expenditures fall within a range and the probability of each result in the range are identical, the best estimate is the median of the range; if there are severable items involved, every possible result and relevant probability are taken into account for the best estimation.

At the balance sheet date, the Company reviews the carrying value of accrued liability and an adjustment is necessary according to the current best appraisable amount if there is obvious evidence that carrying value cannot fairly represent the best appraisable amount.

23. (1)

23. Revenue

(1) Sales of goods

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If there is deferred payment clause in the agreement or mutually agreed price, which in substance is a financing nature, the fair value of the receivables is recorded as sales amount.

– I-132 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

23. (2)

IV. Major Accounting Policies and Accounting Estimates (Continued)

Revenue (Continued)

(2) Provision of labor services

At the balance sheet date, when the outcome of a transaction involving the rendering of services can be estimated reliably, revenue from provision of services shall be recognized using the percentage of completion method. The percentage of completion is determined by the Company based on the percentage of actual cost over estimated total cost. At the balance sheet date, when the outcome of the transaction involving the rendering of services cannot be estimated reliably, it shall be dealt with in the following ways: if the cost of services incurred is expected to be compensated, the revenue from the rendering of services is recognized to the extent of actual cost incurred to date, and the relevant cost is carried forward to cost of service in profit or loss; if the cost of services incurred is not expected to be compensated, the cost incurred should be included in current profit or loss, and no revenue from the rendering of services may be recognized.

(3)

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(3) Alienating the right to use an asset

When the inflow of economic benefits from the alienating of assets is probable and the income can be measured reliably, the income from alienating the right to use an asset is recognized.

– I-133 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

IV. Major Accounting Policies and Accounting Estimates (Continued)

Government grants
(1) Basis for determination of and accounting treatment for government grants related to assets

(2)
(2) Basis for determination of and accounting treatment for government grants related to income

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(3) Specific standards for differentiating governmental grants related to assets from those related to income

Where there is no express regulation on subsidy object in government documents, the criteria for differentiating governmental grants related to assets from those related to income is as below: government grant subject to a certain project shall be separated according to the proportion of expenditure budget and capitalization budget, and the proportion shall be reviewed and modified if necessary on the balance sheet date; government grant shall be categorized as related to income if its usage is just subject to general statement without specific project in relevant document.

– I-134 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

IV. Major Accounting Policies and Accounting Estimates (Continued)

Deferred tax assets/deferred tax liabilities
(1) The deferred income tax assets or income tax liabilities shall be calculated and recognized at the applicable tax rate during which such asset are expected to be recovered or such liabilities can be settled, based on the difference between the carrying amount of assets and liabilities and their tax basis (for the items that have not been recognized as the assets and liabilities and whose taxable basis can be determined according to the tax law, the taxable basis can be determined as its difference).
(2) The deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilized. At the balance sheet date, if there is positive evidence indicating that sufficient taxable profits can be obtained in the future period to deduct deductible temporary differences, and the unrecognized deferred income tax asset in the previous accounting period shall be recognized. The carrying amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefit of the deferred tax asset to be utilized.
(3) As for taxable temporary difference related to the investments of subsidiaries and associated enterprises, the deferred income tax liabilities are recognized unless the Company can control the time for the reversal of temporary differences and such differences are much likely not to be reversed in the foreseeable future. As for the deductible temporary difference related to investments in subsidiaries and associated enterprises, the deferred income tax assets shall be recognized when such temporary differences are much likely to be reversed in the foreseeable future and the taxable profit are available against which the deductible temporary difference can be utilized.

– I-135 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

IV. Major Accounting Policies and Accounting Estimates (Continued)
Lease

Accounting treatment for operating leases

Lease expenditure for operating leases shall be recorded into the cost of the relevant asset or the current profits and losses on a straight-line basis during the lease term.

Changes in significant accounting policies

Details of and reason in accounting policies	s for changes					Procedures for approval Note (Financial statement items and amounts materially affected)
2017 5 10 16 2017 6 12 2006 16 2017 1 1 2017 1 1 2017 1 ~~6~~ 19,749,138.28 19,749,138.28 On 10 May 2017, the Ministry of Finance of the PRC published the amended Accounting Standard for Business Enterprises No. 16 Government Grants which came into force since 12 June 2017 with the Accounting Standard for Business Enterprises No. 16 promulgated by the Ministry of Finance of the PRC in 2006 repealed simultaneously. In accordance with such amended standard, for government grants Approved at the 33rd meeting of the eighth session of the Board of the Company Items of income statement for January to June 2017 An increase in other income by RMB19,749,138.28 A decrease in non-operating income by RMB19,749,138.28

On 10 May 2017, the Ministry of Finance of the PRC published the amended Accounting Standard for Business Enterprises No. 16 Government Grants which came into force since 12 June 2017 with the Accounting Standard for Business Enterprises No. 16 promulgated by the Ministry of Finance of the PRC in 2006 repealed simultaneously. In accordance with such amended standard, for government grants existing as at 1 January 2017, the prospective application method shall be applied; and for newlyadded government grants from 1 January 2017 to the date on which the standard came into force, adjustments shall be made according to the amended standard.

Explanation:

2017 6 12

The Group started to implement the amended standard since 12 June 2017.

The main changes in the aforementioned accounting policy are as follows: government grants relating to the ordinary activities of enterprises shall be included in other income or used to write down the related costs based on the nature of economic business. Enterprises shall separately present other income above operating profit in their income statements and the government grants included in other income shall be reflected therein. Government grants not relating to the ordinary activities of enterprises shall be included in non-operating income and expenses.

– I-136 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

V. Taxes

1. Major categories of taxes and tax rates

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----- Start of picture text -----

Category Tax basis Tax rate
Value added tax Assessable value-added part 13% 17% 13% and 17%
of sales revenue and labor
services
City maintenance and Turnover tax paid 5% 7% 5% and 7%
construction tax
Enterprise income tax Enterprise's profit 15% 25% 15% and 25%
Educational Turnover tax paid 3% 3%
surcharges
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----- Start of picture text -----

Should there be any entity paying taxes at different enterprise income
tax rates, the disclosure is explained below
Name of entity paying taxes Income tax rate
The Company 25%
Longhai Company, Bengbu Company 15%
Other subsidiaries 25%
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2. 2. Preferential tax treatment

2016 12 2017 15%

2016

10 21 GR201634000360 2017 15%

Longhai Company, a wholly-owned subsidiary of the Company, has been approved as a high-tech enterprise in December 2016 and paid the enterprise income tax at a tax rate of 15% in 2017.

– I-137 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

VI. Notes to Significant Items of the Consolidated Financial Statements
Cash and cash equivalents

Unit: Yuan Currency: RMB

Item	Closing balance	Opening balance
Cash on hand	87,694.01	95,219.74
Deposits at banks	60,600,343.19	112,433,296.79
Other cash and cash equivalents	30,000,000.00	45,000,000.00

Total	90,688,037.20	157,528,516.53

(1)
Notes receivable
(1) Category of notes receivable

Unit: Yuan Currency: RMB

	Item Closing balance Opening balance
	Bank acceptance 43,611,023.42 45,586,571.00 Trade acceptance 400,000.00
	Total 43,611,023.42 45,986,571.00

– I-138 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.
(2)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Notes receivable (Continued)
- (2) Notes receivable which were endorsed but were not yet discounted by the Company at the end of the period and not due as of the date of the balance sheet:

Unit: Yuan Currency: RMB

	Item Derecognized amount at the end of the period Not-yet-derecognized amount at the end of the period
	Bank acceptance 45,070,979.84 Trade acceptance
	Total 45,070,979.84

(1)
Accounts receivable
(1) Disclosed categorization of accounts receivable

Unit: Yuan Currency: RMB

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Closing balance Opening balance
Carrying amount Provision for bad debts Carrying amount Provision for bad debts
Category Amount Ratio Amount Provision ratio Book value Amount Ratio Amount Provision ratio Book value
(%) (%) (%) (%)
Account receivables with significant
single amount and individual
provision for bad debts
Accounts receivable with provision 193,577,848.89 100.00 55,474,889.68 28.66 138,102,959.21 156,466,612.01 100.00 54,575,282.88 34.88 101,891,329.13
for bad debts pursuant to
the group with credit risk
characteristics
Account receivables with
insignificant single amount and
individual provision for bad debts
Total 193,577,848.89 / 55,474,889.68 / 138,102,959.21 156,466,612.01 / 54,575,282.88 / 101,891,329.13
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– I-139 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Accounts receivable (Continued)
- (1) Disclosed categorization of accounts receivable (Continued)

For the groups, the accounts receivable with provision for bad debts are calculated pursuant to the ageing analysis method are as follows:

Unit: Yuan Currency: RMB

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----- Start of picture text -----

Closing balance
Accounts Provision for
Aging receivable bad debts Provision ratio
(%)
1 Within 1 year
1 Including: Sub-items within 1 year
1 Sub-total within 1 year 109,541,575.90
1 2 1 to 2 years 4,746,367.28 1,423,910.18 30.00
2 3 2 to 3 years 2.14 1.07 50.00
3 Above 3 years
3 4 3 to 4 years 79,720.82 79,720.82 100.00
4 5 4 to 5 years 605,589.30 605,589.30 100.00
5 Above 5 years 53,365,668.31 53,365,668.31 100.00
Total 168,338,923.75 55,474,889.68 32.95
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For the groups, the accounts receivable without provision for bad debts are as follows:

Unit: Yuan Currency: RMB

		Item Amount at the end of the period Amount at the beginning of the period
		Group without provision for bad debts (related parties) 25,238,925.14 30,282,005.49
		Total 25,238,925.14 30,282,005.49

– I-140 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4.

899,606.80 0

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127,807,491.72 66.02% 4,757,122.32
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Accounts receivable (Continued)
- (2) Provision for bad debts made, recovered or reversed for the current period:

Provision for bad debts for the current period is RMB899,606.80; the recovery or reversal of the provision for bad debts is RMB0.

(3) Top five largest accounts receivable at the end of the period by the balance collected regarding the party in default:

The total amount from the top five largest accounts receivable at the end of the period by the balance collected regarding the party in default is RMB127,807,491.72, representing 66.02% of the total balance of the accounts receivable at the end of the period. The total balance of the corresponding provision for bad debts at the end of the period is RMB4,757,122.32.

Prepayments
(1) Aging analysis of prepayments

Unit: Yuan Currency: RMB

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Closing balance Opening balance
Aging Amount Ratio Amount Ratio
(%) (%)
1 Within 1 year 3,339,004.70 98.38 1,583,447.58 96.64
1 2 1 to 2 years 5,564.00 0.16 30,737.65 1.88
2 3 2 to 3 years 25,537.65 0.75 3,100.00 0.19
3 Above 3 years 24,167.24 0.71 21,067.24 1.29
Total 3,394,273.59 100.00 1,638,352.47 100.00
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– I-141 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3,058,346.58 90.10%

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Prepayments (Continued)
- (2) Top five largest prepayments at the end of the period by the total balance collected regarding the party paying prepayments:

The total amount from the top five largest prepayments at the end of the period by the balance collected regarding the party paying prepayments is RMB3,058,346.58, representing 90.10% of the total balance of the prepayments at the end of the period.

Other receivables
(1) Disclosed categories of other receivables

Unit: Yuan Currency: RMB

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Closing balance Opening balance
Carrying amount Provision for bad debts Carrying amount Provision for bad debts
Provision Provision
Category Amount Ratio Amount ratio Book value Amount Ratio Amount ratio Book value
(%) (%) (%) (%)
Other receivables with significant 10,808,704.00 13.39 10,808,704.00 100.00 10,808,704.00 6.86 10,808,704.00 100.00
single amount and individual
provision for bad debts
Other receivables with provision 69,900,396.45 86.61 39,734,757.02 56.84 30,165,639.43 146,664,511.77 93.14 39,082,793.86 26.65 107,581,717.91
for bad debts pursuant to
the group with credit risk
characteristics
Other receivables with
insignificant single amount and
individual provision for bad
debts
Total 80,709,100.45 / 50,543,461.02 / 30,165,639.43 157,473,215.77 / 49,891,497.86 / 107,581,717.91
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– I-142 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Other receivables (Continued)
- (1) Disclosed categories of other receivables (Continued)

Other receivables with significant single amount and individual provision for bad debts at the end of the period:

Unit: Yuan Currency: RMB

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Closing balance
Other Provision for Provision
Other receivables (by unit) receivables bad debts Ratio Reason for making provision
(%)
Xili Sub-Branch, Zhengzhou of 10,808,704.00 10,808,704.00 100
China Construction Bank Full provision for bad debts
due to failure of recovery
Total 10,808,704.00 10,808,704.00
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For the groups, other receivables with provision for bad debts by using ageing analysis method:

Unit: Yuan Currency: RMB

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Closing balance
Provision for
Aging Other receivables bad debts Provision Ratio
(%)
1 Within 1 year
1 Including: Sub-items within 1 year
1 Sub-total within 1 year 690,253.34
1 2 1 to 2 years 72,468.82 21,740.65 30.00
2 3 2 to 3 years 968,432.51 484,216.26 50.00
3 Above 3 years
3 4 3 to 4 years 879,072.00 879,072.00 100.00
4 5 4 to 5 years 250,813.89 250,813.89 100.00
5 Above 5 years 38,098,914.22 38,098,914.22 100.00
Total 40,959,954.78 39,734,757.02 97.01
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– I-143 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Other receivables (Continued)
- (1) Disclosed categories of other receivables (Continued)

In the group, other receivables with no provision for bad debts

Unit: Yuan Currency: RMB

		Item Amount at the end of the period Amount at the beginning of the period
		Group with no provision for bad debts (related party, spare fund, security deposit, etc.) 28,940,441.67 105,822,737.09
		Total 28,940,441.67 105,822,737.09

(2)
(2) Provision for bad debts made, recovered or reversed for the current period:

Provision for bad debts for the current period is RMB651,963.16; 651,963.16 Provision for bad debts recovered or reversed for the current 0 period is RMB0.

(3)
(3) Category of other receivables by nature of amount

Unit: Yuan Currency: RMB

			Nature of amount Carrying amount at the end of the period Carrying amount at the beginning of the period
			Performance committed compensation for assets acquisition 23,783,372.88 Security deposit, deposit, reserve 26,767,827.90 79,974,572.99 Current accounts 53,941,272.55 53,715,269.90
			Total 80,709,100.45 157,473,215.77

– I-144 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(4)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Other receivables (Continued)
- (4) The top five largest other receivables at the end of the period by the balance collected regarding the party in default:

Unit: Yuan Currency: RMB

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Name		Nature of amount Closing balance Aging Ratio representing with respect to the total balance of other receivables at the end of the period Balance of provision for bad debts at the end of the period (%)
13,636,363.00 2 3 16.90 International Far Eastern Leasing Co., Ltd. Security deposit 2 to 3 years 10,808,704.00 5 13.39 10,808,704.00 Xili Sub-Branch, Zhengzhou of China Construction Bank Current accounts More than 5 years 10,000,000.00 1 12.39 Taiping & Sinopec Financial Leasing Co., Ltd.* Security deposit Within 1 year 9,856,832.00 5 12.21 9,856,832.00 Zhuge County Government Current accounts More than 5 years 4,600,000.00 5 5.70 4,600,000.00 Shenzhen Cynthia Industrial Company Limited Current accounts More than 5 years
Total 48,901,899.00 60.59 25,265,536.00

– I-145 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.
(1)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Inventories
- (1) Category of inventories

Unit: Yuan Currency: RMB

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Closing balance Opening balance
Carrying Provision for Carrying Provision for
Item amount depreciation Book value amount depreciation Book value
Raw materials 46,621,469.24 1,325,240.88 45,296,228.36 45,997,542.78 1,375,019.80 44,622,522.98
Products in process 3,350,387.32 269,863.36 3,080,523.96 2,700,674.45 2,700,674.45
Commodity inventories 98,663,452.65 22,504,244.19 76,159,208.46 117,910,829.68 32,772,117.38 85,138,712.30
Circulation materials 516,590.53 516,590.53 516,590.53 516,590.53
Total 149,151,899.74 24,099,348.43 125,052,551.31 167,125,637.44 34,147,137.18 132,978,500.26
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(2) (2) Provision for decreased price of inventories

Unit: Yuan Currency: RMB

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Increase for the current period Decrease for the current period
Reversal or
Item Opening balance Provision Others write-off Others Closing balance
Raw materials 1,375,019.80 225,895.73 275,674.65 1,325,240.88
Products in process 269,863.36 269,863.36
Commodity inventories 32,772,117.38 10,267,873.19 22,504,244.19
Total 34,147,137.18 495,759.09 10,543,547.84 24,099,348.43
----- End of picture text -----

– I-146 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Other current assets

Unit: Yuan Currency: RMB

	Item Closing balance Opening balance
	Tax to be deducted 24,084,688.81 33,708,996.77 Payment of Enterprise Income Tax in advance 1,165,037.58 1,165,037.58
	Total 25,249,726.39 34,874,034.35

(1)
Available-for-sale financial assets
(1) Available-for-sale financial assets

Unit: Yuan Currency: RMB

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Closing balance Opening balance
Carrying Provision for Carrying Provision for
Item amount impairment Book value amount impairment Book value
Available-for-sale debt
instruments:
Available-for-sale equity 7,791,217.53 7,791,217.53 7,791,217.53 7,791,217.53
instruments:
Measured at fair value
Measured at cost 7,791,217.53 7,791,217.53 7,791,217.53 7,791,217.53
Total 7,791,217.53 7,791,217.53 7,791,217.53 7,791,217.53
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– I-147 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(2)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Available-for-sale financial assets (Continued)
- (2) Available-for-sale financial assets measured per cost at the end of the period

Unit: Yuan Currency: RMB

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Carrying amount Provision for impairment
Cash
At the Increase for Decrease for At the Increase for Decrease for Shareholding dividend for
beginning of the current the current At the end of beginning of the current the current At the end of ratio in the the current
Investee the period period period the period the period period period the period investee period
(%)
1. 1. Luoyang Luobo Glass 4,000,000.00 4,000,000.00 4,000,000.00 4,000,000.00 35.90
Fibre Co., Ltd. (Note)
2. 2. CLFG Luoyang Jingjiu 1,500,000.00 1,500,000.00 1,500,000.00 1,500,000.00 31.08
Glass Products
Company Limited
(Note)
3. 3. CLFG New Lighting 2,291,217.53 2,291,217.53 2,291,217.53 2,291,217.53 29.45
Company Limited
(Note)
Total 7,791,217.53 7,791,217.53 7,791,217.53 7,791,217.53
----- End of picture text -----

20%

Note: The Company is of the view that, despite the Company s shareholding in the investees exceeds 20%, since the Company did not assign any management personnel to the investees, or participate in any formulation of the investees financial and operating policies, engage in any significant transactions with the investees, or provide any key technological information to the investees, Thus, the Company is of the view that it has no significant impact on the investees and classified as available-for-sale financial assets.

– I-148 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(3)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Available-for-sale financial assets (Continued)
- (3) Change in the impairment of available-for-sale financial assets during the Reporting Period

Unit: Yuan Currency: RMB

			Category of available-for-sale financial assets Available-for-sale equity instruments Available-for-sale debt instruments Total
			Balance of provision for impairment at the beginning of the period 7,791,217.53 7,791,217.53 Provision for the Period Including: Shift from other comprehensive income Decrease for the period Including: Reverse from recovery of fair value after the period Balance of provision for impairment at the end of the period 7,791,217.53 7,791,217.53

Long-term receivables
(1) (1) Long-term receivables:

Unit: Yuan Currency: RMB

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Closing balance Opening balance
Range of
Carrying Provision for Carrying Provision for discount
Item amount bad debts Book value amount bad debts Book value rate
Receivables from disposal of
equity interest in the
Industrial Company 55,000,000.00 55,000,000.00 55,000,000.00 55,000,000.00
Total 55,000,000.00 55,000,000.00 55,000,000.00 55,000,000.00
----- End of picture text -----

– I-149 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Fixed assets
- (1) Fixed assets

Unit: Yuan Currency: RMB

		Item Buildings Machinery Transportation equipment Others Total
. 1. 2. (1) (2) (3) 3. (1) (2) 4.		I. Original book value: 1. Opening balance 266,547,539.08 780,172,744.85 4,121,659.45 1,582,484.33 1,052,424,427.71 2. Increase for the current period 68,382.89 66,337.60 29,711.58 164,432.07 (1) Purchase 68,382.89 66,337.60 29,711.58 164,432.07 (2) Shift from construction in progress (3) Increase from business combination 3. Decrease for the current period 49,900,930.32 62,865.00 49,963,795.32 (1) Disposal or retirement 62,865.00 62,865.00 (2) Transferred to construction in progress 49,900,930.32 49,900,930.32 4. Closing balance 266,547,539.08 730,340,197.42 4,125,132.05 1,612,195.91 1,002,625,064.46
. 1. 2. (1) 3. (1) (2) 4.		II. Accumulated depreciation 1. Opening balance 59,109,420.39 332,895,698.22 3,148,900.50 751,529.11 395,905,548.22 2. Increase for the current period 5,625,525.03 17,346,819.18 81,698.34 131,013.87 23,185,056.42 (1) Provision 5,625,525.03 17,346,819.18 81,698.34 131,013.87 23,185,056.42 3. Decrease for the current period 40,022,382.20 25,302.67 40,047,684.87 (1) Disposal or retirement 25,302.67 25,302.67 (2) Transferred to construction in progress 40,022,382.20 40,022,382.20 4. Closing balance 64,734,945.42 310,220,135.20 3,205,296.17 882,542.98 379,042,919.77
. 1. 2. (1) 3. (1) 4.		III. Provision for impairment 1. Opening balance 7,546,566.43 7,546,566.43 2. Increase for the current period (1) Provision 3. Decrease for the current period (1) Disposal or retirement 4. Closing balance 7,546,566.43 7,546,566.43
. 1. 2.		IV. Book value 1. Book value at the end of the period 201,812,593.66 412,573,495.79 919,835.88 729,652.93 616,035,578.26 2. B ook value at the beginning of the period 207,438,118.69 439,730,480.20 972,758.95 830,955.22 648,972,313.06

– I-150 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Construction in progress
- (1) Construction in progress

Unit: Yuan Currency: RMB

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----- Start of picture text -----

Closing balance Opening balance
Carrying Provision for Carrying Provision for
Item amount impairment Book value amount impairment Book value
Upgrading of cold 12,402,424.04 12,402,424.04
repair technology
for production line of
ultra-thin substrate for
information display
400 400 tons of ultra-white 1,683,486.57 1,683,486.57
photothermal materials
project
Total 14,085,910.61 14,085,910.61
----- End of picture text -----

– I-151 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Intangible Assets
- (1) Intangible Assets

Unit: Yuan Currency: RMB

		Item Land use rights patent right Non-patent technology Trademark rights Software Total
. 1. 2. (1) (2) (3) 3. (1) 4.		I. Original book value 1. Opening balance 71,342,574.11 6,000,000.00 435,897.46 77,778,471.57 2. Increase for the current period 58,275,196.60 58,275,196.60 (1) Purchase 58,275,196.60 58,275,196.60 (2) Internal research and development (3) Increase from business combination 3. Decrease for the current period 2,011,785.37 2,011,785.37 (1) Disposal 2,011,785.37 2,011,785.37 4. Closing balance 127,605,985.34 6,000,000.00 435,897.46 134,041,882.80
. 1. 2. (1) 3. (1) 4.		II. Accumulated amortization 1. Opening balance 8,999,783.52 6,000,000.00 169,515.65 15,169,299.17 2. Increase for the current period 1,181,328.92 72,649.56 1,253,978.48 (1) Provision 1,181,328.92 72,649.56 1,253,978.48 3. Decrease for the current period 125,693.33 125,693.33 (1) Disposal 125,693.33 125,693.33 4. Closing balance 10,055,419.11 6,000,000.00 242,165.21 16,297,584.32
. 1. 2. (1) 3. (1) 4.		III. Provision for impairment 1. Opening balance 2. Increase for the current period (1) Provision 3. Decrease for the current period (1) Disposal 4. Closing balance
. 1. 2.		IV. Book value 1. Book value at the end of the period 117,550,566.23 193,732.25 117,744,298.48 2. Book value at the beginning of the period 62,342,790.59 266,381.81 62,609,172.40

28 50

Note: Land use rights among the Group s intangible assets were all for lands located in the PRC with a remaining use period ranging from 28 to 50 years.

– I-152 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(2)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Intangible Assets (Continued)
- (2) Land use rights for incompletely processed ownership certificate:

Unit: Yuan Currency: RMB

	Item Book value Reason for incompletely processed ownership certificate
	Land of Development Zone 9,415,764.88 Still in the process of application

Long-term deferred expenses

Unit: Yuan Currency: RMB

		Item Opening balance Increase for the current period Amortized amount for the current period Other decreased amount Closing balance
		Amortization of reconstruction of the electrical circuit of the office 270,000.00 54,000.00 216,000.00 Far East Leasing Service Fees 2,078,624.23 710,235.84 1,368,388.39 Consultation service charge 1,166,666.67 2,500,000.00 324,999.99 3,341,666.68
		Total 3,515,290.90 2,500,000.00 1,089,235.83 4,926,055.07

– I-153 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Deferred income tax assets/deferred income tax liabilities
- (1) Deferred income tax assets not being offset

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----- Start of picture text -----

Unit: Yuan Currency: RMB
Closing Balance Opening Balance
Deductible Deferred Deductible Deferred
temporary income tax temporary income tax
Item differences assets differences assets
Provision for impairment of assets 12,966,060.29 1,982,819.21 16,451,510.01 2,467,726.50
Unrealized profits in internal
transactions
Deductible losses
Deferred income 4,562,500.00 684,375.00 12,489,972.00 1,873,495.80
Total 17,528,560.29 2,667,194.21 28,941,482.01 4,341,222.30
----- End of picture text -----

(2) (2) Breakdown of unrecognized deferred income tax assets

Unit: Yuan Currency: RMB

		Item Closing balance Opening balance
		Deductible temporary differences 132,489,422.80 137,500,191.85 Deductible losses 562,585,312.07 544,435,331.97
		Total 695,074,734.87 681,935,523.82

Note: Because it is uncertain whether sufficient taxable incomes can be obtained in the future, they are not recognized as deferred income tax assets.

– I-154 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.
(3)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Deferred income tax assets/deferred income tax liabilities (Continued)
- (3) Deductible losses not yet recognized as deferred tax assets will expire in the following years indicated

Unit: Yuan Currency: RMB

			Amount at the
		Amount at the end	beginning of
	Year	of the period	the period	Note
2017	2017		10,589,070.12
2018	2018	36,614,485.92	36,614,485.92
2019	2019	21,894,490.75	21,894,490.75
2020	2020	372,641,647.21	372,641,647.21
2021	2021	102,695,637.97	102,695,637.97
2022	2022	28,739,050.22
	Total	562,585,312.07	544,435,331.97

Other non-current assets

Unit: Yuan Currency: RMB

	Item				Closing balance

EPC	EPC	engineering	management	software	364,102.58
	Total				364,102.58

– I-155 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Short-term loans
- (1) Category of short-term loans

Unit: Yuan Currency: RMB

Item	Closing balance	Opening balance
Pledged loan
Mortgage loan Guaranty loan Credit loan	5,000,000.00 321,496,500.00	20,000,000.00
Total	326,496,500.00	20,000,000.00

2 0 1 7 6 3 0 4. 3 5% 4.785%

Note: On 30 June 2017, annual interest rate of short-term loans was 4.35%-4.785%.

Bills payable

Unit: Yuan Currency: RMB

Category	Closing balance	Opening balance
Commercial acceptances
Bank acceptances	50,000,000.00	90,000,000.00
Total	50,000,000.00	90,000,000.00

The total amount of bills payable that became due at the end of the period but had not been paid was RMB0.

– I-156 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

18.

(1)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Accounts payable
- (1) Accounts payable are shown as follows

Unit: Yuan Currency: RMB

		Item						Closing balance	Opening balance
1	1	Within	1	year	(including	1	year)	15,503,229.21	17,853,268.60
1		Above	1	year				17,443,282.57	28,520,633.60

		Total						32,946,511.78	46,373,902.20

Receipts in advance
(1) (1) Receipts in advance are shown as follows

Unit: Yuan Currency: RMB

		Item						Closing balance	Opening balance
1	1	Within	1	year	(including	1	year)	7,474,969.65	5,354,722.46
1		Above	1	year				3,796,217.09	9,036,932.04

		Total						11,271,186.74	14,391,654.50

– I-157 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Staff remuneration payables
- (1) Staff remuneration payables are shown as follows:

Unit: Yuan Currency: RMB

			Item Opening Balance Increase for the current period Decrease for the current period Closing Balance
. . . .			I. Short-term remuneration 22,042,997.95 26,883,350.54 30,571,472.60 18,354,875.89 II. After-service welfare provision plan set 3,700,972.00 4,365,963.46 8,004,053.86 62,881.60 III. Termination benefits IV. Other benefits due within one year

			Total 25,743,969.95 31,249,314.00 38,575,526.46 18,417,757.49

(2) (2) Short-term remuneration is shown as follows:

Unit: Yuan Currency: RMB

					Item Opening Balance Increase for the current period Decrease for the current period Closing Balance
. . . . . . .					I. Salary, bonus, allowance and subsidy 6,409,534.80 21,512,713.58 25,286,897.09 2,635,351.29 II. Staff s welfare 1,164,522.00 1,164,522.00 III. Social insurance premium 897,818.59 1,834,114.08 2,731,932.67 Including: Medical insurance 764,375.80 1,508,236.49 2,272,612.29 Labor injury insurance 79,406.21 211,306.96 290,713.17 Birth insurance 54,036.58 114,570.63 168,607.21 IV. Housing accumulation fund 6,971,509.03 2,164,110.35 1,138,344.65 7,997,274.73 V. Labor union expenses and employee education expenses 7,764,135.53 207,890.53 249,776.19 7,722,249.87 VI. Short-period paid leave VII. Short-term profit sharing plan
					Total 22,042,997.95 26,883,350.54 30,571,472.60 18,354,875.89

– I-158 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(3)

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Staff remuneration payables (Continued)
- (3) Provision Plan set is shown as follows

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----- Start of picture text -----

Unit: Yuan Currency: RMB
Decrease for
Opening Increase for the the current Closing
Item Balance current period period Balance
1. 1. Basic endowment insurance 3,517,879.98 4,240,691.48 7,695,689.86 62,881.60
2. 2. Unemployment insurance 183,092.02 125,271.98 308,364.00
3. 3. Enterprise annuity
Total 3,700,972.00 4,365,963.46 8,004,053.86 62,881.60
----- End of picture text -----

Tax payable

Unit: Yuan Currency: RMB

Item
Closing balance
Opening balance

Value-added tax
844,356.63
2,959,777.00
Consumption tax
Business tax
75,649.29
75,649.29
Enterprise income tax
2,526,843.91
9,106,452.20
Individual income tax
153,306.11
154,688.43
Urban maintenance and construction tax
146,299.53
294,378.96
Property tax
1,238,632.96
1,238,632.92
Land-use tax
1,637,181.63
1,278,844.52
Education surcharges
101,742.22
207,513.24
Other tax
20,870.09
65,130.89
~~Other tax~~
~~2087009~~
~~6513089~~

~~,.~~
~~,.~~
Total
6,744,882.37
15,381,067.45

– I-159 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Interest payable

Unit: Yuan Currency: RMB

		Item Closing balance Opening balance
		Interest on long-term loan with periodic payments of interest and return of principal at maturity 1,717,967.40 684,626.58 Interest on corporate bonds Interests payable for short-term borrowings 29,241.67 Interest on preference shares/perpetual bonds classified as financial liabilities
		Total 1,717,967.40 713,868.25

Other payables
(1) (1) Other payables by nature of amounts are shown as follows

Unit: Yuan Currency: RMB

Item	Closing balance	Opening balance
Announcement and intermediary fee	5,133,600.06	5,617,787.84
Current accounts	47,915,899.32	36,961,134.20
Total	53,049,499.38	42,578,922.04

1. Non-current liabilities due within one year

Unit: Yuan Currency: RMB

	Item Closing balance Opening balance
1 1 1	Long-term loans due within one year 111,407,706.89 471,337,062.91 Bonds payable due within one year Long-term payable due within one year
	Total 111,407,706.89 471,337,062.91

– I-160 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Long-term loans
- (1) Category of Long-term loans

Unit: Yuan Currency: RMB

Item	Closing balance	Opening balance
Pledged loan
Mortgage loan Guaranty loan Credit loan	120,896,021.00 826,297.19	86,889,567.92 946,806.31
Total	121,722,318.19	87,836,374.23

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----- Start of picture text -----

1. 2010
2010 2
1 2017 1 31
2017 6 30
8,768,000.00
2017 10 30
2018 1 6
2017 6 30
321,496,500.00
----- End of picture text -----

Note: 1. In 2010, the Company concluded the debt restructuring agreements of interest free and delayed repayment of principal, respectively, with certain financial institutions, i.e. Bank of Communication Luoyang Branch, Bank of China Luoyang Xigong Sub-branch, China Construction Bank Luoyang Branch, Bank of Luoyang Kaidong Sub-branch and Industrial & Commercial Bank of China Luoyang Branch, under which interests are exempted from the period of 1 February 2010 to 31 January 2017 and repayment of principal can be delayed after the first two years. The principals will be paid in the following five years according to the agreed proportion. As of 30 June 2017, the balance of the interest-free long-term loans of Industrial & Commercial Bank of China Luoyang Branch was RMB8,768,000.00, which will expire on 30 October 2017 and have been reclassified into long-term loans due within one year. Upon the termination of the policies concerning interest-free and repayment of principal by Bank of Communication Luoyang Branch, Bank of China Luoyang Xigong Sub-branch, China Construction Bank Luoyang Branch, Bank of Luoyang Kaidong Sub-branch and Industrial & Commercial Bank of China Luoyang Branch, the Company will conclude short-term loans contracts with each of such banks with a term from January to June 2018. As of 30 June 2017, the balance of loans was RMB321,496,500.00.

– I-161 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Long-term loans (Continued)
- (1) Category of Long-term loans (Continued)

Note: (Continued)

( 1 ) 2 0 1 5 6 54,437,104.51 5000 36 5000 2017 6 30 17,526,930.36 (2) 2015 6 88,788,355.07 63,636,363.00 3 6.44% 2017 6 30 22,296,739.23 (3) 2016 12 120,372,692.36 10,000 3
With respect to the mortgaged loan: (1) in June 2015, Longhai Company used part of its production equipment (with the original book value of RMB54,437,104.51) to process the after-sale lease-back financing lease business with International Far Eastern Leasing Co., Ltd. for a financing amount of RMB50,000,000 for a lease term of 36 months. CLFG and Triumph Technology Group Company provided guarantee for joint and several liability with respect to the foregoing financing leasing matter. Longhai Company believed that pursuant to the substance-over-form principle, for such transaction in reality, the Lessor (International Far Eastern Leasing Co., Ltd.) provided loan to the Lessee (Longhai Company) by taking the leased article as the mortgaged article. Under such transaction, the nominal selling price of the underlying asset (the leased article) of RMB50,000,000 was handled as long-term loan by Longhai Company and the underlying asset (the leased article) was booked in at its original book value with provision made. As of 30 June 2017, the balance of such long-term loan was RMB17,526,930.36, all of which is long-term loan due within one year. (2) in June 2015, Longhai Company used part of its production equipment (with the original book value of RMB88,788,355.07) as collateral to obtain a 3-year loan of RMB63,636,363.00 in total, at annual interest rate of 6.44% issued by Bank of Shanghai, Pudong Branch, as entrusted by International Far Eastern Leasing Co., Ltd.. As of 30 June 2017, the balance of such long-term loan was RMB22,296,739.23, all of which is long-term loan. (3) In December 2016, Bengbu Company conducted its sale and leaseback financial leasing business with part of its production equipment (with original book value of RMB120,372,692.36) with Taiping & Sinopec Financial Leasing Co., Ltd.* ( ) for financing of RMB100,000,000.00 with a term of 3 years. Triumph Technology Group Company provided joint-liability guarantee for the foregoing financing leasing matter.

– I-162 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Long-term loans (Continued)
- (1) Category of Long-term loans (Continued)

Note: (Continued)

10,000 2017 6 30 83,333,334.00 33,333,332.00 (4) 2017 4 129,477,714.97 10,000 5

(Continued)

Bengbu Company believed that, based on the principle of substance over form , the transaction actually was the Lessor (Taiping & Sinopec Financial Leasing Co., Ltd. ( )) provided loans to the Lessee (Bengbu Company) with the leased property as the collateral. Under such transaction, the nominal selling price of the underlying asset (the leased property) of RMB100,000,000.00 was accounted as long-term loan by Bengbu Company and the underlying asset (the leased property) was accounted at its original book value with provision for depreciation. As of 30 June 2017, the balance of such long-term loan was RMB83,333,334.00, of which, the long-term loan due within one year amounted to RMB33,333,332.00. (4) In April 2017, Bengbu Company entered into the finance lease agreement (leaseback) in respect of certain equipment of the production line of ultra-thin glass and ancillary equipment (with original book value of RMB129,477,714.97) with Suyin Financial Leasing Co., Ltd. ( ) for financing of RMB100,000,000.00 with a term of 5 years. Triumph Technology Group Company provided joint-liability guarantee for the foregoing financing leasing matter. Bengbu Company believed that, based on the principle of substance over form , the transaction actually was the Lessor (Suyin Financial Leasing Co., Ltd.* ( )) provided loans to the Lessee (Bengbu Company) with the leased property as the collateral. Under such transaction, the nominal selling price of the underlying asset (the leased property) of RMB100,000,000.00 was accounted as long-term loan by Bengbu Company and the underlying asset (the leased property) was accounted at its original book value with provision for depreciation. As of 30 June 2017, the balance of such long-term loan was RMB100,000,000.00, of which, the long-term loan due within one year amounted to RMB29,103,981.00.

10,000 2017 6 30 100,000,000.00 29,103,981.00

– I-163 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Deferred income

Deferred income

Unit: Yuan Currency: RMB

			Increase for	Decrease for
		Opening	the current	the current	Closing
Item		Balance	period	period	Balance	Reason
		formation
Government	grants	19,290,781.82	950,000.00	11,375,138.28	8,865,643.54
Total		19,290,781.82	950,000.00	11,375,138.28	8,865,643.54

Projects involving government subsidy:

Unit: Yuan Currency: RMB

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----- Start of picture text -----

Amount recorded
New additional in non-operating
subsidy for the profits for the Related to assets/
Projects with liabilities Opening Balance current period current period Other changes Closing Balance related to income
Fiscal subsidy for ultra-thin and ultra-white glass 2,632,500.00 607,500.00 2,025,000.00
production line Related to assets
Land-use subsidy for ultra-thin and ultra-white 2,305,103.82 26,960.28 2,278,143.54
glass production line project Related to assets
0.45mm 0.45mm E-glass technology research and 1,863,206.01 1,863,206.01
application Related to income
Special fund for ultra-thin production line 600,000.00 37,500.00 562,500.00
Related to assets
Subsidy for stabilizing employment from the 70,018.76 70,018.76
Social Security Bureau Related to income
2016 Special fund for innovative provincial 1,050,000.00 950,000.00 2,000,000.00
construction of Anhui province of 2016 Related to income
2016 Special municipal supporting funds for major 2,000,000.00 2,000,000.00
provincial technology projects of 2016 Related to income
Technology projects construction funds 8,769,953.23 8,769,953.23
Related to income
Total 19,290,781.82 950,000.00 11,375,138.28 8,865,643.54
----- End of picture text -----

– I-164 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Share capital

Unit: Yuan Currency: RMB

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----- Start of picture text -----

+ -
Changes in this period (+, -)
Capital
reserve
transferred to
Opening Balance New shares Bonus shares shares Others Sub-total Closing Balance
Total number of shares 526,766,875.00 526,766,875.00
28. 28. Capital reserve
Unit: Yuan Currency: RMB
Increase for the Decrease for the
Item Opening Balance current period current period Closing Balance
Capital premium (share capital premium) 1,400,804,566.23 1,400,804,566.23
Other capital reserves 72,300,473.27 72,300,473.27
Total 1,473,105,039.50 1,473,105,039.50
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----- Start of picture text -----

29. 29. Surplus reserve
Unit: Yuan Currency: RMB
Increase for the Decrease for the
Item Opening Balance current period current period Closing Balance
Statutory surplus reserve 51,365,509.04 51,365,509.04
Discretionary surplus reserve
Reserve fund
Enterprise development fund
Others
Total 51,365,509.04 51,365,509.04
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– I-165 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Undistributed profit

Unit: Yuan Currency: RMB

							Item Current period Previous period
		+			-		Undistributed profit at the end of the previous period before adjustment -1,527,968,006.58 -1,539,484,070.36 Total effects of adjustments of undistributed profits at the beginning of the period (increase expressed with +, and decrease expressed with -) Undistributed profit at the beginning of the period after adjustment -1,527,968,006.58 -1,539,484,070.36 Add: net profit attributable to owners of the Company for the period 1,177,959.02 -25,745,594.23 Less: Appropriation to statutory surplus reserve Appropriation to discretionary surplus reserve Appropriation to general risk provisions Dividend payable in respect of ordinary shares Dividend on ordinary shares as converted into share capital
							Undistributed profit at the end of the period -1,526,790,047.56 -1,565,229,664.59

Operating income and operating cost

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----- Start of picture text -----

Unit: Yuan Currency: RMB
Amount for current period Amount for previous period
Item Income Cost Income Cost
Principal operations 152,856,356.90 111,125,433.36 135,466,204.64 127,477,857.21
Other operations 2,112,920.14 1,464,581.96 1,773,509.99 1,009,663.49
Total 154,969,277.04 112,590,015.32 137,239,714.63 128,487,520.70
----- End of picture text -----

– I-166 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Tax and surcharges

Unit: Yuan Currency: RMB

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----- Start of picture text -----

||||
|---|---|---|
|Amount for|Amount for|
|Item|current period|previous period|
|Consumption tax|
|Business tax|5,741.68|
|City maintenance tax|222,690.73|108,800.50|
|Education surcharges|159,064.81|77,599.81|
|Resource tax|
|Property tax|1,037,097.14|
|Land-use tax|1,641,860.37|
|Vehicle-use tax|
|Stamp duty|200,128.78|
|Others|41,111.31|
|Total|3,301,953.14|192,141.99|

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1. Selling expenses

Unit: Yuan Currency: RMB

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----- Start of picture text -----

||||
|---|---|---|
|Amount for|Amount for|
|Item|current period|previous period|
|Staff s remuneration|2,379,334.16|2,485,495.04|
|Depreciation expenses|87,597.70|118,033.97|
|Transportation costs|46,118.69|81,230.34|
|Loading and unloading charges|276,093.80|228,723.14|
|Material consumption|110,190.65|119,336.11|
|Other selling expenses|361,821.57|508,337.55|
|Total|3,261,156.57|3,541,156.15|

----- End of picture text -----

– I-167 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Administrative expenses

Unit: Yuan Currency: RMB

		Item Amount for current period Amount for previous period
		Staff s remuneration 10,287,367.74 12,035,425.21 Depreciation of fixed assets 2,163,272.51 992,385.23 Amortization of intangible assets 1,253,978.48 878,642.62 Intermediary engagement fees 3,127,928.60 2,973,674.53 Research and development fees 14,594,681.15 2,264,527.32 Taxes 3,022,044.94 Other expenses 5,685,544.94 5,301,730.78 ~~Total~~
		Total 37,112,773.42 27,468,430.63

1. Financial expenses

Unit: Yuan Currency: RMB

			Item Amount for current period Amount for previous period
			Interest expense 11,717,495.38 4,426,071.99 Less: Interest income -422,177.91 -2,061,988.44 Exchange loss 74,982.72 70,867.83 Less: Exchange gain -0.27 -162.23 Handling charges (interests of discounted bill) 1,164,199.93 Other expenses 1,129,432.54 782,534.07
			Total 13,663,932.39 3,217,323.22

– I-168 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Impairment losses of assets

Unit: Yuan Currency: RMB

	Item Amount for current period Amount for previous period
. .	I. Bad debt losses 1,551,569.96 153,921.09 II. Impairment losses of inventories -698,146.41 950,398.98
	Total 853,423.55 1,104,320.07

	37. Non-operating income

Non-operating income

Unit: Yuan Currency: RMB

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----- Start of picture text -----

Amount recognized
as extraordinary
Amount for Amount for gain or loss of the
Item current period previous period current period
Total gain on disposal of non-current 83,418.35 95.03 83,418.35
assets
Including: Gain on disposal of fixed 22,266.73 95.03 22,266.73
assets
Gains on disposal of 61,151.62 61,151.62
intangible assets
Gains from debt restructuring 1,715,899.47 2,046.24 1,715,899.47
Gains from non-monetary assets
exchange
Donations received
Government subsidies 4,294,086.69
Other gains 110,316.00 32,651.65 110,316.00
Total 1,909,633.82 4,328,879.61 1,909,633.82
----- End of picture text -----

– I-169 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

==> picture [89 x 32] intentionally omitted <==

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Non-operating income (Continued)

Government subsidy recognized as gain or loss of the current period

Unit: Yuan Currency: RMB

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----- Start of picture text -----

Amount for Amount for Related to assets/
Subsidy item current period previous period earnings
Fiscal subsidy for ultra-thin and ultra- 607,500.00
white glass production line Related to assets
Land-use subsidy for ultra-thin and 26,960.28
ultra-white glass production line Related to assets
project
Special financial subsidy for research 140,065.80
and development of application Related to earnings
technology
Subsidy for supporting enterprises 3,421,560.61
and stabilizing employment issued Related to earnings
by Social Security Funds Collecting
Center of Bengbu
Construction funds for scientific and
technological projects Related to earnings
Economic compensation for
personnel buyout Related to earnings
Other incentives and subsidies 98,000.00
Related to earnings
Total 4,294,086.69
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– I-170 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Non-operating expense

Unit: Yuan Currency: RMB

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----- Start of picture text -----

Amount recognized
as extraordinary
Amount for Amount for profit and loss of
Item current period previous period the current period
Total Loss from disposal of non-
current assets
Including Loss from disposal of
fixed assets
Loss from disposal of
intangible assets
Loss from debt restructuring
Loss from exchange of non-monetary
assets
External donation
Indemnities, liquidated damages and 226,243.61 226,243.61
penalties
Other expenditures 10,135.00 140,580.22 10,135.00
Total 236,378.61 140,580.22 236,378.61
----- End of picture text -----

1. Income tax expenses

(1) (1) The table for income tax expenses

Unit: Yuan Currency: RMB

	Item Amount for current period Amount for previous period
	Income tax expenses for the current period 2,756,429.03 1,727,874.09 Deferred income tax expenses 1,674,028.09 1,434,841.40
	Total 4,430,457.12 3,162,715.49

– I-171 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(2)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Income tax expenses (Continued)
- (2) Reconciliation between accounting profit and income tax expenses

Unit: Yuan Currency: RMB

									Item Amount for current period
									Total profits 5,608,416.14 Income tax expenses calculated in accordance with legal/ applicable tax rates 1,402,104.04 Effect of different tax rates applicable to subsidiaries -2,938,559.32 Effect of adjustment of income tax in previous periods Effect of non-taxable income Effect of cost, expense and loss non-deductible 373,963.70 Effect of deductible losses that have not recognized for deferred income tax asset during the prior period Effect of deductible temporary differences or deductible losses that have not recognized for deferred income tax asset during the period 5,868,886.68 Super deduction of research and development expenses -303,083.87 Adjustment effect for income tax in previous periods 27,145.89 Income tax expenses 4,430,457.12

Items of cash flow statement
(1) (1) Cash received related to other operating activities:

Unit: Yuan Currency: RMB

	Amount for	Amount for
Item	current period	previous period
Government subsidies	9,270,000.00
Other current accounts	3,039,769.38	5,590,870.37
Total	12,309,769.38	5,590,870.37

– I-172 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(2)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Items of cash flow statement (Continued)
- (2) Other cash paid related to operating activities:

Unit: Yuan Currency: RMB

	Amount for	Amount for
Item	current period	previous period
Intermediary engagement fees	961,182.97	7,911,415.88
Travel expense Other current accounts and expenses	585,367.24 5,798,481.87	571,304.35 7,212,727.99

Total	7,345,032.08	15,695,448.22

(3) (3) Other cash received for activities related to investment

Unit: Yuan Currency: RMB

			Amount for	Amount for
Item			current period	previous period
Compensation	for	performance	23,798,268.89
commitment
Total			23,798,268.89

(4) (4) Other cash paid for activities related to investment

Unit: Yuan Currency: RMB

						Amount for	Amount for
Item						current period	previous period
Payment	for	acquisition	of	equity	interest		90,729,715.31
Total							90,729,715.31

– I-173 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(5)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Items of cash flow statement (Continued)
- (5) Other cash received for activities related to financing

Unit: Yuan Currency: RMB

	Item Amount for current period Amount for previous period
	Bill discount 38,865,850.00 Triumph Technology Group Company 49,000,000.00 CNBM (Bengbu) Photoelectricity Materials Co., Ltd. 15,000,000.00 CLFG 217,391,582.90 11,055,772.70 Bill deposit 15,000,000.00 Other accounts 6,000,000.00
	Total 271,257,432.90 81,055,772.70

(6) (6) Other cash paid for activities related to financing

Unit: Yuan Currency: RMB

	Item Amount for current period Amount for previous period
	Repayment of matured bill 90,000,000.00 45,000,000.00 Triumph Technology Group Company 9,000,000.00 31,200,000.00 CLFG 197,660,000.00 10,600,000.00 Other accounts 4,500,000.00 55,497.44
	Total 301,160,000.00 86,855,497.44

– I-174 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Supplementary information of cash flow statement
- (1) Supplementary information of cash flow statement

Unit: Yuan Currency: RMB

									Supplementary information Amount for the current period Amount for the previous period
1. 2.		- -							1. Net profit adjusted to cash flow of operating activities: Net profit 1,177,959.02 -25,745,594.23 Add: Provision for assets impairment 853,423.55 1,104,320.07 Depreciation of fixed assets, depletion of oil and gas assets, depreciation of productive biological assets 23,185,056.42 29,143,819.04 Amortization of intangible assets 1,253,978.48 970,476.94 Amortization of long-term deferred expenses 1,089,235.83 967,550.40 - Losses from disposal of fixed assets, intangible assets and other long-term assets ( - for gains) -83,418.35 -95.03 - Losses from scrapping of fixed assets ( - for gains) 11,544.99 - Losses from changes in fair value ( - for gains) - Finance expenses ( - for gains) 12,498,076.75 3,651,180.97 - Investment losses ( - for gains) - Decrease in deferred income tax assets ( - for increase) 1,674,028.09 1,434,841.40 - Increase in deferred income tax liabilities ( - for decrease) - Decrease in inventories ( - for increase) 17,866,448.59 -46,523,419.33 Decrease in operating receivables ( - for increase) -32,400,058.37 -37,368,886.46 Increase in operating payables ( - for decrease) -49,335,110.58 -3,482,107.68 Others Net cash flow from operating activities -22,220,380.57 -75,836,368.92 2. Significant investing and financing activities that do not involve cash receipts and payment: Conversion of debts into capital Convertible corporate bonds due within one year Fixed assets acquired under finance leases

– I-175 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)
VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Supplementary information of cash flow statement (Continued)
- (1) Supplementary information of cash flow statement (Continued)

Unit: Yuan Currency: RMB

							Supplementary information Amount for the current period Amount for the previous period
3.							3. Net changes in cash and cash equivalents: Closing balance of cash at the end of the period 60,688,037.20 36,373,776.90 Less: Opening balance of cash at the beginning of the period 112,528,516.53 42,342,860.91 Add: Closing balance of cash equivalents at the end of the period Less: Opening balance of cash equivalents at the beginning of the period Net increase in cash and cash equivalents -51,840,479.33 -5,969,084.01

(2) (2) Constitution of cash and cash equivalents

Unit: Yuan Currency: RMB

				Item Closing balance at the end of the period Opening balance at the beginning of the period
. .				I. Cash 60,688,037.20 112,528,516.53 Including: Cash on hand 87,694.01 95,219.74 Bank deposit available for payment at any time 60,600,343.19 112,433,296.79 Other cash and cash equivalents available for payment at any time Deposits in central bank available for payment Deposit in other banks Loans to other banks II. Cash equivalents Including: Bond investment due in three months

– I-176 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

. VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)

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----- Start of picture text -----

41. 41. Supplementary information of cash flow statement (Continued)
(2) (2) Constitution of cash and cash equivalents (Continued)
Unit: Yuan Currency: RMB
Closing balance Opening balance
at the end of at the beginning
Item the period of the period
. III. Balance of cash and cash equivalents as at the 60,688,037.20 112,528,516.53
end of the period
Including: Cash and cash equivalents subject
to restriction by the Company or
subsidiaries under the Group
----- End of picture text -----

1. Assets under restricted ownership or use right

Unit: Yuan Currency: RMB

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----- Start of picture text -----

Book value
at the end of Reasons for
Item the period restriction
Cash and cash equivalents 30,000,000.00
Bill deposit
Notes receivable
Inventory
Fixed assets 268,583,878.04
Mortgage loan
Intangible assets
Total 298,583,878.04
----- End of picture text -----

– I-177 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Monetary item in foreign currency
- (1) Monetary item in foreign currency:

Unit: Yuan

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----- Start of picture text -----

Balance of
foreign currency Balance of RMB
at the end converted at the
Item of the period Exchange rate end of the period
Cash and cash equivalents 6,409.74
Including: USD 27.58 6.7745 186.84
EURO 0.60 7.7667 4.66
HKD 7,164.53 0.8679 6,218.24
Long-term loans 1,205,021.49
Including: USD
EURO 155,494.67 7.7496 1,205,021.49
HKD
----- End of picture text -----

– I-178 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

VI. Notes to Significant Items of the Consolidated Financial Statements (Continued)
Government subsidies
1. Basic information on government subsidies

Unit: Yuan Currency: RMB

						Items Amount Presentation The amount recognized in the current profits and losses
						Fiscal subsidy for ultra-thin and ultra-white glass production line 607,500.00 Other income 607,500.00 Land-use subsidy for ultra-thin and ultra-white glass production line project 26,960.28 Other income 26,960.28 Special financial subsidy for research and development of application technology 1,863,206.01 Other income 1,863,206.01 Subsidy for supporting enterprises and stabilizing employment issued by Social Security Funds Collecting Center of Bengbu 124,018.76 Other income 124,018.76 Construction funds for scientific and technological projects 8,769,953.23 Other income 8,769,953.23 Economic compensation for personnel buyout 8,320,000.00 Other income 8,320,000.00 Other incentives and subsidies 37,500.00 Other income 37,500.00
						Total 19,749,138.28 19,749,138.28

45. 45. Other

==> picture [140 x 92] intentionally omitted <==

The Group has participated in the defined pension plan for the employees as organized by the local government according to the relevant Chinese regulations. Pursuant to the Plan, the Group needs to make the pension contributions in a unified manner in proportion to the salary, bonus and partial allowance of the employees. Each retired employee is entitled to the equivalent pension at certain fixed ratio to the salary on the retirement date. Except as the aforesaid annual defined contributions, the Group is not obligated to pay any other significant retirement benefits.

– I-179 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

VII. Interests in Other Entities

==> picture [490 x 337] intentionally omitted <==

----- Start of picture text -----

1. 1. Interests in subsidiaries
(1) (1) The constitution of the Group
(%)
Shareholding ratio (%)
Location of Place of Nature of
Name of subsidiaries principal business Registration business Direct Indirect Obtained by
100
CLFG Longmen Glass Co. Ltd. Yanshi City Yanshi City Producing and Investment
selling
100
CLFG Longhai Electronic Glass Limited Yanshi City Yanshi City Producing and Investment
selling
100
CNBMG (Puyang) Photoelectric Material Puyang City Puyang City Producing and Investment
Co., Ltd. selling
100
Bengbu China National Building Materials Bengbu City Bengbu City Producing and Business
Information Display Materials Co., Ltd. selling combination
under
common
control
----- End of picture text -----*

1. VIII. Risks Relating to Financial Instruments

1. Financial risks

The business of the Group involves various financial risks: market risk (inclusive of foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Group concentrates its efforts on unpredicable factors in the financial market in its overall risk management procedure, and aims to seek methods to minimize potential negative effects that will affect the financial performance of the Group. Such kinds of risks still are limited by following financial management policies and practice of the Group.

– I-180 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1.1.1

VIII. Risks Relating to Financial Instruments (Continued)

Financial risks (Continued)
1.1 Market risk

1.1.1 Foreign exchange risk

The exchange risk of the Group mainly comes from the bank deposit and loan out of the range of recording currency. The main currencies that incur risks include U.S. dollar, Euro and HK dollar.

1.1.2

2017 1 6

There have been little foreign exchange transactions from January to June 2017 by the Group. Therefore, the management of the Company anticipates there is no commercial transaction in the future that will incur major foreign exchange risks.

1.1.2 Interest rate risk

The interest rate risk of the Group mainly comes from bank and other loans and bank deposit. Since most expenses and operating cash flow of the Group is not hugely relevant to the changes in market interest rates, fixed interest bank loan will not have sensitive reaction with the changes in market interest rates. The Group had never hedged potentially floating rate with any financial instrument before.

– I-181 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1.2

1.2.1 VIII. Risks Relating to Financial Instruments (Continued)

Financial risks (Continued)
1.2 Credit risk
- 1.2.1 Account receivable

The credit risk that the Group faces will be mainly affected by individual characteristics of clients. The industry that its clients engage in and bad debt risk of the state will slightly affect credit risk. Therefore, the concentration of material credit risk is mainly due to the large account receivable of the Group payable by individual client. As of the balance sheet date, the account receivable of the Group payable by the top five clients has accounted for 66.02% of the total amount of account receivable of the Group (without deducting bad debt reserve).

66.02%

1.2.2 1.2.2 Bank deposits

– I-182 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1.

1.3 VIII. Risks Relating to Financial Instruments (Continued)

Financial risks (Continued)

1.3 Liquidity risk

Financial assets and financial liabilities held by the Group is analyzed dependent on maturity date of the undiscounted remaining contractual obligations:

==> picture [445 x 208] intentionally omitted <==

----- Start of picture text -----

1 1 2 2 5
Item Within 1 year 1 to 2 years 2 to 5 years Total
Cash and cash equivalents 90,688,037.20 90,688,037.20
Bills receivables 43,611,023.42 43,611,023.42
Accounts receivables 138,102,959.21 138,102,959.21
Other receivables 3,394,273.59 3,394,273.59
Long-term receivables 55,000,000.00 55,000,000.00
Total financial assets 330,796,293.42 330,796,293.42
Short-term loans 326,496,500.00 326,496,500.00
Accounts payables 32,946,511.78 32,946,511.78
Other payables 53,049,499.38 53,049,499.38
Other non-current liabilities due within 111,407,706.89 111,407,706.89
one year
Long-term loan 53,101,303.19 68,621,015.00 121,722,318.19
Total financial liability 523,900,218.05 53,101,303.19 68,621,015.00 645,622,536.24
----- End of picture text -----

– I-183 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

IX. Disclosure of Fair Value

According to the input values which are significant to the overall fair value measurement, the fair value hierarchy could be divided into:

Level one: The (unadjusted) quoted prices in active markets for identical assets or liabilities.

Level three: The (unobservable) input values for the assets or liabilities as determined by the variables other than observable market data.

2017 6 30 2017 6 30

As at 30 June 2017, the Group did not have any financial instruments that are accounted for by fair value measurements. For the half year ended 30 June 2017, there were not any significant transfers between level one and level two financial instruments.

X. Related Parties and Connected Transactions

Parent company of the Company

Unit: Yuan Currency: RMB

Name of parent company	Place of Registration Nature of business Registered capital Shareholding ratio in the Company by parent company Ratio of voting rights of the parent company in the Company (%) (%)
1,286,740,000.00 19.94 19.94 China Luoyang Float Glass (Group) Company Limited Luoyang, China Manufacturing of glass and related raw materials, whole-set equipment

==> picture [124 x 32] intentionally omitted <==

Subsidiaries of the Company

For details, please refer to Note VII. Interests in Other Entities.

– I-184 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

. X. Related Parties and Connected Transactions (Continued)
1. Other related parties Name of other related parties

Relationship with the Company

Triumph	Triumph	Triumph	Technology	Technology	Technology	Technology	Technology	Technology	Technology	Group Company Others	Group Company Others	Group Company Others
CLFG		(Beijing) International Engineering Co., Ltd. Wholly-owned subsidiary of the parent company
CLFG		Luoyang Jingrun									Coating Glass Co., Ltd. Controlled subsidiary of the parent company
Luoyang New					Jingrun					Engineering Glass Co., Ltd. Controlled subsidiary of the parent company
CLFG		Luoyang Glass								Engineering Design and Research Co., Ltd. Wholly-owned subsidiary of the parent company
CLFG		Warehousing							&	Logistics Company Limited Wholly-owned subsidiary of the parent company
Luoyang Luobo Glass Fibre Co., Ltd. Controlled subsidiary of the parent company
China		Triumph				International Engineering Co., Ltd. Brother company of the Group
Anhui		Bengbu				Huayi Conductive Film Glass Co., Ltd. Brother							company of the Group
Henan Zhonglian Glass											Co.,	Ltd. Brother	company of the Group
Bengbu			Glass			Industry Design Institute Brother							company of the Group
Triumph			Science				&	Technology Co., Ltd Brother					company of the Group

CTIEC Shenzhen Scieno-tech Engineering Company Brother													company of the Group
China		Triumph				Bengbu					Engineering and Technology Company Limited Brother		company of the Group
Jiangsu			CTIEC Environmental Protection Research Institute Co., Ltd. Brother										company of the Group
China		Triumph				Bengbu					Engineering and Technology Company Limited Brother		company of the Group
Sino-Italian				CTIEC (Bengbu)								Glass Cold-End Machinery Company Brother	company of the Group
	Limited

– I-185 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

. X. Related Parties and Connected Transactions (Continued)

==> picture [68 x 32] intentionally omitted <==

Name of other related parties

Other related parties (Continued)

Relationship with the Company

Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd Bengbu Chemical Machinery Manufacturing Co., Ltd. CNBM (Bengbu) Photoelectricity Materials Co., Ltd. CNBM (Hefei) New Energy Company Limited Dengfeng Hongzhai Silicon Co., Ltd. CNBM Triumph Robotics (Shanghai) Co., Ltd. Shanghai CTIEC Luculent Information Technology Co., Ltd. Bengbu China Optoelectronics Technology Co., Ltd. Sinoma Science & Technology Co., Ltd. Wonderful Sky Financial Group Limited

Brother company of the Group Brother company of the Group Brother company of the Group Controlled subsidiary of the parent company Controlled subsidiary of the parent company Brother company of the Group Brother company of the Group Brother company of the Group Brother company of the Group Others

– I-186 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

(1)
X. Related Parties and Connected Transactions (Continued)
Connected transactions
- (1) Connected transactions regarding purchase and sales of commodity, provision and receiving of labor service

Table of purchase of commodity/receiving of labor service

Unit: Yuan Currency: RMB

Related party

Content of connected
transactions
Amount for the
current period
Amount for the
previous period

Bengbu Glass Industry Design Institute
Bengbu Glass Industry Design Institute
Bengbu Chemical Machinery
Manufacturing Co., Ltd.
Sino-Italian CTIEC (Bengbu) Glass Cold-
End Machinery Company Limited
Bengbu Glass Industry Design Institute
CNBM (Bengbu) Photoelectricity Materials
Co., Ltd.
CNBM (Hefei) New Energy Company
Limited
CNBM Triumph Robotics (Shanghai) Co.,
Ltd.
Triumph Technology Group Company
Dengfeng Hongzhai Silicon Co., Ltd.
Wonderful Sky Financial Group Limited
China Triumph Bengbu Engineering and
Technology Company Limited
Sinoma Science & Technology Co., Ltd.
China Luoyang Float Glass (Group)
Company Limited

449,197.86
928,000.70
Purchase of raw materials
188,679.24
Consulting services received
1,721,747.82
1,723,179.50
Purchase of raw materials
9,572.64
16,581.20
Purchase of raw materials
109,958.34
Interests expenditure
117,135.42
Interests expenditure
42,009.35
Interests expenditure
14,358.97
Purchase of raw materials
9,081,346.37
7,223,530.78
Purchase of raw materials
814,687.63
1,910,486.31
Purchase of raw materials
1,586,660.00
1,107,585.13
Service fees for
announcements
32,051.28
Purchase of raw materials
36,656.41
Purchase of fixed assets
1,211,578.78
Interests expenditure

– I-187 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

X. Related Parties and Connected Transactions (Continued)

Connected transactions (Continued)
(1) Connected transactions regarding purchase and sales of commodity, provision and receiving of labor service (Continued)

Table of sales of commodity/provision of labor service

Unit: Yuan Currency: RMB

Related party

Content of connected
transactions
Amount for the
current period
Amount for the
previous period

3,531,503.96
6,286,108.85
Anhui Bengbu Huayi Conductive Film Glass
Co., Ltd.
Float glass
469,923.60
552,528.27
Triumph Science & Technology Co., Ltd
Float glass
990,754.71
CLFG Longhao Glass Co. Ltd.
Technical services
82,013.68
10,493.68
China Luoyang Float Glass (Group)
Company Limited
Utilities and tenant
7,180.17
Sino-Italian CTIEC (Bengbu) Glass Cold-
End Machinery Company Limited
Float glass
1,390,700.00
Bengbu China Optoelectronics Technology
Co., Ltd.*
Disposal of land
557,900.00
CNBM (Bengbu) Photoelectricity Materials
Co., Ltd.
Disposal of land
1,017,303.86
CNBM (Bengbu) Photoelectricity Materials
Co., Ltd.
Sales of raw materials
566,037.72
CNBM (Bengbu) Photoelectricity Materials
Co., Ltd.
Technical services

– I-188 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

(2)
X. Related Parties and Connected Transactions (Continued)
Connected transactions (Continued)
- (2) Related guaranty

The Company acts as the guaranteed party

Unit: Yuan Currency: RMB

==> picture [445 x 462] intentionally omitted <==

----- Start of picture text -----

Whether the
Commencement guaranty been
Amount under date of the Expiry date of completed
Guarantor guaranty guaranty the guaranty or not
106,860,000.00 2017 1 25 2018 1 25
China National Building Material Group 25 January 2017 25 January 2018 No
Co., Ltd.
57,600,000.00 2017 1 26 2018 1 26
China National Building Material Group 26 January 2017 26 January 2018 No
Co., Ltd.
71,424,000.00 2017 2 10 2019 2 9
China National Building Material Group 10 February 2017 9 February 2019 No
Co., Ltd.
92,721,000.00 2017 1 16 2018 1 5
China National Building Material Group 16 January 2017 5 January 2018 No
Co., Ltd.
28,758,400.00 2016 6 6 2017 6 6
China National Building Material Group 6 June 2016 6 June 2017 Yes
Co., Ltd.
9,014,600.00 2016 10 30 2017 10 30
China National Building Material Group 30 October 2016 30 October 2017 No
Co., Ltd.
50,000,000.00 2016 6 13 2017 6 13
China National Building Material Group 13 June 2016 13 June 2017 Yes
Co., Ltd.
50,000,000.00 2015 6 19 2018 6 18
China Luoyang Float Glass (Group) Company 19 June 2015 18 June 2018 No
Limited, Triumph Technology Group
Company
63,636,363.00 2015 6 23 2018 6 22
China Luoyang Float Glass (Group) Company 23 June 2015 22 June 2018 No
Limited, Triumph Technology Group
Company
100,000,000.00 2016 12 8 2019 12 8
Triumph Technology Group Company 8 December 2016 8 December 2019 No
100,000,000.00 2017 4 12 2022 4 12
Triumph Technology Group Company 12 April 2017 12 April 2022 No
----- End of picture text -----

– I-189 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(3)
X. Related Parties and Connected Transactions (Continued)
Connected transactions (Continued)
- (3) Remuneration of key management personnel

Unit: Yuan Currency: RMB

	Item Amount for the current period Amount for the previous period
	Remuneration of key management personnel 793,701.83 807,423.58

(4)

(4) Other connected transactions

Entrusted loans of related parties:

2017 6 30 205,000,000.00

As of 30 June 2017, the entrusted loans provided by the Company through banks to its subsidiaries amounted to RMB205,000,000.00.

Financial assistance of related parties:

2017 1 6 217,391,582.90

In the period from January to June 2017, CLFG provided an aggregate fund of RMB217,391,582.90 directly to the Company.

– I-190 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.
(1)
X. Related Parties and Connected Transactions (Continued)
Receivables and payables of related parties
- (1) Receivables

Unit: Yuan Currency: RMB

==> picture [445 x 433] intentionally omitted <==

----- Start of picture text -----

Closing balance at the Opening balance at the
end of the period beginning of the period
Carrying Provision for Carrying Provision for
Project name Related party amount bad debts amount bad debts
24,546,298.49 28,621,134.25
Accounts Anhui Bengbu Huayi Conductive Film Glass
receivable Co., Ltd.
289,079.90
Accounts Anhui Huaguang Photoelectricity Materials
receivable Technology Group Co., Ltd
1,349,753.33
Accounts Luoyang New Jingrun Engineering Glass
receivable Co., Ltd.
463,969.47 22,038.01
Accounts Triumph Science & Technology Co., Ltd
receivable
13,500.00
Prepayment China Triumph Bengbu Engineering and
Technology Company Limited
279,436.97
Prepayment Triumph Technology Group Company
1,627.36 5,600.00
Prepayment CNBM Triumph Robotics (Shanghai) Co., Ltd.
288,005.60 23,982,714.48
Other receivables China Luoyang Float Glass (Group) Company
Limited
1,650,000.00 1,650,000.00
Other receivables China Triumph International Engineering
Co., Ltd.
22,796.95 82,796.95
Other receivables CLFG (Beijing) International Engineering
Co., Ltd.
150,738.92 150,738.92
Other receivables Luoyang Luobo Glass Fibre Co., Ltd.
----- End of picture text -----*

– I-191 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

X. Related Parties and Connected Transactions (Continued)

Receivables and payables of related parties (Continued)
(2) Payables

Unit: Yuan Currency: RMB

Project name

Related party
Carrying amount
at the end of
the period
Carrying amount
at the beginning
of the period

Accounts payable
Accounts payable
Accounts payable
Accounts payable
Accounts payable
Accounts payable
Accounts payable
Prepayment received
Prepayment received
Prepayment received
Other payables
Other payables
Other payables
Other payables
Other payables
Other payables
Other payables

971,319.60
1,279,458.02
Bengbu Chemical Machinery Manufacturing Co., Ltd.
1,182,499.11
3,544,508.91
Jiangsu CTIEC Environmental Protection Research Institute
Co., Ltd.
2,351,773.05
4,611,449.84
Triumph Technology Group Company
909,893.08
963,003.08
Bengbu Glass Industry Design Institute
472,417.48
517,453.69
Dengfeng Hongzhai Silicon Co., Ltd.
85,400.00
135,400.00
Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery
Company Limited
2,714.60
Yinan Huasheng Mineral Products Industry Co., Ltd.
746,721.84
5,496,513.80
Anhui Bengbu Huayi Conductive Film Glass Co., Ltd.
1,300,000.00
1,800,000.00
CNBM (Bengbu) Photoelectricity Materials Co., Ltd.
6,552.00
6,552.00
Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery
Company Limited
33,654,884.31
18,899,748.61
China Luoyang Float Glass (Group) Company Limited
5,258,770.75
239,181.20
Bengbu Glass Industry Design Institute
140,000.00
140,000.00
China Triumph International Engineering Co., Ltd. Bengbu
Branch
9,000,000.00
Triumph Technology Group Company
3,500.00
3,500.00
Bengbu Chemical Machinery Manufacturing Co., Ltd.
1,600.00
1,600.00
Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery
Company Limited
3,021,234.05
2,659,797.02
Wonderful Sky Financial Group Limited

– I-192 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

X. Related Parties and Connected Transactions (Continued)

Other significant events

Segment information

(1)
(1) Determination basis and accounting policy of reporting segment

During the reporting period, the Group s revenue mainly came from the sale of photovoltaic glass, thus it is regarded as the only reportable segment. The management of the Group reviews the Group s performance based on such segment and regularly reviews its financial information to decide on resources allocation thereto and assess its performance.

(2)

(2) Other explanations:

Geographic information

==> picture [445 x 99] intentionally omitted <==

----- Start of picture text -----

Revenue from external customers Non-current assets
2017 1 6 2016 1 6 2017 6 30 2016 12 31
January January 30 June 31 December
Item June 2017 June 2016 2017 2016
China 154,969,277.04 137,239,714.63 753,155,945.00 715,096,776.36
Total 154,969,277.04 137,239,714.63 753,155,945.00 715,096,776.36
----- End of picture text -----

Major customers

2017 1 6 50%

The Group has a concentrated group of major customers that the total sales to the top five customers accounted for over 50% of the Group s revenue in the period from January to June 2017.

– I-193 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.
XI. Notes to Major Items of the Financial Statements of the Company
Accounts receivable

(1)

(1) Accounts receivable by category:

Unit: Yuan Currency: RMB

==> picture [512 x 232] intentionally omitted <==

----- Start of picture text -----

Closing balance Opening balance
Carrying amount Provision for bad debts Carrying amount Provision for bad debts
Category Amount Ratio Amount Provision ratio Book value Amount Ratio Amount Provision ratio Book value
(%) (%) (%) (%)
219,348,939.58 78.08 22,868,491.89 10.43 196,480,447.69 219,348,939.58 77.85 22,868,491.89 10.43 196,480,447.69
Account receivables with significant single amount
and individual provision for bad debts
61,567,844.92 21.92 51,262,347.81 83.26 10,305,497.11 62,400,361.33 22.15 51,222,485.92 82.09 11,177,875.41
Accounts receivable with provision for bad
debts pursuant to the group with credit risk
characteristics
Account receivables with insignificant single amount
and individual provision for bad debts
Total 280,916,784.50 74,130,839.70 206,785,944.8 281,749,300.91 74,090,977.81 207,658,323.10
----- End of picture text -----

Account receivables with significant single amount and individual provision for bad debts at the end of the period:

Unit: Yuan Currency: RMB

==> picture [445 x 148] intentionally omitted <==

----- Start of picture text -----

Closing balance
Accounts Provision for
Accounts receivable (by Unit) receivable bad debts Provision ratio Reasons for provision
219,348,939.58 22,868,491.89 10.43%
CLFG Longmen Glass Co. Ltd. It is expected that the
recovered amount is
lower than the carrying
amount
Total 219,348,939.58 22,868,491.89
----- End of picture text -----

– I-194 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)
XI. Notes to Major Items of the Financial Statements of the Company (Continued)
Accounts receivable (Continued)
- (1) Accounts receivable by category: (Continued)

In the group, accounts receivable with provision for bad debts made based on ageing analysis:

Unit: Yuan Currency: RMB

==> picture [445 x 211] intentionally omitted <==

----- Start of picture text -----

Closing balance
Accounts Provision for
Aging receivable bad debts Provision ratio
1 Within 1 year
1 Including: sub-items within 1 year
1 Subtotal for those within 1 year 10,305,493.58
1 2 1 to 2 years 3.51 1.05 29.91
2 3 2 to 3 years 2.14 1.07 50.00
3 Above 3 years
3 4 3 to 4 years 79,720.82 79,720.82 100.00
4 5 4 to 5 years 604,439.11 604,439.11 100.00
5 Above 5 years 50,578,185.76 50,578,185.76 100.00
Total 61,567,844.92 51,262,347.81 83.26
----- End of picture text -----

In the group, the accounts receivable without provision for bad debts is as follows:

Unit: Yuan Currency: RMB

		Item Amount at the end of the period Amount at the beginning of the period
		Group without provision for bad debts (related parties) 1,349,753.33
		Total 1,349,753.33

– I-195 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

XI. Notes to Major Items of the Financial Statements of the Company (Continued)
Accounts receivable (Continued)
(2)
(2) Provision for bad debts made, recovered and reversed for the current period:
39,861.89
0

Provision for bad debts for the current period is RMB39,861.89; the recovery or reversal of the provision for bad debts for the current period is RMB0.

(3)
(3) Top five largest accounts receivable at the end of the period by the balance collected regarding the party in default:

236,602,674.01 84.23% 30,446,240.13

The total accounts receivable at the end of the period by the balance collected regarding the party in default is RMB236,602,674.01, representing 84.23% of the total balance of the accounts receivable at the end of the period. The total balance of the corresponding provision for bad debts at the end of the period is RMB30,446,240.13.

Other receivables
(1)
(1) Other accounts receivable by category:

Unit: Yuan Currency: RMB

==> picture [512 x 218] intentionally omitted <==

----- Start of picture text -----

Closing balance Opening balance
Carrying amount Bad debt provision Carrying amount Provision for bad debts
Category Amount Ratio Amount Provision ratio Book value Amount Ratio Amount Provision ratio Book value
(%) (%) (%) (%)
263,569,509.44 91.56 241,515,980.86 91.63 22,053,528.58 241,515,980.86 69.91 241,515,980.86 100
Other receivables with significant single amount and
individual provision for bad debts
24,300,738.07 8.44 21,750,947.68 89.51 2,549,790.39 103,942,012.09 30.09 21,190,288.37 20.39 82,751,723.72
Other receivables provided for bad debts in groups with
credit risk characteristics
Other receivables with insignificant single amount and
individual provision for bad debts
Total 287,870,247.51 263,266,928.54 24,603,318.97 345,457,992.95 262,706,269.23 82,751,723.72
----- End of picture text -----

– I-196 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)
XI. Notes to Major Items of the Financial Statements of the Company (Continued)
Other receivables (Continued)
- (1) Other accounts receivable by category: (Continued)

Other receivables with significant single amount and individual provision for bad debts at the end of the period are set as follows:

Unit: Yuan Currency: RMB

==> picture [445 x 208] intentionally omitted <==

----- Start of picture text -----

Closing balance
Provision for Reasons for
Other receivables (by unit) Other receivables bad debts Provision ratio provision
252,760,805.44 230,707,276.86 91.27%
CLFG Longmen Glass Company It is expected that
Limited the recovered
amount is lower
than the carrying
amount
10,808,704.00 10,808,704.00 100.00%
Xili Sub-branch, Zhengzhou of It is expected to be
China Construction Bank unrecoverable
Total 263,569,509.44 241,515,980.86
----- End of picture text -----

– I-197 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(1)
XI. Notes to Major Items of the Financial Statements of the Company (Continued)
Other receivables (Continued)
- (1) Other accounts receivable by category: (Continued)

In the group, other receivables with provision for bad debts based on ageing analysis:

Unit: Yuan Currency: RMB

==> picture [445 x 211] intentionally omitted <==

----- Start of picture text -----

Closing balance
Provision for
Aging Other receivables bad debts Provision ratio
1 Within 1 year
1 Including: sub-items within 1 year
1 Subtotal for those within 1 year 241,899.22
1 2 1 to 2 years
2 3 2 to 3 years 844,296.51 422,148.26 50.00
3 Above 3 years
3 4 3 to 4 years 783,600.00 783,600.00 100.00
4 5 4 to 5 years 113,085.89 113,085.89 100.00
5 Above 5 years 20,432,113.53 20,432,113.53 100.00
Total 22,414,995.15 21,750,947.68 97.04
----- End of picture text -----

In the group, other receivables without provision for bad debts are as follows:

Unit: Yuan Currency: RMB

			Item Amount at the end of the period Amount at the beginning of the period
			Group with no provision for bad debts (related party, spare fund, security deposit etc.) 1,885,742.92 81,656,976.72
			Total 1,885,742.92 81,656,976.72

– I-198 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

560,659.31

XI. Notes to Major Items of the Financial Statements of the Company (Continued)
Other receivables (Continued)
- (2) Provision for bad debts made, recovered or reversed for the current period:

Provision for bad debts for the current period is RMB560,659.31. Provision for bad debts recovered or reversed for the current period is RMB0.

(3) Other receivables categorized by nature of amount

Unit: Yuan Currency: RMB

	Nature of amount Carrying amount at the end of the period Carrying amount at the beginning of the period
	Amounts due from subsidiaries 252,760,805.44 231,720,141.78 Compensation for performance commitment 23,783,372.88 Land deposits 55,000,000.00 Reserves 74,156.06 64,237.86 Current accounts 35,035,286.01 34,890,240.43
	Total 287,870,247.51 345,457,992.95

– I-199 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(4)
XI. Notes to Major Items of the Financial Statements of the Company (Continued)
Other receivables (Continued)

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(4) Top five largest other receivables at the end of the period by the
balance collected regarding the party in default:
Unit: Yuan Currency: RMB
Proportion in
total balance Balance of
of other provision for
receivables bad debts
at the end at the end
Name of Unit Nature of amount Closing balance Aging of the period of the period
(%)
252,760,805.44 1 87.80 230,707,276.86
CLFG Longmen Glass Loans from Within 1 year or
Company Limited subsidiaries above
10,808,704.00 1 3.75 10,808,704.00
Xili Sub-branch, Zhengzhou of Current accounts Within 1 year
China Construction Bank
4,600,000.00 5 1.60 4,600,000.00
Shenzhen Cynthia Industrial Current accounts Above 5 years
Company Limited
2,372,413.21 2 3 0.82 2,372,413.21
Zhengzhou Yinji Trade City Current accounts 2 to 3 years
Co., Ltd
1,777,751.72 5 0.62 1,777,751.72
CLFG Luoyang Dinghong Current accounts Above 5 years
Glass Technology
Engineering Co., Ltd
Total 272,319,674.37 94.59 250,266,145.79
----- End of picture text -----

– I-200 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

XI. Notes to Major Items of the Financial Statements of the Company (Continued)
Long-term equity investment

Unit: Yuan Currency: RMB

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Closing balance Opening balance
Carrying Provision for Carrying Provision for
Item amount impairment Book value amount impairment Book value
893,499,984.17 64,513,390.18 828,986,593.99 813,499,984.17 64,513,390.18 748,986,593.99
Investment in subsidiaries
Investment in associates and joint
ventures
Total 893,499,984.17 64,513,390.18 828,986,593.99 813,499,984.17 64,513,390.18 748,986,593.99
(1) (1) Investment in subsidiaries
Unit: Yuan Currency: RMB
Balance of the
Provision for provision for
Increase for the Decrease for the impairment for the impairment at the
Investee Opening balance current period current period Closing balance current period end of the period
64,513,390.18 64,513,390.18 64,513,390.18
CLFG Longmen Glass Company
Limited
48,941,425.28 48,941,425.28
CLFG Longhai Electronic Glass
Limited
699,545,168.71 699,545,168.71
Bengbu China National Building
Materials Information Display
Material Co., Ltd.
500,000.00 80,000,000.00 80,500,000.00
CNBMG (Puyang) Photoelectric
Material Co., Ltd.
Total 813,499,984.17 80,000,000.00 893,499,984.17 64,513,390.18
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– I-201 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

XI. Notes to Major Items of the Financial Statements of the Company (Continued)
Operating income and operating costs:

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Unit: Yuan Currency: RMB
Januar y J une 2017 Januar y June 2016
Item Income Costs Income Costs
72,204,860.11 72,203,078.73 83,865,123.56 83,030,353.10
Principal business
233,892.84 49,746.60 6,831,644.50 5,672,998.92
Other business
Total 72,438,752.95 72,252,825.33 90,696,768.06 88,703,352.02
----- End of picture text -----

1. Investment income

Unit: Yuan Currency: RMB

								Item Januar~~y~~ June 2017 January ~~J~~une 2016
								Income from long-term equity investment based on the cost method Income from long-term equity investment based on the equity method Investment income from disposal of long-term equity investment Investment income from financial assets at fair value through profit or loss during the holding period Investment income from disposal of financial assets at fair value through profit or loss Investment income from held-for-maturity investments during the holding period 5,515,364.92 5,533,462.50 Investment income from available-for-sale financial assets during the holding period Investment income from disposal of available- for-sale financial assets Gains arising from remeasurement of the fair value of residual equity interests after loss of control
								Total 5,515,364.92 5,533,462.50

– I-202 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

XII. Supplementary Information

Breakdown of extraordinary profit and loss for the current period

Unit: Yuan Currency: RMB

						Item Amount Explanation
						Profit/loss on disposal of non-current assets 83,418.35 Tax return and deduction due to ultra vires approval or without formal approval documents Government subsidies (except for the grants which are closely related to the Company s normal business, are in compliance with the provisions of the State and have the standard amount or quantities in accordance with the national standard) attributable to profits and losses for the period 19,077,178.00 Profit/loss from debt restructuring 1,715,899.47 Other non-operating income and expenses other than the aforesaid items -126,062.61 Other profits or losses items within the definition of extraordinary profit or loss Effect of income tax -1,343,268.54 Effect of minority interests
						Total 19,407,164.67

– I-203 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

.

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XII. Supplementary Information (Continued)

Return on net assets and earnings per share

				Earnings	per share	per share

		Weighted
	average return			Basic earnings	Diluted		earnings
Profit for the reporting period	on net assets			per share		per share
			(%)
Net profit attributable to holders of			0.22	0.0022			0.0022
ordinary shares of the Company
Net profit attributable to holders of			-3.48	-0.0346			-0.0346
ordinary shares of the Company
after deducting extraordinary
profit and loss

– I-204 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. STATEMENT OF INDEBTEDNESS

1. Borrowings

At the close of business on 31 August 2017, being the latest practicable date for the purpose of this indebtedness statement prior to printing of this circular, the Enlarged Group had outstanding bank loans and other borrowings of approximately RBM1,282,819,968.68. As at 31 August 2017, bank loans and other borrowings of RMB1,056,472,000.00 were guaranteed by the de facto controller and its subsidiaries; bank loans and other borrowings of RMB195,058,246.00 were secured by the interests of the Enlarged Group in investment property and land use rights and guaranteed by the de facto controller and its subsidiaries; bank loans and other borrowings of RMB30,084,701.19 were secured by the interests of the Enlarged Group in investment property and land use rights; and bank loans of RMB1,205,021.49 were pledged by certificate of deposit.

The breakdown of the outstanding borrowings as at 31 August 2017 is shown as follows:

	Date of
Counterparty	borrowing	Expiration date	Rate	Balance
				RMB
Bank of China	2017.2.6	2018.2.12	4.350%	106,860,000.00
China Construction Bank	2017.2.10	2018.2.9	4.350%	64,224,000.00
Bank of Communications	2017.1.16	2018.1.15	4.568%	88,450,000.00
Bank of Luoyang	2017.1.26	2018.1.26	4.568%	57,600,000.00
Industrial and Commercial	2017.7.25	2018.6.02	4.350%	26,750,000.00
Bank
Huishang Bank Bengbu	2017.7.20	2018.7.20	4.785%	9,500,000.00
Branch
Huishang Bank Bengbu	2017.8.8	2018.8.8	4.785%	9,000,000.00
Branch
Bank of China	1989.3.07	2019.2.15	2.50%	1,205,021.49
Industrial and Commercial	2016.10.30	2017.10.30	0%	8,768,000.00
Bank
Taiping & Sinopec Financial	2016.12.9	2019.12.9	4.275%	75,000,001.00
Leasing Co., Ltd.
Suyin Financial Leasing Co.,	2017.4.27	2022.4.27	4.750%	90,058,245.00
Ltd.
International Far Eastern	2015.6.23	2018.6.23	5.23%	13,244,607.50
Leasing Co., Ltd.
International Far Eastern	2015.6.23	2018.6.23	6.43%	16,840,093.69
Leasing Co., Ltd.

– I-205 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

	Date of
Counterparty	borrowing	Expiration date	Rate	Balance
				RMB
Hefei Science & Technology	2016.10.28	2017.10.28	4.350%	35,000,000.00
Rural Commercial Bank
Qilitang Sub-branch
Hefei Science & Technology	2017.2.6	2018.2.6	4.350%	45,500,000.00
Rural Commercial Bank
Qilitang Sub-branch
Hefei Science & Technology	2017.3.9	2018.3.9	4.350%	30,000,000.00
Rural Commercial Bank
Qilitang Sub-branch
Hefei Science & Technology	2017.5.23	2018.5.23	4.350%	15,000,000.00
Rural Commercial Bank
Qilitang Sub-branch
China Construction Bank	2017.2.4	2018.2.3	4.350%	30,000,000.00
Heifei Zhonglou
Sub-branch
China Construction Bank	2017.5.3	2018.2.3	4.350%	20,000,000.00
Heifei Zhonglou
Sub-branch
Huishang Bank Hefei North	2017.7.21	2018.7.21	5.003%	15,000,000.00
Railway Station Sub-branch
Huishang Bank Hefei North	2017.7.24	2018.7.21	5.003%	15,000,000.00
Railway Station Sub-branch
Industrial Bank Hefei	2015.3.26	2021.3.25	6.431%	72,700,000.00
Qingyang Road Sub-branch
Industrial Bank Hefei	2015.5.28	2021.5.27	6.159%	3,000,000.00
Qingyang Road Sub-branch
Industrial Bank Hefei	2015.9.9	2021.9.8	5.364%	71,620,000.00
Qingyang Road Sub-branch
Industrial Bank Hefei	2015.12.15	2021.12.14	5.341%	67,500,000.00
Qingyang Road Sub-branch
CCB Trust	2016.10.28	2018.10.26	4.750%	30,000,000.00
Bank of Jiangsu Yixing	2017.3.27	2018.3.26	4.350%	75,000,000.00
Sub-branch
Bank of Jiangsu Yixing	2017.3.28	2018.3.27	4.350%	50,000,000.00
Sub-branch
Jiangsu Yixing Rural	2017.1.11	2018.1.11	4.350%	20,000,000.00
Commercial Bank
Jiangsu Yixing Rural	2017.1.16	2018.1.16	4.350%	30,000,000.00
Commercial Bank
Jiangsu Yixing Rural	2017.5.8	2018.6.20	5.145%	15,000,000.00
Commercial Bank

– I-206 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Counterparty
Date of
borrowing
Expiration date
Rate
Jiangsu Yixing Rural
Commercial Bank
2017.5.8
2018.12.20
5.145%
Jiangsu Yixing Rural
Commercial Bank
2017.6.14
2019.6.20
5.145%
Jiangsu Yixing Rural
Commercial Bank
2017.6.14
2019.12.20
5.145%
Jiangsu Yixing Rural
Commercial Bank
2017.8.4
2019.12.20
5.145%
Jiangsu Yixing Rural
Commercial Bank
2017.8.4
2020.6.20
5.145%
Total

Balance
RMB
15,000,000.00
20,000,000.00
10,000,000.00
10,000,000.00
20,000,000.00

1,282,819,968.68

As at 31 August 2017, the pledged bank deposits, the secured fixed assets-buildings, the secured fixed assets-machinery and equipment and the secured intangible assets-land use rights amounted to RMB1,400,000.00, RMB36,244,499.34, RMB264,726,351.34 and RMB54,519,612.81, respectively.

2. Capital commitments

As at 31 August 2017, the Enlarged Group made a capital commitment of RMB4,845,591.20 with respect to the property, plant and equipment and others, which had been contracted for but not provided in the financial statements.

3. Pledge of assets

As at 31 August 2017, the net book value of certain secured assets of the Enlarged Group amounted to RMB355,490,463.49.

4. Operating lease commitments

As at 31 August 2017, the Enlarged Group had no operating lease commitments.

5. Contingent liabilities

As at 31 August 2017, the Enlarged Group had no contingent liabilities.

Save as aforesaid and apart from intra-group liabilities, and normal trade payables in the ordinary course of business, none of the companies under the Enlarged Group had any outstanding debt securities, liabilities under acceptances (other than normal trade bills), acceptance credits, finance lease or hire purchase commitments,

– I-207 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

mortgages, pledge, loan capital or overdraft or other similar indebtedness, as at the close of business on 31 August 2017.

The Directors have confirmed that there has not been any material change in the indebtedness and contingent liabilities of the Enlarged Group since 31 August 2017.

For the purpose of the above indebtedness statement, foreign currency amounts have been translated into Renminbi at the rates of exchange prevailing at the close of business on 31 August 2017.

6. WORKING CAPITAL SUFFICIENCY OF THE ENLARGED GROUP

Taking into account the financial resources available to the Enlarged Group, including its existing cash and cash equivalents and cash flow from operations, the Directors believe that the Enlarged Group has available sufficient working capital for at least the next 12 months from the date of this circular.

7. NO MATERIAL CHANGE

The Directors confirm that save as disclosed below, there had been no material change in the financial or trading position or outlook of the Group since 31 December 2016, being the date to which the latest published audited consolidated financial statements of the Company were made up, and up to and including the Latest Practicable Date:

(i) on 7 February 2017, the Company entered into the (a) First SP Agreement (as supplemented by the First Supplemental SP Agreement); (b) the Second SP Agreement (as supplemented by the Second Supplemental SP Agreement); and (c) the Third SP Agreement (as supplemented by the Third Supplemental SP Agreement), in relation to the Proposed Acquisitions;
(ii) on 7 February 2017, the Company entered into (a) the First PG Indemnity Agreement (as supplemented by the First Supplemental PG Indemnity Agreement); (b) the Second PG Indemnity Agreement (as supplemented by the Second Supplemental PG Indemnity Agreement); and (c) the Third PG Indemnity Agreement (as supplemented by the Third Supplemental PG Indemnity Agreement);
(iii) on 7 February 2017, the Company entered into the Triumph Group Subscription Agreement (as supplemented by the Supplemental Triumph Group Subscription Agreement);
(iv) the supplemental subscription agreement dated 24 February 2017 entered into between the Company and Triumph Group in respect of the amendment of the issue price per A Share and the pricing base date under the Triumph Group Subscription Agreement;

– I-208 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(v) on 7 August 2017, the Company entered into (a) the First Supplemental SP Agreement; (b) the Second Supplemental SP Agreement; and (c) the Third Supplemental SP Agreement, in relation to the amendment of the consideration and the number of new A Shares to be allotted and issued as consideration shares under the Proposed Acquisitions Agreements; and
(vi) on 7 August 2017, the Company entered into (a) the First Supplemental PG Indemnity Agreement; (b) the Second Supplemental PG Indemnity Agreement; and (c) the Third Supplemental PG Indemnity Agreement, in respect of the confirmation of the respective Profit Guarantee amounts under the Proposed Acquisitions Agreements.

8. FINANCIAL AND TRADING PROSPECTS

Set out below is the financial and trading prospects of the Group as extracted from the 2016 Annual Report of the Company:

(I) Industry pattern and development trend

The Chinese economy has been in a new normal, with a proper growth rate and an optimised structure, in which the growth of traditional industries slows down while the strategic emerging industries will still maintain a higher growth rate.

The outline of the National “Thirteenth Five-year” Plan proposes to “step up breakthroughs in core technologies in terms of a new generation of information communication, new energy, new materials, aerospace, biological medicine, intelligent manufacturing, etc.”. The Made in China 2025 puts forward “to vigorously promote the breakthrough development in key fields and place the focus on ten key fields including a new generation of information technology industry, high-end CNC machine tool and robot, aerospace equipment, ocean engineering equipment and high-tech ships, advanced rail transit equipment, energy-saving and new energy automobiles, power equipment, agricultural machinery equipment, new materials, biological medicine and high performance medical devices”.

The future market growth mainly derives from the demand increase in downstream markets and the expansion of application fields. In recent years, amid the explosive growth of mobile internet applications, the demands for smartphone, laptop and other consumer electronics maintained growth and the intelligentization in professional application fields including on-board equipment, industrial control, intelligent household appliances and medical treatment continued to intensify in an accelerated manner with stable growth at the annual growth rate of market share exceeding 20%. It is expected that the demand for ultra-thin glass substrate, as a core material for touch screen, will reach 101 million m[2] by 2020.

– I-209 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

At present, China has become the largest producer and exporter of ITO conductive glass, TP touch screen glass, cover glass and protective shields. The overall market developments show favourable signs as domestic and international markets have maintained stable with good momentum driven by the expansion, upgrading and growth of relevant consumer markets. It is expected that the ultra-thin glass substrate market will be cautiously optimistic in 2017.

(II) Development strategy

Led by innovation, the Company will maintain the lead in respect of Luoyang float glass technology. With the stress laid on consolidating information display glass substrate to enhance competitive edge and market advantage, the Company, centering on new glass, new material and new energy market, aims at becoming a provider of special high-tech glass through expansion of application fields and optimisation of product mix.

(III) Business plan

In 2017, the Company’s main operation targets are to achieve production volume of 26.84 million square meters and realize revenue of RMB500.00 million.

Based on the aforesaid targets, the Company will take the following measures:

Adherence to the operation and management guiding principles of “integration and optimisation, quality improvement and benefit increase, preparation, meticulosity, refinement and solidity, practice foremost, price stabilization, quantity assurance, cost reduction, receivables collection, inventory control, adjustment, and profit and efficiency as the first priority”.

The Company will intensify market value management, and simultaneously implement physical operation and capital operation. By adhering to the operation ideas led by market value and supported by performance, the Company will boost its competitiveness and strength, and increase investors’ confidence. In combination of the Company’s strategic positioning and industry development direction, the Company will seek for new leap in respect of transformation and upgrade so as to realize win-win situation for both the Company and the investors.
The Company will implement the plan on enhancement and transformation of Longhai production line to build a new generation of production line of ultra-thin glass and improve production technology and core equipment, striving to achieve international advanced product quality.
Investment will be made in construction of a production line of ultra-white photothermal materials in Puyang to develop new energy materials, enrich and

– I-210 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

optimise the Company’s product mix, seize the market of strategic emerging industries and foster a new growth driver.

While strengthening technical exchange and cooperation and increasing investment in research and development to enhance technological strength, the Company will focus on the development of products with high added value and tape potential demands in the market. In addition, the Company will consolidate its market share and maintain a stable market price.
To improve the management and control mode and innovate the internal mechanism, the Company will, based on assets restructuring, explore and establish a management and control mode that tallies with its development requirements and promote remuneration system reform to link remuneration and welfare with operating performance and form a positively related incentive mechanism. It will vigorously carry forward the corporate culture of “innovation, performance, harmony and responsibility” and earnestly practice the code of conduct “reverence, gratefulness, humility and appropriateness” to foster key technical personnel and a staff team with craftsmanship.
Further efforts will be made to carry out “increasing, cutting and reducing” in a solid manner, and the Company will align to the benchmark of international peers in the industry to improve product technology, technological equipment, energy efficiency and environmental protection.
In addition to fulfillment of the energy conservation and emission reduction targets, the Company will shoulder its due social responsibilities and enhance production safety to ensure no accident in production throughout the year.
The Company will strengthen the Party construction in an all-round way to generate positive energy as powerful support for realisation of the goals for the year.
Centering on the annual operational targets and based on comprehensive budget management and refined management, the Company will take practically effective risk management measures to restrain risks in the controllable range. Moreover, the Company will further improve the construction of internal control system to improve the executive force of internal control.

– I-211 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

9. MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

Set out below is the management discussion and analysis of the Group as extracted from the annual reports of the Company for the three years ended 31 December 2016, 2015 and 2014 and the interim report of the Company for the six months ended 30 June 2017:

(a) Management discussion and analysis for the year ended 31 December 2016

Discussion and Analysis of the Operations of the Company during the Reporting Period

In 2015, the Company made a successful strategic transformation from ordinary float glass to optical electronic and information display ultra-thin glass through significant asset restructuring. The main product of the Company is ultra-thin electronic glass substrate. Currently, the Company possesses three ultra-thin electronic glass production lines and is one of the manufacturers capable of mass production of 0.15–2.0 mm series of electronic information display glass in China. Ranking among the leading manufacturers of ultra-thin electronic display glass in China in terms of production capacity, product varieties and specifications, the Company takes up over 20% share of the domestic ultra-thin glass market, with its product mainly distributed across 18 provinces (or municipalities directly under the central government) including Anhui, Guangdong, Jiangsu, Shanghai, Zhejiang and Hebei.

The year 2016 marked the beginning of the Company’s strategic transformation. During the Reporting Period, the Company laid emphasis on management improvement and technological innovation and managed to achieve profits through controlling costs internally, expanding market externally, improving product quality and implementing asset restructuring.

Review of business operations and financial performance

During the reporting period of the year ended 31 December 2016, the Company recorded an operation revenue of RMB392,095,600, representing a year-on-year decrease of RMB270,061,000; recorded an operating profit of RMB-80,256,200, representing a year-on-year decrease of RMB104,137,900; recorded a net profit attributable to the shareholders of the Company of RMB11,516,100, representing a year-on-year increase of RMB196,271,200.

Analysis of revenue and costs

Analysis of the factors driving the changes in business revenue

The revenue from business operations of the Company is mainly from sales of physical products (photoelectric glass). For the financial year ended 31 December 2016, the Company recorded an operating revenue of RMB392,095,600, representing a decrease of 40.79% as compared to that of last year.

– I-212 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Analysis of the factors affecting the revenue mainly from sales of physical products of the Company

The decrease in operating revenue for the reporting period of the year ended 31 December 2016 as compared to that of last year was mainly due to the exclusion of operating revenue from transferred-out companies.

Impact analysis of new products and new services

During the reporting period of the year ended 31 December 2016, the Company successfully developed and produced 0.15mm ultra-thin float electronic glass, further enriched the categories of high value-added products of the Company and enhanced the core competitiveness of the Company.

Major sales to customers and major suppliers

During the reporting period of the year ended 31 December 2016, the total sales to the top five customers amounted to RMB198,439,000, representing 52.21% of the total annual sales, of which sales to the related party Anhui Bengbu Huayi Conductive Film Glass Co., Ltd. amounted to RMB85,980,900, representing 22.62% of the total annual sales.

During the reporting period of the year ended 31 December 2016, the purchase amount of top five suppliers is RMB160,690,300, representing 66.00% of total purchase amount of the year, of which the amount purchased from the related parties was RMB0, representing 0% of total purchase amount of the year.

Saved as disclosed above, none of the Directors, supervisors nor their associates or any Shareholders (who to the knowledge of the Directors owns 5% or more share capital of the Company) was interested in the foresaid customers and suppliers.

Capital liquidity, financial resources and capital structure

(1) Capital liquidity

As at 31 December 2016, the Group’s liquidity ratio was 0.80 (31 December 2015: 0.86) and quick ratio was 0.57 (31 December 2015: 0.41).

As at 31 December 2016, the turnover rate of accounts receivable for the year was 4.38 times (31 December 2015: 12.52); and the turnover rate of inventory was 2.05 times (31 December 2015: 2.68 times).

– I-213 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(2) Financial resources

As at 31 December 2016, the Group’s cash and cash equivalents amounted to RMB112,528,516.53, including 99.994% dominated in RMB and 0.006% dominated in US$ and other foreign currencies.

As at 31 December 2016, the Group’s bank loans amounted to RMB579,173,437.14 (31 December 2015: RMB608,197,786.13), including short-term loans amounting to RMB20,000,000.00 (31 December 2015: RMB67,930,000.00) and long-term loans amounting to RMB559,173,437.14 (31 December 2015: RMB540,267,786.13).

(3) Capital structure

As at 31 December 2016, the Group’s current liabilities amounted to RMB726,520,447.30 (31 December 2015: RMB567,495,089.06), representing an increase of 28.02% from 2015; non-current liabilities amounted to RMB107,127,156.05 (31 December 2015: RMB468,194,996.46), representing a decrease of 77.12% from 2015; and equity attributable to shareholders of the Company amounted to RMB523,269,416.96 (31 December 2015: RMB278,344,996.00), representing an increase of 87.99% from 2015.

Pledged of Assets

As at 31 December 2016, the Group has pledged approximately RMB174,093,824.18 of fixed assets to bank and financial institution for mortgage loan.

Capital Commitments

As at 31 December 2016, the Group did not have any capital commitments.

Contingent Liability

As at 31 December 2016, the Group did not have any material contingent liability.

Foreign exchange risk

As at 31 December 2016, the exchange risk of the Group mainly comes from the account receivable, bank deposit and loan out of the range of recording currency. The main currencies that incur risks include U.S. dollar, Euro and HK dollar.

– I-214 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Material Changes to Major Assets of the Company

As at 31 December 2016, the Company did not have any material changes to major assets.

Employees and Remuneration Policies

As at 31 December 2016, the Group had 959 employees. Total staff costs (including Directors’ remuneration) were approximately RMB50,299,063.33. An annual remuneration system is adopted for the management of the Company and its subsidiaries while a position plus skill-based salary system is adopted for the employees of the Company.

(b) Management discussion and analysis for the year ended 31 December 2015

Discussion and Analysis of the Operations of the Company during the Reporting Period

During the reporting period of the year ended 31 December 2015, the Company’s main product was ultra-thin glass substrate which lies at the upstream of the electronic industry chain. Based on the specific processing methods and applications, ultra-thin glass substrate is mainly used for displaying, touching, window protection and other core functions in the panel display devices and touch equipment, and, to a large extent, it determines the function and property of the equipment. Thus, ultra-thin glass substrate is non-substitutable, and has favorable growth prospect with development of the whole electronic product market.

Impacted by domestic macro-economic downturn, depressed real estate market and other factors, the glass market suffered a continued declining trend in 2015, with the selling price of ordinary glass falling below cost and the selling price of ultra-thin glass plummeting as a result of aggravated oversupply. Facing such grim situation, the Company put forth a strong effort to boost transformation and upgrading through multiple measures, including implanting asset restructuring, promoting technological innovation, emphasizing “increasing income, cutting expenditure, and reducing consumption”, optimizing product mix to keep up with market demand and boosting brand image by improving quality. Thanks to these efforts, the Company was able to maintain stable production and operation.

Review of business operations and financial performance

During the reporting period of the year ended 31 December 2015, the Company recorded an operating revenue of RMB662,156,600, representing a year on year increase of 2,098,400; recorded an operating profit of RMB-184,394,100, representing a year-on-year decrease of RMB127,399,400; recorded a net profit attributable to the shareholders of the Company of RMB-184,755,100, representing a year-on-year decrease of RMB205,914,300.

– I-215 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Analysis of revenue and costs

Analysis of the factors driving the changes in business revenue

The income from business operations of the Company is mainly from sales of physical products (glass and silicon sand). For the financial year ended 31 December 2015, the Company recorded an operating revenue of RMB662,156,600, representing an increase of 0.32% as compared to that of last year.

Analysis of the factors affecting the revenue mainly from sales of physical products of the Company

During the reporting period of the year ended 31 December 2015, the sales of glass products of the Company recorded a significant growth due to business combination under common control and incorporation of Bengbu Company into the consolidation scope. Therefore, the income from glass products increase attributable to the increase in sales.

Impact analysis of new products and new services

During the reporting period of the year ended 31 December 2015, the Company successfully researched and developed 0.20mm ultra-thin glass products, which is the thinnest glass in the PRC. Accordingly, we achieved continuous and stable production. The successful and stable production of 0.20mm ultra-thin glass products further enriched the categories of high added value products of the Company.

Major sales to customers

During the reporting period of the year ended 31 December 2015, the total sales to the top five customers amounted to RMB232,457,852.31, representing 35.11% of the Company’s total operating income for the year, among which, the sales to Fangxing Science & Technology, one of the top five customers, accounted for 3.07% of the Company’s total operating income for the year. Fangxing Science & Technology is a subsidiary controlled by CNBMG, the de facto controller of the Company.

Capital liquidity, financial resources and capital structure

(1) Capital liquidity

As at 31 December 2015, the Group’s liquidity ratio was 0.86 (31 December 2014: 0.75) and quick ratio was 0.41 (31 December 2014: 0.25). The turnover rate of accounts receivable for the year was 12.52 times (31 December 2014: 23.29); and the turnover rate of inventory was 2.68 (31 December 2014: 2.66 times).

– I-216 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(2) Financial resources

As at 31 December 2015, the Group’s cash and cash equivalents amounted to RMB42,342,860.91, including 99.99% of RMB and 0.01% of US$ and other foreign currencies.

As at 31 December 2015, the Group’s bank loans amounted to RMB608,197,786.13 (31 December 2014: 525,829,398.25), including short-term loans amounting to RMB67,930,000.00 (31 December 2014: 20,000,000.00) and long-term loans amounting to RMB540,267,786.13 (31 December 2014: 505,829,398.25).

(3) Capital structure

As at 31 December 2015, the Group’s current liabilities amounted to RMB567,495,089.06 (31 December 2014: RMB674,259,284.43), representing a decrease of 15.83% from 2014; long term liabilities amounted to RMB468,194,996.46 (31 December 2014: RMB470,184,675.53), representing a decrease of 0.42% from 2014; and equity attributable to shareholders of the Company amounted to RMB278,344,996.00 (31 December 2014: RMB717,077,784.06), representing a decrease of 61.18% from 2014.

Pledged of Assets

As at 31 December 2015, the Group has pledged approximately RMB9,429,009.42 of fixed assets and approximately RMB36,269,452.96 intangible assets to bank and financial institution for mortgage loan.

Capital Commitments

As at 31 December 2015, the Group had capital commitments of approximately RMB2,337,873.60.

Contingent Liability

As at 31 December 2015, the Group did not have any material contingent liability.

Foreign exchange risk

As at 31 December 2015, the exchange risk of the Group mainly comes from the account receivable, bank deposit and loan out of the range of recording currency. The main currencies that incur risks include U.S. dollar, Euro and HK dollar.

– I-217 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

There have been very little foreign exchange transactions in 2015 by the Group. Therefore, the management of the Company anticipates there is no commercial transaction in the future that will incur major foreign exchange risks.

Material Changes to Major Assets of the Company

(1) During the reporting period of the year ended 31 December 2015, upon approval of the Chinese Securities Regulatory Commission (CSRC) (ZJXK [2015] No. 2813), the Company implemented and completed the significant asset restructuring with CLFG, a controlling shareholder of the Company.
(2) On 21 December 2015, the Company entered into the Agreement between Luoyang Glass Company and China Luoyang Float Glass (Group) Company Limited concerning Delivery of Significant Asset Restructuring, under which, 21 December 2015 was regarded as the delivery date of the exchange-in assets and the exchange-out assets in this restructuring, it was confirmed that as at the delivery date, both parties to the transaction completed the asset delivery procedures in this transaction. Transfer and delivery of the relevant assets are as follows:
(i) Delivery of exchange-in assets

The exchange-in assets were the 100% equity interests held by CLFG in Bengbu Company. On 14 December 2015, 100% equity interests of Bengbu Company were transferred to the Company, and the relevant procedures for the registration of changes were completed, whereupon Bengbu Company became a wholly-owned subsidiary of the Company.

(ii) Delivery of exchange-out assets

Exchange-out assets were 100%, 63.98%, 67%, 52% and 40.29% of equity interests held by the Company respectively in Longhao Company, Longfei Company, Dengfeng Silicon, Yinan Huasheng Mineral Products Company and CLFG Mineral, and liabilities (including accounts receivable, other receivables and entrusted loans) of the Company to Longhao Company, Longfei Company, Dengfeng Silicon, Yinan Huasheng Mineral Products Company and CLFG Mineral. Transfer and delivery of the exchange-out assets are as follows:

(a) Equity assets

100% of equity interests held by the Company in Longhao Company were registered in the name of CLFG, and the relevant procedures for industrial and commercial registration of changes were completed on 16 December 2015.

– I-218 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

63.98% of equity interests held by the Company in Longfei Company were registered in the name of CLFG, and the relevant procedures for industrial and commercial registration of changes were completed on 18 December 2015.

67% of equity interests held by the Company in Dengfeng Silicon were registered in the name of CLFG, and the relevant procedures for industrial and commercial registration of changes were completed on 15 December 2015.

52% of equity interests held by the Company in Yinan Huasheng Mineral Products Company were registered in the name of CLFG, and the relevant procedures for industrial and commercial registration of changes were completed on 21 December 2015.

40.29% equity interests held by the Company in CLFG Mineral were registered in the name of CLFG, and the relevant procedures for industrial and commercial registration of changes were completed on 16 December 2015.

(b) Credit assets

On 21 December 2015, the Company informed the corresponding debtors of the exchange-out credit assets in writing that all rights and obligations of the Company corresponding to the creditors’ rights to Longhao Company, Longfei Company, Longxiang Company, Yinan Huasheng Mineral Products Company, and CLFG Mineral had been transferred to CLFG.

Employees and Remuneration Policies

As at 31 December 2015, the Group had 1,102 employees. Total staff costs (including Directors’ remuneration) were approximately RMB50,398,246.78. An annual remuneration system is adopted for the management of the Company and its subsidiaries while a position plus skill-based salary system is adopted for the employees of the Company.

(c) Management discussion and analysis for the year ended 31 December 2014

Discussion and Analysis of the Operations of the Company during the Reporting Period

During the reporting period of the year ended 31 December 2014, the Company’s main products were ordinary float glass and ultra-thin electronic glass. During the reporting period, the Company was still confronted with numerous adverse factors,

– I-219 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

such as continued downturn in the ordinary glass market, severe imbalance between supply and demand in the electronic glass market and the increase in cost resulting from the rise in natural gas price. Against such a backdrop, the Company adopted a number of initiatives, including developing new products and improving product profitability through technological innovation, driving transformation and upgrading through significant asset restructuring, enhancing performance assessment and management efficiency through optimizing management and control approaches, and increasing income through disposal of idle assets. Thanks to these efforts, the Company was able to secure continuous operation and production and accomplishment of its annual profit targets.

Review of business operations and financial performance

During the reporting period of the year ended 31 December 2014, the Company recorded an operation revenue of RMB660,058,300, representing a year-on-year increase of 75.67%; recorded an operating profit of RMB-56,994,700, representing a year-on-year reduction of loss of RMB78,522,200; recorded a net profit attributable to the shareholders of the company of RMB21,159,200, representing a year-on-year increase of RMB120,132,400, mainly attributable to gain from disposal of equity interests of subsidiaries and government grant.

Analysis of revenue

Analysis of the factors driving the changes in business revenue

The income from business operations of the Company is mainly from sales of physical products (glass and silicon sand). During the reporting period, the Company recorded an operating revenue of RMB660,058,300, representing an increase of 75.67% as compared to that of last year.

Analysis of the factors affecting the income mainly from sales of physical products of the Company

During the reporting period of the year ended 31 December 2014, the sales of glass products of the Company recorded a significant growth due to the increase in production. Therefore, the income from glass products increase attributable to the increase in sales.

Impact analysis of new products and new services

In January 2014, the Company successfully researched and developed 0.33mm ultra-thin glass products, which is the thinnest glass in the PRC. Accordingly, we achieved continuous and stable production. The successful and stable production of 0.33mm ultra-thin glass products further enriched the categories of high added value products of the Company.

– I-220 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Major sales to customers

During the reporting period of the year ended 31 December 2014, the total sales to the top five customers amounted to RMB154,123,790.22, representing 22.35% of the Company’s total operating income, among which, the sales to Huayi Glass, one of the top five customers, accounted for 4.83% of the Company’s total operating income for the year. Huayi Glass is a subsidiary controlled by CNBMG, the de facto controller of the Company.

Capital liquidity, financial resources and capital structure

(1) Capital liquidity

As at 31 December 2014, the Group’s liquidity ratio was 0.75 (31 December 2013: 0.75) and quick ratio was 0.25 (31 December 2013: 0.45). The turnover rate of accounts receivable for the year was 23.29 times (31 December 2013: 3.45); and the turnover rate of inventory was 2.66 times (31 December 2013: 1.25 times).

(2) Financial resources

As at 31 December 2014, the Group’s cash and cash equivalents amounted to RMB37,777,890.19, including 99.997% of RMB and 0.003% of US$ and other foreign currencies.

As at 31 December 2014, the Group’s bank loans amounted to RMB525,829,398.25 (31 December 2013: RMB603,144,409.84), including short-term loans amounting to RMB20,000,000.00 (31 December 2013: 50,696,833.33) and long-term loans amounting to RMB505,829,398.25 (31 December 2013: 552,447,576.51).

(3) Capital structure

As at 31 December 2014, the Group’s current liabilities amounted to RMB674,259,284.43 (31 December 2013: RMB756,121,624.86), representing a decrease of 10.83% from 2013; long term liabilities amounted to RMB470,184,675.53 (31 December 2013: RMB517,551,976.42), representing a decrease of 9.15% from 2013; and equity attributable to shareholders of the Company amounted to RMB717,077,784.06 (31 December 2013: RMB103,313,890.92), representing an increase of 594.08% from 2013.

Pledged of Assets

As at 31 December 2014, the Group had no pledged assets.

– I-221 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Capital Commitments

As at 31 December 2014, the Group had capital commitments of approximately RMB116,688,080.

Contingent Liability

As at 31 December 2014, the Group did not have any material contingent liability.

Foreign exchange risk

As at 31 December 2014, the exchange risk of the Group mainly comes from the account receivable, bank deposit and loan out of the range of recording currency. The main currencies that incur risks include U.S. dollar, Euro and HK dollar.

There have been very little foreign exchange transactions in 2014 by the Group. Therefore, the management of the Company anticipates there is no commercial transaction in the future that will incur major foreign exchange risks.

Material Changes to Major Assets of the Company

During the reporting period of the year ended 31 December 2014, the Company disposed of 100% equity interest in Luoyang Luobo Industrial Co., Ltd. by way of public auction to Luoyang Tianyuan Real-estate Company Limited at a hammer price of RMB122 million.

During the reporting period of the year ended 31 December 2014, the Company disposed 3,659,521 shares equity of Sanmenxia Bank Co., Ltd at a consideration of RMB6,879,905.41 to Sanmenxia Yutong Materials Co., Ltd.

Employees and Remuneration Policies

As at 31 December 2014, the Group had 2,172 employees. Total staff costs (including Directors’ remuneration)) were approximately RMB75,965,371.27. An annual remuneration system is adopted for the management of the Company and its subsidiaries while a position plus skill-based salary system is adopted for the employees of the Company.

(d) Management discussion and analysis for the six months ended 30 June 2017

During the reporting period, the Company took the initiative to adapt to market changes and fully implemented its development strategy aiming for “integration and optimization, quality and benefit improvement”.

– I-222 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Company proactively carried forward the significant asset restructuring. Under the restructuring, the Company proposed to acquire 100% equity interest in CNBM (Hefei) New Energy Company Limited (中建材（合肥）新能源有限公司), 100% equity interest in CNBM (Tongcheng) New Energy Materials Company Limited (中國建材桐城新能源材料有限公司) and 70.99% equity interest in CNBM (Yixing) New Energy Company Limited* (中建材（宜興）新能源有限公司) by means of issuance of shares and raise proceeds through non-public issuance of shares for funding the relevant project construction of the companies proposed to be acquired. The restructuring, if completed, will enable the Company to develop the new energy glass business in addition to its photoelectric glass and information display glass businesses, further enrich the product mix and expand the application scope of the products, thereby enhancing the profitability and core competitiveness of the Company and strengthening its risk-resistant capability.

The Company devoted great efforts to implement the plan on improvement and transformation of aged production lines. It planned to rebuild a new generation of production line of ultra-thin substrate for information display on the original site of Longhai Company so as to elevate the standard of production process techniques and core equipment of the ultra-thin glass substrate production line of Longhai Company, thereby further enhancing the competitive edges and market advantages of its products. A mature, reliable, advanced and rational technical solution is expected to be adopted for the new production line in a bid to reach the advanced standard of the industry in terms of technical equipment and automated control of the main part of the production line. The designed melting capacity of the melting furnace is 180t/d and the designed annual output is 15.50 million m[2] . So far, Longhai Company has completed the demolition of the original production line.

The Company officially commenced the construction of the ultra-white photothermal materials project in Puyang on 10 May 2017, with an aggregate of approximately RMB800 million invested in phase one of the project. The project is designed mainly for the production of solar glass substrate used for solar thermal power generation and, upon completion, is expected to enrich and optimise the ultra-thin glass product portfolio of the Company, thereby further expanding the new energy material business, improving profitability and enhancing industry competitiveness and sustainable development capability of the Company.

For the reporting period, the Company’s operating revenue amounted to RMB154,969,277.04, representing year-on-year increase of 12.92%; operating profit amounted to RMB3,935,160.93, representing a year-on-year increase of RMB30,706,339.06; net profit attributable to the shareholders of the Company amounted to RMB1,177,959.02, representing a year-on-year increase of RMB26,923,553.25; and basic earnings per share attributable to shareholders of the Company amounted to RMB0.0022. Gearing ratio was 58.61%, representing a decrease of 2.83 percentage points from the beginning of the reporting period.

– I-223 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Borrowings and debts

As at the end of the reporting period, the balance of short-term loans was RMB326,496,500.00, including secured loans of RMB5,000,000.00 and guaranteed loans of RMB321,496,500.00. The balance of long-term loans was RMB233,130,025.08 (including the balance of long-term loans due within one year amounting to RMB111,407,706.89), of which: bank loans of RMB9,973,021.49 and secured loans from non-bank financial institutions of RMB223,157,003.59.

Liquidity and capital resources

As at 30 June 2017, the Group had cash and cash equivalents of RMB60,688,037.20, including US dollar deposits of RMB186.84 (31 December 2016: RMB234.47), HK dollar deposits of RMB6,218.24 (31 December 2016: RMB6,408.42) and Euro deposits of RMB4.66 (31 December 2016: RMB4.38), representing a decrease of RMB51,840,479.33 compared with the total amount of RMB112,528,516.53 as at 31 December 2016. Cash inflows of the Group in the reporting period mainly came from sales revenue and financial leases, which were mainly used as working capital and for repayment of bank loans.

Gearing ratio

Gearing ratio is calculated based on the total liabilities at the end of the reporting period less the balance of cash and cash equivalents and divided by net assets attributable to the parent. The gearing ratio of the Group calculated under this formula was 130.03% as at 30 June 2017, compared to 137.81% as at 31 December 2016.

Contingent liabilities

As at 30 June 2017, the Group has no material contingent liabilities.

Risk of exchange rate fluctuations

The Group’s assets, liabilities and transactions are denominated in Renminbi. Therefore, fluctuations in foreign exchange rates do not have any material impact on the Group.

Employees of the Company

As at 30 June 2017, the number of employees listed on the payroll register of the Group was 938, of which 714 were production staff, 128 were sales, finance and technical staff, and 96 were administrative staff. 49% of the Group’s staff were college graduates or above.

– I-224 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

The following is the text of the accountants’ report of Hefei New Energy received from the independent reporting accountants of Hefei New Energy, WUYIGE Certified Public Accountants LLP.

To the Board of Directors of

Luoyang Glass Company Limited *

Dear Sirs,

We hereby present a report on the financial information (“ Financial Information ”) of CNBM (Hefei) New Energy Company Limited (“ Hefei New Energy ”), which comprises the balance sheets as at 31 December 2014, 31 December 2015, 31 December 2016 and 31 May 2017, the income statements, the cash flow statements and the statements of changes in owners’ equity for the years of 2014, 2015 and 2016 and for the five months ended 31 May 2017, and the notes to the financial statements. Such Financial Information was prepared pursuant to the basis set out in Note II/1 of the Report, for inclusion in the circular which will be issued by Luoyang Glass Company Limited in respect of proposed acquisition of the entire equity of Hefei New Energy.

BASIC INFORMATION

The basic information of Hefei New Energy was set out in Note 1 to the report. Hefei New Energy adopts 31 December as its financial year end date.

RESPONSIBILITY OF THE DIRECTORS TO FINANCIAL INFORMATION

For the purpose of this report, the directors of Hefei New Energy have prepared and made a true and fair presentation on the financial statements of Hefei New Energy for the relevant periods, under the basis set out in Note II/1 and in accordance with the disclosure requirements of China Accounting Standards for Business Enterprises, Hong Kong Company Ordinance and The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and other relevant regulations. The directors of Hefei New Energy must take the full responsibility for this.

RESPONSIBILITY OF THE REPORTING ACCOUNTANTS

The Financial Information accompanying this report was prepared in accordance with relevant financial statements which are without any adjustments. Our responsibilities are to prepare Financial Information to be set out in this report in accordance with relevant financial statements, provide our independent opinion on the Financial Information, and report our opinion to you. For the purpose of this report, we have carried out procedures in accordance with the Chinese Certified Public Accountants Auditing Standards and the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountants” issued by the Hong Kong Institute of Certified Public Accountants.

– II-1 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

AUDIT OPINION

In our opinion, for the purpose of this report, the Financial Information gives a true and fair view of the financial position of Hefei New Energy as at 31 December 2014, 31 December 2015, 31 December 2016 and 31 May 2017 respectively, and the operating results and cash flows of Hefei New Energy as at 2014, 2015 and 2016 and for the five months ended 31 May 2017.

REVIEW OF COMPARATIVE FINANCIAL INFORMATION FOR THE STUB PERIOD

We have reviewed the comparative financial information contained in this report, including the income statements, the cash flow statements and the statements of changes in equity for the five months ended 31 May 2016 and notes to the financial statements of Hefei New Energy (“ Comparative Financial Information ”).

The directors of Hefei New Energy prepared the Comparative Financial Information under the basis set out in Note II and in accordance with the disclosure requirements of China Accounting Standards for Business Enterprises, Hong Kong Company Ordinance and The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and other relevant regulations.

Our responsibilities are to make a conclusion on the Comparative Financial Information based on our review. Our review has been made under the Chinese Certified Public Accountants Auditing Standards No. 2101 – Review of Financial Statements. Our review of Comparative Financial Information includes making inquiries to persons primarily responsible for financial and accounting matters, and applying analytical and other review procedures. Our review excludes audit procedures such as control tests and verification of assets and liabilities, and transactions. The scope of our review is substantially less than that of an audit, and consequently we would not express any audit opinion on the Comparative Financial Information.

REVIEW CONCLUSIONS

We are of the view that no material changes are required in the Comparative Financial Information for the stub period, as our review of the Comparative Financial Information for the stub period does not constitute an audit.

– II-2 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

BALANCE SHEET

Item Notes Current Assets: Cash and cash equivalents V (1) Financial assets at fair value through profit or loss Derivative financial assets Notes receivables V (2) Accounts receivable V (3) Prepayments V (4) Interests receivable Dividends receivable Other receivables V (5) Inventories V (6) Assets held for sale Non-current assets due within one year Other current assets V (7) Total current assets Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term receivables Long-term equity investments Investment properties Fixed assets V (8) Construction in progress V (9) Construction materials Disposal of fixed assets Productive biological assets Gas assets Intangible assets V (10) Development expenditure Goodwill Long-term deferred expenses V (11) Deferred income tax assets Other non-current assets V (12) Total non-current assets Total assets	31 May 2017 19,243,150.04 103,983,151.37 226,794,141.83 19,048,491.83 5,283,904.37 45,709,013.77 1,070,876.01 421,132,729.22 688,610,839.36 36,589,066.42 97,145,068.83 707,412.31 30,705.24 1,369,700.00 824,452,792.16 1,245,585,521.38	31 December 2016 41,335,372.53 40,450,406.54 136,388,856.55 19,450,159.33 2,257,611.51 44,364,723.08 5,661,435.62 289,908,565.16 693,539,264.72 44,224,322.64 98,046,948.18 5,103,700.00 840,914,235.54 1,130,822,800.70	Unit: RMB Yuan 31 December 2015 31 December 2014 48,767,304.76 10,088,009.42 12,667,993.75 54,170.29 511,780.00 5,295,888.18 3,509,756.00 21,276,773.00 36,549,657.44 63,219.48 125,123,567.42 13,660,984.90 449,545,405.36 414,205.33 309,919,434.89 585,937,983.76 100,112,402.21 102,267,478.83 4,164,000.00 859,577,242.46 692,783,667.92 984,700,809.88 706,444,652.82	Unit: RMB Yuan 31 December 2015 31 December 2014 48,767,304.76 10,088,009.42 12,667,993.75 54,170.29 511,780.00 5,295,888.18 3,509,756.00 21,276,773.00 36,549,657.44 63,219.48 125,123,567.42 13,660,984.90 449,545,405.36 414,205.33 309,919,434.89 585,937,983.76 100,112,402.21 102,267,478.83 4,164,000.00 859,577,242.46 692,783,667.92 984,700,809.88 706,444,652.82
				13,660,984.90
				414,205.33 585,937,983.76 102,267,478.83 4,164,000.00
				692,783,667.92
				706,444,652.82

– II-3 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

Item Notes Current liabilities: Short-term loans V (13) Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes payable V (14) Accounts payable V (15) Receipts in advance V (16) Employee compensation payable V (17) Tax payables V (18) Interest payable V (19) Dividends payable Other payables V (20) Liabilities held for sale Non-current liabilities due within one year V (21) Other current liabilities Total current liabilities Non-current liabilities: Long-term borrowings V (22) Debentures payable Long-term payables Long-term employee compensation payable Special payables Estimated liability Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total Liabilities Owners’ equity: Paid-up capital V (23) Other equity instruments Capital reserve Less: Treasury stock Other comprehensive income Special reserve Surplus reserves V (24) Undistributed profit V (25) Total owners’ equity Total liabilities and owners’ equity	31 May 2017 175,500,000.00 9,951,944.03 379,215,824.02 166,655.78 2,992,975.32 8,311,686.90 3,894,409.49 234,020,933.29 49,870,000.00 863,924,428.83 202,450,000.00 202,450,000.00 1,066,374,428.83 130,000,000.00 4,239,113.75 44,971,978.80 179,211,092.55 1,245,585,521.38	31 December 2016 124,500,000.00 15,951,039.96 363,017,801.50 196,232.86 6,425,293.76 3,264,284.48 634,986.63 174,687,024.00 49,870,000.00 738,546,663.19 219,885,000.00 219,885,000.00 958,431,663.19 130,000,000.00 4,239,113.75 38,152,023.76 172,391,137.51 1,130,822,800.70	31 December 2015 53,500,000.00 1,871,120.00 313,094,935.99 16,072,514.00 4,247,289.25 11,107,224.55 600,561.52 140,023,669.93 49,870,000.00 590,387,315.24 239,755,000.00 239,755,000.00 830,142,315.24 130,000,000.00 3,634,077.72 20,924,416.92 154,558,494.64 984,700,809.88	31 December 2014 334,629,524.47 11,106,578.83 194,367,772.33
				540,103,875.63

				540,103,875.63
				130,000,000.00 3,634,077.72 32,706,699.47
				166,340,777.19
				706,444,652.82

– II-4 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

INCOME STATEMENT

		January–May	January–May
Item	Notes	2017	2016	2016	2015	2014
			(Unaudited)
I. Operating revenue	V (26)	239,296,805.88	186,447,721.06	505,711,315.13	14,505,905.85
Less: Operating cost	V (26)	190,134,545.04	148,678,411.30	404,497,332.67	13,989,490.87
Tax and surcharges	V (27)	1,876,633.01		2,697,244.00
Selling expenses	V (28)	12,534,940.23	6,190,549.78	17,613,773.23	819,582.52
Administrative expenses	V (29)	15,913,430.50	10,080,186.64	38,244,913.27	11,747,611.31	6,223,254.04
Financial expenses	V (30)	13,180,930.16	4,842,188.44	26,057,249.61	10,092.84	4,586.50
Impairment losses of assets	V (31)	204,701.62
Add: Gains from changes in
fair value
Investment income
Including: Gains from investment in associates and
joint ventures
Other gains	V (32)	2,310,699.53
II. Operating profit		7,762,324.85	16,656,384.90	16,600,802.35	-12,060,871.69	-6,227,840.54
Add: Non-operating income	V (33)	295,160.00		2,309,000.00	25,000,000.00	27,610,000.00
Including: Gains on disposal of non-current assets
Less: Non-operating expense	V (34)				24,721,410.86
Including: Loss on disposal of non-current assets
III. Total profit		8,057,484.85	16,656,384.90	18,909,802.35	-11,782,282.55	21,382,159.46
Less: Income tax expenses	V (35)	1,237,529.81	588,266.76	1,077,159.48		5,345,539.87
IV. Net profit		6,819,955.04	16,068,118.14	17,832,642.87	-11,782,282.55	16,036,619.59
V. Other comprehensive income, net of tax
(I) Other comprehensive income that cannot be
subsequently reclassified into profit and loss
(II) Other comprehensive income that will be
subsequently reclassified into profit and loss
VI. Total comprehensive income		6,819,955.04	16,068,118.14	17,832,642.87	-11,782,282.55	16,036,619.59

VI. Total comprehensive income

VII. Earnings per share

(I) Basic earnings per share
(II) Diluted earnings per share

– II-5 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

CASH FLOW STATEMENT

Unit: RMB Yuan

Item Notes I. Cash flows from operating activities: Cash received from sale of goods or rendering of services Refunds of Taxes and Levies Other cash received from operating activities V (36) Sub-total of cash inflow from operating activities Cash paid for goods purchased and services received Cash paid to and on behalf of employees Tax payments Other cash paid for operating activities V (36) Sub-total of cash outflow from operating activities Net cash flow from operating activities II. Cash flow from investment activities: Cash received from investments Cash received from returns on investments Net cash received from disposal of fixed assets, intangible assets and other long term assets Net cash received from the disposal of subsidiaries and other business entities Other cash received from investment activities Sub-total of cash inflow from investment activities Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets Cash paid for investments Net cash from acquisition of subsidiaries and other business entities Other cash paid for investment activities Sub-total of cash outflow from investment activities Net cash flow from investment activities	January–May 2017 51,566,746.20 476,749.12 52,043,495.32 121,210,360.22 22,635,417.64 2,953,557.30 8,063,752.62 154,863,087.78 -102,819,592.46 481,833.55 481,833.55 -481,833.55	January–May 2016 (Unaudited) 106,258,514.76 404,062.42 106,662,577.18 127,664,230.64 13,750,229.29 2,441,433.87 431,932.23 144,287,826.03 -37,625,248.85	2016 267,702,943.40 67,665,414.62 335,368,358.02 258,757,119.88 43,035,390.31 15,184,264.43 37,004,826.52 353,981,601.14 -18,613,243.12 28,943,087.77 28,943,087.77 -28,943,087.77	2015 1,887,012.60 26,988,653.31 28,875,665.91 2,937,814.47 1,768,257.72 2,976,735.28 55,373,274.49 63,056,081.96 -34,180,416.05 224,953,392.44 224,953,392.44 -224,953,392.44	2014 27,663,187.00
					27,663,187.00
					846,682.19 1,761,592.97 1,019,893.29
					3,628,168.45
					24,035,018.55

					188,209,413.81
					188,209,413.81
					-188,209,413.81

– II-6 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

Item Notes III. Cash flow from financing activities: Cash received from capital contributions Proceeds from loans Other cash received from financing activities V (36) Sub-total of cash inflow from financing activities Cash paid for repayment of loans Cash paid for dividends, profit or interest payments Other cash paid for financing activities V (36) Sub-total of cash outflow from financing activities Net cash flow from financing activities IV. Effects of changes in exchange rate on cash and cash equivalents V. Net increase in cash and cash equivalents Add: Opening balance of cash and cash equivalents VI. Closing balance of cash and cash equivalents	January–May 2017 140,500,000.00 55,000,000.00 195,500,000.00 106,935,000.00 5,428,534.33 112,363,534.33 83,136,465.67 -20,164,960.34 36,526,696.43 16,361,736.09	January–May 2016 (Unaudited) 58,042,476.07 58,042,476.07 36,561,451.66 4,915,253.16 41,476,704.82 16,565,771.25 -21,059,477.60 0.00 -21,059,477.60	2016 154,500,000.00 20,000,000.00 174,500,000.00 103,370,000.00 20,149,386.04 103,555.40 123,622,941.44 50,877,058.56 3,320,727.67 33,205,968.76 36,526,696.43	2015 343,500,000.00 343,500,000.00 375,000.00 14,264,428.00 46,608,804.17 61,248,232.17 282,251,767.83 23,117,959.34 10,088,009.42 33,205,968.76	2014 148,149,858.00
					148,149,858.00


					148,149,858.00

					-16,024,537.26 26,112,546.68 10,088,009.42

– II-7 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

STATEMENT OF CHANGES IN OWNERS’ EQUITY

Unit: RMB Yuan

					January–May 2017
		Other		Less:	Other				Total
	Paid-up	equity	Capital	Treasury	comprehensive	Special	Surplus	Undistributed	shareholder’s
Item	capital	instruments	reserve	stock	income	reserve	reserves	profit	equity
I. Closing balance of last year	130,000,000.00						4,239,113.75	38,152,023.76	172,391,137.51
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year	130,000,000.00						4,239,113.75	38,152,023.76	172,391,137.51
III. Changes in current period
(decrease is represented by
“-”)								6,819,955.04	6,819,955.04
(I) Total comprehensive income								6,819,955.04	6,819,955.04
(II) Shareholders’ contribution
and decrease in capital
1. Ordinary shares paid by
shareholders
2. Capital injected by other
equity instrument holders
3. Amount of shares payment
charged to the owners’ equity
4. Others
(III) Profit Distribution
1. Withdrawal of surplus
reserves
2. Distribution to shareholders
3. Others
(IV) Internal carry-forward of
shareholders’ equity
1. Conversion of capital reserve
into share capital
2. Increasing capital stock by
surplus reserves
3. Making up losses by surplus
reserve
4. Others
(V) Special reserves
1. Withdrawn during the period
2. Utilised during the period
(VI) Others
IV. Closing balance for the
period	130,000,000.00						4,239,113.75	44,971,978.80	179,211,092.55

– II-8 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

				January–May 2016 (unaudited)	January–May 2016 (unaudited)
				Less:	Other				Total
	Paid-up	Other equity	Capital	Treasury	comprehensive	Special	Surplus	Undistributed	shareholder’s
Item	capital	instruments	reserve	stock	income	reserve	reserves	profit	equity
I. Closing balance of last year	130,000,000.00						3,634,077.72	20,924,416.92	154,558,494.64
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year	130,000,000.00						3,634,077.72	20,924,416.92	154,558,494.64
III. Changes in current period
(decrease is represented by
“-”)								16,068,118.14	16,068,118.14
(I) Total comprehensive income								16,068,118.14	16,068,118.14
(II) Shareholders’ contribution
and decrease in capital
1. Ordinary shares paid by
shareholders
2. Capital injected by other
equity instrument holders
3. Amount of shares payment
charged to the owners’ equity
4. Others
(III) Profit Distribution
1. Withdrawal of surplus
reserves
2. Distribution to shareholders
3. Others
(IV) Internal carry-forward of
shareholders’ equity
1. Conversion of capital reserve
into share capital
2. Increasing capital stock by
surplus reserves
3. Making up losses by surplus
reserve
4. Others
(V) Special reserves
1. Withdrawn during the period
2. Utilised during the period
(VI) Others
IV. Closing balance for the
period	130,000,000.00						3,634,077.72	36,992,535.06	170,626,612.78

– II-9 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

					2016
		Other		Less:	Other				Total
	Paid-up	equity	Capital	Treasury	comprehensive	Special	Surplus	Undistributed	shareholder’s
Item	capital	instruments	reserve	stock	income	reserve	reserves	profit	equity
I. Closing balance of last year	130,000,000.00						3,634,077.72	20,924,416.92	154,558,494.64
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year	130,000,000.00						3,634,077.72	20,924,416.92	154,558,494.64
III. Changes in current period
(decrease is represented by
“-”)							605,036.03	17,227,606.84	17,832,642.87
(I) Total comprehensive income								17,832,642.87	17,832,642.87
(II) Shareholders’ contribution
and decrease in capital
1. Ordinary shares paid by
shareholders
2. Capital injected by other
equity instrument holders
3. Amount of shares payment
charged to the owners’ equity
4. Others
(III) Profit Distribution								605,036.03	-605,036.03
1. Withdrawal of surplus
reserves								605,036.03	-605,036.03
2. Distribution to shareholders
3. Others
(IV) Internal carry-forward of
shareholders’ equity
1. Conversion of capital reserve
into share capital
2. Increasing capital stock by
surplus reserves
3. Making up losses by surplus
reserve
4. Others
(V) Special reserves
1. Withdrawn during the period
2. Utilised during the period
(VI) Others
IV. Closing balance for the
period	130,000,000.00						4,239,113.75	38,152,023.76	172,391,137.51

– II-10 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

2015 Other Less: Other Total Paid-up equity Capital Treasury comprehensive Special Surplus Undistributed shareholder’s Item capital instruments reserve stock income reserve reserves profit equity I. Closing balance of last year 130,000,000.00 3,634,077.72 32,706,699.47 166,340,777.19 Add: Changes in accounting policies Correction of accounting errors in the previous period Others II. Opening balance of the year 130,000,000.00 3,634,077.72 32,706,699.47 166,340,777.19 III. Changes in current period (decrease is represented by “-”) -11,782,282.55 -11,782,282.55 (I) Total comprehensive income -11,782,282.55 -11,782,282.55 (II) Shareholders’ contribution and decrease in capital 1. Ordinary shares paid by shareholders 2. Capital injected by other equity instrument holders 3. Amount of shares payment charged to the owners’ equity 4. Others (III) Profit Distribution 1. Withdrawal of surplus reserves 2. Distribution to shareholders 3. Others (IV) Internal carry-forward of shareholders’ equity 1. Conversion of capital reserve into share capital 2. Increasing capital stock by surplus reserves 3. Making up losses by surplus reserve 4. Others (V) Special reserves 1. Withdrawn during the period 2. Utilised during the period (VI) Others IV. Closing balance for the period 130,000,000.00 3,634,077.72 20,924,416.92 154,558,494.64

– II-11 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

					2014
		Other		Less:	Other				Total
	Paid-up	equity	Capital	Treasury	comprehensive	Special	Surplus	Undistributed	shareholder’s
Item	capital	instruments	reserve	stock	income	reserve	reserves	profit	equity
I. Closing balance of last year	130,000,000.00						2,030,415.76	18,273,741.84	150,304,157.60
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year	130,000,000.00						2,030,415.76	18,273,741.84	150,304,157.60
III. Changes in current period
(decrease is represented by
“-”)							1,603,661.96	14,432,957.63	16,036,619.59
(I) Total comprehensive income								16,036,619.59	16,036,619.59
(II) Shareholders’ contribution
and decrease in capital
1. Ordinary shares paid by
shareholders
2. Capital injected by other
equity instrument holders
3. Amount of shares payment
charged to the owners’ equity
4. Others
(III) Profit Distribution							1,603,661.96	-1,603,661.96
1. Withdrawal of surplus
reserves							1,603,661.96	-1,603,661.96
2. Distribution to shareholders
3. Others
(IV) Internal carry-forward of
shareholders’ equity
1. Conversion of capital reserve
into share capital
2. Increasing capital stock by
surplus reserves
3. Making up losses by surplus
reserve
4. Others
(V) Special reserves
1. Withdrawn during the period
2. Utilised during the period
(VI) Others
IV. Closing balance for the
period	130,000,000.00						3,634,077.72	32,706,699.47	166,340,777.19

– II-12 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

NOTES TO THE FINANCIAL STATEMENTS

(All monetary amounts in these notes are expressed in RMB unless otherwise stated)

I. COMPANY PROFILE

CNBM (Hefei) New Energy Company Limited (hereafter referred to as “ Heifei New Energy ”) was invested and established by China Triumph International Engineering Co., Ltd. (中國建材國際工程集團有限公司) and Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd.* (安徽華光光電材料科技集團有限公司) on 4 March 2011, and it had obtained the Enterprise Business License with an operating period commencing on 4 March 2011 and expiring on 4 March 2061 issued by Hefei Administration for Industry & Commerce.

At its inception, the Company had a registered capital of RMB100,000,000.00, and as verified by the Capital Verification Report (Wan Zhong An Yan Zi [2011] No. 071) issued by Anhui Zhongan Certified Public Accountants (安徽中安會計師事務所有限公司) on 2 March 2011, it had received an initial contribution amounting to RMB20,000,000.00. On 14 November 2011, pursuant to the resolutions passed at its general meeting, the Company increased its registered capital from RMB100,000,000.00 to RMB130,000,000.00, and the increase in paid-in capital of RMB110,000,000.00 had been verified by the Capital Verification Report (Anhui Yong He Yan Zi [2011] No. 093) issued by Anhui Yong He Certified Public Accountants Ltd. (安徽永合會計師事務所有限公司) on 29 November 2011. Upon such change in registered capital, Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. (安徽華光光電材料科技集團有限公司), China Triumph International Engineering Co., Ltd. (中國建材國際工程集團有限公司) and Hefei High-Tech Construction Investment Group Company (合肥高新建設投資集團公司) had contributed RMB70,000,000.00, RMB30,000,000.00 and RMB30,000,000.00, respectively, representing 53.84%, 23.08% and 23.08% of the registered capital, respectively. On 12 July 2014, pursuant to the resolutions passed at the general meeting of the Company, Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. (安徽華光光電材料科技集團有限公司) transferred its 53.84% equity interests in the Company to China Luoyang Float Glass (Group) Company Limited (中國洛陽浮法玻璃集團有限責任公司), and such equity transfer had been registered with the administration for industry & commerce on 20 August 2014. On 20 October 2014, pursuant to the resolutions passed at the general meeting of the Company, China Triumph International Engineering Co., Ltd. (中國建材國際工程集團有限公司) transferred its 23.08% equity interests in the Company to China Luoyang Float Glass (Group) Company Limited* (中國洛陽浮法玻璃集團有限責任公司), and such equity transfer had been registered with the administration for industry & commerce on 30 October 2014.

Legal representative: Zhang Chong;

Corporate domicile: 601 Changning Avenue, High-tech Zone, Hefei; Unified social credit code: 91340100570418775Y;

The registered capital is RMB130,000,000.00, among which, CLFG and Hefei High-Tech Construction Investment Group Company (合肥高新建設投資集團公司) had contributed RMB100,000,000.00 and RMB30,000,000.00, respectively, representing 76.92% and 23.08% of the registered capital, respectively. The controlling shareholder is China Luoyang Float Glass (Group) Company Limited (中國洛陽浮法玻璃集團有限責任公司).

Its scope of business mainly includes research, development, production and sales of solar photovoltaic glass and further processed glass; import and export of technologies; and investment in solar photovoltaic industry related enterprises.

– II-13 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

II. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

Basis of preparation: the financial statements of Hefei New Energy have been prepared on a going-concern basis, based on the requirements set out in Accounting Standards for Business Enterprises – Basic Standards and specific accounting standards (the “ Accounting Standards for Business Enterprises ”) issued by the Ministry of Finance of the PRC as well as relevant disclosure requirements of the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No. 15 – General Provisions on Financial Reporting issued by the China Securities Regulatory Commission, the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Hong Kong Companies Ordinance and according to actual transactions and events.
Going-concern: there are no events or situations of Hefei New Energy which would cast significant doubts on the going-concern assumption for next 12 months commencing from the end of the reporting period.

III. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

(I) Statement on Compliance with the Accounting Standards for Business Enterprises

The financial statements of Hefei New Energy were prepared in accordance with Accounting Standards for Business Enterprises, truly and completely reflecting Hefei New Energy’s financial positions as at 31 May 2017, 31 December 2016, 31 December 2015 and 31 December 2014 and the operating results and cash flows and other relevant information for the period from January to May 2017 and the years of 2016, 2015 and 2014.

(II) Accounting period

The accounting year of Hefei New Energy is a calendar year from 1 January to 31 December.

(III) Operating cycle

The normal operating cycle of Hefei New Energy is 12 months in a year, and the operating cycle is determined as the classification criterion of the liquidity of assets and liabilities.

(IV) Functional currency

The functional currency of Hefei New Energy is Renminbi (“ RMB ”)

(V) Criteria for recognition of cash and cash equivalent

Cash presented in the cash flow statements of Hefei New Energy represents the cash on hand and deposits available for payment at any time. Cash equivalents presented in the cash flow statements refer to short-term, highly liquid investments held that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

(VI) Financial instruments

1. Classification and recognition of financial instruments

Financial instruments are classified as financial assets, financial liabilities or equity instruments. A financial asset, a financial liability or equity instruments is recognized when Hefei New Energy becomes a contractual party of a financial instrument.

– II-14 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

of holding the financial asset of Hefei New Energy and its subsidiaries. At initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities.

Financial assets at fair value through profit or loss include held-for-trading financial assets held for the purpose of selling in the short term and financial assets designated at fair value through profit or loss at initial recognition; receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market; available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories at initial recognition; held-to-maturity investments are non-derivative financial assets with fixed maturity and fixed or determinable payments that management has the positive intention and ability to hold to maturity.

2. Measurement of financial instruments

Financial instruments of Hefei New Energy are initially recognized and measured at fair values. Subsequent measurement is dealt with based on different categories: financial assets at fair value through profit or loss, financial assets available for sale and financial liabilities at fair value through profit or loss are subsequently measured at fair values; held-to-maturity investments, loans and receivables and other financial liabilities are subsequently measured at amortized costs; derivative financial assets or liabilities linked to and which must be settled by delivery of an equity instrument (without a quoted price in an active market) whose fair value cannot be measured reliably are subsequently measured at cost. Except for financial instruments held for hedging purposes, the gains or losses arising from the changes in fair values in subsequent measurements of Hefei New Energy’s financial assets or financial liabilities are accounted for as follows: (i) gains or losses resulting from the changes in fair values of the financial assets or financial liabilities which are measured at fair values through profit and loss for the current period are recorded as change in fair value in profit or loss; and (ii) changes in fair values of available-for-sale financial assets are recorded in other comprehensive income.

3. Recognition of the fair value of financial instruments by Hefei New Energy

As for the financial instruments for which there is an active market, the quoted prices in the active market shall be used to determine the fair values thereof. Where there is no active market for a financial instrument, valuation techniques shall be adopted to determine its fair value. The valuation techniques mainly include market approach, income approach and cost approach.

4. Basis of recognition and measurement of transfer of financial assets and liabilities

When Hefei New Energy has transferred nearly all of the risks and rewards related to the ownership of a financial asset to the transferee, or neither transferred nor retained nearly all of the risks and rewards related to the ownership of the financial asset but given up the control of the financial asset, the financial asset shall be derecognized. When the criteria for derecognition of a financial asset are met, the difference between the carrying amount of the transferred financial asset and the sum of the consideration received from the transfer and the accumulated fair value changes previously recorded in other comprehensive income are recorded in profit or loss for the current period. If the partial transfer satisfies the criteria for derecognition, the entire carrying amount of the transferred financial asset shall proportionally be allocated between the derecognized portion and the retained portion according to their respective relative fair value.

When all or part of the current obligation to a financial liability has been terminated, the entire or part of such financial liability shall be derecognized.

5. Impairment of financial assets

When an impairment loss on a financial asset carried at amortized cost has occurred, the amount of loss is provided for at the difference between the asset’s carrying amount and the present value

– II-15 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of the financial asset recovered and the recovery is related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed and the amount of reversal is recognized in profit or loss for the current period.

When an impairment loss on a financial asset measured at cost has occurred, the amount of loss is provided for at the difference between the asset’s carrying amount and the present value of its estimated future cash flows. The impairment loss on such financial asset is not reversed once it is recognized.

For investments in equity instruments, the specific quantitative criteria for Hefei New Energy to determine “serious” or “not temporary” decrease in their fair value, cost computing method, method for determining fair value at period end, and basis for determining the continuous decrease period are set out below:

Specific quantitative criterion on Decrease in period-end fair “serious” decrease in their fair value cost has reached or exceeded Specific quantitative criterion on “not Fall for 12 consecutive months. temporary” decrease in their fair value

Decrease in period-end fair value relative to the cost has reached or exceeded 50%.

Cost computing method Consideration of payment at acquisition (net of cash dividends declared but not yet paid or due but unclaimed interest on bonds) and the relevant transaction cost are recognized as the investment cost.

Method for determining fair value at As for a financial instrument for which there is an period end active market, the quoted prices in the active market shall be used to recognize the fair values thereof. Where there is no active market for a financial instrument, valuation techniques shall be adopted to determine its fair value.

Basis for determining the continuous The rebound in the continuous fall or the period decrease period with the continuous trend of fall is less than 20%. Rebound duration not more than six months is treated as continuous decrease period.

(VII) Receivables

The receivables of Hefei New Energy mainly included account receivables, long-term receivables and other receivables. If there is objective evidence that receivables have been impaired at the balance sheet date, impairment loss shall be recognized based on the differences between the carrying amount and the present value of estimated future cash flows.

– II-16 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

1. Receivables individually significant and with provision for bad debts on an individual basis

Basis and criteria for determining whether Receivables with the book balance of over RMB5 a receivable is individually significant million
Method for making bad-debt provision for To confirm according to the difference between the individually significant receivables carrying amount and the present value of estimated future cash flows

2. Receivables for which bad debt provision is made on group basis

Basis for group determination Nature of receivables and risk characteristics

The group with provision for bad debts based on aging analysis methods

Except for receivables for which no bad-debt provision is made, receivables which are unimpaired through separate test of impairment are divided into certain portfolios of credit risk in accordance with the aging analysis methods, and then the provision for bad debts is made in proportion to the balance of these receivable portfolios.

The group without provision for bad debts

(1) Various guarantee and security related to the production and operations that are fully recoverable upon maturity;
(2) Receivables due from related parties with good financial position;
(3) Other balances that have positive evidence indicating they are fully recoverable.

Methods for making bad-debt provision on group basis

The group with provision for bad debts Aging analysis methods based on aging analysis methods

The group without provision for bad debts No provision for bad debts will be made

In the groups, the provision for bad debts based on aging analysis methods set out as follows:

	Provision rate for
	accounts	Provision rate for
Age	receivable	other receivables
	(%)	(%)
Within 1 year (including 1 year)	0	0
1–2 years	30	30
2–3 years	50	50
3–4 years	100	100
4–5 years	100	100
Over 5 years	100	100

– II-17 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

3. Individually insignificant receivables with provision for bad debts on an individual basis

Basis for individual provision Concrete evidence indicates that there is obvious difference in recoverability.

Provision method Bad-debt provision is made on individual basis, and full provisions are made for receivables due from related parties that are estimated to be fully unrecoverable.

(VIII) Inventories

1. Classification

Inventories mean finished goods or merchandise held for sale in the ordinary course of business, unfinished products in the process of production, materials or supplies used in the process of production or rendering of services. Inventories mainly include raw materials, revolving materials, work in progress and goods in stock.

2. Measurement for delivered inventories

Upon delivery of inventories, the actual cost of such inventories will be determined by using weighted average method.

3. Provision for impairment

At the end of the period, after a thorough inspection of the inventories, provision for decline in value of inventories will be made and adjusted at the lower of the cost and the net realizable value. Net realizable value of held-for-sale commodity stocks, such as finished goods, goods in stock, and held-for-sale raw materials, during the normal course of production and operation, shall be determined by their estimated selling prices less the related selling expenses and taxes; the net realizable value of material inventories, which need to be processed, during the normal course of production and operation, shall be determined by the amount after deducting the estimated cost of completion, estimated selling expenses and relevant taxes from the estimated selling price of finished goods; the net realizable value of inventories held for execution of sales contracts or labor contracts shall be calculated on the ground of the contracted price. If an enterprise holds more inventories than the quantity stipulated in the sales contract, the net realizable value of the exceeding part shall be calculated on the ground of general selling price.

Provision for decline in value of inventories is made on an item-by-item basis at the end of the period. For large quantity and low value items of inventories, provision may be made based on categories of inventories; for items of inventories relating to a product line that is produced and marketed in the same geographical area and with the same or similar end uses or purposes, which cannot be measured separately from other items in that product line, provision for decline in value of inventories may be determined on an aggregate basis.

4. Inventory system

Hefei New Energy adopts the perpetual inventory system.

– II-18 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

5. Amortization of low-value consumables and packaging materials

Low-value consumables, packaging materials and other revolving materials are amortized using one-off write-off method.

(IX) Fixed assets

1. Recognition of fixed assets

Fixed assets are tangible assets that are held for production, provision of services, leasing or administrative purposes, and have useful life of more than one financial year. A fixed asset is recognized when both of the following conditions are met: economic benefits associated with the fixed asset are very likely to flow into the enterprise; and the cost of the fixed asset can be measured reliably.

2. Classification and depreciation methods of fixed assets

The fixed assets of Hefei New Energy are mainly classified as buildings and structures, machinery and equipment, electronic equipment, transportation tools, etc. Depreciation is provided based upon the straight-line method. Hefei New Energy determines the useful life and estimates the net residual value of a fixed asset according to the nature and use pattern of the fixed asset. Hefei New Energy, at the end of each year, has a review of the useful life, expected residual value and the depreciation method of the fixed assets. If it differs from its previous estimate, adjustment will be made accordingly. Hefei New Energy provides depreciation for all its fixed assets other than fully depreciated fixed assets that are still in use and land individually accounted for.

	Estimated useful	Estimated net	Annual
Category	life	residual value rate	depreciation rate
	(years)	(%)	(%)
Buildings and structures	30–50	3–5	1.90–3.23
Machinery and equipment	4–28	3–5	3.39–24.25
Electronic equipment	4–10	3–5	9.50–24.25
Transportation tools	6–12	3–5	7.92–16.17
Other equipment	4–28	3–5	3.39–24.25

(X) Construction in progress

There are two types of construction in progress for Hefei New Energy: self-construction and sub-contracting construction. Construction in progress is transferred to fixed assets when the project is completed and ready for its intended use. A fixed asset is ready for intended use if any of the following criteria is met: the construction of the fixed asset (including installation) has been completed or substantially completed; the fixed asset has been put to trial production or trial operation and it is evidenced that the asset can operate normally or produce steadily qualified products; or the result of trial operation proves that it can run or operate normally; little or no further expenditure will be incurred for construction of the fixed asset; or the fixed asset constructed has achieved or almost achieved the requirement of design or contract.

(XI) Borrowing costs

1. Principle for recognition of capitalization of borrowing costs

Hefei New Energy’s borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized and included in the cost of the asset. Other borrowing costs are recognized as expenses when incurred through current profit and loss.

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

Qualifying assets include fixed assets, investment properties and inventories that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.

2. Calculation of amount to be capitalized

The capitalization period refers to the period beginning from the commencement of capitalizing borrowing costs to the date of ceasing capitalization, excluding the period of suspension of capitalization. Where the acquisition and construction or production of a qualifying asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.

For designated borrowings, the capitalized amount shall be the actual interest expense incurred for the designated borrowings, less the interest income from the unused funds of the designated borrowings or investment income from the temporary investments; and for general borrowings, the capitalized amount shall be the weighted average of the accumulated expenditure exceeding the capital expenditure from designated borrowings times the capitalization rate of the general borrowings occupied (i.e. the weighted average rate of the general borrowings); and for borrowings with discount or premium, the discount or premium is amortized over the term of the borrowings to adjust the interest in every period using effective interest rate method.

Effective interest rate method is a method that amortized discount or premium or interest expense is calculated according to the actual rate of borrowings. Effective interest rate is the rate used to discount the future cash flow of borrowings during its expected duration to the present carrying amount of the borrowings.

(XII) Intangible assets

1. Measurement of intangible assets

Intangible assets of Hefei New Energy are initially measured at costs. The actual costs of purchased intangible assets include the considerations and relevant expenses paid. The actual costs of intangible assets contributed by investors are the prices contained in the investment agreements or mutually agreed. If the price contained in the investment agreement or mutually is not a fair value, the fair value of the intangible asset is regarded as the actual cost. The cost of a self-developed intangible asset is the total expenditure incurred for bringing the asset to its intended use.

Subsequent measurement of Hefei New Energy’s intangible assets: Intangible assets with finite useful lives are amortized on a straight-line basis; at the end of each year, the useful lives and amortization policy are reviewed, and adjusted accordingly if there are differences from original estimates. Intangible assets with indefinite useful lives are not amortized and the useful lives are reviewed at the end of each year. If there is objective evidence that the useful life of an intangible asset is finite, the intangible asset is amortized using the straight line method according to the estimated useful life.

2. Determination basis of infinite useful life

An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for Hefei New Energy or it has no definite useful life. The determination basis of intangible assets with infinite useful lives: derived from contractual rights or other legal rights and there are no explicit years of use stipulated in the contract or laws and regulations; the period over which the asset is expected to generate economic benefits for Hefei New Energy still could not be estimated after considering the industrial practices or relevant expert opinion.

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

At the end of each year, the useful lives of the intangible assets with indefinite useful lives are reviewed. The review is performed by the departments that use the intangible assets, using the down-to-top approach, to determine if there are changes to the indefinite useful lives.

3. Basis for research and development phases for internal research and development project and basis for capitalization of expenditure incurred in development stage

As for an internal research and development project, expenditure incurred in the research phase is recognized in profit or loss in the period as incurred. Expenses incurred in the development stage are recognized as intangible assets if all of the following conditions are met: (1) the technical feasibility of completing the intangible asset so that it will be available for use or for sale; (2) the intention to complete the intangible asset for use or for sale; (3) the intangible asset will generate economic benefits including there is evidence that the products produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the intangible asset; (4) the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; (5) the expenditures attributable to the development of the intangible asset could be reliably measured.

(XIII) Impairment of long-term assets

Long-term assets such as fixed assets, construction in progress and intangible assets are tested for impairment if there is any indication that these assets may be impaired at the balance date. If the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount, a provision for impairment and an impairment loss are recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.

Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period.

(XIV) Long-term deferred expenses

Long-term deferred expenses of Hefei New Energy are expenses which have been paid but the benefit period is over one year (not including one year). Long-term deferred expenses are amortized over the benefit period. If a long-term deferred expense cannot benefit the future accounting period, the unamortized balance shall be transferred to the profit or loss in the current period.

(XV) Staff remuneration

Staff remuneration refers to compensation or indemnification in various forms given to employees by a company for services rendered by such employees or for termination of employment relationship with such employees. Staff remuneration mainly includes short-term remuneration, post-employment benefits, termination benefits and other long-term employee benefits.

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

1. Short-term remuneration

During the accounting period in which an employee provides service to Hefei New Energy, short-term remuneration incurred is recognized as liabilities and charged to profit or loss for the current period, or if otherwise required or allowed by other accounting standards, to the related costs of assets. At the time of actual occurrence, Hefei New Energy’s employee benefits are recorded into current profit or loss or assets associated costs according to the actual amount. The non-monetary employee benefits are measured at fair value. Regarding to the medical insurance, work-related injury insurance, maternity insurance and other social insurances, housing provident fund and labor union expenditure and personnel education that Hefei New Energy paid for employees, Hefei New Energy should recognize corresponding staff remuneration payables according to the appropriation basis and proportion as stipulated by relevant requirements and recognize the corresponding liabilities and include these expenses in the current profit or loss or recognized as respective assets costs.

2. Post-employment benefits

During the accounting period for which employees provide their service, Hefei New Energy shall recognize the amounts payable as liabilities calculated based on the defined contribution plans, and shall recognize it in current profit and loss or the relevant asset cost. According to the formula confirmed by the expected accumulated welfare unit method, the welfare obligations generated in defined benefit plans shall be attributable to the period for which employees provide their service and shall be recognized in current profit and loss or the relevant asset cost.

3. Termination benefits

When Hefei New Energy provides employees with termination benefits, the staff remuneration liabilities arising from termination benefits are recognized and recorded in current profit and loss whichever of the following is earlier: when Hefei New Energy cannot unilaterally revoke such termination benefits provided due to termination of labor relationship plan or layoff proposal; when Hefei New Energy recognizes such cost or expenses associated with the restructuring involving the payment of termination benefits.

4. Other long-term employee benefits

Hefei New Energy provides other long-term employee benefits to its employees. Those falling within the scope of the defined contribution plans are accounted for pursuant to the requirements of the defined contribution plans. In addition, net liabilities or net assets of other long-term employee benefits are recognized and measured pursuant to the relevant requirements of the defined benefit plans.

(XVI) Estimated liability

If an obligation in relation to contingency is the present obligation of Hefei New Energy and the performance of such obligation are likely to lead to the outflow of economic benefits and its amount can be reliably measured, such obligation shall be recognized as accrued liability. Initial measurement should be made by Hefei New Energy in accordance with the best appraisable amount of expenses to fulfill relevant current obligation. The best appraisable amount should be a middle value if the expense occurred in a continuous period in which kinds of results occurred at the same possibility. If there are lots of projects, the best appraisable amount should be based on kinds of results and relevant possibility.

At the balance sheet date, Hefei New Energy reviews the carrying amount of estimated liability and an adjustment is necessary according to the current best appraisable amount if there is obvious evidence that carrying amount cannot fairly represent the best appraisable amount.

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(XVII) Revenue

1. Sales of goods

Revenue from the sale of goods shall be recognized at the amount received or receivable from buyers based on contractual or agreed prices, only when all of the following conditions are satisfied: (i) the significant risks and rewards of ownership of the goods have been passed to the buyer; (ii) Hefei New Energy retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (iii) the amount of revenue can be measured reliably; (iv) it is probable that the associated economic benefits will flow to the enterprise; and (v) the associated costs incurred or to be incurred can be measured reliably.

Specific recognition method for revenue: upon delivery of goods, receipt by customers upon acceptance, and invoice or bill of lading or other relevant documents being delivered to customers who purchase goods, the sales revenue is realized; for those directly exported goods, the sales revenue will be recognized upon export customs declaration.

If the selling income according to the contract or agreement is deferred and is of financial nature, the revenue from sales of goods should be the fair value of receivable amount of contract or agreement.

2. Provision of services

At the balance sheet date, when the outcome of a transaction involving the rendering of services can be estimated reliably, revenue from provision of services shall be recognized using the percentage of completion method. The progress of completion of the transaction is recognized by Hefei New Energy by reference to ratio of the actual cost with respect to the estimated total cost. At the balance sheet date, when the outcome of the transaction involving the rendering of services cannot be estimated reliably, it shall be dealt with in the following ways: (i) if the cost of services incurred is expected to be compensated, the revenue from the rendering of services is recognized to the extent of actual cost incurred to date, and the relevant cost is transferred to cost of service; or (ii) if the cost of services incurred is not expected to be compensated, the cost incurred should be included in current profit or loss, and no revenue from the rendering of services may be recognized.

3. Abalienating the right to use an asset

When the inflow of economic benefits from the abalienation of assets is probable and the income can be measured reliably, the income from abalienating the right to use an asset is recognized.

(XVIII) Government grants

1. Accounting treatment for government grants related to assets

The government grant that is obtained by Hefei New Energy and is used for acquisition or construction or forming long-term assets in other ways shall be recognized as the government grants related to assets. Government grants related to an asset shall be recognized as deferred income. Commencing from the day on which the relevant assets are available for use, deferred income shall be recorded into profits and loss for the current period on an even and amortized basis according to the estimated useful life of the relevant assets.

2. Accounting treatment for government grants related to income

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

expenses are recognized; those used to compensate relevant expenses or losses that have been incurred by the enterprise are recorded directly in current profit or loss.

Specific standards for differentiating government grants related to asset from that related to income

Where there is no express regulation on subsidy object in government documents, the criteria for differentiating government grants related to asset from that related to income are as below: (i) government grant subject to a certain project shall be separated according to the proportion of expenditure budget and capitalization budget, and the proportion shall be reviewed and modified if necessary on the balance sheet date; and (ii) government grants shall be categorized as related to income if its usage is just subject to general statement and is not designated for any specific project in relevant document.

(XIX) Deferred income tax assets and deferred income tax liabilities

Deferred income tax assets or deferred income tax liabilities are recognized based on the difference between the carrying amounts of the assets or liabilities and their tax bases (or, for items not recognized as assets or liabilities but whose tax base can be determined under tax laws, such tax base can be determined as their difference), and are calculated at the tax rates expected to apply to the period in which the assets are recovered or the liabilities are settled.
Deferred income tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. At the balance sheet date, deferred income tax assets unrecognized in prior periods are recognized to the extent that there is obvious evidence that it has become probable that sufficient taxable profit will be available in subsequent periods against which the deductible temporary differences can be utilized. The carrying amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefit of the deferred tax asset to be utilized.

(XX) Leases

Accounting treatment for operating leases: rental expenses for operating leases shall be recorded into the cost of the relevant asset or the current profit or loss on a straight-line basis during the lease term.
Accounting treatment for financing leases: the lower of the fair value of the leased assets and the present value of the minimum lease payment shall be taken as the book value of the leased assets. The difference of the book value of the assets under lease and the minimum lease payment shall be the unrecognized financing expenses and shall be amortized according to the actual interest rate within the lease term. The balance derived from deducting the unrecognized financing expenses from the minimum lease payment shall be presented as long-term payables.

(XXI) Explanation on changes in significant accounting policies and accounting estimates

Nil

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

IV. TAXES

(I) Major types and rates of taxes

Type	Tax basis	Tax rate
Value added tax	Taxable income	17%
Urban maintenance and construction tax	Turnover tax payable	7%
Enterprise income tax	Taxable income	25%

(II) Significant tax preferences and approvals

Hefei New Energy has obtained the High-tech Enterprise Certificate (No. GR201634001122) issued jointly by Anhui Provincial Department of Science and Technology, Anhui Provincial Department of Finance, Anhui Provincial Office, SAT and Anhui Local Taxation Bureau on 5 December 2016 with a term of 3 years. In accordance with the relevant provisions of the Enterprise Income Tax Law of the People’s Republic of China, the Regulations on the Implementation of the Enterprise Income Tax Law of the People’s Republic of China and the Administrative Measures for the Recognition of High-tech Enterprises, Hefei New Energy enjoyed a corporate income preferential tax rate for high-tech enterprises of 15% from 1 January 2016 to 31 December 2018.

V. NOTES TO SIGNIFICANT ITEMS OF THE FINANCIAL STATEMENTS

(I) Cash and cash equivalents

Item Cash Deposits at banks Other monetary funds Total	31 May 2017 1,931.98 16,359,804.11 2,881,413.95 19,243,150.04	31 December 2016 37,491.98 36,489,204.45 4,808,676.10 41,335,372.53	31 December 2015 4,601.98 33,201,366.78 15,561,336.00 48,767,304.76	31 December 2014 1,039.43 10,086,969.99
				10,088,009.42

Note: Other monetary funds represented the security deposit for notes payable, of which, RMB15 million in 2015 was used as the security deposit for letters of guarantee.

(II) Notes receivable

Item Bank acceptances Trade acceptances Letters of credit Total	31 May 2017 28,311,172.22 75,541,225.05 130,754.10 103,983,151.37	31 December 2016 12,940,104.70 27,510,301.84 40,450,406.54	31 December 2015 12,667,993.75 12,667,993.75	31 December 2014

Note: As at 31 May 2017, the amount of the undue bills which had been endorsed by Hefei New Energy was RMB32,904,764.73. Hefei New Energy had derecognized the undue bank acceptances which had been discounted or endorsed.

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(III) Accounts receivable

Item	31 May 2017	31 December 2016	31 December 2015
Accounts receivable	226,998,843.45	136,388,856.55	54,170.29
Less: provision for bad debts	204,701.62
Net accounts receivable	226,794,141.83	136,388,856.55	54,170.29

Hefei New Energy’s sales are generally made on credit, with credit terms usually ranging from 3 months to 6 months.

1. Aging analysis of the accounts receivable based on their recording dates sets out below:

Aging Within 1 year 1 to 2 years Total	31 May 2017 226,316,504.72 682,338.73 226,998,843.45	31 December 2016 136,388,856.55 136,388,856.55	31 December 2015 54,170.29
			54,170.29

2. Accounts receivable by category

Category Accounts receivable with significant single amount and individual provision for bad debts Accounts receivable with provision for bad debts made on group basis Account receivables with insignificant single amount and individual provision for bad debts Total	Carrying Amount 226,998,843.45 226,998,843.45	31 May 2017 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 204,701.62 0.09 100.00 204,701.62 0.09	31 May 2017 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 204,701.62 0.09 100.00 204,701.62 0.09
			0.09

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

3. Top five debtors as at 31 May 2017

Company name Risen Energy Co., Ltd. (東方日升新能源股份有限公司) Real Force Co., Ltd. (潤峰電力有限公司) Changzhou Trina Solar Energy Co., Ltd. (常州天合光能有限公司) Hanwha SolarOne (Qidong) Co., Ltd. (韓華新能源(啟東)有限公司) Canadian Solar Manufacturing (Changshu) INC* (常熟阿特斯陽光電力科技有限公司) Total	Closing balance 58,028,828.52 32,530,472.74 30,307,021.34 21,825,450.39 13,240,723.00 155,932,495.99	As a percentage of the total accounts receivable (%) 25.56 14.33 13.35 9.61 5.83 68.68	Provision balance for bad debts

(IV) Prepayments

1. Aging analysis of prepayments

Aging Within 1 year Total	31 May 2017 Amount Ratio (%) 19,048,491.83 100.00 19,048,491.83 100.00	31 December 2016 Amount Ratio (%) 19,450,159.33 100.00 19,450,159.33 100.00	31 December 2015 Amount Ratio (%) 511,780.00 100.00 511,780.00 100.00	31 December 2015 Amount Ratio (%) 511,780.00 100.00 511,780.00 100.00
				100.00

2. Top five debtors in terms of prepayments as at 31 May 2017

Company name CNBM (Yixing) New Energy Company Limited (中建材(宜興)新能源有限公司) State Grid Anhui Electric Power Company Hefei Power Supply Company (國網安徽省電力公司合肥供電公司) Triumph Technology Group Company (凱盛科技集團公司) Far East Optoelectronics Company Limited (遠東光電股份有限公司) Qingdao Dashunyou Machinery Manufacturing Co., Ltd* (青島大順友機械製造有限公司) Total	Closing balance 15,000,000.00 2,441,451.19 1,093,959.02 289,740.00 166,099.12 18,991,249.33	As a percentage of the total prepayments (%) 78.75 12.82 5.74 1.52 0.87
		99.70

– II-28 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(V) Other receivables

1. Other receivables

Category Other receivables with significant single amount and individual provision for bad debts Other receivable with provision for bad debts made on group basis 1. Groups with provision for bad debts based on aging analysis 2. Groups without provision for bad debts Other receivables with insignificant single amount and individual provision for bad debts Total Category Other receivables with significant single amount and individual provision for bad debts Other receivable with provision for bad debts made on group basis 1. Groups with provision for bad debts based on aging analysis 2. Groups without provision for bad debts Other receivables with insignificant single amount and individual provision for bad debts Total	Carrying Amount 5,283,904.37 2,531,163.59 2,752,740.78 5,283,904.37 Carrying Amount 2,257,611.51 186,047.10 2,071,564.41 2,257,611.51	31 May 2017 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 47.90 52.10 100.00 31 December 2016 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.0 8.24 91.76 100.00	31 May 2017 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 47.90 52.10 100.00 31 December 2016 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.0 8.24 91.76 100.00

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

Category Other receivables with significant single amount and individual provision for bad debts Other receivable with provision for bad debts made on group basis 1. Groups with provision for bad debts based on aging analysis 2. Groups without provision for bad debts Other receivables with insignificant single amount and individual provision for bad debts Total Category Other receivables with significant single amount and individual provision for bad debts Other receivables with provision for bad debts made on group basis 1. Groups with provision for bad debts based on aging analysis 2. Groups without provision for bad debts Other receivables with insignificant single amount and individual provision for bad debts Total	Carrying Amount 5,295,888.18 745,063.42 4,550,824.76 5,295,888.18 Carrying Amount 3,509,756.00 46,500.00 3,463,256.00 3,509,756.00	31 December 2015 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 14.07 85.93 100.00 31 December 2014 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 1.32 98.68 100.00	31 December 2015 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 14.07 85.93 100.00 31 December 2014 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 1.32 98.68 100.00

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(1) Other receivable with provision for bad debts made on group basis
(i) Groups with provision for bad debts based on aging analysis

Aging Within 1 year Total Aging Within 1 year Total	31 May 2017 Carrying amount Provision ratio Provision for bad debts (%) 2,531,163.59 2,531,163.59 31 December 2015 Carrying amount Provision ratio Provision for bad debts (%) 745,063.42 745,063.42	31 December 2016 Carrying amount Provision ratio Provision for bad debts (%) 186,047.10 186,047.10 31 December 2014 Carrying amount Provision ratio Provision for bad debts (%) 46,500.00 46,500.00	31 December 2016 Carrying amount Provision ratio Provision for bad debts (%) 186,047.10 186,047.10 31 December 2014 Carrying amount Provision ratio Provision for bad debts (%) 46,500.00 46,500.00


			Provision for bad debts

(ii) Groups without provision for bad debts

Name of debtor Amounts due from related parties Petty cash Government special security deposit Total	31 May 2017 739,484.78 2,013,256.00 2,752,740.78	31 December 2016 27,467.43 30,840.98 2,013,256.00 2,071,564.41	31 December 2015 1,041,805.45 480,563.31 3,028,456.00 4,550,824.76	31 December 2014 400,000.00 50,000.00 3,013,256.00
				3,463,256.00

2. Other accounts receivable categorized by nature

Nature Government special security deposit Current accounts Other Total	31 May 2017 2,013,256.00 3,270,648.37 5,283,904.37	31 December 2016 2,013,256.00 27,467.43 216,888.08 2,257,611.51	31 December 2015 3,028,456.00 1,041,805.45 1,225,626.73 5,295,888.18	31 December 2014 3,013,256.00 400,000.00 96,500.00
				3,509,756.00

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APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

3. Top five debtors in terms of other receivables as at 31 May 2017

Name of debtor Nature Finance Bureau of Hefei High-tech Zone (合肥市高新區財政局) Security deposit State Grid Anhui Electric Power Company Hefei Power Supply Company* (國網安徽省電力公司合肥供電公司) Grants for photovoltaic power generation Hefei Municipal Labor And Social Security Bureau (合肥市勞動和社會保障局) Security deposit Hefei High-tech Zone Management Committee (合肥高新管委會) Grants for photovoltaic power generation Liu Feng (劉峰) Petty cash Total –	Closing balance Aging 1,422,223.00 4–5 years 2,007,112.27 Within 1 year 377,700.00 4–5 years 337,641.41 Within 1 year 124,983.85 Within 1 year 4,269,660.53	As a percentage of the total closing balance of other receivables Balance of provision for bad debts (%) 26.92 37.99 7.15 6.39 2.37 80.82

(VI) Inventories

1. Category of inventories

Items of inventories Raw materials Work in progress Goods in stock Total Items of inventories Raw materials Work in progress Goods in stock Total	Carrying amount 24,526,759.24 67,686.96 21,114,567.57 45,709,013.77 Carrying amount 15,344,491.89 179,326.84 28,840,904.35 44,364,723.08	31 May 2017 Provision for depreciation 31 December 2016 Provision for depreciation	Book value 24,526,759.24 67,686.96 21,114,567.57
			45,709,013.77

			Book value 15,344,491.89 179,326.84 28,840,904.35
			44,364,723.08

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APPENDIX II

FINANCIAL INFORMATION OF HEFEI NEW ENERGY

31 December 2015

Items of inventories Raw materials Work in progress Goods in stock Total (VⅡ) Other current assets Item Deductible input tax Enterprise Income Tax paid in advance Total (VIII) Fixed assets Item I. Original book value 1. 1 January 2014 2. Increase for the period (1) Purchase 3. Decrease for the period 4. 31 December 2014 II. Accumulated depreciation 1. 1 January 2014 2. Increase for the period (1) Provision 3. Decrease for the period 4. 31 December 2014 III. Book value as at 31 December 2014	Carrying amount Provision for depreciation 17,732,066.97 893,668.38 2,651,037.65 21,276,773.00 31 May 2017 31 December 2016 31 December 2015 4,555,969.39 36,549,657.44 1,070,876.01 1,105,466.23 1,070,876.01 5,661,435.62 36,549,657.44 Transportation equipment Electronic equipment Office equipment 169,240.00 131,310.00 117,970.00 196,307.54 24,469.67 94,800.00 196,307.54 24,469.67 94,800.00 365,547.54 155,779.67 212,770.00 50,238.90 79,160.56 41,246.12 71,270.56 47,849.13 30,126.61 71,270.56 47,849.13 30,126.61 121,509.46 127,009.69 71,372.73 244,038.08 28,769.98 141,397.27		Book value 17,732,066.97 893,668.38 2,651,037.65
			21,276,773.00

			31 December 2014 63,219.48
			63,219.48

			Total 418,520.00 315,577.21 315,577.21 734,097.21 170,645.58 149,246.30 149,246.30 319,891.88 414,205.33

– II-33 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

			Transportation	Electronic	Office
Item	Buildings	Machinery	equipment	equipment	equipment	Total
I. Original book value
1. 1 January 2015			365,547.54	155,779.67	212,770.00	734,097.21
2. Increase for the period	159,990,550.40	285,968,308.60	1,427,179.53	623,798.16	1,445,548.02	449,455,384.71
(1) Purchase		830,000.01	1,427,179.53	623,798.16	1,445,548.02	4,326,525.72
(2) Transfers from construction in progress	159,990,550.40	285,138,308.59				445,128,858.99
3. Decrease for the period
4. 31 December 2015	159,990,550.40	285,968,308.60	1,792,727.07	779,577.83	1,658,318.02	450,189,481.92
II. Accumulated depreciation
1. 1 January 2015			121,509.46	127,009.69	71,372.73	319,891.88
2. Increase for the period		6,812.33	91,580.16	68,468.49	157,323.70	324,184.68
(1) Provision		6,812.33	91,580.16	68,468.49	157,323.70	324,184.68
3. Decrease for the period
4. 31 December 2015		6,812.33	213,089.62	195,478.18	228,696.43	644,076.56
III. Book value as at 31 December 2015	159,990,550.40	285,961,496.27	1,579,637.45	584,099.65	1,429,621.59	449,545,405.36
			Transportation	Electronic	Office
Item	Buildings	Machinery	equipment	equipment	equipment	Total
I. Original book value
1. 1 January 2016	159,990,550.40	285,968,308.60	1,792,727.07	779,577.83	1,658,318.02	450,189,481.92
2. Increase for the period	51,607,626.19	226,189,724.92	197,564.10	149,682.22	233,451.53	278,378,048.96
(1) Purchase		1,059,396.90	197,564.10	149,682.22	233,451.53	1,640,094.75
(2) Transfers from construction in progress	51,607,626.19	225,130,328.02				276,737,954.21
3. Decrease for the period
4. 31 December 2016	211,598,176.59	512,158,033.52	1,990,291.17	929,260.05	1,891,769.55	728,567,530.88
II. Accumulated depreciation
1. 1 January 2016		6,812.33	213,089.62	195,478.18	228,696.43	644,076.56
2. Increase for the period	4,632,473.62	28,525,934.35	360,573.11	212,912.72	652,295.80	34,384,189.60
(1) Provision	4,632,473.62	28,525,934.35	360,573.11	212,912.72	652,295.80	34,384,189.60
3. Decrease for the period
4. 31 December 2016	4,632,473.62	28,532,746.68	573,662.73	408,390.90	880,992.23	35,028,266.16
III. Book value as at 31 December 2016	206,965,702.97	483,625,286.84	1,416,628.44	520,869.15	1,010,777.32	693,539,264.72
			Transportation	Electronic	Office
Item	Buildings	Machinery	equipment	equipment	equipment	Total
I. Original book value
1. 1 January 2017	211,598,176.59	512,158,033.52	1,990,291.17	929,260.05	1,891,769.55	728,567,530.88
2. Increase for the period	12,258,997.65	254,183.41	–	–	59,914.53	12,573,095.59
(1) Purchase		254,183.41			59,914.53	314,097.94
(2) Transfers from construction in progress	12,258,997.65					12,258,997.65
3. Decrease for the period
4. 31 May 2017	223,857,174.24	512,412,216.93	1,990,291.17	929,260.05	1,951,684.08	741,140,626.47
II. Accumulated depreciation
1. 1 January 2017	4,632,473.62	28,532,746.68	573,662.73	408,390.90	880,992.23	35,028,266.16
2. Increase for the period	2,418,819.24	14,707,499.66	149,216.15	69,286.95	156,698.95	17,501,520.95
(1) Provision	2,418,819.24	14,707,499.66	149,216.15	69,286.95	156,698.95	17,501,520.95
3. Decrease for the period
4. 31 May 2017	7,051,292.86	43,240,246.34	722,878.88	477,677.85	1,037,691.18	52,529,787.11
III. Book value as at 31 May 2017	216,805,881.38	469,171,970.59	1,267,412.29	451,582.20	913,992.90	688,610,839.36

Note: As at the end of the period, Hefei New Energy is still in the process of obtaining title certificates for the fixed assets with an aggregate book value of RMB12,198,988.60.

– II-34 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(IX) Construction in progress

1. Construction in progress

Item Buildings and structures Installation of equipment Total Item Buildings and structures Installation of equipment Deferred expenses Total	Carrying amount 4,675,269.11 31,913,797.31 36,589,066.42 Carrying amount 65,749,165.75 244,170,269.14 309,919,434.89	31 May 2017 Provision for impairment 31 December 2015 Provision for impairment	Book value 4,675,269.11 31,913,797.31 36,589,066.42 Book value 65,749,165.75 244,170,269.14 309,919,434.89	Carrying amount 16,149,849.64 28,074,473.00 44,224,322.64 Carrying amount 215,943,500.00 359,963,410.00 10,031,073.76 585,937,983.76	31 December 2016 Provision for impairment 31 December 2014 Provision for impairment	Book value 16,149,849.64 28,074,473.00
						44,224,322.64

						Book value 215,943,500.00 359,963,410.00 10,031,073.76
						585,937,983.76

– II-35 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

			Funding sources		Amounts due	from related	parties					Funding sources		Amounts due	from related	parties and
Interest	capitalization	rate for	the period	(%)	5.05%				Interest	capitalization	rate for the	period	(%)	5.22%
Including:	interest	capitalized for	the period		2,372,149.75			2,372,149.75	Including:	interest	capitalized for	the period		16,123,713.82			16,123,713.82
	Accumulated	capitalized	interest		5,883,982.98			5,883,982.98		Accumulated	capitalized	interest		22,007,696.80			22,007,696.80
		Project	progress		71%			71%			Project	progress		91%			91%
	Investment as a	percentage of	budget	(%)	71%			71%		Investment as a	percentage of	budget	(%)	91%			91%
		31 December	2014		585,937,983.76			585,937,983.76			31 December	2015		309,919,434.89			309,919,434.89
		Other	reduction								Other	deductions
		Transfer to	fixed assets								Transfer to	fixed assets		445,128,858.99			445,128,858.99
		Increase for	the period		480,370,687.10			480,370,687.10			Increase for	the period		169,110,310.12			169,110,310.12
		1 January	2014		105,567,296.66			105,567,296.66			1 January	2015		585,937,983.76			585,937,983.76
			Budget		828,730,000.00			828,730,000.00				Budget		828,730,000.00			828,730,000.00
			Project name		CNBM (Hefei) New Energy	Industrial Base phase I	preparatory work	Total				Project name		CNBM (Hefei) New Energy	Industrial base phase I	preparatory work	Total

– II-36 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

			Funding sources		Amounts due	from related	parties and					Funding sources		Amounts due	from related	parties and
Interest	capitalization	rate for the	period	(%)	5.35%				Interest	capitalization	rate for the	period	(%)	5.35%
Including:	interest	capitalized for	the period		4,043,315.53			4,043,315.53	Including:	interest	capitalized for	the period
	Accumulated	capitalized	interest		26,051,012.33			26,051,012.33		Accumulated	capitalized	interest		26,051,012.33			26,051,012.33
		Project	progress		93%			93%			Project	progress		93.50%			93.50%
	Investment as a	percentage of	budget	(%)	93%			93%		Investment as a	percentage of	budget	(%)	93.50%			93.50%
		31 December	2016		44,224,322.64			44,224,322.64			31 May	2017		36,027,605.34			36,027,605.34
		Other	deductions								Other	deductions
		Transfer to	fixed assets		276,737,954.21			276,737,954.21			Transfer to	fixed assets		12,258,997.65			12,258,997.65
		Increase for	the period		11,042,841.96			11,042,841.96			Increase for	the period		4,062,280.35			4,062,280.35
		1 January	2016		309,919,434.89			309,919,434.89			1 January	2017		44,224,322.64			44,224,322.64
			Budget		828,730,000.00			828,730,000.00				Budget		828,730,000.00			828,730,000.00
			Project name		CNBM (Hefei) New Energy	Industrial Base phase I	preparatory work	Total				Project name		CNBM (Hefei) New Energy	Industrial Base phase I	preparatory work	Total

– II-37 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(X) Intangible Assets

Item		Land use rights	Total
I. Original book value
1. 1 January 2014		107,753,830.88	107,753,830.88
2. Increase for the period
3. Decrease for the period
4. 31 December 2014		107,753,830.88	107,753,830.88
II. Accumulated amortization
1. 1 January 2014		3,331,275.43	3,331,275.43
2. Increase for the period		2,155,076.62	2,155,076.62
(1) Provision		2,155,076.62	2,155,076.62
3. Decrease for the period
4. 31 December 2014		5,486,352.05	5,486,352.05
III. Book value as at 31 December 2014		102,267,478.83	102,267,478.83
Item		Land use rights	Total
I. Original book value
1. 1 January 2015		107,753,830.88	107,753,830.88
2. Increase for the period
3. Decrease for the period
4. 31 December 2015		107,753,830.88	107,753,830.88
II. Accumulated amortization
1. 1 January 2015		5,486,352.05	5,486,352.05
2. Increase for the period		2,155,076.62	2,155,076.62
(1) Provision		2,155,076.62	2,155,076.62
3. Decrease for the period
4. 31 December 2015		7,641,428.67	7,641,428.67
III. Book value as at 31 December 2015		100,112,402.21	100,112,402.21
Item	Land use rights	Patent right	Total
I. Original book value
1. 1 January 2016	107,753,830.88		107,753,830.88
2. Increase for the period		94,339.62	94,339.62
(1) Purchase		94,339.62	94,339.62
3. Decrease for the period
4. 31 December 2016	107,753,830.88	94,339.62	107,848,170.50
II. Accumulated amortization
1. 1 January 2016	7,641,428.67		7,641,428.67
2. Increase for the period	2,155,076.57	4,717.08	2,159,793.65
(1) Provision	2,155,076.57	4,717.08	2,159,793.65
3. Decrease for the period
4. 31 December 2016	9,796,505.24	4,717.08	9,801,222.32
III. Book value as at 31 December
2016	97,957,325.64	89,622.54	98,046,948.18

– II-38 –

APPENDIX II

FINANCIAL INFORMATION OF HEFEI NEW ENERGY

Item	Land use rights	Patent right	Total
I. Original book value
1. 1 January 2017	107,753,830.88	94,339.62	107,848,170.50
2. Increase for the period
3. Decrease for the period
4. 31 May 2017	107,753,830.88	94,339.62	107,848,170.50
II. Accumulated amortization
1. 1 January 2017	9,796,505.24	4,717.08	9,801,222.32
2. Increase for the period	897,948.55	3,930.80	901,879.35
(1) Provision	897,948.55	3,930.80	901,879.35
3. Decrease for the period
4. 31 May 2017	10,694,453.79	8,647.88	10,703,101.67
III. Book value as at 31 May 2017	97,059,377.09	85,691.74	97,145,068.83

(XI) Long-term deferred expenses

Category Refurbishment costs Total (XⅡ) Other non-current assets Item Prepayment for equipment Total (XⅢ) Short-term loans Borrowing conditions Guaranteed loans Total (XIV) Notes payable Item Bank acceptances Trade acceptances Total		1 January 2017 Increase for the period Amortized amount for the period Other decrease 757,941.76 50,529.45 757,941.76 50,529.45 31 May 2017 31 December 2016 31 December 2015 1,369,700.00 5,103,700.00 1,369,700.00 5,103,700.00 31 May 2017 31 December 2016 31 December 2015 175,500,000.00 124,500,000.00 53,500,000.00 175,500,000.00 124,500,000.00 53,500,000.00 31 May 2017 31 December 2016 31 December 2015 8,107,927.46 15,951,039.96 1,871,120.00 1,844,016.57 9,951,944.03 15,951,039.96 1,871,120.00	1 January 2017 Increase for the period Amortized amount for the period Other decrease 757,941.76 50,529.45 757,941.76 50,529.45 31 May 2017 31 December 2016 31 December 2015 1,369,700.00 5,103,700.00 1,369,700.00 5,103,700.00 31 May 2017 31 December 2016 31 December 2015 175,500,000.00 124,500,000.00 53,500,000.00 175,500,000.00 124,500,000.00 53,500,000.00 31 May 2017 31 December 2016 31 December 2015 8,107,927.46 15,951,039.96 1,871,120.00 1,844,016.57 9,951,944.03 15,951,039.96 1,871,120.00	31 May 2017 707,412.31
				707,412.31

				31 December 2014 4,164,000.00
				4,164,000.00

				31 December 2014


				31 December 2014

– II-39 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(XV) Accounts payable

Item Within 1 year (including 1 year) Over 1 year Total	31 May 2017 105,380,876.84 273,834,947.18 379,215,824.02	31 December 2016 79,877,577.07 283,140,224.43 363,017,801.50	31 December 2015 313,094,935.99 313,094,935.99	31 December 2014 334,629,524.47
				334,629,524.47

Significant accounts payable aged over one year

Name of Creditor China Triumph International Engineering Co., Ltd. Total Receipts in advance Item 31 May 2017 Within 1 year (including 1 year) 160,025.32 Over 1 year 6,630.46 Total 166,655.78	Closing balance Reason for non-payment 273,423,781.04 Unsettled 273,423,781.04 31 December 2016 31 December 2015 31 December 2014* 196,232.86 16,072,514.00 196,232.86 16,072,514.00	Closing balance Reason for non-payment 273,423,781.04 Unsettled 273,423,781.04 31 December 2016 31 December 2015 31 December 2014* 196,232.86 16,072,514.00 196,232.86 16,072,514.00

(XVI) Receipts in advance

(XVII) Staff remuneration payables

1. Staff remuneration payables are shown as follows by category

Item I. Short-term remuneration II. Post-employment benefits – defined contribution plan Total	1 January 2014	Increase for the period 1,440,828.98 136,912.73 1,577,741.71	Decrease for the period 1,440,828.98 136,912.73 1,577,741.71	31 December 2014

– II-40 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

Item I. Short-term remuneration II. Post-employment benefits – defined contribution plan Total Item I. Short-term remuneration II. Post-employment benefits – defined contribution plan Total Item I. Short-term remuneration II. Post-employment benefits – defined contribution plan Total	1 January 2015 1 January 2016 4,247,289.25 4,247,289.25 1 January 2017 6,425,293.76 6,425,293.76	Increase for the period 12,555,064.81 975,285.73 13,530,350.54 Increase for the period 43,274,431.29 3,216,524.40 46,490,955.69 Increase for the period 19,061,078.28 1,501,043.52 20,562,121.80	Decrease for the period 8,307,775.56 975,285.73 9,283,061.29 Decrease for the period 41,096,426.78 3,216,524.40 44,312,951.18 Decrease for the period 22,493,396.72 1,501,043.52 23,994,440.24	31 December 2015 4,247,289.25
				4,247,289.25

				31 December 2016 6,425,293.76
				6,425,293.76

				31 May 2017 2,992,975.32
				2,992,975.32

– II-41 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

2. Short-term staff remuneration

Item 1. Salary, bonus, allowance and subsidy 2. Staff’s welfare 3. Social insurance premium Including: Medical insurance Work-related injury insurance Maternity insurance 4. Housing provident fund 5. Labor union expenses and employee education expenses Total Item 1. Salary, bonus, allowance and subsidy 2. Staff’s welfare 3. Social insurance premium Including: Medical insurance Work-related injury insurance Maternity insurance 4. Housing provident fund Total	1 January 2014 1 January 2015	Increase for the period 1,199,353.37 127,282.57 61,540.04 50,618.28 6,070.41 4,851.35 52,353.00 300.00 1,440,828.98 Increase for the period 11,464,013.72 545,208.37 428,187.72 340,402.38 43,392.39 44,392.95 117,655.00 12,555,064.81	Decrease for the period 1,199,353.37 127,282.57 61,540.04 50,618.28 6,070.41 4,851.35 52,353.00 300.00 1,440,828.98 Decrease for the period 7,216,724.47 545,208.37 428,187.72 340,402.38 43,392.39 44,392.95 117,655.00 8,307,775.56	31 December 2014


				31 December 2015 4,247,289.25
				4,247,289.25

– II-42 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

Item 1. Salary, bonus, allowance and subsidy 2. Staff’s welfare 3. Social insurance premium Including: Medical insurance Work-related injury insurance Maternity insurance 4. Housing Provident fund 5. Labor union expenses and employee education expenses Total Item 1. Salary, bonus, allowance and subsidy 2. Staff’s welfare 3. Social insurance premium Including: Medical insurance Work-related injury insurance Maternity insurance 4. Housing provident fund 5. Labor union expenses and employee education expenses Total 3. *Defined contribution plans* Item 1. Basic pension insurance 2. Unemployment insurance 3. Enterprise annuity Total	1 January 2016 4,247,289.25 4,247,289.25 1 January 2017 6,425,293.76 6,425,293.76 1 January 2014	Increase for the period 37,474,383.33 3,019,303.27 1,473,736.27 1,176,770.71 140,465.34 156,500.22 531,916.00 775,092.42 43,274,431.29 Increase for the period 15,322,530.20 2,304,283.96 704,661.88 562,236.87 67,539.69 74,885.32 517,407.08 212,195.16 19,061,078.28 Increase for the period 121,408.20 7,615.25 7,889.28 136,912.73	Decrease for the period 35,296,378.82 3,019,303.27 1,473,736.27 1,176,770.71 140,465.34 156,500.22 531,916.00 775,092.42 41,096,426.78 Decrease for the period 18,804,630.72 2,304,283.96 704,661.88 562,236.87 67,539.69 74,885.32 467,625.00 212,195.16 22,493,396.72 Decrease for the period 121,408.20 7,615.25 7,889.28 136,912.73	31 December 2016 6,425,293.76
				6,425,293.76

				31 May 2017 2,943,193.24 49,782.08
				2,992,975.32

				31 December 2014

– II-43 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

Item 1. Basic pension insurance 2. Unemployment insurance 3. Enterprise annuity Total Item 1. Basic pension insurance 2. Unemployment insurance 3. Enterprise annuity Total Item 1. Basic pension insurance 2. Unemployment insurance Total	1 January 2015 1 January 2016 1 January 2017	Increase for the period 902,011.40 65,794.33 7,480.00 975,285.73 Increase for the period 3,020,012.82 176,168.78 20,342.80 3,216,524.40 Increase for the period 1,425,946.40 75,097.12 1,501,043.52	Decrease for the period 902,011.40 65,794.33 7,480.00 975,285.73 Decrease for the period 3,020,012.82 176,168.78 20,342.80 3,216,524.40 Decrease for the period 1,425,946.40 75,097.12 1,501,043.52	31 December 2015


				31 December 2016


				31 May 2017

(XVIII) Taxes payable

Type Value-added tax Enterprise income tax Land-use tax Property tax Individual income tax Other taxes Total	31 May 2017 4,547,681.45 1,124,121.79 2,518,018.30 45,496.31 76,369.05 8,311,686.90	31 December 2016 1,348,946.19 1,777,424.68 28,093.86 109,819.75 3,264,284.48	31 December 2015 9,734,229.65 1,348,946.20 24,048.70 11,107,224.55	31 December 2014 9,734,229.65 1,355,690.93 16,658.25
				11,106,578.83

– II-44 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(XIX) Interest payable

Category Interest payable on long-term loans Interest payable on short-term loans Total	31 May 2017 2,909,436.58 984,972.91 3,894,409.49	31 December 2016 469,505.38 165,481.25 634,986.63	31 December 2015 514,241.94 86,319.58 600,561.52	31 December 2014

(XX) Other payables

Nature of amounts Current accounts Guarantee deposit and security deposit Construction costs and purchase costs Others Total	31 May 2017 232,264,473.70 1,092,177.88 530,940.56 133,341.15 234,020,933.29	31 December 2016 173,041,436.62 400,000.00 524,099.29 721,488.09 174,687,024.00	31 December 2015 122,985,397.85 1,500,000.00 14,667,443.99 870,828.09 140,023,669.93	31 December 2014 192,198,211.06 2,063,974.27 105,587.00
				194,367,772.33

Other significant payables aged over 1 year as at 31 May 2017

Company names China Luoyang Float Glass (Group) Company Limited (中國洛陽浮法玻璃集團有限責任公司) Total	Closing balance 153,615,734.65
	153,615,734.65

(XXI) Non-current liabilities due within one year

Item Long-term loans due within one year Total	31 May 2017 49,870,000.00 49,870,000.00	31 December 2016 49,870,000.00 49,870,000.00	31 December 2015 49,870,000.00 49,870,000.00	31 December 2014

– II-45 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(XXII) Long-term loans

31 May 2017 31 December 2016 31 December 2015 Borrowing conditions Closing balance Range of interest rate Closing balance Range of interest rate Closing balance Range of interest rate Mortgage and guarantee loans 172,450,000.00 5.34%–6.43% 189,885,000.00 5.34%–6.43% 209,755,000.00 5.34%–6.43% Guarantee loans 30,000,000.00 4.75% 30,000,000.00 4.75% 30,000,000.00 4.75% Total 202,450,000.00 219,885,000.00 239,755,000.00 Paid-in capital Name of investor 31 May 2017 31 December 2016 31 December 2015 31 December 2014 Hefei High-Tech Construction Investment Group Company (合肥高新建設投資集團公司) 30,000,000.00 30,000,000.00 30,000,000.00 30,000,000.00 China Luoyang Float Glass (Group) Company Limited (中國洛陽浮法玻璃集團有限責任公司) 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 Total 130,000,000.00 130,000,000.00 130,000,000.00 130,000,000.00 Surplus reserves Category 1 January 2014 Increase for the period 31 December 2014 Increase for the period 31 December 2015 Statutory surplus reserve 2,030,415.76 1,603,661.96 3,634,077.72 3,634,077.72 Total 2,030,415.76 1,603,661.96 3,634,077.72 3,634,077.72 Category 31 December 2015 Increase for the period 31 December 2016 Increase for the period 31 May 2017* Statutory surplus reserve 3,634,077.72 605,036.03 4,239,113.75 4,239,113.75 Total 3,634,077.72 605,036.03 4,239,113.75 4,239,113.75	31 May 2017 31 December 2016 31 December 2015 Borrowing conditions Closing balance Range of interest rate Closing balance Range of interest rate Closing balance Range of interest rate Mortgage and guarantee loans 172,450,000.00 5.34%–6.43% 189,885,000.00 5.34%–6.43% 209,755,000.00 5.34%–6.43% Guarantee loans 30,000,000.00 4.75% 30,000,000.00 4.75% 30,000,000.00 4.75% Total 202,450,000.00 219,885,000.00 239,755,000.00 Paid-in capital Name of investor 31 May 2017 31 December 2016 31 December 2015 31 December 2014 Hefei High-Tech Construction Investment Group Company (合肥高新建設投資集團公司) 30,000,000.00 30,000,000.00 30,000,000.00 30,000,000.00 China Luoyang Float Glass (Group) Company Limited (中國洛陽浮法玻璃集團有限責任公司) 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 Total 130,000,000.00 130,000,000.00 130,000,000.00 130,000,000.00 Surplus reserves Category 1 January 2014 Increase for the period 31 December 2014 Increase for the period 31 December 2015 Statutory surplus reserve 2,030,415.76 1,603,661.96 3,634,077.72 3,634,077.72 Total 2,030,415.76 1,603,661.96 3,634,077.72 3,634,077.72 Category 31 December 2015 Increase for the period 31 December 2016 Increase for the period 31 May 2017* Statutory surplus reserve 3,634,077.72 605,036.03 4,239,113.75 4,239,113.75 Total 3,634,077.72 605,036.03 4,239,113.75 4,239,113.75	31 May 2017 31 December 2016 31 December 2015 Borrowing conditions Closing balance Range of interest rate Closing balance Range of interest rate Closing balance Range of interest rate Mortgage and guarantee loans 172,450,000.00 5.34%–6.43% 189,885,000.00 5.34%–6.43% 209,755,000.00 5.34%–6.43% Guarantee loans 30,000,000.00 4.75% 30,000,000.00 4.75% 30,000,000.00 4.75% Total 202,450,000.00 219,885,000.00 239,755,000.00 Paid-in capital Name of investor 31 May 2017 31 December 2016 31 December 2015 31 December 2014 Hefei High-Tech Construction Investment Group Company (合肥高新建設投資集團公司) 30,000,000.00 30,000,000.00 30,000,000.00 30,000,000.00 China Luoyang Float Glass (Group) Company Limited (中國洛陽浮法玻璃集團有限責任公司) 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 Total 130,000,000.00 130,000,000.00 130,000,000.00 130,000,000.00 Surplus reserves Category 1 January 2014 Increase for the period 31 December 2014 Increase for the period 31 December 2015 Statutory surplus reserve 2,030,415.76 1,603,661.96 3,634,077.72 3,634,077.72 Total 2,030,415.76 1,603,661.96 3,634,077.72 3,634,077.72 Category 31 December 2015 Increase for the period 31 December 2016 Increase for the period 31 May 2017* Statutory surplus reserve 3,634,077.72 605,036.03 4,239,113.75 4,239,113.75 Total 3,634,077.72 605,036.03 4,239,113.75 4,239,113.75
	130,000,000.00

		31 December 2015 3,634,077.72
		3,634,077.72

		31 May 2017 4,239,113.75
		4,239,113.75

(XXIII) Paid-in capital

(XXIV) Surplus reserves

– II-46 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(XXV) Undistributed profits

31 May 2017 Proportion of appropriation Item Amount or distribution Undistributed profit at the end of prior period before adjustment 38,152,023.76 Total effects of adjustment of undistributed profit at the beginning of the period (“+” for increase and “-” for decrease) Undistributed profit at the beginning of the period after adjustment 38,152,023.76 Add: Net profit attributable to owners for the period 6,819,955.04 – Less: Appropriation to statutory surplus reserve Undistributed profit at the end of the period 44,971,978.80

31 December 2016 Proportion of appropriation Item Amount or distribution Undistributed profit at the end of prior period before adjustment 20,924,416.92 Total effects of adjustment of undistributed profit at the beginning of the period (“+” for increase and “-” for decrease) Undistributed profit at the beginning of the period after adjustment 20,924,416.92 Add: Net profit attributable to owners for the period 17,832,642.87 – Less: Appropriation to statutory surplus reserve 605,036.03 Undistributed profit at the end of the period 38,152,023.76 31 December 2015 Proportion of appropriation Item Amount or distribution Undistributed profit at the end of prior period before adjustment 32,706,699.47 Total effects of adjustment of undistributed profit at the beginning of the period (“+” for increase and “-” for decrease) Undistributed profit at the beginning of the period after adjustment 32,706,699.47 Add: Net profit attributable to owners for the period -11,782,282.55 – Less: Appropriation to statutory surplus reserve Undistributed profit at the end of the period 20,924,416.92

– II-47 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

31 December 2014

Item

Proportion of appropriation Amount or distribution

Undistributed profit at the end of prior period before adjustment 18,273,741.84 Total effects of adjustment of undistributed profit at the beginning of the period (“+” for increase and “-” for decrease) Undistributed profit at the beginning of the period after adjustment 18,273,741.84 Add: Net profit attributable to owners for the period 16,036,619.59 – Less: Appropriation to statutory surplus reserve 1,603,661.96 10% Undistributed profit at the end of the period 32,706,699.47

(XXVI) Operating income and operating cost

January to May of 2017 Item Income Cost I. Subtotal of principal operations 230,139,611.43 181,945,582.67 Photovoltaic glass 230,139,611.43 181,945,582.67 II. Subtotal of other operations 9,157,194.45 8,188,962.37 Electricity fees 9,022,921.40 8,188,962.37 Others 134,273.05 Total 239,296,805.88 190,134,545.04 (XXVII) Taxes and surcharges Item Property tax Land-use tax Others Total (XXVIII) Selling expenses Item Staff remuneration Transportation costs Others Total	January to May of 2016 2016 Income Cost Income 176,211,223.22 138,510,681.46 482,165,519.48 176,211,223.22 138,510,681.46 482,165,519.48 10,236,497.84 10,167,729.84 23,545,795.65 10,236,497.84 10,167,729.84 23,059,495.25 68,768.00 486,300.40 186,447,721.06 148,678,411.30 505,711,315.13 January to May of 2017 January to May of 2016 740,593.62 1,124,121.80 11,917.59 1,876,633.01 January to May of 2017 January to May of 2016 301,234.79 202,609.62 12,065,547.53 5,913,514.09 168,157.91 74,426.07 12,534,940.23 6,190,549.78	January to May of 2016 2016 Income Cost Income 176,211,223.22 138,510,681.46 482,165,519.48 176,211,223.22 138,510,681.46 482,165,519.48 10,236,497.84 10,167,729.84 23,545,795.65 10,236,497.84 10,167,729.84 23,059,495.25 68,768.00 486,300.40 186,447,721.06 148,678,411.30 505,711,315.13 January to May of 2017 January to May of 2016 740,593.62 1,124,121.80 11,917.59 1,876,633.01 January to May of 2017 January to May of 2016 301,234.79 202,609.62 12,065,547.53 5,913,514.09 168,157.91 74,426.07 12,534,940.23 6,190,549.78	January to May of 2016 2016 Income Cost Income 176,211,223.22 138,510,681.46 482,165,519.48 176,211,223.22 138,510,681.46 482,165,519.48 10,236,497.84 10,167,729.84 23,545,795.65 10,236,497.84 10,167,729.84 23,059,495.25 68,768.00 486,300.40 186,447,721.06 148,678,411.30 505,711,315.13 January to May of 2017 January to May of 2016 740,593.62 1,124,121.80 11,917.59 1,876,633.01 January to May of 2017 January to May of 2016 301,234.79 202,609.62 12,065,547.53 5,913,514.09 168,157.91 74,426.07 12,534,940.23 6,190,549.78	2015 Cost Income Cost 381,763,542.82 11,677,414.52 11,751,860.94 381,763,542.82 11,677,414.52 11,751,860.94 22,733,789.85 2,828,491.33 2,237,629.93 22,733,789.85 2,828,491.33 2,237,629.93 404,497,332.67 14,505,905.85 13,989,490.87 2016 2015 1,036,831.06 1,573,770.56 86,642.38 2,697,244.00 2016 2015 663,762.43 118,775.05 16,271,221.53 700,807.47 678,789.27 17,613,773.23 819,582.52	2015 Cost Income Cost 381,763,542.82 11,677,414.52 11,751,860.94 381,763,542.82 11,677,414.52 11,751,860.94 22,733,789.85 2,828,491.33 2,237,629.93 22,733,789.85 2,828,491.33 2,237,629.93 404,497,332.67 14,505,905.85 13,989,490.87 2016 2015 1,036,831.06 1,573,770.56 86,642.38 2,697,244.00 2016 2015 663,762.43 118,775.05 16,271,221.53 700,807.47 678,789.27 17,613,773.23 819,582.52	2015 Cost Income Cost 381,763,542.82 11,677,414.52 11,751,860.94 381,763,542.82 11,677,414.52 11,751,860.94 22,733,789.85 2,828,491.33 2,237,629.93 22,733,789.85 2,828,491.33 2,237,629.93 404,497,332.67 14,505,905.85 13,989,490.87 2016 2015 1,036,831.06 1,573,770.56 86,642.38 2,697,244.00 2016 2015 663,762.43 118,775.05 16,271,221.53 700,807.47 678,789.27 17,613,773.23 819,582.52
						13,989,490.87

						2015


		January to May of 2016 202,609.62 5,913,514.09 74,426.07				2015 118,775.05 700,807.47
		6,190,549.78				819,582.52

– II-48 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(XXIX) Administrative expenses

Item Staff’s remuneration Depreciation of fixed assets Intangible asset amortization Office expenses Travel expenses Communication fees Car usage expenses Repair fees Utilities Property management fees Intermediary engagement fees Business entertainment expenses Taxes Research and development costs Material consumption Other administrative expenses Total	January to May of 2017 5,877,636.79 1,746,584.69 901,879.35 62,019.45 42,395.02 45,152.86 86,703.87 658,150.94 27,265.06 307,824.15 148,699.62 83,960.38 5,089,259.06 339,529.35 496,369.91 15,913,430.50	January to May of 2016 4,646,050.08 298,714.62 913,473.80 145,848.69 71,202.88 15,653.65 125,363.43 57,560.00 123,718.81 397,621.44 125,677.75 134,668.60 939,567.49 1,038,038.70 286,826.32 760,200.38 10,080,186.64	2016 14,886,485.46 3,280,209.24 2,159,793.65 468,149.58 217,987.06 67,645.01 269,520.22 420,711.09 194,481.08 1,027,504.12 1,173,756.88 356,956.00 1,926,602.86 2,187,348.48 6,744,555.66 2,863,206.88 38,244,913.27	2015 4,036,088.85 325,498.83 1,501,267.09 737,173.75 286,424.13 20,259.05 398,845.03 3,861.39 280,618.35 734,000.99 132,023.12 179,969.00 2,802,392.40 600.00 308,589.33 11,747,611.31	2014 885,293.81 149,246.30 1,441,829.87 97,577.03 148,775.18 41,410.70 55,329.09 8,927.00 18,063.50 361,960.00 17,433.96 34,340.00 2,754,210.93 208,856.67
					6,223,254.04

(XXX) Financial expenses

Item Interest expenses Less: interest income Others Total	January to May of 2017 12,426,782.95 66,505.59 820,652.80 13,180,930.16	January to May of 2016 3,943,504.85 42,159.27 940,842.86 4,842,188.44	2016 22,861,651.80 660,121.23 3,855,719.04 26,057,249.61	2015 10,092.84 10,092.84	2014 4,586.50
					4,586.50

(XXXI) Impairment losses of assets

Item Bad debt losses Total	January to May of 2017 204,701.62 204,701.62	January to May of 2016	2016	2015	2014

– II-49 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(XXXII) Other income

January to January to Item May of 2017 May of 2016 2016 2015 2014 Subsidies for photovoltaic power generation 2,310,699.53 Total 2,310,699.53

(XXXIII) Non-operating income

1. Breakdown of non-operating income

January to May of 2017	January to May of 2017	January to May of 2017		January to May of 2016	January to May of 2016		2016	2016			2015	2015			2014
		Amount			Amount			Amount					Amount				Amount
		recognized as			recognized as			recognized as				recognized as				recognized as
		extraordinary			extraordinary			extraordinary				extraordinary				extraordinary
	Amount	profit and loss		Amount	profit and loss	Amount		profit and loss			Amount	profit and loss			Amount	profit and loss
Item	incurred	of the period		incurred	of the period	incurred		of the period			incurred	of the period			incurred	of	the period
Government
subsidies 294,800.00		294,800.00				2,309,000.00		2,309,000.00		25,000,000.00		25,000,000.00		27,610,000.00		27,610,000.00
Others	360.00	360.00
Total 295,160.00		295,160.00				2,309,000.00		2,309,000.00		25,000,000.00		25,000,000.00		27,610,000.00		27,610,000.00

2.	*Government subsidies recognized in profit or*						*loss*
			January to	May of 2017	January to May of 2016			2016				2015			2014
			Amount	Related to	Amount	Related to		Amount	Related to			Amount	Related to		Amount		Related to
Item			incurred	assets/income	incurred	assets/income		incurred	assets/income			incurred	assets/income		incurred	assets/income
Policy-based subsidies (政策兌現資金)									Income		25,000,000.00		Income		27,610,000.00	Income
Subsidies for R&D project								2,254,000.00	Income
Special fund for building innovative								54,000.00	Income
province of the province
(省創新型省份建設專項資金)
Intellectual property rewards			11,000.00	Income				1,000.00	Income
(知識產權獎勵)
Hefei innovative enterprise subsidies			30,000.00	Income
(合肥市級創新型企業補助)
Economic and trade incentives from			10,000.00	Income
High-tech Zone in Hefei
(合肥市高新區經貿獎勵)
Incentive payments for being recognized as			200,000.00	Income
a “National High - tech	Enterprise”
Subsidies for recruitments			43,800.00	Income
(用工單位招聘補貼)
Total			294,800.00	Income				2,309,000.00	Income		25,000,000.00		Income		27,610,000.00	Income

– II-50 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(XXXIV) Non-operating expenses

Item Liquidated damages Total	January to May of 2017 Amount incurred Amount recognized as extraordinary profit and loss of the period	January to May of 2016 Amount incurred Amount recognized as extraordinary profit and loss of the period	2016 Amount incurred Amount recognized as extraordinary profit and loss of the period	2015 Amount incurred Amount recognized as extraordinary profit and loss of the period 24,721,410.86 24,721,410.86 24,721,410.86 24,721,410.86	2014 Amount incurred Amount recognized as extraordinary profit and loss of the period	2014 Amount incurred Amount recognized as extraordinary profit and loss of the period

(XXXV) Income tax expenses

Item Current income tax expenses under applicable tax laws and regulations Deferred income tax expenses Total	January to May of 2017 1,268,235.05 -30,705.24 1,237,529.81	January to May of 2016 588,266.76 588,266.76	2016 1,077,159.48 1,077,159.48	2015	2014 5,345,539.87
					5,345,539.87

(XXXVI) Cash Flow Statement

1. Other cash received or paid relating to operating activities

	January to
Item	May of 2017	2016	2015	2014
Other cash received
relating to operating
activities	476,749.12	67,665,414.62	26,988,653.31	27,663,187.00
Including: Interest income	66,505.59	660,121.23
Government subsidies	294,800.00	2,309,000.00	25,000,000.00	27,610,000.00
Current accounts		48,400,000.00
Refund of guarantee
deposits		15,000,000.00
Deposit			1,560,000.00
Others	115,443.53	1,296,293.39	428,653.31	53,187.00
Other cash paid relating to
operating activities	8,063,752.62	37,004,826.52	55,373,274.49	1,019,893.29
Including: selling expenses	168,157.91	262,675.14
Administrative expenses	7,192,915.54	9,663,947.18	3,798,356.23	992,373.13
Current accounts		27,041,248.84	10,996,757.46
Liquidated damages			24,721,410.86
Guarantee deposits			15,000,000.00
Others	702,679.17	36,955.36	856,749.94	27,520.16

– II-51 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

2. Other cash received or paid relating to financing activities

	January to
Item	May of 2017	2016	2015	2014
Other cash received
relating to financing
activities	55,000,000.00	20,000,000.00		148,149,858.00
Including: Payments from
Triumph Group in
ordinary course of
business		20,000,000.00
Payments from Bengbu
Institute in ordinary
course of business				10,000,000.00
Payments from CLFG in
ordinary course of
business				138,149,858.00
Payments from Bengbu
COE in ordinary course
of business	55,000,000.00
Other cash paid relating to
financing activities		103,555.40	46,608,804.17
Including: transaction
costs and guarantee fees
paid to Bengbu Institute		103,555.40	46,608,804.17
ementary information of the cash flow statements
*Supplementary information of the cash flow statements*
	January to
Item	May of 2017	2016	2015	2014
1. Net profit adjusted to cash
flow of operating activities:
Net profit	6,819,955.04	17,832,642.87	-11,782,282.55	16,036,619.59
Add: Provision for impairment of
assets	204,701.62
Depreciation of fixed assets,
depletion of oil and gas assets,
depreciation of productive
biological assets	17,501,520.95	34,384,189.60	324,184.68	149,246.30
Amortization of intangible assets	901,879.35	2,159,793.65	1,501,267.09	1,441,829.87
Amortization of long-term
deferred expenses	50,529.45
Losses from disposal of fixed
assets, intangible assets and
other long-term assets (“-” for
gains)
Losses on scrapping of fixed
assets (“-” for gains)

(XXXVII) Supplementary information of the cash flow statements

1. Supplementary information of the cash flow statements

– II-52 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

		January to
	Item	May of 2017	2016	2015	2014
	Losses from changes in fair value
	(“-” for gains)
	Financial expenses (“-” for gains)	12,906,782.95	24,300,151.80
	Investment losses (“-” for gains)
	Decrease in deferred income tax
	assets (“-” for increase)	-30,705.24
	Increase in deferred income tax
	liabilities (“-” for decrease)
	Decrease in inventories (“-” for
	increase)	-1,344,290.69	-23,087,950.08	-21,276,773.00
	Decrease in operating receivables
	(“-” for increase)	-151,272,797.48	-149,128,979.89	-15,020,076.22	-86,153.14
	Increase in operating payables
	(“-” for decrease)	11,442,831.59	74,926,908.93	12,073,263.95	6,493,475.93
	Others
	Net cash flow from operating
	activities	-102,819,592.46	-18,613,243.12	-34,180,416.05	24,035,018.55
	2. Net changes in cash and cash
	equivalents
	Closing balance of cash	16,361,736.09	36,526,696.43	33,205,968.76	10,088,009.42
	Less: Opening balance of cash	36,526,696.43	33,205,968.76	10,088,009.42	26,112,546.68
	Add: Closing balance of cash
	equivalents
	Less: Opening balance of cash
	equivalents
	Net increase in cash and cash
	equivalents	-20,164,960.34	3,320,727.67	23,117,959.34	-16,024,537.26
2.	*Cash and cash equivalents*
		January to
	Item	May of 2017	2016	2015	2014
	I. Cash
	Including: Cash on hand	1,931.98	37,491.98	4,601.98	1,039.43
	Bank deposit available for
	payment at any time	16,359,804.11	36,489,204.45	33,201,366.78	10,086,969.99
	II. Cash and cash
	equivalents at the end of
	the period	16,361,736.09	36,526,696.43	33,205,968.76	10,088,009.42

(XXXVIII) Assets under restricted ownership or use right

Item Monetary funds Notes receivable Fixed assets Intangible assets Total	31 May 2017 Book value Reasons for restriction 2,881,413.95 Guarantee deposit for bills 5,607,927.46 Pledged as security for drawing bills 71,816,534.17 Mortgaged to secure loans 48,471,445.67 Mortgaged to secure loans 128,777,321.25

– II-53 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(XXXIX) Foreign currency monetary items

		31 May 2017
	Foreign currency	Exchange	Equivalent
Item	amount	rate	RMB amount
Cash and cash equivalents
Including: US$	5,068.81	6.8633	34,788.76
Account receivable
Including: US$	1,903,741.26	6.8633	13,065,947.38
		31 December 2016
	Foreign currency	Exchange	Equivalent RMB
Item	amount	rate	amount
Account receivable
Including: US$	690,454.49	6.8054	4,698,845.46

VI. RELATIONSHIPS AND TRANSACTIONS WITH RELATED PARTIES

(I) The parent company of Hefei New Energy

				Equity interest	Voting rights
			Registered	in Hefei New	in Hefei New
Parent company name	Registration place	Business nature	capital	Energy	Energy
				(%)	(%)
China Luoyang Float Glass (Group)	No. 9, Tanggong Middle	State-owned	1,286,740,000.00	76.92	76.92
Company Limited*	Road, Xigong District,
	Luoyang

The ultimate controller of Hefei New Energy is China National Building Material Group Co., Ltd.

(II) Other related parties of Hefei New Energy

Name of other related parties

Relationship between other related parties and Hefei New Energy

China Triumph International Engineering Co., Ltd. China Triumph International Engineering Co., Ltd. Hainan Branch China Triumph International Engineering Co., Ltd. Bengbu Branch Bengbu Design & Research Institute for Glass Industry CNBM (Zhenjiang) Photovoltaic Application Technology Research Institute Company Limited Luoyang Glass Company Limited CNBM (Tongcheng) New Energy Materials Company Limited Triumph Technology Group Company CNBM Triumph Robotics (Shanghai) Co., Ltd. Anhui Tianzhu Green Energy Science & Technology Co., Ltd. Triumph Bengbu Engineering and Technology Company Limited Bengbu Chemical Engineering Machinery Making Co., Ltd. CTIEC Shenzhen Scieno-tech Engineering Company Limited Bengbu Branch

Common ultimate controller Common ultimate controller Common ultimate controller

Common ultimate controller Common ultimate controller

Common ultimate controller Common ultimate controller Common ultimate controller Common ultimate controller Common ultimate controller Common ultimate controller

Common ultimate controller Common ultimate controller

– II-54 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

Name of other related parties

Relationship between other related parties and Hefei New Energy

Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery Company Limited*

Shanghai CTIEC Luculent Information Technology Co., Ltd. (上海凱盛朗坤信息技術股份有限公司) CNBM (Bengbu) Photovoltaic Materials Company Limited

Common ultimate controller

Common ultimate controller Common ultimate controller

(III) Related transactions

1. Purchase and sales of goods and provision and receiving of services

		January–May
Name of related party	Content of related party transaction	2017	2016	2015	2014
Purchasing of goods/receiving of services:
China Luoyang Float Glass (Group)	Capital use fee	2,520,659.30	6,109,677.50	6,835,539.85
Company Limited*
Triumph Technology Group Company*	Capital use fee	471,597.01	685,816.67
Triumph Technology Group Company*	Procurement of raw material	22,603,295.90	45,428,111.16	6,375,958.31
CNBM Triumph Robotics (Shanghai)	Procurement of Equipment		800,854.72
Co., Ltd.*
Anhui Tianzhu Green Energy Science &	Procurement of Equipment	3,247,863.24	4,615,384.60
Technology Co., Ltd.*
CNBM (Zhenjiang) Photovoltaic Application	Commissioned research and		2,075,471.64
Technology Research Institute Company	development fee
Limited *
Bengbu Design & Research Institute for	Guarantee fee	480,000.00	1,438,500.00	1,767,000.00
Glass Industry*	Supervision fee			412,000.00
	Capital use fee			1,862,733.33	2,420,655.56
	Service fee		141,509.43
	Purchase of patents		94,339.62
China Triumph International Engineering	Procurement of raw material	5,537,349.05	14,316,826.16	1,520,323.07
Co., Ltd. Hainan Branch*
Triumph Bengbu Engineering and	Procurement of raw material	3,931.62		2,156,923.08
Technology Company Limited*	Maintenance fee	101,196.58
China Triumph International	Project contracting			76,259,445.60	575,506,910.00
Engineering Co., Ltd.*
China Triumph International Engineering	Design fee			2,594,339.63
Co., Ltd. Bengbu Branch*
CNBM (Tongcheng) New Energy	Service fee		326,028.30
Materials Company Limited*	Purchase of fixed assets		46,504.27	11,463.77
	Commissioned manufacturing fee	438,058.03
CNBM (Bengbu) Photovoltaic Materials	Capital utilization fee	746,569.45
Company Limited*
Shanghai CTIEC Luculent Information	Procurement of Software System	464,102.59
Technology Co., Ltd* (上海凱盛朗坤信息
技術股份有限公司)
Sino-Italian CTIEC (Bengbu) Glass Cold-End	Procurement of raw material		29,017.09
Machinery Company Limited*
CTIEC Shenzhen Scieno-tech Engineering	Procurement of raw material		24,287.18
Company Limited Bengbu Branch*
Bengbu Chemical Engineering Machinery	Procurement of raw material	1,524,739.57	1,412,240.42	1,068,461.54
Making Co., Ltd.*

– II-55 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

		January–May	January–May
Name of related party	Content of related party	transaction	2017	2016	2015	2014
Sales of goods/provision of services:
Luoyang Glass Company Limited*	Capital use fee			153,207.55
China Triumph International	Sales of glass	5,209,638.68
Engineering Co., Ltd.*
*Related party guarantees*
						Guarantee
		Guarantee				fulfilled
Guarantor	Guaranteed party	amount	Start	date	End date	or not
January–May 2017
Triumph Technology Group	CNBM (Hefei) New Energy	20,000,000.00	2017/6/2		2019/6/1	No
Company*	Company Limited*
Triumph Technology Group	CNBM (Hefei) New Energy	30,000,000.00	2018/2/4		2020/2/3	No
Company*	Company Limited*
Triumph Technology Group	CNBM (Hefei) New Energy	45,500,000.00	2018/2/7		2020/2/6	No
Company*	Company Limited*
Triumph Technology Group	CNBM (Hefei) New Energy	30,000,000.00	2018/3/9		2020/3/8	No
Company*	Company Limited*
Triumph Technology Group	CNBM (Hefei) New Energy	15,000,000.00	2018/5/24		2020/5/23	No
Company*	Company Limited*
2016
Triumph Technology Group	CNBM (Hefei) New Energy	30,000,000.00	2017/3/3		2019/3/2	No
Company*	Company Limited*
Triumph Technology Group	CNBM (Hefei) New Energy	30,000,000.00	2017/2/21		2019/2/20	No
Company*	Company Limited*
Triumph Technology Group	CNBM (Hefei) New Energy	29,500,000.00	2017/2/22		2019/2/21	No
Company*	Company Limited*
Triumph Technology Group	CNBM (Hefei) New Energy	35,000,000.00	2017/10/29		2019/10/28	No
Company*	Company Limited*
2015
Bengbu Design & Research	CNBM (Hefei) New Energy	100,000,000.00	2021/3/26		2023/3/25	No
Institute for Glass	Company Limited*
Industry*
Bengbu Design & Research	CNBM (Hefei) New Energy	4,500,000.00	2021/5/28		2023/5/27	No
Institute for Glass	Company Limited*
Industry*
Bengbu Design & Research	CNBM (Hefei) New Energy	95,500,000.00	2021/9/9		2023/9/8	No
Institute for Glass	Company Limited*
Industry*
Bengbu Design & Research	CNBM (Hefei) New Energy	90,000,000.00	2021/12/15		2023/12/14	No
Institute for Glass	Company Limited*
Industry*
Triumph Technology Group	CNBM (Hefei) New Energy	49,000,000.00	2016/10/28		2018/10/27	No
Company*	Company Limited*
Bengbu Design & Research	CNBM (Hefei) New Energy	4,500,000.00	2016/6/2		2018/6/1	No
Institute for Glass	Company Limited*
Industry*

2. Related party guarantees

– II-56 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

(IV) Accounts receivable from and payable to related parties

1. Items of receivables

		31 May	2017		31 December 2016	31 December 2016
				Bad debt		Bad debt
Item	Name of related party	Book balance		provision	Book balance	provision
Other receivables	CNBM (Tongcheng) New Energy				27,467.43
	Materials Company Limited*
Other non-current assets	Anhui Tianzhu Green Energy	1,303,700.00			5,103,700.00
	Science & Technology Co., Ltd.*
Other non-current assets	Triumph Bengbu Engineering and	36,000.00
	Technology Company Limited*
Prepayments	Triumph Technology Group	1,093,959.02
	Company*
Prepayments	Sino-Italian CTIEC (Bengbu)			3,247.43
	Glass Cold-End Machinery
	Company Limited*
Prepayments	CNBM (Yixing) New Energy	15,000,000.00			15,000,000.00
	Company Limited*
		31 December 2015			31 December 2014
				Bad debt		Bad debt
Item	Name of related party	Book balance		provision	Book balance	provision
Other receivables	CNBM (Zhenjiang) Photovoltaic	400,000.00			400,000.00
	Application Technology
	Research Institute Company
	Limited*
Other receivables	Bengbu Design & Research	241,805.45
	Institute for Glass Industry*
Other receivables	CNBM (Tongcheng) New Energy	400,000.00
	Materials Company Limited*
Other receivables	China Triumph International	5,000.00
	Engineering Co., Ltd.*
*Items of payables*
		31 May	31	December	31 December	31 December
Item	Name of related party	2017		2016	2015	2014
Other payables	Bengbu Design & Research	1,814,944.60	1,334,944.60			54,048,353.06
	Institute for Glass Industry*
Other payables	Triumph Bengbu Engineering and	11,840.00
	Technology Company Limited*
Other payables	China Triumph International				2,000.00
	Engineering Co., Ltd. Hainan
	Branch*
Other payables	China Luoyang Float Glass	153,615,734.65	151,095,075.35		122,985,397.85	138,149,858.00
	(Group) Company Limited*
Other payables	Triumph Technology Group	21,087,225.00	20,611,416.67
	Company*
Other payables	CNBM (Bengbu) Photovoltaic	55,746,569.45
	Materials Company Limited*

2. Items of payables

– II-57 –

APPENDIX II — FINANCIAL INFORMATION OF HEFEI NEW ENERGY

		31 May	31 December	31 December	31 December
Item	Name of related party	2017	2016	2015	2014
Accounts payable	China Triumph International	273,423,781.04	282,519,058.29	286,017,346.12	334,629,524.47
	Engineering Co., Ltd.*
Accounts payable	Triumph Technology Group		660,066.38	401,870.72
	Company*
Accounts payable	Triumph Bengbu Engineering and	64,636.90	64,636.90	1,284,790.00
	Technology Company Limited
Accounts payable	China Triumph International			1,294,339.63
	Engineering Co., Ltd. Bengbu
	Branch*
Accounts payable	China Triumph International	11,524,994.31	8,514,531.63	1,520,323.07
	Engineering Co., Ltd. Hainan
	Branch*
Accounts payable	CNBM Triumph Robotics	546,000.00	546,000.00
	(Shanghai) Co., Ltd.*
Accounts payable	CNBM (Tongcheng) New Energy	512,527.90
	Materials Company Limited*
Accounts payable	CTIEC Shenzhen Scieno-tech		3,406.84
	Engineering Company Limited.
	Bengbu Branch*
Accounts payable	Bengbu Chemical Engineering	1,639,246.34	744,157.43
	Machinery Making Co., Ltd.*

VII. COMMITMENTS AND CONTINGENCIES

None

VIII. EVENTS AFTER THE BALANCE SHEET DATE

None

IX. OTHER SIGNIFICANT EVENTS

(I) Segment reporting

The income and profit of Heifei New Energy are mainly generated from the sales of photovoltaic glass. Therefore, Heifei New Energy believes there is no need to prepare segment reporting.

(II) There is no other significant matters that require disclosure.

X. SUBSEQUENT FINANCIAL STATEMENTS

Heifei New Energy hasn’t prepared any audited financial statements, nor has it declared or paid any dividends in respect of any period subsequent to 31 May 2017.

Yours faithfully, WUYIGE Certified Public Accountants LLP

7 August 2017

– II-58 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

The following is the text of the accountants’ report of Tongcheng New Energy received from the independent reporting accountants of Tongcheng New Energy, WUYIGE Certified Public Accountants LLP.

To the Board of Directors of

Luoyang Glass Company Limited *

Dear Sirs,

We hereby present a report on the financial information (“ Financial Information ”) of CNBM (Tongcheng) New Energy Materials Company Limited (“ Tongcheng New Energy ”), which comprises the balance sheets as at 31 December 2014, 31 December 2015, 31 December 2016 and 31 May 2017, the income statements, the cash flow statements and the statements of changes in owners’ equity for the years of 2014, 2015 and 2016 and for the five months ended 31 May 2017, and the notes to the financial statements. Such Financial Information was prepared pursuant to the basis set out in Note II/1 of the Report, for inclusion in the circular which will be issued by Luoyang Glass Company Limited in respect of proposed acquisition of the entire equity of Tongcheng New Energy.

BASIC INFORMATION

The basic information of Tongcheng New Energy was set out in Note 1 to the report. Tongcheng New Energy adopts 31 December as its financial year end date.

RESPONSIBILITY OF THE DIRECTORS TO FINANCIAL INFORMATION

For the purpose of this report, the directors of Tongcheng New Energy have prepared and made a true and fair presentation on the financial statements of Tongcheng New Energy for the relevant periods, under the basis set out in Note II/1 and in accordance with the disclosure requirements of China Accounting Standards for Business Enterprises, Hong Kong Company Ordinance and The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and other relevant regulations. The directors of Tongcheng New Energy must take the full responsibility for this.

RESPONSIBILITY OF THE REPORTING ACCOUNTANTS

– III-1 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

AUDIT OPINION

In our opinion, for the purpose of this report, the Financial Information gives a true and fair view of the financial position of Tongcheng New Energy as at 31 December 2014, 31 December 2015, 31 December 2016 and 31 May 2017 respectively, and the operating results and cash flows of Tongcheng New Energy as at 2014, 2015 and 2016 and for the five months ended 31 May 2017.

REVIEW OF COMPARATIVE FINANCIAL INFORMATION FOR THE STUB PERIOD

We have reviewed the comparative financial information contained in this report, including the income statements, the cash flow statements and the statements of changes in equity for the five months ended 31 May 2016 and notes to the financial statements of Tongcheng New Energy (“ Comparative Financial Information ”).

The directors of Tongcheng New Energy prepared the Comparative Financial Information under the basis set out in Note II and in accordance with the disclosure requirements of China Accounting Standards for Business Enterprises, Hong Kong Company Ordinance and The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and other relevant regulations.

Our responsibilities are to make a conclusion on the Comparative Financial Information based on our review. Our review has been made under the Chinese Certified Public Accountants Auditing Standards No.2101 – Review of Financial Statements. Our review of Comparative Financial Information includes making inquiries to persons primarily responsible for financial and accounting matters, and applying analytical and other review procedures. Our review excludes audit procedures such as control tests and verification of assets and liabilities, and transactions. The scope of our review is substantially less than that of an audit, and consequently we would not express any audit opinion on the Comparative Financial Information.

REVIEW CONCLUSIONS

– III-2 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

BALANCE SHEET

Item Notes Current Assets: Cash and cash equivalents V (1) Financial assets at fair value through profit or loss Derivative financial assets Notes receivable V (2) Accounts receivable V (3) Prepayments V (4) Interests receivable Dividends receivable Other receivables V (5) Inventories V (6) Assets held for sale Non-current assets due within one year Other current assets V (7) Total current assets Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term receivables Long-term equity investments Investment properties Fixed assets V (8) Construction in progress V (9) Construction materials Disposal of fixed assets Productive biological assets Gas assets Intangible assets V (10) Development expenditure Goodwill Long-term deferred expenses Deferred tax assets V (11) Other non-current assets V (12) Total non-current assets Total assets	31 May 2017 4,001,345.49 23,960,036.60 113,433,249.72 983,429.71 210,466.15 18,017,823.03 1,593,532.21 162,199,882.91 262,758,771.93 14,808,685.98 51,466,690.25 651,763.84 329,685,912.00 491,885,794.91	31 December 2016 17,139,435.86 17,920,000.00 85,136,743.73 1,361,751.60 148,817.66 29,029,597.59 2,618,373.40 153,354,719.84 259,603,658.52 1,728,535.21 52,419,908.25 732,915.61 735,160.00 315,220,177.59 468,574,897.43	Unit: RMB Yuan 31 December 2015 31 December 2014 4,569,654.10 1,434,093.01 12,954,898.52 9,714,089.18 70,221,628.75 26,925,687.36 503,153.77 1,070,899.01 277,205.55 692,918.14 12,992,051.66 22,244,052.53 15,462,477.32 20,508,322.82 116,981,069.67 82,590,062.05 271,786,076.26 1,535,968.17 213,559,520.01 54,707,631.52 56,925,910.36 170,783.15 204,914.72 11,142.00 326,675,632.93 272,226,313.26 443,656,702.60 354,816,375.31	Unit: RMB Yuan 31 December 2015 31 December 2014 4,569,654.10 1,434,093.01 12,954,898.52 9,714,089.18 70,221,628.75 26,925,687.36 503,153.77 1,070,899.01 277,205.55 692,918.14 12,992,051.66 22,244,052.53 15,462,477.32 20,508,322.82 116,981,069.67 82,590,062.05 271,786,076.26 1,535,968.17 213,559,520.01 54,707,631.52 56,925,910.36 170,783.15 204,914.72 11,142.00 326,675,632.93 272,226,313.26 443,656,702.60 354,816,375.31
				82,590,062.05

				1,535,968.17 213,559,520.01 56,925,910.36 204,914.72 272,226,313.26
				354,816,375.31

– III-3 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Item Notes Current liabilities: Short-term loans V (13) Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes payable V (14) Accounts payable V (15) Receipts in advance V (16) Employee compensation payable V (17) Tax payables V (18) Interest payable V (19) Dividends payable Other payables V (20) Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities: Long-term borrowings Debentures payable Long-term payables Long-term employee compensation payable Special payables Estimated liability Deferred income Deferred income tax liabilities Other non-current liabilities	31 May 2017 50,000,000.00 90,212,791.10 830,684.62 1,319,841.39 1,293,245.42 133,213,325.40 276,869,887.93	31 December 2016 131,600,000.00 50,000,000.00 71,936,770.27 77,335.05 1,803,215.18 3,269,796.82 420,206.11 344,662.72 259,451,986.15	31 December 2015 91,060,000.00 152,279,559.08 496,309.41 1,233,806.80 565,901.71 121,827,487.31 367,463,064.31	31 December 2014 167,988,549.89 2,410,158.80 671,274.60 108,362,064.23
				279,432,047.52

Total non-current liabilities Total Liabilities	276,869,887.93	259,451,986.15	367,463,064.31

				279,432,047.52

– III-4 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Item Notes Owners’ equity: Paid-up capital V (21) Other equity instruments Capital reserve V (22) Less: Treasury stock Other comprehensive income Special reserve Surplus reserves V (23) Undistributed profit V (24) Total owners’ equity Total liabilities and owners’ equity	31 May 2017 133,388,980.00 6,611,020.00 3,073,858.35 71,942,048.63 215,015,906.98 491,885,794.91	31 December 2016 133,388,980.00 6,611,020.00 3,073,858.35 66,049,052.93 209,122,911.28 468,574,897.43	31 December 2015 37,000,000.00 80,931.05 39,112,707.24 76,193,638.29 443,656,702.60	31 December 2014 37,000,000.00 38,384,327.79
				75,384,327.79

				354,816,375.31

– III-5 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

INCOME STATEMENT

Unit: RMB Yuan

		January–May	January–May
Item	Notes	2017	2016	2016	2015	2014
			(Unaudited)
I. Operating revenue	V (25)	106,906,230.23	93,419,982.97	233,072,833.77	69,275,702.33	5,568,563.14
Less: Operating cost	V (25)	85,161,305.55	66,392,927.42	163,081,479.66	52,782,206.56	5,784,194.00
Tax and surcharges	V (26)	2,061,013.95		3,595,600.28
Selling expenses	V (27)	5,499,717.93	5,183,876.61	11,110,997.40	4,314,863.82	677,537.66
Administrative expenses	V (28)	3,818,521.46	4,789,944.45	11,950,806.92	10,312,172.81	9,500,409.27
Financial expenses	V (29)	2,951,533.69	2,879,587.08	5,880,721.55	2,985,108.36	56,781.05
Impairment losses of assets	V (30)	-250,490.69	2,248,529.85	-136,526.29	789,283.87
Add: Gains from changes in fair value
Investment income
Including: Gains from investment in
associates and joint ventures
Other gains
II. Operating profit		7,664,628.34	14,173,647.41	35,204,698.11	-982,122.93	-11,239,642.71
Add: Non-operating income	V (31)	200,200.00		107,652.89	1,825,565.00	3,803,905.00
Including: Gains on disposal of
non-current assets				27,253.89
Less: Non-operating expense	V (32)			8,019.40
Including: Loss on disposal of non-current
assets
III. Total profit		7,864,828.34	14,173,647.41	35,304,331.60	843,442.07	-7,435,737.71
Less: Income tax expenses	V (33)	1,971,832.64	72,992.43	5,375,058.61	34,131.57	-197,320.97
IV. Net profit		5,892,995.70	14,100,654.98	29,929,272.99	809,310.50	-7,238,416.74
V. Other comprehensive income, net of tax
(I) Other comprehensive income that
cannot be subsequently reclassified into
profit and loss
(II) Other comprehensive income that will
be subsequently reclassified into profit
and loss
VI. Total comprehensive income		5,892,995.70	14,100,654.98	29,929,272.99	809,310.50	-7,238,416.74
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share

– III-6 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

CASH FLOW STATEMENT

Unit: RMB Yuan

Item Notes I. Cash flows from operating activities: Cash received from sale of goods or rendering of services Refunds of Taxes and Levies Other cash received from operating activities V (34) Sub-total of cash inflow from operating activities Cash paid for goods purchased and services rendered Cash paid to and on behalf of employees Tax payments Other cash paid for operating activities V (34) Sub-total of cash outflow from operating activities Net cash flow from operating activities II. Cash flow from investment activities: Cash received from investments Cash received from returns on investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from the disposal of subsidiaries and other business entities Other cash received from investment activities Sub-total of cash inflow from investment activities	January–May 2017 35,166,311.99 1,705,393.77 36,871,705.76 31,866,627.34 8,437,814.51 5,917,733.20 848,725.74 47,070,900.79 -10,199,195.03	January–May 2016 (Unaudited) 36,709,597.89 2,209,197.79 38,918,795.68 24,979,994.78 8,583,511.09 1,863,703.19 2,435,453.53 37,862,662.59 1,056,133.09	2016 89,832,737.39 4,162,495.52 93,995,232.91 67,018,909.19 21,382,784.34 10,391,476.96 4,098,575.36 102,891,745.85 -8,896,512.94	2015 51,304,916.15 2,673,567.90 53,978,484.05 40,163,377.45 6,376,551.06 4,318,723.56 229,246.83 51,087,898.90 2,890,585.15	2014 7,940,939.94 3,671,510.00 509,864.27 12,122,314.21 6,870,812.53 2,019,672.56 3,330,257.64 486,690.37
					12,707,433.10

					-585,118.89

– III-7 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Item Notes Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets Cash paid for investments Net cash from acquisition of subsidiaries and other business entities Other cash paid for investment activities Sub-total of cash outflow from investment activities Net cash flow from investment activities III. Cash flow from financing activities: Cash received from capital contributions Proceeds from loans Other cash received from financing activities V (34) Sub-total of cash inflow from financing activities Cash paid for repayment of loans Cash paid for dividends, profit or interest payments Other cash paid for financing activities V (34) Sub-total of cash outflow from financing activities Net cash flow from financing activities IV. Effects of changes in exchange rate on cash and cash equivalents V. Net increase in cash and cash equivalents Add: Opening balance of cash and cash equivalents VI. Closing balance of cash and cash equivalents	January–May 2017 1,219,870.34 1,219,870.34 -1,219,870.34 1,719,025.00 1,719,025.00 -1,719,025.00 -13,138,090.37 17,139,435.86 4,001,345.49	January–May 2016 (Unaudited) 905,088.80 905,088.80 905,088.80 29,143,117.00 29,143,117.00 29,109,936.80 29,109,936.80 33,180.20 184,224.49 4,569,654.10 4,753,878.59	2016 86,220,896.52 86,220,896.52 -86,220,896.52 63,000,000.00 174,689,560.48 237,689,560.48 6,123,167.06 123,879,202.20 130,002,369.26 107,687,191.22 12,569,781.76 4,569,654.10 17,139,435.86	2015 27,755,024.06 27,755,024.06 -27,755,024.06 127,375,000.00 127,375,000.00 99,375,000.00 99,375,000.00 28,000,000.00 3,135,561.09 1,434,093.01 4,569,654.10	2014 38,278,605.83
					38,278,605.83

					-38,278,605.83 39,727,317.79
					39,727,317.79




					39,727,317.79 863,593.07 570,499.94 1,434,093.01

– III-8 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

STATEMENT OF CHANGES IN OWNERS’ EQUITY

Unit: RMB Yuan

					January–May 2017
					Other				Total
		Other equity		Less: Treasury	comprehensive		Surplus	Undistributed	shareholder’s
Item	Paid-up capital	instruments	Capital reserve	stock	income	Special reserve	reserves	profit	equity
I. Closing balance of last year	133,388,980.00		6,611,020.00				3,073,858.35	66,049,052.93	209,122,911.28
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year	133,388,980.00		6,611,020.00				3,073,858.35	66,049,052.93	209,122,911.28
III. Changes in current period
(decrease is represented by
“-”)								5,892,995.70	5,892,995.70
(I) Total comprehensive income								5,892,995.70	5,892,995.70
(II) Shareholders’ contribution
and decrease in capital
1.Ordinary shares paid by
shareholders
2.Capital injected by other
equity instrument holders
3.Amount of shares payment
charged to the owners’ equity
4.Others
(III) Profit Distribution
1.Withdrawal of surplus
reserves
2.Distribution to shareholders
3.Others
(IV) Internal carry-forward of
shareholders’ equity
1.Conversion of capital reserve
into share capital
2.Increasing capital stock by
surplus reserves
3.Making up losses by surplus
reserve
4.Others
(V) Special reserves
1.Withdrawn during the period
2.Utilised during the period
(VI) Others
IV. Closing balance for the
period	133,388,980.00		6,611,020.00				3,073,858.35	71,942,048.63	215,015,906.98

– III-9 –

APPENDIX III

FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

				January–May 2016 (unaudited)	January–May 2016 (unaudited)	January–May 2016 (unaudited)
					Other				Total
		Other equity		Less: Treasury	comprehensive		Surplus	Undistributed	shareholder’s
Item	Paid-up capital	instruments	Capital reserve	stock	income	Special reserve	reserves	profit	equity
I. Closing balance of last year	37,000,000.00						80,931.05	39,112,707.24	76,193,638.29
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year	37,000,000.00						80,931.05	39,112,707.24	76,193,638.29
III. Changes in current period
(decrease is represented by
“-”)								14,100,654.98	14,100,654.98
(I) Total comprehensive income								14,100,654.98	14,100,654.98
(II) Shareholders’ contribution
and decrease in capital
1.Ordinary shares paid by
shareholders
2.Capital injected by other
equity instrument holders
3.Amount of shares payment
charged to the owners’ equity
4.Others
(III) Profit Distribution
1.Withdrawal of surplus
reserves
2.Distribution to shareholders
3.Others
(IV) Internal carry-forward of
shareholders’ equity
1.Conversion of capital reserve
into share capital
2.Increasing capital stock by
surplus reserves
3.Making up losses by surplus
reserve
4.Others
(V) Special reserves
1.Withdrawn during the period
2.Utilised during the period
(VI) Others
IV. Closing balance for the
period	37,000,000.00						80,931.05	53,213,362.22	90,294,293.27

– III-10 –

APPENDIX III

FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

					2016
					Other				Total
		Other equity		Less: Treasury	comprehensive		Surplus	Undistributed	shareholder’s
Item	Paid-up capital	instruments	Capital reserve	stock	income	Special reserve	reserves	profit	equity
I. Closing balance of last year	37,000,000.00						80,931.05	39,112,707.24	76,193,638.29
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year	37,000,000.00						80,931.05	39,112,707.24	76,193,638.29
III. Changes in current period
(decrease is represented by
“-”)	96,388,980.00		6,611,020.00				2,992,927.30	26,936,345.69	132,929,272.99
(I) Total comprehensive income								29,929,272.99	29,929,272.99
(II) Shareholders’ contribution
and decrease in capital	96,388,980.00		6,611,020.00						103,000,000.00
1.Ordinary shares paid by
shareholders	96,388,980.00		6,611,020.00						103,000,000.00
2.Capital injected by other
equity instrument holders
3.Amount of shares payment
charged to the owners’ equity
4.Others
(III) Profit Distribution							2,992,927.30	-2,992,927.30
1.Withdrawal of surplus
reserves							2,992,927.30	-2,992,927.30
2.Distribution to shareholders
3.Others
(IV) Internal carry-forward of
shareholders’ equity
1.Conversion of capital reserve
into share capital
2.Increasing capital stock by
surplus reserves
3.Making up losses by surplus
reserve
4.Others
(V) Special reserves
1.Withdrawn during the period
2.Utilised during the period
(VI) Others
IV. Closing balance for the
period	133,388,980.00		6,611,020.00				3,073,858.35	66,049,052.93	209,122,911.28

– III-11 –

APPENDIX III

FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

					2015
					Other				Total
		Other equity		Less: Treasury	comprehensive		Surplus	Undistributed	shareholder’s
Item	Paid-up capital	instruments	Capital reserve	stock	income	Special reserve	reserves	profit	equity
I. Closing balance of last year	37,000,000.00							38,384,327.79	75,384,327.79
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year	37,000,000.00							38,384,327.79	75,384,327.79
III. Changes in current period
(decrease is represented by
“-”)							80,931.05	728,379.45	809,310.50
(I) Total comprehensive income								809,310.50	809,310.50
(II) Shareholders’ contribution
and decrease in capital
1.Ordinary shares paid by
shareholders
2.Capital injected by other
equity instrument holders
3.Amount of shares payment
charged to the owners’ equity
4.Others
(III) Profit Distribution							80,931.05	-80,931.05
1.Withdrawal of surplus
reserves							80,931.05	-80,931.05
2.Distribution to shareholders
3.Others
(IV) Internal carry-forward of
shareholders’ equity
1.Conversion of capital reserve
into share capital
2.Increasing capital stock by
surplus reserves
3.Making up losses by surplus
reserve
4.Others
(V) Special reserves
1.Withdrawn during the period
2.Utilised during the period
(VI) Others
IV. Closing balance for the
period	37,000,000.00						80,931.05	39,112,707.24	76,193,638.29

– III-12 –

APPENDIX III

FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

					2014
					Other				Total
		Other equity		Less: Treasury	comprehensive		Surplus	Undistributed	shareholder’s
Item	Paid-up capital	instruments	Capital reserve	stock	income	Special reserve	reserves	profit	equity
I. Closing balance of last year	37,000,000.00							45,622,744.53	82,622,744.53
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year	37,000,000.00							45,622,744.53	82,622,744.53
III. Changes in current period
(decrease is represented by
“-”)								-7,238,416.74	-7,238,416.74
(I) Total comprehensive income								-7,238,416.74	-7,238,416.74
(II) Shareholders’ contribution
and decrease in capital
1.Ordinary shares paid by
shareholders
2.Capital injected by other
equity instrument holders
3.Amount of shares payment
charged to the owners’ equity
4.Others
(III) Profit Distribution
1.Withdrawal of surplus
reserves
2.Distribution to shareholders
3.Others
(IV) Internal carry-forward of
shareholders’ equity
1.Conversion of capital reserve
into share capital
2.Increasing capital stock by
surplus reserves
3.Making up losses by surplus
reserve
4.Others
(V) Special reserves
1.Withdrawn during the period
2.Utilised during the period
(VI) Others
IV. Closing balance for the
period	37,000,000.00							38,384,327.79	75,384,327.79

– III-13 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

**CNBM (TONGCHENG) NEW ENERGY MATERIALS COMPANY LIMITED* NOTES TO THE FINANCIAL STATEMENTS**

(All monetary amounts in these notes are expressed in RMB unless otherwise stated)

I. COMPANY PROFILE

CNBM (Tongcheng) New Energy Materials Company Limited (formerly known as Anhui Hengchang Photoelectric Glass Company Limited) (hereafter referred to as “ Tongcheng New Energy ”) is a company with limited liability established with joint contributions made by Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. (安徽華光光電材料科技集團有限公司), Anhui Hengchang Group Co., Ltd. (安徽恒昌集團有限公司) and China Triumph International Engineering Co., Ltd. (中國建材國際工程集團有限公司). On 24 December 2010, it was issued the Enterprise Business License with the registration number of 340881000046390(1-1) by Tongcheng Administration for Industry & Commerce. At its inception, the Company had a registered capital of RMB100 million, among which, Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. (安徽華光光電材料科技集團有限公司), Anhui Hengchang Group Co., Ltd. (安徽恒昌集團有限公司) and China Triumph International Engineering Co., Ltd. (中國建材國際工程集團有限公司) had contributed RMB50 million, RMB40 million and RMB10 million, respectively, representing 50%, 40% and 10% of the registered capital, respectively.

On 4 September 2013, it was resolved at the general meeting of the Company that Anhui Hengchang Group Co., Ltd. (安徽恒昌集團有限公司) was approved to transfer all its 40% equity interests in the Company to Tongcheng Construction Investment and Development Co., Ltd. (桐城市建設投資發展有限責任公司).

On 28 August 2016, it was resolved at the general meeting of the Company that Tongcheng Construction Investment and Development Co., Ltd. (桐城市建設投資發展有限責任公司) was approved to transfer all its 40% equity interests in the Company to Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. (安徽華光光電材料科技集團有限公司).

On 21 October 2016, it was resolved at the general meeting of the Company that the registered capital was approved to increase from RMB100 million to RMB133.38898 million. This increase in registered capital of RMB33.38898 million had been fully subscribed for by a new shareholder Bengbu Design & Research Institute for Glass Industry (蚌埠玻璃工業設計研究院). Upon such change in equity interests, Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. (安徽華光光電材料科技集團有限公司), China Triumph International Engineering Co., Ltd. (中國建材國際工程集團有限公司) and Bengbu Design & Research Institute for Glass Industry (蚌埠玻璃工業設計研究院) had contributed RMB90 million, RMB10 million and RMB33.38898 million, respectively, representing 67.47%, 7.5% and 25.03% of the registered capital, respectively.

Unified social credit code: 91340881567507232G Corporate domicile: North Third Road of Tongcheng Economic Development Zone, Anqing, Anhui Legal representative: Mao Lingwen Registered capital: RMB133.38898 million

Scope of business: research, development, production and sales of solar photovoltaic, photothermal materials, components and ancillary products; and self-operated and commissioned import and export business for products and technologies (other than products and technologies whose dealing, import or export is restricted or prohibited to operate by the State).

– III-14 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

II. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

Basis of preparation: the financial statements of Tongcheng New Energy have been prepared on a going-concern basis, based on actual transactions and events and in accordance with the requirements set out in the Accounting Standards for Business Enterprises – Basic Standards and specific accounting standards (the “ Accounting Standards for Business Enterprises ”) issued by the Ministry of Finance of the PRC as well as relevant disclosure requirements of the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No. 15 – General Provisions on Financial Reporting issued by the China Securities Regulatory Commission, the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Hong Kong Companies Ordinance.
Going concern: there are no events or situations of Tongcheng New Energy which would cast significant doubts on the going-concern assumption for the next 12 months commencing from the end of the reporting period.

III. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

(I) Statement on Compliance with Accounting Standards for Business Enterprises

The financial statements prepared by Tongcheng New Energy are compliant with the requirements set out in the Accounting Standards for Business Enterprises, and give a true and complete view of the financial position of Tongcheng New Energy as at 31 May 2017, 31 December 2016, 31 December 2015 and 31 December 2014 and the operating results, cash flows and other relevant information of Tongcheng New Energy for the period from January to May of 2017 and the years ended 31 December 2014, 2015 and 2016.

(II) Accounting period

The accounting year of Tongcheng New Energy is a calendar year from 1 January to 31 December.

(III) Operating cycle

The normal operating cycle of Tongcheng New Energy is 12 months in a year, and the operating cycle is determined as the classification criterion of the liquidity of assets and liabilities.

(IV) Functional currency

The functional currency of Tongcheng New Energy is Renminbi (“ RMB ”).

(V) Recognition standard for cash and cash equivalents

Cash presented in the cash flow statements of Tongcheng New Energy represents the cash on hand and deposits available for payment at any time. Cash equivalents presented in the cash flow statements refer to short-term, highly liquid investments held that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

(VI) Financial instruments

1. Classification and recognition of financial instruments

Financial instruments are classified as financial assets, financial liabilities or equity instruments. A financial asset, a financial liability or equity instruments is recognized when Tongcheng New Energy becomes a contractual party of a financial instrument.

– III-15 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

of holding the financial asset of Tongcheng New Energy and its subsidiaries. At initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities.

2. Measurement of financial instruments

Financial instruments of Tongcheng New Energy are initially recognized and measured at fair values. Subsequent measurement is dealt with based on different categories: financial assets at fair value through profit or loss, financial assets available for sale and financial liabilities at fair value through profit or loss are subsequently measured at fair values; held-to-maturity investments, loans and receivables and other financial liabilities are subsequently measured at amortized costs; derivative financial assets or liabilities linked to and which must be settled by delivery of an equity instrument (without a quoted price in an active market) whose fair value cannot be measured reliably are subsequently measured at cost. Except for financial instruments held for hedging purposes, the gains or losses arising from the changes in fair values in subsequent measurements of Tongcheng New Energy’s financial assets or financial liabilities are accounted for as follows: (i) gains or losses resulting from changes in fair values of the financial assets or financial liabilities which are measured at fair values through profit or loss are recorded as change in fair value in profit or loss; and (ii) changes in fair values of available-for-sale financial assets are recorded in other comprehensive income.

3. Recognition of the fair value of financial instruments by Tongcheng New energy

As for the financial instruments for which there is an active market, the quoted prices in the active market shall be used to determine the fair values thereof. Where there is no active market for a financial instrument, valuation techniques shall be adopted to determine its fair value. Such valuation techniques mainly include market approach, income approach and cost approach.

4. Basis of recognition and measurement of transfer of financial assets and liabilities

When Tongcheng New Energy has transferred nearly all of the risks and rewards related to the ownership of a financial asset to the transferee, or neither transferred nor retained nearly all of the risks and rewards related to the ownership of the financial asset but given up the control of the financial asset, the financial asset shall be derecognized. When the criteria for derecognition of a financial asset are met, the difference between the carrying amount of the transferred financial asset and the sum of the consideration received from the transfer and the accumulated fair value changes previously recorded in other comprehensive income are recorded in current profit or loss. If the partial transfer satisfies the criteria for derecognition, the entire carrying amount of the transferred financial asset shall proportionally be allocated between the derecognized portion and the retained portion according to their respective relative fair value.

When all or part of the current obligation to a financial liability has been terminated, the entire or part of such financial liability shall be derecognized.

– III-16 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

5. Impairment of financial assets

When an impairment loss on a financial asset carried at amortized cost has occurred, the amount of loss is provided for at the difference between the asset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of the financial asset recovered and the recovery is related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed and the amount of reversal is recognized in current profit or loss.

Where there is objective evidence that an impairment loss on available-for-sale financial assets occurs, the cumulative loss arising from the decline in fair value that had been recognized directly in equity is removed from equity and recognized in impairment loss. For an investment in debt instrument classified as available-for-sale on which impairment losses have been recognized, if, in a subsequent period, its fair value increases and the increase can be objectively related to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed and recognized in current profit or loss. For an investment in an equity instrument classified as available-for-sale on which impairment losses have been recognized, the increase in its fair value in a subsequent period is recognized in shareholders’ equity directly.

For investments in equity instruments, the specific quantitative criteria for Tongcheng New Energy to determine “serious” or “not temporary” decrease in their fair value, cost computing method, method for determining fair value at period end, and basis for determining the continuous decrease period are set out below:

Specific quantitative criterion on Decrease in period-end fair value relative to the “serious” decrease in their fair value cost has reached or exceeded 50%.

Specific quantitative criterion on “not temporary” decrease in their fair value

Decline for 12 consecutive months.

Cost computing method

Consideration of payment at acquisition (net of cash dividends declared but not yet paid or due but unclaimed interest on bonds) and the relevant transaction cost are recognized as the investment cost.

Method for determining fair value at period end

As for a financial instrument for which there is an active market, the quoted prices in the active market shall be used to recognize the fair values thereof. Where there is no active market for a financial instrument, valuation techniques shall be adopted to determine its fair value.

Basis for determining the continuous decrease period

The rebound in the continuous fall or the period with the continuous trend of fall is less than 20%. Rebound duration not more than six months is treated as continuous decrease period.

– III-17 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(VII) Receivables

The receivables of Tongcheng New Energy mainly included account receivables, long-term receivables and other receivables. If there is objective evidence that receivables have been impaired at the balance sheet date, impairment loss shall be recognized based on the differences between the carrying amount and the present value of estimated future cash flows.

1. Receivables individually significant and with provision for bad debts on an individual basis

Basis and criteria for determining whether Receivables with the book balance of over RMB5 a receivable is individually significant million
Method for making bad-debt provision for To confirm according to the difference between the individually significant receivables carrying amount and the present value of estimated future cash flows

2. Receivables for which bad debt provision is made on group basis

Basis for group determination

Nature of receivables and risk characteristics

The group with provision for bad debts based on aging analysis methods

The group without provision for bad debts

(1) Various guarantee and security deposits related to the production and operations that are fully recoverable upon maturity;
(2) Receivables due from related parties with good financial position;
(3) Other balances that have positive evidence indicating they are fully recoverable.

Methods for making bad-debt provision on group basis

The group with provision for bad debts Aging analysis method based on aging analysis methods

The group without provision for bad debts No provision for bad debts will be made

In the groups, the provision for bad debts based on aging analysis methods set out as follows:

– III-18 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

	Provision rate for
	accounts	Provision rate for
Age	receivable	other receivables
	(%)	(%)
Within 1 year (including 1 year)	0	0
1–2 years	30	30
2–3 years	50	50
3–4 years	100	100
4–5 years	100	100
Over 5 years	100	100

3. Individually insignificant receivables with provision for bad debts on an individual basis

Basis for individual provision

Concrete evidence indicates that there is obvious difference in recoverability.

Provision method Bad-debt provision is made on individual basis, and full provisions are made for receivables due from related parties that are estimated to be fully unrecoverable.

(VIII) Inventories

1. Classification

2. Measurement of delivered inventories

Upon delivery of inventories, the actual cost of such inventories will be determined by using weighted average method.

3. Provision for impairment

At the end of each reporting period, after a thorough inspection of the inventories, provision for decline in value of inventories will be made and adjusted at the lower of the cost and the net realizable value. Net realizable value of held-for-sale commodity stocks, such as finished goods, goods in stock and held-for-sale raw materials, during the normal course of production and operation, shall be determined by their estimated selling prices less the related selling expenses and taxes; the net realizable value of material inventories, which need to be processed, during the normal course of production and operation, shall be determined by the amount after deducting the estimated cost of completion, estimated selling expenses and relevant taxes from the estimated selling price of finished goods; the net realizable value of inventories held for execution of sales contracts or labor contracts shall be calculated on the ground of the contracted price. If an enterprise holds more inventories than the quantity stipulated in the sales contract, the net realizable value of the exceeding part shall be calculated on the ground of general selling price.

Provision for decline in value of inventories is made on an item-by-item basis at the end of each reporting period. For large quantity and low value items of inventories, provision may be made based on categories of inventories; for items of inventories relating to a product line that is produced and marketed in the same geographical area and with the same or similar end uses or purposes, which cannot be measured separately from other items in that product line, provision for decline in value of inventories may be determined on an aggregate basis.

– III-19 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Should the factors causing any write-down of the inventories no longer exist, the amount of write-down will be recovered and be reversed from the provision for diminution in value of inventories that has been made. The reversed amount will be included in the current profits and losses.

4. Inventory system

Tongcheng New Energy adopts the perpetual inventory system.

5. Amortization of low-value consumables and packaging materials

Low-value consumables are amortized using the one-off write-off method. Packaging materials and other revolving materials are amortized using the equal-split amortization method.

(IX) Fixed assets

1. Recognition conditions of fixed assets

2. Classification and depreciation methods of fixed assets

The fixed assets of Tongcheng New Energy are mainly classified as buildings and structures, machinery and equipment, electronic equipment, transportation tools, etc. Depreciation is provided based upon the straight-line method. Tongcheng New Energy determines the useful life and estimates the net residual value of a fixed asset according to the nature and use pattern of the fixed asset. Tongcheng New Energy, at the end of each year, has a review of the useful life, expected residual value and the depreciation method of the fixed assets. If it differs from its previous estimate, adjustment will be made accordingly. Tongcheng New Energy provides depreciation for all its fixed assets other than fully depreciated fixed assets that are still in use and land individually accounted for.

	Estimated	Estimated net	Annual
Category	useful life	residual value rate	depreciation rate
	(years)	(%)	(%)
Buildings and structures	30–50	3–5	1.90–3.23
Machinery and equipment	4–28	3–5	3.39–24.25
Electronic equipment	4–10	3–5	9.50–24.25
Transportation tools	6–12	3–5	7.92–16.17
Other equipment	4–28	3–5	3.39–24.25

(X) Construction in progress

There are two types of construction in progress for Tongcheng New Energy: self-construction and sub-contracting construction. Construction in progress is transferred to fixed assets when the project is completed and ready for its intended use. A fixed asset is ready for intended use if any of the following criteria is met: the construction of the fixed asset (including installation) has been completed or substantially completed; the fixed asset has been put to trial production or trial operation and it is evidenced that the asset can operate normally or produce steadily qualified products; or the result of trial operation proves that it can run or operate normally; little or no further expenditure will be incurred for construction of the fixed asset; or the fixed asset constructed has achieved or almost achieved the requirement of design or contract.

– III-20 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XI) Borrowing costs

1. Recognition principle for capitalization of borrowing costs

Tongcheng New Energy’s borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized and included in the cost of the asset. Other borrowing costs are recognized as expenses when incurred through profit and loss account. Qualifying assets include fixed assets, investment properties and inventories that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.

2. Calculation of amount to be capitalized

The capitalization period refers to the period beginning from the commencement of capitalizing borrowing costs to the date of ceasing capitalization, excluding the period of suspension of capitalization. Where the acquisition and construction or production of a qualifying asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.

For designated borrowings, the capitalized amount shall be the actual interest expense incurred for the designated borrowings, less the interest income from the unused funds of the designated borrowings or investment income from the temporary investments; and for general borrowings, the capitalized amount shall be the weighted average of the accumulated expenditure exceeding the capital expenditure from designated borrowings times the capitalization rate of the general borrowings occupied (i.e. the weighted average rate of the general borrowings); and for borrowings with discount or premium, the discount or premium is amortized over the term of the borrowings to adjust the interest in every period using effective interest rate method.

(XII) Intangible assets

1. Measurement of intangible assets

Subsequent measurement of Tongcheng New Energy’s intangible assets: Intangible assets with finite useful lives are amortized on a straight-line basis; at the end of each year, the useful lives and amortization policy are reviewed, and adjusted accordingly if there are differences from original estimates. Intangible assets with indefinite useful lives are not amortized and the useful lives are reviewed at the end of each year. If there is objective evidence that the useful life of an intangible asset is finite, the intangible asset is amortized using the straight line method according to the estimated useful life.

– III-21 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

2. Determination basis of infinite useful life

An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for Tongcheng New Energy or it has no definite useful life. The determination basis of intangible assets with infinite useful lives: derived from contractual rights or other legal rights and there are no explicit years of use stipulated in the contract or laws and regulations; the period over which the asset is expected to generate economic benefits for Tongcheng New Energy still could not be estimated after considering the industrial practices or relevant expert opinion.

3. Basis for research and development phases for internal research and development project and basis for capitalization of expenditure incurred in development stage.

As for an internal research and development project, expenditure incurred in the research phase is recognized in profit or loss in the period as incurred. Expenses incurred in the development stage are recognized as intangible assets if all of the following conditions are met: (1) the technical feasibility of completing the intangible asset so that it will be available for use or for sale; (2) the intention to complete the intangible asset for use or for sale; (3) the intangible asset will generate economic benefits including there is evidence that the products produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the intangible asset; (4) the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; (5) the expenditures attributable to the development of the intangible asset could be reliably measured.

(XIII) Impairment of long-term assets

Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period.

– III-22 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XIV) Long-term deferred expenses

Long-term deferred expenses of Tongcheng New Energy are expenses which have been paid but the benefit period is over one year (not including one year). Long-term deferred expenses are amortized over the benefit period. If a long-term deferred expense cannot benefit the future accounting period, the unamortized balance shall be transferred to current profit or loss.

(XV) Staff remuneration

1. Short-term remuneration

During the accounting period in which an employee provides service for Tongcheng New Energy, short-term remuneration incurred is recognized as liabilities and charged to profit or loss, or if otherwise required or allowed by other accounting standards, to the related costs of assets for the current period. At the time of actual occurrence, Tongcheng New Energy’s employee benefits are recorded into the profits and losses of the current year or assets associated costs according to the actual amount. The non-monetary employee benefits are measured at fair value. Regarding to the medical insurance, work-related injury insurance, maternity insurance and other social insurances, housing provident fund and labor union expenditure and personnel education that Tongcheng New Energy paid for employees, Tongcheng New Energy should recognize corresponding staff remuneration payables according to the appropriation basis and proportion as stipulated by relevant requirements and recognize the corresponding liabilities and include these expenses in current profit and loss or recognized as respective asset costs.

2. Post-employment benefits

During the accounting period for which employees provide their service, Tongcheng New Energy shall recognize the amounts payable as liabilities calculated based on the defined contribution plans, and shall recognize it in current profit and loss or the relevant asset cost. According to the formula confirmed by the expected accumulated welfare unit method, the welfare obligations generated in defined benefit plans shall be attributable to the period for which employees provide their service and shall be recognized in current profit and loss or the relevant asset cost.

3. Termination benefits

When Tongcheng New Energy provides employees with termination benefits, the staff remuneration liabilities arising from termination benefits are recognized and recorded in current profit and loss whichever of the following is earlier: when Tongcheng New Energy cannot unilaterally revoke such termination benefits provided due to termination of labor relationship plan or layoff proposal; when Tongcheng New Energy recognizes such cost or expenses associated with the restructuring involving the payment of termination benefits.

4. Other long-term employee benefits

Tongcheng New Energy provides other long-term employee benefits to its employees. Those falling within the scope of the defined contribution plans are accounted for pursuant to the requirements of the defined contribution plans. In addition, net liabilities or net assets of other long-term employee benefits are recognized and measured pursuant to the relevant requirements of the defined benefit plans.

– III-23 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XVI) Estimated liability

If an obligation in relation to contingency is the present obligation of Tongcheng New Energy and the performance of such obligation is likely to lead to the outflow of economic benefits and its amount can be reliably measured, such obligation shall be recognized as accrued liability. Initial measurement should be made by Tongcheng New Energy in accordance with the best appraisable amount of expenses to fulfill relevant current obligation. The best appraisable amount should be a middle value if the expense occurred in a continuous period in which kinds of results occurred at the same possibility. If there are lots of projects, the best appraisable amount should be based on kinds of results and relevant possibility.

At the balance sheet date, Tongcheng New Energy reviews the carrying amount of estimated liability and an adjustment is necessary according to the current best appraisable amount if there is obvious evidence that carrying amount cannot fairly represent the best appraisable amount.

(XVII) Revenue

1. Sales of goods

Revenue from the sale of goods shall be recognized at the amount received or receivable from buyers based on contractual or agreed prices, only when all of the following conditions are satisfied: (i) the significant risks and rewards of ownership of the goods have been passed to the buyer; (ii) Tongcheng New Energy retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (iii) the amount of revenue can be measured reliably; (iv) it is probable that the associated economic benefits will flow to the enterprise; and (v) the associated costs incurred or to be incurred can be measured reliably.

Specific recognition method for revenue: Upon delivery of goods, receipt by customers upon acceptance, and invoice or bill of lading or other relevant documents being delivered to customers who purchase goods, the sales revenue is realized.

2. Provision of services

At the balance sheet date, when the outcome of a transaction involving the rendering of services can be estimated reliably, revenue from provision of services shall be recognized using the percentage of completion method. The progress of completion of the transaction is recognized by Tongcheng New Energy by reference to ratio of the actual cost with respect to the estimated total cost. At the balance sheet date, when the outcome of the transaction involving the rendering of services cannot be estimated reliably, it shall be dealt with in the following ways: (i) if the cost of services incurred is expected to be compensated, the revenue from the rendering of services is recognized to the extent of actual cost incurred to date, and the relevant cost is transferred to cost of service; or (ii) if the cost of services incurred is not expected to be compensated, the cost incurred should be included in current profit or loss, and no revenue from the rendering of services may be recognized.

3. Abalienating the right to use an asset

When the inflow of economic benefits from the abalienation of assets is probable and the income can be measured reliably, the income from abalienating the right to use an asset is recognized.

– III-24 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XVIII) Government grants

1. Accounting treatment for government grants related to assets

The government grant that is obtained by Tongcheng New Energy and is used for acquisition or construction or forming long-term assets in other ways shall be recognized as the government grants related to assets. Government grants related to an asset shall be recognized as deferred income. Commencing from the day on which the relevant assets are available for use, deferred income shall be recorded into profits and loss for the current period on an even and amortized basis according to the estimated useful life of the relevant assets.

2. Accounting treatment for government grants related to income

The governmental grants other than that is related to asset shall be recognized as the government grants related to income. Government grants related to income shall be treated as follows: those used to compensate relevant expenses or losses to be incurred by the enterprise in subsequent periods are recognized as deferred income and recorded in profit or loss for the period when such expenses are recognized; those used to compensate relevant expenses or losses that have been incurred by the enterprise are recorded directly in current profit or loss.

Specific standards for differentiating government grants related to asset from that related to income

Where there is no express regulation on subsidy object in government documents, the criteria for differentiating government grants related to asset from that related to income is as below: (i) government grant subject to a certain project shall be separated according to the proportion of expenditure budget and capitalization budget, and the proportion shall be reviewed and modified if necessary on the balance sheet date; and (ii) government grants shall be categorized as related to income if its usage is just subject to general statement and is not designated for any specific project in relevant document.

(XIX) Deferred income tax assets and deferred income tax liabilities

Deferred income tax assets or deferred income tax liabilities are recognized based on the difference between the carrying amounts of the assets or liabilities and their tax bases (or, for items not recognized as assets or liabilities but whose tax base can be determined under tax laws, such tax base can be determined as their difference), and are calculated at the tax rates expected to apply to the period in which the assets are recovered or the liabilities are settled.
Deferred income tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. At the balance sheet date, deferred income tax assets unrecognized in prior periods are recognized to the extent that there is obvious evidence that it has become probable that sufficient taxable profit will be available in subsequent periods against which the deductible temporary differences can be utilized. The carrying amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefit of the deferred tax asset to be utilized.

– III-25 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XX) Leases

Accounting treatment for operating leases: rental expenses for operating leases shall be recorded into the cost of the relevant asset or current profit or loss on a straight-line basis during the lease term.
Accounting treatment for financing leases: the lower of the fair value of the leased assets and the present value of the minimum lease payment shall be taken as the book value of the leased assets. The difference of the book value of the assets under lease and the minimum lease payment shall be the unrecognized financing expenses and shall be amortized using effective interest rate method over the lease term. The balance derived from deducting the unrecognized financing expenses from the minimum lease payment shall be presented as long-term payables.

(XXI) Explanation on changes in significant accounting policies and accounting estimates

Nil

IV. TAXES

(I) Major taxes and tax rates

Type	Tax basis	Tax rate
Value added tax	Taxable revenue	17%
Urban maintenance and construction tax	Turnover tax payable	7%
Enterprise income tax	Taxable income	25%

(II) Major preferential tax treatment and approvals

Nil

V. NOTES TO SIGNIFICANT ITEMS OF THE FINANCIAL STATEMENTS

(I) Cash and cash equivalents

Item Cash Deposits at banks Total	31 May 2017 30,075.62 3,971,269.87 4,001,345.49	31 December 2016 7,087.97 17,132,347.89 17,139,435.86	31 December 2015 24,933.82 4,544,720.28 4,569,654.10	31 December 2014 26,580.88 1,407,512.13
				1,434,093.01

(II) Notes receivable

Item Bank acceptances Trade acceptances Letters of credit Total	31 May 2017 19,960,036.60 4,000,000.00 23,960,036.60	31 December 2016 17,920,000.00 17,920,000.00	31 December 2015 7,954,898.52 5,000,000.00 12,954,898.52	31 December 2014 4,610,000.00 1,000,000.00 4,104,089.18
				9,714,089.18

– III-26 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Note: As at 31 May 2017, notes receivable that have been endorsed but not matured amounted to RMB55,741,815.67, and notes receivable that have been discounted or endorsed but not yet matured are derecognized.

(III) Accounts receivable

1. Accounts receivable by category

Item Accounts receivable Less: provision for bad debts Net accounts receivable	31 May 2017 115,880,068.62 2,446,818.90 113,433,249.72	31 December 2016 87,838,039.32 2,701,295.59 85,136,743.73	31 December 2015 70,837,675.73 616,046.98 70,221,628.75	31 December 2014 27,690,494.23 764,806.87
				26,925,687.36

Under normal conditions, Tongcheng New Energy granted its customers a credit term ranging from 3 to 6 months generally.

Aging analysis of the accounts receivable based on their recording dates sets out below:

Aging Within 1 year 1 to 2 years 2 to 3 years 3 to 4 years Total	31 May 2017 110,219,971.68 2,996,404.40 2,231,561.95 432,130.59 115,880,068.62	31 December 2016 79,513,053.17 6,751,322.96 487,564.20 1,086,098.99 87,838,039.32	31 December 2015 68,651,437.15 661,565.59 1,524,672.99 70,837,675.73	31 December 2014 24,451,619.59 3,238,874.64
				27,690,494.23

Accounts receivable by category

Category Accounts receivable with significant single amount and individual provision for bad debts Accounts receivable with provision for bad debts made on group basis Accounts receivable with insignificant single amount and individual provision for bad debts Total	Carrying Amount 115,880,068.62 115,880,068.62	31 May 2017 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 2,446,818.90 2.11 100.00 2,446,818.90 2.11	31 May 2017 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 2,446,818.90 2.11 100.00 2,446,818.90 2.11
			2.11

– III-27 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Category Accounts receivable with significant single amount and individual provision for bad debts Accounts receivable with provision for bad debts made on group basis Account receivables with insignificant single amount and individual provision for bad debts Total Category Accounts receivable with significant single amount and individual provision for bad debts Accounts receivable with provision for bad debts made on group basis Accounts receivable with insignificant single amount and individual provision for bad debts Total Category Accounts receivable with significant single amount and individual provision for bad debts Accounts receivable with provision for bad debts made on group basis Accounts receivable with insignificant single amount and individual provision for bad debts Total	31 December 2016 Carrying amount Provision for bad debts Amount Ratio Amount Provision ratio (%) (%) 87,838,039.32 100.00 2,701,295.59 3.08 87,838,039.32 100.00 2,701,295.59 3.08 31 December 2015 Carrying amount Provision for bad debts Amount Ratio Amount Provision ratio (%) (%) 70,837,675.73 100.00 616,046.98 0.87 70,837,675.73 100.00 616,046.98 0.87 31 December 2014 Carrying amount Provision for bad debts Amount Ratio Amount Provision ratio (%) (%) 27,690,494.23 100.00 764,806.87 2.76 27,690,494.23 100.00 764,806.87 2.76	31 December 2016 Carrying amount Provision for bad debts Amount Ratio Amount Provision ratio (%) (%) 87,838,039.32 100.00 2,701,295.59 3.08 87,838,039.32 100.00 2,701,295.59 3.08 31 December 2015 Carrying amount Provision for bad debts Amount Ratio Amount Provision ratio (%) (%) 70,837,675.73 100.00 616,046.98 0.87 70,837,675.73 100.00 616,046.98 0.87 31 December 2014 Carrying amount Provision for bad debts Amount Ratio Amount Provision ratio (%) (%) 27,690,494.23 100.00 764,806.87 2.76 27,690,494.23 100.00 764,806.87 2.76
		2.76

– III-28 –

FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

APPENDIX III

(1) Accounts receivable with provision for bad debts made on group basis

(i) Accounts receivable with provision for bad debts based on aging analysis

Aging Within 1 year 1–2 years 2–3 years 3–4 years Total Aging Within 1 year 1–2 years 2–3 years Total	Carrying amount 66,447,835.49 2,996,357.76 2,231,561.95 432,130.59 72,107,885.79 31 Carrying amount 48,424,762.73 661,565.59 835,154.59 49,921,482.91	31 May 2017 Provision ratio Provision for bad debts (%) 30.00 898,907.33 50.00 1,115,780.98 100.00 432,130.59 3.39 2,446,818.90 December 2015 Provision ratio Provision for bad debts (%) 30.00 198,469.68 50.00 417,577.30 1.23 616,046.98	31 Carrying amount 46,175,026.84 6,751,276.32 487,564.20 432,130.59 53,845,997.95 31 Carrying amount 15,579,230.85 2,549,356.24 18,128,587.09	December 2016 Provision ratio Provision for bad debts (%) 30.00 2,025,382.90 50.00 243,782.10 100.00 432,130.59 5.02 2,701,295.59 December 2014 Provision ratio Provision for bad debts (%) 30.00 764,806.87 4.22 764,806.87	December 2016 Provision ratio Provision for bad debts (%) 30.00 2,025,382.90 50.00 243,782.10 100.00 432,130.59 5.02 2,701,295.59 December 2014 Provision ratio Provision for bad debts (%) 30.00 764,806.87 4.22 764,806.87
					764,806.87

(ii) Accounts receivable with provision for bad debts made on other group-based method

Name of group The group with no provision made for bad debts (related party) Total Name of group The group with no provision made for bad debts (related party) Total	Carrying amount 43,772,182.83 43,772,182.83 31 Carrying amount 20,916,192.82 20,916,192.82	31 May 2017 Provision ratio Provision for bad debts (%) December 2015 Provision ratio Provision for bad debts (%)	31 Carrying amount 33,992,041.37 33,992,041.37 31 Carrying amount 9,561,907.14 9,561,907.14	December 2016 Provision ratio Provision for bad debts (%) December 2014 Provision ratio Provision for bad debts (%)	December 2016 Provision ratio Provision for bad debts (%) December 2014 Provision ratio Provision for bad debts (%)

– III-29 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

2. Top five debtors in terms of closing balances as at 31 May 2017

Company name Jetion Solar (China) Co., Ltd. (中建材浚鑫科技有限公司) Jiangsu Seraphim Solar System Co., Ltd. (江蘇賽拉弗光伏系統有限公司) Hangzhou Sunny Energy Science & Technology Co., Ltd. Tonglu Branch (杭州桑尼能源科技股份有限公司桐廬分公司) Zhangjiagang Wanshengda Trading Co., Ltd (張家港市萬盛達貿易有限公司) AVIC Sanxin Solar Photoelectric Glass Co., Ltd.* (中航三鑫太陽能光電玻璃有限公司) Total	Closing balance 37,824,907.28 18,261,257.28 15,139,525.29 6,722,957.25 5,434,701.01 83,383,348.11	As a percentage of the total accounts receivable (%) 32.64 15.76 13.06 5.80 4.69
		71.95

(IV) Prepayments

1. Aging analysis of prepayments

Aging Within 1 year 1–2 years 2–3 years Total Aging Within 1 year 1–2 years 2–3 years Above 3 years Total	31 May 2017 Amount Ratio (%) 939,079.80 95.49 44,349.91 4.51 983,429.71 100.00 31 December 2015 Amount Ratio (%) 490,113.77 97.41 13,040.00 2.59 503,153.77 100.00	31 December 2016 Amount Ratio (%) 1,341,361.60 98.51 17,750.00 1.30 2,640.00 0.19 1,361,751.60 100.00 31 December 2014 Amount Ratio (%) 1,061,719.01 99.14 9,180.00 0.86 1,070,899.01 100.00	31 December 2016 Amount Ratio (%) 1,341,361.60 98.51 17,750.00 1.30 2,640.00 0.19 1,361,751.60 100.00 31 December 2014 Amount Ratio (%) 1,061,719.01 99.14 9,180.00 0.86 1,070,899.01 100.00
			100.00

– III-30 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

2. Top five debtors in terms of closing balances of prepayments as at 31 May 2017

Company name Anhui Natural Gas Development Co., Ltd (安徽省天然氣開發股份有限公司) Anhui Shengke New Energy Technology Co., Ltd (安徽聖科新能源科技有限公司) Anhui Sixing Construction & Installation Engineering Co., Ltd (安徽四星建築安裝工程有限責任公司) Bengbu Zhixiang Smart Decoration Technology Co., Ltd (蚌埠治翔智能裝飾科技有限公司) China Triumph Bengbu Engineering and Technology Company Limited* (蚌埠凱盛工程技術有限公司) Total	Closing balance (%) 550,688.38 92,757.72 80,700.00 67,216.00 44,000.00 835,362.10	As a percentage of the total prepayments 56.00 9.43 8.21 6.83 4.47
		84.94

(V) Other receivables

1. Other receivables

Category Other receivables with significant single amount and individual provision for bad debts Other receivable with provision for bad debts made on group basis Other receivables with insignificant single amount and individual provision for bad debts Total	Carrying Amount 301,526.15 301,526.15	31 May 2017 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 91,060.00 30.20 100.00 91,060.00 30.20	31 May 2017 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 91,060.00 30.20 100.00 91,060.00 30.20
			30.20

– III-31 –

FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

APPENDIX III

Category Other receivables with significant single amount and individual provision for bad debts Other receivable with provision for bad debts made on group basis Other receivables with insignificant single amount and individual provision for bad debts Total Category Other receivables with significant single amount and individual provision for bad debts Other receivable with provision for bad debts made on group basis Other receivables with insignificant single amount and individual provision for bad debts Total Category Other receivables with significant single amount and individual provision for bad debts Other receivable with provision for bad debts made on group basis Other receivables with insignificant single amount and individual provision for bad debts Total	Carrying Amount 235,891.66 235,891.66 Carrying Amount 344,291.15 344,291.15 Carrying Amount 747,770.14 747,770.14	31 December 2016 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 87,074.00 36.91 100.00 87,074.00 36.91 31 December 2015 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 67,085.60 19.49 100.00 67,085.60 19.49 31 December 2014 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 54,852.00 7.34 100.00 54,852.00 7.34	31 December 2016 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 87,074.00 36.91 100.00 87,074.00 36.91 31 December 2015 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 67,085.60 19.49 100.00 67,085.60 19.49 31 December 2014 amount Provision for bad debts Ratio Amount Provision ratio (%) (%) 100.00 54,852.00 7.34 100.00 54,852.00 7.34
			7.34

– III-32 –

FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

APPENDIX III

(1) Other receivables with provision for bad debts made on group basis

(i) Other receivables with provision for bad debts based on aging analysis

Aging Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Above 5 years Total Aging Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Total	Carrying amount 122,015.17 5,160.00 15,700.00 7,912.00 28,000.00 45,750.00 224,537.17 31 Carrying amount 247,649.15 20,552.00 30,340.00 45,750.00 344,291.15	31 May 2017 Provision ratio Provision for bad debts (%) 30.00 1,548.00 50.00 7,850.00 100.00 7,912.00 100.00 28,000.00 100.00 45,750.00 40.55 91,060.00 December 2015 Provision ratio Provision for bad debts (%) 30.00 6,165.60 50.00 15,170.00 100.00 45,750.00 19.49 67,085.60	31 Carrying amount 136,889.66 2,360.00 20,552.00 30,340.00 45,750.00 235,891.66 31 Carrying amount 671,680.14 30,340.00 45,750.00 747,770.14	December 2016 Provision ratio Provision for bad debts (%) 30.00 708.00 50.00 10,276.00 100.00 30,340.00 100.00 45,750.00 36.91 87,074.00 December 2014 Provision ratio Provision for bad debts (%) 30.00 9,102.00 100.00 45,750.00 7.34 54,852.00	December 2016 Provision ratio Provision for bad debts (%) 30.00 708.00 50.00 10,276.00 100.00 30,340.00 100.00 45,750.00 36.91 87,074.00 December 2014 Provision ratio Provision for bad debts (%) 30.00 9,102.00 100.00 45,750.00 7.34 54,852.00
					54,852.00

(ii) Other accounts receivable with no provision for bad debts

Name of group Group with no provision for bad debts (related party) Total	Carrying amount 76,988.98 76,988.98	31 May 2017 Provision ratio (%)	Provision for bad debts	31 Carrying amount	December 2016 Provision ratio Provision for bad debts (%)	December 2016 Provision ratio Provision for bad debts (%)

– III-33 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

2. Other accounts receivable categorized by nature

Nature Petty cash Advances Other current accounts Total	31 May 2017 61,867.42 42,223.75 197,434.98 301,526.15	31 December 2016 88,259.72 42,185.94 105,446.00 235,891.66	31 December 2015 209,311.11 35,978.04 99,002.00 344,291.15	31 December 2014 621,664.77 29,463.37 96,642.00
				747,770.14

3. Top five debtors in terms of closing balances of other accounts receivable as at 31 May 2017

Name of debtor Nature Bengbu Design & Research Institute for Glass Industry (蚌埠玻璃工業設計研究院) Current accounts Yixing Nuoming Heat and Fire Resistance Material Company Limited (宜興市諾明高溫耐火材料有限公司) Current accounts Project Department Current accounts Pension insurance Withheld payments Shanghai Cenxin Roller Manufacturing Factory* (上海岑信製輥廠) Current accounts Total	Closing balance Aging 76,988.98 Within 1 year 45,750.00 Above 5 years 31,696.00 0-4years 30,916.72 Within 1 year 28,000.00 4-5years 213,351.70	As a percentage of the total closing balance of other receivables (%) 25.53 15.17 10.51 10.25 9.29 70.75	Balance of provision for bad debts 45,750.00 17,310.00 28,000.00
			91,060.00

– III-34 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(VI) Inventories

1. Category of inventories

Category Raw materials Work in progress Goods in stock Revolving materials (packing materials, low-value consumables, etc.) Total Category Raw materials Work in progress Goods in stock Revolving materials (packing materials, low-value consumables, etc.) Total Category Raw materials Work in progress Goods in stock Revolving materials (packing materials, low-value consumables, etc.) Total	Carrying amount 8,515,424.67 2,369,188.30 7,194,812.68 7,573.81 18,086,999.46 Carrying amount 9,744,114.75 4,050,277.77 15,371,833.98 6,663.93 29,172,890.43 Carrying amount 6,745,736.73 2,464,310.64 3,774,521.02 7,483.27 12,992,051.66	31 May 2017 Provision for depreciation 69,176.43 69,176.43 31 December 2016 Provision for depreciation 143,292.84 143,292.84 31 December 2015 Provision for depreciation	Book value 8,515,424.67 2,369,188.30 7,125,636.25 7,573.81
			18,017,823.03

			Book value 9,744,114.75 4,050,277.77 15,228,541.14 6,663.93
			29,029,597.59

			Book value 6,745,736.73 2,464,310.64 3,774,521.02 7,483.27
			12,992,051.66

– III-35 –

FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

APPENDIX III

31 December 2014

Category Carrying amount Provision for depreciation Raw materials 6,483,301.74 Work in progress 1,303,776.97 Goods in stock 14,423,370.08 Revolving materials (packing materials, low-value consumables, etc.) 33,603.74 Total 22,244,052.53 (VII) Other current assets Item 31 May 2017 31 December 2016 31 December 2015 Input tax withheld 1,593,532.21 2,618,373.40 15,462,477.32 Total 1,593,532.21 2,618,373.40 15,462,477.32		Book value 6,483,301.74 1,303,776.97 14,423,370.08 33,603.74
		22,244,052.53

		31 December 2014 20,508,322.82
		20,508,322.82

(VIII) Fixed assets

*Fixed assets*
			Transportation
Item	Buildings	Machinery	equipment	Others	Total
I. Original book value
1. As at 1 January 2015		733,889.85	698,100.65	514,311.18	1,946,301.68
2. Increase for the period	118,409,499.57	155,704,900.16	-	83,030.47	274,197,430.20
(1) Purchase		365,837.61		83,030.47	448,868.08
(2) Transfers from
construction in progress	118,409,499.57	155,339,062.55			273,748,562.12
3. Decrease for the period
4. As at 31 December 2015	118,409,499.57	156,438,790.01	698,100.65	597,341.65	276,143,731.88
II. Accumulated depreciation
1. As at 1 January 2015		78,682.46	214,368.20	117,282.85	410,333.51
2. Increase for the period	794,060.80	2,964,288.85	82,848.12	106,124.34	3,947,322.11
(1) Provision	794,060.80	2,964,288.85	82,848.12	106,124.34	3,947,322.11
3. Decrease for the period
4. As at 31 December 2015	794,060.80	3,042,971.31	297,216.32	223,407.19	4,357,655.62
III. Provision for impairment
IV. Book value
1. As at 1 January 2015		655,207.39	483,732.45	397,028.33	1,535,968.17
2. As at 31 December 2015	117,615,438.77	153,395,818.70	400,884.33	373,934.46	271,786,076.26

– III-36 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

			Transportation
Item	Buildings	Machinery	equipment	Others	Total
I. Original book value
1. As at 1 January 2016	118,409,499.57	156,438,790.01	698,100.65	597,341.65	276,143,731.88
2. Increase for the period	302,529.92	2,135,567.91	268,794.87	166,000.00	2,872,892.70
(1) Purchase		2,135,567.91	268,794.87	166,000.00	2,570,362.78
(2) Transfers from
construction in progress	302,529.92				302,529.92
3. Decrease for the period	63,473.57			26,320.00	89,793.57
(1) Disposal or retirement				26,320.00	26,320.00
(2) Others	63,473.57				63,473.57
4. As at 31 December 2016	118,648,555.92	158,574,357.92	966,895.52	737,021.65	278,926,831.01
II. Accumulated depreciation
1. As at 1 January 2016	794,060.80	3,042,971.31	297,216.32	223,407.19	4,357,655.62
2. Increase for the period	3,212,624.55	11,528,191.05	114,871.56	116,899.33	14,972,586.49
(1) Provision	3,212,624.55	11,528,191.05	114,871.56	116,899.33	14,972,586.49
3. Decrease for the period				7,069.62	7,069.62
(1) Disposal or retirement				7,069.62	7,069.62
4. As at 31 December 2016	4,006,685.35	14,571,162.36	412,087.88	333,236.90	19,323,172.49
III. Provision for impairment
IV. Book value as at 31
December 2016	114,641,870.57	144,003,195.56	554,807.64	403,784.75	259,603,658.52
			Transportation
Item	Buildings	Machinery	equipment	Others	Total
I. Original book value
1. As at 1 January 2017	118,648,555.92	158,574,357.92	966,895.52	737,021.65	278,926,831.01
2. Increase for the period	20,460.00	20,776,243.55		3,000.00	20,799,703.55
(1) Purchase		19,739,829.04		3,000.00	19,742,829.04
(2) Transfers from
construction in progress	20,460.00	1,036,414.51			1,056,874.51
3. Decrease for the period		12,298,249.52			12,298,249.52
(1) Transfer into construction
in progress		12,298,249.52			12,298,249.52
4. As at 31 May 2017	118,669,015.92	167,052,351.95	966,895.52	740,021.65	287,428,285.04
II. Accumulated depreciation
1. As at 1 January 2017	4,006,685.35	14,571,162.36	412,087.88	333,236.90	19,323,172.49
2. Increase for the period	1,324,730.92	4,955,046.82	61,130.75	45,099.85	6,386,008.34
(1) Provision	1,324,730.92	4,955,046.82	61,130.75	45,099.85	6,386,008.34
3. Decrease for the period		1,039,667.72			1,039,667.72
(1) Transfer to construction in
progress		1,039,667.72			1,039,667.72
4. As at 31 May 2017	5,331,416.27	18,486,541.46	473,218.63	378,336.75	24,669,513.11
III. Provision for impairment
IV. Book value as at 31 May
2017	113,337,599.65	148,565,810.49	493,676.89	361,684.90	262,758,771.93

– III-37 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(IX) Construction in progress

1. Construction in progress

Item Carrying amount Testing center 1,777,649.57 Further processing production line 1# 12,791,036.41 Further processing production line 4# 240,000.00 Total 14,808,685.98 Item Carrying amount 7 million m2/a photovoltaic cover and further processing project Total Intangible assets Item I. Original book value 1. As at 1 January 2015 2. Increase for the period (1) Purchase 3. Decrease for the period 4. As at 31 December 2015 II. Accumulated amortization 1. As at 1 January 2015 2. Increase for the period (1) Provision 3. Decrease for the period 4. As at 31 December 2015 III. Provision for impairment IV. Book value 1. As at 31 December 2014 2. As at 31 December 2015	31 May 2017 31 December 2016 Provision for impairment Book value Carrying amount Provision for impairment Book value 1,777,649.57 1,728,535.21 1,728,535.21 12,791,036.41 240,000.00 14,808,685.98 1,728,535.21 1,728,535.21 31 December 2015 31 December 2014 Provision for impairment Book value Carrying amount Provision for impairment Book value 213,559,520.01 213,559,520.01 213,559,520.01 213,559,520.01 Land use rights Non-patent technology Software Total 51,880,051.60 12,316,037.70 64,196,089.30 55,555.56 55,555.56 55,555.56 55,555.56 51,880,051.60 12,316,037.70 55,555.56 64,251,644.86 3,692,073.60 3,578,105.34 7,270,178.94 1,037,601.00 1,231,603.77 4,629.63 2,273,834.40 1,037,601.00 1,231,603.77 4,629.63 2,273,834.40 4,729,674.60 4,809,709.11 4,629.63 9,544,013.34 48,187,978.00 8,737,932.36 56,925,910.36 47,150,377.00 7,506,328.59 50,925.93 54,707,631.52	Book value 1,728,535.21
		1,728,535.21

		Book value 213,559,520.01
		213,559,520.01

(X) Intangible assets

– III-38 –

FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

APPENDIX III

		Non-patent
Item	Land use rights	technology	Software	Total
I. Original book value
1. As at 1 January 2016	51,880,051.60	12,316,037.70	55,555.56	64,251,644.86
2. Increase for the period
3. Decrease for the period
4. As at 31 December 2016	51,880,051.60	12,316,037.70	55,555.56	64,251,644.86
II. Accumulated amortization
1. As at 1 January 2016	4,729,674.60	4,809,709.11	4,629.63	9,544,013.34
2. Increase for the period	1,037,601.00	1,231,603.75	18,518.52	2,287,723.27
(1) Provision	1,037,601.00	1,231,603.75	18,518.52	2,287,723.27
3. Decrease for the period
4. As at 31 December 2016	5,767,275.60	6,041,312.86	23,148.15	11,831,736.61
III. Provision for impairment
IV. Book value as at 31 December
2016	46,112,776.00	6,274,724.84	32,407.41	52,419,908.25
		Non-patent
Item	Land use rights	technology	Software	Total
I. Original book value
1. As at 1 January 2017	51,880,051.60	12,316,037.70	55,555.56	64,251,644.86
2. Increase for the period
3. Decrease for the period
4. As at 31 May 2017	51,880,051.60	12,316,037.70	55,555.56	64,251,644.86
II. Accumulated amortization
1. As at 1 January 2017	5,767,275.60	6,041,312.86	23,148.15	11,831,736.61
2. Increase for the period	432,333.75	513,168.20	7,716.05	953,218.00
(1) Provision	432,333.75	513,168.20	7,716.05	953,218.00
3. Decrease for the period
4. As at 31 May 2017	6,199,609.35	6,554,481.06	30,864.20	12,784,954.61
III. Provision for impairment
IV. Book value as at 31 May 2017	45,680,442.25	5,761,556.64	24,691.36	51,466,690.25

(XI) Deferred income tax assets

1. Deferred income tax assets and deferred income tax liabilities before offsetting

Item Deferred income tax assets: Provision for impairment of assets Provision for depreciation of inventories Subtotal	31 May 2017 Deferred income tax assets/ liabilities Deductible/ taxable temporary differences 634,469.73 2,537,878.90 17,294.11 69,176.43 651,763.84 2,607,055.33	31 December 2016 Deferred income tax assets/ liabilities Deductible/ taxable temporary differences 697,092.40 2,788,369.59 35,823.21 143,292.84 732,915.61 2,931,662.43	31 December 2016 Deferred income tax assets/ liabilities Deductible/ taxable temporary differences 697,092.40 2,788,369.59 35,823.21 143,292.84 732,915.61 2,931,662.43
			2,931,662.43

– III-39 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Item Deferred income tax assets: Provision for impairment of assets Subtotal	31 December 2015 Deferred income tax assets/ liabilities Deductible/ taxable temporary differences 170,783.15 683,132.58 170,783.15 683,132.58	31 December 2014 Deferred income tax assets/ liabilities Deductible/ taxable temporary differences 204,914.72 819,658.87 204,914.72 819,658.87	31 December 2014 Deferred income tax assets/ liabilities Deductible/ taxable temporary differences 204,914.72 819,658.87 204,914.72 819,658.87
			819,658.87

(XII) Other non-current assets

Item Prepayment for equipment Total	31 May 2017	31 December 2016 735,160.00 735,160.00	31 December 2015 11,142.00 11,142.00	31 December 2014

(XIII) Short-term loans

1. Category of short-term loans

Condition Mortgage loan Total	31 May 2017	31 December 2016 131,600,000.00 131,600,000.00	31 December 2015	31 December 2014

Note: On 29 January 2016, Tongcheng New Energy (as the second lessee), Triumph Technology Group Company (凱盛科技集團公司) (as the first lessee) and King Sun Financial Leasing (Shanghai) Co., Ltd (君信融資租賃(上海)有限公司) (as the lessor) entered into the Finance Lease Agreement (Sale and Leaseback) (NO. M59-JXHZ2016-5), pursuant to which, Tongcheng New Energy would sell part of relevant equipment of production lines to the lessor and then lease back such equipment. Both the selling price and principal amount of lease amounted to RMB131,600,000.00 with an interest rate of 6.11325% and a lease term commencing from the lease date and ending on 9 March 2017. Based on a “substance-over-the-form” principle, Tongcheng New Energy determined that the lessor provided loans to Tongcheng New Energy taking the leased items as security in essence in such transaction. The nominal selling price for the subject assets (being RMB131,600,000.00) had been considered as a short-term loan by Tongcheng New Energy and the subject assets remained to be accounted for at their original book value and would be depreciated.

– III-40 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XIV) Notes payable

Item Bank acceptances Trade acceptances Total	31 May 2017 50,000,000.00 50,000,000.00	31 December 2016 50,000,000.00 50,000,000.00	31 December 2015 760,000.00 90,300,000.00 91,060,000.00	31 December 2014

(XV) Accounts payable

Item Within 1 year (including 1 year) Over 1 year Total	31 May 2017 51,187,776.60 39,025,014.50 90,212,791.10	31 December 2016 32,120,994.91 39,815,775.36 71,936,770.27	31 December 2015 98,494,589.20 53,784,969.88 152,279,559.08	31 December 2014 21,380,379.03 146,608,170.86
				167,988,549.89

The significant accounts payable with the aging over one year as at 31 May 2017

Name of creditor
Closing balance
China Triumph International Engineering Co., Ltd. Bengbu
Branch (中國建材國際工程集團有限公司蚌埠分公司)
38,961,654.50
Total
38,961,654.50
I) Receipts in advance
Item
31 May 2017
31 December
2016
31 December
2015*
Within 1 year (including 1 year)
830,684.62
77,335.05
446,309.41
Over 1 year
50,000.00
Total
830,684.62
77,335.05
496,309.41

Reason for default
Unsettled
31 December
2014
2,380,158.80
30,000.00
2,410,158.80

(XVI) Receipts in advance

(XVII) Staff remuneration payables

1. Staff remuneration payables presented by category

Item I. Short-term remuneration II. Post-employment benefits – defined contribution plan Total	1 January 2015	Increase for the period 16,745,757.81 1,186,274.79 17,932,032.60	Decrease for the period 15,511,951.01 1,186,274.79 16,698,225.80	31 December 2015 1,233,806.80
				1,233,806.80

– III-41 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Item 1 January 2016 I. Short-term remuneration 1,233,806.80 II. Post-employment benefits – defined contribution plan Total 1,233,806.80 Item 1 January 2017 I. Short-term remuneration 1,803,215.18 II. Post-employment benefits – defined contribution plan III. Termination benefits Total 1,803,215.18 2. *Short-term staff remuneration* Item 1 January 2015 1. Salary, bonus, allowance and subsidy 2. Staff’s welfare 3. Social insurance premium Including: Medical insurance Labor injury insurance Maternity insurance 4. Labor union expenses and employee education expenses Total	Increase for the period 21,884,233.29 1,398,969.72 23,283,203.01 Increase for the period 8,650,252.06 612,646.81 20,134.67 9,283,033.54 Increase for the period 15,464,433.64 912,438.59 337,391.08 262,185.08 50,040.75 25,165.25 31,494.50 16,745,757.81	Decrease for the period 21,314,824.91 1,398,969.72 22,713,794.63 Decrease for the period 9,133,625.85 612,646.81 20,134.67 9,766,407.33 Decrease for the period 14,230,626.84 912,438.59 337,391.08 262,185.08 50,040.75 25,165.25 31,494.50 15,511,951.01	31 December 2016 1,803,215.18
			1,803,215.18

			31 May 2017 1,319,841.39
			1,319,841.39

			31 December 2015 1,233,806.80
			1,233,806.80

– III-42 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Item 1. Salary, bonus, allowance and subsidy 2. Staff’s welfare 3. Social insurance premium Including: Medical insurance Labor injury insurance Maternity insurance 4. Labor union expenses and employee education expenses 5.Other short-term remuneration Total Item 1. Salary, bonus, allowance and subsidy 2. Staff’s welfare 3. Social insurance premium Including: Medical insurance Labor injury insurance Maternity insurance 4. Labor union expenses and employee education expenses Total 3. *Defined contribution plans* Item 1. Basic pension insurance 2. Unemployment insurance Total	1 January 2016 1,233,806.80 1,233,806.80 1 January 2017 1,803,215.18 1,803,215.18 1 January 2015	Increase for the period 19,332,149.69 1,283,208.53 467,320.95 307,048.01 137,571.46 22,701.48 37,838.34 763,715.78 21,884,233.29 Increase for the period 7,698,395.39 718,106.14 215,677.09 142,715.61 60,152.86 12,808.62 18,073.44 8,650,252.06 Increase for the period 1,134,264.08 52,010.71 1,186,274.79	Decrease for the period 18,762,741.31 1,283,208.53 467,320.95 307,048.01 137,571.46 22,701.48 37,838.34 763,715.78 21,314,824.91 Decrease for the period 8,181,769.18 718,106.14 215,677.09 142,715.61 60,152.86 12,808.62 18,073.44 9,133,625.85 Decrease for the period 1,134,264.08 52,010.71 1,186,274.79	31 December 2016 1,803,215.18
				1,803,215.18

				31 May 2017 1,319,841.39
				1,319,841.39

				31 December 2015

– III-43 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Item 1. Basic pension insurance 2. Unemployment insurance Total Item 1. Basic pension insurance 2. Unemployment insurance Total (XVIII) Taxes payable Category Enterprise income tax Property tax Land-use tax Individual income tax Other taxes and charges Total (XIX) Interest payable Category Interest payable for short-term loans Total	1 January 2016 1 January 2017 31 May 2017 851,659.79 74,938.61 332,564.40 34,082.62 1,293,245.42 31 May 2017	Increase for the period 1,347,979.25 50,990.47 1,398,969.72 Increase for the period 591,843.91 20,802.90 612,646.81 31 December 2016 2,812,550.77 74,938.61 332,564.40 44,595.64 5,147.40 3,269,796.82 31 December 2016 420,206.11 420,206.11	Decrease for the period 1,347,979.25 50,990.47 1,398,969.72 Decrease for the period 591,843.91 20,802.90 612,646.81 31 December 2015 221,725.61 332,564.40 11,611.70 565,901.71 31 December 2015	31 December 2016


				31 May 2017


				31 December 2014 660,515.16 10,759.44
				671,274.60

				31 December 2014

– III-44 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XX) Other payables

Nature Current accounts with related parties Security deposit and guarantee deposit Other current accounts Total Paid-in capital Name of investor Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. (安徽華光光電材料科技集團有限公司) China Triumph International Engineering Co., Ltd. (中國建材國際工程集團有限公司) Tongcheng Construction Investment and Development Co., Ltd. (桐城市建設投資發展有限責任公司) Bengbu Design & Research Institute for Glass Industry (蚌埠玻璃工業設計研究院) Total	31 May 2017 132,919,838.33 192,500.00 100,987.07 133,213,325.40 31 May 2017 90,000,000.00 10,000,000.00 33,388,980.00 133,388,980.00	31 December 2016 192,500.00 152,162.72 344,662.72 31 December 2016 90,000,000.00 10,000,000.00 33,388,980.00 133,388,980.00	31 December 2015 121,514,535.03 197,500.00 115,452.28 121,827,487.31 31 December 2015 15,000,000.00 10,000,000.00 12,000,000.00 37,000,000.00	31 December 2014 108,278,077.15 3,500.00 80,487.08
				108,362,064.23

				31 December 2014 15,000,000.00 10,000,000.00 12,000,000.00
				37,000,000.00

(XXI) Paid-in capital

Notes:

On 28 September 2016, it was resolved at the shareholders’ meeting of Tongcheng New Energy that Tongcheng Construction Investment and Development Co., Ltd. (桐城市建設投資發展有限責任公司) would transfer all its 40% equity interests in Tongcheng New Energy to Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd..
On 21 October 2016, it was resolved at the shareholders’ meeting of Tongcheng New Energy that: (1) the outstanding contribution of RMB63,000,000.00 which originally should be made by Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. (安徽華光光電材料科技集團有限公司) in kind, would be made by it in cash instead;(2) the registered capital would change from RMB100,000,000.00 to RMB133,388,980.00. Bengbu Design & Research Institute for Glass Industry (蚌埠玻璃工業設計研究院) subscribed for additional registered capital with the State-owned Capital Operation Budget of RMB40,000,000.00 allocated to Tongcheng New Energy by it during the construction stage, of which RMB33,388,980.00 would be recognized as Paid-in Capital and RMB6,611,020.00 was recognized as capital reserve.

– III-45 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XXII) Capital reserve

Category I. Capital premium Total Category I. Capital premium Total	1 January 2016 1 January 2017 6,611,020.00 6,611,020.00	Increase for the current period 6,611,020.00 6,611,020.00 Increase for the current period	Decrease for the current period Decrease for the current period	31 December 2016 6,611,020.00
				6,611,020.00

				31 May 2017 6,611,020.00
				6,611,020.00

Note:

For details about changes in capital reserve, please refer to note 2 to the paid-in capital above.

(XXIII) Surplus reserve

Category Statutory surplus reserve Total	1 January 2015	Increase for the current period 80,931.05 80,931.05	Decrease for the period	31 December 2015 80,931.05 80,931.05	Increase for the current period 2,992,927.30 2,992,927.30	Decrease for the period	31 December 2016	Increase for the period 3,073,858.35 3,073,858.35	Decrease for the period	31 May 2017 3,073,858.35
										3,073,858.35

– III-46 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XXIV) Undistributed profit

	31 May 2017	31 May 2017
		Proportion of
		appropriation or
Item	Amount	distribution
Undistributed profit at the end of the previous year before
adjustment	66,049,052.93
Total effects of adjustment of undistributed profit at the
beginning of the period (“+”for increase and “-”for
decrease)
Undistributed profit at the beginning of the period after
adjustment	66,049,052.93
Add: Net profit for the period	5,892,995.70	-
Less: Appropriation to statutory surplus reserve
Appropriation to discretionary surplus reserve
Provision for general risks
Dividends payable on ordinary shares
Dividends payable on ordinary shares as converted into
share capital
Undistributed profit at the end of the period	71,942,048.63
	31 December 2016
		Proportion of
		appropriation or
Item	Amount	distribution
Undistributed profit at the end of the previous year before
adjustment	39,112,707.24
Total effects of adjustment of undistributed profit at the
beginning of the period (“+”for increase and “-”for
decrease)
Undistributed profit at the beginning of the period after
adjustment	39,112,707.24
Add: Net profit for the period	29,929,272.99	–
Less: Appropriation to statutory surplus reserve	2,992,927.30	10%
Appropriation to discretionary surplus reserve
Provision for general risks
Dividends payable on ordinary shares
Dividends payable on ordinary shares as converted into
share capital
Undistributed profit at the end of the period	66,049,052.93

– III-47 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

	31 December 2015	31 December 2015
		Proportion of
		appropriation or
Item	Amount	distribution
Undistributed profit at the end of the previous year before
adjustment	38,384,327.79
Total effects of adjustment of undistributed profit at the
beginning of the period (“+”for increase and “-”for
decrease)
Undistributed profit at the beginning of the period after
adjustment	38,384,327.79
Add: Net profit attributable to owners of the parent for the
period	809,310.50		–
Less: Appropriation to statutory surplus reserve	80,931.05		10%
Appropriation to discretionary surplus reserve
Provision for general risks
Dividends payable on ordinary shares
Dividends payable on ordinary shares as converted into the
share capital
Undistributed profit at the end of the period	39,112,707.24
		31 December	2014
		Proportion of
		appropriation or
Item	Amount	distribution
Undistributed profit at the end of the previous year before
adjustment	45,622,744.53
Total effects of adjustment of undistributed profit at the
beginning of the period (“+”for increase and “-”for
decrease)
Undistributed profit at the beginning of the period after
adjustment	45,622,744.53
Add: Net profit attributable to owners of the parent for the
period	-7,238,416.74		–
Less: Appropriation to statutory surplus reserve
Appropriation to discretionary surplus reserve
Provision for general risks
Dividends payable on ordinary shares
Dividends payable on ordinary shares as converted into
share capital
Undistributed profit at the end of the period	38,384,327.79

– III-48 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XXV) Operating income and operating cost

Item I. Sub-total of principal operations Photovoltaic glass II. Sub-total of other operations Technical services Obsolete materials Others Total	January–May 2017 Income Cost 102,689,576.26 81,434,969.88 102,689,576.26 81,434,969.88 4,216,653.97 3,726,335.67 1,886,792.46 1,774,667.85 2,329,861.51 1,951,667.82 106,906,230.23 85,161,305.55	January to May of 2016 Income Cost 93,419,982.97 66,392,927.42 93,419,982.97 66,392,927.42 93,419,982.97 66,392,927.42	2016 Income Cost 232,365,982.64 162,750,998.98 232,365,982.64 162,750,998.98 706,851.13 330,480.68 326,028.30 335,777.78 330,480.68 45,045.05 233,072,833.77 163,081,479.66	2015 Income Cost 69,089,292.06 52,782,206.56 69,089,292.06 52,782,206.56 186,410.27 186,410.27 69,275,702.33 52,782,206.56	2015 Income Cost 69,089,292.06 52,782,206.56 69,089,292.06 52,782,206.56 186,410.27 186,410.27 69,275,702.33 52,782,206.56	2014 Income Cost 5,545,249.46 5,784,194.00 5,545,249.46 5,784,194.00 23,313.68 23,313.68 5,568,563.14 5,784,194.00	2014 Income Cost 5,545,249.46 5,784,194.00 5,545,249.46 5,784,194.00 23,313.68 23,313.68 5,568,563.14 5,784,194.00
					52,782,206.56		5,784,194.00

(XXVI) Taxes and surcharges

Item Urban maintenance and construction tax Education surcharges Property tax Land-use tax Others Total	January–May 2017 374,693.05 1,662,822.00 23,498.90 2,061,013.95	January to May of 2016	2016 135,790.17 58,195.79 654,952.68 2,660,515.20 86,146.44
			3,595,600.28

Note:

Pursuant to the Regulations for the Accounting Treatment of VAT (Cai Kuai [2016] No. 22) (增值稅會計處理規定(財會[2016]22號)) issued by the Ministry of Finance on 3 December 2016, Tongcheng New Energy has adjusted the property tax, stamp duty and other relevant taxes used for calculation of administrative expenses occurred subsequent to 1 May 2016 to be presented under the item titled “Tax and surcharges”.

(XXVII) Selling expenses

Item Staff’s remuneration Transportation costs Others Total	January–May 2017 366,817.74 4,998,599.10 134,301.09 5,499,717.93	January to May of 2016 469,506.09 4,584,532.85 129,837.67 5,183,876.61	2016 1,004,172.61 9,705,288.07 401,536.72 11,110,997.40	2015 803,224.71 3,426,854.69 84,784.42 4,314,863.82	2014 314,802.49 217,986.47 144,748.70
					677,537.66

– III-49 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XXVIII) Administrative expenses

Item Staff’s remuneration Amortization of intangible assets Taxes Others Total (XXIX) Financial expenses Item Interest expense Less: Interest income Others Total (XXX) Assets impairment losses Item I. Loss on bad debts II. Loss on inventory depreciation Total	January–May 2017 840,993.02 953,218.00 2,024,310.44 3,818,521.46 January–May 2017 2,618,657.22 7,515.25 340,391.72 2,951,533.69 January–May 2017 -250,490.69 -250,490.69	January to May of 2016 1,256,200.50 432,333.75 1,692,337.24 1,409,072.96 4,789,944.45 January to May of 2016 2,876,443.78 3,944.05 7,087.35 2,879,587.08 January to May of 2016	2016 3,689,132.24 2,287,723.27 1,624,064.66 4,349,886.75 11,950,806.92 2016 9,479,856.47 4,164,236.92 565,102.00 5,880,721.55 2016 2,105,237.01 143,292.84 2,248,529.85	2015 2,672,235.68 2,273,834.40 4,229,826.71 1,136,276.02 10,312,172.81 2015 2,328,034.72 3,115.59 660,189.23 2,985,108.36 2015 -136,526.29 -136,526.29	2014 2,622,480.29 2,269,204.77 3,990,772.80 617,951.41
					9,500,409.27

					2014 5,526.17 62,307.22
					56,781.05

					2014 789,283.87
					789,283.87

– III-50 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XXXI) Non-operating income

1. Breakdown of non-operating income

Item Total gain on disposal of non-current assets Including: Gain on disposal of fixed assets Government subsidy Others Total	January–May 2017 Amount Amount recognized as non-recurring gain or loss of the period 200,000.00 200,000.00 200.00 200.00 200,200.00 200,200.00	January to May of 2016 Amount Amount recognized as non-recurring gain or loss of the period	2016 Amount Amount recognized as non-recurring gain or loss of the period 27,253.89 27,253.89 27,253.89 27,253.89 75,399.00 75,399.00 5,000.00 5,000.00 107,652.89 107,652.89	2015 Amount Amount recognized as non-recurring gain or loss of the period 1,825,565.00 1,825,565.00 1,825,565.00 1,825,565.00	2014 Amount Amount recognized as non-recurring gain or loss of the period 3,788,510.00 3,788,510.00 15,395.00 15,395.00 3,803,905.00 3,803,905.00	2014 Amount Amount recognized as non-recurring gain or loss of the period 3,788,510.00 3,788,510.00 15,395.00 15,395.00 3,803,905.00 3,803,905.00
						3,803,905.00

2. Government subsidy recognized as gain or loss of the current period

	January–May 2017	January–May 2017	January to	May of 2016	2016	2016	2015	2015	2014	2014
		Related to		Related to		Related to		Related to		Related to
Item	Amount	assets/income	Amount	assets/income	Amount	assets/income	Amount	assets/income	Amount	assets/income
Incentive for the income growth of	150,000.00	Related to
principal operations		income
Incentive for energy saving and	50,000.00	Related to
consumption reduction		income
Patent subsidy from Tongcheng Intellectual					20,000.00	Related to
Property Office						income
Subsidy for stable employment from					35,399.00	Related to
Tongcheng Labor and Employment						income
Bureau in 2016
Safe production standardization bonus					20,000.00	Related to
issued by the Treasury Payment Center of						income
Tongcheng Finance Bureau on behalf of
the Administration of Work Safety
Special financial subsidy for supporting							1,580,000.00	Related to
industrial economy development from the								income
Finance Bureau of the Tongcheng
Economic Development Zone

– III-51 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Item January–May 2017 January to May of 2016 2016 2015 Amount Related to assets/income Amount Related to assets/income Amount Related to assets/income Amount Related to assets/income Financial incentive for the strategic new enterprises 100,000.00 Related to income Employment subsidy for college graduates issued by the Treasury Payment Center of Tongcheng Finance Bureau 19,800.00 Related to income Incentive for new large-scaled enterprises from the Treasury Department of Tongcheng Finance Bureau 100,000.00 Related to income Subsidy for new employees of enterprises issued by Tongcheng Municipal Bureau of Human Resources and Social Security in 2015 25,765.00 Related to income Subsidy for land use tax rebate issued by the Finance Bureau of Tongcheng Economic Development Zone Subsidy for training on employment skills issued by Tongcheng Labor and Employment Administration Bureau Subsidy for new employees of enterprises issued by Tongcheng Human Resources Service Centre in 2014 Total 200,000.00 75,399.00 1,825,565.00 (XXXII) Non-operating expenses Item January–May 2017 January to May of 2016 2016 2015 Amount Amount recognized as non-recurring gain or loss of the current period Amount Amount recognized as non-recurring gain or loss of the current period Amount Amount recognized as non-recurring gain or loss of the current period Amount Amount recognized as non-recurring gain or loss of the current period External donation 8,019.40 8,019.40 Total 8,019.40 8,019.40	Item January–May 2017 January to May of 2016 2016 2015 Amount Related to assets/income Amount Related to assets/income Amount Related to assets/income Amount Related to assets/income Financial incentive for the strategic new enterprises 100,000.00 Related to income Employment subsidy for college graduates issued by the Treasury Payment Center of Tongcheng Finance Bureau 19,800.00 Related to income Incentive for new large-scaled enterprises from the Treasury Department of Tongcheng Finance Bureau 100,000.00 Related to income Subsidy for new employees of enterprises issued by Tongcheng Municipal Bureau of Human Resources and Social Security in 2015 25,765.00 Related to income Subsidy for land use tax rebate issued by the Finance Bureau of Tongcheng Economic Development Zone Subsidy for training on employment skills issued by Tongcheng Labor and Employment Administration Bureau Subsidy for new employees of enterprises issued by Tongcheng Human Resources Service Centre in 2014 Total 200,000.00 75,399.00 1,825,565.00 (XXXII) Non-operating expenses Item January–May 2017 January to May of 2016 2016 2015 Amount Amount recognized as non-recurring gain or loss of the current period Amount Amount recognized as non-recurring gain or loss of the current period Amount Amount recognized as non-recurring gain or loss of the current period Amount Amount recognized as non-recurring gain or loss of the current period External donation 8,019.40 8,019.40 Total 8,019.40 8,019.40	2014 Amount Related to assets/income 12,600.00 Related to income 10,000.00 Related to income 3,671,510.00 Related to income 78,800.00 Related to income 15,600.00 Related to income 3,788,510.00 2014 Amount Amount recognized as non-recurring gain or loss of the current period	2014 Amount Related to assets/income 12,600.00 Related to income 10,000.00 Related to income 3,671,510.00 Related to income 78,800.00 Related to income 15,600.00 Related to income 3,788,510.00 2014 Amount Amount recognized as non-recurring gain or loss of the current period	2014 Amount Related to assets/income 12,600.00 Related to income 10,000.00 Related to income 3,671,510.00 Related to income 78,800.00 Related to income 15,600.00 Related to income 3,788,510.00 2014 Amount Amount recognized as non-recurring gain or loss of the current period


				Amount recognized as non-recurring gain or loss of the current period

– III-52 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

(XXXIII) Income tax expenses

1.	*Breakdown of income tax expenses*	*Breakdown of income tax expenses*
		January-May		January to
	Item		2017	May of 2016			2016	2015	2014
	Current income tax
	expenses calculated
	according to tax laws
	and related regulations	1,890,680.87			72,992.43	5,937,191.07
	Deferred income tax
	expenses	81,151.77				-562,132.46		34,131.57	-197,320.97
	Total	1,971,832.64			72,992.43	5,375,058.61		34,131.57	-197,320.97

Cash	Flow Statement
1.	*Other cash received from or*	*paid for operating*			*activities*
		January–May
	Item			2017		2016		2015	2014
	Other cash received from
	operating activities	1,705,393.77			4,162,495.52		2,673,567.90		509,864.27
	Including: Government
	subsidies	200,000.00			75,399.00		1,825,565.00		117,000.00
	Others	1,505,393.77			4,087,096.52			848,002.90	392,864.27
	Other cash paid for
	operating activities	848,725.74			4,098,575.36			229,246.83	486,690.37
	Including: Payment of
	expenses	848,725.74			4,098,575.36			229,246.83	486,690.37
2.	*Other cash received from or*	*paid for financing*			*activities*
		January–May
	Item			2017		2016		2015	2014
	Other cash received from
	financing activities				174,689,560.48		127,375,000.00		39,727,317.79
	Including: Bengbu Design
	& Research Institute for
	Glass Industry* (蚌埠玻
	璃工業設計研究院)				29,000,000.00		118,375,000.00		33,500,000.00
	CNBM (Hefei) New
	Energy Company
	Limited* (中建材(合
	肥)新能源有限公司)						9,000,000.00
	Bill discount								6,227,317.79
	Finance lease rentals				131,600,000.00
	Triumph Technology
	Group Company* (凱盛
	科技集團公司)				4,089,560.48

(XXXIV) Cash Flow Statement

– III-53 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

		January–May
	Item	2017	2016	2015	2014
	Far East Optoelectronics
	Company Limited* (遠
	東光電股份有限公司)		10,000,000.00
	Other cash paid for
	financing activities		123,879,202.20	107,975,000.00
	Including: Bengbu Design
	& Research Institute for
	Glass Industry* (蚌埠玻
	璃工業設計研究院)		123,879,202.20	99,375,000.00
	CNBM (Hefei) New
	Energy Company
	Limited* (中建材(合
	肥)新能源有限公司)			8,600,000.00
Supplementary information of cash		flow statement
1.	*Supplementary information of cash flow statement*
		January–May
	Item	2017	2016	2015	2014
	1. Net profit adjusted to
	cash flow of operating
	activities
	Net profit	5,892,995.70	29,929,272.99	809,310.50	-7,238,416.74
	Add: Provision for
	impairment of assets	-250,490.69	2,248,529.85	-136,526.29	789,283.87
	Depreciation of fixed
	assets, depletion of oil
	and gas assets,
	depreciation of
	productive biological
	assets	6,386,008.34	14,972,586.49	3,947,322.11	205,788.27
	Amortization of intangible
	assets	953,218.00	2,287,723.27	2,273,834.40	2,269,204.77
	Amortization of long-term
	deferred expenses
	Losses of disposal of fixed
	assets, intangible assets
	and other long-term
	assets (“-” for gains)		-27,253.89
	Loss of retirement of fixed
	assets (“-” for gains)
	Loss of fair value changes
	(“-” for gains)
	Financial expenses (“-” for
	gains)	2,618,657.22	4,378,257.32	2,328,034.72
	Investment loss (“-” for
	gains)
	Decrease in deferred
	income tax assets (“-”
	for increase)	81,151.77	-562,132.46	34,131.57	-197,320.97

(XXXV) Supplementary information of cash flow statement

– III-54 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

		January–May
	Item	2017	2016	2015	2014
	Increase in deferred
	income tax liabilities
	(“-” for decrease)
	Decrease in inventories
	(“-” for increase)	11,011,774.56	-16,180,838.77	9,252,000.87	-16,422,651.98
	Decrease in operating
	receivables (“-” for
	increase)	-33,769,378.50	-20,645,976.40	-45,416,766.61	-28,736,276.40
	Increase in operating
	payables (“-” for
	decrease)	-3,123,131.43	-25,296,681.34	29,799,243.88	48,745,270.29
	Others
	Net cash flow from
	operating activities	-10,199,195.03	-8,896,512.94	2,890,585.15	-585,118.89
	2.Significant investment
	and financing activities
	that do not involve cash
	receipts and payments
	Conversion of debt into
	capital
	Convertible corporate
	bonds due within one
	year
	Fixed assets under finance
	leases
	3.Net change in cash and
	cash equivalents
	Closing cash balance	4,001,345.49	17,139,435.86	4,569,654.10	1,434,093.01
	Less: Opening cash
	balance	17,139,435.86	4,569,654.10	1,434,093.01	570,499.94
	Add: Closing cash
	equivalent balance
	Less: Opening cash
	equivalent balance
	Net increase in cash and
	cash equivalents	-13,138,090.37	12,569,781.76	3,135,561.09	863,593.07
2.	*Cash and cash equivalents*
		January–May
	Item	2017	2016	2015	2014
	I. Cash	4,001,345.49	17,139,435.86	4,569,654.10	1,434,093.01
	Including: Cash on hand	30,075.62	7,087.97	24,933.82	26,580.88
	Bank deposit available for
	payment at any time	3,971,269.87	17,132,347.89	4,544,720.28	1,407,512.13
	Other monetary funds
	available for payment at
	any time
	II. Cash equivalents
	III. Closing balance of
	cash and cash
	equivalents	4,001,345.49	17,139,435.86	4,569,654.10	1,434,093.01

– III-55 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

VI. RELATIONSHIPS AND TRANSACTIONS WITH RELATED PARTIES

(I) The parent company of Tongcheng New Energy

				Equity interest	Equity interest	Voting rights in
Name of parent	Registration		Registered	in	Tongcheng	Tongcheng New
company	place	Business nature	capital	New Energy		Energy
					(%)	(%)
Anhui	Bengbu	State-owned	323.18million		67.47	67.47
Huaguang
Photoelectricity
Materials
Technology
Group Co.,
Ltd.* (安徽
華光光電材料
科技集團有限
公司)

The ultimate controller of Tongcheng New Energy is China National Building Materials Group Corporation (中國建材集團有限公司).

(II) Other related parties of Tongcheng New Energy

Name of other related party Relationship with Tongcheng New Energy China Triumph International Engineering Shareholder of Tongcheng New Energy and common Co., Ltd. (中國建材國際工程集團有限 ultimate controller 公司) Bengbu Design & Research Institute for Shareholder of Tongcheng New Energy and common Glass Industry (蚌埠玻璃工業設計研究 ultimate controller 院) Triumph Technology Group Company The controlling shareholder of the parent company (凱盛科技集團公司) CNBM (Hefei) New Energy Company Common ultimate controller Limited (中建材(合肥)新能源有限公司) China Triumph International Engineering Common ultimate controller Co., Ltd. Hainan Branch (中國建材國際工程集團有限公司海南分公司) China Triumph International Engineering Common ultimate controller Co., Ltd. Bengbu Branch * Jetion Solar (China) Co., Ltd. * Common ultimate controller Anhui Tianzhu Green Energy Science & Common ultimate controller Technology Co., Ltd. (安徽天柱綠色能源科技有限公司) CNBM Triumph Robotics (Shanghai) Co., Common ultimate controller Ltd.* (中建材凱盛機器人(上海)有限公司)

– III-56 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Name of other related party

Relationship with Tongcheng New Energy

Bengbu Chemical Engineering Machinery Making Co., Ltd.* (蚌埠化工機械製造有限公司)

Common ultimate controller

Bengbu Triumph Engineering Technology Co., Ltd.* (蚌埠凱盛工程技術有限公司)

Common ultimate controller

Triumph Quartz Materials (Huangshan) Co., Ltd.* (凱盛石英材料(黃山)有限公司)

Common ultimate controller

CTIEC Shenzhen Scieno-tech Engineering Common ultimate controller Company Limited* (深圳市凱盛科技工程有限公司)
CTIEC Shenzhen Scieno-tech Engineering Common ultimate controller Company Limited Bengbu Branch* (深圳市凱盛科技工程有限公司蚌埠分公司)
Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery Company Limited* (中意凱盛(蚌埠)玻璃冷端機械有限公司)

Common ultimate controller

AVIC Sanxin Solar Photoelectric Glass Co., Ltd.*
Related person (The directors of Tongcheng New Energy serve as their directors)

(III) Related transactions

1. Related transactions in relation to purchase and sale of goods and provision and receiving of services

Content of related party January–May Name of related party transaction 2017 2016 2015 2014 Triumph Technology Group Procurement 9,202,780.00 23,246,128.14 3,292,478.64 Company of raw materials China Triumph International Procurement 2,737,777.71 10,721,534.44 5,958,244.34 Engineering Co., Ltd. of raw Hainan Branch materials China Triumph International Procurement 17,094,017.09 Engineering Co., Ltd. of Bengbu Branch equipment CNBM Triumph Robotics Procurement 1,282,051.28 1,196,581.20 (Shanghai) Co., Ltd. of equipment Bengbu Design & Research Procurement 34,188.03 Institute for Glass Industry of equipment Bengbu Design & Research Receiving of 84,905.66 292,452.83 Institute for Glass Industry technical services

– III-57 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

	Content of
	related party	January–May
Name of related party	transaction	2017	2016	2015	2014
Bengbu Chemical Engineering	Procurement	11,794.87	34,080.34	58,311.97	6,153.85
Machinery Making Co.,	of raw
Ltd.*	materials
Bengbu Chemical Engineering	Procurement		3,760.68
Machinery Making Co.,	of
Ltd.*	equipment
Anhui Tianzhu Green Energy	Procurement		94,871.79
Science & Technology Co.,	of
Ltd.*	equipment
AVIC Sanxin Solar	Procurement				5,939,874.44
Photoelectric Glass Co.,	of
Ltd.*	photovoltaic
	glass
Bengbu Triumph Engineering	Procurement			3,020,410.26	155,025.64
Technology Co., Ltd.*	of raw
	materials
Bengbu Triumph Engineering	Purchase of		96,923.08
Technology Co., Ltd.*	labour
	services
CTIEC Shenzhen Scieno-tech	Procurement		23,247.86
Engineering Company	of raw
Limited*	materials
Sino-Italian CTIEC (Bengbu)	Procurement	5,641.03	6,358.97	7,880.34
Glass Cold-End Machinery	of raw
Company Limited*	materials
CTIEC Shenzhen Scieno-tech	Procurement		9,743.59	4,871.79
Engineering Company	of raw
Limited Bengbu Branch*	materials
CTIEC Shenzhen Scieno-tech	Procurement		17,094.02
Engineering Company	of
Limited Bengbu Branch*	equipment
Triumph Quartz Materials	Procurement		544,415.40
(Huangshan) Co., Ltd.*	of raw
	materials
Jetion Solar (China) Co., Ltd.*	Procurement		9,689.08	87,608.97
	of raw
	materials
Bengbu Design & Research	Interest		3,730,375.89	4,979,224.22	3,166,077.78
Institute for Glass Industry*	expenses
Jetion Solar (China) Co., Ltd.*	Sales of	10,736,414.68	39,923,353.96	33,030,463.25	9,978,077.37
	products
Bengbu Design & Research	Sales of			8,460,147.38	4,942,467.28
Institute for Glass Industry*	products
Bengbu Design & Research	Provision of	1,886,792.46
Institute for Glass Industry*	services
China Triumph International	Sales of			1,076,108.24
Engineering Co., Ltd.*	products
CNBM (Hefei) New Energy	Provision of		326,028.30
Company Limited*	services
CNBM (Hefei) New Energy	Consigned	438,058.03
Company Limited *	processing
	income

– III-58 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

Content of related party January–May Name of related party transaction 2017 2016 2015 2014 CNBM (Hefei) New Energy Sales of 46,504.27 11,463.77 Company Limited products AVIC Sanxin Solar Sales of 9,345,898.30 1,381,103.60 265,269.03 Photoelectric Glass Co., products Ltd. Anhui Tianzhu Green Energy Sales of 2,329,861.51 54,177.78 Science & Technology Co., photovoltaic Ltd. modules Triumph Technology Group Interest 1,319,838.33 Company expenses Triumph Technology Group Interest 5,005,800.80 Company* revenue

Note: In 2013, 2014 and 2015, the sales revenue from Jetion Solar (China) Co., Ltd. which had been recognized under the item titled “Construction in progress” amounted to RMB2,598,793.80, RMB5,414,624.22 and RMB14,834,043.55, respectively. In 2014 and 2015, the sales revenue from Bengbu Design & Research Institute for Glass Industry which had been recognized under the item titled “Construction in progress” amounted to RMB4,942,467.28 and RMB8,460,147.38, respectively.

(IV) Accounts receivable and payable of related parties

	Name of related		31 December	31 December	31 December
Item	party	31 May 2017	2016	2015	2014
Notes receivable	Jetion Solar	4,000,000.00		5,000,000.00
	(China)
	Co., Ltd.*
Notes receivable	AVIC Sanxin	6,500,000.00
	Solar
	Photoelectric
	Glass
	Co., Ltd.*
Accounts	Jetion Solar	37,824,907.28	33,274,638.33	18,967,627.78	8,872,388.74
receivable	(China)
	Co., Ltd.*
Accounts	Anhui Tianzhu		717,356.40	689,518.40	689,518.40
receivable	Green Energy
	Science &
	Technology
	Co., Ltd.*
Accounts	AVIC Sanxin	5,434,701.01
receivable	Solar
	Photoelectric
	Glass
	Co., Ltd.*
Accounts	CNBM (Hefei)	512,527.90
receivable	New Energy
	Company
	Limited*
Accounts	China Triumph	46.64	46.64	1,259,046.64
receivable	International
	Engineering
	Co., Ltd.*

– III-59 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

	Name of related		31 December	31 December	31 December
Item	party	31 May 2017	2016	2015	2014
Other	Bengbu Design	76,988.98
receivables	& Research
	Institute for
	Glass
	Industry*
Prepayments	Bengbu	44,000.00			247,174.36
	Triumph
	Engineering
	Technology
	Co., Ltd.*
Notes payable	China Triumph	50,000,000.00	50,000,000.00	90,000,000.00
	International
	Engineering
	Co., Ltd.
	Bengbu
	Branch*
Accounts	China Triumph	56,598,406.71	38,961,654.50	103,700,000.00	144,107,000.00
payable	International
	Engineering
	Co., Ltd.
	Bengbu
	Branch*
Accounts	Triumph	30,704.62	4,488,113.34	3,292,478.64
payable	Technology
	Group
	Company*
Accounts	China Triumph	3,440,183.11	2,689,013.55	2,333,931.07
payable	International
	Engineering
	Co., Ltd.
	Hainan
	Branch*
Accounts	China Triumph			1,868,563.42	1,868,563.42
payable	International
	Engineering
	Co., Ltd.*
Accounts	CNBM	1,082,051.28	250,000.00
payable	Triumph
	Robotics
	(Shanghai)
	Co., Ltd.*
Accounts	Bengbu Design			500,000.00	960,000.00
payable	& Research
	Institute for
	Glass
	Industry*
Accounts	Bengbu	26,674.00	35,274.00
payable	Chemical
	Engineering
	Machinery
	Making
	Co., Ltd.*

– III-60 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

	Name of related		31 December	31 December	31 December
Item	party	31 May 2017	2016	2015	2014
Accounts	Bengbu		60,400.00	755,360.80
payable	Triumph
	Engineering
	Technology
	Co., Ltd.*
Accounts	Jetion Solar		11,336.22	102,502.50
payable	(China)
	Co., Ltd.*
Accounts	Anhui Tianzhu	5,550.00
payable	Green Energy
	Science &
	Technology
	Co., Ltd.*
Payments	AVIC Sanxin			32,564.29
received in	Solar
advance	Photoelectric
	Glass
	Co., Ltd.*
Payments	Bengbu Design				2,000,000.00
received in	& Research
advance	Institute for
	Glass
	Industry*
Other payables	Bengbu Design			121,114,535.03	108,278,077.15
	& Research
	Institute for
	Glass
	Industry*
Other payables	Triumph	132,919,838.33
	Technology
	Group
	Company*
Other payables	CNBM (Hefei)			400,000.00
	New Energy
	Company
	Limited*)

– III-61 –

APPENDIX III — FINANCIAL INFORMATION OF TONGCHENG NEW ENERGY

VII. COMMITMENTS AND CONTINGENCIES

None

VIII. EVENTS AFTER THE BALANCE SHEET DATE

None

IX. SUPPLEMENTARY INFORMATION

(I) Segment reporting

The income and profit of Tongcheng New Energy are mainly generated from the sales of photovoltaic glass. Therefore, Tongcheng New Energy believes there is no need to prepare segment reporting.

(II) There is no other significant matters that require disclosure.

X. SUBSEQUENT FINANCIAL STATEMENTS

Tongcheng New Energy hasn’t prepared any audited financial statements, nor has it declared or paid any dividends in respect of any period subsequent to 31 May 2017.

Yours faithfully, WUYIGE Certified Public Accountants LLP 7 August 2017

– III-62 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

The following is the text of the accountants’ report of Yixing New Energy received from the independent reporting accountants of Yixing New Energy, WUYIGE Certified Public Accountants LLP.

To the Board of Directors of

Luoyang Glass Company Limited *

Dear Sirs,

We report on the financial information (“ Financial Information ”) of CNBM (Yixing) New Energy Company Limited (“ Yixing New Energy ”), which comprises the balance sheets as at 31 December 2016 and 31 May 2017, the income statements, the cash flow statements and the statements of changes in owners’ equity for the period from 28 October 2016 (“ incorporation date of Yixing New Energy ” ) to 31 December 2016 and the five months ended 31 May 2017, and the notes to the financial statements. Such Financial Information was prepared on the basis set out in Note II/1 of this report, for inclusion in the circular to be issued by Luoyang Glass Company Limited in connection with the proposed acquisition of the 70.99% equity interest of Yixing New Energy.

BASIC INFORMATION

The basic information of Yixing New Energy was set out in Note I of this report. Yixing New Energy adopts 31 December as its financial year end date.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

For the purpose of this report, the directors of Yixing New Energy have prepared, on the basis set out in Note II/1, the financial statements of Yixing New Energy for the relevant periods that give a true and fair view in accordance with the disclosure requirements of China Accounting Standards for Business Enterprises, the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and other relevant regulations, for which the directors of Yixing New Energy are solely responsible.

REPORTING ACCOUNTANTS’ RESPONSIBILITY

The Financial Information contained in this report has been prepared based on the relevant financial statements to which no adjustment was made. It is our responsibility to compile the Financial Information contained in this report based on the relevant financial statements to form an independent opinion on the Financial Information and to report our opinion to you. For the purpose of this report, we have carried out procedures in accordance with the Auditing Standards for Certified Public Accountants of China and the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountants” issued by the Hong Kong Institute of Certified Public Accountants.

– IV-1 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

AUDIT OPINION

In our opinion, for the purpose of this report, the Financial Information gives a true and fair view of the financial position of Yixing New Energy as at 31 December 2016 and 31 May 2017 respectively, and the operating results and cash flows of Yixing New Energy for the period from 28 October 2016 (“ incorporation date of Yixing New Energy ”) to 31 December 2016 and the five months ended 31 May 2017.

– IV-2 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

BALANCE SHEET

Item Notes Current Assets: Cash and cash equivalents V(1) Financial assets at fair value through profit or loss Derivative financial assets Notes receivable V(2) Accounts receivable V(3) Prepayments V(4) Interests receivable Dividends receivable Other receivables V(5) Inventories V(6) Assets held for sale Non-current assets due within one year Other current assets V(7) Total current assets Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term receivables Long-term equity investments Investment properties Fixed assets V(8) Construction in progress V(9) Construction materials Disposal of fixed assets Productive biological assets Gas assets Intangible assets V(10) Development expenditure Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets V(11) Total non-current assets Total assets	Unit: RMB Yuan 31 May 2017 31 December 2016 47,485,346.63 32,016,695.93 42,970,974.46 99,061,741.56 33,347,754.21 7,160,431.14 1,700,398.32 686,723.30 803.25 21,904,164.79 18,693,469.47 24,894,300.31 23,745,076.59 244,163,682.19 109,504,197.77 273,053,224.80 283,697,640.09 94,040,700.17 49,167,503.96 54,908,694.10 55,518,607.10 2,011,520.54 424,014,139.61 388,383,751.15 668,177,821.80 497,887,948.92	Unit: RMB Yuan 31 May 2017 31 December 2016 47,485,346.63 32,016,695.93 42,970,974.46 99,061,741.56 33,347,754.21 7,160,431.14 1,700,398.32 686,723.30 803.25 21,904,164.79 18,693,469.47 24,894,300.31 23,745,076.59 244,163,682.19 109,504,197.77 273,053,224.80 283,697,640.09 94,040,700.17 49,167,503.96 54,908,694.10 55,518,607.10 2,011,520.54 424,014,139.61 388,383,751.15 668,177,821.80 497,887,948.92
		109,504,197.77

		283,697,640.09 49,167,503.96 55,518,607.10
		388,383,751.15

		497,887,948.92

– IV-3 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

Item Notes Current liabilities: Short-term loans V (12) Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes payable V (13) Accounts payable V (14) Receipts in advance V (15) Employee compensation payable V (16) Tax payables V (17) Interest payable V (18) Dividends payable Other payables V (19) Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities: Long-term borrowings V (20) Debentures payable Long-term payables Long-term employee compensation payable Special payables Estimated liability Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total Liabilities Owners’ equity: Paid-up capital V (21) Other equity instruments Capital reserve V (22) Less: Treasury stock Other comprehensive income Special reserve Surplus reserves V (23) Undistributed profit V (24) Total owners’ equity Total liabilities and owners’ equity	31 May 2017 175,000,000.00 81,494,723.74 28,778,166.33 18,945,481.57 2,568,630.60 1,623,005.86 279,766.66 4,890,835.33 313,580,610.09 30,000,000.00 30,000,000.00 343,580,610.09 313,700,000.00 6,776,785.31 53,914.54 4,066,511.86 324,597,211.71 668,177,821.80	31 December 2016 100,000,000.00 16,635,433.48 31,987,007.38 15,000,000.00 2,155,640.80 582,535.61 10,511,400.96
		176,872,018.23




		176,872,018.23

		313,700,000.00 6,776,785.31 53,914.54 485,230.84
		321,015,930.69

		497,887,948.92

– IV-4 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

INCOME STATEMENT

Unit: RMB Yuan

			28 October
			2016
			(“Establishment
			Date”)–31
		January–May	December
Item	Notes	2017	2016
I. Operating revenue	V(25)	110,801,652.03	37,110,963.00
Less: Operating cost	V(25)	90,346,690.55	32,710,082.72
Tax and surcharges	V(26)	1,107,700.16	379,941.66
Selling expenses	V(27)	2,722,317.06	777,570.36
Administrative expenses	V(28)	9,409,972.49	1,601,379.72
Financial expenses	V(29)	2,420,299.86	919,470.70
Impairment losses of assets
Add: Gains from changes in fair value
Investment income
Including: Gains from investment in associates
and joint ventures
Other gains
II. Operating profit		4,794,671.91	722,517.84
Add: Non-operating income
Including: Gains on disposal of non-current
assets
Less: Non-operating expense
Including: Loss on disposal of non-current
assets
III. Total profit		4,794,671.91	722,517.84
Less: Income tax expenses	V(30)	1,213,390.89	183,372.46
IV. Net profit		3,581,281.02	539,145.38
V. Other comprehensive income, net of tax
(I) Other comprehensive income that cannot be
subsequently reclassified into profit and loss
(II) Other comprehensive income that will be
subsequently reclassified into profit and loss
VI. Total comprehensive income		3,581,281.02	539,145.38
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share

– IV-5 –

FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

CASH FLOW STATEMENT

			Unit: RMB Yuan
			28 October 2016
			(“Establishment
			Date”) – 31
Item	Notes	January – May 2017	December 2016
I. Cash flows from operating activities:
Cash received from sale of goods or rendering of services		9,712,038.51	2,283,360.48
Refunds of Taxes and Levies
Other cash received from operating activities	V(31)	794,022.31	461,851.10
Sub-total of cash inflow from operating activities		10,506,060.82	2,745,211.58
Cash paid for goods purchased and services rendered		75,313,222.26	21,479,140.47
Cash paid to and on behalf of employees		10,395,446.93	2,077,311.48
Tax payments		1,160,941.83	3,717.80
Other cash paid for operating activities	V(31)	13,690,577.56	430,313.52
Sub-total of cash outflow from operating activities		100,560,188.58	23,990,483.27
Net cash flow from operating activities		-90,054,127.76	-21,245,271.69
II. Cash flow from investment activities:
Cash received from investments
Cash received from returns on investments
Net cash received from disposal of fixed assets, intangible assets and
other long term assets
Net cash received from disposal of subsidiaries and other business
entities
Other cash received from investment activities
Sub-total of cash inflow from investment activities
Cash paid for purchase and construction of fixed assets, intangible
assets and other long-term assets		12,313,948.65	16,249,341.19
Cash paid for investments
Net cash paid for acquisition of subsidiaries and other business
entities
Other cash paid for investment activities
Sub-total of cash outflow from investment activities		12,313,948.65	16,249,341.19
Net cash flow from investment activities		-12,313,948.65	-16,249,341.19
III. Cash flow from financing activities:
Cash received from capital contributions			222,700,000.00
Proceeds from loans		230,000,000.00
Other cash received from financing activities
Sub-total of cash inflow from financing activities		230,000,000.00	222,700,000.00
Cash paid for repayment of loans		125,000,000.00	99,000,000.00
Cash paid for dividends, profit or interest payments		2,335,520.84	824,124.67
Other cash paid for financing activities	V(31)		60,000,000.00
Sub-total of cash outflow from financing activities		127,335,520.84	159,824,124.67
Net cash flow from financing activities		102,664,479.16	62,875,875.33
IV. Effects of changes in exchange rate on cash and cash equivalents
V. Net increase in cash and cash equivalents		296,402.75	25,381,262.45
Add: Opening balance of cash and cash equivalents			25,381,262.45
VI. Closing balance of cash and cash equivalents		25,677,665.20	25,381,262.45

– IV-6 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

STATEMENT OF CHANGES IN OWNERS' EQUITY

Unit: RMB Yuan

					January – May 2017
					Other				Total
		Other equity		Less: Treasury	comprehensive		Surplus	Undistributed	shareholder’s
Item	Paid-up capital	instruments	Capital reserve	stock	income	Special reserve	reserves	profit	equity
I. Closing balance of last year	313,700,000.00		6,776,785.31				53,914.54	485,230.84	321,015,930.69
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year	313,700,000.00		6,776,785.31				53,914.54	485,230.84	321,015,930.69
III. Changes in current period
(decrease is represented by
“-”)								3,581,281.02	3,581,281.02
(I) Total comprehensive income								3,581,281.02	3,581,281.02
(II) Shareholders’ contribution
and decrease in capital
1.Ordinary shares paid by
shareholders
2.Capital injected by other
equity instrument holders
3.Amount of shares payment
charged to the owners’ equity
4.Others
(III) Profit Distribution
1.Withdrawal of surplus
reserves
2.Distribution to shareholders
3.Others
(IV) Internal carry-forward of
shareholders’ equity
1.Conversion of capital reserve
into share capital
2.Increasing capital stock by
surplus reserves
3.Making up losses by surplus
reserve
4.Others
(V) Special reserves
1.Withdrawn during the period
2.Utilised during the period
(VI) Others
IV. Closing balance for the
period	313,700,000.00		6,776,785.31				53,914.54	4,066,511.86	324,597,211.71

– IV-7 –

APPENDIX IV

FINANCIAL INFORMATION OF YIXING NEW ENERGY

			28	October 2016 (“Establishment Date”)	October 2016 (“Establishment Date”)	– 31 December 2016
					Other				Total
		Other equity		Less: Treasury	comprehensive		Surplus	Undistributed	shareholder’s
Item	Paid-up capital	instruments	Capital reserve	stock	income	Special reserve	reserves	profit	equity
I. Closing balance of last year
Add: Changes in accounting
policies
Correction of accounting errors
in the previous period
Others
II. Opening balance of the year
III. Changes in current period
(decrease is represented by
“-”)	313,700,000.00		6,776,785.31				53,914.54	485,230.84	321,015,930.69
(I) Total comprehensive income								539,145.38	539,145.38
(II) Shareholders’ contribution
and decrease in capital	313,700,000.00		6,776,785.31						320,476,785.31
1.Ordinary shares paid by
shareholders	313,700,000.00		6,776,785.31						320,476,785.31
2.Capital injected by other
equity instrument holders
3.Amount of shares payment
charged to the owners’ equity
4.Others
(III) Profit Distribution							53,914.54	-53,914.54
1.Withdrawal of surplus
reserves							53,914.54	-53,914.54
2.Distribution to shareholders
3.Others
(IV) Internal carry-forward of
shareholders’ equity
1.Conversion of capital reserve
into share capital
2.Increasing capital stock by
surplus reserves
3.Making up losses by surplus
reserve
4.Others
(V) Special reserves
1.Withdrawn during the period
2.Utilised during the period
(VI) Others
IV. Closing balance for the
period	313,700,000.00		6,776,785.31				53,914.54	485,230.84	321,015,930.69

– IV-8 –

FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

CNBM (YIXING) NEW ENERGY COMPANY LIMITED *

NOTES TO THE FINANCIAL STATEMENTS

(All monetary amounts in these notes are expressed in RMB unless otherwise stated)

I. COMPANY PROFILE

CNBM (Yixing) New Energy Company Limited (“Yixing New Energy”) is a company with limited liability established with joint contributions made by Triumph Technology Group Company (凱盛科技集團公司), Far East Optoelectronics Company Limited (遠東光電股份有限公司), Yixing Environmental Technology Innovation Venture Investment Company Limited (宜興環保科技創新創業投資有限公司) and GCL System Integration Technology Co., Ltd. (協鑫集成科技股份有限公司). On 28 October 2016, it was issued a business license with the unified social credit code of 91320282MA1MXWBJ1H by Yixing Market Supervision and Administration Bureau. At its inception, Yixing New Energy had a registered capital of RMB313.7 million, among which, Triumph Technology Group Company (凱盛科技集團公司), Far East Optoelectronics Company Limited (遠東光電股份有限公司), Yixing Environmental Technology Innovation Venture Investment Company Limited (宜興環保科技創新創業投資有限公司) and GCL System Integration Technology Co., Ltd.* (協鑫集成科技股份有限公司) had contributed RMB160,000,000.00, RMB91,000,000.00, RMB40,000,000.00 and RMB22,700,000.00, respectively, representing 51.00%, 29.01%, 12.75% and 7.24% of the registered capital, respectively.

Corporate domicile: No. 1 Xinyunlai Road, Taoyuan Development Zone, Gaocheng Town, Yixing Legal representative: Zhang Chong Registered capital: RMB313.7 million

Scope of business: Research and development of new energy technologies; manufacturing, processing, technology research, development and sales of glass products; outward investment with self-own capital; self-operated and commissioned import and export business for various commodities and technologies (excluding commodities and technologies that are operated by State-designated enterprises or prohibited for import or export by the State). (Businesses that require approvals under laws shall only be carried out with the approvals from the relevant authorities.)

II. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

Basis of preparation: the financial statements of Yixing New Energy have been prepared on a going-concern basis in respect of the actual transactions and events in accordance with the requirements of the Accounting Standards for Business Enterprises － Basic Standards and specific accounting standards (collectively the “ Accounting Standards for Business Enterprises ”) issued by the Ministry of Finance of the PRC as well as relevant disclosure requirements of the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No.15 － General Provisions on Financial Reporting issued by the China Securities Regulatory Commission, the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Hong Kong Companies Ordinance.
Going concern: there are no events or situations of Yixing New Energy that would cast significant doubts on the going-concern assumption for the next 12 months commencing from the end of the reporting period.

– IV-9 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

III. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

(I) Statement on Compliance with Accounting Standards for Business Enterprises

The financial statements prepared by Yixing New Energy are compliant with the requirements set out in the Accounting Standards for Business Enterprises and give a true and complete view of Yixing New Energy’s financial position as at 31 May 2017 and 31 December 2016 as well as its operating results, cash flows and other relevant information for January to May of 2017 and the period from 28 October 2016 (the “Incorporation Date”) to 31 December 2016.

(II) Accounting period

The accounting year of Yixing New Energy is a calendar year from 1 January to 31 December.

(III) Operating cycle

The normal operating cycle of Yixing New Energy is 12 months in a year, and the operating cycle is determined as the classification criterion of the liquidity of assets and liabilities.

(IV) Functional currency

The functional currency of Yixing New Energy is Renminbi (“RMB”).

(V) Recognition standard for cash and cash equivalents

Cash presented in the cash flow statements of Yixing New Energy represents its cash on hand and deposits available for payment at any time. Cash equivalents presented in the cash flow statements refer to short-term, highly liquid investments held that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

(VI) Financial instruments

1. Classification and recognition of financial instruments

Financial instruments are classified as financial assets, financial liabilities or equity instruments. A financial asset, a financial liability or an equity instrument is recognized when Yixing New Energy becomes a contractual party of a financial instrument.

At initial recognition, financial assets are classified into financial assets at fair value through profit or loss, held-to-maturity investments, receivables and available-for-sale financial assets. Except for receivables, the classification of a financial asset is based on the purpose and capability of holding the financial asset of Yixing New Energy and its subsidiaries. At initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities.

– IV-10 –

FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

2. Measurement of financial instruments

Financial instruments of Yixing New Energy are initially recognized and measured at fair values. Subsequent measurement is dealt with based on different categories: financial assets at fair value through profit or loss, financial assets available for sale and financial liabilities at fair value through profit or loss are subsequently measured at fair values; held-to-maturity investments, loans and receivables and other financial liabilities are subsequently measured at amortized costs; derivative financial assets or liabilities linked to and which must be settled by delivery of an equity instrument (without a quoted price in an active market) whose fair value cannot be measured reliably are subsequently measured at cost. Except for financial instruments held for hedging purposes, the gains or losses arising from the changes in fair values in subsequent measurements of Yixing New Energy’s financial assets or financial liabilities are accounted for as follows: (i) gains or losses resulting from changes in fair values of the financial assets or financial liabilities which are measured at fair values through profit or loss are recorded as change in fair value in profit or loss; and (ii) changes in fair values of available-for-sale financial assets are recorded in other comprehensive income.

3. Recognition of the fair value of financial instruments by Yixing New Energy

As for the financial instruments for which there is an active market, the quoted prices in the active market shall be used to determine the fair values thereof. Where there is no active market for a financial instrument, valuation techniques shall be adopted to determine its fair value. Such techniques mainly include market approach, income approach and cost approach.

4. Basis of recognition and measurement of transfer of financial assets and liabilities

When Yixing New Energy has transferred nearly all of the risks and rewards related to the ownership of a financial asset to the transferee, or neither transferred nor retained nearly all of the risks and rewards related to the ownership of the financial asset but given up the control of the financial asset, the financial asset shall be derecognized. When the criteria for derecognition of a financial asset are met, the difference between the carrying amount of the transferred financial asset and the sum of the consideration received from the transfer and the accumulated fair value changes previously recorded in other comprehensive income are recorded in current profit or loss. If the partial transfer satisfies the criteria for derecognition, the entire carrying amount of the transferred financial asset shall proportionally be allocated between the derecognized portion and the retained portion according to their respective relative fair value.

When all or part of the current obligation to a financial liability has been terminated, the entire or part of such financial liability shall be derecognized.

5. Impairment of financial assets

– IV-11 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

Where there is objective evidence that an impairment loss on available-for-sale financial assets occurs, the cumulative loss arising from the decline in fair value that had been recognized directly in equity is removed from equity and recognized in impairment loss. For an investment in debt instrument classified as available-for-sale on which impairment losses have been recognized, if, in a subsequent period, its fair value increases and the increase can be objectively related to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed and recognized in current profit or loss. For an investment in an equity instrument classified as available-for-sale on which impairment losses have been recognized, the increase in its fair value in a subsequent period is recognized in shareholders’ equity directly.

For investments in equity instruments, the specific quantitative criteria for Yixing New Energy to determine “serious” or “not temporary” decrease in their fair value, cost computing method, method for determining fair value at period end, and basis for determining the continuous decrease period are set out below:

Specific quantitative criterion on Decrease in period-end fair value relative to the “serious” decrease in their fair value cost has reached or exceeded 50%. Specific quantitative criterion on “not Fall for 12 consecutive months. temporary” decrease in their fair value

Cost computing method

(VII) Receivables

The receivables of Yixing New Energy mainly included accounts receivable, long-term receivables and other receivables. If there is objective evidence that receivables have been impaired at the balance sheet date, impairment loss shall be recognized based on the differences between the carrying amount and the present value of estimated future cash flows.

1. Receivables individually significant and with provision for bad debts on an individual basis

Basis or criteria for determining whether a Receivables with the book balance of over RMB5 receivable is individually significant million Methods for making bad debt provision To confirm according to the difference between the for individually significant receivables carrying amount and the present value of estimated future cash flows

– IV-12 –

FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

2. Receivables for which bad debt provision is made on group basis

Basis for group determination Nature of receivables and risk characteristics

The group with provision for bad debts Except for receivables for which no bad-debt based on aging analysis methods provision is made, receivables which are unimpaired through separate test of impairment are divided into certain portfolios of credit risk in accordance with the aging analysis methods, and then the provision for bad debts is made in proportion to the balance of these receivable portfolios.

The group without provision for bad debts

(1) Various guarantee and security deposits related to the production and operations that are fully recoverable upon maturity;
(2) Receivables due from related parties with good financial position;
(3) Other receivables that have positive evidence indicating they are fully recoverable.

Methods for making bad-debt provision on group basis

The group with provision for bad debts Aging analysis methods based on aging analysis methods

The group without provision for bad debts To aggregate those of related parties and business units individually deemed as without collection risks

In the groups, the provision for bad debts based on aging analysis methods set out as follows:

	Provision rate for
	accounts	Provision rate for
Age	receivable	other receivables
	(%)	(%)
Within 1 year (including 1 year)	0	0
1–2 years	30	30
2–3 years	50	50
Over 3 years	100	100

3. Individually insignificant receivables with provision for bad debts on an individual basis

Basis for individual provision

Concrete evidence indicates that there is obvious difference in recoverability

Provision method Bad-debt provision is made on individual basis, and full provisions are made for receivables due from related parties that are estimated to be fully unrecoverable.

– IV-13 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(VIII) Inventories

1. Classification

2. Measurement of delivered inventories

Upon delivery of inventories, the actual cost of such inventories will be determined by using weighted average method.

3. Provision for impairment

Inventories shall be measured at the lower of their costs and net realizable value as at the balance sheet date and the provision for impairment shall be made individually based on inventory items. For those inventories of large quantity and low value, provision for impairment may be made based on categories of inventories.

The determination basis for the net realizable value of inventories is as follows: (i) for the finished goods, the net realizable value represents the amount of the estimated selling price minus the estimated selling costs and related taxes; (ii) for the materials held for production, the net realizable value will be measured at their costs when the net realizable value of the finished goods produced by such materials is higher than the costs; when the price of such materials declines showing the net realizable value of the corresponding finished goods is lower than the costs, the net realizable value will be determined as the amount of the estimated selling price minus the estimated costs to be incurred upon completion, the estimated selling costs and related taxes; and (iii) for the materials held for sale, the net realizable value is the selling price in the market.

4. Inventory system

Yixing New Energy adopts the perpetual inventory system.

5. Amortization of low-value consumables and packaging materials

Low-value consumables are amortized using the one-off write-off method. Packaging materials and other revolving materials are amortized using the equal-split amortization method.

(IX) Fixed assets

1. Recognition conditions of fixed assets

– IV-14 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

2. Classification and depreciation methods of fixed assets

The fixed assets of Yixing New Energy are mainly classified as buildings and structures, machinery and equipment, electronic equipment, transportation tools, etc. Depreciation is provided based upon the straight-line method. Yixing New Energy determines the useful life and estimates the net residual value of a fixed asset according to the nature and use pattern of the fixed asset. Yixing New Energy, at the end of each year, has a review on the useful life, expected residual value and the depreciation method of the fixed assets. If it differs from its previous estimate, adjustment will be made accordingly. Yixing New Energy provides depreciation for all its fixed assets other than fully depreciated fixed assets that are still in use and land individually accounted for.

	Estimated useful	Estimated net	Annual
Category	life	residual value rate	depreciation rate
	(years)	(%)	(%)
Buildings and structures	30–50	3–5	1.90–3.23
Machinery and equipment	4–28	3–5	3.39–24.25
Electronic equipment	4–10	3–5	9.50–24.25
Transportation tools	6–12	3–5	7.92–16.17
Other equipment	4–28	3–5	3.39–24.25

(X) Construction in progress

There are two types of construction in progress for Yixing New Energy: self-construction and sub-contracting construction. Construction in progress is transferred to fixed assets when the project is completed and ready for its intended use. A fixed asset is ready for intended use if any of the following criteria is met: the construction of the fixed asset (including installation) has been completed or substantially completed; the fixed asset has been put to trial production or trial operation and it is evidenced that the asset can operate normally or produce steadily qualified products; or the result of trial operation proves that it can run or operate normally; little or no further expenditure will be incurred for construction of the fixed asset; or the fixed asset constructed has achieved or almost achieved the requirement of design or contract.

(XI) Borrowing costs

1. Recognition principle for capitalization of borrowing costs

Yixing New Energy’s borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized and included in the cost of the asset. Other borrowing costs are recognized as expenses when incurred through profit and loss account. Qualifying assets include fixed assets, investment properties and inventories that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.

2. Calculation of amount to be capitalized

The capitalization period refers to the period beginning from the commencement of capitalizing borrowing costs to the date of ceasing capitalization, excluding the period of suspension of capitalization. Where the acquisition and construction or production of a qualifying asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.

– IV-15 –

FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

For designated borrowings, the capitalized amount shall be the actual interest expense incurred for the designated borrowings, less the interest income from the unused funds of the designated borrowings or investment income from the temporary investments; and for general borrowings, the capitalized amount shall be the weighted average of the accumulated expenditure exceeding the capital expenditure from designated borrowings times the capitalizaiton rate of the general borrowings occupied (i.e.the weighted average rate of the general borrowings); and for borrowings with discount or premium, the discount or premium is amortized over the term of the borrowings to adjust the interest in every period using effective interest rate method.

(XII) Intangible assets

1. Measurement of intangible assets

Intangible assets of Yixing New Energy are initially measured at costs. The actual costs of purchased intangible assets include the considerations and relevant expenses paid. The actual costs of intangible assets contributed by investors are the prices contained in the investment agreements or mutually agreed. If the price contained in the investment agreement or mutually is not a fair value, the fair value of the intangible asset is regarded as the actual cost. The cost of a self-developed intangible asset is the total expenditure incurred for bringing the asset to its intended use.

Subsequent measurement of Yixing New Energy’s intangible assets: Intangible assets with finite useful lives are amortized on a straight-line basis; at the end of each year, the useful lives and amortization policy are reviewed, and adjusted accordingly if there are differences from original estimates. Intangible assets with indefinite useful lives are not amortized and the useful lives are reviewed at the end of each year. If there is objective evidence that the useful life of an intangible asset is finite, the intangible asset is amortized using the straight line method according to the estimated useful life.

2. Determination basis of infinite useful life

An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for Yixing New Energy or it has no definite useful life. The determination basis of intangible assets with infinite useful lives: derived from contractual rights or other legal rights and there are no explicit years of use stipulated in the contract or laws and regulations; the period over which the asset is expected to generate economic benefits for Yixing New Energy still could not be estimated after considering the industrial practices or relevant expert opinion.

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APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

3. Basis for research and development phases for internal research and development project and basis for capitalization of expenditure incurred in development stage

As for an internal research and development project, expenditure incurred in the research phase is recognized in profit or loss in the period as incurred. Expenses incurred in the development stage are recognized as intangible assets if all of the following conditions are met: (1) the technical feasibility of completing the intangible asset so that it will be available for use or for sale; (2) the intention to complete the intangible asset for use or for sale; (3) the intangible asset will generate economic benefits including there is evidence that the products produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the intangible asset; (4) the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; (5) the expenditures attributable to the development of the intangible asset could be reliably measured.

(XIII) Impairment of long-term assets

Long-term assets such as fixed assets, construction in progress and intangible assets are tested for impairment if there is any indication that these assets may be impaired at the balance sheet date. If the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount, a provision for impairment and an impairment loss are recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period.

(XIV) Long-term deferred expenses

Long-term deferred expenses of Yixing New Energy are expenses which have been paid but the benefit period is over one year (not including one year). Long-term deferred expenses are amortized over the benefit period. If a long-term deferred expense cannot benefit the future accounting period, the unamortized balance shall be transferred to the profit or loss in the current period.

(XV) Staff remuneration

– IV-17 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

1. Short-term remuneration

During the accounting period in which an employee provides service, short term remuneration incurred is recognized as liabilities and charged to profit or loss, or if otherwise required or allowed by other accounting standards, to the related costs of assets for the current period. At the time of actual occurrence, Yixing New Energy’s employee benefits are recorded into current profit or loss or assets associated costs according to the actual amount. The non-monetary employee benefits are measured at fair value. Regarding to the medical insurance, work-related injury insurance, maternity insurance and other social insurances, housing provident fund and labor union expenditure and personnel education that Yixing New Energy paid for employees, Yixing New Energy should recognize corresponding staff remuneration payables according to the appropriation basis and proportion as stipulated by relevant requirements and recognize the corresponding liabilities and include these expenses in current profit or loss or recognized as respective assets costs.

2. Post-employment benefits

During the accounting period for which employees provide their service, Yixing New Energy shall recognize the amounts payable as liabilities calculated based on the defined contribution plans, and shall recognize it in current profit and loss or the relevant asset cost. According to the formula confirmed by the expected accumulated welfare unit method, the welfare obligations generated in defined benefits plans shall be attributable to the period for which employees provide their service and shall be recognized in current profit and loss or the relevant asset cost.

3. Termination benefits

When Yixing New Energy provides employees with termination benefits, the staff remuneration liabilities arising from termination benefits are recognized and recorded in current profit and loss whichever of the following is earlier: when Yixing New Energy cannot unilaterally revoke such termination benefits provided due to termination of labor relationship plan or layoff proposal; when Yixing New Energy recognizes such cost or expenses associated with the restructuring involving the payment of termination benefits.

4. Other long-term employee benefits

Yixing New Energy provides other long-term employee benefits to its employees. Those falling within the scope of the defined contribution plans are accounted for pursuant to the requirements of the defined contribution plans. In addition, net liabilities or net assets of other long-term employee benefits are recognized and measured pursuant to the relevant requirements of the defined benefit plans.

(XVI) Estimated liability

If an obligation in relation to contingency is the present obligation of Yixing New Energy and the performance of such obligation are likely to lead to the outflow of economic benefits and its amount can be reliably measured, such obligation shall be recognized as accrued liability. Initial measurement should be made by Yixing New Energy in accordance with the best appraisable amount of expenses to fulfill relevant current obligation. The best appraisable amount should be a middle value if the expense occurred in a continuous period in which kinds of results occurred at the same possibility. If there are lots of projects, the best appraisable amount should be based on kinds of results and relevant possibility.

At the balance sheet date, Yixing New Energy reviews the carrying amount of estimated liability and an adjustment is necessary according to the current best appraisable amount if there is obvious evidence that carrying amount cannot fairly represent the best appraisable amount.

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APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(XVII) Revenue

1. Sales of goods

Revenue from the sale of goods shall be recognized at the amount received or receivable from buyers based on contractual or agreed prices, only when all of the following conditions are satisfied: (i)the significant risks and rewards of ownership of the goods have been passed to the buyer; (ii) Yixing New Energy retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (iii) the amount of revenue can be measured reliably; (iv) it is probable that the associated economic benefits will flow to the enterprise; and (v) the associated costs incurred or to be incurred can be measured reliably.

2. Provision of services

At the balance sheet date, when the outcome of a transaction involving the rendering of services can be estimated reliably, revenue from provision of services shall be recognized using the percentage of completion method. The progress of completion of the transaction is recognized by Yixing New Energy by reference to ratio of the actual cost with respect to the estimated total cost. At the balance sheet date, when the outcome of the transaction involving the rendering of services cannot be estimated reliably, it shall be dealt with in the following ways: (i) if the cost of services incurred is expected to be compensated, the revenue from the rendering of services is recognized to the extent of actual cost incurred to date, and the relevant cost is transferred to cost of service; or (ii) if the cost of services incurred is not expected to be compensated, the cost incurred should be included in current profit or loss, and no revenue from the rendering of services may be recognized.

3. Abalienating the right to use an asset

When the inflow of economic benefits from the abalienation of assets is probable and the income can be measured reliably, the income from abalienating the right to use an asset is recognized.

(XVIII) Government grants

1. Accounting treatment for government grants related to assets

The government grant that is obtained by Yixing New Energy and is used for acquisition or construction or forming long-term assets in other ways shall be recognized as the government grants related to assets. Government grants related to an asset shall be recognized as deferred income. Commencing from the day on which the relevant assets are available for use, deferred income shall be included in current profit or loss on an even and amortized basis according to the estimated useful life of the relevant assets.

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APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

2. Accounting treatment for government grants related to income

Specific standards for differentiating government grants related to asset from that related to income.

Where there is no express regulation on subsidy object in government documents, the criteria for differentiating government grants related to asset from that related to income is as below: (i) government grant subject to a certain project shall be separated according to the proportion of expenditure budget and capitalization budget, and the proportion shall be reviewed and modified if necessary on the balance sheet date; and (ii) government grants shall be categorized as related to income if its usage is just subject to general statement and is not designated for any concern.

(XIX) Deferred income tax assets and deferred income tax liabilities

Deferred income tax assets or deferred income tax liabilities are recognized based on the difference between the carrying amounts of the assets or liabilities and their tax bases (or, for items not recognized as assets or liabilities but whose tax base can be determined under tax laws, such tax base can be determined as their difference), and are calculated at the tax rates expected to apply to the period in which the assets are recovered or the liabilities are settled.
Deferred income tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. At the balance sheet date, deferred income tax assets unrecognized in prior periods are recognized to the extent that there is obvious evidence that it has become probable that sufficient taxable profit will be available in subsequent periods against which the deductible temporary differences can be utilized. The carrying amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefit of the deferred tax asset to be utilized.
As for taxable temporary difference related to the investments of subsidiaries and associated enterprises, deferred income tax liabilities are recognized unless Yixing New Energy can control the timing for the reversal of temporary differences and such differences are much likely not to be reversed in the foreseeable future. As for the deductible temporary difference related to investments of subsidiaries and associated enterprises, the deferred income tax assets are recognized when such temporary differences are much likely to be reversed in the foreseeable future and it is probable that the taxable profit will be available against which the deductible temporary difference can be utilized.

(XX) Leases

Accounting treatment for operating leases: Rental expenses for operating leases shall be recorded into the cost of the relevant asset or current profit or loss on a straight-line basis over the lease term.
Accounting treatment for financing leases: the lower of the fair value of a leased asset and the present value of the minimum lease payment shall be taken as the book value of the leased asset. The difference between the book value of the asset under lease and the minimum lease payment shall be the unrecognized financing expenses and shall be amortized using effective interest rate method over the lease term. The balance derived from deducting the unrecognized financing expenses from the minimum lease payment shall be presented as long-term payables.

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APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(XXI) Other significant accounting policies and accounting estimates

Nil

(XXII) Explanation on changes in significant accounting policies and accounting estimates

Nil

IV. TAXES

(I) Major taxes and tax rates

Type	Tax basis	Tax rate
Value added tax	Taxable revenue	17%
Urban maintenance and construction tax	Turnover tax	5%
	payable
Enterprise income tax	Taxable income	25%

(II) Major preferential tax treatment and approvals

Nil

V. NOTES TO SIGNIFICANT ITEMS OF THE FINANCIAL STATEMENTS

(I) Cash and cash equivalents

Item Cash Deposits at banks Other monetary funds Total	31 May 2017 109,719.53 25,567,945.67 21,807,681.43 47,485,346.63	31 December 2016 193,750.06 25,187,512.39 6,635,433.48
		32,016,695.93

(II) Notes receivable

Item Bank acceptances Trade acceptance Total	31 May 2017 31 December 2016 36,766,457.02 6,204,517.44 42,970,974.46

Note: As at 31 May 2017, notes receivable that have been pledged amounted to RMB24,752,868.72, and notes receivable that have been endorsed but not matured amounted to RMB18,971,450.83. Bank acceptances that have been discounted or endorsed but not yet matured are derecognized.

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APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(III) Accounts receivable

1. Aging analysis of the accounts receivable based on their recording dates is set out below:

Aging Within 1 year Total	31 May 2017 99,061,741.56 99,061,741.56	31 December 2016 33,347,754.21
		33,347,754.21

Yixing New Energy’s sales are generally made on credit with credit term usually ranging from 3 months to 6 months.

2. Accounts receivable by category

Category Accounts receivable with significant single amount and individual provision for bad debts Accounts receivable with provision for bad debts made on group basis Including: Accounts receivable with provision for bad debts based on aging analysis Other receivable without provision for bad debts Account receivables with insignificant single amount and individual provision for bad debts Total	Carrying Amount 99,061,741.56 93,767,531.81 5,294,209.75 99,061,741.56	31 May 2017 amount Provision for bad debts Ratio (%) Amount Ratio (%) 100.00 94.66 5.34 100.00	31 May 2017 amount Provision for bad debts Ratio (%) Amount Ratio (%) 100.00 94.66 5.34 100.00

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APPENDIX IV

FINANCIAL INFORMATION OF YIXING NEW ENERGY

3. Top five debtors as at 31 May 2017

Company name Znshine PV-Tech Co., Ltd. (正信光電科技股份有限公司) Nanjing Chaoyang Glass C Co., Ltd. (南京朝陽玻璃有限公司) Wuxi Aisheng New Energy Co., Ltd. (無錫愛晟新能源有限公司) Risen Energy Co., Ltd (東方日升新能源股份有限公司) Jetion Solar (China) Co., Ltd. (中建材浚鑫科技有限公司) Total	Balance at the end of the period 14,896,790.71 4,235,384.62 2,708,715.20 62,201,896.47 5,294,209.75 89,336,996.75	As a percentage of the total balance of accounts receivable Balance of the provision for bad debts (%) 15.04 4.28 2.73 62.79 5.34 90.18

(IV)	Prepayments
	1. *Aging*	*analysis*	of	*prepayments*

Aging Within 1 year Total	31 May 2017 Amount Ratio (%) 7,160,431.14 100.00 7,160,431.14 100.00	31 December 2016 Amount Ratio (%) 1,700,398.32 100.00 1,700,398.32 100.00	31 December 2016 Amount Ratio (%) 1,700,398.32 100.00 1,700,398.32 100.00
			100.00

2. Top two debtors in terms of prepayments as at 31 May 2017

Company name Jiangsu Electric Power Company Yixing Power Supply Company (江蘇省電力公司宜興市供電公司) Anhui Debang Chemicals Co., Ltd. (安徽德邦化工有限公司) Total	Balance as at the end of the period 3,817,860.28 2,963,141.04 6,781,001.32	As a percentage of the total balance of prepayments (%) 53.32 41.38
		94.70

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APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(V) Other receivables

1. Other receivables

Category Other receivables with significant single amount and individual provision for bad debts Other receivable with provision for bad debts made on group basis Including: Accounts receivable with provision for bad debts based on aging analysis Other receivables with insignificant single amount and individual provision for bad debts Total Category Other receivables with significant single amount and individual provision for bad debts Other receivable with provision for bad debts made on group basis Including: Accounts receivable with provision for bad debts based on aging analysis Other receivables with insignificant single amount and individual provision for bad debts Total	Carrying Amount 686,723.30 686,723.30 686,723.30 Carrying Amount 803.25 803.25 803.25	31 May 2017 amount Provision for bad debts Ratio (%) Amount Provision ratio (%) 100.00 100.00 100.00 31 December 2016 amount Provision for bad debts Ratio (%) Amount Provision ratio (%) 100.00 100.00 100.00

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FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

(1) Other receivable with provision for bad debts made on group basis
(i) Other receivable with provision for bad debts based on aging analysis

Aging Within 1 year Total	31 May 2017 Carrying amount Provision ratio Provision for bad debts (%) 686,723.30 686,723.30	31 December 2016 Carrying amount Provision ratio Provision for bad debts (%) 803.25 803.25

2. Category of other receivables by nature

Nature Petty cash Others Total	31 May 2017 686,187.80 535.50 686,723.30	31 December 2016 803.25
		803.25

3. Top five debtors in terms of other receivables as at 31 May 2017

Name of debtor Nature Yang Dongqing Petty cash advances Wang Suyan Petty cash advances Shen Qingguo Petty cash advances Ji Decheng Petty cash advances Xu Yangyang Petty cash advances Total	Balance at the end of the period Aging 72,000.00 Within 1 year 43,935.00 Within 1 year 81,810.00 Within 1 year 201,800.50 Within 1 year 65,223.50 Within 1 year 464,769.00	As a percentage of the total balance of other receivables at the end of the period Balance of provision for bad debts (%) 10.48 6.40 11.91 29.39 9.50 67.68

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FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

(VI) Inventories

1. Category of inventories

Category Raw materials Commodity inventories Revolving materials Total	Carrying amount 11,624,010.77 10,268,953.13 11,200.89 21,904,164.79	31 May 2017 Provision for depreciation	Book value 11,624,010.77 10,268,953.13 11,200.89 21,904,164.79	31 December 2016 Carrying amount Provision for depreciation 7,944,952.07 10,724,655.96 23,861.44 18,693,469.47	Book value 7,944,952.07 10,724,655.96 23,861.44
					18,693,469.47

(VII) Other current assets

Item

Deductible input tax Surtax paid in advance Total

31 May 2017 24,894,289.60 10.71 24,894,300.31	31 December 2016 23,745,076.59
	23,745,076.59

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FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

(VIII) Fixed assets

1. Fixed assets

			Office
Item	Buildings	Machinery	equipment	Total
I. Original book value
1. 28 October 2016
2. Increase for the period	179,510,143.01	104,969,943.48	684,439.67	285,164,526.16
(1) Purchase		591,926.02	4,871.79	596,797.81
(2) Transfers from
construction in progress		100,718,128.09	115,042.72	100,833,170.81
(3) Contributions by
investors	179,510,143.01	3,659,889.37	564,525.16	183,734,557.54
3. Decrease for the period
4. 31 December 2016	179,510,143.01	104,969,943.48	684,439.67	285,164,526.16
II. Accumulated
depreciation
1. 28 October 2016
2. Increase for the period	812,069.70	635,118.19	19,698.18	1,466,886.07
(1) Provision		6,324.16		6,324.16
(2) Transfers from
construction in progress		588,019.37	1,821.52	589,840.89
(3) Contribution by
investors	812,069.70	40,774.66	17,876.66	870,721.02
3. Decrease for the period
4. 31 December 2016	812,069.70	635,118.19	19,698.18	1,466,886.07
III. Provision for
impairment
IV. Book value as at 31
December 2016	178,698,073.31	104,334,825.29	664,741.49	283,697,640.09

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APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

				Office
	Item	Buildings	Machinery	equipment	Others
	I. Original book value
	1. 1 January 2017	179,510,143.01	104,969,943.48	684,439.67	285,164,526.16
	2. Increase for the period	255,792.12	1,544,715.49	95,281.79	1,895,789.40
	(1) Purchase	19,345.00	426,461.54	95,281.79	541,088.33
	(2) Transfers from
	construction in progress	236,447.12	1,118,253.95		1,354,701.07
	3. Decrease for the period	7,505,338.05			7,505,338.05
	(1) Transfers to
	construction in progress	7,505,338.05			7,505,338.05
	4. 31 May 2017	172,260,597.08	106,514,658.97	779,721.46	279,554,977.51
	II. Accumulated
	depreciation
	1. Balance as at 1 January
	2017	812,069.70	635,118.19	19,698.18	1,466,886.07
	2. Increase for the period	2,030,910.83	3,065,896.19	56,894.14	5,153,701.16
	(1) Provision	2,030,910.83	3,065,896.19	56,894.14	5,153,701.16
	3. Decrease for the period	118,834.52			118,834.52
	(1) Transfers to
	construction in progress	118,834.52			118,834.52
	4. Balance as at 31 May
	2017	2,724,146.01	3,701,014.38	76,592.32	6,501,752.71
	III. Provision for
	impairment
	IV. Book value as at 31
	May 2017	169,536,451.07	102,813,644.59	703,129.14	273,053,224.80
2.	*As at 31 May 2017, fixed assets that were leased*		*out by way of operating lease*
	Category				Book value
	Buildings and structures				6,224,902.37
	Total				6,224,902.37

(IX) Construction in progress

1. Basic information of Construction in progress

Item Phase II production line Total	31 May 2017 Carrying amount Provision for impairment 94,040,700.17 94,040,700.17	Book value 94,040,700.17 94,040,700.17	31 December 2016 Carrying amount Provision for impairment 49,167,503.96 49,167,503.96	Book value 49,167,503.96
				49,167,503.96

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APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

		Funding	sources							Funding	sources
	Interest	capitalized for	the period	(%)			–	Interest	capitalized	during the	period	(%)		–
Including:	capitalized	interest for the	period					Including:	capitalized	interest for the	period		308,261.38	308,261.38
	Accumulated	interest	capitalized						Accumulated	interest	capitalized		308,261.38	308,261.38
			Progress								Progress
	Investment as a	percentage of	budget	(%)			–		Investment as a	percentage of	budget	(%)		–
		31 December	2016			49,167,503.96	49,167,503.96				31 May 2017		94,040,700.17	94,040,700.17
		Other	reduction							Other	reduction
		Transfer to	fixed assets		100,833,170.81		100,833,170.81			Transfer to	fixed assets		1,354,701.07	1,354,701.07
		Increase for the	period		100,833,170.81	49,167,503.96	150,000,674.77			Increase for the	period		46,227,897.28	46,227,897.28
		28 October	2016								1 January 2017		49,167,503.96	49,167,503.96
			Budget amount								Budget amount
			Project		Phase one production line	Phase two production line	Total				Project		Phase two production line	Total

– IV-30 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(X) Intangible Assets

Item
I. Original book value
1. 28 October 2016
2. Increase for the period
(1)Contributions by investors
3. Decrease for the period
4. 31 December 2016
II. Accumulated amortization
1. 28 October 2016
2. Increase for the period
(1) Provision
3. Decrease for the period
4. 31 December 2016
III. Provision for impairment
IV. Book value as at 31 December 2016
Item
I. Original book value
1. 1 January 2017
2. Increase for the period
3. Decrease for the period
4. 31 May 2017
II. Accumulated amortization
1. 1 January 2017
2. Increase for the period
(1) Provision
3. Decrease for the period
4. 31 May 2017
III. Provision for impairment
IV. Book value as at 31 May 2017
(XI)
Other non-current assets
Item
Deductible input tax on immovable property - 40%
Total

Land use rights
Total
55,762,572.30
55,762,572.30
55,762,572.30
55,762,572.30
55,762,572.30
55,762,572.30
243,965.20
243,965.20
243,965.20
243,965.20
243,965.20
243,965.20
55,518,607.10
55,518,607.10
Land use rights
Total
55,762,572.30
55,762,572.30
55,762,572.30
55,762,572.30
243,965.20
243,965.20
609,913.00
609,913.00
609,913.00
609,913.00
853,878.20
853,878.20
54,908,694.10
54,908,694.10
31 May 2017
31 December 2016
2,011,520.54
2,011,520.54

(XII) Short-term loans *Category of short-term loans* Borrowing condition Guaranteed loans Total	31 May 2017 175,000,000.00 175,000,000.00	31 December 2016 100,000,000.00
		100,000,000.00

– IV-31 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(XIII) Notes payable

Item Bank acceptances Total (XIV) Accounts payable Item Within 1 year (including 1 year) Total (XV) Receipts in advance Item Within 1 year (including 1 year) Total	31 May 2017 81,494,723.74 81,494,723.74 31 May 2017 28,778,166.33 28,778,166.33 31 May 2017 18,945,481.57 18,945,481.57	31 December 2016 16,635,433.48
		16,635,433.48

		31 December 2016 31,987,007.38
		31,987,007.38

		31 December 2016 15,000,000.00
		15,000,000.00

(XVI) Staff remuneration payables

1. *Breakdown of staff remuneration payables* Item 28 October 2016 I. Short-term remuneration II. Post-employment benefits - defined contribution plan Total Item 1 January 2017 I. Short-term remuneration 1,933,280.80 II. Post-employment benefits - defined contribution plan 222,360.00 III. Termination benefits Total 2,155,640.80	Increase for the period 4,034,895.82 450,863.68 4,485,759.50 Increase for the period 14,244,564.23 1,309,833.76 108,800.00 15,663,197.99	Decrease for the period 2,101,615.02 228,503.68 2,330,118.70 Decrease for the period 13,903,484.43 1,237,923.76 108,800.00 15,250,208.19	31 December 2016 1,933,280.80 222,360.00
			2,155,640.80

			31 May 2017 2,274,360.60 294,270.00
			2,568,630.60

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FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

2. Short-term staff remuneration

Item 1. Salary, bonus, allowance and subsidy 2. Staff’s welfare 3. Social insurance premium Including: Medical insurance Work-related injury insurance Maternity insurance 4. Housing provident fund Total Item 1. Salary, bonus, allowance and subsidy 2. Staff’s welfare 3. Social insurance premium Including: Medical insurance Work-related injury insurance Maternity insurance 4. Housing provident fund 5. Labor union expenses and employee education expenses Total 3. *Defined contribution plans* Item 1. Basic pension insurance 2. Unemployment insurance 3. Enterprise annuity contribution Total	28 October 2016 1 January 2017 1,801,000.00 128,968.80 100,062.00 23,347.80 5,559.00 3,312.00 1,933,280.80 28 October 2016	Increase for the period 3,623,389.36 134,611.16 259,619.30 202,003.70 46,370.85 11,244.75 17,276.00 4,034,895.82 Increase for the period 12,359,799.31 759,742.67 589,452.39 137,542.92 32,747.36 102,240.00 79,198.81 14,244,564.23 Increase for the period 428,200.50 22,242.28 420.90 450,863.68	Decrease for the period 1,822,389.36 134,611.16 130,650.50 101,941.70 23,023.05 5,685.75 13,964.00 2,101,615.02 Decrease for the period 12,080,299.31 943,583.44 718,034.87 557,092.89 129,992.37 30,949.61 82,368.00 79,198.81 13,903,484.43 Decrease for the period 216,958.50 11,124.28 420.90 228,503.68	31 December 2016 1,801,000.00 128,968.80 100,062.00 23,347.80 5,559.00 3,312.00
				1,933,280.80

				31 May 2017 2,080,500.00 943,583.44 170,676.60 132,421.50 30,898.35 7,356.75 23,184.00
				2,274,360.60

				31 December 2016 211,242.00 11,118.00
				222,360.00

– IV-33 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

Item 1. Basic pension insurance 2. Unemployment insurance premium Total	1 January 2017 211,242.00 11,118.00 222,360.00	Increase for the period 1,244,359.20 65,474.56 1,309,833.76	Decrease for the period 1,176,044.70 61,879.06 1,237,923.76	31 May 2017 279,556.50 14,713.50
				294,270.00

(XVII) Taxes payable

Category Value-added tax Enterprise income tax Urban maintenance and construction tax Property tax Land-use tax Individual income tax Education surcharges Other taxes Total (XVIII) Interest payable Category Interest on long-term loans Interest payable on short-term loans Total (XIX) Other payables Nature Balances with related parties Deposit and tender bond Advances from shareholders for assuming debts Other current accounts Total	31 May 2017 271.46 1,213,390.89 286,764.78 84,757.48 32,111.45 5,709.80 1,623,005.86 31 May 2017 47,162.5 232,604.16 279,766.66 31 May 2017 99,130.71 155,400.00 4,500,000.00 136,304.62 4,890,835.33	31 December 2016 14.08 183,372.46 0.70 286,764.78 84,757.48 22,925.21 0.42 4,700.48
		582,535.61

		31 December 2016 31 December 2016 91,600.00 10,149,166.66 270,634.30
		10,511,400.96

– IV-34 –

FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

(XX) Long-term loans

Borrowing condition Mortgage loan Total	31 May 2017 31 December 2016 Interest rate range 30,000,000.00 5.145% 30,000,000.00

(XXI) Paid-in capital

Name of investor Triumph Technology Group Company (凱盛科技集團公司) Far East Optoelectronics Company Limited (遠東光電股份有限公司) Yixing Environmental Technology Innovation Venture Investment Company Limited (宜興環保科技創新創業投資有限公司) GCL System Integration Technology Co., Ltd. (協鑫集成科技股份有限公司) Total Capital reserve Category 1. Capital premium Total	31 December 2016 Increase for the period Decrease for the period Amount Ratio % 160,000,000.00 51.00 91,000,000.00 29.01 40,000,000.00 12.75 22,700,000.00 7.24 313,700,000.00 100.00 28 October 2016 Increase for the period 31 December 2016 6,776,785.31 6,776,785.31 6,776,785.31 6,776,785.31	Amount 160,000,000.00 91,000,000.00 40,000,000.00 22,700,000.00 313,700,000.00 Increase for the period	31 May 2017 Ratio % 51.00 29.01 12.75 7.24
			100.00

			31 May 2017 6,776,785.31
			6,776,785.31

(XXII) Capital reserve

– IV-35 –

APPENDIX IV

FINANCIAL INFORMATION OF YIXING NEW ENERGY

Note: Pursuant to the relevant agreement, the capital contribution subscribed by Far East Optoelectronics Company Limited (遠東光電股份有限公司) is RMB91,000,000.00, which will be made with the appraised and valued net assets of its photovoltaic glass production line and corresponding complementary assets and liabilities. As valuated by Zhongjing Minxin (Beijing) Assets Evaluation Co., Ltd. (中京民信(北京)資產評估有限公司) who 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) at the valuation base date of 30 April 2016, the appraised value of the net assets is RMB97,776,785.31. After deducting the subscribed capital contribution of RMB91,000,000.00, the premium of RMB6,776,785.31 will be transferred to capital reserve.

(XXIII) Surplus reserve

Category 28 October 2016 Statutory surplus reserve Total	Increase for the period 53,914.54 53,914.54	31 December 2016 Increase for the period 53,914.54 53,914.54	31 May 2017 53,914.54
			53,914.54

(XXIV) Undistributed profits

	31 December	2016
		Proportion of
		appropriation or
Item	Amount	distribution
Undistributed profit at the end of prior period before
adjustment
Adjustment of total undistributed profit at the beginning of
the period (increase expressed with +, and decrease
expressed with -)
Undistributed profit at the beginning of the period after
adjustment	539,145.38
Add: Net profit attributable to the owners of the parent for
the period	539,145.38
Less: Appropriation to statutory surplus reserve	53,914.54	10%
Appropriation to discretionary surplus reserve
Dividend payable on ordinary shares
Dividend on ordinary shares as converted into share capital
Undistributed profit at the end of period	485,230.84

– IV-36 –

FINANCIAL INFORMATION OF YIXING NEW ENERGY

APPENDIX IV

				31 May 2017	31 May 2017
						Proportion of
					appropriation or
Item				Amount		distribution
Undistributed profit at the end of prior period before
adjustment				485,230.84
Total effects of adjustment of undistributed profit at the
beginning of the period (“+”for increase and “-”for
decrease)
Undistributed profit at the beginning of period after
adjustment				485,230.84
Add: Net profit attributable to the owners of the parent for
the period				3,581,281.02
Less: Appropriation to statutory surplus reserve
Appropriation to discretionary surplus reserve
Dividend payable on ordinary shares
Dividend on ordinary shares as converted into share capital
Undistributed profit at the end of period				4,066,511.86
Operating income and operating cost
				28 October 2016	to	31 December
Item	January to May of 2017					2016
	Income		Cost	Income		Cost
I. Subtotal of principal
operations	103,151,943.86	83,267,237.26		33,070,696.37	28,747,568.00
Photovoltaic glass	103,151,943.86	83,267,237.26		33,070,696.37	28,747,568.00
II. Subtotal of other operations	7,649,708.17	7,079,453.29		4,040,266.63		3,962,514.72
Sales of materials	295,431.63		3,063.37	77,948.69
Fixed assets leasing	349,519.46		71,545.35
Sales of water and electricity	7,004,757.08	7,004,844.57		3,962,317.94		3,962,514.72
Total	110,801,652.03	90,346,690.55		37,110,963.00	32,710,082.72

(XXV) Operating income and operating cost

(XXVI) Taxes and surcharges

Item Urban maintenance and construction tax Education surcharges Property tax Land-use tax Stamp duty Others Total	January to May of 2017 35.65 21.38 674,888.41 211,893.77 220,846.69 14.26 1,107,700.16	28 October 2016 to 31 December 2016 0.70 0.42 286,764.78 84,757.48 8,418.00 0.28
		379,941.66

– IV-37 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(XXVII) Selling expenses

Item Staff salaries and benefits Social insurances Depreciation expenses Office expenses Business travel expenses Transportation costs Others Total	January to May of 2017 363,817.46 48,351.00 1,652.37 139,370.85 78,030.75 2,090,476.81 617.82 2,722,317.06	28 October 2016 to 31 December 2016 53,772.91 10,245.60 446.58 5,875.63 27,250.50 679,979.14
		777,570.36

(XXVIII) Administrative expenses

Item Staff salaries and benefits Social insurance premium Housing provident fund Depreciation of fixed assets Amortization of intangible assets Office expenses Business travel expenses Utilities Intermediary engagement fees Business Entertainment expenses Research and development costs Other administrative expenses Total	January to May of 2017 2,225,191.44 261,053.70 18,864.00 980,515.97 348,813.15 412,281.91 143,293.10 193,176.70 28,301.89 147,229.14 4,400,916.10 250,335.39 9,409,972.49	28 October 2016 to 31 December 2016 519,857.07 103,715.58 13,244.00 419,689.58 139,525.26 47,656.42 8,934.40 13,717.11 61,320.75 27,430.00 246,289.55
		1,601,379.72

(XXIX) Financial expenses

Item Interest expense Less: Interest income Other expenses Total	January to May of 2017 2,521,182.65 136,818.52 35,935.73 2,420,299.86	28 October 2016 to 31 December 2016 973,291.33 64,237.51 10,416.88
		919,470.70

– IV-38 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(XXX) Income tax expenses

1. Breakdown of income tax expenses

Item Current income tax expenses under applicable tax laws and regulations Total	January to May of 2017 1,213,390.89 1,213,390.89	28 October 2016 to 31 December 2016 183,372.46
		183,372.46

(XXXI) Cash flow statement

1. Other cash received from or paid for activities related to operation

	January to May of	28 October to 31
Item	2017	December of 2016
Other cash received from activities related to
operation	794,022.31	461,851.10
Including: guarantee deposits and security deposits	244,200.00	199,600.00
Current accounts with entities and individuals	522,042.11	198,013.59
Interest income	27,780.20	64,237.51
Other cash paid for activities related to operation	13,690,577.56	430,313.52
Including: payment of various expenses	699,815.90	93,249.39
Guarantee deposits	160,400.00	108,000.00
Bank charges and others	180,458.54	10,414.88
Payments to Far East Optoelectronics Company
Limited*	6,988,650.00
Payments to Huai’an Dongxu Cable Sales Co., Ltd*
(淮安市東旭電纜銷售有限公司)	5,000,000.00
Other current accounts with entities and individuals	661,253.12	218,649.25
*Other cash received from or paid for financing-related activities*
	January to May of	28 October to 31
Item	2017	December of 2016
Other cash paid for financing-related activities		60,000,000.00
Including: CNBM (Hefei) New Energy Company
Limited*		20,000,000.00
Yixing Yuntong Chemical Technology Co., Ltd* (宜興
市運通化工科技有限公司)		40,000,000.00

2. Other cash received from or paid for financing-related activities

– IV-39 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(XXXII) Supplementary information of cash flow statement

1. Supplementary information of cash flow statement

		January to May of	28 October to 31
	Item	2017	December of 2016
	1. Net profit adjusted to cash flow of operating
	activities
	Net profit	3,581,281.02	539,145.38
	Add: Provision for impairment of assets
	Depreciation of fixed assets, depletion of oil and gas
	assets, depreciation of productive biological assets	5,153,701.16	1,466,886.07
	Amortization of intangible assets	609,913.00	243,965.20
	Amortization of long-term deferred expenses
	Losses from disposal of fixed assets, intangible assets
	and other long-term assets (“-” for gains)
	Losses on scrapping of fixed assets (“-” for gains)
	Losses from changes in fair value (“-” for gains)
	Financial expenses (“-” for gains)	2,524,638.35	824,124.67
	Investment losses (“-” for gains)
	Decrease in deferred income tax assets (“-” for
	increase)
	Increase in deferred income tax liabilities (“-” for
	decrease)
	Decrease in inventories (“-” for increase)	-3,210,695.32	-18,693,469.47
	Decrease in operating receivables (“-” for increase)	-135,918,375.89	-35,048,127.57
	Increase in operating payables (“-” for decrease)	37,205,409.92	29,422,204.03
	Others
	Net cash flow from operating activities	-90,054,127.76	-21,245,271.69
	2. Significant investing and financing activities that do
	not involve cash receipts or payments
	Conversion of debt into capital
	Convertible corporate bonds due within one year
	Fixed assets under finance lease
	3. Net changes in cash and cash equivalents
	Closing balance of cash	25,677,665.20	25,381,262.45
	Less: Opening balance of cash	25,381,262.45
	Add: Closing balance of cash equivalents
	Less: Opening balance of cash equivalents
	Net increase in cash and cash equivalents	296,402.75	25,381,262.45
2.	*Cash and cash equivalents*
		January to May of	28 October to 31
	Item	2017	December of 2016
	1. Cash	25,677,665.20	25,381,262.45
	Including: Cash on hand	109,719.53	193,750.06
	Bank deposit available for payment at any time	25,567,945.67	25,187,512.39
	Other monetary funds available for payment at any
	time
	2. Cash equivalents
	3. Cash and cash equivalents at the end of the period	25,677,665.20	25,381,262.45

– IV-40 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(XXXIII) Assets under restricted ownership or use right

Book value at the Reasons for Item end of the period restriction Monetary funds 21,807,681.43 Guarantee deposit for bank acceptance Notes receivable 24,752,868.72 Pledged for notes payable Fixed assets 36,496,135.95 Mortgaged to secure loans Total 83,056,686.10 –

VI. RELATED PARTIES AND RELATED PARTY TRANSACTIONS

(I) The parent company of Yixing New Energy

				Equity interest	Voting shares
	Place of	Nature of	Registered	in Yixing New	in Yixing New
Name of parent company	registration	business	capital	Energy	Energy
				(%)	(%)
Triumph Technology Group	Beijing	State-owned	2,498,320,000.00	51	51
Company*		enterprise

(II) Other related parties of Yixing New Energy

Name of other related parties

Relationship with Yixing New Energy

Far East Optoelectronics Company Limited*

Yixing Environmental Technology Innovation Venture Investment Company Limited GCL System Integration Technology Co., Ltd. Jetion Solar (China) Co., Ltd. (中建材浚鑫科技有限公司) Light Industry Automation Institute* (輕工業自動化研究所) China Triumph International Engineering Co., Ltd. Jiangsu Branch

Triumph Quartz Materials (Huang Shan) Co., Ltd.* (凱盛石英材料(黃山)有限公司)

CNBM (Hefei) New Energy Company Limited*

Bengbu Chemical Engineering Machinery Making Co., Ltd.* (蚌埠化工機械製造有限公司)
CNBM Triumph Robotics (Shanghai) Co., Ltd.* (中建材凱盛機器人(上海)有限公司)

Shareholder Shareholder

Shareholder

Common ultimate controller Common ultimate controller Common ultimate controller

Common ultimate controller

Common ultimate controller Common ultimate controller

Common ultimate controller

CTIEC Shenzhen Scieno-tech Engineering Company Limited Common ultimate controller Bengbu Branch

– IV-41 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(III) Related party transactions

1. Purchase and sales of goods and provision and receiving of services

			28 October
		January to	to 31
	Content of related	May of	December
Name of related party	party transaction	2017	of 2016
Far East Optoelectronics Company Limited*	Procurement of	253,681.97	15,970,251.87
(遠東光電股份有限公司)	material and
	stock goods
Triumph Technology Group Company*	Procurement of	712,288.17	4,566,667.03
	raw material
Sino-Italian CTIEC (Bengbu) Glass	Procurement of	10,119.66	13,564.10
Cold-End Machinery Company Limited*	spare parts and
	components/
	equipment
Bengbu Design & Research Institute for	Technical service	75,471.70
Glass Industry
Triumph Quartz Materials (Huang Shan)	Procurement of	1,429,923.77
Co., Ltd.* (凱盛石英材料(黃山)有限公司)	raw material
Bengbu Chemical Engineering Machinery	Procurement of	48,618.79
Making Co., Ltd.* (蚌埠化工機械製造有限	spare parts and
公司)	components
Light Industry Automation Institute* (輕工	Procurement of	420,588.83
業自動化研究所)	spare parts and
	components
CNBM Triumph Robotics (Shanghai) Co.,	Procurement of	8,205.13
Ltd.* (中建材凱盛機器人(上海)有限公司)	spare parts and
	components
China Triumph International Engineering	Procurement of	6,183,658.11	13,117,569.20
Co., Ltd. Jiangsu Branch	Equipment
CTIEC Shenzhen Scieno-tech Engineering	Procurement of	15,384.62
Company Limited. Bengbu Branch	Equipment
Jetion Solar (China) Co., Ltd.* (中建材浚鑫	Sales of products	1,755,881.70	2,769,083.90
科技有限公司)
Far East Optoelectronics Company Limited*	Sales of water	2,106,844.47	1,739,703.02
	and electricity

2. Related party leases

Rental income Rental income recognized for recognized for the period from the period from 28 October to Details of lease January to 31 December of Name of lessor Name of lessee of assets May of 2017 2016 Yixing New Far East Office and 349,519.46 Energy Optoelectronics dormitory Company Limited *

– IV-42 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

3. Related party guarantees

					Guarantee
	Guaranteed	Guarantee	Start date of	End date of	fulfilled or
Guarantor	party	amount	guarantee	guarantee	not
Triumph Technology Group	Yixing New	30,000,000.00	2017/4/12	2022/6/30	No
Company*, Far East	Energy
Optoelectronics Company
Limited*
Triumph Technology Group	Yixing New	75,000,000.00	2017/3/27	2018/3/26	No
Company*	Energy
Triumph Technology Group	Yixing New	50,000,000.00	2017/3/28	2018/3/27	No
Company*	Energy
Triumph Technology Group	Yixing New	50,000,000.00	2016/12/26	2018/12/26	No
Company*, Far East	Energy
Optoelectronics Company
Limited*

4. Transfers of assets and debt restructuring involving related parties

		Amount for the
		period from 28
	Content of related	October to 31
Name of related party	party transaction	December of 2016
Far East Optoelectronics Company Limited*	Acquisition of	6,999,968.75
	fixed assets and
	construction in
	progress

5. Other related party transactions

Pursuant to the contribution agreement and the articles of association, the capital contribution from Far East Optoelectronics Company Limited will be made in the form of the appraised and valued net assets of its photovoltaic glass production line and corresponding complementary assets and liabilities. As valuated by Zhongjing Minxin (Beijing) Assets Evaluation Co., Ltd. (中京民信(北京)資產評估有限公司) who 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) at the valuation base date of 30 April 2016, the appraised value of the net assets is RMB97,776,785.31, including fixed assets with appraised value of RMB184,452,708.01 (tax inclusive), construction in progress with appraised value of RMB141,561,505.00 (tax inclusive), intangible assets with appraised value of RMB55,762,572.30, short-term loans with appraised value of RMB199,000,000.00, receipts in advance with appraised value of RMB35,000,000.00 and other payables with appraised value of RMB50,000,000.00. The procedures for handing over the assets and liabilities by Far East Optoelectronics Company Limited* to Yixing New Energy were done as at 31 October 2016.

– IV-43 –

APPENDIX IV — FINANCIAL INFORMATION OF YIXING NEW ENERGY

(IV) Accounts receivable from and payable to related parties

1. Items of receivables

			31 May 2017		31	December 2016	December 2016
				Bad debt			Bad debt
Item	Name of related party Book		balance	provision	Book balance		provision
Accounts	Jetion Solar (China) Co., Ltd.*	5,294,209.75			3,239,828.16
receivable	(中建材浚鑫科技有限公司)
Accounts	Far East Optoelectronics Company Limited*				29,666.29
receivable
Prepayments	Light Industry Automation Institute*				205,000.00
	(輕工業自動化研究所)
Prepayments	CNBM Triumph Robotics (Shanghai) Co., Ltd.*	1,394.87
	(中建材凱盛機器人(上海)有限公司)
Total		5,295,604.62			3,474,494.45

*Items of payables*
							31 December
Item	Name of related party			31 May 2017				2016
Accounts	China Triumph International Engineering Co., Ltd.			3,695,594.22		13,347,556.00
payable	Jiangsu Branch
Accounts	Far East Optoelectronics Company Limited*						5,287,969.62
payable
Accounts	Triumph Technology Group Company*						4,566,667.03
payable
Accounts	Triumph Quartz Materials (Huang Shan) Co., Ltd.*			1,297,626.03
payable	(凱盛石英材料(黃山)有限公司)
Accounts	Light Industry Automation Institute*	(輕工業自動		227,516.33
payable	化研究所)
Accounts	Bengbu Design & Research Institute for Glass			80,000.00
payable	Industry
Accounts	Bengbu Chemical Engineering Machinery		Making	46,328.20			3,076.92
payable	Co., Ltd.* (蚌埠化工機械製造有限公司)
Payments	CNBM (Hefei) New Energy Company Limited*			15,000,000.00		15,000,000.00
received
in
advance
Payments	Far East Optoelectronics Company Limited*			1,084,961.67
received
in
advance
Other	Far East Optoelectronics Company Limited*			91,130.71			149,166.66
payables
Other	Triumph Quartz Materials (Huang Shan) Co., Ltd.*				5,000.00		5,000.00
payables	(凱盛石英材料(黃山)有限公司)
Other	Light Industry Automation Institute*	(輕工業自動			3,000.00		3,000.00
payables	化研究所)
Notes	Light Industry Automation Institute*	(輕工業自動		205,000.0			205,000.00
payable	化研究所)

2. Items of payables

– IV-44 –

APPENDIX IV

FINANCIAL INFORMATION OF YIXING NEW ENERGY

			31 December
Item	Name of related party	31 May 2017	2016
Notes	Far East Optoelectronics Company Limited*	10,500,000.00	10,000,000.00
payable
Notes	Triumph Quartz Materials (Huang Shan) Co., Ltd.*	231,196.00
payable	(凱盛石英材料(黃山)有限公司)
Notes	China Triumph International Engineering Co., Ltd.	17,819,504.79
payable	Jiangsu Branch

VII. COMMITMENTS AND CONTINGENCIES

None

VIII. EVENTS AFTER THE BALANCE SHEET DATE

None

IX. OTHER SIGNIFICANT EVENTS

None

X. SUBSEQUENT FINANCIAL STATEMENTS

Yixing New Energy hasn’t prepared any audited financial statements, nor has it declared or paid any dividends in respect of any period subsequent to 31 May 2017.

Yours faithfully,

WUYIGE Certified Public Accountants LLP

7 August 2017

– IV-45 –

PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

The following is the text of the valuation report prepared for the purpose of incorporation in this circular received from Vigers Appraisal and Consulting Limited, an independent professional valuer, in connection with the valuations of the Properties held by the Group as at 30th June 2017 and 31st July 2017.

Vigers Appraisal and Consulting Limited

International Property Consultants

10/F, The Grande Building, 398 Kwun Tong Road, Kowloon, Hong Kong Tel: (852) 2342-2000 Fax: (852) 3101-9041 E-mail: [email protected] www.Vigers.com

==> picture [77 x 76] intentionally omitted <==

11 October 2017

Luoyang Glass Company Limited

No. 9 Tang Gong Middle Road, Xigong District, Luoyang, Henan Province, The People’s Republic of China

Dear Sirs,

We refer to the recent instruction from “ Luoyang Glass Company Limited” (the “Company”) and its subsidiaries (together referred to as the “Group”) to “ Vigers Appraisal and Consulting Limited ” (hereinafter referred to as “we” or “Vigers”) to assess the capital values of various properties held by the Group (individually referred to as the “Property” and collectively referred to as the “Properties”) as listed in the attached valuation certificates for inclusion in this circular, we confirm that we have inspected the Properties, made relevant enquiries and investigations as well as obtained such further information as we consider necessary for the purpose of providing our opinion of values of the Properties as at 30th June 2017 and 31st July 2017 (the “Date(s) of Valuation”).

BASIS OF VALUE

Our valuations are our opinion of market values of the Properties which is defined as intended to mean “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”. Our valuations have been prepared in accordance with “The HKIS Valuation Standards (2012 Edition)” published by “The Hong Kong Institute of Surveyors” (“HKIS”), “RICS Valuation – Global Standards 2017” published by the “Royal Institution of Chartered Surveyors” (“RICS”), relevant provisions in the Companies Ordinance and the “Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited” (Main Board) published by “The Stock Exchange of Hong Kong Limited” (“HKEx”).

– V-1 –

PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

VALUATION APPROACH

In respect of Property Nos. 2 and 4, we have assessed those two Properties by market approach. As defined in the “International Valuation Standards 2017” published by the “International Valuation Standards Council” (“IVSC”), the market approach “provides an indication of value by comparing the asset with identical or comparable (that is similar) assets for which price information is available”. In our valuations, we have assessed those two Properties by comparison method of valuation whereby comparisons based on actual sales transactions and/or offering of comparable properties in the locality on a unit selling price basis have been made. Comparable properties with similar character are analysed and carefully weighed against all respective advantages and disadvantages of those two Properties in order to arrive at the fair comparison of values.

In respect of Property Nos. 5, 6 and 7 that there was no sufficient comparable for comparison, we have assessed those three Properties by cost approach. As defined in the “International Valuation Standards 2017” published by the IVSC, the cost approach “provides an indication of value using the economic principle that a buyer will pay no more for an asset than the cost to obtain an asset of equal utility, whether by purchase or by construction, unless undue time, inconvenience, risk or other factors are involved. The approach provides an indication of value by calculating the current replacement or reproduction cost of an asset and making deductions for physical deterioration and all other relevant forms of obsolescence”. In arriving at our opinion of values for those three Properties, we have assessed the depreciated replacement cost (“DRC”) whereby “DRC is based on an estimate of the market value for the existing use of the land, plus the current gross replacement (reproduction) costs of the improvements, less allowances for physical deterioration and all relevant forms of obsolescence and optimization”. Value(s) of property interest(s) of the Properties derived from the basis of DRC is/are subject to adequate potential profitability of the business(es) in concern.

In respect of Property Nos. 1 and 3, we have ascribed no commercial value to those two Properties as relevant Certificate of State-owned Land-use or Certificate of Building Ownership is yet to be obtained such that those two Properties could not freely be transferred, leased out, mortgaged or by other legal means disposed of in the prevailing market.

TITLE INVESTIGATION

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

relied on the advice given by the Group and its legal adviser, “Beijing Kang Da Law Firm” (the “PRC Legal Adviser”) on the laws of the PRC regarding titles to the Properties. For the purpose of our valuations, we have taken the legal opinion prepared by the PRC Legal Adviser into account, in particular title, ownership, encumbrances and so on of the Properties. While we have exercised our professional judgement in arriving at our valuations, you are urged to consider our valuation assumptions with caution.

VALUATION CONSIDERATION

On-site inspections to the Properties, but not in any form of a building survey, were carried out by the designated property valuation staff of Vigers in 2017 as detailed in each Valuation Certificate but we must stress that neither structural survey nor test on any services was made. We are therefore unable to report as to whether the Properties are free from rot, infestation or other structural or non-structural defect. We have carried out inspections and investigations to the Properties which is considered professionally adequate for the purpose of our valuations. But we must stress that the inspections and investigation conducted are not equivalent of an inspection conducted by other professional such as building surveyor, structural engineer or electrical engineer other than a general practice surveyor. During the course of our inspections to the Properties, no obvious defect was noted; and hence there was no impact onto the valuations.

Having examined all relevant documents and information, we have relied to a considerable extent on the information given by the Group, in particular planning approvals or statutory notices, easements, land-use rights’ term(s), site and floor areas, occupancy status as well as in the identification of the Properties. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group, and we have been advised by the Group that no material fact has been omitted from the information so given. We have not carried out detailed on-site measurement to verify the correctness of the site and floor areas of the Properties but we have assumed that the site and floor areas shown on the documents and/or information handed to us are accurate and reliable. All dimensions, measurements and areas included in our valuation report are based on the information contained in the documents provided to us by the Group and are therefore approximations.

VALUATION ASSUMPTIONS

Our valuations have been made on the assumption that the Properties could be sold in the prevailing market in existing state but without the effect of any deferred term contract(s), leaseback(s), joint venture(s) or any other similar arrangement(s) which may serve to affect the value(s) of the Properties, unless otherwise noted or specified. In addition, no account has been taken into of any option or right of pre-emption concerning or affecting the sale of the Properties.

In our valuations, we have made reference to the legal opinion prepared by the PRC Legal Adviser, regarding titles to the Properties that the owner(s) of the Properties has/have free and uninterrupted rights to use and assign the Properties during the whole of the respective

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

unexpired land-use rights’ term(s) granted subject to payment of usual land-use fee(s) unless otherwise specified. Our valuations for the Properties are carried out on the basis of a cash purchase, and no allowance has been made for interest(s) and/or funding cost(s) in relation to the sale or purchase of the Properties.

We had carried out on-site inspections to the Properties but no soil investigation has been carried out to determine the suitability of ground conditions or services for any property development erected or to be erected on the Properties. Our valuations have been carried out on the assumption that these aspects are satisfactory. We have also assumed that all necessary consent(s), approval(s) and licence(s) from relevant government authorities have been or will be granted without onerous condition(s) or delay.

Our valuations of the Properties are the value(s) estimated without regard to cost(s) of sale or purchase or transaction and without offset for any associated tax(es) or potential tax(es). Any transaction cost(s) or encumbrance(s) such as mortgage(s), debenture(s) or other charge(s) against the Properties have been disregarded. In our valuations, we have made reference to the legal opinion prepared by the PRC Legal Adviser regarding titles to the Properties that the Properties are free from encumbrance(s), restriction(s) and outgoing of an onerous nature which may serve to affect the value(s) of the Properties.

REMARKS

As advised by the Group, under the prevailing rule(s) and regulation(s) of tax law(s) in the PRC, potential tax liabilities which would arise if the Properties as specified in this valuation report are to be sold include mainly,

Value Added Tax amounting to 5% of the selling price(s) (Value Added Tax excluded amount) without any input credit for properties purchased before 30th April 2016, and 11% of the selling price(s) (Value Added Tax excluded amount) with Value Added Tax input that can be credited for properties purchased after 30th April 2016;
Land Appreciation Tax amounting to 30% to 60% of appreciated amount;
Corporate Income Tax amounting to 25% of the capital gain(s) of the seller after deducting the potential tax fee (i.e. surtaxes of Value Added Tax, Stamp Duty and Land Appreciation Tax) in effecting a sales;
Stamp Duty amounting to 0.05% of transaction amount; and
Withholding Tax at 10% on dividend distributed for dividend repatriated outside PRC; or at 5% on dividend distributed if Hong Kong and the PRC double tax arrangement applies.

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

As advised by the Group, there is no intention in selling those Properties which are held for owner-occupation purpose; whilst for those of the Properties which are held for sale purpose, the tax liabilities which would arise if those of the Properties are to be sold at the amount of the valuation are listed in 1. to 5. above. The likelihood of such liability crystallising for those Properties held for owner-occupation is very low; and the likelihood of such liability for those Properties held for sale is high. As informed by the Company, had Property No. 4 (which is held for sale purpose with a valid Certificate of Building Ownership) been sold at the amount of the valuation as at the Date(s) of Valuation, the estimated amount of potential tax liabilities which would arise is approximately RMB110,000 only, subject to the prevailing rule(s) and regulation(s) of tax law(s) in the PRC.

We hereby declare that we are independent of the Group and we are not interested directly or indirectly in any unit or share in any member of the Group. We do not have any right or option whether legally enforceable or not to subscribe for or to nominate persons to subscribe for any unit or share in any member of the Group.

Unless otherwise stated, all monetary amounts stated herein are denoted in the currency of Renminbi (“RMB”), the lawful currency of the PRC.

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

We enclose herewith the Summary of Values and Valuation Certificates.

Yours faithfully, For and on behalf of VIGERS APPRAISAL AND CONSULTING LIMITED

Sr David W. I. CHEUNG

MRICS MHKIS RPS(GP) CREA RICS Registered Valuer Executive Director

Sr Franky C. H. WONG

MSc(RealEst) MCIM MRICS MHKIS RPS(GP) RICS Registered Valuer Director

Note: Sr David W. I. CHEUNG is a “Registered Professional Surveyor in General Practice Division” (“RPS(GP)”) under the “Surveyors Registration Ordinance” (Cap. 417) in Hong Kong; and is a “RICS Registered Valuer” under the “Valuer Registration Scheme” regulated by the RICS with over 34 years’ valuation experience on properties in various regions including Hong Kong, Macao, the PRC, Taiwan, Japan, Southeast Asia countries, the United Kingdom (“UK”), Canada and the United State of America (“USA”). Sr CHEUNG has been vetted on the “List of Property Valuers for Undertaking Valuations for Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers” published by the HKIS, and is suitably qualified for undertaking valuations relating to listing exercises. Sr CHEUNG has been employed by “Vigers Appraisal and Consulting Limited” as a qualified surveyor since 2006.

Graduated from The University of Hong Kong with a Master of Science in Real Estate, Sr Franky C. H. WONG is a “Registered Professional Surveyor in General Practice Division” (“RPS(GP)”) under the “Surveyors Registration Ordinance” (Cap. 417) in Hong Kong, and is a “RICS Registered Valuer” under the “Valuer Registration Scheme” regulated by the RICS with over 16 years’ valuation experience on properties in various regions including Hong Kong, Macao, the PRC, Taiwan, Japan, Southeast Asia countries, UK and the USA. Sr WONG has been vetted on the “List of Property Valuers for Undertaking Valuations for Incorporation or Reference in Listing Particulars and Circulars and Valuations in connection with Takeovers and Mergers” published by the HKIS and “List of Property Valuers for Undertaking Valuations for Incorporation or Reference in Listing Particulars and Circulars and Valuations in connection with Takeovers and Mergers” published by RICS Hong Kong, and is suitably qualified for undertaking valuations relating to listing exercises. Sr WONG has been employed by “Vigers Appraisal and Consulting Limited” as a valuer since 2006 and as a qualified surveyor since 2009.

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

SUMMARY OF VALUES

		Capital Value in
		Existing State as at	% of Interest	Property Interest
		the Date(s) of	held by the	attributatble to the
No.	Property	Valuation	Compay	Group
1.	The Land Parcels having a Site Area of	As at 30th	As at 30th	As at 30th
	about 56,691.40 square metres bounded by	June 2017	June 2017	June 2017
	Zhou Wang Ling Road, Lingbo Road, Heluo	No Commercial	100%	No Commercial
	Road and Zhuofei Road,	Value		Value
	Phase 2 of High-tech Industrial
	Development District,	As at 31st	As at 31st	As at 31st
	Luoyang,	July 2017	July 2017	July 2017
	Henan Province	No Commercial	100%	No Commercial
	the PRC	Value		Value
2.	Lot No. 2016-43,	As at 30th	As at 30th	As at 30th
	Puyang Town,	June 2017	June 2017	June 2017
	Puyang,	RMB50,100,000	100%	RMB50,100,000
	Henan Province
	the PRC	As at 31st	As at 31st	As at 31st
		July 2017	July 2017	July 2017
		RMB50,100,000	100%	RMB50,100,000
3.	Flat 701 on 7th Floor,	As at 30th	As at 30th	As at 30th
	No. 4-7-1 of Block A of Hanxi First Road,	June 2017	June 2017	June 2017
	Qiaokou District,	No Commercial	100%	No Commercial
	Wuhan,	Value		Value
	Hubei Province,
	the PRC	As at 31st	As at 31st	As at 31st
		July 2017	July 2017	July 2017
		No Commercial	100%	No Commercial
		Value		Value
4.	Units 116 and 171 on 3rd Floor,	As at 30th	As at 30th	As at 30th
	Block 1,	June 2017	June 2017	June 2017
	No. 68 Dehua Street,	RMB720,000	100%	RMB720,000
	Erqi District,
	Zhengzhou,	As at 31st	As at 31st	As at 31st
	Henan Province,	July 2017	July 2017	July 2017
	the PRC	RMB720,000	100%	RMB720,000

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

No.
Property
Capital Value in
Existing State as at
the Date(s) of
Valuation
% of Interest
held by the
Compay
5.
Lot Nos. 02-38, 02-39 and 02-40,
Xihan Village,
Zhuge Town, Yanshi District,
Luoyang,
Henan Province,
the PRC
As at 30th
June 2017
RMB111,400,000
As at 31st
July 2017
RMB111,400,000
As at 30th
June 2017
100%
As at 31st
July 2017
100%
6.
Lot No. 03-054,
Shoumang Road,
Yanshi District,
Luoyang,
Henan Province,
the PRC
As at 30th
June 2017
RMB100,200,000
As at 31st
July 2017
RMB100,100,000
As at 30th
June 2017
100%
As at 31st
July 2017
100%
7.
No. 123 Longjin Road,
Lot No. Jiao 1103015,
Longzihu District,
Bengbu,
Anhui Province,
the PRC
As at 30th
June 2017
RMB127,600,000
As at 31st
July 2017
RMB127,500,000
As at 30th
June 2017
100%
As at 31st
July 2017
100%
TOTAL

Property Interest
attributatble to the
Group
As at 30th
June 2017
RMB111,400,000
As at 31st
July 2017
RMB111,400,000
As at 30th
June 2017
RMB100,200,000
As at 31st
July 2017
RMB100,100,000
As at 30th
June 2017
RMB127,600,000
As at 31st
July 2017
RMB127,500,000

As at 30th
June 2017
RMB390,020,000
As at 31st
July 2017
RMB389,820,000

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

VALUATION CERTIFICATE

Property held by the Group for Owner-occupation purpose

				Capital Value in
				Existing State as at		Property Interest
				the Date(s) of	% of Interest held by	attributable to the
No.	Property	General Description	Occupancy Status	Valuation	the Company	Company
1.	The Land Parcels	The Property	As informed, part of	As at 30th	As at 30th	As at 30th
	having a Site Area	comprises several	the Property is	June 2017	June 2017	June 2017
	of about 56,691.40	land parcels having	occupied as roads	No Commercial	100%	No Commercial
	square metres	a site area of about	and public	Value		Value
	bounded by Zhou	56,691.40 square	facilities; whilist
	Wang Ling Road,	metres.	the remainder is	As at 31st	As at 31st	As at 31st
	Lingbo Road,		left vacant.	July 2017	July 2017	July 2017
	Heluo Road and	The land-use rights		No Commercial	100%	No Commercial
	Zhuofei Road,	of the Property	(Please also refer to	Value		Value
	Phase 2 of	was to be granted	Notes 2.(2) and 4.
	High-tech	for a term of 50	below for further
	Industrial	years from 25th	details.)
	Development	July 1995 to 24th
	District,	July 2045 for
	Luoyang,	industrial and
	Henan Province	living uses.
	the PRC

Notes:

Pursuant to Transfer Contract of State-owned Land-use dated 2nd June 1995, Supplementary Contract of State-owned Land-use dated 9th August 1995, Supplementary Contract of State-owned Land-use dated 24th July 1997, Agreement of Return the Land dated 4th November 1999, Agreement dated 20th September 2006 Notice of Transaction of State-owned Land-use and as informed by the Company, the land-use rights of the Property having a site area of about 56,691.40 square metres was granted and transferred to “Luoyang Glass Company Limited”.
The PRC Legal Adviser has stated in his legal opinion that, including but not limited to,
(1) The land-use rights of the Property with a site area of approximately 56,691.40 square metres is vested in the name of “Luoyang Glass Company Limited”.
(2) The Property has been scattered into several separate land parcels to be occupied as roads, public facilities and so on; the Property cannot be used for manufacturing operation activities; and hence no Certificate of State-owned Land-use could be obtained.
In view of the fact that no Certificate of State-owned Land-use for the Property could be obtained, as detailed in Notes 2.(2) above, we have ascribed no commercial value to the Property as at the Date(s) of Valuation.
Since the Property was scattered into several separate land parcels of which partly occupied as roads and public facilities and partly vacant without detail site plan(s) for identification purpose, the exact lot boundaries of the Property could not be identified during our inspection as carried out by Mr. Gary K. Y. LAU BA (Project Management) who has over 5-year property valuation experience in the PRC on 18th June 2017. However, we must stress that we are not professional land surveyor or a firm of professional land surveyors in the jurisdiction who is competent and experienced in identifying exact lot boundaries or conducting accurate measurement to the site area of the Property.

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

VALUATION CERTIFICATE

Property held by the Group for Owner-occupation purpose

				Capital Value in
				Existing State as at		Property Interest
				the Date(s) of	% of Interest held by	attributable to the
No.	Property	General Description	Occupancy Status	Valuation	the Company	Company
2.	Lot No. 2016-43,	The Property	The property was left	As at 30th	As at 30th	As at 30th
	Puyang Town,	comprises a parcel	vacant and	June 2017	June 2017	June 2017
	Puyang,	of land having the	intended to be	RMB50,100,000	100%	RMB50,100,000
	Henan Province	site area of about	developed into an
	the PRC	205,468.67 square	industrial premises	(Renminbi Fifty		(Renminbi Fifty
		metres.	for owner-occupation	Million One		Million One
			purpose.	Hundred		Hundred
		The land-use rights		Thousand Only)		Thousand Only)
		of the Property
		was granted for a		As at 31st	As at 31st	As at 31st
		term from 23rd		July 2017	July 2017	July 2017
		March 2017 to		RMB50,100,000	100%	RMB50,100,000
		23rd March 2067
		for industrial use.		(Renminbi Fifty		(Renminbi Fifty
				Million One		Million One
				Hundred		Hundred
				Thousand Only)		Thousand Only)

Notes:

Pursuant to Certificate of Real Estate Ownership (Document No.: Yu (2017) Pu Yang Xian Bu Dong Chan Quan No. 0001406) dated 11th July 2017, the land-use rights of the Property has been granted to “Luoyang Glass Company Limited”.
Pursuant to Permission Certificate for Construction Land-Use Planning (Document No.: Di Zi No. 410928201706003) dated 22nd June 2017, the land use of the Property has been approved for construction with minimum plot ratio of 1.0 for industrial use.
The PRC Legal Adviser has stated in his legal opinion that, including but not limited to,
(1) “Luoyang Glass Company Limited” is the legal owner of the Property.
(2) “Luoyang Glass Company Limited” can legally occupy, use, transfer, lease out and mortgage the Property.
(3) The Property is not subject to mortgage or other material encumbrances.
Inspection to the Property, a vacant industrial site, was carried out by Mr. Gary K. Y. LAU BA (Project Management) who has over 5-year property valuation experience in the PRC on 19th June 2017.

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

VALUATION CERTIFICATE

Property held by the Group for Sale purpose

				Capital Value in
				Existing State as at		Property Interest
				the Date(s) of	% of Interest held by	attributable to the
No.	Property	General Description	Occupancy Status	Valuation	the Company	Company
3.	Flat 701 on 7th	The Property	The Property was left	As at 30th	As at 30th	As at 30th
	Floor,	comprises a	vacant.	June 2017	June 2017	June 2017
	No. 4-7-1 of Block	residential unit in a		No Commercial	100%	No Commercial
	A of Hanxi First	7-storey residential		Value		Value
	Road,	building completed
	Qiaokou District,	in or about 70’s.		As at 31st	As at 31st	As at 31st
	Wuhan,			July 2017	July 2017	July 2017
	Hubei Province,	The Property has a		No Commercial	100%	No Commercial
	the PRC	gross floor area of		Value		Value
		about 60.19 square
		meters.
		The Property is held
		under allocated
		(not granted for a
		specified term)
		land-use rights for
		residential use.

Notes:

Pursuant to Certificate of State-owned Land-use (Document No.: Qiao Shang Guo Yong (2002) Zi No. 0151) dated 20th March 2002, the allocated land-use rights of the Property is vested in the name of “Luoyang Glass Company Limited” for residential use.
Pursuant to Certificate of Building Ownership (Document No.: Wu Fang Quan Zheng Qiao Zi No. 200101658) dated 5th April 2001, the building ownership of the Property, which has no expiry date, is vested in the name of “Luoyang Glass Company Limited” for residential use.
The PRC Legal Adviser has stated in his legal opinion that, including but not limited to,
(1) The Property is held under allocated land-use rights.
(2) Approval from relevant municipal government and fullfilment of the following conditions are required for transferal, leasing or mortgage of the Property:
- Land user shall be corporation, enterprise, other economic organization or individual;
- Certificate of State-owned Land-use has been obtained;
- Title(s) of the building(s) and other fixtures can be proved; and
- The land-use rights grant premium shall be settled and State-owned Land-use Rights Grant Contract with relevant government authority(ies) shall be entered into.
In view of the fact that the Property is held under allocated land-use rights that has no specified land-use rights term and could not be freely disposed of in the prevailing market, we have ascribed no commercial value to the Property as at the Date(s) of Valuation.
An external inspection to the Property was carried out by Mr. Vincent T. S. CHAN BSc (Hons) who has over 4-year property valuation experience in the PRC on 13th July 2017. During the course of our inspection, no serious defect to the Property was noted; and the condition of the Property is considered to be fair commensurate to its age and use. Vertical circulation to the Property is served by a common staircase only; and supply of building services such as electricity, water and drainage are available throughout the Property.

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

VALUATION CERTIFICATE

Property held by the Group for Sale purpose

				Capital Value in
				Existing State as at		Property Interest
				the Date(s) of	% of Interest held by	attributable to the
No.	Property	General Description	Occupancy Status	Valuation	the Company	Company
4.	Units 116 and 171 on	The Property	The property was left	As at 30th	As at 30th	As at 30th
	3rd Floor,	comprises two	vacant since 2002.	June 2017	June 2017	June 2017
	Block 1,	commercial units		RMB720,000	100%	RMB720,000
	No. 68 Dehua	in a high-rise
	Street,	composite building		(Renminbi Seven		(Renminbi Seven
	Erqi District,	completed in 1998.		Hundred Twenty		Hundred Twenty
	Zhengzhou,			Thousand Only)		Thousand Only)
	Henan Province,	The Property has a
	the PRC	total gross floor		As at 31st	As at 31st	As at 31st
		area of about 40.94		July 2017	July 2017	July 2017
		square meters with		RMB720,000	100%	RMB720,000
		breakdown below.
				(Renminbi Seven		(Renminbi Seven
		Gross Floor		Hundred Twenty		Hundred Twenty
		Unit Area		Thousand Only)		Thousand Only)
		116 33.76 sq.m.
		171 7.18 sq.m.
		There is no expiry
		date regarding the
		building ownership
		of the Property.

Notes:

Pursuant to “Certificate of Building Ownership” (Document Nos.: Zheng Fang Quan Zheng Zi Nos. 0201106116 and 0201106107) dated 4th December 2002, the building ownership of the Property is vested in the name of “Luoyang Glass Company Limited” for commercial and service uses.
The PRC Legal Adviser has stated in his legal opinion that, including but not limited to,
(1) “Luoyang Glass Company Limited” is the legal owner of the Property.
(2) “Luoyang Glass Company Limited” can legally occupy, use, transfer, leased out and mortgage the Property.
(3) The Property is not subject to mortgage or other material encumbrances.
As advised by the Company, the Property was left vacant and intended to be sold with vacant possession.
An external inspection to the Property was carried out by Mr. Gary K. Y. LAU BA (Project Management) who has over 5-year property valuation experience in the PRC on 19th June 2017. During the course of our inspection, no serious defect to the Property was noted; and the condition of the Property is considered to be reasonable commensurate to its age and use. Vertical circulation to the Property is served by various lifts and staircases; and supply of building services such as electricity, water and drainage are available throughout the Property. Since the Property was left vacant as at the Date(s) of Valuation, we have assessed the Property on a market value basis assuming sale with vacant possession accordingly.

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APPENDIX V

VALUATION CERTIFICATE

Property held by the Group for Owner-occupation purpose

				Capital Value in
				Existing State as at		Property Interest
				the Date(s) of	% of Interest held by	attributable to the
No.	Property	General Description	Occupancy Status	Valuation	the Company	Company
5.	Lot Nos. 02-38,	The Property	The Property is	As at 30th	As at 30th	As at 30th
	02-39 and 02-40,	comprises an	owner-occupied for	June 2017	June 2017	June 2017
	Xihan Village,	industrial complex	industrial use.	RMB111,400,000	100%	RMB111,400,000
	Zhuge Town,	completed in 2000
	Yanshi District,	and 2002.		(Renminbi One		(Renminbi One
	Luoyang, Henan			Hundred Eleven		Hundred Eleven
	Province, the PRC	The Property has a		Million Four		Million Four
		total site area of		Hundred Thousand		Hundred Thousand
		about 104,176.90		Only)		Only)
		square meters and
		a total gross floor		As at 31st	As at 31st	As at 31st
		area of about		July 2017	July 2017	July 2017
		44,835.51 square		RMB111,400,000	100%	RMB111,400,000
		metres.
				(Renminbi One		(Renminbi One
		The Property is held		Hundred Eleven		Hundred Eleven
		under granted		Million Four		Million Four
		land-use rights for		Hundred Thousand		Hundred Thousand
		a term to be		Only)		Only)
		expired on 6th
		January 2060 for
		industrial use.

Notes:

Pursuant to Certificates of State-owned Land-use, the granted land-use rights of the Property is vested in the name of “CLFG Longmen Glass Co. Ltd.” for industrial use with breakdown information tabulated below.

Certificate No.	Date	Portion	Site Area
Yan Guo Yong (2010) No. 100002	8th January 2010	Lot No. 02-38	92,392.92 square
			metres
Yan Guo Yong (2010) No. 100003	8th January 2010	Lot No. 02-39	11,669.88 square
			metres
Yan Guo Yong (2010) No. 100004	8th January 2010	Lot No. 02-40	114.10 square
			metres

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

Pursuant to Certificates of Building Ownership (Document Nos.: Yan Shi Fang Quan Zheng (2000) Zi Nos. 00000479, 00000481, 00011421, 00011430, 00011433, 00011416, 00011431, 00011435, 00011427, 00011428, 00011429, 00011417, 00011419, 00011415, 00011420, 00011413, 00011434, 00011422, 00011423, 00011418, 00011426, 00011484, 00011483, 00011424, 00011426 and 00011436), the building ownership of the Property is vested in the name of “CLFG Longmen Glass Co. Ltd.” with breakdown information tabulated below.

Use

Gross Floor Area

Office 6,292.39 square metres Residential under Multiple Ownership 67.24 square metres Industrial Plant 38,475.88 square metres

The PRC Legal Adviser has stated in his legal opinion that, including but not limited to,
(1) “CLFG Longmen Glass Co. Ltd.” is the legal owner of the Property.
(2) “CLFG Longmen Glass Co. Ltd.” can legally occupy, use, transfer, lease out and mortgage the Property.
(3) The Property is not subject to mortgage or other material encumbrances.
“CLFG Longmen Glass Co. Ltd.” is a wholly-owned subsidiary of the Company.
An inspection to the Property was carried out by Mr. Gary K. Y. LAU BA (Project Management) who has over 5-year property valuation experience in the PRC on 18th June 2017. During the course of our inspection, no serious defect to the Property was noted; and the condition of the Property is considered to be reasonable commensurate to its age and use. Vertical circulation to the Property is served by various staircases only; and supply of building services such as electricity, water and drainage are available throughout the Property.

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

VALUATION CERTIFICATE

Property held by the Group for Owner-occupation purpose

				Capital Value in
				Existing State as at		Property Interest
				the Date(s) of	% of Interest held by	attributable to the
No.	Property	General Description	Occupancy Status	Valuation	the Company	Company
6.	Lot No. 03-054,	The Property	The Property is	As at 30th	As at 30th	As at 30th
	Shoumang Road,	comprises an	owner-occupied for	June 2017	June 2017	June 2017
	Yanshi District,	industrial complex	industrial use.	RMB100,200,000	100%	RMB100,200,000
	Luoyang, Henan	completed in 2006.
	Province, the PRC			(Renminbi One		(Renminbi One
		The Property has a		Hundred Million		Hundred Million
		site area of about		Two Hundred		Two Hundred
		126,605.98 square		Thousand Only)		Thousand Only)
		meters and a total
		gross floor area of		As at 31st	As at 31st	As at 31st
		about 43,626.32		July 2017	July 2017	July 2017
		square metres.		RMB100,100,000	100%	RMB100,100,000
		The Property is held		(Renminbi One		(Renminbi One
		under granted		Hundred Million		Hundred Million
		land-use rights for		One Hundred		One Hundred
		a term to be		Thousand Only)		Thousand Only)
		expired on 14th
		October 2060 for
		industrial use.

Notes:

Pursuant to Certificate of State-owned Land-use (Document No.: Yan Guo Yong (2010) No. 100122) dated 8th December 2010, the land-use rights of the Property is vested in the name of “CLFG Longhai Electronic Glass Limited” for industrial use.
Pursuant to Certificates of Building Ownership (Document Nos.: Yan Shi Fang Quan Zheng (2006) Zi Nos. 00021902, 00021901, 00021903, 00021904, 00021905, 00021984, 00021985, 00021986, 00021987, 00021988, 00021989, 00021990, 00021991, 00021992, 00021993, 00021997, 00021994, 00021995, 00021906), the building ownership of the Property is vested in the name of “CLFG Longhai Electronic Glass Limited” with breakdown information tabulated below.

Use Gross Floor Area

Office 1,702.55 square metres Industrial Plant 41,923.77 square metres

The PRC Legal Adviser has stated in his legal opinion that, including but not limited to,
(1) “CLFG Longhai Electronic Glass Limited” is the legal owner of the Property.
(2) “CLFG Longhai Electronic Glass Limited” can legally occupy, use, transfer, lease out and mortgage the Property.
(3) The Property is not subject to mortgage or other material encumbrances.
“CLFG Longhai Electronic Glass Limited” is a wholly-owned subsidiary of the Company.
An inspection to the Property was carried out by Mr. Gary K. Y. LAU BA (Project Management) who has over 5-year property valuation experience in the PRC on 18th June 2017. During the course of our inspection, no serious defect to the Property was noted; and the condition of the Property is considered to be reasonable commensurate to its age and use. Vertical circulation to the Property is served by various staircases only; and supply of building services such as electricity, water and drainage are available throughout the Property.

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

VALUATION CERTIFICATE

Property held by the Group for Owner-occupation purpose

				Capital Value in
				Existing State as at		Property Interest
				the Date(s) of	% of Interest held by	attributable to the
No.	Property	General Description	Occupancy Status	Valuation	the Company	Company
7.	No. 123 Longjin	The Property	The Property is	As at 30th	As at 30th	As at 30th
	Road, Lot No. Jiao	comprises an	owner-occupied for	June 2017	June 2017	June 2017
	1103015, Longzihu	industrial complex	industrial use.	RMB127,600,000	100%	RMB127,600,000
	District, Bengbu,	completed in 2014
	Anhui Province,	and 2015.		(Renminbi One		(Renminbi One
	the PRC			Hundred Twenty		Hundred Twenty
		The Property has a		Seven Million Six		Seven Million Six
		site area of about		Hundred Thousand		Hundred Thousand
		117,692.30 square		Only)		Only)
		meters and a total
		gross floor area of		As at 31st	As at 31st	As at 31st
		about 43,921.56		July 2017	July 2017	July 2017
		square metres.		RMB127,500,000	100%	RMB127,500,000
		The Property is held		(Renminbi One		(Renminbi One
		under granted		Hundred Twenty		Hundred Twenty
		land-use rights for		Seven Million FIve		Seven Million FIve
		a term to be		Hundred Thousand		Hundred Thousand
		expired on 25th		Only)		Only)
		June 2057 for
		industrial use.

Notes:

Pursuant to Certificate of State-owned Land-use (Document No.: Beng Guo Yong (Chu Rang) No. 2014285) dated 31st October 2014, the land-use rights of the Property is vested in the name of “Bengbu China National Building Materials Information Display Material Company” for industrial use.
Pursuant to Certificates of Real Estate Ownership (Document Nos.: Beng Bu Shi Fang Di Quan Zheng Beng Bu Zi Nos. 2014024948, 2014024969, 2014024964, 2014024967, 2014024965, 2014024958, 2014024968, 2014024961, 2014024949, 2014024954, 2014024938, 2014024919, 2014024944, 2014024960, 2014024959, 2014024970, 2014024957, 2014024963, 2014024962 and 2015015949), the building ownership of the Property is vested in the name of “Bengbu China National Building Materials Information Display Material Company”.
Pursuant to Transfer Contract of State-owned Land-use dated 30th June 2017, portion of the land-use rights of the Property with respective gross floor area of 1,814.31 square metres and 4,522.71 square metres were to be transferred to “蚌埠中光電科技有限公司” and “Bengbu China National Building Materials Photovoltaic Materials Company Limited” for the considerations of RMB557,900 and RMB1,390,700 respectively.

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PROPERTY VALUATION REPORT OF THE GROUP

APPENDIX V

The PRC Legal Adviser has stated in his legal opinion that, including but not limited to,
(1) “Bengbu China National Building Materials Information Display Material Company” is the legal owner of the Property.
(2) “Bengbu China National Building Materials Information Display Material Company” can legally occupy, use, transfer, lease out and mortgage the Property.
(3) The Property is not subject to mortgage or other material encumbrances.
(4) Portion of land-use rights of the Property with respective gross floor area of 1,814.31 square metres and 4,522.71 square metres is to be registered that to be transferred to “蚌埠中光電科技有限公司” and “Bengbu China National Building Materials Photovoltaic Materials Company Limited” as at the the Date(s) of Valuation.
“Bengbu China National Building Materials Information Display Material Company” is a wholly-owned subsidiary of the Company.
An inspection to the Property was carried out by Mr. Gary K. Y. LAU BA (Project Management) who has over 5-year property valuation experience in the PRC on 20th June 2017. During the course of our inspection, no serious defect to the Property was noted; and the condition of the Property is considered to be reasonable commensurate to its age and use. Vertical circulation to the Property is served by various staircases only; and supply of building services such as electricity, water and drainage are available throughout the Property.

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PROPERTY VALUATION REPORT OF THE TARGET COMPANIES

APPENDIX VI

Vigers Appraisal and Consulting Limited

International Property Consultants

10/F, The Grande Building, 398 Kwun Tong Road, Kowloon, Hong Kong Tel: (852) 2342-2000 Fax: (852) 3101-9041 E-mail: [email protected] www.Vigers.com

==> picture [77 x 77] intentionally omitted <==

11 October 2017

Luoyang Glass Company Limited

No. 9 Tang Gong Middle Road, Xigong District, Luoyang, Henan Province, The People’s Republic of China

Dear Sirs,

We refer to the recent instruction from “ Luoyang Glass Company Limited” (the “Company”) to “ Vigers Appraisal and Consulting Limited ” (hereinafter referred to as “we” or “Vigers”) to assess the capital values of various properties (individually referred to as the “Property” and collectively referred to as the “Properties”) held by “ CNBM (Hefei) New Energy Company Limited ” (“Hefei New Energy”), “ CNBM (Tongcheng) New Energy Materials Company Limited ” (“Tongcheng New Energy”) and “ CNBM (Yixing) New Energy Company Limited ” (“Yixing New Energy “) (individually referred to as the “Target Company” and collectively referred to as the “Target Companies”) as listed in the attached valuation certificates for inclusion in this circular, we confirm that we have inspected the Properties, made relevant enquiries and investigations as well as obtained such further information as we consider necessary for the purpose of providing our opinion of values of the Properties held by the Target Companies as at 30th June 2017 and 31st July 2017(the “Date(s) of Valuation”).

BASIS OF VALUE

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PROPERTY VALUATION REPORT OF THE TARGET COMPANIES

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“RICS Valuation - Global Standards 2017” published by the “Royal Institution of Chartered Surveyors” (“RICS”), relevant provisions in the Companies Ordinance and the “Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited” (Main Board) published by “The Stock Exchange of Hong Kong Limited” (“HKEx”).

VALUATION APPROACH

In view of the fact that there was no sufficient comparable for comparison, we have assessed the Properties by cost approach. As defined in the “International Valuation Standards 2017” published by the “International Valuation Standards Council” (“IVSC”), the cost approach “provides an indication of value using the economic principle that a buyer will pay no more for an asset than the cost to obtain an asset of equal utility, whether by purchase or by construction, unless undue time, inconvenience, risk or other factors are involved. The approach provides an indication of value by calculating the current replacement or reproduction cost of an asset and making deductions for physical deterioration and all other relevant forms of obsolescence”. In arriving at our opinion of value for the Properties, we have assessed the depreciated replacement cost (“DRC”) whereby “DRC is based on an estimate of the market value for the existing use of the land, plus the current gross replacement (reproduction) costs of the improvements, less allowances for physical deterioration and all relevant forms of obsolescence and optimization”. Value(s) of property interest(s) of the Property(ies) derived from the basis of DRC is/are subject to adequate potential profitability of the business(es) in concern.

TITLE INVESTIGATION

Since land and real estate laws of the People’s Republic of China (“PRC”), including laws relating to land title and building ownership and laws applicable to landlords and tenants, are still under development and reform, there is no public domain available to us, as independent property valuer to the Company and the Target Companies, for obtaining copy of Certificate(s) of State-owned Land-use, Certificate(s) of Building Ownership or Certificate(s) of Real Estate Ownership (as the case may be) of the Properties from the relevant government authority(ies). Instead, we have been given extracted copies of relevant title documents for the Properties by the Company and the Target Companies but we have not checked the titles to the Properties nor scrutinized the original title documents. The transaction(s) as detailed in this circular is/are regarded as connected transaction, and we have relied on the advice given by the Company and its legal adviser, “Beijing Kang Da Law Firm” (the “PRC Legal Adviser”) on the laws of the PRC regarding titles to the Properties. For the purpose of our valuations, we have taken the legal opinion prepared by the PRC Legal Adviser into account, in particular title, ownership, encumbrances and so on of the Properties. While we have exercised our professional judgement in arriving at our valuations, you are urged to consider our valuation assumptions with caution.

VALUATION CONSIDERATION

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APPENDIX VI

We are therefore unable to report as to whether the Properties are free from rot, infestation or other structural or non-structural defect. We have carried out inspections and investigations to the Properties which is considered professionally adequate for the purpose of our valuations. But we must stress that the inspections and investigation conducted are not equivalent of an inspection conducted by other professional such as building surveyor, structural engineer or electrical engineer other than a general practice surveyor. During the course of our inspections to the Properties, no obvious defect was noted; and hence there was no impact onto the valuations.

Having examined all relevant documents and information, we have relied to a considerable extent on the information given by the Company and the Target Companies, in particular planning approvals or statutory notices, easements, land-use rights’ term(s), site and floor areas, occupancy status as well as in the identification of the Properties. We have had no reason to doubt the truth and accuracy of the information provided to us by the Company and the Target Companies, and we have been advised by the Company and the Target Companies that no material fact has been omitted from the information so given. We have not carried out detailed on-site measurement to verify the correctness of the site and floor areas of the Properties but we have assumed that the site and floor areas shown on the documents and/or information handed to us are accurate and reliable. All dimensions, measurements and areas included in our valuation report are based on the information contained in the documents provided to us by the Company and the Target Companies, and are therefore approximations.

VALUATION ASSUMPTIONS

In our valuations, we have made reference to the legal opinion prepared by the PRC Legal Adviser regarding titles to the Properties that the owner(s) of the Properties has/have free and uninterrupted rights to use and assign the Properties during the whole of the respective unexpired land-use rights’ term(s) granted subject to payment of usual land-use fee(s). Our valuations for the Properties are carried out on the basis of a cash purchase, and no allowance has been made for interest(s) and/or funding cost(s) in relation to the sale or purchase of the Properties.

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on the assumption that these aspects are satisfactory. We have also assumed that all necessary consent(s), approval(s) and licence(s) from relevant government authorities have been or will be granted without onerous condition(s) or delay.

REMARKS

As advised by the Company, under the prevailing rule(s) and regulation(s) of tax law(s) in the PRC, potential tax liabilities which would arise if the Properties as specified in this valuation report are to be sold include mainly,

Value Added Tax amounting to 5% of the selling price(s) (Value Added Tax excluded amount) without any input credit for properties purchased before 30 April 2016, and 11% of the selling price(s) (Value Added Tax excluded amount) with Value Added Tax input that can be credited for properties purchased after 30 April 2016;
Land Appreciation Tax amounting to 30% to 60% of appreciated amount;
Corporate Income Tax amounting to 25% of the capital gain(s) of the seller after deducting the potential tax fee (i.e. surtaxes of Value Added Tax, Stamp Duty and Land Appreciation Tax) in effecting a sales;
Stamp Duty amounting to 0.05% of transaction amount; and
Withholding Tax at 10% on dividend distributed for dividend repatriated outside PRC; or at 5% on dividend distributed if Hong Kong and the PRC double tax arrangement applies.

As advised by the Company and the Target Companies, there is no intention in selling the Properties as the Properties are to be held for owner-occupation purpose after acquisition. The likelihood of such liability crystallising for the Properties is very low.

We hereby declare that we are independent of the Company and the Target Companies, and we are not interested directly or indirectly in any unit or share in any member of the Company and the Target Companies. We do not have any right or option whether legally enforceable or not to subscribe for or to nominate persons to subscribe for any unit or share in any member of the Company and the Target Companies.

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Unless otherwise stated, all monetary amounts stated herein are denoted in the currency of Renminbi (“RMB”), the lawful currency of the PRC.

We enclose herewith the Summary of Values and Valuation Certificates.

Yours faithfully, For and on behalf of VIGERS APPRAISAL AND CONSULTING LIMITED

Sr David W. I. CHEUNG

Sr Franky C. H. WONG

MRICS MHKIS RPS(GP) CREA MSc(RealEst) MCIM MRICS MHKIS RPS(GP) RICS Registered Valuer RICS Registered Valuer Executive Director Director

Note: Sr David W. I. CHEUNG is a “Registered Professional Surveyor in General Practice Division” (“RPS(GP)”) under the “Surveyors Registration Ordinance” (Cap. 417) in Hong Kong; and is a “RICS Registered Valuer” under the “Valuer Registration Scheme” regulated by the RICS with over 34 years’ valuation experience on properties in various regions including Hong Kong, Macao, the PRC, Taiwan, Japan, Southeast Asia countries, the United Kingdom (“UK”), Canada and the United State of America (“USA”). Sr CHEUNG has been vetted on the “List of Property Valuers for Undertaking Valuations for Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers” published by the HKIS, and is suitably qualified for undertaking valuations relating to listing exercises. Sr CHEUNG has been employed by “Vigers Appraisal and Consulting Limited” as a qualified surveyor since 2006.

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APPENDIX VI

SUMMARY OF VALUES

No.
Property
Capital Value in
Existing State as at
the Date of Valuation
% of Interest to
be held by the
Company after
Acquisition
1.
Courtyard of China National Building
Material Company,
Bei Third Road,
Economic Development Zone,
Tongcheng District,
Anqing,
Anhui Province,
the PRC
As at 30th
June 2017
RMB140,400,000
As at 31st
July 2017
RMB140,200,000
As at 30th
June 2017
100%
As at 31st
July 2017
100%
2.
No. 601 Changning Main Road,
Lot Nos. S73400, S73501 and S73502,
Feixi District,
Hefei,
Anhui Province,
the PRC
As at 30th
June 2017
RMB285,500,000
As at 31st
July 2017
RMB285,000,000
As at 30th
June 2017
100%
As at 31st
July 2017
100%
3.
No. 1 Xinyunlai Road,
Taoyuan Development Zone,
Gaocheng Town,
Yixing,
Jiangsu Province,
the PRC
As at 30th
June 2017
RMB215,900,000
As at 31st
July 2017
RMB215,900,000
As at 30th
June 2017
70.99%
As at 31st
July 2017
70.99%
TOTAL

Property Interest
attributatble to the
Company after
Acquisition
As at 30th
June 2017
RMB140,400,000
As at 31st
July 2017
RMB140,200,000
As at 30th
June 2017
RMB285,500,000
As at 31st
July 2017
RMB285,000,000
As at 30th
June 2017
RMB153,267,410
As at 31st
July 2017
RMB153,267,410

As at 30th
June 2017
RMB579,167,410
As at 31st
July 2017
RMB578,467,410

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PROPERTY VALUATION REPORT OF THE TARGET COMPANIES

APPENDIX VI

VALUATION CERTIFICATE

Property held by the Target Company for Owner-occupation purpose

				Capital Value
				in Existing State	% of Interest to be	Property Interest
				as at the	held by the	attributable to
				Date(s) of	Company after	the Company after
No.	Property	General Description	Occupancy Status	Valuation	Acquisition	Acquisition
1.	Courtyard of China	The Property comprises an	The Property is	As at 30th	As at 30th	As at 30th
	National Building	industrial complex	owner-occupied	June 2017	June 2017	June 2017
	Material Company,	completed in 2012 and	for industrial	RMB140,400,000	100%	RMB140,400,000
	Bei Third Road,	2013.	use.
	Economic			(Renminbi One		(Renminbi One
	Development Zone,	The Property has an aggregate		Hundred Forty		Hundred Forty
	Tongcheng District,	site area of about		Million Four		Million Four
	Anqing,	332,564.36 square meters		Hundred		Hundred
	Anhui Province,	and a total gross floor area		Thousand Only)		Thousand Only)
	the PRC	of about 51,628.87 square
		metres (excluding the		As at 31st	As at 31st	As at 31st
		building named “Product		July 2017	July 2017	July 2017
		Warehouse” without proper		RMB140,200,000	100%	RMB140,200,000
		Certificate of Real estate
		Ownership having a gross		(Renminbi One		(Renminbi One
		floor area of about 3,400.00		Hundred Forty		Hundred Forty
		square metres).		Million Two		Million Two
				Hundred		Hundred
		The Property is held under		Thousand Only)		Thousand Only)
		granted land-use rights for a
		term from 28th February
		2011 to 28th February 2061
		for industrial use.

Notes:

Pursuant to Certificates of Real Estate Ownership (Document Nos.: Wan (2016) Tong Cheng Shi Bu Dong Chan Quan Nos. 0000870, 0000868, 0000873, 0000867, 0000875, 0000871, 0000869, 0000872, 0000874, 0000876, 0000877 and 0000929), the Property is vested in the name of “CNBM (Tongcheng) New Energy Materials Company Limited” for industrial use.
The PRC Legal Adviser has stated in his legal opinion that, including but not limited to,
(1) The Property is vested in the name of “CNBM (Tongcheng) New Energy Materials Company Limited”.
(2) The Property could freely be sold, leased out, mortgaged or by other legal means disposed of during the unexpired land-use rights term(s).
(3) The Property is not subject to mortgage or other material encumbrances.
(4) “CNBM (Tongcheng) New Energy Materials Company Limited” cannot obtain Certificate of Real Estate Ownership for a building named “Product Warehouse”.

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“CNBM (Tongcheng) New Energy Materials Company Limited” will be a wholly-owned subsidiary of the Company upon the Proposed Acquisitions.
As informed by the “CNBM (Tongcheng) New Energy Materials Company Limited”, “Product Warehouse” with a gross floor area of about 3,400.00 square metres was constructed by “CNBM (Tongcheng) New Energy Materials Company Limited” for temporary operation reason; and no Certificate of Real Estate Ownership for the aforesaid building has been applied since such building is to be demolished. Since no Certificate of Real Estate Ownership has been issued for such building, we have ascribed no commercial value to such building as at the Date(s) of Valuation accordingly. Had a valid Certificate of Real Estate Ownership been issued as at the Date(s) of Valuation, the capital value of the aforesaid building, for reference purpose, is RMB1,800,000 (Renminbi One Million Eight Hundred Thousand Only).
An inspection to the Property was carried out by Mr. Gary K. Y. LAU BA (Project Management) who has over 5-year property valuation experience in the PRC on 22nd June 2017. During the course of our inspection, no serious defect to the Property was noted; and the condition of the Property is considered to be reasonable commensurate to its age and use. Vertical circulation to the Property is served by various staircases only; and supply of building services such as electricity, water and drainage are available throughout the Property.

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APPENDIX VI

VALUATION CERTIFICATE

Property held by the Target Company for Owner-occupation purpose

				Capital Value
				in Existing State	% of Interest to be	Property Interest
				as at the	held by the	attributable to
				Date(s) of	Company after	the Company after
No.	Property	General Description	Occupancy Status	Valuation	Acquisition	Acquisition
2.	No. 601 Changning	The Property comprises an	The Property is	As at 30th	As at 30th	As at 30th
	Main Road,	industrial complex	owner-occupied	June 2017	June 2017	June 2017
	Lot Nos. S73400,	completed in 2007.	for industrial	RMB285,500,000	100%	RMB285,500,000
	S73501 and S73502,		use.
	Feixi District,	The Property has a site area		(Renminbi Two		(Renminbi Two
	Hefei,	of about 269,789.24 square		Hundred Eighty		Hundred Eighty
	Anhui Province,	meters and a total gross		Five Million		Five Million
	the PRC	floor area of about		Five Hundred		Five Hundred
		137,784.93 square metres		Thousand Only)		Thousand Only)
		(including the building
		named “Apartment A”		As at 31st	As at 31st	As at 31st
		having a gross floor area of		July 2017	July 2017	July 2017
		about 7,000.62 square		RMB285,000,000	100%	RMB285,000,000
		metres of which Certificate
		of Real Estate Ownership		(Renminbi Two		(Renminbi Two
		was issued on 28th		Hundred Eighty		Hundred Eighty
		September 2017; but		Five Million		Five Million
		excluding the two buildings		Only)		Only)
		named “Main Door A” and
		“Main Door B” having an		(Please refer to		(Please refer to
		aggregate gross floor area of		Note 9. below		Note. 9 below
		about 60.17 square metres		for further		for further
		of which registration for		details.)		details.)
		Real Esate Ownership is not
		required by the relevant
		government authorities).

The Property is held under granted land-use rights with the earliest expiry and latest expiry on 31st December 2016 and 25th December 2062 respectively for industrial use.

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Notes:

Pursuant to Certificates of State-owned Land-use, the granted land-use rights of the Property is vested in the name of “CNBM (Hefei) New Energy Company Limited” for industrial use with breakdown information tabulated below.

Certificate No. Date Portion Site Area He Gao Xin Guo Yong (2012) No. 24 21st April 2012 Lot No. S73400 136,119.04 square metres He Gao Xin Guo Yong (2015) No. 078 20th October Lot No. S73501 130,270.70 square 2015 metres He Gao Xin Guo Yong (2015) No. 079 20th October Lot No. S73502 3,399.50 square 2015 metres

Pursuant to Certificates of Real Estate Ownership (Document Nos.: Wan (2017) He Bu Dong Chan Quan No. 0005709, 0018005, 0017993, 0018002, 0017998, 0017990, 0005746, 0017997, 0005715 and 0018007), the building ownership of the Property is vested in the name of “CNBM (Hefei) New Energy Company Limited” for industrial use.
Pursuant to Certificates of Real Estate Ownership (Document Nos.: Wan (2017) He Bu Dong Chan Quan Nos. 0005709, 0005746 and 0005715), the land-use rights of Lot No. S73400 of the Property is subject to mortgage.
The PRC Legal Adviser has stated in his legal opinion that, including but not limited to,
(1) The Property is vested in the name of “CNBM (Hefei) New Energy Company Limited”.
(2) The Property could freely be sold, leased out, mortgaged or by other legal means disposed of during the unexpired land-use rights term(s).
(3) Portion of the land-use rights of the Property (i.e. Lot No. S73400) is subject to mortgage and the remaining portion of the Property is not subject to mortgage or other material encumbrances.
(4) “CNBM (Hefei) New Energy Company Limited” cannot obtain the Certificate of Real Estate Ownership for two building named “Main Door A” and “Main Door B” due to the fact that no relevant registration for Real Estate Ownership is not required by the relevant government authorities”.
“CNBM (Hefei) New Energy Company Limited” will be a wholly-owned subsidiary of the Company upon the Proposed Acquisitions.
As informed by “CNBM (Hefei) New Energy Company Limited”, two buildings named “Main Door A” and “Main Door B” with aggregate gross floor area of about 60.17 square metres were constructed by “CNBM (Hefei) New Energy Company Limited”; and registration for Real Estate Ownership to such two buildings is not required by relevant government authorities, pursuant to a Letter issued by “合肥高新技術產業開發區建設發展局” dated 28th December 2016. Since no Certificate of Real Estate Ownership has been issued for such two buildings, we have ascribed no commercial value to such buildings as at the Date(s) of Valuation accordingly. Had a valid Certificate of Real Estate Ownership been issued as at the Date(s) of Valuation, the capital value of such two buildings, for reference purpose, is RMB100,000 (Renminbi One Hundred Thousand Only).

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APPENDIX VI

As advised by the Company, the property interest of the Property is considered as “material property” upon the Proposed Acquisitions as at the Date(s) of Valuation; and the relevant information is listed as follows:

(i) General description of : The Property is located at the southern side of Mingzhu location Avenue at its junction with Changning Avenue in Shushan District, Hefei. The locality of the Property is an industrial area with various large-scale industrial complexes mainly served by private vehicles. The nearest Hefei South Railway Station is located in about 45 minutes’ drive away from the Property. (ii) Restrictions on its use : Industrial only (iii) Details of encumbrances, : According to the PRC legal opinion, portion of the liens, pledges, mortgages land-use rights of the Property (i.e. Lot No. S73400) is subject to mortgage and the remaining portion of the Property is not subject to mortgage or other material encumbrances. (iv) Environmental issues : Nil (v) Details of investigations, : Nil notices, pending litigation, breaches of law or title defects (vi) Plans for construction, : As advised by the Target Company, there is no other plan renovation, improvement or for renovation, improvement or development of the development of the property Property. and estimated associated costs (vii) Plans to dispose of or change : As confirmed by the Target Company, there is no plan to the use dispose of or change the use of the Property. (viii) Any other information : As confirmed by the Target Company, there is no any considered material for other information of the Property considered material for investors investors.

An inspection to the Property was carried out by Mr. Gary K. Y. LAU BA (Project Management) who has over 5-year property valuation experience in the PRC on 21st June 2017. During the course of our inspection, no serious defect to the Property was noted; and the condition of the Property is considered to be reasonable commensurate to its age and use. Vertical circulation to the Property is served by various staircases only; and supply of building services such as electricity, water and drainage are available throughout the Property.
Pursuant to Certificate of Real Estate Ownership (Document No.: Wan (2017) He Bu Dong Chan Quan No. 0228861) dated 28th September 2017, a building named “Apartment A” of the property is vested in the name of “CNBM (Hefei) New Energy Company Limited” for staff quarters use.

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PROPERTY VALUATION REPORT OF THE TARGET COMPANIES

APPENDIX VI

VALUATION CERTIFICATE

Property held by the Target Company for Owner-occupation purpose

				Capital Value
				in Existing State	% of Interest to be	Property Interest
				as at the	held by the	attributable to
				Date(s) of	Company after	the Company after
No.	Property	General Description	Occupancy Status	Valuation	Acquisition	Acquisition
3.	No. 1 Xinyunlai	The Property comprises an	The Property is	As at 30th	As at 30th	As at 30th
	Road,	industrial complex	owner-occupied	June 2017	June 2017	June 2017
	Taoyuan	completed in 2010 and	for industrial	RMB215,900,000	70.99%	RMB153,267,410
	Development Zone,	2011.	use.
	Gaocheng Town,			(Renminbi Two		(Renminbi One
	Yixing,	The Property has a total site		Hundred Fifteen		Hundred Fifty
	Jiangsu Province,	area of about 127,136.20		Million Nine		Three Million
	the PRC	square meters and a total		Hundred		Two Hundred
		gross floor area of about		Thousand Only)		Sixty Seven
		96,179.21 square metres				Thousand Four
		(excluding the six buildings				Hundred Ten
		named “Power Distribution				Only)
		room”, “Expansion Project
		for New Office Building”,		As at 31st	As at 31st	As at 31st
		“Expansion for Third Floor		July 2017	July 2017	July 2017
		of Eastern side of Union		RMB215,900,000	70.99%	RMB153,267,410
		Factory”, “Expansion Work
		for Western side of Union		(Renminbi Two		(Renminbi One
		Factory”, “Extra Floor of		Hundred Fifteen		Hundred Fifty
		Batching Room” and “Raw		Million Nine		Three Million
		Material Room” with		Hundred		Two Hundred
		aggregate gross floor area of		Thousand Only)		Sixty Seven
		about 5,157.59 square				Thousand Four
		metres of which				Hundred Ten
		Certificate(s) of Real estate				Only)
		Ownership is/are to be
		applied).

The Property is held under granted land-use rights with the earliest expiry and latest expiry on 14th January 2054 and 24th December 2056 respectively for industrial use.

Notes:

Pursuant to Certificates of Real Estate Ownership (Document Nos.: Su (2016) Yi Xing Bu Dong Chan Quan Nos. 0009783, 0009782, 0009785, 0009786 and 0009784), the Property is vested in the name of “CNBM (Yixing) New Energy Company Limited” for industrial use.

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PROPERTY VALUATION REPORT OF THE TARGET COMPANIES

APPENDIX VI

2 Pursuant to Maximum Mortgage Contract (Document No.: 26 Yi Yin Gao Di Zi (2017) No. 2031), the land-use rights and buildings of the Property under Certificate of Real Estate Ownership (Document No.: Su (2016) Yi Xing Bu Dong Chan Quan No. 0009784) with site area of 14,827.20 square metres and gross floor area of 15,263.15 square metres is subject to mortgage for a term from 12th April 2017 to 30th June 2022.
The PRC Legal Adviser has stated in his legal opinion that, including but not limited to,
(1) The Property is vested in the name of “CNBM (Yixing) New Energy Company Limited”.
(2) The Property could freely be sold, leased out, mortgaged or by other legal means disposed of during the unexpired land-use rights term(s).
(3) The land-use rights and building under Certificate of Red Estate Ownership (Document No.: Su (2016) Yi Xing Bu Dong Chan Quan No. 0009784) of the Property) is subject to mortgage; and the remainder of the Property is not subject to mortgage or other material encumbrances.
“CNBM (Yixing) New Energy Company Limited” will be a 70.99% owned subsidiary of the Company upon the Proposed Acquisitions.
As informed by “CNBM (Yixing) New Energy Company Limited”, an extra floor space with a gross floor area of about 4,690.50 square metres was being constructed with an estimated construction cost of RMB20,350,000 of which RMB12,720,000 was incurred as at the Date(s) of Valuation. Sicne no relevant certificate(s) for approval to construct such extra floor space could be made available to us, we have ascribed no commercial value to such extra floor area as at the Date(s) of Valuation accordingly.
As informed by “CNBM (Yixing) New Energy Company Limited”, six buildings named “Power Distribution room”, “Expansion Project for New Office Building”, “Expansion for Third Floor of Eastern side of Union Factory”, “Expansion Work for Western side of Union Factory”, “Extra Floor of Batching Room” and “Raw Material Room” with aggregate gross floor area of about 5,157.59 square metres was constructed by “CNBM (Yixing) New Energy Company Limited”. Certificate(s) of Real Estate Ownership for such six buildings is/are to be applied. Since no Certificate(s) of Real Estate Ownership has/have been issued for such six buildings, we have ascribed no commercial value to such six buildings as at the Date(s) of Valuation accordingly. Had a valid Certificate of Real Estate Ownership been issued as at the Date(s) of Valuation, the capital value of the aforesaid six buildings, for reference purpose, is RMB9,100,000 (Renminbi Nine Million One Hundred Thousand Only) on the assumption that such six buildings could freely be sold, leased out, mortgaged or by other legal means disposed of in the prevailing market without payment of extra land-use rights grant premium.
As advised by the Company, the property interest of the Property is considered as “material property” upon the Proposed Acquisitions as at the Date(s) of Valuation; and the relevant information is listed as follows:
(i) General description of : location
The Property is located at the southeast side of Huayuan Road in Gaocheng Town, Yixing. The locality of the Property is an industrial area with various large-scale industrial complexes mainly served by private vehicles. The nearest Yixing North Railway Station is located in about 20 minutes’ drive away from the Property.
(ii) Restrictions on its use : Industrial only

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APPENDIX VI

(iii) Details of encumbrances, : The land-use rights and buildings under Certificate of liens, pledges, mortgages Real Estate Ownership (Document No.: Su (2016) Yi Xing Bu Dong Chan Quan No. 0009784) of the Property is subject to mortgage; and the remaining portion of the property is not subject to mortgage or other material encumbrances. (iv) Environmental issues : Nil (v) Details of investigations, : Nil notices, pending litigation, breaches of law or title defects (vi) Plans for construction, : As confirmed by the Company, there is no other plan for renovation, improvement or construction, renovation, improvement or development development of the property of the Property. and estimated associated costs (vii) Plans to dispose of or change : As confirmed by the Company, there is no plan to the use dispose of or change the use of the Property. (viii) Any other information : As confirmed by the Company, there is no any other considered material for information of the Property considered material for investors investors.

An inspection to the Property was carried out by Mr. Jeff M. C. LIU BSc(Hons) who has over 9-year property valuation experience in the PRC on 22nd June 2017. During the course of our inspection, no serious defect to the Property was noted; and the condition of the Property is considered to be reasonable commensurate to its age and use. Vertical circulation to the Property is served by various staircases only; and supply of building services such as electricity, water and drainage are available throughout the Property.

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PROPERTY VALUATION REPORT OF THE TARGET COMPANIES

APPENDIX VI

PROPERTY VALUE RECONCILIATION

For the one month ended 30th June 2017

			(RMB)
Property No.	1	2	3
	Courtyard of
	China National
	Building
	Material
	Company,	No. 601
	Bei Third Road,	Changning Main	No. 1 Xinyunlai
	Economic	Road,	Road,
	Development	Lot Nos. S73400,	Taoyuan
	Zone,	S73501 and	Development
	Tongcheng	S73502,	Zone,
	District,	Feixi District,	Gaocheng Town,
	Anqing,	Hefei,	Yixing,
	Anhui Province,	Anhui Province,	Jiangsu Province,
Property address	the PRC	the PRC	the PRC
Reference values (Note 1)	140,400,000	285,500,000	215,900,000
Book values as at 31th May 2017 (Note 2)	146,316,780	273,343,791	218,374,453
Adjustment of net change in fair values
(Note 3)	–	–	–
Accumulated depreciation up to 30th June 2017
(Note 4)	-321,718	-723,184	-480,699
Book values as at 30th June 2017	145,995,062	272,620,607	217,893,755
Revaluation surplus	-5,595,062	12,879,394	-1,993,755

Notes:

Reference values of the Properties were calculated based on the Property Valuation Report of the Target Companies as at 30th June 2017.
Net book values refers to the sum of net book value of the investment properties as shown in the accountant’s report as at 31st May 2017 as set out in Appendices II, III and IV of this circular.
This adjustment refers to the difference between the fair values as shown in the accountant’s report of Appendices II, III and IV and that as set out in the management accounts of the Target Companies.
The accumulated depreciation as at 30th June 2017 was prepared based on the management accounts of the Target Companies.

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PROPERTY VALUATION REPORT OF THE TARGET COMPANIES

APPENDIX VI

PROPERTY VALUE RECONCILIATION

For the two months ended 31st July 2017

(RMB)

Property No.	1	2	3
	Courtyard of
	China National
	Building
	Material
	Company,	No. 601
	Bei Third Road,	Changning Main	No. 1 Xinyunlai
	Economic	Road,	Road,
	Development	Lot Nos. S73400,	Taoyuan
	Zone,	S73501 and	Development
	Tongcheng	S73502,	Zone,
	District,	Feixi District,	Gaocheng Town,
	Anqing,	Hefei,	Yixing,
	Anhui Province,	Anhui Province,	Jiangsu Province,
Property address	the PRC	the PRC	the PRC
Reference values (Note 1)	140,200,000	285,000,000	215,900,000
Book values as at 31st May 2017 (Note 2)	146,316,780	273,343,791	218,374,453
Adjustment of net change in fair values
(Note 3)	–	–	–
Accumulated depreciation up to 31st July 2017
(Note 4)	-644,366	-1,336,547	-961,397
Book values as at 31st July 2017	145,672,415	272,007,243	217,413,056
Revaluation surplus	-5,472,415	12,992,757	-1,513,056

Notes:

Reference values of the Properties were calculated based on the Property Valuation Report of the Target Companies as at 31st July 2017.
Net book values refers to the sum of net book value of the investment properties as shown in the accountant’s report as at 31st May 2017 as set out in Appendices II, III and IV of this circular.
This adjustment refers to the difference between the fair values as shown in the accountant’s report of Appendices II, III and IV and that as set out in the management accounts of the Target Companies.
The accumulated depreciation as at 31st July 2017 was prepared based on the management accounts of the Target Companies.

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SUMMARY OF VALUATION REPORT OF HEFEI NEW ENERGY

APPENDIX VII

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 circular. 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. [(Note)]

Note: The Valuer has reviewed the financial information of CNBM (Hefei) New Energy Company Limited as of July 2017 provided by the auditor and the respective Target Companies and the explanatory materials and forecast information of CNBM (Hefei) New Energy Company Limited, and obtained confirmation from CNBM (Hefei) New Energy Company Limited 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 this valuation report during the period from 31 October 2016 to 31 July 2017. Accordingly, there was no material change in the appraised value of CNBM (Hefei) New Energy Company Limited as at 31 July 2017 as compared to those set out in this valuation report.

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APPENDIX VII

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 majeure.
Assuming the company to operate as a going concern based on the actual status of the assets as at the valuation base date.

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APPENDIX VII

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.

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.

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APPENDIX VII

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.

(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:

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SUMMARY OF VALUATION REPORT OF HEFEI NEW ENERGY

APPENDIX VII

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.
(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

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SUMMARY OF VALUATION REPORT OF HEFEI NEW ENERGY

APPENDIX VII

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 selling expenses and all taxes; for products with normal sales, appraised values were determined according to their factory selling price less selling 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 selling 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.

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SUMMARY OF VALUATION REPORT OF HEFEI NEW ENERGY

APPENDIX VII

(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

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SUMMARY OF VALUATION REPORT OF HEFEI NEW ENERGY

APPENDIX VII

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 Value-added 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價依據的通知) (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.

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%

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SUMMARY OF VALUATION REPORT OF HEFEI NEW ENERGY

APPENDIX VII

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 = total construction and installation tax cost/1.11 × 11% + preliminary cost deductible (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

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.

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SUMMARY OF VALUATION REPORT OF HEFEI NEW ENERGY

APPENDIX VII

Calculation of theoretical newness rate

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

(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.

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.

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SUMMARY OF VALUATION REPORT OF HEFEI NEW ENERGY

APPENDIX VII

(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.

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

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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.

e. Capital cost

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

C. Vehicles

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“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 = current purchase price (tax exclusive) + cost 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.
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 (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 = taxable price × 10% purchase tax

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.

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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 determined life)/economic service life × 100% using service life approach

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 newness rate life)/economic service life × 100%

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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 environmental policy in relation to vehicle emission, 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 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

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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 floor-price coefficient correction approach, market comparison approach and cost approximation approach can be adopted for valuation, while the residual approach and income capitalization approach are not suitable.

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.

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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.

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

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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.

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.

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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 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

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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 + C1 + C2 + E’ Formula 2 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).

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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.

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.

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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.

5) Determination of appraised value of surplus assets and non-operating 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. 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.

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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.

(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》( );

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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));
Interim Regulation on the Supervision and Administration of State-owned 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))；

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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 State-owned 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》( );
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));

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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));
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));

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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;
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));

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APPENDIX VII

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));
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價依據的通知》(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));

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APPENDIX VII

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));
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.

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APPENDIX VII

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%.

The summary of valuation results is set out below:

Summary of Asset Valuation Results

Unit: RMB’0,000

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.

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APPENDIX VII

(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.

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 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 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 (Renminbi Three Hundred and Seven Million, Eight Hundred and Twenty Five Thousand Only) as at 31 October 2016, the valuation base date.

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APPENDIX VII

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.
(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 [(Note)] :

The building ownership certificates of certain buildings of CNBM (Hefei) New Energy Company Limited* included in the valuation scope have not been obtained. 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.

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APPENDIX VII

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 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 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*.

The buildings of CNBM (Hefei) New Energy Company Limited without building ownership certificates are not connected with the ordinary manufacturing procedure and do not have impact on the revenue stream of CNBM (Hefei) New Energy Company Limited. Given that the valuation is appraised by adopting income approach valuation method, the “incompleteness or defects in the ownership documents” and the amount of “adjustment to the valuation results” shall not affect the valuation of CNBM (Hefei) New Energy Company Limited.

(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.

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APPENDIX VII

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:

No.
1
2
3

Status of application
Status of
patent
protection
Application No.
Application
Date
Name of invention
Applicant
Type of
patent
201620526213.2
2016/5/27
A simple and efficient device for rapid
moving of water bags at the neck of
glass furnace (一種簡便高效的玻璃窯
爐卡脖水包快速移動裝置)
CNBM
(Hefei)
New
Energy
Company
Limited*
Utility model
Granted on 7
December
2016
201620526288.0
2016/5/27
A device for counting defects of high
transparent glass used in 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)
Utility model
Granted on
18 January
2017
201620500263.3
2016/5/23
A new type of wedge-shaped device used
as sidewalk bricks for rolled
production (一種新型楔形壓延生產擋
邊磚裝置)
Utility model
Granted on 7
December
2016

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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SUMMARY OF VALUATION REPORT OF TONGCHENG NEW ENERGY

APPENDIX VIII

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 Pan-China Assets Appraisal Co., Ltd. (“ Beijing Pan-China ”), for the purpose of inclusion in this circular. 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 Materials 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 Materials Company Limited* as at the valuation base date.

II. VALUATION SCOPE

The entire assets of CNBM (Tongcheng) New Energy Materials 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. [(Note)]

Note: The Valuer has reviewed the financial information of CNBM (Tongcheng) New Energy Materials Company Limited as of July 2017 provided by the auditor and the respective Target Companies and the explanatory materials and forecast information of CNBM (Tongcheng) New Energy Materials Company Limited, and obtained confirmation from CNBM (Tongcheng) New Energy Materials Company Limited 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 this valuation report during the period from 31 October 2016 to 31 July 2017. Accordingly, there was no material change in the appraised value of CNBM (Tongcheng) New Energy Materials Company Limited as at 31 July 2017 as compared to those set out in this valuation report.

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APPENDIX VIII

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.
Assuming the company to operate as a going concern based on the actual status of the assets as at the valuation base date.

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APPENDIX VIII

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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APPENDIX VIII

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, 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 directly 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 or transaction cases and 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.

(II) Introduction of the Specific Valuation Methods

I) Asset-based Approach

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SUMMARY OF VALUATION REPORT OF TONGCHENG NEW ENERGY

APPENDIX VIII

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 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.
(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,

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APPENDIX VIII

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.

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 selling expenses and all taxes; for products with normal sales, appraised values were determined according to their factory selling price less selling 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 selling 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.

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APPENDIX VIII

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.

2. Valuation of buildings and structures

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

(1) Full replacement price (tax exclusive)

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

A. Construction and installation cost

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APPENDIX VIII

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 Value-added 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價依據的( 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 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

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.

C. Capital cost

Capital cost: capital cost refers to the loan interest of the construction investment during the construction period, interest

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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

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

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Inspected newness rate

Calculation of theoretical newness rate

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

B. Equipment purchased

a. Determination of purchase price of equipment

b. Determination of transportation and miscellaneous cost

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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

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

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.

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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.
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.

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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 – determined using serviced life)/economic service life approach service life × 100%

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

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

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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.

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

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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.

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 cost approach is the most mature method to valuate the value of patented and proprietary technologies application. As there is no

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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, 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 (Tongcheng) New Energy Materials 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.

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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.

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, this method is more commonly used in the technological asset valuation by virtue of its widely-accepted reasonableness and feasibility.

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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

– Sharing ratio of sales revenue of intangible assets

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.

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.

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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.

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 <==

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

5. Determination of discount rate

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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

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;
The minutes of the 22nd meeting of eighth session of the Board of Directors of Luoyang Glass Company Limited*;
The document of the Board of Directors of China National Building Material Company Limited, “the Reply on Approval of Transfer of 7.5% Equity Interest in CNBM (Tongcheng) New Energy Materials Company Limited* by China Triumph International Engineering Co., Ltd.” (CNBM Tou Fa (2016) No. 644);

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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));
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));

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Interim Regulation on the Supervision and Administration of State-owned 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 State-owned 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));
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》);

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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));
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));

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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 Disclosure of Valuation Report in relation to 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)).

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));

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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));
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 (Common Catalog) of Anhui Province 2009 (《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 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價依據的通知》(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》);

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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));
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;

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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 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 Materials 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%.

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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 Current liabilities Non-current liabilities Total liabilities Net assets	Book value 15,614.91 31,653.80 26,187.81 107.41 5,280.12 78.46 47,268.71 26,259.71 – 26,259.71 21,009.00	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 26,259.71 – – – 26,259.71 – 20,936.19 -72.81	Appreciation rate % 0.84 -0.64 -4.31 – 17.51 –
			-0.15

			–
			–

			-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 Materials 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 Materials 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.

IX. 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

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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) 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 Materials 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 Materials 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 Materials Company Limited has not obtained building ownership certificate, CNBM (Tongcheng) New Energy Materials 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 Materials 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 Materials 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*.

The building of CNBM (Tongcheng) New Energy Materials Company Limited without building ownership certificate is not connected with the ordinary manufacturing procedure and does not have impact on the revenue stream of CNBM (Tongcheng) New Energy Materials Company Limited. Given that the valuation is appraised by adopting income approach valuation method, the “incompleteness or defects in the ownership documents” and the amount of “adjustment to the valuation results” shall not affect the valuation of CNBM (Tongcheng) New Energy Materials Company Limited*.

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(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.
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 IX

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 circular. 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. [(Note)]

Note: The Valuer has reviewed the financial information of CNBM (Yixing) New Energy Company Limited as of July 2017 provided by the auditor and the respective Target Companies and the explanatory materials and forecast information of CNBM (Yixing) New Energy Company Limited, and obtained confirmation from CNBM (Yixing) New Energy Company Limited 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 this valuation report during the period from 31 October 2016 to 31 July 2017. Accordingly, there was no material change in the appraised value of CNBM (Yixing) New Energy Company Limited as at 31 July 2017 as compared to those set out in this valuation report.

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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.
Assuming the company to operate as a going concern based on the actual status of the assets as at the valuation base date.

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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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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.

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

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.

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(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.

(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

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

(1) Full replacement price

Full replacement = construction and installation cost + price (tax exclusive) preliminary cost and other cost + capital 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 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) (《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

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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

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 newness = (1 – life in use/economic useful life) 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:

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Appraised value

= full replacement price × newness rate

Valuation of machineries and equipment

(1) Determination of full replacement price of machineries and equipment
Full replacement = purchase price of equipment + 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 value-added 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

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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.

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,

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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.

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.

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(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.

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

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

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

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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 value = full replacement price × comprehensive 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, computer-based 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 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.

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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 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

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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. 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

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 [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)

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

5. Determination of discount rate

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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

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;
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

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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));
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));

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Interim Regulation on the Supervision and Administration of State-owned 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 State-owned 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 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));

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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));
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)).

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(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;
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》( );

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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;
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.

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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
	Others	–	–	–	–
Total assets		62,859.89	61,585.69	-1,274.20	-2.03
Current liabilities		30,812.21	30,812.21	–	–
Non-current liabilities		–	–	–	–
Total liabilities		30,812.21	30,812.21	–	–
Net assets		32,047.68	30,773.48	-1,274.20	-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%.

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(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.

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 (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.

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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.
(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.

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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 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

(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.
(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

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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:

According to the PRC legal opinion prepared	According to the PRC legal opinion prepared	According to the PRC legal opinion prepared	According to the PRC legal opinion prepared	by a qualified PRC legal adviser Beijing	by a qualified PRC legal adviser Beijing	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*.
					Gross Floor
No.	Name of Building	Structure	Completion	Date	Area	Remarks
					(m 2)
1	3rd floor additional to the	Framework	2013–06		474.56	Included in the joint
	eastern end of the joint					workshop numbered 1
	factory					in the buildings, being
						a connected
						workshop, new
						property right
						certificate of which
						was under application
2	Addition of lifting arch at	Framework	2013–06		1,606.2
	the west end of the joint
	factory
3	Floor additional to the	Framework	2012–06		179.4
	storeroom (next to
	chimney)
4	Workshop for raw	Framework	2012–06		1,747.6
	materials
5	Power distribution rooms	Framework	2012–06		378.00
6	Expansion of office	Framework	2011–11		771.83
	building
Total					5,157.59

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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

No. Land Use Right Certificate No. Location Expiry Date Nature Type of Use Right Development Level 1 Su (2016) Yixing Real Estate No. 0009784 Fandao Agricultural & Forest Farm, Gao Cheng Town, Yixing 2054–1-14 Industrial Transfer Five Connections and one leveling 2 Su (2016) Yixing Real Estate No. 0009782 Fandao Agricultural & Forest Farm, Gao Cheng Town 2056–12–24 Industrial Transfer Five Connections and one leveling 3 Su (2016) Yixing Real Estate No. 0009783 Fandao Agricultural & Forest Farm, Gao Cheng Town 2056–12–24 Industrial Transfer Five Connections and one leveling 4 Su (2016) Yixing Real Estate No. 0009785 Fandao Agricultural & Forest Farm, Gao Cheng Town, Yixing 2054–1-14 Industrial Transfer Five Connections and one leveling 5 Su (2016) Yixing Real Estate No. 0009786 Fandao Agricultural & Forest Farm Gao Cheng Town, Yixing 2054–1-14 Industrial Transfer Five Connections and one leveling Total	Area (m 2) 14,827.20 13,333.40 24,927.70 28,617.80 45,430.10 127,136.20	Book Value 6,449,832.00 5,933,363.00 11,092,826.50 9,658,653.00 2,809,332.00 8,225,902.80 11,592,663.00
		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.

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SUMMARY OF VALUATION REPORT OF YIXING NEW ENERGY

APPENDIX IX

(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

– IX-29 –

APPENDIX X — LETTERS FROM THE REPORTING ACCOUNTANT AND THE FINANCIAL ADVISER OF THE COMPANY ON THE PROFIT FORECASTS OF THE TARGET COMPANIES

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 circular.

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 Materials 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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APPENDIX X — LETTERS FROM THE REPORTING ACCOUNTANT AND THE FINANCIAL ADVISER OF THE COMPANY ON THE PROFIT FORECASTS OF THE TARGET COMPANIES

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.

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APPENDIX X — LETTERS FROM THE REPORTING ACCOUNTANT AND THE FINANCIAL ADVISER OF THE COMPANY ON THE PROFIT FORECASTS OF THE TARGET COMPANIES

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.

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

– X-3 –

APPENDIX X — LETTERS FROM THE REPORTING ACCOUNTANT AND THE FINANCIAL ADVISER OF THE COMPANY ON THE PROFIT FORECASTS OF THE TARGET COMPANIES

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 circular.

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.

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,

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APPENDIX X — LETTERS FROM THE REPORTING ACCOUNTANT AND THE FINANCIAL ADVISER OF THE COMPANY ON THE PROFIT FORECASTS OF THE TARGET COMPANIES

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

– X-5 –

MANAGEMENT DISCUSSION AND ANALYSIS OF HEFEI NEW ENERGY

APPENDIX XI

The following sets out the management discussion and analysis of Hefei New Energy for the three years ended 31 December 2014, 2015 and 2016 and the five months ended 31 May 2017.

Capital liquidity and financial resources

As at 31 December 2014, CNBM (Hefei) New Energy Company Limited* had no short-term borrowings or long-term borrowings;

As at 31 December 2015, CNBM (Hefei) New Energy Company Limited* had short-term borrowings of RMB53,500,000.

On 1 September 2015, CNBM (Hefei) New Energy Company Limited entered into a loan agreement with Hua Xia Bank Co., Ltd., Hefei Branch (華夏銀行股份有限公司合肥分行) for a loan in the amount of RMB4,500,000, with a term from 1 September 2015 to 1 June 2016, which was guaranteed by Bengbu Design & Research Institute for Glass Industry. On 27 December 2015, CNBM (Hefei) New Energy Company Limited entered into a loan agreement with Hefei Science & Technology Rural Commercial Bank Company Limited, Qilitang Sub-branch (合肥科技農村商業銀行股份有限公司七裡塘支行) for a loan in the amount of RMB49,000,000 with a term from 27 December 2015 to 27 October 2016, which was guaranteed by Triumph Technology Group Company[] .

As at 31 December 2015, CNBM (Hefei) New Energy Company Limited* had long-term borrowings of RMB239,755,000.

In 2015, CNBM (Hefei) New Energy Company Limited entered into loan agreements with Industrial Bank Co., Ltd., Hefei Branch, pursuant to which it was granted a loan in the amount of RMB81,800,000 with a term from 26 March 2015 to 25 March 2021, a loan in the amount of RMB3,375,000 with a term from 28 May 2015 to 27 May 2021, a loan in the amount of RMB79,580,000 with a term from 9 September 2015 to 8 September 2021 and a loan in the amount of RMB75,000,000 with a term from 15 December 2015 to 14 December 2021, respectively, all of which were guaranteed by Bengbu Design & Research Institute for Glass Industry.

As at 31 December 2016, CNBM (Hefei) New Energy Company Limited* had short-term borrowings of RMB124,500,000.

In 2016, CNBM (Hefei) New Energy Company Limited entered into loan agreements with Hefei Science & Technology Rural Commercial Bank Company Limited, Qilitang Sub-branch (合肥科技農村商業銀行股份有限公司七裡塘支行), pursuant to which it was granted a loan in the amount of RMB30,000,000 with a term from 2 March 2016 to 2 March 2017, a loan in the amount of RMB30,000,000 with a term from 21 July 2016 to 21 July 2017, a loan in the amount of RMB29,500,000 with a term from 19 August 2016 to 19 August 2017 and a loan in the amount of RMB35,000,000 with a term from 28 October 2016 to 28 October 2017, respectively, all of which were guaranteed by Triumph Technology Group Company*.

– XI-1 –

MANAGEMENT DISCUSSION AND ANALYSIS OF HEFEI NEW ENERGY

APPENDIX XI

On 6 February 2017, 9 March 2017 and 24 May 2017, CNBM (Hefei) New Energy Company Limited entered into loan agreements with Hefei Science & Technology Rural Commercial Bank, Qilitang Sub-branch (合肥科技農村商業銀行七裡塘支行), pursuant to which it was granted a loan in the amount of RMB45,500,000 with a term from 6 February 2017 to 6 February 2018, a loan in the amount of RMB30,000,000 with a term from 9 March 2017 to 9 March 2018, and a loan in the amount of RMB15,000,000 with a term from 24 May 2017 to 24 March 2018, respectively, all of which were guaranteed by Triumph Technology Group Company*.

On 4 February 2017 and 3 May 2017, CNBM (Hefei) New Energy Company Limited entered into loan agreements with China Construction Bank, Heifei Zhonglou Sub-branch (中國建設銀行合肥鐘樓支行), pursuant to which it was granted a loan in the amount of RMB30,000,000 with a term from 4 February 2017 to 3 February 2018 and a loan in the amount of RMB20,000,000 with a term from 3 May 2017 to 3 February 2018,respectively, all of which were guaranteed by Triumph Technology Group Company*.

CNBM (Hefei) New Energy Company Limited* is a creditworthy enterprise and is able to ensure timely repayment of principal amounts and interest of its loans.

In 2014, CNBM (Hefei) New Energy Company Limited* received government subsidies of RMB27,610,000, which was granted from the earmarked funds under the Polices of Hefei on Carrying on Relocated Industries and Expediting the Development of New Industrialization (Tentative) 《合肥市承接產業轉移加快新型工業化發展若干政策( (試行)》) and the Polices and Measures of Hefei on Carrying on Relocated Industries and Further Promoting Independent Innovation (Tentative) 《合肥市承接產業轉移進一步推進自主創新若干政策措施( (試行)》.

In 2015, CNBM (Hefei) New Energy Company Limited* received government subsidies of RMB25,000,000, which was granted from the earmarked funds under the Polices of Hefei on Carrying on Relocated Industries and Expediting the Development of New Industrialization (Tentative) 《合肥市承接產業轉移加快新型工業化發展若干政策( (試行)》) and the Polices and Measures of Hefei on Carrying on Relocated Industries and Further Promoting Independent Innovation (Tentative) 《合肥市承接產業轉移進一步推進自主創新若干政策措施( (試行)》.

Capital structure of the company

Hefei New Energy was established in March 2011 with a registered capital of RMB100 million, of which RMB70 million to be contributed by International Engineering and RMB30 million by Huaguang Group. In June 2011, as resolved at the general meeting of Hefei New Energy, the 40% equity interest in Hefei New Energy held by International Engineering was transferred to Huaguang Group, and accordingly the capital contributions of International Engineering and Huaguang Group were changed to RMB30 million and RMB70 million, respectively. In November 2011, as resolved at the general meeting of Hefei New Energy, Hefei High-Tech Construction Investment Group Company* (合肥高新建設投資集團公司) (“Hefei High-Tech”) made a capital injection of RMB30 million into Hefei New Energy. Upon the

– XI-2 –

MANAGEMENT DISCUSSION AND ANALYSIS OF HEFEI NEW ENERGY

APPENDIX XI

capital injection, the registered capital of Hefei New Energy was increased to RMB130 million, of which RMB70 million, RMB30 million and RMB30 million were contributed by Huaguang Group, International Engineering and Hefei High-Tech respectively, representing 53.84%, 23.08% and 23.08% equity interest in Hefei New Energy, respectively. In July 2014 and October 2014, as resolved at the general meeting of Hefei New Energy, Huaguang Group and International Engineering transferred their respective 53.84% and 23.08% equity interest in Hefei New Energy to China Luoyang Float Glass (Group) Company Limited* (中國洛陽浮法玻璃集團有限責任公司)(“CLFG”). Upon the transfer, CLFG and Hefei High-Tech owned RMB100 million and RMB30 million of the resisted capital of Hefei New Energy, representing 76.92% and 23.08% equity interest in Hefei New Energy, respectively.

Orders for products and prospect for new products of the company

The raw glass production line commenced operation in December 2015, and recorded a finished product yield of more than 83%, with product quality at top-level internationally; the further processing line commenced operation in February 2016 and recorded a finished product yield of more than 97%. Relying on its excellent product quality and positive and thorough after-sales service, the company recorded admirable orders for its products and expanding sales coverage since its commencement of operation in December 2015. As at the end of 2016, 14 PV modules enterprises have established cooperation with the company, of which four customers are among the top five module giants in the photovoltaic industry. The company will further optimize its product quality and reduce production costs, striving to become the industry benchmark.

The company commenced trial production in December 2015 and achieved sales revenue of RMB11,680,000 and total profit of RMB-11,780,000 for the year.

In 2016, the company achieved sales revenue of RMB482,170,000 and total profit of RMB18,910,000.

For the period from January to May 2017, the company achieved sales revenue of RMB230,140,000 and total profit of RMB8,060,000.

The company started operation in December 2015 and generated an insignificant amount of sales revenue for that year. In 2016, the company achieved sales revenue of RMB505,711,315 and total profit of RMB18,909,802.

Material investment held

Since its establishment and up to 31 December 2016, CNBM (Hefei) New Energy Company Limited* had no material investment.

– XI-3 –

MANAGEMENT DISCUSSION AND ANALYSIS OF HEFEI NEW ENERGY

APPENDIX XI

Substantial acquisition and disposal of subsidiaries and associated companies:

Since its establishment and up to 31 December 2016, CNBM (Hefei) New Energy Company Limited* had no substantial acquisition and disposal.

Comments on the report of board of directors and the classified information provided in the accounts:

CNBM (Hefei) New Energy Company Limited presents information such as financial statements, financial indicators and statistical indexes to the board of directors, which gives a true view of its operation, so that the board of directors can make reasonable decisions. CNBM (Hefei) New Energy Company Limited carries out final financial accounting at the end of the year to reflect its financial conditions, operating results and cash flows for an accounting year.

Information on the employees of the company

As at 31 December 2014, 2015 and 2016 and 31 May 2017, the company had 20, 407, 698 and 644 employees respectively, with an average employee remuneration of approximately RMB3,799, approximately RMB3,220, approximately RMB4,123 and approximately RMB4,678. The company provides training on safety for all employees and training on expertise for certain employees to improve the technical competence and skills of employees.

Pledge of assets

In February 2015, CNBM (Hefei) New Energy Company Limited entered into the Pledge Contract with Maximum Amount with Industrial Bank Co., Ltd., Hefei Branch, pursuant to which, the company pledged its land and constructions in progress as security for a loan of RMB100,000,000 from the bank, with the pledge amount of RMB39,000,000 and RMB37,000,000, respectively and a pledge term from 28 February 2015 to 28 February 2021, for which Bengbu Design & Research Institute for Glass Industry assumed liability of guaranty.

Plans for significant investment or purchase of capital assets in future

CNBM (Hefei) New Energy Company Limited* currently has no plan for significant investment, except to purchase special equipment relating to its production. The specific purchase plans will be in line with the relevant production needs of company.

Gearing ratio:

As at 31 December 2014, the total assets and total liabilities of CNBM (Hefei) New Energy Company Limited* amounted to approximately RMB706,440,000 and approximately RMB540,100,000, respectively, with a gearing ratio of approximately 76.45%;

– XI-4 –

MANAGEMENT DISCUSSION AND ANALYSIS OF HEFEI NEW ENERGY

APPENDIX XI

As at 31 December 2015, the total assets and total liabilities of CNBM (Hefei) New Energy Company Limited* amounted to approximately RMB984,700,000 and approximately RMB830,140,000, respectively, with a gearing ratio of approximately 84.30%;

As at 31 December 2016, the total assets and total liabilities of CNBM (Hefei) New Energy Company Limited* amounted to approximately RMB1,130,820,000 and approximately RMB958,430,000, respectively, with a gearing ratio of approximately 84.76%;

As at 31 May 2017, the total assets and total liabilities of CNBM (Hefei) New Energy Company Limited* amounted to RMB1,245,590,000 and RMB1,066,370,000, respectively, with a gearing ratio of approximately 85.61%;

Exposure to fluctuations in exchange rates and any related hedges:

As at 31 December 2016, CNBM (Hefei) New Energy Company Limited* had a small amount of transactions denominated in foreign currency, accounting for a very low percentage of its sales. Therefore, such risk is minimal and the company has no related hedges.

Details of contingent liabilities:

As at 31 December 2016, CNBM (Hefei) New Energy Company Limited* had no contingent liabilities.

– XI-5 –

MANAGEMENT DISCUSSION AND ANALYSIS OF TONGCHENG NEW ENERGY

APPENDIX XII

The following sets out the management discussion and analysis of Tongcheng New Energy for the years ended 31 December 2015 and 2016 and the five months ended 31 May 2017.

Capital liquidity and financial resources

As at 31 December 2015, Tongcheng New Energy had no short-term financial loans.

As at 31 December 2016, Tongcheng New Energy had short-term financial loans of RMB131,600,000. On 29 January 2016, Tongcheng New Energy (as the secondary lessee) entered into the Financial Leasing Agreement (Leaseback) (No. M59-JXHZ2016-5) with Triumph Technology Group Company* (as the primary lessee) and King Sun Financial Leasing (Shanghai) Co., Ltd. (as the leaser), pursuant to which, Tongcheng New Energy sold certain equipment of its production line to the leaser and then lease the same back, with both the selling price and lease principal being RMB13,160, at an interest rate of 6.11325%, and for a term from the lease date to 9 March 2017. In accordance with “Substance over Form” principle, such transaction, in essence, was that the leaser used the equipment as security for providing loans to the company. The company took the nominal selling price of RMB131,600,000 of the target asset as a short-term loan. The target asset was accounted for at the original book value and provided for depreciation.

As at 31 May 2017, Tongcheng New Energy had no short-term financial loans.

As at 31 December 2015, the government subsidies of RMB1,825,565 received by Tongcheng New Energy were related to revenue, including RMB1,580,000 from the earmarked funds for supporting industrial economic development granted by the Finance Bureau of Tongcheng Economic and Technological Development Zone on 11 May 2015, RMB100,000 of emerging strategic enterprise incentives granted by the Finance Bureau of Tongcheng Economic and Technological Development Zone on 30 December 2015, RMB19,800 of employment subsidies for college graduates granted by the Treasury Payment Center, Finance Bureau of Tongcheng City on 10 February 2015 and 4 July 2015, RMB100,000 of incentives for reaching above designated size granted by the Treasury Payment Center, Finance Bureau of Tongcheng City on 15 February 2015, and RMB25,765 of job subsidies for corporate additional recruitment granted by the Human Resources and Social Security Bureau of Tongcheng City on 4 December 2015.

As at 31 December 2016, the government subsidies of RMB75,399 received by Tongcheng New Energy were related to revenue, including RMB20,000 of patent subsidies granted by the Intellectual Property Office of Tongcheng City on 2 August 2016, RMB35,399 of employment stabilization subsidies granted by the Labor and Employment Bureau of Tongcheng City on 1 October 2016, and RMB20,000 of incentives for maintaining safety production standards of the Work Safety Bureau granted by the Treasury Payment Center, Finance Bureau of Tongcheng City on 10 December 2016.

– XII-1 –

MANAGEMENT DISCUSSION AND ANALYSIS OF TONGCHENG NEW ENERGY

APPENDIX XII

As at 31 May 2017, the government subsidies of RMB200,000 received by Tongcheng New Energy were related to revenue, representing RMB150,000 of incentives for growth of principal businesses and RMB50,000 of incentives for energy saving and emission reductions granted by the Finance Bureau of Tongcheng Economic and Technological Development Zone on 13 January 2017.

Capital Structure of Tongcheng New Energy

CNBM (Tongcheng) New Energy Materials Company Limited, formerly known as Anhui Hengchang Photoelectric Glass Co., Ltd. * (安徽恒昌光電玻璃有限公司), is a company with limited liability jointly established by Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd., Anhui Hengchang Group Co., Ltd. and China Triumph International Engineering Company Limited. It obtained the Business License from Tongcheng Administration for Industry and Commerce on 24 December 2010. At establishment, the registered capital of the company amounted to RMB100 million, of which Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. subscribed for RMB50 million, representing 50% of registered capital; Anhui Hengchang Group Co., Ltd. subscribed for RMB40 million, representing 40% of registered capital; and China Triumph International Engineering Company Limited* subscribed for RMB10 million, representing 10% of registered capital.

On 4 September 2013, as resolved at the general meeting of the company, Anhui Hengchang Group Co., Ltd. was approved to transfer all its 40% equity interests in the company to Tongcheng Construction Investment and Development Co., Ltd..

On 28 August 2016, as resolved at the general meeting of the company, Tongcheng Construction Investment and Development Co., Ltd. was approved to transfer all its 40% equity interests in the company to Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd..

On 21 October 2016, as resolved at the general meeting of the company, the registered capital was approved to be increased from RMB100 million to RMB133,388,980. The increase of RMB33,388,980 in the registered capital was fully subscribed for by Bengbu Design & Research Institute for Glass Industry, a new shareholder of the company. Upon the changes in the shareholdings, Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. subscribed for RMB90 million, representing 67.47% of the registered capital; China Triumph International Engineering Company Limited subscribed for RMB10 million, representing 7.5% of the registered capital; and Bengbu Design & Research Institute for Glass Industry subscribed for RMB33,388,980, representing 25.03% of the registered capital.

The sources of funds of Tongcheng New Energy include receipts of goods and cash contribution from investors and are mainly used for production, operation and construction of the company. In order to strengthen financial control, Tongcheng New Energy has formulated financial systems in terms of payment, reimbursement, product cost accounting

– XII-2 –

MANAGEMENT DISCUSSION AND ANALYSIS OF TONGCHENG NEW ENERGY

APPENDIX XII

and fixed assets management so as to effectively control capital inflow and outflow, broaden sources of revenue and cut expenditure as well as optimise its capital structure.

Order for products and prospect for new products of Tongcheng New Energy

The company commenced production in October 2015 and recorded revenue of approximately RMB69,275,700, gross profit margin of 24% and profit after tax of RMB810,000 in the year. In 2016, its revenue amounted to approximately RMB233,072,833, the gross profit margin reached 30% and its profit after tax was approximately RMB29,929,272. The sales volume of the company was in a trend of continuous increase. After a year of research from 2015 to 2016, the company developed the anti-PID photovoltaic glass, which filled the gap of the world and had broad prospects.

Material investments held

Tongcheng New Energy did not make any investment in the period from 1 January 2015 to 31 May 2017.

Substantial acquisition and disposal of subsidiaries and associated companies

Tongcheng New Energy had no acquisition or disposal in the period from 1 January 2015 to 31 May 2017.

Comments on the report of board of directors and classified information provided in the accounts:

Tongcheng New Energy presents the information such as financial statements, financial indicators and statistical indexes to the board of directors, which gives a true view of its operation and market competitiveness of its new products, so that the board of directors can make reasonable decisions. The final financial accounting conducted at the end of the year truly reflected the financial position, operating results and cash flow in the accounting year.

Information on the employees

As at 31 December 2014, 2015 and 2016, Tongcheng New Energy had 315, 365 and 370 employees, with an average employee remuneration of RMB3,022, RMB3,270 and RMB3,296, respectively. Tongcheng New Energy provides training on safety for all employees and training on expertise for certain employees. Its trainings to employees are provided in a combination of internal and external trainings, thus improving the professional competence and skills of employees.

Pledge of assets

As at 31 May 2017, there was no charge over the assets of Tongcheng New Energy.

– XII-3 –

MANAGEMENT DISCUSSION AND ANALYSIS OF YIXING NEW ENERGY

APPENDIX XIII

The following sets out the management discussion and analysis of Yixing New Energy for the period from 28 October 2016 (date of incorporation) to 31 December 2016 and for the five months ended 31 May 2017.

i. For the year ended 31 December 2016

Business review

CNBM (Yixing) New Energy Company Limited is a company incorporated and owned as to 51% by Triumph Group, 29.01% by Far East Optoelectronics Company Limited (private enterprise), 12.75% by Yixing Environmental Technology and 7.24% by GCL System Integration (private enterprise). It has the strength and standardized management of central government-controlled enterprises, while possessing the vitality and efficient operation of private enterprises. The company specialises in research and development, production and sales of cutting-edge photovoltaic glass products, with various indicators of its self-developed products in line with the industry-leading levels.

Financial review

Revenue

The revenue of Yixing New Energy for the year ended 31 December 2016 amounted to approximately RMB37,110,963, mainly generated from the sales of coated photovoltaic glass.

Liquidity, financial conditions and basic structure

As at 31 December 2016, the cash and cash equivalents amounted to approximately RMB32,016,695.

As at 31 December 2016, the current assets amounted to approximately RMB109,504,197.

As at 31 December 2016, the total liabilities amounted to approximately RMB176,872,018.

As at 31 December 2016, the outstanding bank borrowing amounted to RMB100,000,000.

As at 31 December 2016, the working capital amounted to approximately RMB-67,367,820.

– XIII-1 –

MANAGEMENT DISCUSSION AND ANALYSIS OF YIXING NEW ENERGY

APPENDIX XIII

Prospect for new businesses

Yixing New Energy expects that its future revenue will be generated from its existing and new customers. The customers of Yixing New Energy are PV module enterprises.

Dividend

As at 31 May 2017, Yixing New Energy did not distribute any dividend.

ii. For the five months ended 31 May 2017

Financial review

Revenue

The revenue of Yixing New Energy for the five months ended 31 May 2017 amounted to approximately RMB110,801,652, mainly generated from the sales of coated photovoltaic glass.

Liquidity, financial conditions and basic structure

As at 31 May 2017, the cash and cash equivalents amounted to approximately RMB47,485,346.

As at 31 May 2017, the current assets amounted to approximately RMB244,163,682.

As at 31 May 2017, the total liabilities amounted to approximately RMB343,580,610.

As at 31 May 2017, the outstanding bank borrowing amounted to RMB205,000,000.

As at 31 May 2017, the working capital amounted to approximately RMB-69,416,927.

Capital liquidity and financial resources

As at 31 October 2016, Triumph Technology Group Company, Far East Optoelectronics Company Limited, Yixing Environmental Technology Innovation Venture Investment Company Limited and GCL System Integration Technology Co., Ltd. contributed an aggregate of RMB313,700,000 to the registered capital. In particular, the paid-in capital of Triumph Technology Group Company, Yixing Environmental Technology Innovation Venture Investment Company Limited and GCL System Integration Technology Co., Ltd. amounted to RMB160,000,000, RMB40,000,000 and RMB22,700,000, respectively, while Far East Optoelectronics Company Limited contributed RMB91,000,000 in kind.

– XIII-2 –

MANAGEMENT DISCUSSION AND ANALYSIS OF YIXING NEW ENERGY

APPENDIX XIII

WUYIGE Certified Public Accountants LLP has carried out capital verification on the abovementioned contributions and issued the capital verification report Da Xin Yan Zi (2016) No. 2-00179 thereon.

According to the contribution agreement, Yixing New Energy took over the bank borrowing of RMB199,000,000 from Far East Optoelectronics Company Limited* and repaid the bank borrowing of RMB99,000,000 in November 2016. As at 31 December 2016, the balance of loan of Yixing New Energy was RMB100,000,000 with Bank of Jiangsu, Yixing Branch as creditor.

In January 2017, Yixing New Energy obtained short-term financial loans of RMB50,000,000 from Jiangsu Yixing Rural Commercial Bank, Fandao Branch, which were guaranteed by Triumph Technology Group Company and Far East Optoelectronics Company Limited. In particular, the term is from 11 January 2017 to 11 January 2018 for the loan of RMB20,000,000 and from 16 January 2017 to 16 January 2018 for the loan of RMB30,000,000 respectively.

In March 2017, Yixing New Energy obtained a short-term financial loan of RMB50,000,000 from Bank of Jiangsu, Yixing Branch, which was guaranteed by Triumph Technology Group Company and Far East Optoelectronics Company Limited, with a term from 27 March 2017 to 26 March 2018. In the same month, RMB25,000,000 was used to repay the borrowing from the Bank of Jiangsu it took over.

In April 2017, Yixing New Energy obtained the project credit facilities of RMB120,000,000 from Jiangsu Yixing Rural Commercial Bank, Fandao Branch, which were guaranteed by Triumph Technology Group Company and Far East Optoelectronics Company Limited, and withdrew RMB30,000,000 therefrom in May. In particular, the term is from 8 May 2017 to 20 June 2018 for the loan of RMB15,000,000 and from 8 May 2017 to 20 December 2018 for the loan of RMB15,000,000, respectively.

As at 31 May 2017, the total balance of financial loans of Yixing New Energy include the short-term borrowing of RMB50,000,000 from Jiangsu Yixing Rural Commercial Bank, Fandao Branch; the short-term borrowing of RMB125,000,000 from Bank of Jiangsu, Yixing Branch and the long-term borrowing of RMB30,000,000 from Jiangsu Yixing Rural Commercial Bank, Fandao Branch.

In December 2016, Yixing New Energy obtained the banker’s acceptance with outstanding facilities of RMB50,000,000 from China Everbright Bank, Yixing Branch. As at 31 May 2017, RMB35,500,000 of the facilities has been utilised.

Yixing New Energy is a creditworthy enterprise, has repaid the loan interest as scheduled and is able to ensure the timely repayment of the principal amounts. As at 31 May 2017, Yixing New Energy did not receive any financial support or government subsidies.

– XIII-3 –

MANAGEMENT DISCUSSION AND ANALYSIS OF YIXING NEW ENERGY

APPENDIX XIII

Capital structure of Yixing New Energy

Yixing New Energy was established on 28 October 2016 with the registered capital of RMB313,700,000. As at 31 May 2017, there had been no change in the registered capital.

The sources of funds of Yixing New Energy include project loans, short-term borrowings and cash contribution from investors, and are mainly used for construction and production of the company. In order to strengthen financial control, it has established strict financial systems in terms of payment, reimbursement, product cost accounting and fixed assets management so as to effectively control capital inflow and outflow, broaden sources of revenue and cut expenditure as well as optimise its capital structure.

Orders for products and prospect for new products of Yixing New Energy

Yixing New Energy completed its trial production and formally put into production in November 2016. By virtue of its high-quality products, it initiated a new lightweight era for the photovoltaic glass industry in line with the development trend of domestic and overseas photovoltaic industry. Accordingly, the company recorded admirable orders for its products, which injected strong impetus into its transformation and greatly improved its competitiveness. Yixing New Energy has been focusing on exploration and innovation and kept improving its technology process. After continuous breakthrough, it successfully developed 1.8mm, 1.6mm and 1.5 mm series of ultra-thin photovoltaic glasses and achieved consecutive and stable mass production. Among which, 1.5 mm photovoltaic glass is currently the thinnest among those available for mass production.

At present, the mainstream double glass modules mainly adopts the 2.5mm and 2mm two-sided glasses, the majority of which are guaranteed for power generation of 25 to 30 years. They are particularly suitable for application in the agriculture or working with double-sided batteries to generate higher efficiency for power generation. The promotion of this series of ultra-thin photovoltaic glass by Yixing New Energy will benefit to various segments within the photovoltaic glass industry, thus creating a win-win situation as well as improving the overall competitiveness of the photovoltaic industry in China.

Substantial acquisition and disposal of subsidiaries and associated companies

Yixing New Energy had no substantial acquisition and disposal from its establishment date to 31 May 2017.

Comments on the report of board of directors and the classified information provided in the accounts

Yixing New Energy presents the information such as financial statements, financial indicators and statistical indexes to the board of directors, which gives a true view of its operation and market competitiveness of new products, so that the board of directors can

– XIII-4 –

MANAGEMENT DISCUSSION AND ANALYSIS OF YIXING NEW ENERGY

APPENDIX XIII

make reasonable decisions. Yixing New Energy carries out final financial accounting at the end of the year to reflect its financial conditions, operating results and cash flows for an accounting year.

Information on the employees

As at 31 December 2016, Yixing New Energy had 554 employees with average employee compensation of RMB3,968. As at 31 May 2017, it had 565 employees with average employee compensation of RMB4,179. Yixing New Energy provides training on safety for all employees and training on expertise for certain employees. Its trainings to employees are provided in a combination of internal and external trainings, thus improving the professional competence and skills of employees.

Charges over assets

In April 2017, the buildings and lands registered under the Real Estate Ownership Certificate numbered Su (2016) Yixing Bu Dong Chang No. 0009784 (蘇(2016)宜興不動產權第0009784號) were pledged as a guarantee for the financing of projects.

Plans for significant investment or purchase of capital assets in future

Yixing New Energy has no plans for future significant investment, except to purchase special equipment relating to its production. The specific purchase plans will be in line with the relevant production needs of Yixing New Energy.

Gearing Ratio

As at 31 December 2016, the total assets and the total liabilities of Yixing New Energy amounted to approximately RMB497,887,948 and approximately RMB176,872,018, respectively, with a gearing ratio of approximately 35.52%. As at 31 May 2017, the total assets and the total liabilities of Yixing New Energy were approximately RMB668,177,821 and approximately RMB343,580,610, respectively, with a gearing ratio of approximately 51.42%.

Exposure to fluctuations in exchange rates and any related hedges

As at 31 December 2016 and 31 May 2017, as Yixing New Energy carried out no transactions denominated in foreign currencies, its exposures to exchange rate fluctuations is minimal, therefore, there was no related hedge.

Details of contingent liabilities (if any)

As at 31 December 2016 and 31 May 2017, Yixing New Energy had no contingent liabilities.

– XIII-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The accompanying unaudited pro forma consolidated balance sheet, the unaudited pro forma consolidated income statement and the unaudited pro forma consolidated cash flow statement of the Enlarged Group (collectively, the”Unaudited Pro Forma Financial Information”) have been prepared by the directors of the Company in accordance with paragraph 29 of Chapter 4 of the Listing Rules for the purpose of illustrating the effects of the proposed acquisition of the 100% equity interest in CNBM (Hefei) New Energy Company Limited (“Hefei New Energy”), the 100% equity interest in CNBM (Tongcheng) New Energy Materials Company Limited (“Tongcheng New Energy”) and the 70.99% equity interest in CNBM (Yixing) New Energy Company Limited* (“Yixing New Energy”) (the “Acquisitions”) on the consolidated financial position, the consolidated operating results and the cash flows of the Enlarged Group.

The unaudited pro forma consolidated balance sheet of the Enlarged Group has been prepared based on the audited consolidated balance sheet of the Group as at 31 December 2016, which has been extracted from the Group’s published annual results announcement for the year ended 31 December 2016 dated 31 March 2017, and the audited balance sheets of Hefei New Energy, Tongcheng New Energy and Yixing New Energy as at 31 May 2017, which have been extracted from the accountants’ reports of Hefei New Energy, Tongcheng New Energy and Yixing New Energy set out in Appendix II to IV to this Circular, after taking into account the pro forma adjustments relating to the proposed Acquisitions that are (i) clearly shown and explained; (ii) directly attributable to the proposed Acquisitions and not relating to future events or decisions; and (iii) factually supportable, as explained in the accompanying notes, as if the proposed Acquisitions had been completed on 31 December 2016.

The unaudited pro forma consolidated income statement and the unaudited pro forma consolidated cash flow statement of the Enlarged Group have been prepared based on the audited consolidated income statement and the audited consolidated cash flow statement of the Group for the year ended 31 December 2016, which have been extracted from the Group’s published 2016 annual results announcement dated 31 March 2017, and the audited income statements and the audited statements of cash flows of Hefei New Energy, Tongcheng New Energy and Yixing New Energy for the year ended 31 December 2016, which have been extracted from the accountants’ reports of Hefei New Energy, Tongcheng New Energy and Yixing New Energy set out in Appendix II to IV to this Circular, after taking into account the pro forma adjustments relating to the proposed Acquisitions that are (i) clearly shown and explained; (ii) directly attributable to the Acquisitions and not relating to future events or decisions; and (iii) factually supportable, as explained in the accompanying notes, as if the Acquisitions had been completed on 1 January 2016.

The accompanying Unaudited Pro Forma Financial Information of the Enlarged Group is prepared by the Directors of the Company based on a number of assumptions, estimates, uncertainties and currently available information to provide information of the Enlarged Group upon completion of the Acquisitions. As the Unaudited Pro Forma Financial

– XIV-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

Information is prepared for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the financial position and results of the Enlarged Group following the completion of the Acquisitions and does not purport to describe the actual results of operations, financial position and cash flows of the Enlarged Group had the Acquisitions been completed on the dates indicated herein. Further, the accompanying Unaudited Pro Forma Financial Information of the Enlarged Group does not purport to predict the future financial position, results of operations or cash flows of the Enlarged Group after the completion of the Acquisitions.

The Unaudited Pro Forma Financial Information of the Enlarged Group has been prepared in accordance with paragraph 29 of Chapter 4 and paragraph 69(4)(a)(ii) of Chapter 14 of the Listing Rules. The Unaudited Pro Forma Financial Information of the Enlarged Group should be read in conjunction with the financial information of the Group as set out in Appendix I to the Circular, the accountants’ reports of Hefei New Energy, Tongcheng New Energy and Yixing New Energy as set out in Appendices II to IV to the Circular and other financial information included elsewhere in the Circular.

– XIV-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET OF THE ENLARGED GROUP

Unit: RMB

Item Current Assets: Cash and cash equivalents Financial assets at fair value through profit or loss Derivative financial assets Notes receivable Accounts receivable Prepayments Interests receivable Dividends receivable Other receivables Inventories Assets held for sale Non-current assets due within one year Other current assets Total current assets Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term receivables Long-term equity investments Investment properties Fixed assets Construction in progress Construction materials Disposal of fixed assets Productive biological assets Gas assets Intangible assets Development expenditure Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	Audited Consolidated Balance Sheet of the Group as at 31 December 2016 Note 1 157,528,516.53 45,986,571.00 101,891,329.13 1,638,352.47 107,581,717.91 132,978,500.26 34,874,034.35 582,479,021.65 55,000,000.00 648,972,313.06 62,609,172.40 3,515,290.90 4,341,222.30 774,437,998.66 1,356,917,020.31	Audited Balance Sheet of the Target Companies as at 31 May 2017 Hefei New Energy Tongcheng New Energy Yixing New Energy Note 2 Note 2 Note 2 19,243,150.04 4,001,345.49 47,485,346.63 103,983,151.37 23,960,036.60 42,970,974.46 226,794,141.83 113,433,249.72 99,061,741.56 4,048,491.83 983,429.71 7,160,431.14 20,283,904.37 210,466.15 686,723.30 45,709,013.77 18,017,823.03 21,904,164.79 1,070,876.01 1,593,532.21 24,894,300.31 421,132,729.22 162,199,882.91 244,163,682.19 688,610,839.36 262,758,771.93 273,053,224.80 36,589,066.42 14,808,685.98 94,040,700.17 97,145,068.83 51,466,690.25 54,908,694.10 707,412.31 30,705.24 651,763.84 1,369,700.00 2,011,520.54 824,452,792.16 329,685,912.00 424,014,139.61 1,245,585,521.38 491,885,794.91 668,177,821.80	Pro Forma Adjustment Notes -512,527.90 4 -15,000,000.00 4	Unaudited Pro Forma Consolidated Balance Sheet of the Group as at 31 December 2016 228,258,358.69 216,900,733.43 540,667,934.34 13,830,705.15 113,762,811.73 218,609,501.85 62,432,742.88
				1,394,462,788.07

				55,000,000.00 1,873,395,149.15 145,438,452.57 266,129,625.58 4,222,703.21 5,023,691.38 3,381,220.54
				2,352,590,842.43

				3,747,053,630.50

– XIV-3 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

Item Current liabilities: Short-term loans Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes payable Accounts payable Receipts in advance Employee compensation payable Tax payables Interests payable Dividends payable Other payables Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities: Long-term borrowings Bonds payable Long-term payables Long-term employee compensation payable Special payables Estimated liability Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total Liabilities Owners’ equity: Share capital Other equity items Total owners’ equity attributable to parent company Minority interests Total owners’ equity Total liabilities and owners’ equity	Audited Consolidated Balance Sheet of the Group as at 31 December 2016 Note 1 20,000,000.00 90,000,000.00 46,373,902.20 14,391,654.50 25,743,969.95 15,381,067.45 713,868.25 42,578,922.04 471,337,062.91 726,520,447.30 87,836,374.23 19,290,781.82 107,127,156.05 833,647,603.35 526,766,875.00 -3,497,458.04 523,269,416.96 523,269,416.96 1,356,917,020.31	Audited Balance Sheet of the Target Companies as at 31 May 2017 Hefei New Energy Tongcheng New Energy Yixing New Energy Note 2 Note 2 Note 2 175,500,000.00 175,000,000.00 370,500,000.00 9,951,944.03 50,000,000.00 81,494,723.74 379,215,824.02 90,212,791.10 28,778,166.33 166,655.78 830,684.62 3,945,481.57 2,992,975.32 1,319,841.39 2,568,630.60 8,311,686.90 1,293,245.42 1,623,005.86 3,894,409.49 279,766.66 234,020,933.29 133,213,325.40 19,890,835.33 49,870,000.00 863,924,428.83 276,869,887.93 313,580,610.09 202,450,000.00 30,000,000.00 202,450,000.00 30,000,000.00 1,066,374,428.83 276,869,887.93 343,580,610.09 130,000,000.00 133,388,980.00 313,700,000.00 49,211,092.55 81,626,926.98 10,897,211.71 179,211,092.55 215,015,906.98 324,597,211.71 179,211,092.55 215,015,906.98 324,597,211.71 1,245,585,521.38 491,885,794.91 668,177,821.80	Pro Forma Adjustment Notes -512,527.90 4 -15,000,000.00 4 -130,000,000.00 3(2) -133,388,980.00 3(2) -313,700,000.00 3(2) 13,126,864.00 3(1) 9,452,076.00 3(1) 10,451,576.00 3(1) -49,211,092.55 3(2) -81,626,926.98 3(2) -10,897,211.71 3(2) 591,628,044.12 3(2) -94,165,651.12 3(3) 94,165,651.12 3(3)	Unaudited Pro Forma Consolidated Balance Sheet of the Group as at 31 December 2016 231,446,667.77 544,068,155.75 19,334,476.47 32,625,417.26 26,609,005.63 4,888,044.40 414,704,016.06 521,207,062.91
				2,165,382,846.25

				320,286,374.23 19,290,781.82 339,577,156.05 2,504,960,002.30 559,797,391.00 588,130,586.08
				1,147,927,977.08

				94,165,651.12 1,242,093,628.20

				3,747,053,630.50

– XIV-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT OF THE ENLARGED GROUP

Unit: RMB

							Unaudited Pro
	Audited						Forma
	Consolidated						Consolidated
	Income Statement	Audited Income Statement of the Target Companies for the					Income Statement
	of the Group for	year	ended 31 December 2016				of the Group for
	the year ended 31	Hefei New	Tongcheng New	Yixing New	Pro Forma		the year ended 31
Item	December 2016	Energy	Energy	Energy	Adjustment	Notes	December 2016
	Note 1	Note 2	Note 2	Note 2
I. Operating revenue	392,095,626.14	505,711,315.13	233,072,833.77	37,110,963.00	-326,028.30	4	1,167,664,709.74
Less: Operating cost	343,709,563.17	404,497,332.67	163,081,479.66	32,710,082.72	-326,028.30	4	943,672,429.92
Tax and surcharges	5,232,136.49	2,697,244.00	3,595,600.28	379,941.66			11,904,922.43
Selling expenses	7,482,306.95	17,613,773.23	11,110,997.40	777,570.36			36,984,647.94
Administrative expenses	87,025,947.92	38,244,913.27	11,950,806.92	1,601,379.72			138,823,047.83
Financial expenses	8,433,936.20	26,057,249.61	5,880,721.55	919,470.70			41,291,378.06
Impairment losses of assets	20,467,971.87		2,248,529.85				22,716,501.72
Add: Gains from changes in fair value
Investment income
Of which: Gains from investment in associates and
joint ventures
II. Operating profit (loss is represented by “-”)	-80,256,236.46	16,600,802.35	35,204,698.11	722,517.84			-27,728,218.16
Add: Non-operating income	105,878,607.94	2,309,000.00	107,652.89				108,295,260.83
Including: Gains on disposal of non-current assets	254,968.93		27,253.89				282,222.82
Less: Non-operating expense	4,451,875.58		8,019.40				4,459,894.98
Including: Loss on disposal of non-current assets	15,875.60						15,875.60
III. Total profit (total loss is represented by “-”)	21,170,495.90	18,909,802.35	35,304,331.60	722,517.84			76,107,147.69
Less: Income tax expenses	9,654,432.12	1,077,159.48	5,375,058.61	183,372.46			16,290,022.67
IV. Net profit (net loss is represented by “-”)	11,516,063.78	17,832,642.87	29,929,272.99	539,145.38			59,817,125.02
Including: Net profit attributable to the owners of
the parent company	11,516,063.78	17,832,642.87	29,929,272.99	539,145.38	-156,406.07	3(3)	59,660,718.95
Minority interests					156,406.07	3(3)	156,406.07

– XIV-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS OF THE ENLARGED GROUP

Unit: RMB

								Unaudited Pro
		Audited						Forma
		Consolidated						Consolidated
		Cash Flow						Cash Flow
		Statement of						Statement of
		the Group for	Audited Cash Flow Statement of the Target					the Group for
		the year ended	Companies for the year ended 31 December 2016					the year ended
		31 December	Hefei New	Tongcheng New	Yixing New	Pro Forma		31 December
Item		2016	Energy	Energy	Energy	Adjustment	Notes	2016
		Note 1	Note 2	Note 2	Note 2
I.	Cash flows from operating
	activities:
	Cash received from sale of goods	136,730,044.67	267,702,943.40	89,832,737.39	2,283,360.48			496,549,085.94
	or rendering of services
	Refunds of Taxes and Levies
	Other cash received from	115,177,751.23	67,665,414.62	4,162,495.52	461,851.10	-6,162,400.00	4	161,305,112.47
	operating activities
						-20,000,000.00	4
	Sub-total of cash inflow from	251,907,795.90	335,368,358.02	93,995,232.91	2,745,211.58			657,854,198.41
	operating activities
	Cash paid for goods purchased	100,904,584.34	258,757,119.88	67,018,909.19	21,479,140.47			448,159,753.88
	and services received
	Cash paid to and on behalf of	75,241,190.93	43,035,390.31	21,382,784.34	2,077,311.48			141,736,677.06
	employees
	Tax payments	21,684,812.32	15,184,264.43	10,391,476.96	3,717.80			47,264,271.51
	Other cash paid for operating	23,524,286.36	37,004,826.52	4,098,575.36	430,313.52	-6,000,000.00	4	59,058,001.76
	activities
	Sub-total of cash outflow from	221,354,873.95	353,981,601.14	102,891,745.85	23,990,483.27			696,218,704.21
	operating activities
	Net cash flow from operating	30,552,921.95	-18,613,243.12	-8,896,512.94	-21,245,271.69			-38,364,505.80
	activities

– XIV-6 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

								Unaudited Pro
		Audited						Forma
		Consolidated						Consolidated
		Cash Flow						Cash Flow
		Statement of						Statement of
		the Group for	Audited Cash Flow Statement of the Target					the Group for
		the year ended	Companies for the year ended 31 December 2016					the year ended
		31 December	Hefei New	Tongcheng New	Yixing New	Pro Forma		31 December
Item		2016	Energy	Energy	Energy	Adjustment	Notes	2016
		Note 1	Note 2	Note 2	Note 2
II.	Cash flow from investment
	activities:
	Cash received from investments
	Cash received from returns on
	investments
	Net cash received from disposal	322,732.92						322,732.92
	of fixed assets, intangible assets
	and other long-term assets
	Net cash received from disposal
	of subsidiaries and other
	business entities
	Other cash received from	9,930,000.00						9,930,000.00
	investment activities
	Sub-total of cash inflow from	10,252,732.92						10,252,732.92
	investment activities
	Cash paid for purchase and	56,177,058.27	28,943,087.77	86,220,896.52	16,249,341.19			187,590,383.75
	construction of fixed assets,
	intangible assets and other
	long-term assets
	Cash paid for investments
	Net cash from acquisition of
	subsidiaries and other business
	entities
	Other cash paid for investment	104,992,752.67						104,992,752.67
	activities
	Sub-total of cash outflow from	161,169,810.94	28,943,087.77	86,220,896.52	16,249,341.19			292,583,136.42
	investment activities
	Net cash flow from investment	-150,917,078.02	-28,943,087.77	-86,220,896.52	-16,249,341.19			-282,330,403.50
	activities

– XIV-7 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

								Unaudited Pro
		Audited						Forma
		Consolidated						Consolidated
		Cash Flow						Cash Flow
		Statement of						Statement of
		the Group for	Audited Cash Flow Statement		of the Target			the Group for
		the year ended	Companies for the year ended 31		December 2016			the year ended
		31 December	Hefei New	Tongcheng New	Yixing New	Pro Forma		31 December
Item		2016	Energy	Energy	Energy	Adjustment	Notes	2016
		Note 1	Note 2	Note 2	Note 2
III.	Cash flow from financing
	activities:
	Cash received from capital	209,624,984.30		63,000,000.00	222,700,000.00			495,324,984.30
	contributions
	Of which: Cash received from
	capital contributions by
	minority shareholders of
	subsidiaries
	Proceeds from loans	120,000,000.00	154,500,000.00					274,500,000.00
	Other cash received from	340,319,034.02	20,000,000.00	174,689,560.48		-6,000,000.00	4	529,008,594.50
	financing activities
	Sub-total of cash inflow from	669,944,018.32	174,500,000.00	237,689,560.48	222,700,000.00			1,298,833,578.80
	financing activities
	Cash paid for repayment of loans	141,829,011.07	103,370,000.00		99,000,000.00			344,199,011.07
	Cash paid for dividends, profit or	6,927,438.38	20,149,386.04	6,123,167.06	824,124.67			34,024,116.15
	interest payments
	Of which: dividends, profit paid
	to minority shareholders from
	subsidiaries
	Other cash paid for financing	330,638,185.77	103,555.40	123,879,202.20	60,000,000.00	-6,162,400.00	4	488,458,543.37
	activities					-20,000,000.00	4
	Sub-total of cash outflow from	479,394,635.22	123,622,941.44	130,002,369.26	159,824,124.67			866,681,670.59
	financing activities
	Net cash flow from financing	190,549,383.10	50,877,058.56	107,687,191.22	62,875,875.33			432,151,908.21
	activities
IV.	Effects of changes in exchange	428.59						428.59
	rate on cash and cash
	equivalents
V.	Net increase in cash and cash	70,185,655.62	3,320,727.67	12,569,781.76	25,381,262.45			111,457,427.50
	equivalents
	Add: Opening balance of cash	42,342,860.91	33,205,968.76	4,569,654.10				80,118,483.77
	and cash equivalents
VI.	Closing balance of cash and cash	112,528,516.53	36,526,696.43	17,139,435.86	25,381,262.45			191,575,911.27
	equivalents

– XIV-8 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

Notes to unaudited pro forma financial information of the Enlarged Group:

1 Figures are extracted from the audited consolidated financial statements of the Group for the year ended 31 December 2016 as set out in the 2016 annual report of the Company.
2 Audited balance sheets as at 31 May 2017 and audited income statements and cash flow statements for the year ended 31 December 2016 of Hefei New Energy, Tongcheng New Energy and Yixing New Energy are extracted from the accountants’ report of the Target Companies set out in Appendices II to IV to this Circular.
3 (1) The considerations for these underlying assets were determined by reference to the valuation results set out in the Asset Valuation Reports issued by Beijing Pan-China Assets Appraisal Co., Ltd. (“Beijing Pan-China”) taking 31 October 2016 as valuation base date and filed with competent state-owned assets supervision and administration authorities. As at 31 October 2016, i.e. the valuation base date for the underlying assets of the Transaction, the appraised values of 100% equity interest in Hefei New Energy, 100% equity interest in Tongcheng New Energy and 100% equity interest in Yixing New Energy were RMB307,824,981.58, RMB221,651,108.68 and RMB345,238,266.81, respectively. By reference to the appraised values and upon negotiations among the parties concerned, the considerations for 100% equity interest in Hefei New Energy, 100% equity interest in Tongcheng New Energy and 70.99% equity interest in Yixing New Energy were determined at RMB307,825,000, RMB221,651,200, and RMB245,089,500, respectively. The issue price of the shares to be issued for acquisition of the assets is RMB23.45 per share, which is not less than 90% of the average trading price of A shares of the Company over the 20 trading days preceding the price determination date (i.e. 8 February 2017, being the announcement date of the board resolution in respect of the Transaction) and is subject to approval by the shareholders of the Company at general meeting and approval by the CSRC.

Based on the consideration for 100% equity interest in Hefei New Energy and the issue price, the number of shares to be issued to each of CLFG and Hefei High-Tech is 10,097,588 and 3,029,276, respectively, totaling 13,126,864 shares.

Based on the consideration for 100% equity interest in Tongcheng New Energy and the issue price, the number of shares to be issued to each of Huaguang Group, Bengbu Institute and International Engineering is 6,377,490, 2,365,976 and 708,610, respectively, totaling 9,452,076 shares.

Based on the consideration for 70.99% equity interest in Yixing New Energy and the issue price, the number of shares to be issued to each of Triumph Group, Yixing Environmental Technology and GCL System Integration is 7,508,991, 1,877,247 and 1,065,338, respectively, totaling 10,451,576 shares.

(2) Prior to the Acquisitions, Hefei New Energy, Tongcheng New Energy, Yixing New Energy and the Company were under common control of Triumph Technology Group Company* (凱盛科技集團公司). Upon completion of the Acquisitions, the assets and liabilities of the Target Companies will be subject to the PRC Accounting Standards for Business Enterprises. The pro forma consolidated financial statements of the Enlarged Group are prepared by the Group pursuant to the principle of combination of entities or businesses under common control. The adjustment represents (i) offset of the share capital and reserves of the Target Companies and (ii) recognition of consolidated reserves of RMB591,628,000.
(3) The adjustment represents the attribution of the profit or loss and total equity of Yixing New Energy to minority shareholders of Yixing New Energy.
4 The adjustment represents the offset of intra-group balances, transactions and cash flows upon completion of the Acquisitions.

– XIV-9 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

ASSURANCE REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of Luoyang Glass Company Limited *

We have completed our assurance engagement to report on the compilation of pro forma financial information of Luoyang Glass Company Limited* (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The pro forma financial information consists of the pro forma consolidated balance sheet of the Company as at 31 December 2016, the pro forma consolidated income statement and the pro forma consolidated cash flow statement of the Company for the year ended 31 December 2016 and related notes as set out on pages XIV-1 to XIV-9 in the circular dated 11 October 2017 issued by the Company (the “Circular”). The applicable criteria on the basis of which the Directors have compiled the pro forma financial information are described on pages XIV-1 to XIV-9 in the Circular.

The pro forma financial information has been compiled by the Directors to illustrate the impact of the proposed acquisitions of 100% equity interest in CNBM (Hefei) New Energy Company Limited (“Hefei New Energy”), 100% equity interest in CNBM (Tongcheng) New Energy Materials Company Limited (“Tongcheng New Energy”) and 70.99% equity interest in CNBM (Yixing) New Energy Company Limited* (“Yixing New Energy”) by the Company (the “Transactions”) on the Group’s financial position as at 31 December 2016 and operating results and cash flow for the year ended 31 December 2016, as if the Transactions had taken place at 31 December 2016 and 1 January 2016, respectively. As part of this process, information about the Group’s financial position, operating results and cash flow has been extracted by the Directors from the Group’s consolidated financial statements for the year ended 31 December 2016, on which an independent auditor’s report has been published.

Directors’ Responsibilities for the Pro Forma Financial Information

The Directors are solely responsible for compiling the unaudited pro forma financial information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on the The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 (“Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars”) (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

– XIV-10 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX XIV

Basis of Opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with source documents, considering the evidence supporting the adjustments and discussing the unaudited pro forma financial information with the Directors. The engagement did not involve independent examination of any of the underlying financial information.

Our work did not constitute an audit or review made in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA, and accordingly, we do not express any such audit or review assurance on the unaudited pro forma financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the unaudited pro forma financial information has been properly compiled by the Directors on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purpose of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

The unaudited pro forma financial information is for illustrative purposes only, based on the judgements and assumptions of the Directors, and because of its hypothetical nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of the financial position of the Group as at 31 December 2016 or any future date.

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29 (1) of the Listing Rules.

WUYIGE Certified Public Accountants LLP

11 October 2017

– XIV-11 –

GENERAL INFORMATION

APPENDIX XV

1. RESPONSIBILITY STATEMENT

The circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular (other than those relating to CNBMG) is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

This circular includes particulars given in compliance with the Takeovers Code for the purpose of giving information relating to the Group. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this circular (other than those relating to the CNBMG and parties acting in concert with it) and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this circular (other than those expressed by the directors of CNBMG) have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

The directors of CNBMG accept full responsibility for the accuracy of the information contained in this circular (other than those relating to the Group, the independent sellers, their associates and parties acting in concert with any of them) and confirm, having made all reasonable inquiries, that to the best of his knowledge, opinions expressed in this circular (other than those expressed by Directors) have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

2. SHARE CAPITAL

(a) As at the Latest Practicable Date, the registered capital of the Company is RMB526,766,875, consisting of 250,000,000 H shares of par value RMB1.00 each, and 276,766,875 A shares of par value RMB1.00 each. As at the Latest Practicable Date, all of the Shares were fully issued and fully paid up.
(b) All of the Shares currently in issue rank pari passu in all respects with each other, including, in particular, as to rights in respect of capital, dividends and voting.
(c) No Shares have been issued since 31 December 2016, being the date to which the latest audited financial statements of the Company were made up.

– XV-1 –

GENERAL INFORMATION

APPENDIX XV

(d) As at the Latest Practicable Date, the Company did not have any outstanding options, warrants or other conversion rights affecting the Shares nor enter into any agreement for the issue of any options, warrants or other conversion rights affecting the Shares.
(e) Pursuant to the agreement dated 10 June 2015 entered into between the Company and CLFG and the related proposed A Share placing (details of which were set out in the circular of the Company dated 10 August 2015), the Company completed the issuance of 15,000,000 A Shares to CLFG on 29 December 2015, and completed the issuance of a total of 11,748,633 A Shares to First Capital Securities., Ltd. (第一創業證券股份有限公司) and Caitong Fund Management Co, Ltd. (財通基金管理有限公司) respectively on 2 February 2016. Therefore, the number of issued A Shares of the Company increased from 250,018,242 A Shares to 276,766,875 A Shares.

Save as disclosed above and disclosed in this circular, there has been no other alteration in the share capital of the Company within the two years preceding the date of this circular.

3. MARKET PRICES

The table below shows the closing prices of the Share as quoted on the Stock Exchange (i) on the last day on which trading took place in each of the calendar months during the Relevant Period; (ii) on 6 February 2017, being the Last Trading Day; and (iii) as at the Latest Practicable Date:

	Closing price
Date	per Share
	HK$
2016
31 August	4.63
30 September	5.94
31 October	5.78
30 November	5.6
30 December	5.1
2017
27 January	5.22
6 February (the Last Trading Day)	5.33
28 February	5.71
31 March	5.56
28 April	5.1
31 May	4.15
30 June	4.33
31 July	4.31
31 August	4.66
29 September	4.48
Latest Practicable Date	4.51

During the Relevant Period, the highest and lowest closing prices of the Share as quoted on the Stock Exchange was HK$6.6 per Share on 8 September 2016 and HK$4.06 per Share on 1 June 2017 and 2 June 2017 respectively.

– XV-2 –

GENERAL INFORMATION

APPENDIX XV

4. DISCLOSURE OF INTERESTS

(a) Interests of the Directors, supervisors and chief executives of the Company

As at the Latest Practicable Date, none of the Directors, supervisors or chief executives of the Company had an interest or short position in any Shares, underlying shares or debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which were required to be (i) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Directors, supervisors or chief executives of the Company was taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, entered in the register kept by the Company; or (iii) notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

(b) Substantial Shareholders’ and other Shareholders’ interests

As at the Latest Practicable Date, save as disclosed below, so far as is known to the Directors or chief executives of the Company, no other person had an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or were required to be notified to the Company and the Stock Exchange pursuant to section 324 of the SFO, or, who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any members of the Group.

					Number of	Number of
					underlying			Percentage of		Percentage of
					Shares held		Total number	the relevant		the total issued
				Number of	under equity		of Shares	issued class of		share capital of
Name			Capacity	Shares held 1	derivatives	1	interested 1	share capital		the Company Type of Share
									(%)	(%)
CNBMG		2	Interest in	201,076,897		/	201,076,897		72.65	38.17 A Share
			controlled	(L)			(L)
			corporation
Triumph			Beneficial	200,368,287		/	200,368,287		72.40	38.04 A Share
Group	2		owner/	(L)			(L)
			Interest in
			controlled
			corporation
Bengbu			Beneficial	71,365,976 (L)		/	71,365,976 (L)		25.79	13.55 A Share
Institute			owner
CLFG			Beneficial	115,115,830		/	115,115,830		41.59	21.85 A Share
			owner	(L)			(L)

– XV-3 –

GENERAL INFORMATION

APPENDIX XV

Note 1: (L) – Long position

Note 2: CNBMG is the controlling shareholder of China National Building Material Company Limited (“ CNBM ”), which is the controlling shareholder of International Engineering. Triumph Group, which is a wholly-owned subsidiary of CNBMG, is the controlling shareholder of Huaguang Group, Bengbu Institute and CLFG. Therefore, CNBMG is deemed to have the same interests in the Company as those owned by International Engineering, Triumph Group, Huaguang Group, Bengbu Institute and CLFG by virtue of the SFO; and Triumph Group is deemed to have the same interest in the Company as those owned by Huaguang Group, Bengbu Institute and CLFG by virtue of the SFO.

5. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into any service contract with any member of the Enlarged Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)) nor had any of the Directors entered into any service contract with any member of the Enlarged Group or associated companies which are in force and are fixed term contracts and which have more than 12 months to run irrespective of the notice period or which are continuous contracts with a notice period of 12 months or more, or which have been entered into or amended within six months before the date of the First Announcement.

6. DIRECTORS’ INTEREST IN ASSETS/CONTRACTS AND OTHER INTERESTS

As at the Latest Practicable Date, save as disclosed in this circular:

(a) none of the Directors had any direct or indirect interest in any assets which have been, since 31 December 2016 (being the date to which the latest published audited consolidated financial statements of the Group were made up), acquired, disposed of by, or leased to any member of the Enlarged Group, or are proposed to be acquired, disposed of by, or leased to any member of the Enlarged Group; and
(b) none of the Directors was materially interested, directly or indirectly, in any contract or arrangement subsisting as at the Latest Practicable Date which is significant in relation to the business of the Enlarged Group.

7. COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors were aware of, none of the Directors nor their respective associates had any interest in any business which competes or is likely to compete, or is in conflict or is likely to be in conflict, either directly or indirectly, with the businesses of the Enlarged Group.

– XV-4 –

GENERAL INFORMATION

APPENDIX XV

8. OTHER ARRANGEMENTS

As at the Latest Practicable Date,

(a) there were no agreements, arrangements or understandings (including any compensation arrangement) between CNBMG or any person acting in concert with it and any of the directors, recent directors, shareholders or recent shareholders of the Company having any connection with or dependence upon the outcome of the Reorganisation and the Whitewash Waiver;
(b) no benefit will be given to any of the Directors as compensation for loss of office or otherwise in connection with the Reorganisation and the Whitewash Waiver;
(c) there were no agreements or arrangements between any Directors and any other person which is conditional on or dependent upon the outcome of the Reorganisation and the Whitewash Waiver or otherwise in connection with the Reorganisation and the Whitewash Waiver;
(d) no material contracts were entered into by CNBMG or parties acting in concert with it in which any Director has a material personal interest;
(e) there was no agreement, arrangement or understanding between CNBMG or its concert parties and any other person whereby the Shares to be acquired under the issuance of Consideration Shares and Triumph Placing Shares will be transferred, charged or pledged to any other persons; and
(f) no persons had irrevocably committed themselves to vote for or against resolution(s) to be proposed at the EGM in relation to the Reorganisation and the Whitewash Waiver during the six month period prior to the date of the First Announcement and ending on the Latest Practicable Date.

9. SHAREHOLDINGS AND DEALINGS

As at the Latest Practicable Date,

(a) other than the Shares to be acquired under the Proposed Acquisitions Agreements and the Triumph Group Subscription Agreement and save for the 174,018,242 A Shares (representing approximately 33.04% of the total issued share capital of the Company) currently interested by CNBMG or parties acting in concert with it as disclosed in the section headed “Effect of the completion of the Proposed Acquisitions on the shareholding structure of the Company” in this circular, no voting rights or rights over the Shares, options, derivatives, warrants, other securities convertible into Shares, or other relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) owned or controlled or directed by the CNBMG, directors of CNBMG or any parties acting in concert with it;

– XV-5 –

GENERAL INFORMATION

APPENDIX XV

(b) there is no irrevocable commitment received by CNBMG or any parties acting in concert with it to vote for or against the resolution(s) to be proposed at the EGM in relation to the Reorganisation and the Whitewash Waiver;
(c) there are no outstanding derivatives in respect of securities in the Company entered into by CNBMG;
(d) there is no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code existed between CNBMG or any parties acting in concert with it and other persons in relation to the Shares;
(e) there is no other agreement or arrangement to which CNBMG or any parties acting in concert with it is a party which relates to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Reorganisation and the Whitewash Waiver;
(f) none of the Directors has any dealings in any securities of the Company during the Relevant Period;
(g) save for the completion of transfer of 69,000,000 A Shares between CLFG and Bengbu Institute as disclosed in the announcement of the Company dated 18 October 2016, CNBMG or parties acting in concert with it have not acquired or entered into any agreement or arrangement to acquire any voting rights in the Company, nor dealt in any Shares or convertible securities, warrants, options or derivatives of the Company during the Relevant Period;
(h) there is no relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company which CNBMG or any parties acting in concert with it has borrowed or lent;
(i) there was no agreement, arrangement or understanding between CNBMG or any parties acting in concert with it and other persons in relation to the transfer, charge or pledge of the Consideration Shares and Triumph Placing Shares;
(j) save as disclosed in the sections headed “DISCLOSURE OF INTERESTS” in this Appendix, no Directors have any shares, convertible securities, warrants, options or other derivatives of the Company and none of the Directors had dealt for value in any shares, convertible securities, warrants, options or other derivatives of the Company during the Relevant Period;
(k) none of the subsidiaries of the Company and none of the pension funds of the Company and/or its subsidiaries, nor any fund managed on a discretionary basis by any fund manager connected with the Company owned or controlled any Shares, warrants, options or derivatives of the Company or had dealt for value in any

– XV-6 –

GENERAL INFORMATION

APPENDIX XV

relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company during the Relevant Period;

(l) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or with any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of “associate” under the Takeovers Code;
(m) there have been no shares, convertible securities, warrants, options or derivatives in the Company which the Company, any Director or any person acting in concert with any Director has borrowed or lent;
(n) there were no shares, convertible securities, warrants, options or derivatives in the Company which are managed on a discretionary basis by fund managers connected with the Company; and
(o) none of the Group or any of the Directors have any beneficial interest in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of CNBMG.

10. LITIGATION

As at the Latest Practicable Date, no member of the Enlarged Group was engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened against any member of the Enlarged Group.

11. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by any member of the Enlarged Group) have been entered into by the members of the Enlarged Group after the date two years before the date of the First Announcement up to and including the Latest Practicable Date and which are or may be material:

(a) the Supplemental SP Agreements and the Supplemental PG Indemnity Agreements;
(b) the Proposed Acquisitions Agreements and the Profit Guarantee Indemnity Agreements;
(c) the Triumph Group Subscription Agreement and the Supplemental Triumph Group Subscription Agreement;
(d) the finance lease agreement dated 11 April 2017 entered into between Suyin Financial Leasing Co., Ltd. (蘇銀金融租賃股份有限公司) (“ Suyin ”) and Bengbu

– XV-7 –

GENERAL INFORMATION

APPENDIX XV

China National Building Materials Information Display Materials Company Limited (蚌埠中建材信息顯示材料有限公司), the Lessee, pursuant to which the Lessee agreed to sell part of the equipment of the production line of ultra-thin glass and ancillary equipment to Suyin at a total consideration of RMB100,000,000 and Suyin agreed to leaseback the same to the Lessee for a period of 5 years which is expected to commence from 20 April 2017;

(e) the finance lease agreement dated 8 December 2016 entered into between Taiping & Sinopec Financial Leasing Co., Ltd. (太平石化金融租賃有限責任公司) (“ Taiping ”) and Bengbu China National Building Materials Information Display Materials Company Limited (蚌埠中建材信息顯示材料有限公司) (the “ Lessee ”), pursuant to which the Lessee agreed to sell the moulding and ancillary equipment for production of ultra-thin glass to Taiping at a consideration of RMB100,000,000 and Taiping agreed to leaseback the same to the Lessee for a period of 3 years;
(f) the three framework agreements dated 7 December 2016 entered into between the Company and each of the Vendors in respect of the Reorganisation; and
(g) the formal agreement dated 10 June 2015 entered into between CLFG and the Company in relation to the disposal of the Company’s interests in several outgoing entities to CLFG for a total consideration of RMB494,179,465, the acquisition by the Company of an incoming entity from CLFG for a consideration of RMB674,909,180, the issue of the consideration shares and the proposed A Share placing of not more than 32,137,519 A Shares at the minimum issue price of RMB6.69 per A Share to not more than 10 independent specific investors.

12. EXPERTS’ QUALIFICATIONS AND CONSENTS

The following are the qualifications of the experts who have given opinion and advice, which are contained in this circular:

Name

Qualification

KGI Capital Asia

a corporation licensed to carry out business in type 1 (dealing insecurities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO

Beijing Pan-China Assets Appraisal Co., Ltd.
independent professional valuer in the PRC engaged by the Company for the purpose of the Proposed Acquisitions

WUYIGE

certified public accountants

– XV-8 –

GENERAL INFORMATION

APPENDIX XV

Vigers Appraisal and Consulting independent property valuer Limited (“ Vigers ”)

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and/or opinion (as the case may be) and all references to its name in the form and context in which they appear.

As at the Latest Practicable Date, none of the above experts had any direct or indirect 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 shares in any member of the Group.

As at the Latest Practicable Date, none of the above experts had any direct or indirect interests in any assets which have been, since 31 December 2016 (being the date to which the latest published audited consolidated financial statements of the Group were made up), acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group.

13. CORPORATE AND OTHER INFORMATION

(a) The company secretary of the Company is Mr. Ip Pui Sum, a fellow member of the Association of Chartered Certified Accountants, and a member of the Hong Kong Institute of Certified Public Accountants.
(b) The registered and principal office of the Company is situated at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC.
(c) The branch share registrar and transfer office of the Company in Hong Kong is Hong Kong Registrars Limited at Rooms 1712–1716, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong.
(d) The name and address of CNBMG and its concert parties are as follows:

Name Address CNBMG Block B, Guohai Plaza, No. 17 Fuxing Road, Haidian District, Beijing, the PRC CLFG No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang, the PRC Bengbu Institute No. 1047 Tushan Road, Bengbu City, Anhui Province, the PRC

– XV-9 –

GENERAL INFORMATION

APPENDIX XV

Huaguang Group No. 767 Tushan Road, Bengbu City, Anhui Province, the PRC International Engineering 27/F, Zhongqi Building, No. 2000 North Zhongshan Road, Putuo District, Shanghai, the PRC Triumph Group No. 2 Zizhuyuan South Road, Haidian District, Beijing, the PRC

(e) The ultimate controlling shareholder of CNBMG is the SASAC of the State Council. The director(s) and the immediate controlling shareholder(s) of CNBMG and its concert parties are as follows:

Immediate controlling Name Director(s) shareholder(s) CNBMG Song Zhiping the SASAC of the Liu Zhijiang State Council Yao Yan Cao Jianglin Li Xinhua Zhao Xiaogang Chen Jinen Zhao Jibin Xu Lipeng Sha Ming Zhang Yanling Liu Xinquan Triumph Group NA CNBMG

– XV-10 –

GENERAL INFORMATION

APPENDIX XV

		Immediate
		controlling
Name	Director(s)	shareholder(s)
CLFG	Peng Shou	Triumph Group
	Mao Lingwen
	Zhang Chong
	Tang Liwei
	Lu Yingcheng
	Ding Jianluo
	Ren Zhenduo
	Ma Liyun
	Wang Shengqiang
	Fan Xiaoyang
	Yin Dongfang
	Shi Yinglong
	Li Jian
Bengbu Institute	NA	Triumph Group
Huaguang Group	Xia Ning	Triumph Group
CNBM	Song Zhiping	CNBMG
	Cao Jianglin
	Peng Shou
	Cui Xingtai
	Chang Zhangli
	Guo Chaomin
	Chen Yongxin
	Tao Zheng
	Sun Yanjun
	Liu Jianwen
	Zhou Fangsheng
	Qian Fengsheng
	Xia Xue
International Engineering	Peng Shou	CNBM
	Zhang Jindong
	Tao Ligang
	Chang Zhangli
	Sun Jianan

(f) The financial adviser of the Company is Veda Capital Limited. The registered address of Veda Capital is situated at Room 1106, 11/F, Wing On Centre, 111 Connaught Road Central, Hong Kong.

– XV-11 –

GENERAL INFORMATION

APPENDIX XV

14. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection (i) during normal business hours (i.e. from 9:30 a.m. to 5:00 p.m. on Monday to Friday except public holidays) at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC; (ii) on the website of the SFC (http://www.sfc.hk); and (iii) on the website of the Company (http://www.zhglb.com/) during the period from the date of this circular up to and including the date of the EGM:

(a) the Articles of Association of the Company;
(b) the annual reports of the Company for the financial years ended 31 December 2014, 31 December 2015 and 31 December 2016 and the interim report of the Company for the six months ended 30 June 2017;
(c) the letter from the Board, the text of which is set out on pages 13 to 65 of this circular;
(d) the letter from the Independent Board Committee, the text of which is set out on pages 66 to 67 of this circular;
(e) the letter from the Independent Financial Adviser, the text of which is set out on pages 68 to 126 of this circular;
(f) the accountants’ reports prepared by WUYIGE in respect of each of the Target Companies, the text of which are set out in Appendices II to IV to this circular;
(g) the property valuation report of the Group issued by Vigers, the text of which is set out in Appendix V to this circular;
(h) the property valuation report prepared by Vigers in respect of the Target Companies, the text of which is set out in Appendix VI to this circular;
(i) the summary of the valuation reports prepared by Beijing Pan-China Assets Appraisal Co., Ltd. in respect of each of the Target Companies, the text of which are set out in Appendices VII to IX to this circular;
(j) the letters from the reporting accountant and the financial adviser of the Company on the profit forecasts of the Target Companies as set out in Appendix X to this circular;
(k) the report of WUYIGE on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix XIV to this circular;

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GENERAL INFORMATION

APPENDIX XV

(l) each material contracts referred to in the paragraph headed “11. MATERIAL CONTRACTS” in this Appendix XV;
(m) the letters of consent from each of the Independent Financial Adviser, the Valuer, WUYIGE and Vigers referred to in the paragraph headed “12. EXPERT’S QUALIFICATION AND CONSENT” in this Appendix XV; and
(n) this circular.

– XV-13 –

APPENDIX XVI

EXPLANATIONS ON SITUATION OF CURRENT RETURN DILUTION AND THE REMEDIAL MEASURES IN THE ACQUISITION OF ASSETS AND SUPPORTING FUNDS RAISING BY ISSUANCE OF SHARES AND RELATED PARTY TRANSACTIONS

Luoyang Glass Company Limited (the “ Company ”) proposed to acquire 100% equity interest in CNBM (Hefei) New Energy Company Limited (中建材(合肥)新能源有限公司) (“ Hefei New Energy ”), 100% equity interest in CNBM (Tongcheng) New Energy Materials Company Limited (中國建材桐城新能源材料有限公司) (“ Tongcheng New Energy ”) and 70.99% equity interest in CNBM (Yixing) New Energy Company Limited (中建材(宜興)新能源有限公司) (“ Yixing New Energy ”, together with Hefei New Energy and Tongcheng New Energy, the “ Target Companies ”) and raise supporting funds by way of issuance of shares (the “ Reorganisation ”). Upon completion of the Reorganisation, Hefei New Energy and Tongcheng New Energy will become wholly-owned subsidiaries of the Company and Yixing New Energy will become a subsidiary of the Company.

According to requirements under the relevant laws, regulations and guidelines 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), the Company provides the following explanations on the situation of current return dilution and the remedial measures in the Reorganisation:

I. Effects of the Reorganisation on the Earnings Per Share of the Company

Upon completion of the Reorganisation, in accordance with the Auditors’ Pro Forma Report (WUYIGE Shen Zi [2017] No. 2-01204) issued by WUYIGE Certified Public Accountants LLP., the basic earnings per share of the Company for 2016 will increase from RMB-0.1463 per share to RMB-0.0556 per share. Therefore, the Reorganisation will not dilute returns of the Company in the current period.

II. Necessity and Reasonableness of the Reorganisation

In accordance with the requirements under 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)”, the board of directors of the Company has demonstrated the necessity and reasonableness of the Reorganisation as follows:

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APPENDIX XVI

EXPLANATIONS ON SITUATION OF CURRENT RETURN DILUTION AND THE REMEDIAL MEASURES IN THE ACQUISITION OF ASSETS AND SUPPORTING FUNDS RAISING BY ISSUANCE OF SHARES AND RELATED PARTY TRANSACTIONS

1. In line with the requirements of The People’s Republic of China (the “PRC”) national macro-economic development plan and market demands

The “Outline of the Thirteenth Five-year Plan for National Economic and Social Development of The People’s Republic of China (中華人民共和國國民經濟和社會發展第十三個五年規劃綱要)” proposes to “aim at the cutting edge of technology and grasp the direction of industrial reform while optimizing policy mix with the focus placed on key fields to expand the growth margin of emerging industries and seize a commanding position for future competition, with a view to achieving the proportion of the added value of strategic emerging industries in the gross domestic production of up to 15%” and “further promote the development of wind power and photovoltaic power generation and provide proactive support to solar thermal power generation”. The Reorganisation proposed to inject the assets related to the new energy glass business of China National Building Material Group Corporation ( 中國建材集團有限公司) (“ CNBMG ”) into the Company and vigorously develop the relevant business, which is in line with the requirements of the PRC national macro-economic development plan.

Photovoltaic industry is a strategic emerging industry of the PRC and has been rapidly developing in the recent years. According to the “2050 Solar Power Development Roadmap of the PRC (中國太陽能發展路線圖2050)” published by the Energy Research Institute National Development and Reform Commission, it is expected that, by 2050, solar power generation in the PRC will satisfy 40% of power demand, and the solar energy will account for about 32% of primary energy sources demand. The solar energy will change from a supplementary energy to an alternative energy and gradually become one of the main sources of energy in the “independent, free-standing, low-carbon and sustainable” energy system of the PRC, with broad market prospects.

After completion of the Reorganisation, the Company will, on the basis of the ultra-thin glass substrate business, optimize the product structure, enhance the strength in the relevant businesses and improve technical level, in order to increase the Company’s risk-resistance capacity and market competitiveness.

2. In line with the Company’s business plan on development of new specialized functional glass

In the context of strengthening the “supply side reform”, the market space for low-end products in the glass industry will gradually compress. Riding on the opportunity, the Company promptly adjusted its business plan and gradually developed into a manufacturer of new specialized functional glasses with market competitiveness. Therefore, the Reorganisation is in line with the business plan of the Company.

– XVI-2 –

APPENDIX XVI

EXPLANATIONS ON SITUATION OF CURRENT RETURN DILUTION AND THE REMEDIAL MEASURES IN THE ACQUISITION OF ASSETS AND SUPPORTING FUNDS RAISING BY ISSUANCE OF SHARES AND RELATED PARTY TRANSACTIONS

After the significant assets restructuring in 2015, the Company has initially achieved strategic transformation of its principal business from ordinary float glass to ultra-thin glass substrate, which improved the assets quality of the Company, laying a solid foundation for the subsequent transformation and upgrading as well as positive development. Upon completion of the Reorganisation, the Company will become a professional platform for capital operation and industrial integration specialized in ultra-thin glass substrate business and new energy glass business within the system of CNBMG.

3. Beneficial to creation of value for the shareholders of the Company

Upon completion of the Reorganisation, in addition to the existing ultra-thin glass substrate business, the principal products of the Company will include new energy glass which is expected to have a good market prospect, creating value for all the shareholders and vitalizing the mixed ownership economy.

4. Beneficial to enrichment and optimization of the Company’s product structure, enhancing the Company’s overall competitiveness

Upon completion of the Reorganisation, the Company will develop new energy glass business on the basis of the ultra-thin glass substrate business to enrich and optimize the product structure of the Company and make the business of new specialized functional glass bigger and stronger. In addition to realisation of the Company’s sustainable and healthy development and expansion of development space, there is also further enrichment and optimization of product structure, broadening market field and scope of product application. It will also improve the risk-resistance capacity and core competitiveness of the Company and increase the level of returns to investors.

III. Risk Warning about Dilution of Current Returns in the Reorganisation

Upon implementation of the Reorganisation, the total share capital and net assets of the Company will increase in size. In the long term, assets of the Target Companies will bring good returns to the Company, contributing to the boosting of its earnings per share. However, the earnings per share of the Company may decline to a certain extent in the future if the future performances of the Company and the Target Companies cannot meet the expectation, resulting in dilution of current returns of the Company. Investors are advised to pay attention to the risk of potential dilution of current returns in the Reorganisation.

– XVI-3 –

APPENDIX XVI

EXPLANATIONS ON SITUATION OF CURRENT RETURN DILUTION AND THE REMEDIAL MEASURES IN THE ACQUISITION OF ASSETS AND SUPPORTING FUNDS RAISING BY ISSUANCE OF SHARES AND RELATED PARTY TRANSACTIONS

IV. Measures Taken by the Company in Relation to the Dilution of Current Returns in the Reorganisation

In light of the future potential risk of decrease in earnings per share of the Company, the Company undertakes to take the following measures:

1. Speed up the strategic layout of the Company to proactively enhance the Company’s core competitiveness

In accordance with the Company’s plan on future industrial layout, upon completion of the Reorganisation, the Company will develop photovoltaic glass business on the basis of ultra-thin glass substrate business and thus will become a professional platform for capital operation and industrial integration specialized in ultra-thin glass substrate business and new energy glass business within the system of CNBMG. The Company, with the support of technical innovation, will continuously enhance and improve the level of production technology and equipment for the relevant products, understand the high-tech development direction and implement technical, product and market innovation, in order to maintain the Company’s leading advantages in terms of technology, product competitiveness and market in the fields of ultra-thin glass substrate business and new energy glass business.

2. Accelerate integration of assets of the Target Companies

Upon completion of the Reorganisation, Hefei New Energy and Tongcheng New Energy will become wholly-owned subsidiaries of the Company, and Yixing New Energy will become a controlled subsidiary of the Company. In order to better achieve the performance targets of the Target Companies, the Company will strengthen communication with the Target Companies in all aspects to promote further fusion and upgrade of the corporate cultures of the Company and the Target Companies while maintaining the stability of the existing organizational structure, management and core personnel of the Target Companies.

3. Improve corporate governance to safeguard the legitimate interests of the shareholders

The Company will continue to improve the corporate governance structure in strict compliance with the Company Law, the Securities Law, the Standards on Corporate Governance of Listed Companies and other laws, regulations and guidelines to ensure that: the shareholders are able to fully exercise their rights; the board of directors is able to discharge its duties in accordance with laws, regulations and the articles of association and make scientific, prompt and prudent decisions; the independent directors of the Company are able to discharge their duties earnestly to safeguard the interests of the Company as a whole, in particular the legitimate

– XVI-4 –

APPENDIX XVI

EXPLANATIONS ON SITUATION OF CURRENT RETURN DILUTION AND THE REMEDIAL MEASURES IN THE ACQUISITION OF ASSETS AND SUPPORTING FUNDS RAISING BY ISSUANCE OF SHARES AND RELATED PARTY TRANSACTIONS

interests of minority shareholders; and the supervisory committee of the Company is able to independently exercises the rights of supervision and inspection on directors, managers and other senior management members of the Company, and the finance of the Company, in order to protect the interests of the shareholders of the Company as a whole.

4. Strengthen management and use of proceeds raised to increase returns to the shareholders

The proceeds of the supporting fund raised in the Reorganisation (after deduction of transaction taxes but includes issuance fee) will be used for projects construction of the Target Companies. The proceeds of the supporting fund raised will provide financial support for the Target Companies to further enlarge production capacity of high-quality photovoltaic glass and standardisation of photovoltaic glass business, which will facilitate the Company to achieve sustainable and rapid development, creating more returns to shareholders in the future.

Meanwhile, in order to regulate the use and management of the proceeds raised, improve the usage efficiency of the proceeds raised and protect the interests of investors, the Company has prepared the Measures for Management of Proceeds Raised in accordance with the “Notice on Further Regulating the Use of Proceeds Raised by Listed Companies (關於進一步規範上市公司募集資金使用的通知)” issued by the CSRC and the actual conditions of the Company, so as to ensure that the proceeds raised are used in a reasonable and regulated manner, preventing risks with the use of proceeds and improving the usage efficiency of proceeds.

Investors are reminded that the aforementioned measures of the Company do not represent any representation of the Company in respect of its future profit. Investors shall not make any investment decisions relying thereon and the Company is not liable to any compensation to investors for the losses caused by such investment decisions.

V. Undertakings of the Directors and Senior Management Members of the Company on the Actual Implementation of the Remedial Measures in Relation to Dilution of Current Returns in the Reorganisation

In order to practically safeguard the legitimate interests of small and medium investors, the directors and senior management members of the Company provided the Undertakings on the Actual Implementation of the Remedial Measures in relation to Dilution of Current Returns in the Significant Assets Restructuring of the Company as follows:

– XVI-5 –

APPENDIX XVI

EXPLANATIONS ON SITUATION OF CURRENT RETURN DILUTION AND THE REMEDIAL MEASURES IN THE ACQUISITION OF ASSETS AND SUPPORTING FUNDS RAISING BY ISSUANCE OF SHARES AND RELATED PARTY TRANSACTIONS

“1. undertake to faithfully and diligently discharge duties to safeguard the legitimate interests of the Company and the shareholders as a whole;
undertake not to direct benefits to other entities or individuals without consideration or on unfair terms, nor compromise interests of the Company in any other manner;
undertake to restrain duty-related spending of the directors and senior management members of the Company within scope of my duties and authorities;
undertake not to appropriate assets of the Company for investment and spending unrelated to performance of my duties;
undertake to promote linkage between the remuneration system formulated by the board of directors or the remuneration and review committee of the Company and the implementation of the Company’s remedial measures for returns within the scope of my duties and authorities;
in the event of proposed implementation of any share option incentives by the Company, undertake to promote linkage between the exercise conditions for share options to be published by the Company and the implementation of the Company’s remedial measures for returns within the scope of my duties and authorities; and
during the period from the date of these undertakings to the completion date of the Reorganisation, if there are new regulatory requirements published by the CSRC concerning remedial measures for returns and the related undertakings and the foregoing undertakings are unable to meet such new requirement, undertake to provide supplementary undertakings in accordance with the new requirements of the CSRC.”

– XVI-6 –

APPENDIX XVII — NOTICE OF THE 2017 THIRD EXTRAORDINARY GENERAL MEETING

IMPORTANT NOTICE:

As stated in the announcements of the Company dated 8 September 2017 and 29 September 2017, the EGM originally scheduled to be held at 9:00 a.m. on Tuesday, 26 September 2017 was further postponed to 9:00 a.m. on Friday, 27 October 2017, and the venue, the attendance eligibility, the resolutions to be considered at and other relevant matters of the EGM will remain unchanged. For details, please refer to the notice of the EGM of the Company dated 7 August 2017 set out below.

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＊

NOTICE OF THE 2017 THIRD EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY given that the 2017 Third Extraordinary General Meeting of Luoyang Glass Company Limited (the “ Company ”) will be held at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the People’s Republic of China (the “ PRC* ”) at 9:00 a.m. on 26 September 2017 (Tuesday) for the purpose of considering and, if thought fit, passing the following resolutions:

Unless otherwise indicated, capitalised terms used herein shall have the same meanings as those defined in the announcements of the Company dated 7 February 2017, 24 February 2017 and 7 August 2017.

SPECIAL RESOLUTIONS

To approve the resolution that the transactions for the acquisition of assets and supporting funds raising by the Company by issuance of shares are in compliance with the relevant laws and regulations;
To approve the resolution regarding the plan for the acquisition of assets and supporting funds raising by the Company by issuance of shares;
2.01 The plan for the acquisition of assets by issuance of shares: The mode, transaction subjects and transaction counterparties of the acquisition of assets by issuance of shares

– XVII-1 –

APPENDIX XVII — NOTICE OF THE 2017 THIRD EXTRAORDINARY GENERAL MEETING

2.02 The plan for the acquisition of assets by issuance of shares: The consideration and basis of consideration for the transactions
2.03 The plan for the acquisition of assets by issuance of shares: The mode of issuance
2.04 The plan for the acquisition of assets by issuance of shares: The type and nominal value of shares in the issuance
2.05 The plan for the acquisition of assets by issuance of shares: The target subscribers of the issuance
2.06 The plan for the acquisition of assets by issuance of shares: The issue price
2.07 The plan for the acquisition of assets by issuance of shares: The number of shares to be issued
2.08 The plan for the acquisition of assets by issuance of shares: The lock-up period arrangement
2.09 The plan for the acquisition of assets by issuance of shares: The profit or loss during the period
2.10 The plan for the acquisition of assets by issuance of shares: The contractual obligation and breach of contract liability in relation to the transfer of rights and ownership of the related assets
2.11 The plan for the acquisition of assets by issuance of shares: The profit guarantee and compensation arrangement
2.12 The supporting funds raising by issuance of shares: The mode of issuance
2.13 The supporting funds raising by issuance of shares: The type and nominal value of shares to be issued
2.14 The supporting funds raising by issuance of shares: The target subscribers of the issuance
2.15 The supporting funds raising by issuance of shares: The issue price and the basis of determination
2.16 The supporting funds raising by issuance of shares: The number of shares to be issued
2.17 The supporting funds raising by issuance of shares: The lock-up period arrangement

– XVII-2 –

APPENDIX XVII — NOTICE OF THE 2017 THIRD EXTRAORDINARY GENERAL MEETING

2.18 The supporting funds raising by issuance of shares: The mode of subscription
2.19 The supporting funds raising by issuance of shares: The use of proceeds to be raised
2.20 The plan regarding handling of the undistributed cumulated profits of the Company
2.21 The place of listing
2.22 The effective period for the resolution regarding the transactions
To approve the resolution that the acquisition of assets and supporting funds raising by issuance of shares constitute related party transactions;
To approve the resolution regarding the “Report on Acquisition of Assets and Supporting Funds Raising by Luoyang Glass Company Limited* by Issuance of Shares and Related Party Transactions (Preliminary Plan) (洛陽玻璃股份有限公司發行股份購買資產並募集配套資金暨關聯交易報告書(草案))” and its summary;
To approve the resolution that the transactions of the Company are in compliance with Rule 4 of the “Rules on Certain Issues Relating to Regulation on Significant Asset Restructuring of Listed Companies (關於規範上市公司重大資產重組若干問題的規定)”;
To approve the resolution regarding execution of the Proposed Acquisitions Agreements and the Supplemental SP Agreements with conditions precedent to their effectiveness between the Company and the transaction counterparties;
To approve the resolution regarding execution of the Profit Guarantee Indemnity Agreements and the Supplemental PG Indemnity Agreements with conditions precedent to their effectiveness between the Company and the transaction counterparties;
To approve the resolution regarding execution of the Triumph Group Subscription Agreement and the Supplemental Subscription Agreement with conditions precedent to their effectiveness between the Company and Triumph Group;
To approve the resolution regarding approval for audited reports and asset valuation reports of the transactions;
To approve the resolution regarding independence of valuers, reasonableness of valuation assumptions and premises, relevance between valuation methods and valuation purpose, and fairness of appraised consideration;
To approve the resolution regarding situation of current return dilution and the remedial measures in the acquisition of assets and supporting funds raising by issuance of shares and related party transactions;

– XVII-3 –

APPENDIX XVII — NOTICE OF THE 2017 THIRD EXTRAORDINARY GENERAL MEETING

To approve the resolution regarding mandate granted by the general meeting to the Board to handle the relevant matters in respect of the acquisition of assets and supporting funds raising by issuance of shares; and
To approve the resolution regarding approval granted by the Non-connected Shareholders in the general meeting for the waiver from the obligation of the transaction parties to make a mandatory general offer in respect of their acquisition of the shares of the Company.

(For details of the above resolutions, please refer to the announcements of the Company dated 7 February 2017, 24 February 2017 and 7 August 2017.)

ORDINARY RESOLUTION

To approve the resolution regarding approval granted by the Independent Shareholders in the general meeting for the Whitewash Waiver:

“ THAT

Subject to the granting of the waiver by the Executive, the Whitewash Waiver be and is hereby approved and the Directors be and are hereby authorised to do all such things and acts and execute all documents which they consider necessary, desirable or expedient to implement or to give effect to any matters relating to the Whitewash Waiver.”

(For details of the above resolution, please refer to the announcements of the Company dated 7 February 2017, 24 February 2017 and 7 August 2017.)

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

Luoyang, the PRC 7 August 2017

As at the date of this notice, 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 identification purposes only

– XVII-4 –

APPENDIX XVII — NOTICE OF THE 2017 THIRD EXTRAORDINARY GENERAL MEETING

Notes:

Holders of the Company’s H Shares, whose names appear on the register of members maintained by Hong Kong Registrars Limited at the close of trading at 4:00 p.m. on 25 August 2017, are entitled to attend and vote at the extraordinary general meeting. The register of members of the Company’s H Shares will be closed from 26 August 2017 to 26 September 2017 (both days inclusive), during which period no transfer of H Shares will be effected in order to determine the list of holders of H Shares eligible to attend the meeting. Holders of H Shares of the Company who wish to attend the extraordinary general meeting must lodge all share transfer forms accompanied by the relevant H share certificates with the registrar of the Company’s H Shares, namely Hong Kong Registrars Limited at Rooms 1712–1716, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong by 4:00 p.m. on 25 August 2017.
Any shareholder entitled to attend and vote at the extraordinary general meeting may appoint a proxy or proxies (who need not be a shareholder of the Company) to attend and vote at the meeting on his/her behalf. A proxy of a Shareholder who has appointed more than one proxy may only vote on a poll. A proxy of the Shareholder needs not be a Shareholder.
The principal may appoint a proxy in written form (i.e. through the enclosed proxy form). The proxy form shall be signed by the principal or his attorney as authorised. In the event that the proxy form is signed by the attorney of the principal, the power of attorney or other authorisation documents must be notarised by the notary public. The proxy form together with the copies of such power of attorney or authorisation documents as notarised by the notary public shall be effective only if the same be delivered to the Company’s share registrar in Hong Kong, Hong Kong Registrars Limited, at Rooms 1712–1716, Hopewell Centre, 183 Queen’s Road East, Hong Kong, or to the Company at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC, not less than 24 hours before the time appointed for the holding of the meeting or any adjournment thereof.
Shareholders who intend to attend the extraordinary general meeting in person or by proxy should complete and return the signed reply slip for attending the meeting to the registered address of the Company on or before 5 September 2017 by courier, mail or facsimile.
Shareholders or their proxies shall produce their proofs of identity when attending the extraordinary general meeting. A proxy of Shareholder who is appointed to attend the meeting shall produce the proxy form at the same time.
The extraordinary general meeting is expected to last for no more than one day. Shareholders and proxies attending the extraordinary general meeting should be responsible for their own travelling and accommodation expenses.
The registered address of the Company is as follows:

No. 9 Tang Gong Zhong Lu, Xigong District Luoyang Municipal, Henan Province the People’s Republic of China Postal Code: 471009 Telephone: 86-379-6390 8588 Facsimile: 86-379-6325 1984

Completion and return of the proxy form will not preclude Shareholders of the Company from subsequently attending and voting in person at the extraordinary general meeting or any adjourned meetings should you so wish.

– XVII-5 –

APPENDIX XVIII — NOTICE OF THE 2017 FIRST H SHARE CLASS MEETING

IMPORTANT NOTICE:

As stated in the announcements of the Company dated 8 September 2017 and 29 September 2017, the H Shares Class Meeting originally scheduled to be held at 10:00 a.m. on Tuesday, 26 September 2017 (or immediately after the A Shares Class Meeting) was further postponed to 10:00 a.m. on Friday, 27 October 2017 (or immediately after the A Shares Class Meeting), and the venue, the attendance eligibility, the resolutions to be considered at and other relevant matters of the H Shares Class Meeting will remain unchanged. For details, please refer to the notice of the H Shares Class Meeting of the Company dated 7 August 2017 set out below.

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＊

NOTICE OF THE 2017 FIRST H SHARE CLASS MEETING

NOTICE IS HEREBY given that the 2017 First H Share Class Meeting of Luoyang Glass Company Limited (the “ Company ”) will be held at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the People’s Republic of China (the “ PRC* ”) at 10:00 a.m. on 26 September 2017 (Tuesday) (or immediately after the A Share Class Meeting of the Company to be convened and held on the same date and at the same place) for the purpose of considering and, if thought fit, passing the following resolutions:

SPECIAL RESOLUTIONS

To approve the resolution regarding the plan for the acquisition of assets and supporting funds raising by the Company by issuance of shares;
1.01 The plan for the acquisition of assets by issuance of shares: The mode, transaction subjects and transaction counterparties of the acquisition of assets by issuance of shares
1.02 The plan for the acquisition of assets by issuance of shares: The consideration and basis of consideration for the transactions

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APPENDIX XVIII — NOTICE OF THE 2017 FIRST H SHARE CLASS MEETING

1.03 The plan for the acquisition of assets by issuance of shares: The mode of issuance
1.04 The plan for the acquisition of assets by issuance of shares: The type and nominal value of shares in the issuance
1.05 The plan for the acquisition of assets by issuance of shares: The target subscribers of the issuance
1.06 The plan for the acquisition of assets by issuance of shares: The issue price
1.07 The plan for the acquisition of assets by issuance of shares: The number of shares to be issued
1.08 The plan for the acquisition of assets by issuance of shares: The lock-up period arrangement
1.09 The plan for the acquisition of assets by issuance of shares: The profit or loss during the period
1.10 The plan for the acquisition of assets by issuance of shares: The contractual obligation and breach of contract liability in relation to the transfer of rights and ownership of the related assets
1.11 The plan for the acquisition of assets by issuance of shares: The profit guarantee and compensation arrangement
1.12 The supporting funds raising by issuance of shares: The mode of issuance
1.13 The supporting funds raising by issuance of shares: The type and nominal value of shares to be issued
1.14 The supporting funds raising by issuance of shares: The target subscribers of the issuance
1.15 The supporting funds raising by issuance of shares: The issue price and the basis of determination
1.16 The supporting funds raising by issuance of shares: The number of shares to be issued
1.17 The supporting funds raising by issuance of shares: The lock-up period arrangement
1.18 The supporting funds raising by issuance of shares: The mode of subscription
1.19 The supporting funds raising by issuance of shares: The use of proceeds to be raised

– XVIII-2 –

NOTICE OF THE 2017 FIRST H SHARE CLASS MEETING

APPENDIX XVIII

1.20 The plan regarding handling of the undistributed cumulated profits of the Company
1.21 The place of listing
1.22 The effective period for the resolution regarding the transaction
To approve the resolution regarding the “Report on Acquisition of Assets and Supporting Funds Raising by Luoyang Glass Company Limited* by Issuance of Shares and Related Party Transactions (Preliminary Plan) (洛陽玻璃股份有限公司發行股份購買資產並募集配套資金暨關聯交易報告書(草案))” and its summary;
To approve the resolution regarding execution of the Proposed Acquisitions Agreements and the Supplemental SP Agreements with conditions precedent to their effectiveness between the Company and the transaction counterparties;
To approve the resolution regarding execution of the Profit Guarantee Indemnity Agreements and the Supplemental PG Indemnity Agreements with conditions precedent to their effectiveness between the Company and the transaction counterparties; and
To approve the resolution regarding execution of the Triumph Group Subscription Agreement and the Supplemental Subscription Agreement with conditions precedent to their effectiveness between the Company and Triumph Group.

(For details of the above resolutions, please refer to the announcements of the Company dated 7 February 2017, 24 February 2017 and 7 August 2017.)

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

Luoyang, the PRC 7 August 2017

For identification purposes only

– XVIII-3 –

NOTICE OF THE 2017 FIRST H SHARE CLASS MEETING

APPENDIX XVIII

Notes:

Holders of the Company’s H Shares, whose names appear on the register of members maintained by Hong Kong Registrars Limited at the close of trading at 4:00 p.m. on 25 August 2017, are entitled to attend and vote at the H Share Class Meeting. The register of members of the Company’s H Shares will be closed from 26 August 2017 to 26 September 2017 (both days inclusive), during which period no transfer of H Shares will be effected in order to determine the list of holders of H Shares eligible to attend the meeting. Holders of H Shares of the Company who wish to attend the H Share Class Meeting must lodge all share transfer forms accompanied by the relevant H share certificates with the registrar of the Company’s H Shares, namely Hong Kong Registrars Limited at Rooms 1712–1716, Hopewell Centre, 183 Queen’s Road East, Hong Kong by 4:00 p.m. on 25 August 2017.
Any shareholder entitled to attend and vote at the H Share Class Meeting may appoint a proxy or proxies (who need not be a shareholder of the Company) to attend and vote at the meeting on his/her behalf. A proxy of a Shareholder who has appointed more than one proxy may only vote on a poll. A proxy of the Shareholder needs not be a Shareholder.
The principal may appoint a proxy in written form (i.e. through the enclosed proxy form). The proxy form shall be signed by the principal or his attorney as authorised. In the event that the proxy form is signed by the attorney of the principal, the power of attorney or other authorisation documents must be notarised by the notary public. The proxy form together with the copies of such power of attorney or authorisation documents as notarised by the notary public shall be effective only if the same be delivered to the Company’s share registrar in Hong Kong, Hong Kong Registrars Limited, at Rooms 1712–1716, Hopewell Centre, 183 Queen’s Road East, Hong Kong, or to the Company at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC, not less than 24 hours before the time appointed for the holding of the meeting or any adjournment thereof.
Shareholders who intend to attend the H Share Class Meeting in person or by proxy should complete and return the signed reply slip for attending the meeting to the registered address of the Company on or before 5 September 2017 by courier, mail or facsimile.
Shareholders or their proxies shall produce their proofs of identity when attending the H Share Class Meeting. A proxy of Shareholder who is appointed to attend the meeting shall produce the proxy form at the same time.
The H Share Class Meeting is expected to last for no more than one day. Shareholders and proxies attending the H Share Class Meeting should be responsible for their own travelling and accommodation expenses.
The registered address of the Company is as follows:

No. 9 Tang Gong Zhong Lu, Xigong District Luoyang Municipal, Henan Province the People’s Republic of China. Postal Code: 471009 Telephone: 86-379-6390 8588 Facsimile: 86-379-6325 1984

Completion and return of the proxy form will not preclude Shareholders of the Company from subsequently attending and voting in person at the H Share Class Meeting or any adjourned meetings should you so wish.

– XVIII-4 –

SUPPLEMENTAL NOTICE OF THE 2017 THIRD EXTRAORDINARY GENERAL MEETING

APPENDIX XIX

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＊

SUPPLEMENTAL NOTICE OF THE 2017 THIRD EXTRAORDINARY GENERAL MEETING

References are made to the notice (the “ Notice ”) of the 2017 Third Extraordinary General Meeting (the “ EGM ”) of Luoyang Glass Company Limited (the “ Company ”) dated 7 August 2017 and the announcements of the Company dated 8 September 2017 and 29 September 2017 (the “ Announcements* ”) in relation to, among other things, postponement of the EGM.

As stated in the Announcements, the EGM originally scheduled to be held at 9:00 a.m. on Tuesday, 26 September 2017 was further postponed to 9:00 a.m. on Friday, 27 October 2017, at the same venue at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the People’s Republic of China (the “ PRC ”). This notice is supplemental to the Notice.

Unless otherwise indicated, capitalised terms used herein shall have the same meanings as those defined in the circular of the Company dated 11 October 2017.

According to Article 73 of the Articles of Association of the Company (the “ Articles of Association ”), shareholders alone or in aggregate holding more than 3% (including 3%) of the shares of the Company can make a temporary proposal and submit in writing to the Board 10 days prior to the date of the general meeting. The Board shall issue a supplemental notice of the general meeting within 2 days upon the receipt of the proposal and submit such temporary proposal to the general meeting for consideration.

On 10 October 2017, the Board received a letter from CLFG, the substantial Shareholder of the Company holding 105,018,242 Shares, representing approximately 19.94% of the total issued share capital of the Company as at the date of the letter, requesting for the inclusion of six special resolutions at the EGM. According to Article 73 of the Articles of Association, the Board agreed to put forward six new special resolutions at the EGM for the Shareholders’ consideration and approval.

– XIX-1 –

SUPPLEMENTAL NOTICE OF THE 2017 THIRD EXTRAORDINARY GENERAL MEETING

APPENDIX XIX

The following special resolutions are proposed to the EGM as special resolution numbers 14, 15, 16, 17, 18 and 19:

SPECIAL RESOLUTIONS

14 To approve the resolution regarding execution of the First SP Agreement and the First Supplemental SP Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties;
15 To approve the resolution regarding execution of the Second SP Agreement and the Second Supplemental SP Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties;
16 To approve the resolution regarding execution of the Third SP Agreement and the Third Supplemental SP Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties;
17 To approve the resolution regarding execution of the First PG Indemnity Agreement and the First Supplemental PG Indemnity Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties;
18 To approve the resolution regarding execution of the Second PG Indemnity Agreement and the Second Supplemental PG Indemnity Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties; and
19 To approve the resolution regarding execution of the Third PG Indemnity Agreement and the Third Supplemental PG Indemnity Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties.

(For details of the above resolutions, please refer to the circular of the Company dated 11 October 2017.)

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

Luoyang, the PRC 11 October 2017

For identification purposes only

– XIX-2 –

SUPPLEMENTAL NOTICE OF THE 2017 THIRD EXTRAORDINARY GENERAL MEETING

APPENDIX XIX

Notes:

For details of other resolutions to be proposed at the EGM, please refer to the Notice.
Holders of the Company’s H Shares, whose names appear on the register of members maintained by Hong Kong Registrars Limited at the close of trading at 4:00 p.m. on 25 August 2017, are entitled to attend and vote at the extraordinary general meeting. The register of members of the Company’s H Shares will be closed from 26 August 2017 to 27 October 2017 (both days inclusive), during which period no transfer of H Shares will be effected in order to determine the list of holders of H Shares eligible to attend the meeting. Holders of H Shares of the Company who wish to attend the extraordinary general meeting must lodge all share transfer forms accompanied by the relevant H share certificates with the registrar of the Company’s H Shares, namely Hong Kong Registrars Limited at Rooms 1712–1716, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong by 4:00 p.m. on 25 August 2017.
Any shareholder entitled to attend and vote at the extraordinary general meeting may appoint a proxy or proxies (who need not be a shareholder of the Company) to attend and vote at the meeting on his/her behalf. A proxy of a Shareholder who has appointed more than one proxy may only vote on a poll. A proxy of the Shareholder needs not be a Shareholder.
The principal may appoint a proxy in written form (i.e. through the enclosed supplemental proxy form). The supplemental proxy form shall be signed by the principal or his attorney as authorised. In the event that the supplemental proxy form is signed by the attorney of the principal, the power of attorney or other authorisation documents must be notarised by the notary public. The supplemental proxy form together with the copies of such power of attorney or authorisation documents as notarised by the notary public shall be effective only if the same be delivered to the Company’s share registrar in Hong Kong, Hong Kong Registrars Limited, at Rooms 1712–1716, Hopewell Centre, 183 Queen’s Road East, Hong Kong, or to the Company at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC, not less than 24 hours before the time appointed for the holding of the meeting or any adjournment thereof.
Shareholders who intend to attend the extraordinary general meeting in person or by proxy should complete and return the signed reply slip for attending the meeting to the registered address of the Company on or before 6 October 2017 by courier, mail or facsimile.
Shareholders or their proxies shall produce their proofs of identity when attending the extraordinary general meeting. A proxy of Shareholder who is appointed to attend the meeting shall produce the supplemental proxy form at the same time.
The extraordinary general meeting is expected to last for no more than one day. Shareholders and proxies attending the extraordinary general meeting should be responsible for their own travelling and accommodation expenses.
The registered address of the Company is as follows:

No. 9 Tang Gong Zhong Lu, Xigong District Luoyang Municipal, Henan Province the People’s Republic of China Postal Code: 471009 Telephone: 86-379-6390 8588 Facsimile: 86-379-6325 1984

Completion and return of the supplemental proxy form will not preclude Shareholders of the Company from subsequently attending and voting in person at the extraordinary general meeting or any adjourned meetings should you so wish.

– XIX-3 –

SUPPLEMENTAL NOTICE OF THE 2017 FIRST H SHARE CLASS MEETING

APPENDIX XX

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＊

SUPPLEMENTAL NOTICE OF THE 2017 FIRST H SHARE CLASS MEETING

References are made to the notice (the “ Notice ”) of the 2017 First H Share Class Meeting (the “ H Share Class Meeting ”) of Luoyang Glass Company Limited (the “ Company ”) dated 7 August 2017 and the announcements of the Company dated 8 September 2017 and 29 September 2017 (the “ Announcements* ”) in relation to, among other things, postponement of the H Share Class Meeting.

As stated in the Announcements, the H Share Class Meeting originally scheduled to be held at 10:00 a.m. on Tuesday, 26 September 2017 (or immediately after the A Share Class Meeting) was further postponed to 10:00 a.m. on Friday, 27 October 2017 (or immediately after the A Share Class Meeting), at the same venue at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the People’s Republic of China (the “ PRC ”). This notice is supplemental to the Notice.

Unless otherwise indicated, capitalised terms used herein shall have the same meanings as those defined in the circular of the Company dated 11 October 2017.

On 10 October 2017, the Board received a letter from CLFG, the substantial Shareholder of the Company holding 105,018,242 Shares, representing approximately 19.94% of the total issued share capital of the Company as at the date of the letter, requesting for the inclusion of six special resolutions at the H Share Class Meeting. According to Article 73 of the Articles of Association, the Board agreed to put forward six new special resolutions at the H Share Class Meeting for the H Shareholders’ consideration and approval.

– XX-1 –

SUPPLEMENTAL NOTICE OF THE 2017 FIRST H SHARE CLASS MEETING

APPENDIX XX

The following special resolutions are proposed to the H Share Class Meeting as special resolution numbers 6, 7, 8, 9, 10 and 11:

SPECIAL RESOLUTIONS

6 To approve the resolution regarding execution of the First SP Agreement and the First Supplemental SP Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties;
7 To approve the resolution regarding execution of the Second SP Agreement and the Second Supplemental SP Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties;
8 To approve the resolution regarding execution of the Third SP Agreement and the Third Supplemental SP Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties;
9 To approve the resolution regarding execution of the First PG Indemnity Agreement and the First Supplemental PG Indemnity Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties;
10 To approve the resolution regarding execution of the Second PG Indemnity Agreement and the Second Supplemental PG Indemnity Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties; and
11 To approve the resolution regarding execution of the Third PG Indemnity Agreement and the Third Supplemental PG Indemnity Agreement with conditions precedent to their effectiveness between the Company and the transaction counterparties.

(For details of the above resolutions, please refer to the circular of the Company dated 11 October 2017.)

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

Luoyang, the PRC 11 October 2017

For identification purposes only

– XX-2 –

SUPPLEMENTAL NOTICE OF THE 2017 FIRST H SHARE CLASS MEETING

APPENDIX XX

Notes:

For details of other resolutions to be proposed at the H Share Class Meeting, please refer to the Notice.
Holders of the Company’s H Shares, whose names appear on the register of members maintained by Hong Kong Registrars Limited at the close of trading at 4:00 p.m. on 25 August 2017, are entitled to attend and vote at the H Share Class Meeting. The register of members of the Company’s H Shares will be closed from 26 August 2017 to 27 October 2017 (both days inclusive), during which period no transfer of H Shares will be effected in order to determine the list of holders of H Shares eligible to attend the meeting. Holders of H Shares of the Company who wish to attend the H Share Class Meeting must lodge all share transfer forms accompanied by the relevant H share certificates with the registrar of the Company’s H Shares, namely Hong Kong Registrars Limited at Rooms 1712–1716, Hopewell Centre, 183 Queen’s Road East, Hong Kong by 4:00 p.m. on 25 August 2017.
Any shareholder entitled to attend and vote at the H Share Class Meeting may appoint a proxy or proxies (who need not be a shareholder of the Company) to attend and vote at the meeting on his/her behalf. A proxy of a Shareholder who has appointed more than one proxy may only vote on a poll. A proxy of the Shareholder needs not be a Shareholder.
The principal may appoint a proxy in written form (i.e. through the enclosed supplemental proxy form). The supplemental proxy form shall be signed by the principal or his attorney as authorised. In the event that the supplemental proxy form is signed by the attorney of the principal, the power of attorney or other authorisation documents must be notarised by the notary public. The supplemental proxy form together with the copies of such power of attorney or authorisation documents as notarised by the notary public shall be effective only if the same be delivered to the Company’s share registrar in Hong Kong, Hong Kong Registrars Limited, at Rooms 1712–1716, Hopewell Centre, 183 Queen’s Road East, Hong Kong, or to the Company at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC, not less than 24 hours before the time appointed for the holding of the meeting or any adjournment thereof.
Shareholders who intend to attend the H Share Class Meeting in person or by proxy should complete and return the signed reply slip for attending the meeting to the registered address of the Company on or before 6 October 2017 by courier, mail or facsimile.
Shareholders or their proxies shall produce their proofs of identity when attending the H Share Class Meeting. A proxy of Shareholder who is appointed to attend the meeting shall produce the supplemental proxy form at the same time.
The H Share Class Meeting is expected to last for no more than one day. Shareholders and proxies attending the H Share Class Meeting should be responsible for their own travelling and accommodation expenses.
The registered address of the Company is as follows:

No. 9 Tang Gong Zhong Lu, Xigong District Luoyang Municipal, Henan Province the People’s Republic of China Postal Code: 471009 Telephone: 86-379-6390 8588 Facsimile: 86-379-6325 1984

Completion and return of the supplemental proxy form will not preclude Shareholders of the Company from subsequently attending and voting in person at the H Share Class Meeting or any adjourned meetings should you so wish.

– XX-3 –

AI assistant

RoboSense Technology Co., Ltd — Proxy Solicitation & Information Statement 2017

50628_rns_2017-10-11_654e5a03-4740-4834-89f1-193b55a05683.pdf

(1) VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS;

(2) PROPOSED ISSUANCE AND PLACING OF A SHARES; (3) APPLICATION FOR WHITEWASH WAIVER; AND

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

DEFINITIONS

DEFINITIONS

China Securities Regulatory Commission

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

To the Shareholders

(1) VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS;

(2) PROPOSED ISSUANCE AND PLACING OF A SHARES; (3) APPLICATION FOR WHITEWASH WAIVER; AND

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

INTRODUCTION

LETTER FROM THE BOARD

(1) THE PROPOSED ACQUISITIONS

1. The Proposed Acquisitions Agreements

(ii) Principal terms of the Second SP Agreement

(iii) Principal terms of the Third SP Agreement

LETTER FROM THE BOARD

Notes:

LETTER FROM THE BOARD

LETTER FROM THE BOARD

The Consideration Shares

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Profit Guarantee

Completion of the Proposed Acquisitions

Principal terms of the Profit Guarantee Indemnity Agreements

LETTER FROM THE BOARD

Profit Guarantee indemnity

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Information of the Target Companies

Hefei New Energy

LETTER FROM THE BOARD

Nature of the products of Hefei New Energy

Tongcheng New Energy

LETTER FROM THE BOARD

Yixing New Energy

LETTER FROM THE BOARD

Shareholding Structure

Financial effects of the Proposed Acquisitions

(2) THE PROPOSED A SHARE PLACING AND THE TRIUMPH GROUP A SHARE PLACING

LETTER FROM THE BOARD

Summary of the terms of the Proposed A Share Placing and principal terms of the Triumph Group Subscription Agreement

Terms of the Proposed A Share Placing

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Principal terms of the Triumph Group Subscription Agreement

Information on Triumph Group

Number of A Shares to be subscribed by Triumph Group

Conditions precedent to the Triumph Group Subscription Agreement

LETTER FROM THE BOARD

Subscription price under the Triumph Group Subscription Agreement

Lock-up period

Listing Rules Implications

EFFECT OF THE COMPLETION OF THE PROPOSED ACQUISITIONS AND THE PROPOSED A SHARE PLACING ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE PROPOSED ACQUISITIONS

LETTER FROM THE BOARD

(1) Hefei New Energy

(2) Tongcheng New Energy

(3) Yixing New Energy

LETTER FROM THE BOARD

LETTER FROM THE BOARD

RoboSense Technology Co., Ltd Proxy Solicitation & Information Statement 2017