Very Substantial Disposal and Connected Transaction Involving the Equity Transfer and the Capital Injection in Guodian United Power Technology Co., Ltd

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Guodian Technology & Environment Group Corporation Limited, you should at once hand this circular to the purchaser or the transferee or to the bank manager, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. 國電科技環保集團股份有限公司 GUODIAN TECHNOLOGY & ENVIRONMENT GROUP CORPORATION LIMITED* (a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock code: 01296)

(1)VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION INVOLVING THE EQUITY TRANSFER AND THE CAPITAL INJECTION IN GUODIAN UNITED POWER TECHNOLOGY CO., LTD. (2)CONNECTED TRANSACTION INVOLVING THE ENTERING INTO OF THE SUPPLEMENTAL AGREEMENT TO THE NON-COMPETITION AGREEMENT AND (3)NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Advisor to the Company

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

The Company will convene the EGM at the Conference Room, 12th Floor, Building 1, Yard 16, W.4th Ring Middle Road, Haidian District, Beijing, the PRC at 10:00 a.m. on Friday, 16 July 2021. The notice of the EGM, the form of proxy and the reply slip for the EGM have been despatched and published on 30 June 2021.

PRECAUTIONARY MEASURES FOR THE EGM To safeguard the health and safety of Shareholders and to prevent the spreading of the COVID-19 pandemic, the following precautionary measures will be implemented at the EGM:

(1) Compulsory temperature screening/checks (2) Wearing of surgical face mask (3) No provision of refreshments or drinks Attendees who do not comply with the precautionary measures referred to in (1) to (3) above may be denied entry to the EGM venue, at the absolute discretion of the Company as permitted by law.

30 June 2021 CONTENTS

Page

DEFINITIONS ...... ii

LETTER FROM THE BOARD ...... 1

LETTER FROM THE INDEPENDENT BOARD COMMITTEE...... 16

LETTER FROM GRAM CAPITAL...... 18

APPENDIX I – FINANCIAL INFORMATION OF THE GROUP ...... 38

APPENDIX II – FINANCIAL INFORMATION OF THE DISPOSAL GROUP ...... 64

APPENDIX III – UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP ...... 75

APPENDIX IV – VALUATION REPORT OF GUODIAN UNITED POWER ...... 91

APPENDIX V – GENERAL INFORMATION ...... 115

NOTICE OF EGM ...... EGM-1

– i – DEFINITIONS

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

“Board” the board of Directors

“Business Day” any day (other than a Saturday, Sunday or public holiday in Hong Kong) on which banks in Hong Kong are open generally for normal banking services to the public

“Capital Injection” the injection of capital of approximately RMB1,474,662,400 and RMB631,998,172 into the share capital of Guodian United Power by China Energy and Longyuan Power, respectively, in accordance with the Equity Transfer and Capital Injection Agreement

“China Energy” China Energy Investment Corporation Limited* (國家能源投資集團有限責任公司), a company incorporated in the PRC with limited liability, being the controlling shareholder of the Company

“Company” Guodian Technology & Environment Group Corporation Limited* (國電科技環保集團股份有限公司), a joint stock company incorporated in the PRC with limited liability, the H Shares of which is listed on the Stock Exchange (stock code: 1296)

“Completion” the completion of the Equity Transfer and Capital Injection Agreement pursuant to the terms and conditions therein

“connected person(s)” has the meaning ascribed thereto under the Listing Rules

“controlling shareholder(s)” has the meaning ascribed thereto under the Listing Rules

“Director(s)” the director(s) of the Company

“Disposal” the Equity Transfer and the Capital Injection which are part and parcel of each other and shall be completed simultaneously pursuant to the Equity Transfer and Capital Injection Agreement

“Disposal Group” Guodian United Power and its subsidiaries

“Domestic Shares” ordinary shares in the share capital of the Company, with a nominal value of RMB1.00 each, which are subscribed for and paid up in RMB

– ii – DEFINITIONS

“EGM” the extraordinary general meeting of the Company to be convened for the purpose of considering and, if thought fit, approving, inter alia, the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement

“Equity Transfer” the equity transfer of approximately 15.68% equity interest in Guodian United Power from the Company to China Energy at a consideration of RMB407,681,944 in accordance with the Equity Transfer and Capital Injection Agreement

“Equity Transfer and Capital the equity transfer and capital injection agreement in respect of Guodian Injection Agreement” United Power dated 16 June 2021 entered into among (i) China Energy; (ii) the Company; (iii) Longyuan Power; and (iv) Guodian United Power

“Group” the Company and its subsidiaries

“Guodian Group” China Guodian Corporation* (中國國電集團公司), being the controlling shareholder of the Company prior to its absorption and merger into China Energy

“Guodian United Power” Guodian United Power Technology Co., Ltd.* (國電聯合動力技術有限公司), a company established in the PRC with limited liability, and owned as to 70% by the Company and 30% by Longyuan Power as at the date of the Equity Transfer and Capital Injection Agreement

“H Share(s)” the overseas-listed foreign shares in the ordinary share capital of the Company, with a RMB denominated par value of RMB1.0 each, which are subscribed for and traded in Hong Kong dollars and listed on the Stock Exchange

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“Independent Board a committee of the Board comprising all the independent non-executive Committee” Directors established for the purpose of considering and advising the Independent Shareholders in respect of the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement

– iii – DEFINITIONS

“Independent Financial Gram Capital Limited, a licensed corporation to carry out type Adviser” or “Gram Capital” 6 (advising on corporate finance) regulated activity under the SFO and the independent financial adviser appointed to advise the the Independent Board Committee and the Independent Shareholders on the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement

“Independent Shareholders” Shareholder(s) other than those required to abstain from voting on the resolution(s) relating to the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement at the EGM under the Listing Rules

“Independent Third Party(ies)” a person/persons, or in case of a company/companies, the company/ companies or its/their ultimate beneficial owner(s), who is/are independent or and not connected with the Company and its subsidiaries and their respective connected persons and their respective ultimate beneficial owner(s) or their respective associates

“Latest Practicable Date” 28 June 2021, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining information contained herein

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

“Longyuan Power” China Longyuan Power Group Corporation Limited* (龍源電力集團股份有限公司), a joint stock company established in the PRC with limited liability, the H Shares of which is listed on the Stock Exchange (stock code: 916)

“Non-competition Agreement” the Non-competition Agreement dated 23 November 2011 entered into between the Company and Guodian Group under which Guodian Group undertook not to engage in the operation of and participation in businesses that compete, or are likely to compete, with the main businesses of the Company

“PRC” the People’s Republic of China, for the purpose of this circular only, excludes Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan

“Remaining Group” the Group after Completion

– iv – DEFINITIONS

“RMB” Renminbi, the lawful currency of the PRC

“SFO” The Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

“SASAC” the State-owned Assets Supervision and Administration Commission of the State Council of the PRC

“Shareholder(s)” the holder(s) of the H share(s)

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Supplemental Agreement” the Supplemental Agreement to the Non-competition Agreement dated 16 June 2021 entered into between the Company and China Energy

“%” per cent.

The English translation of the names in Chinese which is marked with “*” in this circular is for identification purpose only.

– v – LETTER FROM THE BOARD

國電科技環保集團股份有限公司 GUODIAN TECHNOLOGY & ENVIRONMENT GROUP CORPORATION LIMITED* (a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock code: 01296)

Executive Directors: Legal Address: Mr. Chen Dongqing (Chairman) Suite 1101, 11/F, Building 1 Yard 16, W. 4th Ring Middle Road Non-executive Directors: Haidian District, Beijing, the PRC Mr. Wang Zhongqu Mr. Zhang Wenjian Principal Office in the PRC: Mr. Gu Yuchun Building 1 Ms. Ge Xiaojing Yard 16, W. 4th Ring Middle Road Haidian District, Beijing, the PRC Independent non-executive Directors: Mr. Shen Xiaoliu Principal Place of Business in Hong Kong: Mr. Qu Jiuhui 31/F, Tower Two, Times Square, Mr. Xie Qiuye 1 Matheson Street, Causeway Bay, Mr. Yeung Chi Tat Hong Kong

30 June 2021

To the Shareholders,

Dear Sir or Madam,

(1) VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION INVOLVING THE EQUITY TRANSFER AND THE CAPITAL INJECTION IN GUODIAN UNITED POWER TECHNOLOGY CO., LTD. (2) CONNECTED TRANSACTION INVOLVING THE ENTERING INTO OF THE SUPPLEMENTAL AGREEMENT TO THE NON-COMPETITION AGREEMENT AND (3) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the announcement of the Company dated 16 June June 2021 in relation to the Disposal and the Supplemental Agreement. The company announced that on 16 June 2021 (after trading hours), the Company, China Energy, Longyuan Power and Guodian United Power entered into the Equity Transfer and Capital Injection Agreement, pursuant to which the Company conditionally agreed to dispose of 40% equity interest in Guodian United Power which is owned as to 70% by the Company and 30% by Longyuan Power as at the date of the Equity Transfer and Capital Injection Agreement, by way of (i) the Equity Transfer; and (ii) the Capital Injection.

– 1 – LETTER FROM THE BOARD

In addition, the Company entered into the Supplemental Agreement with China Energy to make certain amendments to the Non-competition Agreement on 16 June 2021.

The purpose of this circular is to provide you with, among other things, (i) details of the Equity Transfer and Capital Injection Agreement and the Supplemental Agreement; (ii) financial information of the Disposal Group; (iii) unaudited pro forma financial information of the Remaining Group; (iv) recommendation of the Independent Board Committee to the Independent Shareholders; (v) the letter of advice from Gram Capital to the Independent Board Committee and the Independent Shareholders; and (vi) the notice of EGM, at which ordinary resolutions will be proposed to consider and, if thought fit, approve the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement.

Details of the Equity Transfer and Capital Injection Agreement are summarised as below:

Date : 16 June 2021 (after trading hours)

Parties : (1) the Company

(2) China Energy

(3) Longyuan Power

(4) Guodian United Power

Subject Matter

The Disposal comprises the Equity Transfer and the Capital Injection which are part and parcel of each other and shall be completed simultaneously pursuant to the Equity Transfer and Capital Injection Agreement. In this respect, the Equity Transfer and the Capital Injection are regarded as inter-conditional on each other.

Accordingly, the Company conditionally agreed to dispose of approximately 15.68% equity interest in Guodian United Power to China Energy at a consideration of RMB407,681,944. Immediately upon completion of the Equity Transfer, China Energy and Longyuan Power will make capital injection of approximately RMB1,474,662,400 and RMB631,998,172 into Guodian United Power, respectively, which will result in a further dilution of the Company’s equity interest in Guodian United Power to 30%.

– 2 – LETTER FROM THE BOARD

The following table illustrates the changes in the registered capital (and the contribution made by respective shareholders) and the equity interest in Guodian United Power held by its respective shareholders immediately before and after the Disposal:

Immediately after completion of the Immediately before completion of Equity Transfer but before the Immediately Shareholder Equity Transfer Capital Injection after Completion Contribution Contribution Contribution in the registered in the registered in the registered capital (RMB) % of equity interest capital (RMB) % of equity interest capital (RMB) % of equity interest

The Company 1,496,268,970 70.00 1,161,000,000 54.32 1,161,000,000 30.00 China Energy – – 335,268,970 15.68 1,548,000,000 40.00 Longyuan Power 641,258,130 30.00 641,258,130 30.00 1,161,000,000 30.00

Total 2,137,527,100 100.00 2,137,527,100 100.00 3,870,000,000 100.00

Upon Completion, the total registered capital of Guodian United Power will be RMB3,870,000,000 owned as to RMB1,548,000,000 (equivalent to 40% of the total registered capital of Guodian United Power) by China Energy and RMB1,161,000,000 (equivalent to 30% of the total registered capital of Guodian United Power) each by the Company and Longyuan Power, respectively. Therefore, Guodian United Power will cease to be a subsidiary of the Company and its financial results will no longer be consolidated into the financial statements of the Group.

EQUITY TRANSFER CONSIDERATION AND CAPITAL INJECTION AMOUNTS

The consideration for the Equity Transfer is RMB407,681,944. The amounts of the Capital Injection to be contributed by China Energy and Longyuan Power are RMB1,474,662,400 and RMB631,998,172, respectively. Both the consideration for the Equity Transfer to be paid by China Energy and the amounts of the Capital Injection to be contributed by China Energy and Longyuan Power, respectively, shall be satisfied in cash by the relevant parties within 30 days after the effective date of the Equity Transfer and Capital Injection Agreement, being the date when all the conditions precedent set out in the paragraph headed “Conditions Precedent to the Equity Transfer and Capital Injection Agreement” below having been satisfied.

The consideration for the Equity Transfer and the amounts of the Capital Injection were determined after arm’s length negotiations among the parties with reference to, among other things, (i) the historical financial performance of the Disposal Group for the years ended 31 December 2018, 2019 and 2020 that reflected the status of continuous loss of the Disposal Group; (ii) the valuation of the Disposal Group undertook by an independent valuer based on asset-based approach, which was RMB2,599,200,287 as at 31 December 2020; (iii) the future development plan of the Disposal Group and its funding needs in its ordinary course of business; and (iv) the factors as set out in the paragraph headed “Reasons for and Benefits of the Disposal” in this circular.

– 3 – LETTER FROM THE BOARD

The amount of the Capital Injection by each of China Energy and Longyuan Power, respectively, is determined based on the following factors: (i) the reduction of gearing ratio of the Disposal Group to approximately 75% through the Capital Injection with reference to the market practice that commercial banks generally require borrowers to keep their gearing ratio below 75%; (ii) the funding needs of the Disposal Group for its business development; (iii) the shareholding structure of Guodian United Power after the Capital Injection, such that China Energy will become the first majority shareholder of Guodian United Power by holding 40% of its total registered capital after the Capital Injection into Guodian United Power by Longyuan Power and their business synergy while Longyuan Power maintaining its shareholding of 30% equity interest in Guodian United Power after the Capital Injection; and (iv) the valuation of the Disposal Group.

In particular, the total assets and total liabilities of the Disposal Group as at 31 December 2020 was RMB12,765,911,000 and RMB11,163,367,000, respectively. Under the condition that the total liabilities of the Disposal Group remain unchanged, an additional capital of approximately RMB2.1 billion is needed to reduce the gearing ratio of the Disposal Group to around 75%. Further, the consideration of the Equity Transfer and the amounts of the Capital Injection were calculated with reference to the valuation of the Disposal Group, which is approximately RMB2,599,200,000 as at 31 December 2020 and the holding of 40% and 30% of the equity interests in Guodian United Power by China Energy and Longyuan Power upon Completion. An illustration of the aforesaid is set out below:

1. China Energy acquires approximately 15.68% equity interests in Guodian United Power held by the Company at a consideration of RMB407,681,944. Immediately after the completion of the Equity Transfer but before the Capital Injection, the registered capital and shareholding of Guodian United Power are as follows:

Registered Immediately after completion of the Immediately before completion of the Capital Equity Transfer but before the Shareholder Equity Transfer Acquired Capital Injection Registered Registered Capital % of equity Capital % of equity (RMB) (a) interest (RMB) (b) (RMB) (a+b) interest

China Energy – – 335,268,970 335,268,970 15.68% The Company 1,496,268,970 70% -335,268,970 1,161,000,000 54.32% Longyuan Power 641,258,130 30% – 641,258,130 30.00%

Total 2,137,527,100 100% – 2,137,527,100 100.00%

– 4 – LETTER FROM THE BOARD

2. Immediately after completion of the Equity Transfer, China Energy makes a capital injection of RMB1,474,662,400 into Guodian United Power, and Longyuan Power makes a capital injection of RMB631,998,172 into Guodian United Power, totaling RMB2,106,660,572. After the Capital Injection, the shareholding of Guodian United Power is as follows:

Immediately after completion of the Equity Registered Transfer but capital before the corresponding Shareholder Capital Injection to capital increase Immediately after Completion Registered % of equity Capital % of equity interest (RMB) (c) (Note) (RMB) (a+b+c) interest

China Energy 15.68% 1,212,731,030 1,548,000,000 40% The Company 54.32% – 1,161,000,000 30% Longyuan Power 30.00% 519,741,870 1,161,000,000 30%

Total 100.00% 1,732,472,900 3,870,000,000 100%

Note: Registered capital corresponding to capital increase = the amount of Capital Injection/the price of each registered capital; the price of each registered capital = the appraisal value of all shareholders’ equity of Guodian United Power/registered capital immediately before completion of the Equity Transfer = RMB1.2160.

CONDITIONS PRECEDENT TO THE EQUITY TRANSFER AND CAPITAL INJECTION AGREEMENT

The Equity Transfer and Capital Injection Agreement shall become effective upon the satisfaction of the following:

(1) the signing and execution of the Equity Transfer and Capital Injection Agreement;

(2) all necessary consents and approvals for or in connection with the Equity Transfer and the Capital Injection having been obtained, including but not limited to (a) the approval of the Equity Transfer and the Capital Injection by the relevant state-owned assets regulatory authority in the PRC; (b) the completion of the filing of the valuation report of the Disposal Group with the relevant state-owned assets regulatory authority in the PRC; and (c) the approval by the board of directors of China Energy; (d) the approval by the board of directors of Longyuan Power; (e) the approval by the Board; (f) the approval by the Shareholders at the EGM; and (g) the approval by the shareholders of Guodian United Power at its shareholders’ meeting; and

– 5 – LETTER FROM THE BOARD

(3) the Supplemental Agreement having become unconditional (other than the condition relating to the Equity Transfer and Capital Injection Agreement having become unconditional).

As at the Latest Practicable Date, other than conditions precedent 2(f), 2(g) and (3) above, all of the conditions precedent set out above have been fulfilled.

COMPLETION

Guodian United Power shall complete all requisite registration and filing procedures with the State Administration for Industry and Commerce in the PRC to effect the change of its share capital as a result of the Equity Transfer and the Capital Injection within 30 days upon the consideration of the Equity Transfer and the amounts of the Capital Injection having been settled, or on the date on which the relevant resolutions of the board of directors’ and shareholders’ meeting of Guodian United Power having been signed, whichever is later. The profits and losses of the Disposal Group during the period from 31 December 2020 to the date of Completion shall be enjoyed and borne by China Energy, Longyuan Power and the Company in proportion to their shareholding in the Disposal Group after Completion.

The completion and the effectiveness of the Equity Transfer and Capital Injection Agreement and the Supplemental Agreement are inter-conditional on each other.

Liability for breach of contract

If any party to the Equity Transfer and Capital Injection Agreement breaches its obligations under the Equity Transfer and Capital Injection Agreement, such party shall continue to perform its obligations and pay full compensation to the other party promptly and effectively. In addition, such party shall promptly and effectively compensate the loss of the other parties arising from such breach.

INFORMATION ON THE PARTIES

The Group

The Group is primarily engaged in the provision of integrated clean technology solutions and services within the PRC through its two main business segments, with established market leading or dominant positions in the environmental protection, energy conservation and renewable energy equipment manufacturing and related services industries in the PRC. China Energy is the controlling shareholder of the Company.

– 6 – LETTER FROM THE BOARD

China Energy

As a state-owned enterprise established in accordance with the laws of the PRC, China Energy is the controlling shareholder of the Company, and operates eight business segments including coal, thermal power, new energy, hydropower, transportation, chemicals, environmental technology and finance. It is the world’s largest producer of coal, thermal power, wind power, as well as coal-to-liquids and coal chemical products.

Longyuan Power

Longyuan Power is a leading wind power generation company in the PRC, primarily engaged in the design, development, construction, management and operation of wind farms. In addition to the wind power business, Longyuan Power also operates other power projects such as coal power, solar power, tidal, biomass and geothermal energy. Meanwhile, Longyuan Power also provides consultation, repair and maintenance, training and other professional services to wind farms, as well as manufactures and sells power equipment used in the power grids, wind farms and coal power plants. China Energy is the controlling shareholder of Longyuan Power.

The Disposal Group

Guodian United Power is a company incorporated in the PRC with limited liability and is principally engaged in research and development, production and sale of wind turbines. As at the date of the Equity Transfer and Capital Injection Agreement, Guodian United Power is owned as to 70% and 30% by the Company and Longyuan Power, respectively.

FINANCIAL SUMMARY OF THE DISPOSAL GROUP

The following financial information of the Disposal Group for the three years ended 31 December 2018, 2019 and 2020 is extracted from its unaudited financial statements prepared in accordance with the International Financial Reporting Standards:

The Disposal Group For the year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Revenue 3,511,759 4,458,786 6,355,072 Gross profit 1,054,780 955,774 997,429 Loss before taxation (138,292) (557,803) (466,212) Loss after taxation (127,570) (728,776) (568,308)

– 7 – LETTER FROM THE BOARD

As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Total assets 12,447,734 12,848,900 12,765,911 Total liabilities 9,548,106 10,678,048 11,163,367 Net assets 2,899,628 2,170,852 1,602,544

FINANCIAL EFFECT OF THE DISPOSAL

The Group expects to record an unaudited investment income of approximately RMB703,259,000 from the Equity Transfer and the Capital Injection based on the consideration of the Equity Transfer and the fair value and the unaudited net asset book value of Guodian United Power as at 31 December 2020. Assuming the Disposal had taken place on 1 January 2020, it is estimated that the Group’s profit for the year would increase by RMB702.83 million from RMB -44.43 million to RMB658.40 million upon Completion. Besides, it is estimated that the assets and liabilities of the Group would decrease by RMB10,228.19 million and RMB10,395.57 million, respectively, if the Disposal had taken place on 31 December 2020. The abovementioned figures are for illustrative purpose only. The actual financial figures and financial effect resulted from the Equity Transfer and the Capital Injection will be determined based on the financial position of the Disposal Group at Completion and subject to the review and final audit by the auditors of the Company upon Completion.

Upon Completion, Guodian United Power will cease to be a subsidiary of the Company and the Remaining Group will no longer be engaged in the business of research and development, production and sale of wind turbines.

REASONS FOR AND BENEFITS OF THE DISPOSAL

Optimizing financial performance and minimizing financial risks of the Group

The Disposal Group is principally engaged in the production and sale of wind turbines. As the market centralization of the wind power equipment manufacturing industry is constantly increasing, the Disposal Group needs to continuously invest a tremendous amount of funds in order to maintain its status in the industry. Further, Guodian United Power has been in a loss-making position for a long period of time, and the gearing ratios of the Group and Guodian United Power remain at a high level. The operation of Guodian United Power will increase the operational and financial risks of the Group .

Upon Completion, Guodian United Power will cease to be a subsidiary of the Company, which will be beneficial for the Remaining Group to achieve a positive turnaround. At the same time, the Disposal will help to reduce the gearing ratio and financial risks of the Remaining Group as well as to improve its liquidity and solvency and the ability to resist financial risks in the future.

– 8 – LETTER FROM THE BOARD

Refining business position and enhancing the core competitiveness of energy conservation and environmental protection business

The differences between the business model of Guodian United Power, which is mainly engaged in wind power equipment manufacturing business, and that of the Company, which is mainly engaged in energy conservation and environmental protection business, increase the Company’s difficulties in the management of Guodian United Power. After Completion, the Company may focus its relevant resources on its energy conservation and environmental protection solutions business to make the corporate profile and business position of the Company clearer. In addition, the Company is of the view that the Disposal may facilitate its further expansion in its energy conservation and environmental protection solutions business, thus enhancing the Group’s core competitiveness.

Upon Completion, Guodian United Power, as a loss-making company engaging in the capital intensive business of research and development, production and sale of wind turbines, will cease to be a subsidiary of the Company and its financial results will no longer be consolidated into the financial statements of the Group. This will enable the Company to deploy and focus its resources on the energy conservation and environmental protection solutions business. In particular, the Company will be committed to technological innovation and research and development, responding to the market environment more quickly, building brand awareness and market influence, and enhancing the core competitiveness of its energy conservation and environmental protection solutions business.

Optimizing the shareholding structure and capital structure of Guodian United Power to protect the long-term interests of the Company

Upon Completion, China Energy will directly hold 40% equity interest in Guodian United Power and become its largest shareholder, which will enhance the strategic importance of Guodian United Power. The abundant resources of China Energy will provide more support to Guodian United Power in terms of capital and market development and the synergy between the two will be given full play to.

After the Capital Injection, China Energy and Longyuan Power will increase their total capital contribution in Guodian United Power by approximately RMB2.1 billion, which will help enhance the production capacity of Guodian United Power and significantly reduce its financial risks, enhance the position of Guodian United Power in the wind power equipment manufacturing industry, and improve its profitability.

Upon Completion, the Company will continue to hold 30% equity interest in Guodian United Power and remains as one of the substantial shareholders of Guodian United Power. As a substantial shareholder of Guodian United Power, the Company will be able to enjoy the future development of Guodian United Power and safeguard its long-term interests as a shareholder of Guodian United Power.

In light of the above factors, the Directors consider that the terms of the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder are fair and reasonable, and in the interests of the Shareholders as a whole.

– 9 – LETTER FROM THE BOARD

ENTERING INTO OF THE SUPPLEMENTAL AGREEMENT

As disclosed in the prospectus of the Company dated 9 December 2011, the Company and Guodian Group entered into the Non-competition Agreement, pursuant to which, Guodian Group undertook not to engage in the operation of and participation in any businesses that compete, or are likely to compete, with the main businesses of the Company.

China Energy and Guodian Group are both controlled by the SASAC. As approved by the SASAC (Guo Zi Fa Gai Ge [2017] No. 146), China Energy and Guodian Group implemented strategic restructuring, such that Guodian Group would be absorbed by and merged into China Energy. After such absorption and merger, all of the assets, liabilities, businesses, staff, contracts, qualifications and all other rights and obligations of Guodian Group were transferred to, or assumed, by China Energy.

The Company entered into the Supplemental Agreement with China Energy on 16 June 2021, pursuant to which the definition of “main businesses” of the Company stipulated in the Non-competition Agreement will be amended to reflect the Company’s main businesses upon Completion.

Pursuant to the Non-competition Agreement, the definition of “main businesses” of the Company includes “(1) renewable energy equipment manufacturing and integrated system solution business focusing on wind turbine manufacturing and photovoltaic industry (mainly including solar cells and battery modules); and (2) the provision of environmental protection solutions (including desulfurization, denitrification, dust removal, water treatment, etc.) and energy conversation solutions (including plasma ignition, residual heat recovery, steam turbine flow modification and information system control, etc.) by the Company or its subsidiaries”.

The Company entered into the Supplemental Agreement with China Energy to amend the “main businesses” of the Company as “the provision of environmental protection solutions (including desulfurization, denitrification, dust removal, water treatment, etc.) and energy conversation solutions (including plasma ignition, residual heat recovery, steam turbine flow modification and information system control, etc.) by the Company or its subsidiaries” by removing “renewable energy equipment manufacturing and integrated system solution business focusing on wind turbine manufacturing and photovoltaic industry (mainly including solar cells and battery modules)”.

Save for the abovesaid amendments, other terms of the Non-competition Agreement shall remain unchanged.

– 10 – LETTER FROM THE BOARD

CONDITIONS PRECEDENT TO THE SUPPLEMENTAL AGREEMENT

The amendment of the Non-competition Agreement by way of the Supplemental Agreement is conditional upon (a) the approval by the Board ; (b) the approval by the board of directors of China Energy ; (c) the approval by the Stock Exchange (if required); (d) the passing of the relevant resolution(s) by the Independent Shareholders at the EGM; and (e) the Equity Transfer and Capital Injection Agreement having become unconditional (other than the condition relating to the Supplemental Agreement having become unconditional).

Within the Remaining Group, China Energy I&C Interconnection Technology Co., Ltd* (國能信控互聯技術有限公司) (“China Energy I&C”), a wholly-owned subsidiary of the Company, is principally engaged in the production and sale of variable pitch control systems for wind turbines. Guodian Longyuan Electrical Co., Ltd.* (國電龍源電氣有限公司) (“Guodian Longyuan Electrical”）, a wholly-owned subsidiary of the Company, is principally engaged in the production of wind power converters. The main products of China Energy I&C and Guodian Longyuan Electrical are wind turbine components, while the main business of Guodian United Power is the production of overall units of wind turbines. The businesses and industry chain positions of China Energy I&C and Guodian Longyuan Electrical and those of Guodian United Power are substantially different in the wind turbine industry.

In addition, upon Completion, the Remaining Group will not be engaged in the production and sale of overall units of wind turbines. The aggregate revenue and assets of China Energy I&C and Guodian Longyuan Electrical are relatively small, and the business of China Energy I&C and Guodian Longyuan Electrical will therefore not be perceived as the major businesses of the Group as a whole. The unaudited revenue and the total assets of China Energy I&C and Guodian Longyuan Electrical for the year ended or as at 31 December 2020 are set out in the table below:

For the year ended 31 As at 31 December 2020 December 2020 Revenue Total Assets (RMB’000) (RMB’000)

China Energy I&C 663,752 1,129,370 Guodian Longyuan Electrical 263,087 453,502 The Group 15,624,478 36,782,730 Percentage over the total revenue/total assets of the Group 6% 4%

– 11 – LETTER FROM THE BOARD

Based on the above, and given that the Supplemental Agreement was entered into between the Company and China Energy prior to Completion, the Directors are of the view that there is neither a direct nor indirect competition between the business of the Remaining Group and that of China Energy, and thus the acquisition of the 40% equity interest of Guodian United Power by China Energy complies with the Non- competition Agreement.

Upon Completion, Guodian United Power will remain as a connected person of the Company since each of China Energy and Longyuan Power shall be a substantial shareholder of Guodian United Power. Upon Completion, the Remaining Group, in particular, China Energy I&C and Guodian Longyuan Electrical, and the Disposal Group shall continue to be engaged in transactions in respect of purchase and sale of certain goods and services in the ordinary and usual course of business. Such transactions will remain as connected transactions and shall be governed under the master agreement entered into between the Company and Guodian United Power on 29 October 2019 in relation to the purchase and sale of comprehensive goods and services for the years ended 31 December 2020, 2021 and 2022, the details of which are contained in the circular of the Company dated 3 December 2019.

USE OF PROCEEDS

The net proceeds from the Disposal is approximately RMB403,082,000 (after deducting the related expenses in relation to the Disposal).

The entire net proceeds from the Disposal will be used for repayment of bank loans of the Company.

IMPLICATIONS UNDER THE LISTING RULES

The Equity Transfer involves the disposal of equity interest of Guodian United Power by the Company which constitutes a transaction for disposal of assets under Rule 14.04(1)(a) of the Listing Rules. In addition, since the Capital Injection will result in a dilution of the Company’s shareholding in Guodian United Power, the Capital Injection constitutes a deemed disposal by the Company under Rule 14.29 of the Listing Rules. As one or more of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Disposal exceed 75%, the Disposal constitutes a very substantial disposal of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

– 12 – LETTER FROM THE BOARD

As at the Latest Practicable Date, China Energy is the controlling shareholder of the Company directly or indirectly holding approximately 78.40% of the issued share capital of the Company. In addition, as at the Latest Practicable Date, China Energy is the controlling shareholder of Longyuan Power directly or indirectly holding approximately 58.44% of the issued share capital of Longyuan Power. As such, each of China Energy and Longyuan Power is a connected person of the Company under Chapter 14A of the Listing Rules, and the Disposal and the entering into of the Supplemental Agreement (which is not conducted in the ordinary and usual course of business of the Company) therefore constitute connected transactions of the Company under Chapter 14A of the Listing Rules and are subject to the reporting, announcement and Independent Shareholders’ approval under Chapter 14A of the Listing Rules.

INDEPENDENT FINANCIAL ADVISER

Gram Capital has been appointed as the Independent Financial Adviser by the Company to make recommendations to the Independent Board Committee and the Independent Shareholders in relation to the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement. The letter from Gram Capital is set out in this circular.

EGM

The EGM will be convened by the Company at the Conference Room, 12th Floor, Building 1, Yard 16, W.4th Ring Middle Road, Haidian District, Beijing, the PRC on Friday, 16 July 2021 at 10:00 a.m. at which resolutions will be proposed to consider and, if thought fit, approve Disposal and the transactions contemplated under the Equity Transfer and Capital Injection Agreement, and the Supplemental Agreement. Notice convening the EGM has been despatched to the Shareholders on the date of this circular, a copy of which is set out on pages EGM-1 to EGM-2 of this circular.

As at the Latest Practicable Date, China Energy is the controlling shareholder of the Company directly and indirectly holding approximately 78.40% of the issued share capital of the Company. In addition, China Energy is the controlling shareholder of Longyuan Power directly and indirectly holding approximately 58.44% of the issued share capital of Longyuan Power. Therefore, China Energy, Longyuan Power and their respective associates will abstain from voting at the EGM for approving resolutions on the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, and save for China Energy, Longyuan Power and their respective associates, no other Shareholder has a material interest in Equity Interest and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement, and accordingly no other Shareholder is required to abstain from voting on any of the resolutions to be proposed at the EGM.

– 13 – LETTER FROM THE BOARD

Closure of register of members

The register of members of the Company will be closed from Thursday, 15 July 2021 to Friday, 16 July 2021, both days inclusive, during which period no transfer of shares will be registered. In order to qualify to attend and vote at the EGM, all transfers, together with relevant share certificates, must be lodged with the H Share registrar of the Company, namely Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (for holders of H Shares) or the head office of the Company (for holders of Domestic Shares) at Building 1, Yard 16, W. 4th Ring Middle Road, Haidian District, Beijing, the PRC no later than 4:30 p.m. on Wednesday, 14 July 2021.

Reply Slip and Proxy form

If you are eligible and intend to attend the EGM, please complete and return the reply slip dated 30 June 2021 in accordance with the instructions printed thereon as soon as possible and in any event not later than 7 days before the date appointed for holding such meeting or any adjournment thereof. Shareholders who intend to appoint a proxy to attend the EGM is required to complete and return the proxy form, in accordance with the instructions printed thereon as soon as possible and in any event no later than 24 hours before the time appointed for holding of the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you wish.

RECOMMENDATION

The Directors considered that the terms of the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement were negotiated on an arm’s length basis, are entered into, on normal commercial terms and while the transactions contemplated thereunder are not entered into in the ordinary and usual course of business of the Group, the terms and conditions thereof are fair and reasonable and in the interest of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material aspects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

– 14 – LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular.

Yours faithfully, By Order of the Board Guodian Technology & Environment Group Corporation Limited* Mr. CHEN Dongqing Chairman

– 15 – LETTER FROM THE INDEPENDENT BOARD COMMITTEE

30 June 2021

To the Independent Shareholders

Dear Sir or Madam,

(1) VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION INVOLVING THE EQUITY TRANSFER AND THE CAPITAL INJECTION IN GUODIAN UNITED POWER TECHNOLOGY CO., LTD. AND (2) CONNECTED TRANSACTION INVOLVING THE ENTERING INTO OF THE SUPPLEMENTAL AGREEMENT TO THE NON-COMPETITION AGREEMENT

INTRODUCTION

We refer to the circular dated 30 June 2021 (the “Circular”) of Guodian Technology & Environment Group Corporation Limited (the “Company”) of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

Under the Listing Rules, the terms of the Equity Transfer and Capital Injection Agreement and the Disposal, and the Supplemental Agreement are required to be approved by the Independent Shareholders at the EGM. We, being the independent non-executive Directors, have been appointed to form the Independent Board Committee to advise the Independent Shareholders as to whether the terms of the Equity Transfer and Capital Injection Agreement and the Disposal, and the Supplemental Agreement are fair and reasonable and to make recommendation as to whether the Independent Shareholders should vote in favour of the resolutions to be proposed at the EGM to consider and, if thought fit, approve the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement.

Gram Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Equity Transfer and Capital Injection Agreement and the Disposal, and the Supplemental Agreement.

– 16 – LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We wish to draw your attention to the letter from the Board, the letter from Gram Capital and the appendices to the Circular.

RECOMMENDATION

Having taken into account the advice and recommendations of the Independent Financial Adviser, we consider that the terms of the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement are entered into, on normal commercial terms, and while the transactions contemplated thereunder are not entered into in the ordinary and usual course of business of the Group, the terms and conditions thereof are fair and reasonable so far as the Independent Shareholders are concerned and the Disposal, and the Supplemental Agreement are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Equity Transfer and Capital Injection Agreement and the transactions contemplated thereunder, and the Supplemental Agreement.

Yours faithfully, Independent Board Committee of Guodian Technology & Environment Group Corporation Limited

Mr. Shen Xiaoliu Mr. Qu Jiuhui Mr. Xie Qiuye Mr. Yeung Chi Tat Independent non- Independent non- Independent non- Independent non- executive Director executive Director executive Director executive Director

– 17 – LETTER FROM GRAM CAPITAL

Set out below is the text of a letter received from Gram Capital, the Independent Financial Adviser to the Independent Board Committee and Independent Shareholders in respect of the Transactions for the purpose of inclusion in this circular.

Room 1209, 12/F. Nan Fung Tower 88 Connaught Road Central/ 173 Des Voeux Road Central Hong Kong

30 June 2021

To: The Independent Board Committee and the Independent Shareholders of Guodian Technology & Environment Group Corporation Limited*

Dear Sir/ Madam,

(1) VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION INVOLVING THE EQUITY TRANSFER AND THE CAPITAL INJECTION IN GUODIAN UNITED POWER TECHNOLOGY CO., LTD.; AND (2) CONNECTED TRANSACTION INVOLVING THE ENTERING INTO OF THE SUPPLEMENTAL AGREEMENT TO THE NON-COMPETITION AGREEMENT

1. INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Disposal and the entering into of the Supplemental Agreement (collectively, the “Transactions”), details of which are set out in the letter from the Board (the “Board Letter”) contained in the circular dated 30 June 2021 issued by the Company to the Shareholders (the “Circular”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

– 18 – LETTER FROM GRAM CAPITAL

The Equity Transfer and Capital Injection Agreement

With reference to the Board Letter, on 16 June 2021 (after trading hours), the Company, China Energy, Longyuan Power and Guodian United Power entered into the Equity Transfer and Capital Injection Agreement, pursuant to which, the Company conditionally agreed to conduct the Disposal by way of (i) the Equity Transfer; and (ii) the Capital Injection. The Disposal comprises the Equity Transfer and the Capital Injection which are part and parcel of each other and shall be completed simultaneously pursuant to the Equity Transfer and Equity Injection Agreement. In this respect, the Equity Transfer and the Capital Injection are regarded as inter-conditional on each other.

Upon Completion, the registered capital of Guodian United Power will be owned as to 40%, 30% and 30% by China Energy, the Company and Longyuan Power, respectively. Therefore, Guodian United Power will cease to be a subsidiary of the Company and its financial results will no longer be consolidated into the financial statements of the Group.

The Supplemental Agreement to the Non-competition Agreement

On 16 June 2021, the Company entered into the Supplemental Agreement with China Energy to make certain amendments to the Non-competition Agreement with effect on the date falling upon (a) the obtaining of the approval by the Board; (b) the obtaining of the approval by the board of directors of China Energy; (c) the obtaining of the approval by the Stock Exchange (if required); (d) the passing of the relevant resolution(s) by the Independent Shareholders at the EGM; and (e) the Equity Transfer and Capital Injection Agreement having become unconditional (other than the condition relating to the Supplemental Agreement having become unconditional).

The completion and the effectiveness of the Equity Transfer and Capital Injection Agreement and the Supplemental Agreement are inter-conditional on each other.

With reference to the Board Letter, (i) the Disposal constitutes a very substantial disposal of the Company and is subject to reporting, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules; and (ii) the Transactions constitute connected transactions of the Company and are subject to reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

– 19 – LETTER FROM GRAM CAPITAL

The Independent Board Committee comprising Mr. Shen Xiaoliu, Mr. Qu Jiuhui, Mr. Xie Qiuye and Mr. Yeung Chi Tat, being all of the independent non-executive Directors, has been formed to advise the Independent Shareholders on (i) whether the terms of the Transactions are on normal commercial terms and are fair and reasonable; (ii) whether the Transactions are in the interests of the Company and the Shareholders as a whole and are conducted in the ordinary and usual course of business of the Group; and (iii) how the Independent Shareholders should vote in respect of the resolutions to approve the Transactions at the EGM. We, Gram Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

2. INDEPENDENCE

During the past two years immediately preceding the Latest Practicable Date, Gram Capital was engaged as an independent financial adviser in respect of (i) the continuing connected transactions of the Company as set out in the Company’s circular dated 3 December 2019; and (ii) the major and continuing connected transactions of the Company as set out in the Company’s circular dated 23 October 2020. Notwithstanding the aforesaid past engagement, as at the Latest Practicable Date, we were not aware of any relationships or interests between Gram Capital and the Company, or any other parties that could be reasonably regarded as a hindrance to Gram Capital’s independence to act as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders.

3. BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. Our opinion is based on the Directors’ representation and confirmation that there is no undisclosed private agreement/arrangement or implied understanding with anyone concerning the Transactions. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

– 20 – LETTER FROM GRAM CAPITAL

We have not made any independent evaluation or appraisal of the assets and liabilities of Guodian United Power or its subsidiaries, and we have not been furnished with any such evaluation or appraisal, save as and except for the valuation report on the total shareholders’ equity of Guodian United Power (the “Valuation Report”) as contained in Appendix IV to the Circular. The Valuation Report was prepared by an independent valuer, namely, 北京國融興華資產評估有限責任公司 (Beijing Guorong Xinghua Asset Appraisal Co., Ltd.) (the “Valuer”). Since we are not experts in the valuation of assets or business, we have relied solely upon the Valuation Report for the appraised value of the total shareholders’ equity of Guodian United Power as at 31 December 2020 (the “Appraised Value”).

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 the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement therein or the Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in- depth investigation into the business and affairs of the Company, China Energy, Longyuan Power, Guodian United Power or their respective subsidiaries or associates (if applicable), nor have we considered the taxation implication on the Group or the Shareholders as a result of the Transactions. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. 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.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, it is the responsibility of Gram Capital to ensure that such information has been correctly extracted from the relevant sources while we are not obligated to conduct any independent in-depth investigation into the accuracy and completeness of those information.

– 21 – LETTER FROM GRAM CAPITAL

4. PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Transactions, we have taken into consideration the following principal factors and reasons:

Information on the Group

With reference to the Board Letter, the Group is primarily engaged in the provision of integrated clean technology solutions and services within the PRC through its two main business segments, with established market leading or dominant positions in the environmental protection, energy conservation and renewable energy equipment manufacturing and related services (mainly wind power products and services) industries in the PRC.

Set out below is a summary of the audited consolidated financial information on the Group for the two years ended 31 December 2020 as extracted from the Company’s annual report for the year ended 31 December 2020 (the “2020 Annual Report”):

For the year ended For the year ended Change from 2019 31 December 2020 31 December 2019 to 2020 RMB’000 RMB’000 %

Revenue 15,624,478 11,691,038 33.64 – Environmental protection 4,779,879 4,505,771 6.08 – Energy conservation solutions 4,565,873 1,892,838 141.22 – Wi nd power products and services 5,789,547 4,822,702 20.05 – All others 489,179 469,727 4.14 Gross profit 2,954,867 2,588,198 14.17 Loss for the year (44,433) (447,052) (90.06)

As depicted from the above table, the Group’s revenue and gross profit for the year ended 31 December 2020 (“FY2020”) increased by approximately 33.64% and 14.17% respectively as compared to that for the year ended 31 December 2019 (“FY2019”). With reference to the 2020 Annual Report and as confirmed by the Directors, such increases were mainly attributable to increased sales from general contracting for power stations and wind turbine generator.

The Group’s loss for FY2020 decreased by approximately 90.06% as compared to that for FY2019. With reference to the 2020 Annual Report and as confirmed by the Directors, such decrease was mainly attributable to increase in the Group’s revenue and gross profit for FY2020.

– 22 – LETTER FROM GRAM CAPITAL

With reference to the Board Letter, upon Completion, Guodian United Power will cease to be a subsidiary of the Company and the Remaining Group will no longer be engaged in the business of research and development, production and sale of wind turbines.

Within the Remaining Group, China Energy I&C, a wholly-owned subsidiary of the Company, is principally engaged in the production and sale of variable pitch control systems for wind turbines. Guodian Longyuan Electrical, a wholly-owned subsidiary of the Company, is principally engaged in the production of wind power converters. The main products of China Energy I&C and Guodian Longyuan Electrical are wind turbine components, while the main business of Guodian United Power is the production of overall units of wind turbines.

In addition, upon Completion, the Remaining Group will not engage in the production and sale of overall units of wind turbines. The aggregate revenue and assets of China Energy I&C and Guodian Longyuan Electrical are relatively small, and the business of China Energy I&C and Guodian Longyuan Electrical will therefore not be perceived as the major business of the Group as a whole.

For our due diligence purpose, we obtained the financial information of China Energy I&C and Guodian Longyuan Electrical for the two years ended 31 December 2020 and noted that:

(i) China Energy I&C’s revenue for FY2019 and FY2020 accounted for 5.03% and 4.25% of that of the Group;

(ii) China Energy I&C’s total assets as at 31 December 2019 and 31 December 2020 accounted for 3.18% and 3.07% of that of the Group;

(iii) Guodian Longyuan Electrical’s revenue for FY2019 and FY2020 accounted for 1.68% and 1.68% of that of the Group; and

(iv) Guodian Longyuan Electrical’s total assets as at 31 December 2019 and 31 December 2020 accounted for 1.01% and 1.23% of that of the Group.

As confirmed by the Company, there is no other member of the Remaining Group engaging in the Renewable Energy Equipment Business (as defined below).

Information on the Disposal Group

Guodian United Power is a company incorporated in the PRC with limited liability and is principally engaged in research and development, production and sale of wind turbines.

– 23 – LETTER FROM GRAM CAPITAL

Set out below is the financial information of the Disposal Group for the three years ended 31 December 2020 as extracted from Appendix II to the Circular:

For the year ended For the year ended For the year ended 31 December 2018 31 December 2019 31 December 2020 (unaudited) (unaudited) (unaudited) RMB’000 RMB’000 RMB’000

Revenue 3,511,759 4,458,786 6,355,072 Gross profit 1,054,780 955,774 997,429 Loss after tax (127,570) (728,776) (568,308)

As at 31 As at 31 As at 31 December 2018 December 2019 December 2020 (unaudited) (unaudited) (unaudited) RMB’000 RMB’000 RMB’000

Total assets 12,447,734 12,848,900 12,765,911 Total liabilities (9,548,106) (10,678,048) (11,163,367) Net assets 2,899,628 2,170,852 1,602,544

Information on the other parties

Set out below are the information of China Energy and Longyuan Power as extracted from the Board Letter:

China Energy

Longyuan Power

– 24 – LETTER FROM GRAM CAPITAL solar power, tidal, biomass and geothermal energy. Meanwhile, Longyuan Power also provides consultation, repair and maintenance, training and other professional services to wind farms, as well as manufactures and sells power equipment used in the power grids, wind farms and coal power plants. The ultimate beneficial owner of Longyuan Power is China Energy.

Reasons for and benefits of the Disposal

Optimizing financial performance and minimizing financial risks of the Group

With reference to the Board Letter, the Disposal Group is principally engaged in the production and sale of wind turbines. As the market centralization of the wind power equipment manufacturing industry is constantly increasing, the Disposal Group needs to continuously invest a tremendous amount of funds in order to maintain its status in the industry. Further, Guodian United Power has been in a loss-making position for a long time, and the gearing ratios of the Group and Guodian United Power remain at a high level, the operation of Guodian United Power will increase the operational and financial risks of the Group.

We noted from the financial information of the Disposal Group as set out in Appendix II to the Circular that (i) the Disposal Group recorded losses for three consecutive years ended 31 December 2020; and (ii) the Disposal Group’s gearing ratios (calculated by dividing the total borrowings by total equity attributable to equity shareholders of the company) were approximately 100.01%, 136.35% and 164.15% as at 31 December 2018, 31 December 2019 and 31 December 2020 respectively.

With reference to the Board Letter, upon Completion, Guodian United Power will cease to be a subsidiary of the Company, which will be beneficial for the Remaining Group to achieve the positive turnaround. At the same time, the Disposal will help to reduce the gearing ratio and financial risks of the Remaining Group as well as to improve its liquidity and solvency and the ability to resist financial risks in the future.

According to the Board Letter, the Group expects to record an unaudited investment income of approximately RMB703,259,000 from the Equity Transfer and the Capital Injection based on the consideration of the Equity Transfer and the fair value and the unaudited net asset book value of Guodian United Power as at 31 December 2020. Details of which are set out in the section headed “FINANCIAL EFFECT OF THE DISPOSAL” of the Board Letter.

– 25 – LETTER FROM GRAM CAPITAL

In addition, according to the unaudited Pro Forma Financial Information (as defined below), as if the Disposal had been completed on 1 January 2020/31 December 2020 (as the case may be), the Remaining Group’s unaudited consolidated profit for FY2020 would be approximately RMB658.40 million and gearing ratio (calculated by dividing the total borrowings by total equity attributable to equity shareholders of the Company) would be approximately 147.9% as at 31 December 2020 (as compared to the Group’s loss of approximately RMB44 million for FY2020 and gearing ratio of 212.2% as at 31 December 2020).

Refining business position and enhancing the core competitiveness of energy conservation and environmental protection business

With reference to the Board Letter, the differences between the business model of Guodian United Power, which is mainly engaged in wind power equipment manufacturing business, and that of the Company, which is mainly engaged in energy conservation and environmental protection business, increase the Company’s difficulties in management of Guodian United Power. After Completion, the Group may refocus its relevant resources on its energy conservation and environmental protection solutions business to make the corporate profile and business position of the Group clearer. In addition, the Company is of the view that the Disposal may facilitate its further expansion in its energy conservation and environmental protection solutions business, thus enhancing the Group’s core competitiveness.

Upon Completion, Guodian United Power (a loss-making company engaging in the capital-intensive business of research and development, production and sale of wind turbines) will cease to be a subsidiary of the Group and its financial results will no longer be consolidated into the financial statements of the Group. This will enable the Group to deploy and focus its resources on the energy conservation and environmental protection solutions business. In particular, the Group will be committed to technological innovation and research and development, responding to the market environment more quickly, building brand awareness and market influence, and enhancing the core competitiveness of its energy conservation and environmental protection solutions business.

We noted from the 2020 Annual Report that the Group’s revenue from environmental protection and energy conservation solutions amounted to approximately RMB6.40 billion (representing approximately 54.73% of the Group’s total revenue) for FY2019 and approximately RMB9.35 billion (representing approximately 59.81% of the Group’s total revenue) for FY2020. The Group’s energy conservation and environmental protection businesses are the major revenue contributors of the Group.

With reference to the Board Letter, the net proceeds from the Disposal is approximately RMB403,082,000 (after deducting the related expenses in relation to the Disposal). The entire net proceeds from the Disposal will be used for repayment of bank loans of the Company.

– 26 – LETTER FROM GRAM CAPITAL

With reference to the 2020 Annual Report, the Group’s (i) short-term interest bearing bank loans amounted to approximately RMB5,106 million as at 31 December 2020; (ii) long-term interest bearing bank loans amounted to approximately RMB866 million as at 31 December 2020; and (iii) the effective interest rate of the Group was approximately 4.85% for FY2020.

As repayment of bank loans of the Company can reduce the Company’s finance costs, we consider the use of proceeds from the Disposal to be justifiable.

Optimizing the shareholding structure and capital structure of Guodian United Power and protect the long-term interests of the Company

With reference to the Board Letter, upon Completion, China Energy will directly hold 40% equity interest in Guodian United Power and will become its largest shareholder, which will enhance the strategic importance of Guodian United Power. The abundant resources of China Energy will provide more support to Guodian United Power in terms of capital and market development, and the role of collaborative security will be given full play to.

After the Capital Injection, China Energy and Longyuan Power will increase their capital contribution in Guodian United Power by approximately RMB2.1 billion, which will help enhance the production capacity of Guodian United Power and significantly reduce its financial risks, enhance the position of Guodian United Power in the wind power equipment manufacturing industry, and improve its profitability.

Upon Completion, the Company will continue to hold 30% equity interest in Guodian United Power and remain as one of the significant shareholders of Guodian United Power. As a shareholder of Guodian United Power enables the Company will be able to enjoy the future development of Guodian United Power, and is conducive to safeguarding its long-term interests of the Company as a shareholder of Guodian United Power.

As aforementioned, the Disposal Group is principally engaged in the production and sale of wind turbines. We researched over the internet for further information on the wind power prospect in the PRC. Set out below are the proportion of different types of electricity generation in the PRC for the five years ended 31 December 2020, being the latest five full-year statistics published by the China Electricity Council (a non-profit and self-disciplinary national trade association in the PRC):

2020 2019 2018 2017 2016

Hydropower 17.8% 17.8% 17.6% 18.5% 19.5% Thermal power 67.9% 68.9% 70.4% 71.1% 71.8% Nuclear power 4.8% 4.8% 4.2% 3.8% 3.5% Wind power 6.1% 5.5% 5.2% 4.7% 4.0% Solar power 3.4% 3.1% 2.5% 1.8% 1.1%

– 27 – LETTER FROM GRAM CAPITAL

As shown in the table above, the contribution from wind power to the total electricity generation in the PRC increased from 2016 to 2020.

We also noted that the PRC government and other relevant regulatory authorities issued following regulations and policy initiatives in 2020:

• “Opinions on Promoting the Healthy Development of Non-hydro Renewable Power Generation (Draft for Comments)” jointly issued by the Ministry of Finance, the National Development and Reform Commission and the National Energy Administration (“NEA”) to promote the healthy and stable development of non-hydro renewable energy power generation;

• “Matters Relating to the Construction of Wind Power and Photovoltaic Power Generation Projects in 2020 (Draft for Comments)” and “Notice on Matters Relating to the Construction of Wind Power and Photovoltaic Power Generation Projects in 2020” issued by the NEA to actively promote the construction of grid parity projects, orderly promote the construction of projects requiring state financial subsidies, and actively support the construction of decentralized wind power projects;

• “Guiding Opinions on Energy-related Tasks in 2020” issued by the NEA to promote the development of wind power; and

• “Notice on Carrying out Special Supervision of Wind Power Development and Construction” issued by the Comprehensive Department of the NEA to fully implement the Renewable Energy Law of the PRC and wind power management policies and promote the high-quality development of the wind power industry.

Given the above, we consider that it is reasonable for the Group to retain its interest in Guodian United Power to enjoy the possible benefits arising from future development of the Disposal Group.

Having considered the above reasons for and benefits of the Disposal, we concur with the Directors that, although the Disposal is not conducted in the ordinary and usual course of business of the Group, it is in the interests of the Company and the Shareholders as a whole.

– 28 – LETTER FROM GRAM CAPITAL

Major terms of the Equity Transfer and Capital Injection Agreement

Summarised below are the major terms for the Equity Transfer and Capital Injection Agreement, details of which are set out in the Board Letter.

Date: 16 June 2021 (after trading hours)

Parties: (i) the Company

(ii) China Energy

(iii) Longyuan Power

(iv) Guodian United Power

Subject matter: The Disposal comprises the Equity Transfer and the Capital Injection which are part and parcel of each other and shall be completed simultaneously pursuant to the Capital Transfer and Equity Injection Agreement. In this respect, the Equity Transfer and the Capital Injection are regarded as inter-conditional on each other.

Accordingly, the Company conditionally agreed to dispose of approximately 15.68% equity interest in Guodian United Power to China Energy at a total consideration of RMB407,681,944. Immediately upon completion of the Equity Transfer, China Energy and Longyuan Power will make capital injection of approximately RMB1,474,662,400 and RMB631,998,172 into Guodian United Power, respectively, which will result in the further dilution of the Company’s equity interest in Guodian United Power to 30%.

– 29 – LETTER FROM GRAM CAPITAL

Consideration: The consideration of RMB407,681,944 for the Equity Transfer (the “Consideration”) and the amounts of Capital Injection were determined after arm’s length negotiations among the parties with reference to, among other things, (i) the historical financial performance of the Disposal Group for the years ended 31 December 2018, 2019 and 2020 that reflected the status of continuous loss of Disposal Group; (ii) the Appraised Value; (iii) the future development plan of the Disposal Group and its funding needs in its ordinary course of business; and (iv) the factors as set out in the section headed “Reasons for and Benefits of the Disposal”.

The amounts of the Capital Injection to be contributed by China Energy and Longyuan Power are RMB1,474,662,400 (the “Injection Amount I”) and RMB631,998,172 (the “Injection Amount II”) respectively.

The Consideration to be paid by China Energy and the amounts of the Capital Injection to be contributed by China Energy and Longyuan Power, respectively, shall be satisfied in cash by the relevant parties within 30 days after the effective date of the Equity Transfer and the Capital Injection Agreement.

The Appraised Value

To assess the fairness and reasonableness of the Consideration, the Injection Amount I and the Injection Amount II, we noted from the Valuation Report prepared by the Valuer that the Appraised Value as at 31 December 2020 was RMB2,599,200,287.

For our due diligence purpose, we reviewed and enquired into (i) the terms of engagement of the Valuer with the Company; (ii) the Valuer’s qualification in relation to the preparation of the Valuation Report; and (iii) the steps and due diligence measures taken by the Valuer for conducting the Valuation Report. From the mandate letter and other relevant information provided by the Valuer and based on our interview with them, we were satisfied with the terms of engagement of the Valuer as well as their qualification for preparation of the Valuation Report. The Valuer also confirmed that they are independent to the Group, China Energy, Longyuan Power and the Disposal Group.

– 30 – LETTER FROM GRAM CAPITAL

The Valuation Report was prepared by the Valuer by income approach and asset-based approach and concluded by the asset-based approach. As confirmed by the Valuer, the asset-based approach is a commonly adopted approach for valuation of companies. Upon our further enquiry with the Valuer, we understood that (i) the market approach was not adopted because there were few domestic and foreign company transaction cases similar to Guodian United Power, and it was difficult to find comparable transaction cases; and (ii) although the industry in which Guodian United Power is located is currently encouraged by the state, Guodian United Power is currently in the period of requiring a heavy R&D investment. Since the future income forecast period will be limited by the operation, management and financing ability of Guodian United Power, the income approach cannot well reflect the value of the enterprise. Since Guodian United Power is in the heavy asset industry consists of research and development, manufacturing, sales, operation and maintenance, in combination with the transaction background, appraisal purpose, industry characteristics and enterprise characteristics of this appraisal, through comprehensive analysis, the appraisal result of the asset-based approach is adopted as the appraisal conclusion.

As confirmed by the Directors, the Guodian United Power is in the heavy asset industry. We noted from the financial information of the Disposal Group as set out in Appendix II to the Circular that as at 31 December 2020, (i) the Disposal Group’s major assets include property, plant and equipment, other non-current assets, inventories, receivables and cash at bank and in hand; and (ii) the Disposal Group’s major liabilities include borrowings, payables, contract liabilities and other non-current liabilities. We do not doubt the reasonableness of the adoption of asset-based approach for the purpose of the Valuation Report.

We noticed that the appraised value of the total shareholders’ equity of Guodian United Power as at 31 December 2020 under the income approach in the Valuation Report (the “Income Approach Results”) represents a discount of approximately 5.89% to the Appraised Value. Given (i) that the Valuer prepared the Valuation Report by way of two approaches (i.e. the asset-based approach and income approach); and (ii) the disadvantages of the income approach and the market approach as mentioned above, we did not consider other approach to assess the Appraised Value.

We further reviewed and enquired into the Valuer on the methodology adopted and the basis and assumptions adopted in the Valuation Report in order for us to understand the Valuation Report. We also discussed the key assumptions and parameters under the Valuation Report.

We noted that under the asset-based approach:

(i) The appraised value of Guodian United Power’s current assets represented a depreciation to its book value mainly due to impairment of accounts receivable and decrease in inventories value.

– 31 – LETTER FROM GRAM CAPITAL

With reference to the Valuation Report, (i) for accounts receivable, on the basis of verification, the appraisal value was determined according to the amount that may be recovered for each receivable; and (ii) for inventories, the appraisal value was determined according to the sales price minus the sales expenses, all taxes and an appropriate amount of net profit after tax.

Upon our further enquiry, we understood from the Valuer that impairment of accounts receivable was mainly due to bankruptcy of a third-party debtor (the “Debtor”) and decrease in inventories value was mainly due to decrease in market prices of products.

For our due diligence purpose, we obtained copies of relevant documents demonstrating the Debtor’s bankruptcy and its accounts receivable associated with Guodian United Power. We noted that the Debtor was declared bankruptcy and the related accounts receivable was unlikely to be recovered. Accordingly, we consider the impairment of the aforesaid accounts receivable to be reasonable.

In respect of inventories, we also obtained certain pricing records in 2020 which demonstrated that the selling prices of relevant products were lower than their respective inventory book value. Accordingly, we consider the aforesaid decrease in inventories value to be reasonable.

(ii) The appraised value of Guodian United Power’s long-term equity investment represented an appreciation over its book value mainly due to the profits generated from invested entities.

With reference to the Valuation Report, the appraisal value of the long-term equity investment was determined by multiplying the net assets of the invested entity after the overall appraisal by the shareholding ratio.

For our due diligence, we obtained and reviewed calculations of the appraisal value of invested entities. We also obtained financial information of the said invested entities for the four years ended 31 December 2020 and noted the adoption of such information under relevant appraisal. Based on the aforesaid calculations and financial information, we consider the appraisal of the long-term equity investment to be reasonable.

(iii) The appraised value of Guodian United Power’s fixed assets represented an appreciation over its book value mainly due to longer economic life periods than respective accounting depreciation periods.

With reference to the Valuation Report, according to the characteristics of various types of equipment, appraisal value types, data collection and other relevant conditions, the replacement cost method is adopted for appraisal.

– 32 – LETTER FROM GRAM CAPITAL

Upon our further enquiry, we understood from the Valuer that accounting depreciation periods of fixed assets ranged from 3 years to 10 years and economic life periods can be over 10 years.

For our due diligence, we obtained a detailed list of fixed assets and noted that fixed assets were machinery, vehicles and equipment with different economic life periods. Upon our enquiry, we understand from the Directors that the economic life periods of fixed assets are based on actual usage and operation while their accounting depreciation periods are based on other factors such as accounting standards. We consider that it is reasonable that the fixed assets have longer economic life periods than accounting depreciation periods. Accordingly, we consider the appreciation of the fixed assets over its book value to be reasonable.

(iv) The appraised value of Guodian United Power’s intangible assets represented an appreciation over its book value mainly due to the valuation of intangible assets based on profitability of patent know-how.

With reference to the Valuation Report, license fee-saving method (commission method/ sharing method) is to predict the income of using intangible assets such as patent know- how assets in the future years, discount and sum the income according to a certain sharing rate, that is, the contribution rate of the patent know-how assets and other intangible assets packages in the future annual income, to arrive at the appraisal value.

Upon our further enquiry, we understood from the Valuer that the assumptions for the above assessment included income period, contribution rate and discount rate.

For our due diligence, we obtained and reviewed the key figures and parameters adopted in arriving the appraisal value of the patent know-how. Based on the above and our understanding on the nature of the intangible assets, we consider the appraisal of the intangible assets to be reasonable.

(v) The appraised value of Guodian United Power’s non-current liabilities represented a depreciation to its book value mainly due to completion of projects with deferred income (the “Projects”). Upon our further enquiry, we understood from the Directors that the Projects were substantially completed before the valuation date.

With reference to the Valuation Report, for the appraisal of liabilities, the appraisal value based on the detailed list of various items provided by the enterprise and the actual debts that the enterprise should bear after examination and verification.

– 33 – LETTER FROM GRAM CAPITAL

For our due diligence, we obtained the list of the deferred income and noticed that such deferred income relates to government subsidies granted for conducting the Projects. Upon our enquiry, we understand from the Directors that such government subsidies are refundable to the government should the Projects fail to complete. As most of the Projects were substantially completed before the valuation date, the probability of relevant government subsidies to be refunded would be greatly reduced and we consider the depreciation of the non-current liabilities to be reasonable.

Save as and except for the above, we noted that the appraised value of other items is the same as their respective book value, under the asset-based approach.

During our discussion with the Valuer, we did not identify any major factor which caused us to doubt the fairness and reasonableness of the methodology, principal bases, assumptions and parameters adopted for the Valuation Report.

Based on the Appraised Value of RMB2,599,200,287 as at 31 December 2020 and the registered capital of Guodian United Power as at the Latest Practicable Date, the Appraised Value per RMB1 registered capital of Guodian United Power is approximately RMB1.2160. We noted that (i) the Consideration per RMB1 registered capital of Guodian United Power as at the Latest Practicable Date is approximately RMB1.2160; and (ii) each of the Injection Amount I per RMB1 contributed capital and the Injection Amount II per RMB1 contributed capital is approximately RMB1.2160, which approximate to the Appraised Value per RMB1 registered capital of Guodian United Power.

Having considered the above, we are of the view that the Consideration, the Injection Amount I and the Injection Amount II are fair and reasonable.

Other terms of the Equity Transfer and Capital Injection Agreement are set out in the Board Letter.

Taking into account the principal terms of the Disposal, we consider that the terms of the Disposal are fair and reasonable, on normal commercial terms and in the interest of the Company and the Shareholders as a whole.

Possible financial effects of the Disposal

Upon Completion, Guodian United Power will cease to be a subsidiary of the Company and its financial results will no longer be consolidated into the financial statements of the Group.

With reference to the Board Letter, the Group expects to record an unaudited investment income of approximately RMB703,259,000 from the Equity Transfer and the Capital Injection based on the consideration of the Equity Transfer and the fair value and the unaudited net asset book value of Guodian United Power as at 31 December 2020.

– 34 – LETTER FROM GRAM CAPITAL

The unaudited pro forma financial information of the Remaining Group (the “Pro Forma Financial Information”) is included in Appendix III to the Circular.

As extracted from the 2020 Annual Report, the audited consolidated total assets and total liabilities of the Group as at 31 December 2020 were approximately RMB36.78 billion and RMB28.64 billion respectively. According to the unaudited Pro Forma Financial Information, the unaudited consolidated total assets and total liabilities of the Remaining Group would be approximately RMB26.55 billion and RMB18.24 billion respectively as if the Disposal had been completed on 31 December 2020.

It should be noted that the aforementioned analyses are for illustrative purposes only and do not purport to represent how the financial position of the Group will be upon completion of the Disposal.

The Supplemental Agreement

As disclosed in the Company’s prospectus dated 9 December 2011, the Company and Guodian Group entered into the Non-competition Agreement, pursuant to which, Guodian Group undertook not to engage in the operation of and participation in any businesses that compete, or are likely to compete, with the main businesses of the Company. The Company entered into the Supplemental Agreement with China Energy on 16 June 2021, pursuant to which the definition of “main businesses” of the Company stipulated in the Non-competition Agreement will be amended to reflect the Company’s main businesses upon Completion.

Pursuant to the Non-competition Agreement, the definition of “main businesses” of the Company includes “(1) renewable energy equipment manufacturing and integrated system solution business focusing on wind turbine manufacturing and photovoltaic industry (mainly including solar cells and battery modules) (the “Renewable Energy Equipment Business”); and (2) the provision of environmental protection solutions (including desulfurization, denitrification, dust removal, water treatment, etc.) and energy conversation solutions (including plasma ignition, residual heat recovery, steam turbine flow modification and information system control, etc.) by the Company or its subsidiaries”.

– 35 – LETTER FROM GRAM CAPITAL

Save for the abovesaid amendments, other terms of the Non-competition Agreement shall remain unchanged.

In assessing the fairness and reasonableness of the terms of the Supplemental Agreement, we took into account the following factors:

(i) Upon Completion, Guodian United Power will cease to be a subsidiary of the Company and the Remaining Group will no longer be engaged in the business of research and development, production and sale of wind turbines.

(ii) The main products of two wholly-owned subsidiary of the Company within the Remaining Group, namely, China Energy I&C (principally engaged in the production and sale of variable pitch control systems for wind turbines) and Guodian Longyuan Electrical (principally engaged in the production of wind power converters) are wind turbine components, while the main business of Guodian United Power is the production of overall units of wind turbines.

There is difference among the target customers base of Guodian United Power, China Energy I&C and Guodian Longyuan Electrical and the business of Guodian United Power will not compete with China Energy I&C and Guodian Longyuan Electrical.

(iii) Upon Completion, the Remaining Group will not engage in the production and sale of overall units of wind turbines.

As mentioned above, we obtained the financial information of China Energy I&C and Guodian Longyuan Electrical for the two years ended 31 December 2020 for our due diligence purpose and noted that: (i) China Energy I&C’s revenue for FY2019 and FY2020 accounted for 5.03% and 4.25% of that of the Group; (ii) China Energy I&C’s total assets as at 31 December 2019 and 31 December 2020 accounted for 3.18% and 3.07% of that of the Group; (iii) Guodian Longyuan Electrical’s revenue for FY2019 and FY2020 accounted for 1.68% and 1.68% of that of the Group; and (iv) Guodian Longyuan Electrical’s total assets as at 31 December 2019 and 31 December 2020 accounted for 1.01% and 1.23% of that of the Group.

The aggregate revenue and assets of China Energy I&C and Guodian Longyuan Electrical are relatively small, and the business of China Energy I&C and Guodian Longyuan Electrical will therefore not be perceived as the major business of the Group as a whole.

(iv) For our due diligence purpose, we obtained the existing organisational chart of the Group which specified the business of the Group members and noticed that there is no other member of the Remaining Group engaging in the Renewable Energy Equipment Business.

– 36 – LETTER FROM GRAM CAPITAL

Given the above, we are of the view that there is neither direct nor indirect competition between the business of the Remaining Group and that of China Energy and the entering into of the Supplemental Agreement would not affect the Remaining Group’s operation.

Having also considered that:

(i) the Disposal is in the interests of the Company and the Shareholders as a whole and the terms of the Disposal are fair and reasonable according to our analysis above; and

(ii) the completion of the Equity Transfer and Capital Injection Agreement and the Supplemental Agreement are inter-conditional on each other,

we are of the view that although the entering into of the Supplemental Agreement is not conducted in the ordinary and usual course of business of the Group, it is in the interests of the Company and the Shareholders as a whole and the terms of the Supplemental Agreement are fair and reasonable.

5. RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the terms of the Transactions are on normal commercial terms and are fair and reasonable; and (ii) although the Transactions are not conducted in the ordinary and usual course of business of the Group, it is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve the Transactions and we recommend the Independent Shareholders to vote in favour of the resolutions in this regard.

Yours faithfully, For and on behalf of Gram Capital Limited Susanna Ho David Kwan Director Director

Notes:

Ms. Susanna Ho is a licensed person registered with the Securities and Futures Commission and a responsible officer of Gram Capital Limited to carry out Type 6 (advising on corporate finance) regulated activity under the SFO. She has over 15 years of experience in investment banking industry.

Mr. David Kwan is a licensed person registered with the Securities and Futures Commission and a responsible officer of Gram Capital Limited to carry out Type 6 (advising on corporate finance) regulated activity under the SFO. He has around 15 years of experience in investment banking industry.

* for identification purpose only – 37 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

1. FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for each of the three years ended 31 December 2018, 2019 and 2020 are disclosed in the annual reports of the Company for the years ended 31 December 2018 (pages 173–349), 2019 (pages 168–353) and 2020 (pages 178–353), respectively. All of which are published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.01296.hk):

(i) annual report of the Company for the year ended 31 December 2018:

https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0426/ltn201904262765.pdf

(ii) annual report of the Company for the year ended 31 December 2019:

https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0427/2020042701688.pdf

(iii) annual report of the Company for the year ended 31 December 2020:

https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0422/2021042201650.pdf

2. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

In 2020, there were many uncertainties about the changes in the COVID-19 pandemic and the external environment. The recovery of the Chinese economy was not yet on firm ground, and the world economic situation remained complex and severe with unstable and uneven recovery. The various derivative risks resulting from the impact of the epidemic cannot be ignored. The development of the energy industry is facing new trends such as the optimization of power structures with clean energy, the intellectualization of power systems and the marketization of institutional mechanisms.

Year 2021 marks the start of the 14th Five-Year Plan. It is also the year in which the Company will strive to promote market-oriented reforms and create a world-class professional technology and environmental protection company. The Group will further establish a new green low-carbon and safe and effective development layout to promote system reform, comprehensively implement safe production responsibilities and vigorously promote the standardized construction of on-site projects, build a new marketing pattern, innovate in marketing management and strengthen the cultivation of talents. The Company will, while maintaining its technical advantages in traditional business areas, actively develop new businesses during the progress of “carbon-emission peak and carbon neutrality”.

– 38 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Upon Completion, the remaining group will refocus on the energy conservation and environmental protection solutions business, thus enhancing its core competitiveness.

Energy conservation solution business:

It is a general trend for thermal power units to participate in grid peak shaving on a large scale. At the same time, in accordance with the national requirements for energy-saving transformation of thermal power units, the energy conservation transformation of thermal power units which takes both energy-saving and flexibility into consideration is imperative.

The Company will increase the application of technologies such as energy saving and consumption reduction, energy cascade utilization, expansion of heating capacity, unit flexibility transformation and comprehensive energy-saving transformation of power plants.

Environmental protection solutions business:

The state has been firmly promoting the coordinated emission reduction of nitrogen oxides and volatile organic compounds, strictly implementing ultra-low emissions in coal-fired power plants, upgrading the steel industry to achieve ultra-low emissions, and promoting environmental treatment in the cement, coking, glass and other industries.

With the help of intelligent platforms, the Company will expand the life cycle management of environmental protection facilities such as desulfurization, denitrification, catalysts, and water treatment, forming the entire industry chain capability of engineering and service. The Company will continuously expand its environmental protection solutions business in both electric power and non-electric industries.

At the same time, by adopting share incentive schemes in certain subsidiaries of the Company, the initiative and commitment of key employees will be encouraged, and efficiency of the Company will be improved.

Upon Completion, Guodian United Power, as a loss-making company, will cease to be a subsidiary of the Company and its financial results will no longer be consolidated into the financial statements of the Group. The net proceeds from the Disposal will be used for repayment of bank loans of the Company. The gearing ratio and financial expense of the Company will be reduced, and the liquidity, solvency and the ability to resist financial risks of the Company will be enhanced.

– 39 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. STATEMENT OF INDEBTEDNESS AND CONTINGENT LIABILITIES

Indebtedness

As at the close of business on 31 May 2021, being the latest practicable date for the purpose of this indebtedness statement, the Group had outstanding borrowings of approximately RMB12,428,256,000, details of which are as follows:

As at 31 May 2021 RMB’000

Bank loans – Secured/Guaranteed 13,811 – Secured/Unguaranteed 256,200 – Unsecured/Guaranteed 336,000 – Unsecured/Unguaranteed 5,241,057 Other loans – Secured/Guaranteed 56,000 – Secured/Unguaranteed 179,942 – Unsecured/Unguaranteed 1,286,480 Private placement notes – Unsecured/Guaranteed 1,023,103 – Unsecured/Unguaranteed 1,031,981 Corporate bonds – Unsecured/Guaranteed 3,003,682

12,428,256

As at 31 May 2021, the secured bank loans and other loans were secured by concession assets, trade and bills receivables, long-term service concession receivables and income stream of certain subsidiaries.

As at 31 May 2021, the guaranteed private placement notes of approximately RMB1,023,103,000 and corporate bonds of approximately RMB922,854,000 were guaranteed by China Energy, and Guodian Power provided China Energy with a counter-guarantee over its Shares. At the same time, Guoneng Longyuan Environmental Co., Ltd., a subsidiary of the Copmany, has provided a counter- guarantee of the same amount for Guodian Power in the form of a letter of counter-guarantee. Besides, the remaining guaranteed corporate bonds of approximately RMB2,080,828,000 were also guaranteed by China Energy.

– 40 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Lease liabilities

As at the close of business on 31 May 2021, being the latest practicable date for the purpose of this indebtedness statement, the Group had outstanding unsecured and unguaranteed lease liabilities of approximately RMB120,448,000 in respect of land, buildings and structures, motor vehicles and other equipment.

Contingent liabilities

As at 31 May 2021 RMB’000

Issued guarantee – Performance guarantee 1,428,770

1,428,770

Save as disclosed above and apart from normal accounts payable in the ordinary course of the business, as at the close of business on 31 May 2021, the Group did not have any outstanding mortgages, charges, debentures or other loan capital, bank overdrafts or loans or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptance or acceptance credits, guarantees or other material contingent liabilities. As at the Latest Practicable Date, the Directors are not aware of any material adverse changes in the Group’s indebtedness position and contingent liabilities since the close of business on 31 May 2021.

4. WORKING CAPITAL

The Directors, after due and careful consideration, are of the opinion that, taking into account (i) the Disposal; (ii) the present internal resources; (iii) available facilities from banks and financial institutions at present, the Group would have sufficient working capital for its present requirements for at least 12 months from the date of this circular in the absence of unforeseen circumstances.

5. MATERIAL ADVERSE CHANGE

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

– 41 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Following the Disposal, the Remaining Group will continue to carry out its existing businesses. Set out below is the management discussion and analysis on the continuing operations of the Remaining Group for each of the three financial years ended 31 December 2018, 2019 and 2020.

For the year ended 31 December 2018

Environmental protection

Revenue from the environmental protection business increased by approximately RMB591.3 million or 12.8%, from approximately RMB4,621.5 million for 2017 to approximately RMB5,212.8 million for 2018. The increase was mainly attributable to the increase in revenue from the new business, coal closure renovation and plume treatment. In particular, coal closure renovation business benefited from the opportunity of the restructuring of China Energy, and the Remaining Group targeted to track a number of projects with great potentialities to exploit and power plants with sound operation conditions within the system of China Energy, as a new business direction.

Cost for the environmental protection business increased by approximately RMB509.2 million or 14%, from approximately RMB3,625.5 million for 2017 to approximately RMB4,134.7 million for 2018, which was consistent with the increase in total revenue from such business, which was mainly attributable to the new business of the Remaining Group, coal closure renovation and plume treatment.

As a result of the foregoing factors, gross profit attributable to the environmental protection business increased by approximately RMB82.1 million or 8.2%, from approximately RMB996.0 million for 2017 to approximately RMB1,078.1 million for 2018. Gross profit margin for this business decreased from approximately 21.5% for 2017 to approximately 20.7% for 2018, which was mainly attributable to the decrease in gross profit margins for the desulphurisation, which accounted for a large proportion.

Energy conservation solutions

Revenue attributable to the energy conservation solutions business increased by approximately RMB95.6 million or 4.9%, from approximately RMB1,955.4 million for 2017 to approximately RMB2,051.0 million for 2018, which was mainly attributable to the increase in revenue from the general contracting business for construction of power stations of the Remaining Group.

Cost for the energy conservation solutions business increased by approximately RMB145.6 million or 8.9%, from approximately RMB1,632.7 million for 2017 to approximately RMB1,778.3 million for 2018, which was consistent with the increase in total revenue from such business.

– 42 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

As a result of the foregoing factors, gross profit attributable to the energy conservation solutions business decreased by approximately RMB50.0 million or 15.5%, from approximately RMB322.7 million for 2017 to approximately RMB272.7 million for 2018. Gross profit margin for this business decreased from approximately 16.5% for 2017 to approximately 13.3% for 2018, mainly attributable to the decreased gross profit margin of general contracting business for construction of power stations, which accounted for a large proportion of the revenue from such business.

Wind power products and services

Revenue attributable to the wind power products and services business increased by approximately RMB3.7 million or 0.6%, from approximately RMB652.2 million for 2017 to approximately RMB655.9 million for 2018, which was mainly attributable to the increase in sales revenue from wind turbine converters and real-time power plant information monitoring systems of such business line.

Cost attributable to the wind power products and services business increased by approximately RMB3.1 million or 0.6%, from approximately RMB517.1 million for 2017 to approximately RMB520.2 million for 2018, which was consistent with the increase in total cost of such business.

As a result of the foregoing factors, gross profit attributable to the wind power products and services business increased by approximately RMB0.6 million or 0.4%, from approximately RMB135.1 million for 2017 to approximately RMB135.7 million for 2018. The average gross profit margin of this business was basically the same as the previous year.

Other businesses

Revenue attributable to other businesses decreased by approximately RMB51.5 million or 12.8%, from approximately RMB402.4 million for 2017 to approximately RMB350.9 million for 2018, which was mainly attributable to the decrease in sales revenue from generator set automatic control systems of such business segment.

Cost for other businesses decreased by approximately RMB26.6 million or 10.6%, from approximately RMB250.8 million for 2017 to approximately RMB224.2 million for 2018, which was consistent with the decrease in total revenue from such business.

As a result of the foregoing factors, gross profit attributable to other businesses decreased by approximately RMB24.9 million or 16.4%, from approximately RMB151.6 million for 2017 to approximately RMB126.7 million for 2018. Gross profit margin for this business decreased slightly from 37.7% for 2017 to 36.1% for 2018.

– 43 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Other revenue

Other revenue from the Remaining Group’s continuing operations decreased by approximately RMB97.2 million or 29.5%, from approximately RMB329.7 million for 2017 to approximately RMB232.5 million for 2018, which was primarily due to the decrease in interest income during the year.

Other net income

Other net income from the Remaining Group’s continuing operations decreased by approximately RMB565.9 million or 96.4%, from approximately RMB587.0 million for 2017 to approximately RMB21.1 million for 2018, which was primarily due to the net gain on disposal of subsidiaries of approximately RMB463.2 million in the previous year.

Selling and distribution expenses

Selling and distribution expenses of the Remaining Group’s continuing operations decreased by approximately RMB50.2 million or 24.5%, from approximately RMB204.5 million for 2017 to approximately RMB154.3 million for 2018, which was primarily due to the decrease in bid winning service charges.

Administrative expenses

Administrative expenses of the Remaining Group’s continuing operations increased by approximately RMB41.8 million or 3.4%, from approximately RMB1,236.9 million for 2017 to approximately RMB1,278.7 million for 2018, which was mainly due to the increase in consulting and technology development fees.

Operating profit

As a result of the foregoing factors, the operating profit of the Remaining Group’s continuing operations decreased by approximately RMB646.8 million or 59.9%, from approximately RMB1,080.6 million for 2017 to approximately RMB433.8 million for 2018.

Finance costs

Finance costs of the Remaining Group’s continuing operations decreased by approximately RMB4.9 million or 1.1%, from approximately RMB426.1 million for 2017 to approximately RMB421.2 million for 2018.

– 44 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Income tax charges

In 2018, the income tax charges of the Remaining Group’s continuing operations decreased by approximately RMB132.9 million or 104.9% compared with that in 2017, which was primarily due to the decrease in current income tax charges caused by the decrease in current taxable profits.

Liquidity, financial resources and capital structure

The bank balance and cash of the Remaining Group were RMB2,883.9 million for the year ended 31 December 2018, and RMB3,408.6 million for the year ended 31 December 2017. The net cash generated from the Remaining Group’s operating activities decreased by approximately RMB1,254.8 million, from approximately RMB1,361.7 million for 2017 to approximately RMB106.9 million for 2018, which was mainly due to the decrease in the Remaining Group’s revenue during the year.

The net cash used in investing activities of the Remaining Group was approximately RMB156.8 million for 2018, as compared to the net cash generated from investing activities was approximately RMB740.6 million for 2017. The decrease of the net cash generated from investing activities was mainly attributable to the decrease in the cash received from the recovery of investment income and the disposals of interests in subsidiaries.

The net cash used in financing activities of the Remaining Group decreased by approximately RMB1,958.6 million, from approximately RMB2,440.2 million for 2017 to approximately RMB481.6 million for the year ended 31 December 2018, which was mainly attributable to the increase in the borrowings obtained by the Remaining Group.

Net current assets of the Remaining Group decreased by approximately RMB575.5 million, from approximately RMB1,372.0 million for 2017 to approximately RMB796.5 million for the year ended 31 December 2018.

As at 31 December 2018, the Remaining Group has outstanding borrowings of approximately RMB8,538.7 million. All the borrowings were denominated in Renminbi. Out of these borrowings, approximately RMB4,845.4 million would be fall due within one year and approximately RMB3,693.3 million with the final maturity date falling due more than one year. Besides, borrowings amounted to RMB7,878.9 million carried fixed interest rate of with a range from 4.35% to 6.5% per annum. Borrowings amounted to RMB659.8 million carried variable interest rate.

– 45 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Capital expenditure

The capital expenditure of the Remaining Group mainly included the purchase of property, plant, equipment and intangible assets, and the cash resources included the own funds and loans of the Remaining Group. The capital expenditure of the Remaining Group was approximately RMB294.2 million for the year ended 31 December 2018 (approximately RMB269.8 million for the year ended 31 December 2017).

Pledge of assets

For the year ended 31 December 2018, assets amounting to approximately RMB1,228.8 million (RMB1,238.2 million for the year ended 31 December 2017) of the Remaining Group were pledged to banks for getting bank loans.

Material acquisition and disposal

According to the Agreement on Purchase of Assets by Issuance of Shares and its supplementary agreements signed by the Company and Tianjin Zhonghuan Semiconductor Co., Ltd. (“Zhonghuan Semiconductor”), the Company will dispose 90% equity interest in Guodian Solar to Zhonghuan Semiconductor, and Zhonghuan Semiconductor will issue 83,983,137 ordinary shares to the Company as consideration. The disposal was approved by the China Securities Regulatory Commission on 7 May 2018. On 30 June 2018, the Company completed the transaction on disposal of 90% equity interest in Guodian Solar to Zhonghuan Semiconductor. On 16 August 2018, the non- public issued consideration shares of Zhonghuan Semiconductor were listed on the Shenzhen Stock Exchange.

Market risk

The Remaining Group is exposed to various risks associated with its business operations, including credit risk, interest rate risk, liquidity risk and exchange rate risk.

Credit risk

The Remaining Group’s credit risk is primarily attributable to cash at bank and in hand, trade and bills receivables, deposits, prepayments and other receivables and other non-current assets. The Remaining Group has an internal credit policy in place and the exposure to these credit risks are monitored on an ongoing basis.

Substantially all of the Remaining Group’s cash at bank and in hand are deposited in the stated owned/controlled PRC banking financial institutions which the Directors of the Company are of the view that the credit risk to be insignificant.

– 46 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

The Remaining Group performs credit evaluations on all of its customers, and monitors material outstanding receivables due from such customers on an ongoing basis. The Remaining Group’s credit evaluation focuses on a customer’s payment history and its ability to pay and takes into account industry and customer-specific considerations, as well as the general macroeconomic climate. The Remaining Group generally requires its customers to settle progress billings and other debts in accordance with agreed contract terms.

Interest rate risk

The Remaining Group’s interest rate risk arises primarily from long-term borrowings. Borrowings issued at variable rates expose the Remaining Group to cash flow interest rate risk.

The Remaining Group regularly reviews and monitors the mix of fixed and variable rate borrowings in order to manage its interest rate risks. During the year, however, management of the Remaining Group did not consider it is necessary to use interest rate swaps to hedge their exposure to interest rate risk.

Liquidity risk

The nature of the Remaining Group’s business gives rise to significant irregularity in its cash flow. Through regular collection of receivables and while ensuring sound operations, thereby the Remaining Group was able to significantly increase the Company’s operating cash. Meanwhile, the Remaining Group proposed to improve its financing structure and increase the proportion of long- term borrowings by issuing mid-term and long-term bonds and introducing financial leasing. The Remaining Group is committed to ensuring sufficient working capital to meet its operating needs or having access to adequate bank credit to maintain uninterrupted operations. The Remaining Group’s cash flow position is essential for its continuous development and expansion.

Exchange rate risk

The continued development and expansion of the Remaining Group’s international operations is expected to result in increased exposure to exchange rate risk, arising primarily through export sales which would typically be denominated in foreign currencies. The Remaining Group expects that its future export sales will principally be denominated in either United States dollars or Hong Kong dollars. In 2018, the Remaining Group recorded an exchange gain of RMB6.9 million, mainly because the Hong Kong dollars deposits of the Company and other receivables due from Guodian Technology & Environment Group Hong Kong Corporation Limited, a subsidiary, were priced in Hong Kong dollars and there was an appreciation in the Hong Kong dollar. The Directors of the Company consider that the Remaining Group’s exchange rate risk is insignificant. The Remaining Group does not currently hedge against its exchange rate risk.

– 47 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

RMB is not currently a freely convertible currency and the PRC government may at its discretion restrict access to foreign currency exchange for current account transactions in the future. Changes in such foreign exchange controls may adversely affect the Remaining Group’s international operations and sales, and may limit the Remaining Group’s ability to satisfy its foreign exchange denominated obligations. In addition, the Remaining Group may be restricted from paying dividends on its listed H-shares to Shareholders by any such policy changes.

Significant investment held

The Group did not have any significant investment during the year ended 31 December 2018.

Employees and remuneration policies

As at 31 December 2018, the total number of employees of the Remaining Group was 4,590.

For the year ended 31 December 2018, the staff costs of the Remaining Group was approximately RMB769.3 million.

The salary of staff is composed of basic salary, performance salary and reward salary. The performance salary is determined on the basis of company performance and performance evaluation, and reward salary is determined according to the completion of the company’s annual key work.

Future plans for material investments

For the period ended 31 December 2018, there was no plan for material investment.

Gearing ratio

The gearing ratio (calculated as the aggregate of total bank and other borrowings divided by total assets) of the Remaining Group as at 31 December 2018 was 36%.

Contingent liabilities

The Remaining Group’s contingent liabilities as at 31 December 2018 primarily consisted of bid, performance and litigation guarantee provided by the Remaining Group.

– 48 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

For the year ended 31 December 2019

Environmental protection

Revenue from the environmental protection business decreased by approximately RMB707.0 million or 13.6%, from approximately RMB5,212.8 million for 2018 to approximately RMB4,505.8 million for 2019. The decrease was mainly attributable to the strict national control over the new operation scale of coal-fired power, as well as the unchanged environmental protection policies in coal-fired power field, caused the decrease in new and renewal coal-fired power plants compared with the same period of the previous year and the corresponding decrease in EPC projects for desulphurisation and denitrification. The revenue from water treatment business increased, due to the recognition of additional production value of part of EPC projects.

Cost of sales for the environmental protection business decreased by approximately RMB570.2 million or 13.8%, from approximately RMB4,134.7 million for 2018 to approximately RMB3,564.5 million for 2019, which was consistent with the decrease in revenues from such business line.

As a result of the foregoing factors, gross profit attributable to the environmental protection business decreased by approximately RMB136.8 million or 12.7%, from approximately RMB1,078.1 million for 2018 to approximately RMB941.3 million for 2019. Average gross profit margin for this business remained relatively the same as that of the previous year.

Energy conservation solutions

Revenue attributable to the energy conservation solutions business decreased by approximately RMB129.9 million or 6.3%, from approximately RMB2,051.0 million for 2018 to approximately RMB1,921.1 million for 2019, mainly due to market downturn, leading to decrease in EPC projects in the energy conservation service business.

Cost of sales for the energy conservation solutions business decreased by approximately RMB147.5 million or 8.3%, from approximately RMB1,778.3 million for 2018 to approximately RMB1,630.8 million for 2019, which was consistent with the decrease in revenue from such business line.

As a result of the foregoing factors, gross profit attributable to the energy conservation solutions business increased by approximately RMB17.6 million or 6.5%, from approximately RMB272.7 million for 2018 to approximately RMB290.3 million for 2019. Gross profit margin for this business increased from approximately 13.3% for 2018 to approximately 15.1% for 2019, mainly attributable to the increased gross profit margin of general contracting business for construction of power stations, which accounted for a large proportion of the revenue.

– 49 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Wind power products and services

Revenue attributable to the wind power products and services business increased by approximately RMB97.5 million or 14.9%, from approximately RMB655.9 million for 2018 to approximately RMB753.4 million for 2019. The increase in the revenue was mainly attributable to the impact of “rush for installation tide”, the increase in market demand of wind turbines, and the increase in sales revenue from wind turbine variable pitch controllers, real-time power plant information monitoring system, wind turbine converters, meter reading system, high-voltage inverter and other equipment of such business segment.

Cost of sales attributable to the wind power products and services business increased by approximately RMB51.0 million or 9.8%, from approximately RMB520.2 million for 2018 to approximately RMB571.2 million for 2019, which was consistent with the increase in revenue of such business line.

As a result of the foregoing factors, gross profit attributable to the wind power products and services business increased by approximately RMB46.5 million or 34.3%, from approximately RMB135.7 million for 2018 to approximately RMB182.2 million for 2019. Gross profit margin for this business increased from 20.7% for 2018 to 24.2% for 2019, mainly due to the increase in gross profit margin of the power plant information timely monitoring system, which accounts for a large proportion of revenue.

Other businesses

Revenue attributable to other businesses increased by approximately RMB125.7 million or 35.8%, from approximately RMB350.9 million for 2018 to approximately RMB476.6 million for 2019, which was mainly attributable to the increase in sales revenue of generator set automatic control system of such business line.

Cost for other businesses increased by approximately RMB92.4 million or 41.2%, from approximately RMB224.2 million for 2018 to approximately RMB316.6 million for 2019, which was consistent with the increase in revenue of such business.

As a result of the foregoing factors, gross profit attributable to other businesses increased by approximately RMB33.3 million or 26.3%, from approximately RMB126.7 million for 2018 to approximately RMB160.0 million for 2019. Gross profit margin for such business was 33.6% for 2019, which is little changed compared to 36.1% for 2018.

– 50 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Other revenue

Other revenue of the Remaining Group’s continuing operations increased by approximately RMB41.0 million or 17.6%, from approximately RMB232.5 million for 2018 to approximately RMB273.5 million for 2019, which was primarily due to the increase in refunded taxes and fees this year.

Other net income

Other net income of the Remaining Group’s continuing operations increased by approximately RMB147.2 million or 697.6%, from approximately RMB21.1 million for 2018 to approximately RMB168.3 million for 2019, which was primarily due to the recognition of government compensation for the early termination of the service concession agreement of Taiyuan Lucency Sewage Treatment Co., Ltd., a subsidiary of the Company.

Selling and distribution expenses

Selling and distribution expenses of the Remaining Group’s continuing operations decreased by approximately RMB9.6 million or 6.2%, from approximately RMB154.3 million for 2018 to approximately RMB144.7 million for 2019, which was primarily due to the decrease in business entertainment expenses and travel expenses.

Administrative expenses

Administrative expenses of the Remaining Group’s continuing operations decreased by approximately RMB147.2 million or 11.5%, from approximately RMB1,278.7 million for 2018 to approximately RMB1,131.5 million for 2019, which was primarily due to the decrease in impairment loss for receivables and property, plant and equipment this year.

Operating profit

As a result of the foregoing factors, the operating profit of the Remaining Group’s continuing operations increased by approximately RMB305.8 million or 70.5%, from approximately RMB433.8 million for 2018 to approximately RMB739.6 million for 2019.

Finance costs

Finance costs of the Remaining Group’s continuing operations increased by approximately RMB19.0 million or 4.5%, from approximately RMB421.2 million for 2018 to approximately RMB440.2 million for 2019, which was mainly due to the increase in interest on lease liabilities.

– 51 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Income tax charges

Income tax of the Remaining Group increased by approximately RMB132.8 million or 2,141.9% in 2019 as compared to that in 2018, which was mainly due to the reversal of deferred tax assets this year. As a result of the foregoing factors, the actual tax rate of the Remaining Group’s continuing operations increased from -8.4% for 2018 to 36.7% for 2019.

Liquidity, financial resources and capital structure

The bank balance and cash of the Remaining Group were RMB2,498.2 million for the year ended 31 December 2019, and RMB2,883.9 million for the year ended 31 December 2018. The net cash generated from the Remaining Group’s operating activities increased by approximately RMB888.6 million, from approximately RMB106.9 million for 2018 to approximately RMB995.5 million for 2019, which was mainly due to the recovery of trade receivables.

The net cash used in investing activities of the Remaining Group increased by approximately RMB688.8 million, from approximately RMB156.8 million for 2018 to approximately RMB845.6 million for 2019. The increase of the net cash used in the Remaining Group’s investing activities was mainly attributable to the purchase of structural deposits by its subsidiaries.

The net cash used in financing activities of the Remaining Group increased by approximately RMB55.8 million, from approximately RMB481.6 million for 2018 to approximately RMB537.4 million for 2019, which was mainly attributable to the increase of restricted deposits for issuing the bills payable by the Remaining Group during the year.

Net current assets of the Remaining Group increased by approximately RMB1,724.1 million, from approximately RMB796.5 million for the year ended 31 December 2018 to approximately RMB2,520.6 million for the year ended 31 December 2019.

As at 31 December 2019, the Remaining Group has outstanding borrowings of approximately RMB8,759.2 million. All the borrowings were denominated in Renminbi. Out of these borrowings, approximately RMB3,358.2 million would be fall due within one year and approximately RMB5,401.0 million with the final maturity date falling due more than one year. Besides, borrowings amounted to RMB7,240.6 million carried fixed interest rate of with a range from 4.05% to 6.15% per annum. Borrowings amounted to RMB1,518.6 million carried variable interest rate.

– 52 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Capital expenditure

The capital expenditure of the Remaining Group mainly included the purchase of property, plant, equipment and intangible assets, and the cash resources included the own funds and loans of the Remaining Group. The capital expenditure of the Remaining Group was approximately RMB447.9 million for the year ended 31 December 2019 (approximately RMB294.2 million for the year ended 31 December 2018).

Pledge of assets

For the year ended 31 December 2019, assets amounting to approximately RMB913.7 million (RMB1,228.8 million for the year ended 31 December 2018) of the Remaining Group were pledged to banks for getting bank loans.

Material acquisition and disposal

For the year ended 31 December 2019, the Remaining Group did not have any material acquisition and disposal.

Market risk

The Remaining Group is exposed to various risks associated with its business operations, including credit risk, interest rate risk, liquidity risk and exchange rate risk.

Credit risk

– 53 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Interest rate risk

The Remaining Group’s interest rate risk arises primarily from long-term borrowings. Borrowings issued at variable rates expose the Remaining Group to cash flow interest rate risk. The Remaining Group regularly reviews and monitors the mix of fixed and variable rate borrowings in order to manage its interest rate risks. During the year, however, management of the Remaining Group did not consider it is necessary to use interest rate swaps to hedge their exposure to interest rate risk.

Liquidity risk

Exchange rate risk

The continuing development and expansion of the Remaining Group’s international operations is expected to result in increased exposure to exchange rate risk, arising primarily through export sales which would typically be denominated in foreign currencies. The Remaining Group expects that its future export sales will principally be denominated in either United States dollars or Hong Kong dollars. In 2019, the Remaining Group recorded an exchange gain of RMB3.2 million, mainly because the Hong Kong dollars deposits of the Company and other receivables due from CHN Energy Technology & Environment (HK) Limited, a subsidiary, were priced in Hong Kong dollars and there had been an appreciation in the Hong Kong dollars. The Directors of the Company consider that the Remaining Group’s exchange rate risk is insignificant. The Remaining Group does not currently hedge against its exchange rate risk.

RMB currently is not a freely convertible currency and the PRC government may at its discretion restrict access to foreign currency exchange for current account transactions in the future. Changes in such foreign exchange controls may adversely affect the Remaining Group’s international operations and sales, and may limit the Remaining Group’s ability to satisfy its foreign exchange denominated obligations. In addition, the Remaining Group may be restricted from paying dividends on its listed H-shares to Shareholders by any such policy changes.

– 54 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Significant investment held

The Group did not have any significant investment during the year ended 31 December 2019.

Employees and remuneration policies

As at 31 December 2019, the total number of employees of the Remaining Group was 4,544.

For the year ended 31 December 2019, the staff costs of the Remaining Group was approximately RMB951.8 million.

Future plans for material investments

For the period ended 31 December 2019, there was no plan for material investment.

Gearing ratio

The gearing ratio (calculated as the aggregate of total bank and other borrowings divided by total assets) of the Remaining Group as at 31 December 2019 was 36%.

Contingent liabilities

The Remaining Group’s contingent liabilities as at 31 December 2019 primarily consisted of bid, performance guarantee provided by the Remaining Group and Litigation contingencies.

An arbitration initiated by Lucency, a subsidiary of the Company, was duly accepted on 25 March 2020. Since the arbitration is quite complicated the management considered that the outcomes and the financial effect are not clear at present, and tentatively disclosed it as contingent liabilities.

– 55 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

For the year ended 31 December 2020

Environmental protection

Revenue from the environmental protection business increased by approximately RMB274.1 million or 6.1%, from approximately RMB4,505.8 million for 2019 to approximately RMB4,779.9 million for 2020. The increase was mainly attributable to the increase of amount and revenue of denitrification EPC projects with the orderly progress of 58 general contracting projects as scheduled as the Remaining Group had overcome the impact of the pandemic.

Cost of sales for the environmental protection business decreased by approximately RMB38.0 million or 1.1%, from approximately RMB3,564.5 million for 2019 to approximately RMB3,526.5 million for 2020. The revenue from this business line increased, but the cost decreased slightly. It was mainly due to that the subsidiaries of the Remaining Group’s environmental protection business strengthened project cost control and implemented long-term procurement, resulting in a decrease in procurement costs.

As a result of the foregoing factors, gross profit attributable to the environmental protection business increased by approximately RMB312.1 million or 33.2%, from approximately RMB941.3 million for 2019 to approximately RMB1,253.4 million for 2020. Average gross profit margin for this business increased from 20.9% in 2019 to 26.2% in 2020.

Energy conservation solutions

Revenue attributable to the energy conservation solutions business increased by approximately RMB2,759.7 million or 143.7%, from approximately RMB1,921.1 million for 2019 to approximately RMB4,680.8 million for 2020. Among them, the revenue of general contracting business line of power station construction increased significantly, which was mainly due to that the contract object amount of EPC general contracting for the wind power projects construction on progress and certain new wind power projects this year were relatively large, resulting in the increase of realized revenue recognized according to the project progress compared with the previous year.

The cost of sales of the energy conservation solutions business increased from approximately RMB1,630.8 million for 2019 to approximately RMB4,353.2 million for 2020, representing a significant increase of RMB2,722.4 million or 166.9%, which was basically consistent with the increase in revenue from this business line.

– 56 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

As a result of the foregoing factors, gross profit attributable to the energy conservation solutions business increased by approximately RMB37.3 million or 12.8%, from approximately RMB290.3 million for 2019 to approximately RMB327.6 million for 2020. However, the average gross profit margin dropped significantly from 15.1% in 2019 to 7.0% in 2020. This was mainly due to the decrease in gross profit margin of the general contracting business line of power station construction, which accounts for a relatively large proportion of revenue. On one hand, affected by the epidemic, the project construction progress was prolonged, leading to an increase in cost; on the other hand, “rush of installation tide” led to the rising price of craned, high-voltage cabinets and other equipment in wind power stations, and the correspondingly expense increase, which resulted in the decrease of gross profit margin.

Wind power products and services

Revenue attributable to the wind power products and services business increased by approximately RMB73.6 million or 9.8%, from approximately RMB753.4 million for 2019 to approximately RMB827.0 million for 2020. The increase in the revenue was mainly attributable to the continuous impact of “rush for installation tide”, the increase in market demand of wind turbines, and the increase in sales revenue from variable pitch system of wind turbine variable pitch controllers, real- time power plant information monitoring system, wind turbine converters, meter reading system, high-voltage inverter and other equipment of such business segment.

Cost attributable to the wind power products and services business increased by approximately RMB93.6 million or 16.4%, from approximately RMB571.2 million for 2019 to approximately RMB664.8 million for 2020, which was consistent with the increase in total cost of such business.

As a result of the foregoing factors, gross profit attributable to the wind power products and services business decreased by approximately RMB20.0 million or 11.0%, from approximately RMB182.2 million for 2019 to approximately RMB162.2 million for 2020. Gross profit margin for this business decreased from 24.2% for 2019 to 19.6% for 2020. The decrease in the gross profit was mainly attributable to the increase in upstream raw material in the wind power industry benefiting from the “rush of installation tide”.

Other businesses

Revenue attributable to other businesses increased by approximately RMB13.8 million or 2.9%, from approximately RMB476.6 million for 2019 to approximately RMB490.4 million for 2020, which was mainly attributable to the increase in revenue from selling electricity of such business line.

– 57 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Cost of other businesses decreased by approximately RMB40.5 million or 12.8%, from approximately RMB316.6 million for 2019 to approximately RMB276.1 million for 2020, which was primarily due to the inventory falling price reserves in 2020.

As a result of the foregoing factors, gross profit attributable to other businesses increased by approximately RMB54.3 million or 33.9%, from approximately RMB160.0 million for 2019 to approximately RMB214.3 million for 2020. Gross profit margin for this business increased from 33.6% for 2019 to 43.7% for 2020.

Other revenue

Other revenue of the Remaining Group decreased by approximately RMB49.3 million or 18.0%, from approximately RMB273.5 million for 2019 to approximately RMB224.2 million for 2020, which was primarily due to the decrease in interest income from amortization of unrecognized financing income as at year end.

Other net income

Other income of the Remaining Group for 2020 was approximately RMB41.0 million, while other income for 2019 was approximately RMB168.3 million, representing a decrease of approximately RMB127.3 million, or 75.6%, which was primarily due to the recognition of net gains of RMB141.4 million on disposal of concession assets due to the early termination of the service concession agreement of Taiyuan Lucency Sewage Treatment Co., Ltd., a subsidiary of the Remaining Group in 2019.

Other expenses

Other expenses of the Remaining Group increased by approximately RMB65.7 million or 100%, which was mainly due to the compensation accrued for arbitration for Huajian Water.

Selling and distribution expenses

Selling and distribution expenses of the Remaining Group increased by approximately RMB8.3 million or 5.7%, from approximately RMB144.7 million for 2019 to approximately RMB153.0 million for 2020, which was primarily due to the increase in bid winning service charges from newly awarded projects this year.

– 58 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Administrative expenses

Administrative expenses of the Remaining Group decreased by approximately RMB139.5 million or 12.3%, from approximately RMB1,131.5 million for 2019 to approximately RMB992.0 million for 2020, which was primarily due to the strong recovery of receivables this year and a significant decrease of impairment loss.

Operating profit

As a result of the foregoing factors, the operating profit of the Remaining Group increased by approximately RMB272.4 million or 36.8%, from approximately RMB739.6 million for 2019 to approximately RMB1,012.0 million for 2020.

Finance costs

Finance costs of the Remaining Group decreased by approximately RMB27.0 million or 6.1%, from approximately RMB440.2 million for 2019 to approximately RMB413.2 million for 2020, which was mainly due to the decrease of interest expenses of bank and other loans resulting from the drop of capital cost.

Income tax charges

In 2020, income tax of the Remaining Group increased by RMB20.7 million or 16.4% as compared to that in 2019, which was primarily due to the increase in current income tax charges caused by the increase in current taxable profits.

Liquidity, financial resources and capital structure

The bank balance and cash of the Remaining Group were RMB3,286.5 million for the year ended 31 December 2020, and RMB2,498.2 million for the year ended 31 December 2019. The net cash generated from the Remaining Group’s operating activities decreased by approximately RMB320.1 million, from approximately RMB995.5 million for 2019 to approximately RMB675.4 million for 2020, which was mainly due to the increased advance payment to suppliers of EPC projects.

The net cash generated from investing activities of the Remaining Group were approximately RMB274.3 million for 2020, as compared to the net cash used in investing activities of the Remaining Group approximately RMB845.6 million for 2019. The decrease of the net cash used in investing activities was mainly due to the withdrawal of the structural deposits purchased in the prior year.

– 59 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

The net cash used in the financing activities of the Remaining Group decreased by approximately RMB378.9 million, from approximately RMB537.4 million for 2019 to approximately RMB158.5 million for 2020, which was mainly attributable to the decrease of restricted deposits for issuing the bills payable by the Group during the year.

Net current assets of the Remaining Group decreased by approximately RMB699 million, from approximately RMB2,520.6 million for the year ended 31 December 2019 to approximately RMB1,821.6 million for the year ended 31 December 2020.

As at 31 December 2020, the Remaining Group has outstanding borrowings of approximately RMB9,205.0 million. All the borrowings were denominated in Renminbi. Out of these borrowings, approximately RMB4,984.4 million would be fall due within one year and approximately RMB4,220.6 million with the final maturity date falling due more than one year. Besides, borrowings amounted to RMB8,913.5 million carried fixed interest rate of with a range from 0.00% to 6.15% per annum. Borrowings amounted to RMB291.5 million carried variable interest rate.

Capital expenditure

The capital expenditure of the Remaining Group mainly included the purchase of property, plant, equipment and intangible assets, and the cash resources included the own funds and loans of the Remaining Group. The capital expenditure of the Remaining Group was approximately RMB257.7 million for the year ended 31 December 2020 (approximately RMB447.9 million for the year ended 31 December 2019).

Pledge of assets

For the year ended 31 December 2020, assets amounting to approximately RMB780.6 million (RMB913.7 million for the year ended 31 December 2019) of the Remaining Group were pledged to banks for getting bank loans.

Material acquisition and disposal

On 10 January 2020, the Company entered into an equity transfer agreement with Beijing Huadian Tiande Assets Operation Co., Ltd. (“Huadian Tiande”), pursuant to which, the Company agreed to acquire, and Huadian Tiande agreed to sell, the latter’s 10% equity interest in Beijing Huadian Tianren Power Controlling Technology Co., Ltd. (“Huadian Tianren”) at a consideration of RMB27,111,294 (the “Acquisition”). Upon completion of the Acquisition, Huadian Tianren (later renamed as “Guoneng I&C”) became a wholly-owned subsidiary of the Company.

– 60 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Market risk

The Remaining Group is exposed to various risks associated with its business operations, including credit risk, interest rate risk, liquidity risk and exchange rate risk.

Credit risk

Interest rate risk

Liquidity risk

The nature of the Remaining Group’s business gives rise to significant irregularity in its cash flow. Through regular collection of receivables and while ensuring sound operations, thereby the Remaining Group was able to significantly increase the Company’s operating cash. Meanwhile, the Group proposed to improve its financing structure and increase the proportion of long-term borrowings by issuing mid-term and long-term bonds and introducing financial leasing. The Remaining Group is committed to ensuring sufficient working capital to meet its operating needs or having access to adequate bank credit to maintain uninterrupted operations. The Remaining Group’s cash flow position is essential for its continuous development and expansion.

– 61 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Exchange rate risk

The continued development and expansion of the Remaining Group’s international operations is expected to result in increased exposure to exchange rate risk, arising primarily through export sales which would typically be denominated in foreign currencies. The Remaining Group expects that its future export sales will principally be denominated in either United States dollars or Hong Kong dollars. The foreign currencies assets of the Company mainly include the Hong Kong dollars deposits and other receivables priced in Hong Kong dollars due from Guodian Technology & Environment Group Hong Kong Corporation Limited, a subsidiary. As there had been an depreciation in the Hong Kong dollars against RMB in 2020, the Remaining Group recorded an exchange loss of RMB12.6 million during the year. The Directors of the Company consider that the Remaining Group’s exchange rate risk is insignificant. The Remaining Group does not currently hedge against its exchange rate risk.

Significant investment held

The Group did not have any significant investment during the year ended 31 December 2020.

Employees and remuneration policies

As at 31 December 2020, the total number of employees of the Remaining Group was 4,542.

For the year ended 31 December 2020, the staff costs of the Remaining Group was approximately RMB941.1 million.

Future plans for material investments

For the period ended 31 December 2020, there was no plan for material investment.

– 62 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Gearing ratio

The gearing ratio (calculated as the aggregate of total bank and other borrowings divided by total assets) of the Remaining Group as at 31 December 2020 was 35%.

Contingent liabilities

The Remaining Group’s contingent liabilities as at 31 December 2020 primarily consisted of bid, performance guarantee provided by the Remaining Group.

– 63 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

UNAUDITED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

Set out below are the unaudited consolidated statements of financial position of Guodian United Power Technology Co., Ltd. (the “Target Company”) and its subsidiaries (together the “Disposal Group”) as at 31 December 2018, 2019 and 2020, and the related unaudited consolidated statements of profit or loss and other comprehensive income, unaudited consolidated statements of changes in equity and unaudited consolidated cash flow statements for the years ended 31 December 2018, 2019 and 2020, and explanatory notes (collectively referred to as the “Financial Information”).

The Unaudited Financial Information has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules and the basis of preparation as set out in note 2 to the Unaudited Financial Information and is prepared by the Directors solely for the purposes of inclusion in this circular in connection with the Disposal.

Ernst & Young, Certified Public Accountants, the auditor of the Company, was engaged to review the Unaudited Financial Information set out on pages 65 to 74 of this circular in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” and with reference to Practice Note 750 “Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable the auditor to obtain assurance that the auditor would become aware of all significant matters that might be identified in an audit. Accordingly, the auditor does not express an audit opinion.

Based on the review, nothing has come to the auditor’s attention that causes them to believe that the Unaudited Financial Information is not prepared, in all material respects, in accordance with the basis of preparation set out in note 2 to the Unaudited Financial Information.

– 64 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2018, 2019 and 2020

2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited)

Revenue 3,511,759 4,458,786 6,355,072 Cost of sales (2,456,979) (3,503,012) (5,357,643)

Gross profit 1,054,780 955,774 997,429 Other revenue 99,199 49,612 91,123 Other income 18,942 7,693 7,721 Other expenses – – (45,687) Selling and distribution expenses (499,493) (1,039,908) (941,868) Administrative expenses (652,819) (378,234) (414,398)

Profit/(Loss) from operations 20,609 (405,063) (305,680) Finance costs (158,901) (152,740) (160,532)

Loss before taxation (138,292) (557,803) (466,212) Income tax 10,722 (170,973) (102,096)

Loss for the year (127,570) (728,776) (568,308)

Attributable to: Equity shareholders of the Company (124,500) (728,776) (568,308) Non-controlling interests (3,070) – –

Loss for the year (127,570) (728,776) (568,308)

Total comprehensive income for the year (127,570) (728,776) (568,308)

Attributable to: Equity shareholders of the Company (124,500) (728,776) (568,308) Non-controlling interests (3,070) – –

– 65 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2018, 2019 and 2020

2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited)

Non-current assets Property, plant and equipment 625,821 892,530 1,223,298 Investment properties 4,202 3,866 2,439 Lease prepayments 211,260 – – Intangible assets 240,079 202,559 170,670 Other non-current assets 1,904,434 1,832,107 1,792,051 Deferred tax assets 539,370 361,796 321,113

Total non-current assets 3,525,166 3,292,858 3,509,571

Current assets Inventories 2,278,515 3,593,759 4,163,331 Contract assets 571,971 1,110,159 640,500 Trade and bills receivables 4,857,386 3,046,249 2,237,808 Deposits, prepayments and other receivables 412,489 500,430 752,969 Tax recoverable 79,352 126,221 62,258 Restricted deposits 170,435 532,101 312,889 Cash at bank and in hand 552,420 647,123 1,086,585

Total current assets 8,922,568 9,556,042 9,256,340

Current liabilities Borrowings 3,190,000 2,960,000 2,416,000 Trade and bills payables 3,990,204 4,975,917 5,649,844 Other payables 206,711 162,931 168,671 Contract liabilities 780,929 1,077,001 1,278,431 Income tax payable 24,814 1,644 9 Provision for warranty 341,562 268,696 381,661

Total current liabilities 8,534,220 9,446,189 9,894,616

Net current assets/liabilities 388,348 109,853 (638,276)

Total assets less current liabilities 3,913,514 3,402,711 2,871,295

– 66 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2018, 2019 and 2020

2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited)

Non-current liabilities Borrowings – – 214,600 Deferred income 89,583 117,571 113,018 Deferred tax liabilities – – 7,250 Lease liabilities – – 3,502 Provision for warranty 282,387 261,509 154,922 Other non-current liabilities 641,916 852,779 775,459

Total non-current liabilities 1,013,886 1,231,859 1,268,751

NET ASSETS 2,899,628 2,170,852 1,602,544

CAPITAL AND RESERVES Share capital 2,137,527 2,137,527 2,137,527 Reserves 762,101 33,325 (534,983)

Total equity attributable to equity shareholders of the Company 2,899,628 2,170,852 1,602,544

TOTAL EQUITY 2,899,628 2,170,852 1,602,544

– 67 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2018, 2019 and 2020

Attributable to equity shareholders of the Company Share Capital PRC statutory Retained Non-controlling Total capital reserve reserve profits Sub-total interests equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Balance at 31 December 2017 2,137,527 18,105 154,447 813,308 3,123,387 25,548 3,148,935

Impact on initial application of IFRS 9 – – – (74,259) (74,259) – (74,259)

Balance at 1 January 2018 2,137,527 18,105 154,447 739,049 3,049,128 25,548 3,074,676

Changes in equity for 2018: Loss for the year – – – (124,500) (124,500) (3,070) (127,570)

Total comprehensive income – – – (124,500) (124,500) (3,070) (127,570)

Disposal of subsidiaries – – – (25,000) (25,000) (22,478) (47,478)

Balance at 31 December 2018 2,137,527 18,105 154,447 589,549 2,899,628 – 2,899,628

– 68 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2018, 2019 and 2020

Attributable to equity shareholders of the Company Retained profits/ Share Capital PRC statutory (Accumulated Non-controlling Total capital reserve reserve losses) Sub-total interests equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Balance at 1 January 2019 and 31 December 2018 2,137,527 18,105 154,447 589,549 2,899,628 – 2,899,628

Changes in equity for 2019: Loss for the year – – – (728,776) (728,776) – (728,776)

Total comprehensive income – – – (728,776) (728,776) – (728,776)

Balance at 31 December 2019 and 1 January 2020 2,137,527 18,105 154,447 (139,227) 2,170,852 – 2,170,852

Changes in equity for 2020: Loss for the year – – – (568,308) (568,308) – (568,308)

Total comprehensive income – – – (568,308) (568,308) – (568,308)

Balance at 31 December 2020 2,137,527 18,105 154,447 (707,535) 1,602,544 – 1,602,544

– 69 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2018, 2019 and 2020

2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited)

Cash flows from operating activities

Loss before taxation (138,292) (557,803) (466,212)

Adjustments for: Depreciation 71,017 78,166 101,746 Amortisation 41,900 38,400 34,573 Net gains on disposals of property, plant and equipment and intangible assets (9) (194) (3) Impairment loss on trade and other receivables and contract assets 242,742 19,187 10,218 Finance costs 158,901 152,740 160,532 Interest income (5,437) (16,549) (23,116) Government grants (44,302) (8,319) (7,260) Net gain on disposal of subsidiaries (10,624) – –

Changes in working capital: Decrease/(increase) in inventories 4,920 (1,315,244) (569,572) (Increase)/decrease in contract assets (576,664) (545,546) 465,835 Decrease in trade and bills receivables 1,311,234 1,499,309 812,008 (Increase) in deposits, prepayments and other receivables (98,853) (81,402) (239,384) (Increase)/decrease in other non-current assets (293,853) 72,327 40,056 Increase in trade and bills payables 70,292 985,713 673,927 (Decrease)/increase in other payables (830,762) 219,372 (68,757) Increase in contract liabilities 780,929 296,072 201,430 (Decrease)/increase in provision for warranty (194,977) (93,744) 6,378

Cash generated from operations 488,162 742,485 1,132,399

Income tax (paid)/received (64,601) (63,437) 8,163

Net cash generated from operating activities 423,561 679,048 1,140,562

– 70 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2018, 2019 and 2020

2018 2019 2020 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited)

Cash flows from investing activities Payments for purchase of property, plant and equipment, lease prepayments and intangible assets (163,473) (134,238) (381,642) Disposals of interests in subsidiaries, net of cash disposed of – 10,010 – Government grants received 1,500 2,700 – Proceeds from disposals of property, plant and equipment and intangible assets 10 273 –

Net cash used in investing activities (161,963) (121,255) (381,642)

Cash flows from financing activities Proceeds from borrowings 4,390,000 4,280,000 3,820,600 Repayment of borrowings (4,430,000) (4,210,000) (4,150,000) Decrease in restricted deposits 399,413 750,643 526,089 Increase in restricted deposits (495,195) (1,112,309) (306,877) Dividends paid by subsidiaries to non- controlling equity owners – (17,500) – Interest paid (158,794) (153,924) (164,463) Principal portion of lease payments – – (44,807)

Net cash used in financing activities (294,576) (463,090) (319,458)

Net (decrease)/increase in cash and cash equivalents (32,978) 94,703 439,462

Cash and cash equivalents at 1 January 585,398 552,420 647,123

Cash and cash equivalents at 31 December 552,420 647,123 1,086,585

– 71 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. PRINCIPAL ACTIVITIES AND ORGANISATION

Guodian United Power Technology Corporation Limited (the “Company”) was established with limited liability in the People’s Republic of China (“PRC”) by Guodian Technology & Environment Group Corporation Limited (“Guodian Tech”)and China Longyuan Power Group Corporation Limited (“Longyuan Power”) on 13 December 1994. After several capital injections by Guodian Tech and Longyuan Power, the registered capital of the Company was RMB2,137,527,100 which was owned as to RMB1,496,269,000 by Guodian Tech and 641,258,100 by Longyuan Power for the years ended 31 December 2018, 2019 and 2020. The equity interests for each shareholder are 70% and 30% respectively.

The Company’s unified social credit code is 91110108600028779F and legal representative is Chu Jingchun. The registered address of the Company is 8th Floor, Building 1 Yard 16, W.4th Ring Middle Road, Haidian District, Beijing and the operating period is from 13 December 1994 to an indefinite period.

The Company and its subsidiaries (collectively referred to as “the Group”) are mainly engaged in the business of wind power products and services. The detailed business scope includes technology development, general construction contracting, research, development, and sales of wind turbines supporting products, mechanical and electrical equipment products, and energy-saving engineering products; technical services for the flow of steam turbines; import and export of goods and technology.

All the subsidiaries of the Group are limited liabilities companies. The particulars are set out below:

Place of Proportion of ownership interest incorporation/ Issued and registration fully paid-up Group’s Held by the Held by the Principal Name of the company and business capital effective interest Company subsidiaries activities

Guodian United Power The PRC RMB220,000,000 100% 100% – Production and sale of Technology (Baoding) wind turbines Co., Ltd. Guodian United The PRC RMB150,000,000 100% 100% – Production and sale of Power Technology wind turbines (Lianyungang) Co., Ltd.

– 72 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

Guodian United Power The PRC RMB115,000,000 100% 100% – Production and sale of Technology (Chifeng) wind turbines Co., Ltd. Guodian United Power The PRC RMB89,850,000 100% 100% – Operation of wind farm Technology (Kangbao) Co., Ltd. Beijing Guodian Sida The PRC RMB16,000,000 100% 100% – Installation and Technology Co., Ltd. maintenance of wind turbines

The directors consider that the ultimate holding company and parent of the Company is China Energy Investment Corporation Limited (“China Energy”), a company registered in the PRC and controlled by State-owned Assets Supervision and Administration Commission.

2. BASIS OF PREPARATION

The consolidated statement of financial position of the Group as of 31 December 2018, 2019 and 2020, and the consolidated income statement and other comprehensive income statement, consolidated statement of changes in equity, consolidated statement of cash flow and notes as of 31 December 2018, 2019 and 2020 (the “Relevant Periods”) (collectively referred to as the “Financial Information”) are prepared by paragraph 14.68 (2)(a)(i) of Chapter 14 of the Listing Rules.

The accounting policies used in the preparation of these financial information are the same as those in the consolidated financial statements of the company’s controlling shareholder Guodian Tech and its subsidiaries (collectively referred to as “Guodian Tech Group”) during the Relevant Periods. The consolidated financial statements of Guodian Tech Group are prepared in accordance with the International Financial Reporting Standards issued by the International Accounting Standards Board.

– 73 – APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

Notwithstanding the Group’s incurred the net loss of approximately RMB568,308,000 for the year ended 31 December 2020 and the current liabilities exceeded current assets of approximately RMB638,276,000 as at 31 December 2020, the Financial Information has also been prepared on a going concern basis because the Group has unutilized banking facilities of approximately RMB4,595,217,000 to meet its future capital needs and other financial obligations when they fall due, of which approximately RMB3,983,217,000 will be renewed within next 12 months. The directors believe that the Group will have the necessary fund to meet its working capital and capital expenditure needs. Therefore, the directors of the Company consider it is appropriate to prepare the Financial Information on a going concern basis.

– 74 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(A) UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

1. Introduction

The following is a summary of the illustrative unaudited pro forma consolidated statement of financial position as at 31 December 2020, unaudited pro forma consolidated statement of profit or loss, unaudited pro forma consolidated statement of profit or loss and other comprehensive income, and unaudited pro forma consolidated statement of cash flows for the year ended 31 December 2020 and related notes of the Group excluding the Disposal Group upon the completion of the Disposal (hereinafter referred to as the “Remaining Group”) (the “Unaudited Pro Forma Financial Information”) which has been prepared on the basis of the notes set out below for the purpose of illustrating the effect of the Disposal (i) as if the Disposal had been completed on 31 December 2020 for the unaudited pro forma consolidated statement of financial position; and (ii) as if the Disposal had been completed on 1 January 2020 for the unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and the unaudited pro forma consolidated statement of cash flows for the year ended 31 December 2020.

The unaudited pro forma consolidated statement of financial position of the Remaining Group is prepared based on the audited consolidated statement of financial position of the Group as at 31 December 2020 as extracted from the published Annual Report 2020 after making pro forma adjustments relating to the Disposal that are factually supportable and directly attributable to the Disposal as set out below.

The unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and the unaudited pro forma consolidated statement of cash flows of the Remaining Group are prepared based on the audited consolidated statement of profit or loss, the audited consolidated statement of profit or loss and other comprehensive income and the audited consolidated statement of cash flows of the Group for the year ended 31 December 2020 as extracted from the published Annual Report 2020 after making pro forma adjustments relating to the Disposal that are factually supportable and directly attributable to the Disposal as set out below.

The Unaudited Pro Forma Financial Information has been prepared by the directors of the Company in accordance with paragraph 4.29 of Listing Rules for illustrative purposes only, based on their judgments, estimations and assumptions, and because of its hypothetical nature, it may not give a true picture of the financial position of the Remaining Group as at 31 December 2020 or at any future date, or the financial performance and cash flows of the Remaining Group for the year ended 31 December 2020 or for any future period.

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

– 75 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

2. Unaudited Pro Forma Consolidated Statement of Financial Position of the Group as at 31 December 2020

Unaudited pro forma of the Remaining Group after the completion The Group Pro Forma adjustments of the Disposal RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1) (Note 2) (Note 3) (Note 4)

Non-current assets Property, plant and equipment 4,631,720 (1,223,298) – – 3,408,422 Investment properties 209,501 (2,439) – – 207,062 Intangible assets 824,062 (170,670) – – 653,392 Goodwill 57,591 – – – 57,591 Interests in associates 484,699 – 1,411,758 – 1,896,457 Other equity investments 2,227,673 – – – 2,227,673 Restricted deposits 11,812 – – – 11,812 Other non-current assets 4,094,876 (1,792,051) – – 2,302,825 Deferred tax assets 691,521 (321,113) – – 370,408

Total non-current assets 13,233,455 (3,509,571) 1,411,758 – 11,135,642

Current assets Inventories 4,908,220 (4,163,331) – – 744,889 Contract assets 1,979,535 (640,500) – – 1,339,035 Trade and bills receivables 8,676,786 (2,237,808) – 663,511 7,102,489 Deposits, prepayments and other receivables 2,221,853 (752,969) – 59,369 1,528,253 Tax recoverable 71,128 (62,258) – – 8,870 Restricted deposits 408,556 (312,889) – – 95,667 Cash at bank and in hand 5,283,197 (1,086,585) 403,082 – 4,599,694

Total current assets 23,549,275 (9,256,340) 403,082 722,880 15,418,897

– 76 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Unaudited pro forma of the Remaining Group after the completion The Group Pro Forma adjustments of the Disposal RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 1) (Note 2) (Note 3) (Note 4)

Current liabilities Borrowings 7,400,446 (2,416,000) – – 4,984,446 Trade and bills payables 10,715,283 (5,649,844) – 418,960 5,484,399 Other payables and accruals 1,333,670 (168,671) – 197,766 1,362,765 Contract liabilities 2,596,279 (1,278,431) – – 1,317,848 Income tax payable 44,726 (9) – – 44,717 Provision for warranty 381,661 (381,661) – – –

Total current liabilities 22,472,065 (9,894,616) – 616,726 13,194,175

Net current assets 1,077,210 638,276 403,082 106,154 2,224,722

Total assets less current liabilities 14,310,665 (2,871,295) 1,814,840 106,154 13,360,364

Non-current liabilities Borrowings 4,435,119 (214,600) – – 4,220,519 Deferred income 298,177 (113,018) – – 185,159 Deferred tax liabilities 501,984 (7,250) 44,919 – 539,653 Lease liabilities 70,846 (3,502) – – 67,344 Provision for warranty 184,726 (154,922) – – 29,804 Other non-current liabilities 675,675 (775,459) – 106,154 6,370

Total non-current liabilities 6,166,527 (1,268,751) 44,919 106,154 5,048,849

NET ASSETS 8,144,138 (1,602,544) 1,769,921 – 8,311,515

CAPITAL AND RESERVES Share capital 6,063,770 – – – 6,063,770 Reserves (486,320) (1,602,544) 2,250,684 – 161,820

Total equity attributable to equity shareholders of the Company 5,577,450 (1,602,544) 2,250,684 – 6,225,590

Non-controlling interests 2,566,688 – (480,763) – 2,085,925

TOTAL EQUITY 8,144,138 (1,602,544) 1,769,921 – 8,311,515

– 77 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

3. Unaudited Pro Forma Consolidated Statement of Profit or Loss of the Group for the year ended 31 December 2020

Unaudited proforma of the Remaining Group after the completion The Group Pro Forma adjustments of the Disposal RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 6) (Note 7) (Note 8) (Note 9)

Revenue 15,624,478 (6,355,072) – 1,508,656 10,778,062 Cost of sales 12,669,611 (5,357,643) – 1,508,656 8,820,624

Gross profit 2,954,867 (997,429) – – 1,957,438

Other revenue 315,344 (91,123) – – 224,221 Other income 22,652 (7,721) 456,621 26,049 497,601 Other expenses 111,342 (45,687) – – 65,655 Selling and distribution expenses 1,094,852 (941,868) – – 152,984 Administrative expenses 1,380,365 (414,398) 4,600 26,049 996,616

Profit from operations 706,304 305,680 452,021 – 1,464,005 Finance costs 573,700 (160,532) – – 413,168 Share of profits less losses of associates 72,331 – (294,001) – (221,670)

Profit/(loss) before taxation 204,935 466,212 158,020 – 829,167 Income tax 249,368 (102,096) 23,496 – 170,768

(Loss)/Profit for the year (44,433) 568,308 134,524 – 658,399

Attributable to: – Eq uity shareholders of the Company 57,123 568,308 (35,969) – 589,462 – Non-controlling interests (101,556) – 170,493 – 68,937

– 78 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

4. Unaudited Pro Forma Consolidated Statement of Profit or Loss and Other Comprehensive Income of the Group for the year ended 31 December 2020

Unaudited pro forma of the Remaining Group after the completion The Group Pro Forma adjustments of the Disposal RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 6) (Note 7) (Note 8) (Note 9)

(Loss)/Profit for the year (44,433) 568,308 134,524 – 658,399

Other comprehensive income for the year

Items that will not be reclassified to profit or loss: – Eq uity investments at fair value through other comprehensive income (“FVOCI”): – changes in fair value 1,000,747 – – – 1,000,747 – income tax effect (249,468) – – – (249,468)

Items that may be reclassified subsequently to profit or loss: – Ex change differences on translation of financial statements of operations outside the People’s Republic of China (the “PRC”) (1,269) – – – (1,269)

Other comprehensive income for the year, net of tax 750,010 – – – 750,010 Total comprehensive income for the year 705,577 568,308 134,524 – 1,408,409

Attributable to: Equity shareholders of the Company 807,133 568,308 (35,969) – 1,339,472 Non-controlling interests (101,556) – 170,493 – 68,937

Total comprehensive income for the year 705,577 568,308 134,524 – 1,408,409

– 79 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

5. Unaudited Pro Forma Consolidated Cash Flow Statement of the Group for the year ended 31 December 2020

Unaudited pro forma of the Remaining Group after the completion The Group Pro Forma adjustments of the Disposal RMB’000 RMB’000 RMB’000 RMB’000 (Note 6) (Note 7) (Note 8)

Cash flows from operating activities

Profit before taxation 204,935 466,212 158,020 829,167

Adjustments for: Depreciation 413,176 (101,746) – 311,430 Amortisation 79,153 (34,573) – 44,580 Net losses/(gains) on disposals of property, plant and equipment and intangible assets 7,300 3 – 7,303 (Reversal of impairment)/impairment loss on trade and other receivables and contract assets (124,466) (10,218) – (134,684) Impairment loss on property, plant and equipment and intangible assets 56,047 – – 56,047 Write-down of inventories 1,813 – – 1,813 Finance costs 573,700 (160,532) – 413,168 Interest income (97,509) 23,116 – (74,393) Government grants (31,454) 7,260 – (24,194) Dividend income from equity securities (40,699) – – (40,699) Net gain on disposal of subsidiaries (989) – (452,021) (453,010) Share of profits less losses of associates (72,331) – 294,001 221,670

Changes in working capital: Increase in inventories (762,181) 569,572 – (192,609) Decrease/(Increase) in contract assets 308,390 (465,835) – (157,445) Decrease in trade and bills receivables 1,313,920 (812,008) – 501,912 Increase in deposits, prepayments and other receivables (657,693) 239,384 – (418,309) Increase in other non-current assets (301,243) (40,056) – (341,299) Increase in trade and bills payables 775,746 (673,927) – 101,819 Decrease in other payables (148,931) 68,757 – (80,174) Increase in contract liabilities 421,636 (201,430) – 220,206 Decrease in provision for warranty (26,212) (6,378) – (32,590)

Cash generated from operations 1,892,108 (1,132,399) – 759,709

Income tax paid (76,104) (8,163) – (84,267)

Net cash generated from operating activities 1,816,004 (1,140,562) – 675,442

– 80 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Unaudited pro forma of the Remaining Group after the completion The Group Pro Forma adjustments of the Disposal RMB’000 RMB’000 RMB’000 RMB’000 (Note 6) (Note 7) (Note 8)

Cash flows from investing activities

Payments for purchase of property, plant and equipment, lease prepayments and intangible assets (493,522) 381,642 – (111,880) Proceeds of disposal of an associate 50,000 – – 50,000 Payments for advances to related parties (15,000) – – (15,000) Payments for advances to third parties (6,154) – – (6,154) Proceeds from repayment of advances by third parties 82,017 – – 82,017 Increase in deposits with banks (1,110,000) – – (1,110,000) Withdrawal of deposits with banks 1,241,500 – – 1,241,500 Purchase of a shareholding in an associate (7,800) – – (7,800) Purchase of short-term investments (165,000) – – (165,000) Proceeds from short-term investment 170,000 – – 170,000 Government grants received 34,089 – – 34,089 Proceeds from disposals of property, plant and equipment and intangible assets 727 – – 727 Dividends received 96,625 – – 96,625 Interest received 12,280 – – 12,280 Net proceeds from disposal of a subsidiary – – 403,082 403,082 Proceeds from disposal of equity investments designated at FVOCI 2,874 – – 2,874

Net cash used in investing activities (107,364) 381,642 403,082 677,360

– 81 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Unaudited pro forma of the Remaining Group after the completion The Group Pro Forma adjustments of the Disposal RMB’000 RMB’000 RMB’000 RMB’000 (Note 6) (Note 7) (Note 8)

Cash flows from financing activities

Proceeds from borrowings 8,905,360 (3,820,600) – 5,084,760 Decrease in restricted deposits 675,908 (526,089) – 149,819 Increase in restricted deposits (466,134) 306,877 – (159,257) Repayment of borrowings (8,793,711) 4,150,000 – (4,643,711) Dividends paid by subsidiaries to non-controlling equity owners (132,905) – – (132,905) Payments for acquisition of a non-controlling interest in a subsidiary (27,111) – – (27,111) Interest paid (575,123) 164,463 – (410,660) Principal portion of lease payments (64,279) 44,807 – (19,472)

Net cash used in financing activities (477,995) 319,458 – (158,537)

Net increase in cash and cash equivalents 1,230,645 (439,462) 403,082 1,194,265

Cash and cash equivalents at 1 January 3,145,422 (647,123) – 2,498,299

Effect of foreign exchange rate changes (2,870) – – (2,870)

Cash and cash equivalents at 31 December 4,373,197 (1,086,585) 403,082 3,689,694

6. Notes to the Unaudited Pro Forma Financial Information of the Group

(1) The amounts are extracted from the audited consolidated statement of financial position of the Group for the year ended 31 December 2020 as set out in the published annual report of the Company for the year ended 31 December 2020.

(2) The adjustment represents the deconsolidation of the assets and liabilities of the Disposal Group as at 31 December 2020 as if the Disposal had been completed on 31 December 2020. The balance are extracted from the unaudited financial information of the Disposal Group as at 31 December 2020 as set out in Appendix II to this circular.

– 82 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(3) The adjustment represents the recognition of the cash consideration related to the Disposal, interest in an associate and the related deferred tax liabilities, and the derecognition of non-controlling interests at consolidation level upon the completion of the Disposal.

The deferred tax liabilities are calculated based on the temporary differences between the fair values and the carrying amounts of the net assets of the Disposal Group attributable to the Company and the respective applicable tax rates. The details are as follows:

RMB’000

Fair values of the net assets of the Disposal Group attributable to the Company (Note a) 1,411,758 Less: Carrying amounts of the net assets the Disposal Group attributable to the Company (Note b) 1,112,761 Total temporary differences of the assets and liabilities 298,997

The deferred tax liabilities recognized as at 31 December 2020 (Note c) 44,919

Note a

The amount represents the fair values of 30% net assets in the Disposal Group as at 31 December 2020, with reference to the valuation report prepared by an independent valuer on the fair value of the Disposal Group and the capital injection in the Disposal Group, which will be reassessed on the completion date of the Disposal.

Note b

The amount represents 30% of the net book assets of the Disposal Group as at 31 December 2020 as if the Disposal had been taken place on 31 December 2020.

Note c

The deferred tax liabilities are calculated at the tax rates that are expected to apply to the relevant period when the asset is realised or the liability is settled.

(4) The adjustment represents the uneliminated balance between the Remaining Group and the Disposal Group that was recovered due to the deconsolidation of the Disposal Group.

– 83 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(5) The pro forma gain on the Disposal as if it had been taken place on 31 December 2020 is calculated as follows:

RMB’000

Total cash consideration from equity transfer 407,682 Recognition of interest in an associate (Note a) 1,411,758 Less: De recognition of net assets of Disposal Group attributable to the Company (Note b) 1,121,781 Less: Es timated transaction cost directly in relation to the Disposal (Note c) 4,600 Add: Other reserve changes attributable to the Company of the Disposal Group before the Disposal (Note d) 5,600

Estimated gain on the Disposal before taxation 698,659

Note a

The amount represents the fair value of 30% shareholding in the Disposal Group as at 31 December 2020, with reference to the valuation report prepared by an independent valuer on the fair value of the Disposal Group and the capital injection in the Disposal Group, which will be reassessed on the completion date of the Disposal.

Note b

The amount represents 70% of the net book assets of the Disposal Group attributable to the Company before the Disposal.

Note c

The amount represents the estimated transaction costs payable amounting to RMB4,600,000, including accounting, legal, valuation and other professional service fees and related stamp duties for the Disposal.

Note d

The amount represents the accumulated other capital reserve changes except the net profit or loss of the Disposal Group as at 31 December 2020. The amount attributable to the Company will be transferred into investment income upon the completion of the Disposal.

(6) The amounts are extracted from the audited consolidated statement of profit or loss, the audited consolidated statement of profit or loss and other comprehensive income and the audited consolidated statement of cash flows of the Group for the year ended 31 December 2020, as set out in the published annual report of the Company for the year ended 31 December 2020.

– 84 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(7) The adjustment represents the deconsolidation of the financial performance and cash flows of the Disposal Group for the year ended 31 December 2020 as set out in this circular as if the Disposal had been completed on 1 January 2020. The amounts are extracted from the unaudited financial information of the Disposal Group for the year ended 31 December 2020 as set out in Appendix II to this circular.

(8) The adjustment represents the pro forma gain on the Disposal, the recognition of the share of the net loss of the Disposal Group in accordance with the equity method and the net cash flow of the Disposal as if it had been taken place on 1 January 2020. The details are as follows:

(i) The pro forma gain on the Disposal as if it had been taken place on 1 January 2020 is calculated as follows:

RMB’000

Total cash consideration from equity transfer 407,682 Recognition of interest in an associate (Note a) 1,562,936 Less: De recognition of net assets of Disposal Group attributable to the Company (Note b) 1,519,597 Less: Es timated transaction cost directly in relation to the Disposal (Note c) 4,600 Add: Ot her reserve changes attributable to the Company of the Disposal Group before the Disposal (Note d) 5,600

Estimated gain on the Disposal before taxation 452,021

Note a

The amount represents the fair value of 30% shareholding in the Disposal Group as at 1 January 2020, which will be reassessed on the completion date of the Disposal.

Note b

The amount represents 70% of the net book assets of the Disposal Group attributable to the Company before the Disposal.

Note c

– 85 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Note d

The amount represents the accumulated other capital reserve changes except the net profit or loss of the Disposal Group as at 1 January 2020. The amount attributable to the Company will be transferred into investment income upon the completion of the Disposal.

(ii) Upon the completion of the Disposal as at 1 January 2020, the Disposal Group ceases to be a subsidiary of the Company and becomes an associate. The Company recognized the share of the net loss of the Disposal Group of approximately RMB294,001,000 for the year ended 31 December 2020.

(iii) The net cash flow of the Disposal is total cash consideration from equity transfer less the estimated direct transaction costs as if the Disposal had been completed on 1 January 2020.

(9) The adjustment represents the uneliminated transaction between the Remaining Group and the Disposal Group for the year ended 31 December 2020 that was recovered due to the deconsolidation of the Disposal Group.

– 86 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(B) INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report received from the reporting accountants of the Company, Ernst & Young, Certified Public Accountants, Hong Kong, prepared for the purpose of incorporation in this circular, in respect of the unaudited pro forma financial information of the Remaining Group.

Ernst & Young 安永會計師事務所 Tel 電話: +852 2846 9888 17/F, One Taikoo Place 香港鰂魚涌英皇道979號 Fax 傳真: +852 2868 4432 979 king’s Road 太古坊一座27樓 ey.com Quarry Bay, Hong Kong

The Directors

Guodian Technology & Environment Group Corporation Limited Building 1, Yard16, W.4th Ring Middle Road, Haidian District, Beijing The People’s Republic of China

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

Dear Sirs,

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Guodian Technology & Environment Group Corporation 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 unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of financial position of the Group as at 31 December 2020, the unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and the unaudited pro forma consolidated statement of cash flows for the year ended 31 December 2020 and the related notes set out on pages 76 to 86 of the circular dated 30 June 2021 (the “Circular”) issued by the Company (the “Unaudited Pro Forma Financial Information”) in connection with the proposed very substantial disposal and connected transaction involving the Equity transfer and the Capital injection in Guodian United Power Technology Co., Ltd (the “Disposal”). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described on page 75 of the Circular.

– 87 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the Disposal on the financial position of the Group as at 31 December 2020 as if the Disposal had taken place on 31 December 2020, and the Group’s financial performance and cash flows for the year ended 31 December 2020 as if the Disposal had taken place on 1 January 2020. As part of this process, information about the Group’s financial position, financial performance and cash flows has been extracted by the Directors from the Group’s financial statements for the year ended 31 December 2020, on which an audit report has been published.

Directors’ responsibility for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline (“AG”) 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

Our independence and quality control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting accountants’ responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

– 88 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the Unaudited Pro Forma Financial Information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the Unaudited Pro Forma Financial Information.

The purpose of the Unaudited Pro Forma Financial Information included in the Circular is solely to illustrate the impact of the Disposal on unadjusted financial information of the Group as if the Disposal had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Disposal would have been as presented.

A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the Disposal, and to obtain sufficient appropriate evidence about whether:

• the related pro forma adjustments give appropriate effect to those criteria; and

• the Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the Disposal in respect of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

– 89 – APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

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 purpose of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Ernst & Young Certified Public Accountants Hong Kong 30 June 2021

– 90 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

Entrusted by the Company, Beijing Guorong Xinhua Assets Appraisal Co., Ltd. appraised the market value of the total shareholders’ equity of Guodian United Power Technology Co., Ltd. on the appraisal base date in accordance with applicable laws, administrative regulations and asset appraisal standards, the principles of independence, objectivity and impartiality, and the necessary appraisal procedures. The Asset Appraisal Report is summarized as follows:

The valuers signing the valuation report are Mr. Wang Fenggen (王豐根) and Mr. Wang Dongliang (王棟樑) of Beijing Guorong Xinhua Assets Appraisal Co., Ltd. Mr. Wang Fenggen and Mr. Wang Dongliang both have Asset Appraisal Qualification Certificates issued by China Appraisal Society. Mr. Wang Fenggen (王豐根) and Mr. Wang Dongliang (王棟樑) have been engaged in the asset appraisal industry for more than 25 years and more than 10 years, respectively, and have adequate experience in asset appraisal projects.

Appraisal purpose: the Company plans to transfer the equity of Guodian United Power and increase the capital of Guodian United Power Beijing. Therefore, Guorong Xinhua Assets Appraisal Co., Ltd. is entrusted by the Company and Guodian United Power to evaluate the value of total shareholders’ equity of Guodian United Power and provide the value reference for the transaction.

Appraisal object: the total equity value of Guodian United Power.

Appraisal scope: all assets and liabilities of Guodian United Power.

Appraisal base date: 31 December 2020.

Type of value: market value.

Appraisal approach: asset-based method and an income method.

Appraisal conclusion: The asset-based method was selected to render the appraisal conclusion. The specific conclusion and detailed assessment of appraisal are set out as follows:

As at the appraisal base date, the book value of total owners’ equity of Guodian United Power was RMB1,998,026,894 and the appraisal result of total owners’ equity was RMB2,599,200,287 with an appreciation of RMB601,173,394 and an appreciation rate of 30.09%.

As at the appraisal base date, the book value of total owners’ equity of Guodian United Power attributable to the shareholders of the parent company was RMB2,358,964,883 and the appraisal result of total owners’ equity was RMB2,599,200,287 with an appreciation of RMB240,235,404 and an appreciation rate of 10.18%.

– 91 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

This Asset Appraisal Report only provides the value reference for the transaction described in the Asset Appraisal Report. The valid period of the appraisal result is one year from the appraisal base date.

Users of this Asset Appraisal Report shall take into full consideration the assumptions, restrictive conditions and explanatory notes on special matters specified herein as well as their impacts on the appraisal conclusion.

Appraisal approach

According to the Standards for Asset Appraisal- Enterprise Value, asset appraisers should analyze the applicability of the three basic asset appraisal methods (i.e., income method, market method, and asset- based method) and properly select one or more from them in accordance with the appraisal purpose, appraisal object, value type, data collection and other relevant conditions, when carrying out the enterprise value appraisal. For those suitable for enterprise value appraisal by different evaluation methods, asset appraisal professionals shall adopt two appraisal methods for appraisal, explain the difference in the conclusion of the appraisal based on the two appraisal methods for appraisal and the reasons resulting in the difference, as well as the reasons leading to the conclusion of the appraisal.

The market approach was not considered in this appraisal, mainly because there are very few company transaction cases similar to those of the appraised unit at home and abroad, and it is difficult to obtain transaction cases. Comparable and effective market transaction reference objects cannot be obtained.

In accordance with the appraisal purpose and appraisal object, as well as the applicable conditions of the appraisal method, the asset-based method and the income method were selected for this appraisal.

The preconditions for the application of the asset-based method are: First, the assets under the appraisal are in a state of continuous use; Second, there are available historical data. This appraisal has satisfied the preconditions for applying the asset-based method.

The preconditions for the application of the income method are: First, it can provide the company’s historical operating data and profit forecast data for future years, and the profit forecast has a relatively stable relationship with its assets; Second, it can reasonably quantify the future risks of the enterprise and calculate the discount rate. This appraisal has satisfied the preconditions for applying the income method.

Although the industry of the appraised object is currently encouraged by the state, the appraised object is currently in the period of requiring a heavy R&D investment. Since the future income forecast period is limited by the operation, management and financing ability of the appraised object, the income approach cannot well reflect the value of the appraised object as an enterprise. Since the appraised object is in the heavy asset industry consists of research and development, manufacturing, sales, operation and maintenance, at the same time, in combination with the transaction background, appraisal purpose, industry characteristics and enterprise characteristics of this appraisal, through comprehensive analysis, the appraisal result of the asset-based approach is adopted as to the appraisal conclusion.

– 92 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

(I) ASSET-BASED APPROACH

1. Current assets

Current assets within the scope of appraisal mainly include monetary funds, accounts receivable, prepayments, other receivables and inventories.

(1) Monetary funds

For bank deposits and other monetary funds, the appraisal value shall be determined by verifying bank statements, bank correspondence, etc.

(2) Accounts receivable

On the basis of verification, the appraisal value shall be determined according to the amount that may be recovered for each payment. If there is good reason to believe that all of them can be recovered, the appraisal value shall be calculated according to the total amount of receivables; If part of the receivables are likely to be unrecoverable and the unrecoverable amount is difficult to be determined, the professionals of asset appraisal shall estimate this part of receivables that are likely to be unrecoverable with the aging analysis method by making use of the historical data and the on-site investigation and specifically analyzing the amount, time and reason of the arrears, recovery of the funds, as well as funds, credit, operating management status of the borrower, and then calculate the appraisal value after deducting the risk loss. If there are pieces of conclusive evidence showing that these receivables cannot be recovered, the appraisal value is zero.

(3) Advance payment

The appraisal value is determined based on the value of assets or rights of corresponding goods that can be recovered. For prepayments for which the corresponding goods and rights can be recovered, the verified book value is taken as the appraisal value. For prepayments for which there are pieces of conclusive evidence showing that neither the corresponding can be recovered nor the corresponding assets or rights can be formed, the appraisal value is zero.

(4) Inventories

The inventories included in the scope of this appraisal are inventory commodities, all of which are normally sold commodities. For products sold normally, the appraisal value shall be determined according to the sales price minus the sales expenses, all taxes and an appropriate amount of net profit after tax.

– 93 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

2. Long-term receivables

On the basis of verification, the appraisal value shall be determined according to the amount that may be recovered for each payment. If there is good reason to believe that all of them can be recovered, the appraisal value shall be calculated according to the total amount of long-term receivables; If part of the receivables are likely to be unrecoverable and the unrecoverable amount is difficult to be determined, the professionals of asset appraisal shall estimate this part of receivables that are likely to be unrecoverable with the aging analysis method by making use of the historical data and the on-site investigation and specifically analyzing the amount, time and reason of the arrears, recovery of the funds, as well as funds, credit, operating management status of the borrower, and then calculate the appraisal value after deducting the risk loss. If there is conclusive evidence showing that these receivables cannot be recovered, the appraisal value is zero.

3. Long-term equity investment

The long-term equity investment included in the scope of this appraisal has control rights, and the invested unit operates normally. Therefore, the same appraisal base date is adopted for the overall appraisal of the invested entity by the applicable appraisal approach. After analysis and selection of the appraisal conclusion, the appraisal value of the long-term equity investment is determined by multiplying the net assets of the invested entity after the overall appraisal by the shareholding ratio. The calculation formula is as follows:

Long-term investment appraisal value = net asset value of the invested entity after appraisal × shareholding ratio

4. Machinery and equipment

According to the characteristics of various types of equipment, appraisal value types, data collection and other relevant conditions, the replacement cost method is adopted for appraisal. For some transportation equipment and other equipment that has a long service life and of which the full replacement price cannot be obtained, the appraisal shall be carried out according to the second-hand market price; For scrapped equipment, the appraisal shall be based on the recoverable market price on the appraisal base date.

The calculation formula for the replacement cost approach is defined as follows:

Appraisal value = full replacement price × comprehensive newness rate

– 94 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

(1) Determination of replacement cost

1) Determination of full replacement price of machinery equipment

The full replacement price generally includes the purchase price of equipment, including tax, freight and miscellaneous expenses, installation and commissioning expenses, basic expenses, up-front and other expenses, and capital costs. At the same time, according to the provisions of “CS [2016] No.36” document, for general VAT taxpayers, the full replacement price shall be deducted from the corresponding VAT input tax for equipment that meets the VAT deduction conditions.

The total replacement price shall be calculated by the formula as follows:

Total replacement price = equipment purchase price + transportation and miscellaneous expenses + installation and commissioning expenses + foundation expense + up-front and other expenses + capital cost

① Equipment purchase price

For machinery and equipment, the purchase price is mainly determined by consulting the manufacturer with the market price on the appraisal base date or referring to the recent contract price of similar equipment on the appraisal base date; For small equipment, the purchase price is mainly determined by querying the market quotation information on the appraisal base date; For equipment without market quotation information, the price is mainly determined by referring to the purchase price of similar equipment.

② Freight and miscellaneous expenses

Freight and miscellaneous expenses refer to the transportation expenses, loading and unloading expenses and other related miscellaneous expenses during the transportation of equipment. If the supplier is responsible for the transportation of machinery and equipment (if this part of the price is included in the purchase price), the freight and miscellaneous expenses will not be calculated.

– 95 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

③ Installation and commissioning expenses

According to the Seller’s quotation conditions, if the installation expense is included in the quotation, it will not be counted; If the quotation does not include the installation expense, the actual installation and commissioning expenses shall be counted according to the budget and final accounts data, and the unreasonable expenses caused by abnormal factors shall be eliminated, and the expenses shall be reasonably determined; If there is no budget and final accounts data, the installation and commissioning expenses shall be reasonably determined according to the actual installation project expenditure of the enterprise after comprehensive calculation by referring to the installation project rate level of similar equipment for the same purpose and referring to the Manual of Common Data and Parameters for Asset Appraisal.

④ Preliminary and other expenses

According to the relevant national (industry) expense regulations and the actual situation of the construction project location on the appraisal base date, the appraised unit is regarded as an independent construction project and determined according to the investment scale of the enterprise’s fixed assets.

⑤ Foundation expense

For large-scale equipment, if the equipment foundation is independent or inseparable from the building, the equipment foundation fee shall be considered in the building assets, and the rest shall be reasonably determined after comprehensive calculation by referring to the Manual of Common Data and Parameters for Asset Appraisal.

For small and general equipment, there is no need to make a separate foundation, so the equipment foundation cost is not considered.

⑥ Capital cost

The cost of capital is calculated according to the reasonable construction period of the appraised unit and the LRP benchmark interest rate for RMB loans of financial institutions issued by the People’s Bank of China on the appraisal base date.

– 96 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

⑦ Deductible VAT input tax

According to the provisions of “CS [2019] No.39” document, the deductible VAT is calculated for equipment that meets the VAT deduction conditions. The formula is:

Deductible equipment value-added tax = equipment purchase price/1.13×13%

Therefore, the full replacement price of machinery and equipment = purchase price including tax-deductible VAT input tax

2) Determination of the full replacement price of the vehicle

For transportation equipment, the full replacement price includes the purchase price of vehicles excluding tax, vehicle purchase tax, licensing fee, etc.; At the same time, according to the documents “CS [2016] No.36”, “CS [2018] No.32” and “CS [2019] No.39”, for general VAT taxpayers, the corresponding VAT shall be deducted from the full replacement price, so the calculation formula of the full replacement price of vehicles is:

Full replacement price = vehicle purchase price + vehicle purchase tax + licensing fee-deductible VAT input tax

Where: vehicle purchase tax = vehicle purchase price/1.13× tax rate

The formula for calculating the full replacement price of the vehicle is:

Full replacement price = vehicle purchase price + vehicle purchase tax + licensing fee

For vehicles that the manufacturer no longer produces and the market has no sales of equivalent new cars, the appraiser shall determine the appraisal value according to the second-hand price; For the vehicles that have been disposed of, the appraisal value shall be determined according to the actual disposal price of the enterprise.

– 97 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

3) Determination of the full replacement price of other equipment

For other equipment, the full replacement price shall be determined based on the market purchase price. At the same time, according to the documents “CS [2016] No.36”, “CS [2018] No.32” and “CS [2019] No.39”, for general VAT taxpayers, the corresponding VAT shall be deducted from the replacement price.

(2) Determination of comprehensive newness rate

1) For special equipment and general machinery and equipment, according to the economic service life and practical serviced life of the equipment, the on- site investigation and understanding of the service status and technical status of the equipment shall be carried out to determine its serviceable life, and then its comprehensive newness rate shall be determined according to the following formula.

Comprehensive newness rate = remaining serviceable life/(serviced life + remaining serviceable life) ×100%

2) For vehicles, according to the National Regulations on Compulsory Scrapping Standards for Motor Vehicles, the serviced life newness rate and the mileage newness rate shall be determined first, and then the theoretical newness rate shall be determined according to one of the above two methods (the one according to which the calculation result is lower). Finally, it shall be adjusted in combination with the on-site investigation. The calculation formulas are as follows:

Mileage newness rate = (specified mileage – serviced mileage)/specified mileage × 100%

Service life newness rate = [economic service life – serviced life]/economic service life × 100%

Theoretical newness rate = MIN (service life newness rate, mileage method newness rate)

Comprehensive newness rate = theoretical newness rate – adjustment value

Adjustment coefficient: Judge the manufacturing quality (manufacturing coefficient), use and maintenance status (use coefficient) and on-site investigation status (individual coefficient, including various factors that affect the value learned during the on-site investigation, such as accidents), and give a comprehensive adjustment coefficient of the theoretical newness rate based on the above value influencing factors.

– 98 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

3) For other equipment, the newness rate of service life is mainly determined according to its economic service life. The calculation formulas are as follows:

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

5. Right-of-use assets

For the assets with the right to use, the appraisal value shall be determined through the verified book value obtained by consulting the relevant lease contracts, original vouchers, invoices and other data, checking the occurrence period and amortization time, considering the remaining benefit time, and checking the actual payment of the lease fee.

6. Intangible assets – other intangible assets

According to the characteristics of other intangible assets, appraisal value types, data collection and other relevant conditions, the market approach shall be adopted for appraisal. The details are as follows: For purchased software sold on the market on the appraisal base date, the market price on the appraisal base date shall be taken as the appraisal value; For purchased software that is sold on the market but the version has been upgraded on the appraisal base date, the market value on the appraisal base date from which the software upgrade fee is deducted shall be taken as the appraisal value; For customized software, the quotation to the software developer is taken as the appraisal value; For software that has been abandoned and has no use-value after verification with the enterprise, the appraisal value is zero.

7. Intangible assets – intangible assets packages such as patent know-how

For intangible asset packages such as intangible assets – patent know-how, multi-period excess income discount approach or license fee-saving approach can be applied according to the operating specifications for intangible asset appraisal, the preconditions for their use and the specific conditions of appraisal.

For intangible assets such as intangible assets – patent know-how assets, the license fee- saving approach can be used to appraise the income.

– 99 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

License fee-saving method (commission method/sharing method) is to predict the income of using intangible assets such as intangible assets – patent know-how assets in the future years, and discount and sum the income according to a certain sharing rate, that is, the contribution rate of the intangible asset – patent know-how assets and other intangible assets packages in the future annual income, to obtain the appraisal value. The basic calculation formula is as follows:

n P = kRt ∑ t t=1 (1+i)

Where,

P: Appraisal value of intangible assets packages such as intangible assets – patent know-how assets entrusted to be appraised

Rt: Intangible assets in the Tth year – the annual income of intangible assets packages such as patent and know-how assets in the current period of contracted production (commercial) products or services

t: year of calculation

k: intangible assets – the sharing rate of intangible assets such as patent know-how assets in income

i: discount rate

n: the period of benefit of intangible assets – intangible assets such as patent know-how assets

8. Long-term deferred expenses

The appraisers determine the appraisal value by inquiring about relevant contracts and other materials, as well as relevant vouchers and account books, amortization time, and considering the remaining benefit time and the rights and interests enjoyed by the enterprise after the period.

9. Deferred tax assets

The appraisers investigated and understood the causes of deferred income tax assets, consulted the relevant accounting regulations for confirming deferred income tax assets, and verified the bookkeeping vouchers for confirming deferred income tax assets on the

– 100 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

appraisal base date. For deferred income tax assets formed by accounts receivable and long- term receivables, the accrued provision for bad debts multiplied by the income tax rate is taken as the appraisal value. For deferred income tax assets formed by discounting long-term receivables and losses of available-for-sale financial assets, the audited book value is taken as the appraisal value.

10. Other non-current assets

The appraisers consulted relevant vouchers, account balance sheets and other data to determine the appraisal value through the verified book value.

11. Liabilities

Liabilities mainly include current liabilities and non-current liabilities; current liabilities include short-term loans, bills payable, accounts payable, accounts receivable in advance, salaries payable to employees, taxes payable and other payables; Non-current liabilities are deferred revenue and estimated liabilities. For the appraisal of liabilities, we determine the appraisal value based on the detailed list of various items provided by the enterprise and the actual debts that the enterprise should bear after examination and verification.

(II) INCOME METHOD

In this appraisal report, the free cash flow discount model in the discounted cash flow method is selected. At the same time, this appraisal report is based on the unified R&D, unified design, unified financing, unified sales and unified management and control of Guodian United Power, Beijing Guodian Sida Technology Co., Ltd., Guodian United Power Technology (Baoding) Co., Ltd., Guodian United Power Technology (Chifeng) Co., Ltd. and Guodian United Power Technology (Lianyungang) Co., Ltd. Moreover, the income tax rate of each subsidiary company and its headquarters (Guodian United Power) is 15%, and the subsidiary company is similar to the concept of the workshop. Therefore, the overall consolidated income approach is used to appraise the power generation enterprises of Guodian United Power Technology (Kangbao) Co., Ltd., which are not related to the business of Guodian United Power. The description of the enterprise free cash flow discount model is as follows:

Value of all shareholders’ equity = value of operating assets + value of non-operating assets and liabilities in a broad sense – interest-bearing liabilities

The basic model for this appraisal is: E=P+C-D

– 101 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

Where:

E: the value of total (net assets) of the appraisal object;

P: the value of operating asset of the appraisal object;

C: the value of non-operating assets and liabilities in a broad sense;

D: the value of interest-bearing liabilities of the appraisal object.

(1) Value of operating asset

Operating assets refer to the assets and liabilities, related to the production and operation of the appraised unit and involved in the free cash flow forecast after the appraisal base date. The formula of the value of operating asset is detailed as follows:

formula of perpetual renewal:

n F F P i n = ∑ (i-0.5) + （n-0.5） i=1 (1 + r) r*(1 + r)

Where,

P: the value of enterprise’s operating asset on the appraisal base date

Fi: expected free cash flow of the enterprise on the ith year after the appraisal base date

Fn: predicted free cash flow of the enterprise in the final year (free cash flow in the perpetual renewal year);

r: discount rate (weighted average capital cost, or the WACC for short)

n: forecast period;

i: the ith year in the forecast period.

Deadline calculation formula:

n F F P = i + n ∑ (i-0.5) n i=1 (1 + r) r*(1 + r)

– 102 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

Where,

P: the value of enterprise’s operating asset on the appraisal base date

Fi: expected free cash flow of the enterprise on the ith year after the appraisal base date

Fn: the enterprise’s recovered residual value and net realizable at the end of the forecast period;

r: discount rate (weighted average capital cost, or the WACC for short)

i: the ith year in the forecast period (discount of free cash flow in each period in the middle of the year).

n: at the end of the forecast period (the period of recovery of residual value corresponds to the calendar period).

(2) Determination of the income year

For non-wind power generation production units, the income period is determined to be indefinite. According to the Company’s operating history and the development trend of the industry etc., a two-stage model is adopted, i.e., the income, cost and profit of the enterprise are reasonably predicted according to the actual situation of the enterprise, policies, market and other factors in the 5 years after the appraisal base date, and those after the 6th year are the same as those in the 5th year.

For wind power production units, according to the operating characteristics of the appraised unit and in combination with the investment of enterprise assets, the income period shall be determined based on the economic service life of the existing wind power facilities.

(3) Correlation between the main body of income and the criteria

In this appraisal, the free cash flow of the enterprise is used as the income index of the operating assets of the appraisal object, and its basic formula is:

Free cash flow of enterprise = net operating profit after tax + depreciation and amortization – capital expenditure – change of working capital

According to the principle of consistency between the income amount and the discount rate, if the income amount of this appraisal is the free cash flow of the enterprise, the Weighted Average Cost of Capital (WACC) shall be selected as the discount rate.

– 103 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

The formula of the discount rate (weighted average capital cost) is detailed as follows:

E D WACC = K × + K × (1 − t) × e E + D d E + D

Where:

ke: cost of equity capital;

kd: cost of interest-paying debt capital;

E: market value of equity;

D: market value of interest-paying debt;

t: income tax rate.

Where: the cost of equity capital shall be calculated by using the capital asset pricing model (CAPM). The calculation formulas are as follows:

Ke = rf + MRP ×β+ rc

Where:

rf: risk-free interest rate;

ERP: market risk premium;

β: The systematic risk coefficient of equity;

rc: the specific risk adjustment coefficient of the enterprise.

– 104 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

(4) The value of non-operating assets and liabilities in a broad sense;

non-operating assets and liabilities refer to assets and liabilities that are irrelevant to the production and operation of the appraised unit and are not involved in the free cash flow forecast of the enterprise after the appraisal base date. The appraisal methods and results of non-operating assets and liabilities are consistent with those of the asset-based approach. For details, please refer to the corresponding parts of the asset-based approach.

1) Determination of excess assets value

Surplus assets refer to the excess cash required for enterprise operation on the appraisal base date, which is the difference between the monetary fund and the cash holdings necessary for daily operation as at the base date.

2) Determination of the value of unconsolidated subsidiaries

Unconsolidated subsidiaries refer to the corresponding subsidiaries that have not been appraised by the merger criteria this time. The value of the unconsolidated subsidiaries shall be reasonably analyzed and determined after comprehensive appraisal by appropriate appraisal approaches.

3) Determination of the value of non-operating assets and liabilities in a narrow sense

non-operating assets and liabilities in a narrow sense refer to assets and liabilities that are irrelevant to the production and operation of the appraised unit and are placed in operating asset class (such as working capital and effective long-term assets). The non-operating assets and liabilities shall be separately analyzed and appraised.

(5) Interest-bearing liabilities

Interest-bearing liabilities refer to the debts that the appraised unit needs to pay interest on the appraisal base date. The verified book value of interest-bearing liabilities is taken as the appraisal value.

– 105 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

Appraisal Conclusion

1. APPRAISAL RESULTS OF THE ASSET-BASED METHOD

On the appraisal base date, the book value of total assets of Guodian United Power was RMB11,555,220,412 and the appraisal value was RMB12,081,466,305 with an appreciation of RMB526,245,894 and an appreciation rate of 4.55%; The book value of total liabilities was RMB9,557,193,518 and the appraisal value was RMB9,482,266,018 with a depreciation of RMB74,927,500 and a depreciation rate was 0.78%; The book value of all the owners’ equity was RMB1,998,026,894 and the appraisal value of all the owners’ equity was RMB2,599,200,287 with an appreciation of RMB601,173,394 and an appreciation rate of 30.09%.

On the appraisal base date, the consolidated book value of all the owners’ equity of Guodian United Power attributable to the shareholders of the parent company was RMB2,358,964,883 and the appraisal value of all shareholders’ equity was RMB2,599,200,287 with an appreciation of RMB240,235,404 and an appreciation rate of 10.18%. For the details of appraisal results based on the asset-based method, please see the summary as follows:

Summary Statement of Assets Appraisal Results

Appraisal base date: 31 December 2020

Appraised object: Guodian United Power Technology Co., Ltd. Amount unit: RMB’0000

Increase or Appraisal decrease in Item Book value value value Change rate %

A B C=B-A D=C/A×100% 1 Current assets 754,565.41 749,093.47 -5,471.94 -0.73 2 Non-current assets 400,956.63 459,053.16 58,096.53 14.49 3 Including: fi nancial assets – – – – available for sale 4 Held-to-maturity – – – – investment 5 Long-term accounts 297,323.23 297,323.23 – – receivable 6 Long-term equity 63,092.03 102,279.40 39,187.37 62.11 investment

– 106 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

Increase or Appraisal decrease in Item Book value value value Change rate %

A B C=B-A D=C/A×100% 7 Investment – – – – properties 8 Fixed assets 2,780.90 3,489.03 708.13 25.46 9 Construction in – – – – progress 10 Project material – – – – 11 Fixed assets – – – – pending for disposal 12 Biological assets – – – – for production 13 Oil and gas assets – – – – 14 Right-of-use assets 1,435.69 1,435.69 – – 15 Intangible assets 12,691.54 30,892.57 18,201.03 143.41 16 Expenditure on – – – – development 17 Goodwill – – – – 18 Long-term deferred 10.33 10.33 – – expenses 19 Deferred tax assets 15,667.16 15,667.16 – – 20 Other non-current 7,955.75 7,955.75 – – assets 21 Total assets 1,155,522.04 1,208,146.63 52,624.59 4.55 22 Current liabilities 898,707.44 898,707.44 – – 23 Non-current liabilities 57,011.92 49,519.17 -7,492.75 -13.14 24 Total liabilities 955,719.35 948,226.60 -7,492.75 -0.78 25 Net asset (owners’ equity) 199,802.69 259,920.03 60,117.34 30.09 26 The merger criteria belong 235,896.49 259,920.03 24,023.54 10.18 to the parent company (owner’s equity)

– 107 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

2. APPRAISAL RESULTS OF INCOME METHOD

On the appraisal base date, the book value of net assets of Guodian United Power was RMB1,998,026,894 and the value of the owners’ equity based on the income method appraisal was RMB2,446,000,000 with an appreciation of RMB447,973,106 and an appreciation rate of 22.42%.

On the appraisal base date, the consolidated book value of the net assets attributable to Guodian United Power was RMB2,358,964,883 and the total equity value of shareholders based on income method was RMB2,446,000,000 with an appreciation of RMB87,035,117 and an appreciation rate of 3.69%.

3. DETERMINATION OF APPRAISAL CONCLUSIONS

The total value of the owners’ equity after the appraisal based on the income method was RMB2,446,000,000, and the total value of the owners’ equity after the appraisal based on the asset- based approach was RMB2,599,200,287 , with a difference of RMB153,200,287 or 5.89%.

(1) The main reasons for the difference between the appraisal results of the two methods

The main reasons for the difference in the appraisal results of the two methods are as follows: The two appraisal methods consider the results in different angles. In the asset-based methods, the re-acquisition of assets is considered, which reflects the replacement value of the existing assets of the enterprise. In the income method, the future profitability of the enterprise is considered, which reflects the comprehensive profitability of various assets of the enterprise, so it is normal for the two to have certain differences.

(2) Reasons for selecting the appraisal results of the asset-based method

Although the industry of the appraised object is currently encouraged by the state, the appraised object is currently in the period of requiring a heavy R&D investment. Since the future income forecast period will be limited by the operation, management and financing ability of the appraised object, the income method cannot well reflect the value of the appraised object as an enterprise. Since the appraised object is in the heavy asset industry consists of research and development, manufacturing, sales, operation and maintenance, at the same time, in combination with the transaction background, appraisal purpose, industry characteristics and enterprise characteristics of this appraisal, through comprehensive analysis, the appraisal result of the asset-based approach is adopted as the appraisal conclusion.

Therefore, in this Asset Appraisal Report, the appraisal conclusion was made through the asset-based method, i.e., the appraisal result of the total value of shareholders’ equity of Guodian United Power was determined as RMB2,599,200,287.

– 108 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

BASIS OF VALUATION STANDARDS

(i) Basis of laws and regulations

1. Asset Valuation Law of the People’s Republic of China 《中華人民共和國資產評估法》( ) (adopted at the 21st Session of the Standing Committee of the 12th National People’s Congress of the PRC on 2 July 2016);

2. The Civil Code of the PRC 《中華人民共和國民法典》( ) (adopted at the 3rd Session of the Standing Committee of the 13th National People’s Congress of the PRC on 28 May 2020);

3. The Renewable Energy Law of the PRC 《中華人民共和國可再生能源法》( ) (adopted at the 14th Session of the Standing Committee of the 12th National People’s Congress of the PRC on 2 July 2016);

4. Measures for Financial Supervision and Administration of Asset Appraisal in Industrials 《資( 產評估行業財政監督管理辦法》) (Order No.97 of Ministry of Finance of the PRC);

5. Law of the People’s Republic of China on the Administration of Urban Real Estate 《中華人( 民共和國城市房地產管理法》) (as amended at the 12th Session of the Standing Committee of the 13th National People’s Congress of the PRC on 26 August 2019);

6. Land Administration Law of the People’s Republic of China (中華人民共和國土地管理法》) (as amended at the 12th Session of the Standing Committee of the 13th National People’s Congress of the PRC on 26 August 2019);

7. 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》) (as amended at the 7th Session of the Standing Committee of the 13th National People’s Congress of the PRC on 29 December 2018);

8. Law of the People’s Republic of China on State-owned Assets of Enterprises 《中華人民共( 和國企業國有資產法》) (adopted at the 5th Session of the Standing Committee of the 11th National People’s Congress of the PRC on 28 October 2008);

9. Provisional Regulations on Supervision and Administration of State-owned Assets of Enterprises 《企業國有資產監督管理暫行條例》( ) (Order No.378 of the State Council) (Revised Edition on 2 March 2019);

10. Measures for the Administration of State-owned Assets Evaluation 《國有資產評估管理辦( 法》) (Decree No.91 of the State Council);

– 109 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

11. Notice of with respect to on Issuing the Detailed Rules for the Implementation of the Measures for the Administration of State-owned Assets Evaluation 《關於印發( <國有資產評估管理辦法施行細則>的通知》) (Guo Zi Ban Fa [1992] No.36);

12. Interim Measures for the Evaluation and Management of State-owned Assets of Enterprises 《企業國有資產評估管理暫行辦法》( ) (Decree No.12 of the State Council on State-owned Assets Supervision of Management Committee);

13. Notice of with respect to Municipality on Strengthening the Evaluation and Management of State-owned Assets of Enterprises 《關於加強企業國有資產評估管理工作有關問題的通( 知》) (SASAC Property Right [2006] No.274);

14. Notice on Matters Related to Review of State-owned Assets Appraisal Reports of with respect to Enterprises 《關於企業國有資產評估報告審核工作有關事項的通知》( ) (State- owned Assets Property Right [2009] No.941);

15. Guidelines on Filing of State-owned Assets Appraisal Projects of Enterprises 《企業國有資( 產評估項目備案工作指引》) (Guozifa Property Rights [2013] No.64);

16. Measures for the Supervision and Administration of State-owned Assets Transactions of Enterprises 《企業國有資產交易監督管理辦法》( ) (Order No.32 of the State-owned Assets Supervision and Administration Commission of the State Council, Ministry of Finance);

17. Accounting Standards for Business Enterprises-Basic Standards 《企業會計準則( ––基本準則》) (Order No.33 of Ministry of Finance) and Decision of amendments, with respect to “The Ministry of Finance on Accounting Standards for Business Enterprises-Basic Standards” 《財( 政部關於修改<企業會計準則––基本準則>的決定》) (Order No.76 of Ministry of Finance);

18. Detailed Rules for the Implementation of the Provisional Regulations of the People’s Republic of China on Value Added Tax 《中華人民共和國增值稅暫行條例實施細則》( ) (Order No.65 of Ministry of Finance and the State Administration of Tax Practice);

19. Notice of with respect to on full implementation of the value-added threshold for the reform of enterprises 《關於全面推開營業稅改征增值稅試點的通知》( ) (Caishui No. [2016] 36);

20. Notice of the Ministry of Finance and the State Administration of Taxation on adjusting the value-added tax rate 《財政部稅務總局關於調整增值稅稅率的通知》( ) (Caishui [2018] No.32);

– 110 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

21. Announcement on relevant policies for deepening the reform of value added tax 《關於深化( 增值稅改革有關政策的公告》) (Announcement No. 39 of 2019 of the General Administration of Customs of the General Administration of Tax Practice, Ministry of Finance); and

22. other laws and regulations related to asset appraisal.

(ii) Basis of standards

1. Asset Valuation Basic Standards 《資產評估基本準則》( ) (Cai Zi [2017] No. 43);

2. Asset Valuation Professional Ethical Standards 《資產評估職業道德準則》( ) (Zhong Ping Xie [2017] No. 30);

3. Asset Valuation Practicing Standards – Asset Valuation Procedure 《資產評估執業準則－資( 產評估程序》) (Zhong Ping Xie [2018] No. 36);

4. Asset Valuation Practicing Standards – Asset Valuation Report 《資產評估執業準則－資產( 評估報告》) (Zhong Ping Xie [2018] No. 35);

5. Asset Valuation Practicing Standards – Asset Valuation Engagement Contract 《資產評估執( 業準則－資產評估委託合同》) (Zhong Ping Xie [2017] No. 33);

6. Asset Valuation Practicing Standards – Asset Valuation File 《資產評估執業準則－資產評( 估檔案》) (Zhong Ping Xie [2018] No. 37);

7. Asset Valuation Practicing Standards – Enterprise Value 《資產評估執業準則－企業價值》( ) (Zhong Ping Xie [2018] No. 38);

8. Asset Valuation Practicing Standards – Asset Valuation Methods 《資產評估執業準則－資( 產評估方法》) ((Zhong Ping Xie [2019] No. 35);

9. Asset Valuation Practicing Standards – Intangible Assets 《資產評估執業準則－無形資產》( ) (Zhong Ping Xie [2017] No. 37);

10. Asset Valuation Practicing Standards – Machinery and Equipment《資產評估執業準則－機器設備》) (Zhong Ping Xie [2017] No. 39);

11. Quality Control Guidelines for Business of Asset Valuation Institutions 《資產評估機構業( 務質量控制指南》) (Zhong Ping Xie [2017] No. 46);

– 111 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

12. Guiding Opinions on Types of Value under Asset Valuation 《資產評估價值類型指導意見》( ) (Zhong Ping Xie [2017] No. 47);

13. Guiding Opinions on Legal Ownership of Subject under Valuation 《資產評估對象法律權屬( 指導意見》) (Zhong Ping Xie [2017] No. 48);

14. Asset Valuation Practicing Standards – Engagement of Experts and Use of Relevant Reports 《資產評估執業準則－利用專家工作及相關報告》( ) (Zhong Ping Xie [2017] No. 35);

15. Asset Valuation Expert Guidance No. 12 – Calculation of the Yield Rate in the Evaluation of Enterprise Value under the Income Approach 《資產評估專家指引第( 12號－收益法評估企業價值中折現率的測算》) (Zhong Ping Xie [2018] No. 38);

16. Accounting Standards for Business Enterprises – Basic Standards 《企業會計準則－基本準( 則》) ((Order No.33 of the Ministry of Finance); and

17. Guidelines on Valuation Report of State-Owned Assets of Enterprises 《企業國有資產評估( 報告指南》) (Zhong Ping Xie [2017] No. 42).

VALUATION ASSUMPTIONS

1. Basic Assumptions

(1) The open market assumption assumes that the parties to an asset trading or a proposed asset trading in the market are dealing with each other at arm’s length and have the opportunities and time to obtain sufficient market information.

(2) Assumption for trading principle assumes that all assets to be evaluated have been in the course of transaction, and the Valuer will conduct the evaluation based on simulated market conditions such as the terms of trading of the assets to be evaluated.

(3) Assumption of continuous operation assumes that the assessed entity, based on the existing assets and resources, will not stop business for various reasons in the foreseeable future, but will continue to operate legally.

2. General Assumptions

(1) It is assumed that there is no material change in the existing relevant laws, regulations, policies and the macroeconomics of the PRC and there is no material change in the political, economic and social environment of the regions in which the parties to the transaction are located.

– 112 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

(2) It is assumed that there is no material change in credit interest rate, exchange rate, tax base and rate, as well as policy-imposed levies in relation to the assessed entity subsequent to the valuation date.

(3) It is assumed that the management of the assessed entity is responsible, stable and capable of taking on its duties subsequent to the valuation date.

(4) It is assumed that all inputs for the calculation in the valuation are determined based on the current pricing system and takes no account of the effect from inflation subsequent to the valuation date.

(5) It is assumed that there is no force majeure and unforeseeable factors which may have material adverse impact on the assessed entity.

3. Special assumptions

(1) It is assumed that the accounting principles adopted subsequent to the valuation date and the accounting principles adopted for the preparation of the Valuation Report by the assessed entity should keep consistent in material aspects.

(2) It is assumed that on the basis of existing management method and management level of the assessed entity subsequent to the valuation date, while the business scope and method of operation will be consistent.

(3) It is assumed that the cash inflow of the assessed entity subsequent to the valuation date would flow in equally and the cash outflow would flow out equally.

(4) It is assumed that under the condition of legal and normal operation and compliance with relevant laws, regulations and industry standards, the business qualification possessed by the assessed entity on the valuation date can be normally applied for and extended upon expiration.

(5) On the valuation date, Guodian United Power and its subsidiaries were identified as high- tech enterprises, and obtained the preferential tax rate of 15%; The valuation assumes that there will be no significant changes in the standards and policies for the identification of high-tech enterprises, and that the assessed entity can continue to obtain the qualification of high-tech enterprises, enjoy relevant tax preferences, and pay enterprise income tax at a reduced preferential tax rate of 15%.

– 113 – APPENDIX IV VALUATION REPORT OF GUODIAN UNITED POWER

EXPLANATION TO RESTRICTIONS ON THE USE OF APPRAISAL REPORT

(1) This appraisal report can only be used for the appraisal purpose stated in the appraisal report;

(II) This appraisal report can only be used by the users of the appraisal report specified in the appraisal report;

(III) If all or part of the contents of this appraisal report is extracted, quoted or disclosed in the public media, the appraisal institution shall review the relevant contents, unless otherwise agreed by laws, regulations and relevant parties;

(IV) This appraisal report shall not be officially used before being signed by the asset appraiser, sealed by the appraisal institution and filed by the relevant state-owned asset management institution (China Energy);

(V) The appraisal conclusion revealed in this appraisal report is only valid for the economic behaviors described in the appraisal report. The validity period of the appraisal conclusion is within one year from the appraisal base date, that is, from 31 December 2020 to 30 December 2021. If the validity period exceeds one year, a re-appraisal is needed.

– 114 – APPENDIX V STATUTORY AND GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’, Supervisors’ and chief executive’s interests and short positions in the Company and its associated corporations

As at the Latest Practicable Date, other than as disclosed herein, none of the Directors, supervisors or chief executive of the Company had an interest or short position in any shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he/she was taken or deemed to have under such provisions of the SFO) or which was required, pursuant to section 352 of the SFO, to be entered in the register to therein, or pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules to be notified to the Company and the Stock Exchange.

Except for the positions held by Mr. Wang Zhongqu and Mr. Zhang Wenjian at China Energy, and Mr. Gu Yuchun at GD Power Development Co., Ltd., as at the Latest Practicable Date, none of the Directors was a director or employee of a company that had an interest or short position in the shares and underlying shares that would need to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

– 115 – APPENDIX V STATUTORY AND GENERAL INFORMATION

(b) Substantial Shareholder’s Interest and Short Positions in the Shares and Underlying Shares of the Company

As at the Latest Practicable Date, the following persons/entities (other than directors, supervisors and senior management of the Company) had interests or short positions in the Shares or underlying Shares, which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were recorded in the register required to be kept by the Company under Section 336 of the SFO (the table has been updated according to the records of CCASS and the latest information in the Company’s possession):

Number of Shares/ Percentage in Percentage Name of underlying shares the relevant class in the total Shareholders Class of Share Capacity held (shares) of share capital (1) share capital (1)

China Energy Domestic Shares Interests of beneficial 4,754,000,000(2) 100.00 78.40 owner and controlled (Long position) corporation GD Power Development Domestic Shares Interests of beneficial 2,376,500,000(2) 49.99 39.19 Co., Ltd. owner (Long position) Mr. Yan Andrew Y. H Shares Interests of controlled 288,200,000(3) 22.00 4.75 corporation (Long position) SAIF IV GP Capital Ltd. H Shares Interests of controlled 288,200,000(3) 22.00 4.75 corporation (Long position) SAIF IV GP, L.P. H Shares Interests of controlled 288,200,000(3) 22.00 4.75 corporation (Long position) SAIF Partners IV L.P. H Shares Interests of beneficial 288,200,000(3) 22.00 4.75 owner (Long position) Datang Renewables (HK) H Shares Interests of beneficial 108,050,000 8.25 1.78 Co., Ltd. owner (Long position) State Grid International H Shares Interests of beneficial 76,284,000 5.82 1.26 Development Limited owner (Long position) National Council for Social H Shares Interests of beneficial 64,836,000 4.95 1.07 Security Fund of the PRC owner (Long position)

Notes:

(1) This percentage is calculated based on the number of relevant shares/total shares issued by the Company as at the Latest Practicable Date. As at the Latest Practicable Date, the total number of shares of the Company is 6,063,770,000, of which 4,754,000,000 shares are Domestic Shares and 1,309,770,000 shares are H Shares.

(2) As at the Latest Practicable Date, China Energy owned 46.00% of the total shares of GD Power Development Co., Ltd., and GD Power Development Co., Ltd. owned 49.99% of the Company’s Domestic Shares. Hence, China Energy holds an aggregate of 4,754,000,000 Domestic Shares in the Company directly or indirectly, which represents approximately 78.40% of the Company’s total issued share capital, and is the controlling shareholder of the Company.

– 116 – APPENDIX V STATUTORY AND GENERAL INFORMATION

(3) SAIF Partners IV L.P., a Cayman limited partnership, holds 288,200,000 in the H Shares. Mr. YAN Andrew Y. holds a 100% shareholding in a Cayman corporation SAIF IV GP Capital Ltd., which acts as the general partner of SAIF IV GP, L.P., which in turn acts as the general partner of SAIF Partners IV L.P.. Mr. YAN Andrew Y. thus indirectly controls SAIF Partners IV L.P.. Mr. YAN Andrew Y. disclaims beneficial ownership of the shares held by SAIF Partners IV L.P., except to the extent of his pecuniary interests therein.

3. SERVICE CONTRACTS

Each of the executive Directors and the supervisors of the Company has entered into a service contract with the Company on 7 August 2020, and each of the non-executive Directors and the independent non-executive Directors has entered into a letter of appointment with the Company on 7 August 2020, in compliance with relevant laws and regulations, the articles of association of the Company and the relevant regulations of arbitration. Each service contract is for an initial term of three years commencing from 7 August 2020. Each letter of appointment is for a term of three years commencing from 7 August 2020, with a clause of one-year automatic renewal.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors had entered or proposed to enter into any service agreements with any member of the Group, excluding contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensation).

4. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) have been entered into by members of the Group after the date two years immediately preceding the Latest Practicable Date and are or may be material:

(a) on 19 April 2021, Beijing Lucency Enviro-Tech Co., Ltd.* (國能朗新明環保科技有限公司) (being a wholly-owned subsidiary of the Company) as transferor and Goldwind Environmental Protection Co., Ltd.* (金風環保有限公司) (being an Independent Third Party) as transferee entered into a property rights transaction agreement (產權交易合同) in relation to the disposal of 210,000,000 shares in Guodian Galaxy Water Co., Ltd.* (國電銀河水務股份有限公司) at a consideration of RMB514,983,000;

(b) on 18 March 2021, China Energy Group Xinjiang Energy Co., Ltd.* (國家能源集團新疆能源有限責任公司) (being a wholly-owned subsidiary of China Energy and a connected person of the Company), Xinjiang Derun Economic Construction Development Co., Ltd.* (新疆德潤經濟建設發展有限公司) (being an Independent Third Party), State Grid Xinjiang Electric Power Co., Ltd.* (國網新疆電力有限公司) (being an Independent Third Party), Beijing Longyuan Environmental Engineering Co., Ltd.* (北京國電龍源環保工程有限公司) (being a wholly-owned subsidiary of the Company) and TBEA Xinjiang Sunoasis Co., Ltd.* (特變電工新疆新能源股份有限公司) (being an Independent Third Party) entered into a joint

– 117 – APPENDIX V STATUTORY AND GENERAL INFORMATION

venture agreement, pursuant to which the a joint venture company will be jointly established by the parties thereto with a registered capital of RMB200,010,000. Beijing Longyuan Environmental Engineering Co., Ltd. will contribute RMB30,001,500 in cash to the joint venture company, accounting for 15% of the total registered capital of the joint venture company;

(c) on 22 January 2021, the Company entered into an equity transfer agreement with China Energy Capital Holdings Co., Ltd. (國家能源集團資本控股有限公司) (being a wholly- owned subsidiary of China Energy and a connected person of the Company) pursuant to which, the Company agreed to sell, and China Energy Capital Holdings Co., Ltd. (國家能源集團資本控股有限公司) agreed to acquire, 5% of the equity interest in Guodian Insurance Broker (Beijing) Co., Ltd. (國電保險經紀（北京）有限公司), at the consideration of RMB46,923,140.79;

(d) the Company entered into a property lease framework agreement for 2021 with Guodian New Energy Technology Research Institute Limited (“New Energy Research Institute”) (being a wholly-owned subsidiary of China Energy and a connected person of the Company) on 30 December 2020. Accordingly, the New Energy Research Institute agreed to lease certain properties to the Company and its subsidiaries for a period of one year from 1 January 2021 to 31 December 2021, with an annual cap of RMB42 million;

(e) on 29 September 2020, the Company entered into a financial services framework agreement with China Energy Finance Co., Ltd.* (國家能源集團財務有限公司) (“China Energy Finance”) (being a wholly-owned subsidiary of China Energy and a connected person of the Company), pursuant to which, China Energy Finance shall provide finance services to the Group for a term from the date of consideration and approval at the general meeting of the Company to 31 December 2022, with an annual cap of RMB45 million for each year;

(f) on 13 August 2020, Beijing Guodian Longyuan Environmental Engineering Co., Ltd. (being a subsidiary of the Company), entered into an investment agreement with Tianshenggang Power Generation Co., Ltd. (being a wholly-owned subsidiary of Longyuan Power and a connected person of the Company) and Jin Tong Ling Technology Group Co., Ltd. (being an Independent Third Party) on the establishment of a joint venture. Beijing Guodian Longyuan Environmental Engineering Co., Ltd. will contribute RMB26 million in cash to the joint venture, accounting for 26% of the total registered capital of the joint venture;

(g) the Company entered into an equity transfer agreement with Beijing Huadian Tiande Assets Operation Co., Ltd. (being a connected person of the Company at the subsidiary level) on 10 January 2020. Accordingly, the Company agreed to acquire and Beijing Huadian Tiande Assets Operation Co., Ltd. agreed to sell its 10% equity interest of Beijing Huadian Tianren Power Controlling Technology Co., Ltd. at the consideration of RMB27,111,294; and

– 118 – APPENDIX V STATUTORY AND GENERAL INFORMATION

(h) the Company entered into a property lease framework agreement for 2020 with the New Energy Research Institute (being a wholly-owned subsidiary of China Energy and a connected person of the Company) on 30 December 2019. Accordingly, the New Energy Research Institute agreed to lease certain properties to the Company and its subsidiaries for a period of one year from 1 January 2020 to 31 December 2020, with an annual cap of RMB42 million.

5. LITIGATIONS

As at the Latest Practicable Date, save as disclosed above, the Group was not engaged in any litigation or claims of material importance and there was no litigation or claims of material importance known to the Directors to be pending or threatened by or against the Group.

6. COMPETING INTERESTS

As at the Latest Practicable Date, save as disclosed below, none of the Directors and their close associates had any competing interests in any business that competed or was likely to compete, either directly or indirectly, with the business of the Group:

Name of Directors Position in the Company Other Interests

Mr. Wang Zhongqu Non-executive Director Chief Production Security Officer of China Energy

Mr. Zhang Wenjian Non-executive Director Director of the Science and Technology Department (the Office of the Science and Technology Committee and Major Special Office) of China Energy

Mr. Gu Yuchun Non-executive Director Member of the Party Committee and the vice general manager of GD Power Development Co., Ltd.

– 119 – APPENDIX V STATUTORY AND GENERAL INFORMATION

7. EXPERTS

The qualifications of the experts who have given opinions or advice in this circular are as follows:

Name Qualification

Beijing Guorong Xinghua Asset Independent Professional Valuer Appraisal Co., Ltd.* (北京國融興華資產評估有限責任公司）

Ernst & Young Certified Public Accountant

Gram Capital a licensed corporation to carry out to Type 6 (advising on corporate finance) regulated activity under the SFO

As at the date of the Latest Practicable Date, (a) the above experts did not have any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group and (b) did not have any direct or indirect interest in any assets which have been acquired, or disposed of by, or leased to any member of the Group, or were proposed to be acquired, or disposed of by, or leased to any member of the Group since 31 December 2020, being the date to which the latest published audited consolidated financial statements of the Group were made up.

Each of the above experts has given and has not withdrawn their respective written consents to the publication of this circular with the inclusion of their respective report and/or opinion and all references to their respective names in the form and context in which they are included.

8. OTHER INTEREST OF THE DIRECTORS

As at the Latest Practicable Date, save as disclosed in this circular and in the announcement regarding the Disposal:

(a) none of the Directors or supervisors of the Company have had any interest, either direct or indirect, in any assets which have, since 31 December 2020 (being the date to which the latest published audited accounts of the Group were made up), been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group; and

(b) none of the Directors or supervisors of the Company had material interests in any contract or arrangement entered into by any member of the Group which is subsisting as at the date of this circular and is significant in relation to the business of the Group.

– 120 – APPENDIX V STATUTORY AND GENERAL INFORMATION

9. GENERAL

(a) The company secretary of the Company is Mr. Lee Kwok Fai Kenneth. Mr. Lee Kwok Fai Kenneth is an associate member of Hong Kong Certified Public Accountants, a member of the American Institute of Certified Public Accountants in the United States and a Chartered Financial Analyst.

(b) The registered office of the Company is located at Suite 1101, 11/F, Building 1 Yard 16, W.4th Ring Middle Road Haidian District, Beijing, PRC.

(c) The principal place of business of the Company in Hong Kong is 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong.

(d) The H Share registrar of the Company is Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

(e) The English text of this circular shall prevail over the Chinese text for the purpose of interpretation.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection on any weekday (excluding Saturdays and public holidays) from 9:30 a.m. to 5:00 p.m. at the principal place of business of the Company in Hong Kong at 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong for a period of 14 days from the date of this circular:

1. the Equity Transfer and Capital Injection Agreement;

2. the Supplemental Agreement;

3. the letter from the Independent Board Committee, the text of which is set out in this circular;

4. the letter from Gram Capital, the text of which is set out in this circular;

5. the annual reports of the Company for the three financial years ended 31 December 2018, 2019 and 2020;

6. the report on the unaudited financial information of the Disposal Group, set out in Appendix II to this circular;

– 121 – APPENDIX V STATUTORY AND GENERAL INFORMATION

7. the report on the unaudited pro forma financial information of the Remaining Group, as set out in Appendix III to this circular;

8. the Directors’ service contracts or letters of appointment (as the case may be) with the Company referred to in the section headed “Service Contracts” in this appendix;

9. the material contracts referred to in the section headed “Material Contracts” in this appendix;

10. the written consent of the experts referred to in the paragraph headed “Experts” in this appendix;

11. the articles of association of the Company;

12. the circular of the Company dated 23 October 2020 regarding the major transaction and continuing connected transaction of the Group;

13. the circular of the Company dated 26 May 2021 regarding the major and connected transaction of the Group; and

14. this circular.

– 122 – NOTICE OF EGM

NOTICE OF THE FIRST EXTRAORDINARY GENERAL MEETING FOR THE YEAR 2021

NOTICE IS HEREBY GIVEN that the first extraordinary general meeting (the “EGM”) of Guodian Technology & Environment Group Corporation Limited (the “Company”) for the year 2021 will be held at the Conference Room, 12th Floor, Building 1, Yard 16, W. 4th Ring Middle Road, Haidian District, Beijing, the People’s Republic of China (the “PRC”) at 10:00 a.m. on Friday, 16 July 2021, for the purposes of considering and, if thought fit, passing the following resolutions with or without amendments as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. “THAT:

(a) the Equity Transfer and Capital Injection Agreement (as defined in the circular of the Company dated 30 June 2021, a copy of the Equity Transfer and Capital Injection Agreement has been produced to this meeting marked “A” and signed by the chairman of this meeting for the purpose of identification) and the transactions contemplated thereunder be and are hereby confirmed, approved and ratified; and

(b) any one of the directors for and on behalf of the Company be and is hereby authorized, among other matters, to sign, execute, perfect and deliver or to authorize signing, executing, perfecting and delivering all such documents and deeds, to do or authorize doing all such acts, matters and things as he/she may in his/her discretion consider necessary, expedient or desirable to give effect to and implement the Equity Transfer and Capital Injection Agreement and to waive compliance from or make and agree such amendments of a non- material nature to any of the terms of the Equity Transfer and Capital Injection Agreement he/she may in his/her discretion consider to be desirable and in the interests of the Company and all the directors’ acts as aforesaid.”

– EGM-1 – NOTICE OF EGM

2. ‘‘THAT

(a) the Supplemental Agreement (as defined in the circular of the Company dated 30 June 2021), a copy of the Supplemental Agreement has been produced to this meeting marked ‘‘B’’ and signed by the chairman of this meeting for the purpose of identification) and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and

(b) any one of the directors for and on behalf of the Company be and is hereby authorized, among other matters, to sign , execute, perfect and deliver or to authorize signing, executing, perfecting and delivering all such documents and deeds, to do or authorize doing all such acts, matters and things as he/she may in his/her discretion consider necessary, expedient or desirable to give effect to and implement the Supplemental Agreement and/or the transactions contemplated thereunder, and to waive compliance from or make and agree such amendments of a non-material nature to any of the terms of the Supplemental Agreement he/she may in his/her discretion consider to be desirable and in the interests of the Company and all the directors’ acts as aforesaid.”

By order of the Board Guodian Technology & Environment Group Corporation Limited* Mr. CHEN Dongqing Chairman

Beijing, PRC, 30 June 2021

* For identification purpose only

– EGM-2 – NOTICE OF EGM

Notes:

1. Important

The Company will dispatch and publish a circular containing further details relating to the resolutions in due course. The form of proxy and the reply slip for the EGM will be dispatched and published by the Company on the same date as this notice of the EGM.

2. Closure of Register of Members

The register of members of the Company will be closed from Thursday, 15 July 2021 to Friday, 16 July, 2021, both days inclusive, during which period no transfer of shares will be registered. In order to qualify to attend and vote at the EGM, all transfers accompanied by the relevant share certificates must be lodged with the H share registrar of the Company, namely Computershare Hong Kong Investor Services Limited, at Shops 1712– 1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (for holders of H shares) or the head office of the Company at Building 1, Yard 16, W. 4th Ring Middle Road, Haidian District, Beijing, PRC (for holders of domestic shares) no later than 4:30 p.m. on Wednesday, 14 July 2021.

3. Eligibility for Attending the EGM

Holders of H shares and domestic shares whose names appear on the register of members of the Company at the close of business on Wednesday, 14 July 2021 are entitled to attend and vote at the EGM.

4. Proxy

Shareholders entitled to attend and vote at the EGM may appoint one or more proxies to attend and vote on his/her behalf. A proxy need not be a shareholder of the Company. If the appointer is a legal person, its legal representative or any person authorized by resolutions of the board of the directors or other governing bodies may attend the EGM on behalf of the appointer.

In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of such power of attorney or other authority, must be deposited to the H share registrar of the Company (for holders of H shares), namely Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong or the head office of the Company (for holders of domestic shares) at Building 1, Yard 16, W. 4th Ring Middle Road, Haidian District, Beijing, PRC not less than 24 hours before the time appointed for holding the EGM or any adjournment thereof. If the appointer is a legal person, the proxy form must be either executed under its common seal or under the hand of its directors or attorney duly authorized.

5. Registration Procedures for Attending the EGM

The Company has the rights to request a proxy who attends the EGM on behalf of a shareholder to provide proof of identity. Shareholders who intend to attend the EGM should complete and return the reply slip by hand or by post to the H share registrar of the Company (for holders of H shares), namely Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong or to the head office of the Company (for holders of domestic shares) at Building 1, Yard 16, W. 4th Ring Middle Road, Haidian District, Beijing, PRC on or before Wednesday, 7 July 2021.

– EGM-3 – NOTICE OF EGM

6. Method of Voting at the EGM

Voting at the EGM will be conducted by way of poll.

7. Miscellaneous

(i) The EGM is expected to take half a day. Shareholders or their proxies attending the EGM shall be responsible for their own travel and accommodation expenses. Shareholders or their proxies shall produce their identification documents for verification when attending the EGM.

(ii) Contacts of the Company are as follows:

Address: Building 1, Yard 16 W. 4th Ring Middle Road Haidian District Beijing, PRC

Contact Person Ms. Qin Xiangling (for Shareholders in the PRC): Telephone: (8610) 5765 9867

Contact Person Mr. Lee Kwok Fai Kenneth (for Shareholders outside the PRC): Telephone: (852) 2822 0158

As at the date of this notice, the executive director of the Company is Mr. Chen Dongqing; the non- executive directors are Mr. Wang Zhongqu, Mr. Zhang Wenjian, Mr. Gu Yuchun and Ms. Ge Xiaojing; and the independent non-executive directors are Mr. Shen Xiaoliu, Mr. Qu Jiuhui, Mr. Xie Qiuye and Mr. Yeung Chi Tat.

– EGM-4 –