Tianjin Tianbao Energy : MAJOR TRANSACTION ACQUISITION OF 51% EQUITY INTEREST IN TIANJIN JINNENG LINGANG THERMAL POWER CO., LTD., PROPOSED PROVISION OF GUARANTEE FOR TIANJIN JINNENG LINGANG THERMAL POWER CO., LTD., AND NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING IN 2020

March 11, 2020 at 04:38 am EDT

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Tianjin Tianbao Energy Co., Ltd.*, you should at once hand this circular, the accompanying form of proxy and reply slip to the purchaser or transferee or to the bank, securities broker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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.

Tianjin Tianbao Energy Co., Ltd.*

天津天保能源股份有限公司

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1671)

MAJOR TRANSACTION

ACQUISITION OF 51% EQUITY INTEREST IN

TIANJIN JINNENG LINGANG THERMAL POWER CO., LTD.,

PROPOSED PROVISION OF GUARANTEE FOR

TIANJIN JINNENG LINGANG THERMAL POWER CO., LTD.,

AND

NOTICE OF THE SECOND EXTRAORDINARY

GENERAL MEETING IN 2020

Financial Advisor to the Company

The Letter from the Board is set out on pages 5 to 19 of this circular.

A notice dated March 12, 2020 convening the EGM to be held at 10 a.m. on May 8, 2020 (Friday) at the meeting room, 3/F, No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, the PRC is set out on pages VII-1 to VII-2 of this circular.

The proxy form for the EGM has been posted to you on March 12, 2020. Whether or not you are able to attend the EGM in person, you are requested to complete and return the applicable proxy form in accordance with the instructions printed thereon. In case of H Shareholders, the proxy form shall be lodged with the Company's H Share Registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong as soon as possible; in case of Domestic Shareholders, the proxy form shall be lodged with the head office of the Company in the PRC, at No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, the PRC as soon as possible; but in any event, not less than 24 hours before the time scheduled for holding the relevant meeting (or any adjournment thereof). Completion and delivery of the proxy form will not preclude you from attending and voting in person at the relevant meeting or any adjournment thereof if you so desire.

A reply slip for the EGM is also enclosed. You are reminded to complete and sign the reply slip (if you are entitled to attend the EGM) and return the same to (in case of H Shareholders) the Company's H Share Registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, or (in case of Domestic Shareholders) the head office of the Company in the PRC, at No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, the PRC on or before April 18, 2020 (Saturday) in accordance with the instructions printed thereon.

for identification purposes only

March 12, 2020

		CONTENTS
			Page
DEFINITIONS . . .	. . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
APPENDIX I	- FINANCIAL INFORMATION OF THE GROUP . . . . . .	I-1
APPENDIX II	- FINANCIAL INFORMATION OF THE TARGET
		COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III	-	UNAUDITED PRO FORMA FINANCIAL
		INFORMATION OF THE ENLARGED GROUP . . . . III-1
APPENDIX IV	- MANAGEMENT DISCUSSION AND ANALYSIS ON
		THE TARGET COMPANY . . . . . . . . . . . . . . . . . . . . . .	IV-1
APPENDIX V	-	PROPERTY VALUATION REPORT . . . . . . . . . . . . . . . .	V-1
APPENDIX VI	-	GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . .	VI-1
APPENDIX VII	-	NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VII-1

- i -

DEFINITIONS

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

"Acquisition"	the acquisition of the Sale Interest by the Company from
	the Vendor pursuant to the Equity Transfer Agreement
"Articles of Association"	the articles of association of the Company (as amended,
	supplemented and modified from time to time)
"Board" or "Board of Directors"	the board of Directors
"Company"	Tianjin Tianbao Energy Co., Ltd.* (天津天保能源股份有
	限公司), a joint stock company with limited liability
	incorporated in the PRC on February 28, 2017, and the H
	Shares of which are listed on the Main Board of the Stock
	Exchange (stock code: 1671)
"Completion"	the completion of the Acquisition as defined under the
	Equity Transfer Agreement
"connected person(s)"	as defined under the Listing Rules
"Consideration"	RMB139.13 million, being the aggregate of the cash
	consideration of RMB100.88 million (inclusive of the
	Deposit) and the Guarantee for an amount of RMB38.25
	million
"controlling shareholder(s)"	as defined under the Listing Rules
"Deposit"	the deposit of RMB30 million held in escrow by Tianjin
	Property Rights Exchange for the Company in relation to
	the Acquisition
"Director(s)"	the director(s) of the Company
"Domestic Share(s)"	domestic ordinary share(s) with a nominal value of
	RMB1.00 each in the share capital of the Company
"Domestic Shareholder(s)"	holder(s) of Domestic Shares

- 1 -

	DEFINITIONS
"EGM"	the second extraordinary general meeting of the
	Company in 2020 to be convened at 10 a.m. on May 8,
	2020 (Friday) at the meeting room, 3/F, No. 35 Haibinba
	Road, Tianjin Port Free Trade Zone, Tianjin City, the
	PRC
"Enlarged Group"	the Group and the Target Company after the Completion
"Equity Transfer Agreement"	the equity transfer agreement dated February 17, 2020
	entered into between the Company and the Vendor in
	relation to the Acquisition
"Group"	the Company and its subsidiary
"Guarantee"	the joint and several liability guarantee proposed to be
	provided by the Company for an amount of RMB38.25
	million for the Target Company, being 51% of the
	outstanding amount of the Loan as at the Latest
	Practicable Date
"H Share(s)"	overseas listed foreign ordinary share(s) with a nominal
	value of RMB1.00 each in the share capital of the
	Company, which are listed and traded on the Main Board
	of the Stock Exchange
"H Share Registrar"	Computershare Hong Kong Investor Services Limited,
	the H share registrar of the Company
"H Shareholder(s)"	holder(s) of H Shares
"Hong Kong"	the Hong Kong Special Administrative Region of the
	PRC
"HK$"	the lawful currency of Hong Kong, Hong Kong dollars
"Latest Practicable Date"	March 6, 2020, being the latest practicable date prior to
	the printing of this circular for the purpose of
	ascertaining certain information for inclusion in this
	circular
"Lingang Public Utilities"	Tianjin Lingang Public Utilities Group Co., Ltd.* (天津
	臨港公用事業集團有限公司), a company with limited
	liability established in the PRC and one of the
	shareholders of the Target Company

- 2 -

	DEFINITIONS
"Listing Rules"	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited (as may be
	amended from time to time)
"Loan"	the construction loan of RMB200 million borrowed by
	the Target Company from China Development Bank in
	November 2012, the outstanding amount of which is
	RMB75 million as at the Latest Practicable Date, which
	is guaranteed by a previous shareholder of the Target
	Company and Lingang Public Utilities
"Main Board"	the stock exchange (excluding the option market)
	operated by the Stock Exchange which is independent
	from and operated in parallel with the GEM of the Stock
	Exchange
"PRC"	the People's Republic of China
"Prospectus"	the prospectus of the Company dated April 16, 2018
"RMB"	Renminbi, the lawful currency of the PRC
"Sale Interest"	the 51% equity interest in the Target Company held by
	the Vendor immediately prior to the Completion
"SFO"	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong), as amended, supplemented or
	otherwise modified from time to time
"Share(s)"	H Share(s) and Domestic Share(s)
"Shareholder(s)"	holder(s) of Shares
"Site"	the site owned by the Target Company located at no. 418,
	Haihe Middle Road, Lingang Economic Zone, Binhai
	New District, Tianjin, the PRC (中國天津市濱海新區臨
	港經濟區海河中道418號)
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Supervisor(s)"	the supervisor(s) of the Company

- 3 -

	DEFINITIONS
"Target Company"	Tianjin Jinneng Lingang Thermal Power Co., Ltd.* (天津
	津能臨港熱電有限公司), a company with limited liability
	established in the PRC on May 8, 2009, which is owned
	as to 51% and 49% by the Vendor and Lingang Public
	Utilities, respectively, immediately prior to the
	Completion
"TFIHC"	Tianjin Free Trade Zone Investment Holdings Group Co.,
	Ltd.* (天津保稅區投資控股集團有限公司), a company
	with limited liability and a wholly-owned subsidiary of
	Tianjin Port Free Trade Zone State-owned Assets
	Administration Bureau* (天津港保稅區國有資產管理局)
	established in the PRC, one of the controlling
	shareholders of the Company
"Tianbao Holdings"	Tianjin Tianbao Holdings Limited* (天津天保控股有限
	公司), a company with limited liability established in the
	PRC on January 28, 1999 and a wholly-owned subsidiary
	of TFIHC, one of the controlling shareholders of the
	Company
"Tianbao Investment"	Tianjin Free Trade Zone Investment Company Limited*
	(天津保稅區投資有限公司), a state-owned enterprise
	established in the PRC on January 18, 2002 and a
	wholly-owned subsidiary of TFIHC, a Shareholder of the
	Company
"Tianjin Property Rights	Tianjin Property Rights Exchange* (天津產權交易中心)
Exchange"
"Vendor"	Tianjin Jinneng Binhai Heating Group Co., Ltd.* (天津津
	能濱海供熱集團有限公司), a company with limited
	liability established in the PRC on June 12, 2014 and one
	of the shareholders of the Target Company immediately
	prior to the Completion
"%"	per cent.

for identification purposes only

- 4 -

LETTER FROM THE BOARD

Tianjin Tianbao Energy Co., Ltd.*

天津天保能源股份有限公司

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1671)

Executive Directors:	Registered Address in the PRC:
Mr. ZHOU Shanzhong (Chairman)	No. 35 Haibinba Road
Mr. XING Cheng	Tianjin Port Free Trade Zone
Mr. MAO Yongming	Tianjin City
Mr. PENG Chong	PRC
Non-executive Directors:	Headquarters/Principal Place of
Mr. WANG Xiaotong	Business in the PRC:
Ms. DONG Guangpei	No. 35 Haibinba Road
	Tianjin Port Free Trade Zone
Independent Non-executive Directors:	Tianjin City
Mr. CHAN Wai Dune	PRC
Mr. HAN Xiaoping
Ms. YANG Ying	Principal Place of
	Business in Hong Kong:
	40th Floor, Sunlight Tower
	No. 248 Queen's Road East
	Wanchai, Hong Kong
	March 12, 2020
To the Shareholders,
Dear Sir/Madam,

MAJOR TRANSACTION

ACQUISITION OF 51% EQUITY INTEREST IN

TIANJIN JINNENG LINGANG THERMAL POWER CO., LTD.,

PROPOSED PROVISION OF GUARANTEE FOR

TIANJIN JINNENG LINGANG THERMAL POWER CO., LTD.,

AND

NOTICE OF THE SECOND EXTRAORDINARY

GENERAL MEETING IN 2020

INTRODUCTION

Reference is made to the announcement of the Company dated February 17, 2020 in

relation to the Acquisition and the proposed provision of the Guarantee for the Target

Company.

- 5 -

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (i) further details of the Acquisition; (ii) further details of the proposed provision of the Guarantee for the Target Company; (iii) the financial information of the Group; (iv) the financial information of the Target Company; (v) the unaudited pro forma financial information of the Enlarged Group; (vi) the property valuation report of the Site; (vii) such other information as required under the Listing Rules; and (viii) notice of the EGM, so that you can make informed decisions on whether or not to vote for the relevant resolutions to be proposed at the EGM.

THE ACQUISITION

The Equity Transfer Agreement

On February 17, 2020, the Company and the Vendor entered into the Equity Transfer Agreement, pursuant to which the Company agreed to acquire, and the Vendor agreed to sell, the Sale Interest representing 51% equity interest in the Target Company for the Consideration, consisting of the cash consideration payable by the Company to the Vendor for the Acquisition, being RMB100.88 million (inclusive of the Deposit), and the Guarantee for an amount of RMB38.25 million, amounting to RMB139.13 million. Immediately before the Completion, the Target Company is owned as to 49% and 51% by Lingang Public Utilities and the Vendor, respectively, and upon the Completion, the Target Company will be owned as to 51% by the Company and accordingly it will become a non-wholly owned subsidiary of the Company.

Lingang Public Utilities is a company with limited liability established in the PRC and indirectly wholly-owned by Tianjin City Binhai New District State-owned Assets Supervision and Administration Committee* (天津濱海新區國有資產監督管理委員會).

As at the Latest Practicable Date, the Deposit of RMB30 million has been paid by the Company and was held in escrow by Tianjin Property Rights Exchange for the Company in relation to the Acquisition.

The Target Company is principally engaged in the production and supply of steam for the Binhai New District in Tianjin, the PRC.

Date:	February 17, 2020
Parties:	(1)	the Vendor (as vendor); and
	(2)	the Company (as purchaser).

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, the Vendor, Lingang Public Utilities and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons.

The Company has agreed to acquire, and the Vendor has agreed to sell, the Sale Interest in accordance with the terms and subject to the conditions of the Equity Transfer Agreement.

Subject Matter

Immediately prior to the Completion, the Target Company is owned as to 49% and 51% by Lingang Public Utilities and the Vendor, respectively, and the Sale Interest represents all the 51% equity interest in the Target Company held by the Vendor. Upon the Completion, the

- 6 -

LETTER FROM THE BOARD

Target Company will be held as to 51% by the Company and accordingly it will become a non-wholly owned subsidiary of the Company and the financial results of the Target Company will be consolidated into the financial statements of the Enlarged Group accordingly.

The Target Company is principally engaged in the production and supply of steam at the Site in Tianjin, the PRC. For further details of the Target Company and the Site, please refer to the paragraph headed "III. Information of the Target Company and the Site" below.

The Deposit

For the purpose of the Acquisition, the Company was required to transfer the Deposit of RMB30 million within five business days after confirmation of the Company's qualification as a transferee in the Acquisition. As at the Latest Practicable Date, the Deposit has been paid by the Company and was held in escrow by Tianjin Property Rights Exchange for the Company.

The Deposit may be returned to the Company in the following situations:

the non-satisfaction of the conditions precedent to the Completion due to reasons other than that caused by the Company or wrongful actions of the Company;
the termination of the Equity Transfer Agreement by the Vendor due to non- satisfaction of the provision of the Guarantee for the Target Company by the Company except that the non-satisfaction is caused by the Company or wrongful actions of the Company;
a breach of the terms of the Equity Transfer Agreement by the Vendor leading to the Equity Transfer Agreement cannot be performed (in such situation, the Vendor shall return the Company twice the amount of the Deposit); or
the termination of the Equity Transfer Agreement by mutual agreement between the Vendor and the Company.

For a breach of the terms of the Equity Transfer Agreement by the Company leading to the Equity Transfer Agreement cannot be performed, the Deposit shall be forfeited by the Vendor.

The Consideration

The Consideration consists of the cash consideration payable by the Company to the Vendor for the Acquisition, being RMB100.88 million (inclusive of the Deposit), and the Guarantee for an amount of RMB38.25 million, amounting to RMB139.13 million.

As at the Latest Practicable Date, the Deposit has been paid and was held in escrow by Tianjin Property Rights Exchange for the Company. Pursuant to the Equity Transfer Agreement, the remainder of the cash consideration (excluding the Deposit) shall be payable

- 7 -

LETTER FROM THE BOARD

by the Company to a bank account designated by Tianjin Property Rights Exchange within 30 days after the execution of the Equity Transfer Agreement. Upon the issue of the transaction receipt by Tianjin Property Rights Exchange, the cash consideration (including the Deposit) shall be released to the Vendor. The cash consideration will be satisfied in cash from the Group's internal resources without utilising any of the net proceeds from the initial public offering of the Company in April 2018.

The Guarantee

In order to meet the construction funding needs of the heating steamer and ancillary facilities and other construction works of the Target Company, the Target Company has borrowed the Loan of RMB200 million from China Development Bank in November 2012. The Loan is used to meet the costs for the construction of the heating steamer and ancillary facilities and other construction works at the Site.

As at the Latest Practicable Date, the outstanding amount of the Loan amounted to RMB75 million and such amount is guaranteed by a previous shareholder of the Target Company and Lingang Public Utilities. As part of the Consideration of the Equity Transfer Agreement, the Company is required to, upon the registration of the Company as a shareholder on the register of members of the Target Company and issuance of a capital contribution certificate by the Target Company to the Company but before completion of the business registration in respect of the Acquisition with the relevant PRC government authority or department (in any event within 120 days after the execution of the Equity Transfer Agreement), provide a joint and several liability Guarantee for RMB38.25 million (being 51% of the outstanding amount of the Loan as at the Latest Practicable Date) for the Target Company.

Particulars of the proposed provision of the Guarantee for the Target Company are as follows:

Date of Guarantee:	The date on which the guarantee contract will be
	signed
Name of guarantor:	The Company
Name of guaranteed party:	The Target Company
Guaranteed amount:	RMB38.25 million
Term:	Until the maturity of the Loan on November 27, 2022,
	being 10 years from the commencement date of the
	Loan
Guaranteed method:	Joint and several liability guarantee
Remark:	Construction loan

- 8 -

LETTER FROM THE BOARD

It is one of the conditions precedent of the Equity Transfer Agreement that the Company shall provide the Guarantee to support the Target Company in respect of the Loan following the acquisition of 51% equity interests in the Target Company. In accepting the terms proposed by the Vendor, the Directors recognized that the Loan has provided, and will continue to provide important funding to the continuous construction works to be carried out by the Target Company. The Company, as a 51% majority shareholder of the Target Company upon the Completion, will also benefit from the continual availability of the Loan as the financial results of the Target Company will be consolidated into the financial statements of the Enlarged Group as a subsidiary of the Company.

Taking into account the purpose of the Loan, its significance to the funding to the continuous construction works carried out by the Target Company, the terms and conditions of the Acquisition as a whole, and the overall commercial benefits it could bring to the Enlarged Group's business, the Company considers the proposed provision of the Guarantee is fair and reasonable.

Basis of Determination of the Consideration

The cash consideration was determined after arm's length negotiation between the Company and the Vendor with reference to, amongst others, (i) the equity evaluation report of the Target Company prepared by an independent valuer engaged by the Vendor for the purpose of compliance with the relevant PRC state-owned assets administration requirements, which adopted the asset-based approach in respect of the assets and liabilities of the Target Company as at September 30, 2019 and the fair value of the Target Company's net assets as at September 30, 2019 of approximately RMB197.8 million; (ii) the audited net assets value of the Target Company of approximately RMB168.9 million as at September 30, 2019; and (iii) the business prospects of the Target Company.

The Directors are of the view that the premium of approximately RMB14.74 million on top of 51% of the audited net assets value of the Target Company amounting to approximately RMB86.15 million as at September 30, 2019 is fair and reasonable after taking into account that the Target Company had deferred income of approximately RMB35.29 million as at September 30, 2019 as a result of recognizing certain governmental grants for the construction of heating pipelines and discharge facilities received in 2011, 2013 and 2016 as deferred income which are subsequently recognized in the profit and loss statements of the Target Company over the useful life of the relevant assets. Therefore, the Directors are of the view that the value of the Target Company is higher than its audited net assets value as of September 30, 2019.

Further, the Directors are of the view that the premium paid for the Acquisition is less than the cost of setting up a company principally engaging in the production and supply of steam. Through the Acquisition, the Group can further expand its existing production and supply of steam business while saving up the set up time, effort and costs such as recruitment, operations, licensing and marketing to be incurred for setting up a new company with the same business.

- 9 -

LETTER FROM THE BOARD

Conditions Precedent and Completion

Completion shall be conditional upon, amongst others, the completion of all of the following conditions precedent:

the Equity Transfer Agreement becoming effective;
the Acquisition has been duly approved by the Vendor and the Company, including but not limited to the approvals by their respective board of directors and shareholders;
Lingang Public Utilities has undertaken to give up its pre-emptive rights in respect of the Acquisition;
both the Vendor and the Company have obtained the approval from state-owned assets regulatory authorities or their authorized regulatory units in respect of the Acquisition;
the Acquisition has been approved by relevant authorities, including but not limited to any governmental and regulatory authorities and stock exchange;
the approval by the shareholders of the Target Company in respect of the Acquisition;
the registration of the Company as a shareholder on the register of members of the Target Company and issuance of a capital contribution certificate to the Company by the Target Company;
the completion of registration for provision of the Guarantee for the Target Company by the Company after obtaining the register of members of the Target Company and the capital contribution certificate but before the completion of the business registration in respect of the Acquisition with the relevant PRC government authority or department (in any event within 120 days after the execution of the Equity Transfer Agreement); and
the completion of the business registration in respect of the Acquisition with the relevant PRC government authority or department by the Company with the assistance of the Vendor.

The Vendor shall assist the Company to complete other changes relevant to the Acquisition (including business registration and amendment of articles of association) within 15 business days after the completion of registration for provision of the Guarantee for the Target Company by the Company.

As at the Latest Practicable Date, the above conditions precedent (i), (iii) and (iv) have been satisfied. On the basis of not infringing any rules and regulations or the relevant rules of the Listing Rules, the Vendor and the Company may agree to waive certain of the above conditions precedent.

Completion shall take place on the date on which the business registration in respect of the Acquisition completes.

- 10 -

LETTER FROM THE BOARD

In the following situations below which are not caused by the Company or wrongful actions of the Company, the Vendor shall return to the Company all cash consideration (including the Deposit):

non-satisfactionof the conditions precedent to the Completion; or
termination of the Equity Transfer Agreement by the Vendor due to failure of the Company to provide the Guarantee for the Target Company in respect of the relevant loan within 120 days after the execution of the Equity Transfer Agreement.

Amendment and Termination

The Equity Transfer Agreement may be amended or terminated in the following situations:

mutual agreement between the Vendor and the Company for termination due to changes in situations and such termination will not damage the interests of the nation and the society and the public;
impossibility to carry out all the obligations under the Equity Transfer Agreement due to any force majeure events;
non-performanceof the Equity Transfer Agreement by one party and such non-performance is accepted by the other party; or
occurrence of the events stipulated under the Equity Transfer Agreement where amendment or termination can be made.

If the Equity Transfer Agreement is terminated upon mutual agreement between the Vendor and the Company, the Vendor shall return to the Company all cash consideration (including the Deposit).

INFORMATION OF THE TARGET COMPANY AND THE SITE
The Target Company

The Target Company is a company with limited liability established in the PRC on May

8, 2009, which is owned as to 49% and 51% by Lingang Public Utilities and the Vendor,

respectively, immediately prior to the Completion. It is principally engaged in the production

and supply of steam for the Binhai New District in Tianjin, the PRC.

- 11 -

LETTER FROM THE BOARD

The Site

The Site, which is located in an industrial area in Lingang Economic Zone, Binhai New District in Tianjin province, was acquired by the Target Company by way of direct purchase from the Tianjin Binhai New District Planning and Land Bureau* (中國天津市濱海新區規劃和國土資源管理局) on November 8, 2011 and developed by itself. Details of the Site are listed below:

Site code:

Site location:

Land use:

Total land area:

Total gross floor area:

Terms of land use rights:

Land purchase price:

Long-term land use right certificate:

120116160002GB00011F00090003等

No. 418, Haihe Middle Road, Lingang Economic Zone, Binhai New District, Tianjin, the PRC (天津市濱海新區臨港經濟區海河中道418號)

Public utilities/non-residential

Approximately 86,005 square metres

Approximately 24,608 square metres

Until February 21, 2062

RMB66,653,643

Currently held by the Target Company

The Site mainly consists of the production facility of the Target Company. The production facility has a gross floor area of approximately 24,608 square metres and includes all necessary equipment, such as steam boilers and desulfurization equipment, for the Target Company to carry on its business and for the production and supply of steam. As at the Latest Practicable Date, certain coal boilers at the Site were still in the process of being upgraded, which is an on-going construction project expected to complete in due course.

Based on the information provided by the Target Company, it is expected that the amount of capital expenditure required by the Target Company will be approximately RMB19.34 million and will be incurred according to the following timetable:

Year	Amount payable	Source of fund of the Target Company
	(RMB million)
2020	9.00	Internal resources
2021	8.54	RMB2.87 million from bank borrowings
		and the balance of RMB5.67 million
		from internal resources
2022	1.80	Internal resources

- 12 -

LETTER FROM THE BOARD

The Target Company has also obtained all requisite licenses and permits in relation to the operation, environmental and health and safety compliance of the Site in accordance with the relevant PRC laws and regulations.

According to the valuation report prepared by Cushman & Wakefield Limited, the value of the Site is estimated to be approximately RMB197.3 million as at January 31, 2020. For further details of the Site, please refer to Appendix V of this circular.

Financial Information of the Target Company

Set out below is the audited financial information of the Target Company for the three years ended December 31, 2016, 2017 and 2018 and the nine months ended September 30, 2019, respectively:

				For the nine
				months ended
	For the year ended December 31,	September 30,
	2016	2017	2018	2019
	RMB'000	RMB'000	RMB'000	RMB'000
Revenue	161,193	169,364	184,523	146,419
Net profit before taxation	32,196	6,391	14,132	22,420
Net profit after taxation	24,147	4,634	10,599	16,811

As at September 30, 2019, the audited net asset value of the Target Company was approximately RMB168,915,000.

Property Valuation Reconciliation

Cushman & Wakefield Limited has conducted a valuation of the selected property interest of the Target Company as at January 31, 2020. The texts of its letter and the valuation certificate are set out in Appendix V to this circular. The table below sets forth the reconciliation between the net book value of the properties of the Target Company as at September 30, 2019 amounted to RMB175.0 million comprising selected property, plant and equipment and right-of-use assets for properties amounted to RMB116.7 million and RMB58.3 million, separately, and valuation amount as extracted from the property valuation report as included in Appendix V to this circular as at January 31, 2020.

	RMB ('000)
Net book value of the properties of the Target Company as at
September 30, 2019	175,029
Less:
Depreciation	1,834
Net book value of the properties of the Target Company as at
January 31, 2020	173,195
Net valuation surplus as at January 31, 2020	24,105
Valuation amount as at January 31, 2020	197,300

- 13 -

LETTER FROM THE BOARD

IV. PROPOSED PROVISION OF THE GUARANTEE FOR THE TARGET COMPANY

Proposed Provision of the Guarantee for the Target Company

As part of the Consideration under the Equity Transfer Agreement, the Company is required to provide the Guarantee for the Target Company. For further details of the proposed provision of the Guarantee, please refer to the paragraph headed "II. The Acquisition - the Guarantee" in this circular.

Approval for External Guarantees

As the proposed provision of the Guarantee for the Target Company amounts to approximately 12.6% of the audited net assets of the Company as at December 31, 2018, which is a single guarantee whose amount exceeds 10% of the latest audited net assets of the Company, pursuant to the article 65 of Articles of Association, an ordinary resolution will be proposed at the EGM for the Shareholders to consider and approve the proposed provision of the Guarantee for the Target Company.

Accumulated Number of External Guarantees and Overdue Guarantees up to the Latest

Practicable Date

As at the Latest Practicable Date, the Company has not provided any external guarantee.

The actual incurred total amount of the proposed guarantee for the Target Company will be disclosed in the 2020 annual report and interim report of the Company.

FINANCIAL EFFECT OF THE ACQUISITION

Upon the Completion, the Company will be interested in 51% equity interest in the Target Company. Accordingly, the Target Company will be accounted for as a subsidiary of the Company and it will be included in the Enlarged Group's consolidated financial statements. For details of the unaudited pro forma financial information of the Enlarged Group, please refer to Appendix III to this circular.

Assets and liabilities

Based on the unaudited pro forma financial information as set out in Appendix III to this circular, assuming that the Completion had taken place on June 30, 2019, the total assets of the Group would have increased from approximately RMB532.0 million to approximately RMB812.4 million on a pro forma basis, the total liabilities of the Group would have increased from approximately RMB233.2 million to approximately RMB420.2 million on a pro forma basis, and the net asset of the Group would have increased from approximately RMB298.8 million to approximately RMB392.2 million on a pro forma basis.

- 14 -

LETTER FROM THE BOARD

Earnings

As set out in the accountants' report on historical financial information of the Target Company in Appendix II to this circular, the revenue and net profit after taxation of the Target Company for the year ended December 31, 2018 were approximately RMB184.5 million and approximately RMB10.6 million, respectively. The revenue and net profit after taxation of the Group for the year ended December 31, 2018 were approximately RMB431.11 million and RMB26.35 million, respectively. Upon the Completion, the Target Company will become a subsidiary of the Enlarged Group and the financial results of the Target Company will be consolidated into the consolidated financial statements of the Group. Given the profitability of the Target Company, it is expected that the Target Company will enhance the revenue stream and earnings of the Enlarged Group following the Completion.

Shareholders should be aware that as the fair value of the Target Company to be acquired by the Group under the Acquisition at the Completion may be substantially different from the fair value used in the preparation of the unaudited pro forma financial information of the Enlarged Group as set out in Appendix III to this circular, the actual financial effects of the Acquisition on the Enlarged Group at the Completion may be different from the amounts presented in this section and such differences may be significant.

VI. REASONS FOR AND BENEFITS OF ENTERING INTO THE EQUITY TRANSFER

AGREEMENT

The Company is engaged in cogeneration of steam together with electricity, heating and cooling for Tianjin Port Free Trade Zone (Seaport) and the Target Company mainly produces and supplies steam in Binhai New District. Since both the Company and the Target Company are engaged in the steam generation business which share similar business operation, technology and equipment, and skills and knowledge, the Board believes that the Acquisition will create synergies among and assist with the achievement of economies of scale by the Enlarged Group. Firstly, the Acquisition shall create synergies between the Company and the Target Company based on the reasons that (i) the Company and the Target Company will be able to learn from each other and improve their respective steam businesses in terms of skills and technology and thus will enhance the operation and production efficiency; (ii) the Acquisition will allow the Company to gain access to Lingang Economic Zone and may allow the Company to attract new business opportunities; and (iii) the market share of the Company in the steam generation industry and its assets portfolio will increase and thus will lay a solid foundation for the future development and financing activities for the Company. Secondly, the Acquisition will assist the achievement of economies of scale by the Enlarged Group based on the reasons that (i) the unit cost for procurement of coal, the raw material for the generation of steam by the Enlarged Group, will decrease as the Enlarged Group is more likely to be able to obtain lower procurement price from coal suppliers with a larger procurement amount; (ii) the unit costs for operation and maintenance of the Enlarged Group will decrease as the Company and the Target Company will be able to share their staff and knowledge for operation and maintenance; and (iii) the unit cost for management will decrease as both the Company and the Target Company will adopt the same management method and style. As the Target

- 15 -

LETTER FROM THE BOARD

Company has a good business foundation and great development potential, the Company may increase its sources of revenue, enhance its profits through the Acquisition and step forward in expanding its presence in the energy services sector in different areas in Tianjin, the PRC.

Upon the Completion, the Company will take a controlling stake in the Target Company and be able to exercise control over the management and operations of the Target Company. Accordingly, the Company may leverage its operational and business experiences and expertise to streamline and enhance the business and operational efficiency of the Enlarged Group. Furthermore the financial results of the Target Company will be consolidated into the financial statements of the Enlarged Group upon the Completion, it is expected that the continuous profit-making performance of the Target Company will contribute to the income of the Enlarged Group, thereby improving the balance sheet and increasing the market capitalization of the Enlarged Group. With stronger financial foundation and an enhanced base of operations, the Enlarged Group will also be well-equipped to capture market opportunities. In addition, the Acquisition is complementary to the overall development strategy of the Group to focus on providing reliable energy services in Tianjin.

No Director has any material interest in the transactions under the Equity Transfer Agreement Accordingly, no Director is required to abstain from voting on the Board resolutions approving the Acquisition, the Equity Transfer Agreement and the transactions contemplated thereunder, and the provision of the Guarantee.

The Directors (including the independent non-executive Directors) are of the view that the Acquisition, the Equity Transfer Agreement and the transactions contemplated thereunder, and the provision of the Guarantee were entered into on normal commercial terms, and the terms and conditions therein are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

VII. GENERAL INFORMATION ON THE PARTIES

The Company

The Company is a joint stock company with limited liability incorporated in the PRC on February 28, 2017, and the H Shares of which are listed on the Main Board of the Stock Exchange (stock code: 1671). It is the sole power operator in Tianjin Port Free Trade Zone (Seaport) and is engaged in cogeneration of steam together with electricity, heating and cooling. The Company is the first state-owned power operator in Tianjin engaging in cogeneration of steam, electricity, heating and cooling listed on the Main Board of the Stock Exchange.

The Vendor

The Vendor is a company with limited liability established under the laws of the PRC on June 12, 2014 and is indirectly wholly-owned by the State-owned Assets Supervision and Administration Commission of Tianjin Municipal People's Government. It is principally

- 16 -

LETTER FROM THE BOARD

engaged in (i) the production and supply of steam, hot water and refrigeration; (ii) manufacturing, sales, installation and maintenance of heating pipes, heating equipment and insulation materials; and (iii) provision of consulting services relating to heating and cooling technology.

The Target Company

For further details of the Target Company, please refer to the paragraph headed "III. Information of the Target Company and the Site - The Target Company" in this circular.

VIII. LISTING RULES IMPLICATIONS

As all the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) exceed 25% but are less than 100%, the Acquisition constitutes a major transaction for the Company, and is therefore subject to the reporting, announcement and shareholders' approval requirements pursuant to Chapter 14 of the Listing Rules.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, no Shareholder has any material interests in the Acquisition, the Equity Transfer Agreement and the transactions contemplated thereunder, and the proposed provision of the Guarantee and therefore none of them is required to abstain from voting on the ordinary resolutions in relation to the approval of the said Acquisition, the Equity Transfer Agreement and the transactions contemplated thereunder, and the proposed provision of the Guarantee to be proposed at the EGM.

IX. THE EGM

The Company will convene the EGM at 10 a.m. on Friday, May 8, 2020 at the meeting room, 3/F, No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, the PRC, to consider and, if thought fit, pass the resolutions in relation to the matters as set out in the notice of the EGM. The proxy form and reply slip have been despatched to the Shareholders on March 12, 2020 in accordance with the Listing Rules. The notice of the EGM is set out on pages VII-1 to VII-2 of this circular.

Whether or not you intend to attend and/or vote at the EGM, you are requested to complete and return the proxy form in accordance with the instructions printed thereon.

If you intend to attend the EGM (whether in person or by proxy), you are requested to complete and return the accompanying reply slip to the H Share Registrar (in case of H Shareholders) or the head office of the Company in the PRC (in case of Domestic Shareholders) on or before Saturday, April 18, 2020. If the number of voting Shares represented by the Shareholders who intend to attend the meeting is not lower than half of the Company's total voting Shares, the Company may hold the general meeting. If not, the

- 17 -

LETTER FROM THE BOARD

Company shall within five days inform the Shareholders again, by public notice or otherwise required by the Articles of Association, of the matters to be considered as well as the date and place of the meeting. Upon such notification, the Company may hold the general meeting.

If you intend to appoint a proxy to attend the EGM, you are requested to complete and return the accompanying proxy form in accordance with the instructions printed thereon to the H Share Registrar, Computershare Hong Kong Investor Services Limited (in case of H Shareholders) or the office of the Board at the head office of the Company in the PRC (in case of Domestic Shareholders) by hand or by post as soon as possible and in any event not less than 24 hours before the time appointed for holding the EGM or any adjournment thereof.

Completion and return of the proxy form(s) will not preclude you from attending and voting in person at the EGM if you so desire, and completion and return of the reply slip do not affect the rights of the Shareholders to attend and vote at the relevant meeting.

Voting by Poll at the EGM

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of Shareholders at a general meeting must be taken by way of a poll. Therefore, the chairman of the meeting shall demand that each resolution of the EGM be taken by way of a poll pursuant to article 102(1) of the Articles of Association.

On a poll, every Shareholder present in person or by proxy (or in case of corporation, its duly authorised representative) at the EGM shall have one vote for each Share registered in his/her name in the register of members. A Shareholder entitled to more than one vote needs not use all his/her votes or cast all the votes he/she has in the same manner.

Closure of Register of Members

In order to ascertain the list of Shareholders who are entitled to attend the EGM, the register of members of the Company will be closed from Wednesday, April 8, 2020 to Friday, May 8, 2020 (both days inclusive), during which period no transfer of Shares will be effected. To be eligible to attend and vote at the EGM, all transfer documents must be lodged with the H Share Registrar, 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 in the PRC at No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, the PRC (for holders of Domestic Shares) no later than 4:30 p.m. on Tuesday, April 7, 2020.

- 18 -

LETTER FROM THE BOARD

RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that the terms of the Acquisition, the Equity Transfer Agreement and all the transactions contemplated thereunder, and the proposed provision of the Guarantee for the Target Company are fair and reasonable and in the interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolutions to be proposed at the EGM.

XI. OTHER INFORMATION

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

Yours faithfully,

On behalf of the Board

Tianjin Tianbao Energy Co., Ltd.*

ZHOU Shanzhong

Chairman

Tianjin, the People's Republic of China, March 12, 2020

- 19 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

FINANCIAL INFORMATION OF THE GROUP

Details of the financial information of the Group for the six months ended June 30, 2019 are disclosed in the 2019 interim report of the Company, which was published on September 19, 2019 and is available at https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0919/ ltn20190919063.pdf. In particular, please refer to pages 18 to 48 therein.

Details of the financial information of the Group for the year ended December 31, 2018 are disclosed in the 2018 annual report of the Company, which was published on April 23, 2019 and is available at https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0423/ ltn20190423420.pdf. In particular, please refer to pages 80 to 144 therein.

Details of the financial information of the Group for the years ended December 31, 2016 and 2017 are disclosed in the Prospectus and is available at

https://www1.hkexnews.hk/listedco/listconews/sehk/2018/0416/ltn20180416007.pdf. In particular, please refer to pages I-3 to I-54 of the section headed "Appendix I - Accountants' Report" therein.

The interim report of the Company for the six months ended June 30, 2019, the annual report of the Company for the year ended December 31, 2018 and the Prospectus are also published and available on the website of the Company (http://www.tjtbny.com).

STATEMENT OF INDEBTEDNESS

As at the close of business on January 31, 2020, being the latest practicable date for the purpose of ascertaining the indebtedness of the Enlarged Group prior to the printing of this circular, the Enlarged Group had aggregate outstanding borrowings of approximately RMB311.0 million comprising:

bank loans of approximately RMB151.9 millions, amount which approximately RMB75.0 million is guaranteed bank loans and approximately RMB76.9 million is unsecured bank loans; and
other borrowings of approximately RMB159.1 million.

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, the Enlarged Group did not have at the close of business on January 31, 2020, any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, hire purchase commitments, guarantees or other material contingent liabilities.

- I-1 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

III. WORKING CAPITAL

The Directors, after due and careful enquiry, are of the opinion that, after taking into account the financial resources available to the Enlarged Group, including internally generated funds and the available banking facilities amounted to RMB150.0 million as at January 31, 2020, the Enlarged Group has sufficient working capital for its present requirements for at least the next 12 months from the date of this circular, in the absence of unforeseeable circumstances such as natural disasters including typhoon, storm, flooding, fire, earthquake or other natural disasters and diseases, war and civil unrest.

IV. FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

Upon the completion of the Acquisition, the Enlarged Group will be principally engaged in (i) the existing business of the Group in cogeneration of steam together with electricity, heating and cooling; and (ii) the business of the Target Company in production and supply of steam. The Enlarged Group will leverage its operational and business experiences and expertise in the steam power industry to continue the growth of the Enlarged Group, expanding into new markets in different areas of Tianjin and further gaining market share.

In addition to the creation of synergies between the Company and the Target Company and the achievement of economies of scale of the Enlarged Group after the Acquisition, the revenue and earnings of the Target Company will be contributed to the performance of the Enlarged Group. As the operation model of the Company and the Target Company is similar, the Company may utilize its operational and management experience to further enhance the management systems and operation procedures of the Target Company, strengthening and standardizing the operational management of the Target Company to enhance operational efficiency. In addition, as the business nature, procurement, production and sales model of the Company and the Target Company is similar, upon the completion of the Acquisition, the Company may consolidate the management of procurement and sales, consolidating bidding process, centralize pricing and sales, lowering overall costs and enhance efficiency.

In addition, as the Enlarged Group will continue to engage in the steam power generation business, it will face risks arising from the industry, such as increases in environmental protection compliance requirements, increases in raw material prices such as coal, and loss of major customers. Coupled with the experiences in the industry, the Company and the Target Company have set up relevant management policies to reduce the impact of increasing compliance costs and raw material purchase costs. The Directors believe that the Enlarged Group has sufficient mechanisms in place to tackle the potential risks.

Looking ahead, the Enlarged Group will continue to consolidate its existing business, expand and reach out to new markets, enhance operational efficiency, lower overall operational costs, and based on the principle of steady development and the Enlarged Group's situation, appropriately expand its business scope and set out the foundation for the future development of the Enlarged Group, thereby generating profit for the Shareholders and investors of the Company.

- I-2 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

MATERIAL ADVERSE CHANGE

The Directors confirm that to the best of the Directors' knowledge, there was no material adverse change in the financial or trading position of the Group since December 31, 2018 (being the date to which the latest published audited financial statements of the Company were made up) up to the Latest Practicable Date.

- I-3 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

The following is the text of a report set out on pages II - 1 to II - 42, received from the Target Company's reporting accountants, KPMG, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

ACCOUNTANTS' REPORT ON HISTORICAL FINANCIAL INFORMATION OF TIANJIN JINNENG LINGANG THERMAL POWER CO., LTD. TO THE DIRECTORS OF TIANJIN TIANBAO ENERGY CO., LTD.

Introduction

We report on the historical financial information of Tianjin Jinneng Lingang Thermal Power Co., Ltd. (the "Target Company") set out on pages II-4 to II-42, which comprises the statements of financial position of the Target Company as at 31 December 2016, 2017 and 2018 and 30 September 2019, and the statements of profit or loss, the statements of profit or loss and other comprehensive income, the statements of changes in equity and the cash flow statements, for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2019 (the "Relevant Periods"), and a summary of significant accounting policies and other explanatory information (together, the "Historical Financial Information"). The Historical Financial Information set out on pages II-4 to II-42 forms an integral part of this report, which has been prepared for inclusion in the circular of Tianjin Tianbao Energy Co., Ltd. (the "Company") dated 12 March 2020 (the "Circular") in connection with the proposed acquisition of 51% equity interests in the Target Company by the Company and proposed provision of guarantee for the Target Company.

Directors' responsibility for Historical Financial Information

The directors of the Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information.

The Underlying Financial Statements of the Target Company as defined on page II-4, on which the Historical Financial Information is based, were prepared by the directors of the Target Company. The directors of the Target Company are responsible for the preparation of the Underlying Financial Statements that give a true and fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board ("IASB"), and for such internal control as the directors of the Target Company determine is necessary to enable the preparation of the Underlying Financial Statements that is free from material misstatement, whether due to fraud or error.

Reporting accountants' responsibility

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200 "Accountants' Reports on Historical Financial Information in Investment Circulars" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

- II-1 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants' judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity's preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Historical Financial Information.

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

Opinion

In our opinion, the Historical Financial Information gives, for the purpose of the accountants' report, a true and fair view of the Target Company's financial position as at 31 December 2016, 2017 and 2018 and 30 September 2019 and of the Target Company's financial performance and cash flows for the Relevant Periods in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information.

Review of stub period corresponding financial information

We have reviewed the stub period corresponding financial information of the Target Company which comprises the statement of profit or loss, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the cash flow statement for the nine months ended 30 September 2018 and other explanatory information (the "Stub Period Corresponding Financial Information"). The directors of the Company are responsible for the preparation and presentation of the Stub Period Corresponding Financial Information in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub Period Corresponding Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the HKICPA. A review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Stub Period Corresponding Financial Information, for the purpose of the accountants' report, is not prepared, in all material respects, in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information.

- II-2 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page II-4 have been made.

KPMG

Certified Public Accountants 8th Floor, Prince's Building 10 Chater Road

Central, Hong Kong

12 March 2020

- II-3 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

HISTORICAL FINANCIAL INFORMATION

Set out below is the Historical Financial Information which forms an integral part of this accountants' report.

The financial statements of the Target Company for the Relevant Periods, on which the Historical Financial Information is based ("Underlying Financial Statements"), were audited by KPMG Huazhen LLP (畢馬威華振會計師事務所(特殊普通合夥)) in accordance with Hong Kong Standards on Auditing issued by the HKICPA.

STATEMENTS OF PROFIT OR LOSS

(Expressed in Renminbi "RMB")

								Nine months period
		Year ended 31 December	ended 30 September
	Note	2016		2017	2018		2018		2019
								(unaudited)
		RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Revenue	3	161,193		169,364		184,523		129,984		146,419
Cost of sales		(117,877)	(154,751)	(164,679)	(116,844)	(117,998)
Gross profit
	43,316		14,613		19,844		13,140		28,421
Other net income	4	3,097		5,416		8,624		3,394		4,324
Administrative expenses		(5,840)	(6,310)	(7,446)	(5,295)	(5,889)
Profit from operations
	40,573		13,719		21,022		11,239		26,856
Interest Income		753		348		295		241		201
Interest expense		(9,130)	(7,676)	(7,185)	(5,481)	(4,637)
Profit before taxation
5	32,196		6,391		14,132		5,999		22,420
Income tax	6(a)	(8,049)	(1,757)	(3,533)	(1,500)	(5,609)
Profit for the year/period
	24,147		4,634		10,599		4,499		16,811

- II-4 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(Expressed in RMB)

							Nine months ended
	Year ended 31 December	30 September
Note	2016		2017	2018	2018	2019
							(unaudited)
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Profit for the year/period	24,147		4,634		10,599		4,499	16,811
Other comprehensive income
for the year/period
(after tax)	-	-	-	-	-
Total comprehensive income

for the year/period	24,147		4,634		10,599		4,499	16,811

The accompanying notes form part of the Historical Financial Information.

- II-5 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
STATEMENTS OF FINANCIAL POSITION
(Expressed in RMB)
												As at
			As at 31 December	30 September
		Note	2016	2017		2018		2019
			RMB'000						RMB'000	RMB'000	RMB'000
Non-current assets
Property, plant and equipment		9	249,579	237,742		226,011		240,587
Right-of-use assets for properties		11	62,047	60,673		59,299		58,269
Intangible assets		10	29		129		130		157
			311,655	298,544		285,440		299,013
			- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Current assets
Inventories		12	9,427	9,596		4,858		13,796
Trade and bill receivables		13	5,845	4,233		5,002		2,283
Other receivables and assets		14	28,057	33,715		6,634		8,094
Cash and cash equivalents		15	16,584		2,014		19,995		56,431
			59,913	49,558		36,489		80,604
			- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Current liabilities
Loans and borrowings
(current portion)		16	14,000	20,000		20,000		40,000
Trade and other payables		17	8,603	6,642		4,144		15,857
Salary and welfare payables			-	484		569		593
Current taxation		19	-	745		1,708		960
Current portion of non-current
loans and borrowings		16	22,805	27,425		30,940		36,596

			45,408	55,296		57,361		94,006
			- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Net current assets/(liabilities)			14,505	(5,738)	(20,872)	(13,402)
			- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Total assets less current liabilities		326,160	292,806		264,568		285,611
			- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Non-current liabilities
Loans and borrowings
(non-current portion)		16	133,365	105,940		75,000		81,404
Deferred income		18	42,924			40,361		37,464		35,292
			176,289	146,301		112,464		116,696
			- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
NET ASSETS			149,871	146,505		152,104		168,915
CAPITAL AND RESERVES		20


Paid-in capital		20(a)	100,000	100,000		100,000		100,000
Reserves		20(b)	49,871	46,505		52,104		68,915
TOTAL EQUITY
		149,871	146,505		152,104		168,915

The accompanying notes form part of the Historical Financial Information.

- II-6 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

STATEMENTS OF CHANGES IN EQUITY

(Expressed in RMB)

		Attributable to equity owners of the Target Company
								Statutory
		Paid-in	Capital	surplus	Retained
	Note	capital	reserve	reserves	profits	Total
		RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Balance at 1 January 2016		100,000				1,320		5,241	38,638	145,199
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes in equity for 2016:
Profit for the year		-	-	-	24,147		24,147

Total comprehensive income		-	-	-	24,147		24,147
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Appropriation to reserves	20(b)	-	-	2,467		(2,467)	-
Dividends	20(a)	-	-	-	(19,475)	(19,475)
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Balance at 31 December 2016
and 1 January 2017		100,000				1,320		7,708	40,843	149,871
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes in equity for 2017:
Profit for the year		-	-	-	4,634		4,634

Total comprehensive income		-	-	-	4,634		4,634
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Appropriation to reserves	20(b)	-	-	483		(483)	-
Dividends	20(a)	-	-	-	(8,000)	(8,000)
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Balance at 31 December 2017
and 1 January 2018		100,000				1,320		8,191	36,994	146,505
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes in equity for 2018:
Profit for the year		-	-	-	10,599		10,599

Total comprehensive income		-	-	-	10,599		10,599
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Appropriation to reserves	20(b)	-	-	1,071		(1,071)	-
Dividends	20(a)	-	-	-	(5,000)	(5,000)
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Balance at 31 December 2018		100,000				1,320		9,262	41,522	152,104

- II-7 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
			Attributable to equity owners of the Target Company
							Statutory
			Paid-in	Capital	surplus	Retained
	Note		capital	reserve	reserves	profits	Total
			RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Balance at 1 January 2019		100,000		1,320		9,262			41,522		152,104
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes in equity for the
nine months ended
30 September 2019:
Profit for the period			-	-	-	16,811		16,811

Total comprehensive income			-	-	-	16,811		16,811
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Balance at 30 September 2019	100,000		1,320		9,262			58,333		168,915
(Unaudited)


Balance at 1 January 2018		100,000		1,320		8,191			36,994		146,505
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Change in equity for the
nine months ended
30 September 2018:
Profit for the period			-	-	-	4,499		4,499

Total comprehensive income			-	-	-	4,499		4,499
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Dividends	20(a)		-	-	-	(5,000)	(5,000)
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Balance at 30 September 2018	100,000		1,320		8,191			36,493		146,004

The accompanying notes form part of the Historical Financial Information.

- II-8 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
CASH FLOW STATEMENTS
(Expressed in RMB)
								Nine months ended
		Year ended 31 December	30 September
	Note	2016		2017	2018	2018	2019
								(unaudited)
		RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Operating activities
Profit before taxation		32,196		6,391		14,132		5,999		22,420
Depreciation in property, plant
and equipment		12,364		14,415		14,359		10,859		10,658
Amortization in intangible
assets and depreciation in
right-of-use assets for
properties		1,378		1,381		1,390		1,042		1,044
Amortization in deferred income	(1,564)	(2,563)	(2,897)	(2,172)	(2,172)
Loss/(profit) on disposal of
property, plant and equipment	2,342		-	-	-	(3)
Interest expense		9,123		7,670		7,175		5,474		4,630
Changes in working capital:
(Increase)/decrease in inventories	(5,852)	(169)	4,738		7,663		(8,938)
(Increase)/decrease in trade and
bill receivables		(2,187)	1,612		(769)	(247)	2,719
Decrease/(increase) in other
receivables and assets		34,980		(5,048)	28,756		26,803		377
(Decrease)/increase in trade and
other payables		(2,882)	(1,852)	(552)	1,202		(647)
Increase in salary and welfare
payables		-	484		85		390		24
Cash generated from operating

activities		79,898		22,321		66,417		57,013		30,112
Income tax (paid)/refunded		(12,799)	245		(2,570)	(1,715)	(6,357)
Net cash generated from

operating activities		67,099		22,566		63,847		55,298		23,755
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Investing activities
Proceeds from disposal of
property, plant and equipment	349		-	2		-	8
Payment for the purchase of
property, plant and equipment	(17,166)	(4,441)	(6,231)	(5,289)	(14,631)
Proceeds from government grants
related to assets		13,320		-	-	-	-
Net cash used in investing

activities		(3,497)	(4,441)	(6,229)	(5,289)	(14,623)
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- II-9 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
								Nine months ended
		Year ended 31 December	30 September
	Note	2016		2017	2018	2018	2019
								(unaudited)
		RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Financing activities
Proceeds from bank loans	15	30,500		20,000		20,000		20,000		70,000
Repayment of bank loans		(56,330)	(36,805)	(47,425)	(29,198)	(37,940)
Interest paid		(9,443)	(7,890)	(7,212)	(5,505)	(4,756)
Dividends paid to equity owners
of the Target Company	20(a)	(19,475)	(8,000)	(5,000)	(5,000)	-
Net cash (used in)/generated

from financing activities		(54,748)	(32,695)	(39,637)	(19,703)	27,304
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Net increase/(decrease) in cash
and cash equivalents		8,854		(14,570)	17,981		30,306		36,436
Cash and cash equivalents at
1 January	15	7,730		16,584		2,014		2,014		19,995
Cash and cash equivalents at

31 December/30 September	15	16,584		2,014		19,995		32,320		56,431

The accompanying notes form part of the Historical Financial Information.

- II-10 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

(Expressed in Renminbi unless otherwise indicated)

1 BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

Tianjin Jinneng Lingang Thermal Power Co., Ltd. (the "Target Company") was established in the People's Republic of China ("PRC") on 8 May 2009 with limited liability under the Companies Law of the PRC.

The Target Company is principally engaged in steam generation and supply business in Tianjin Lingang Economic Zone.

The Historical Financial Information has been prepared in accordance with all applicable International Financial Reporting Standards ("IFRSs") which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board ("IASB"). Further details of the significant accounting policies adopted are set out in note 2.

The IASB has issued a number of new and revised IFRSs. For the purpose of preparing this Historical Financial Information, the Target Company has adopted all applicable new and revised IFRSs throughout the Relevant Periods, including IFRS 9 Financial Instruments, IFRS 15 Revenue from contracts with customers and IFRS 16 Leases. Revised and new accounting standards and interpretations issued but not yet effective for the accounting period beginning 1 January 2019 are set out in note 26.

The Historical Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").

The accounting policies set out below have been applied consistently to all periods presented in the Historical Financial Information.

The Stub Period Corresponding Financial Information has been prepared in accordance with the same basis of preparation and presentation adopted in respect of the Historical Financial Information.

The statutory financial statements of the Target Company have been prepared in accordance with Accounting Standards for Business Enterprises issued by the Ministry of Finance of the People's Republic of China ("PRC GAAP"). The statutory financial statements of the Target Company were audited by Zhongshenhua Certified Public Accountants LLP (中審華會計師事務所(特殊普通合夥), Tianjin Xingye Certified Public Accountants Co., Ltd. (天津市興業有限責任會計師事務所) and Tianjin Tiantong Taihe Certified Public Accountants Co., Ltd. (天津天通泰和會計師事務所有限責任公司) for the fiscal year ended 31 December 2016, 2017 and 2018, respectively.

As of 30 September 2019, the Target Company's current liabilities exceeded its current assets, therefore, the continuing operations of the Target Company will to a large extent depend on the availability of funds. The Target Company has unused bank credits of RMB30,000,000 available as of 30 September 2019 and it is expected that the Target Company can extend their short-term bank borrowings upon their expiration. Accordingly, the management of the Target Company believes that the Target Company is able to obtain the required funds from the bank when needed and will have adequate funds to meet its liabilities as and when they fall due for at least twelve months from the end of the reporting period. Hence, the Historical Financial Information has been prepared on a going concern basis.

The Target Company has adopted 31 December as its financial year end date. The Historical Financial Information contained in this Accountants' Report does not constitute the Target Company's statutory annual financial statements for any of the years ended 31 December 2016, 2017 or 2018.

- II-11 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

2 SIGNIFICANT ACCOUNTING POLICIES

Basic of measurement

The Historical Financial Information is presented in Renminbi ("RMB"), rounded to the nearest thousand unless otherwise indicated. The measurement basis used in the preparation of the Historical Financial Information is the historical cost basis.

Use of estimates and judgements

The preparation of Historical Financial Information in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Property, plant and equipment

The following items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (see note 2(f)):

Buildings and structure;
Steam generation plant in service;
Motor vehicles;
Construction in progress ("CIP"); and
Other items of plant and equipment.

The cost of self-constructed items of property, plant and equipment includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads and borrowing costs (see note 2(q)).

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal. Any related revaluation surplus is transferred from the revaluation reserve to retained profits and is not reclassified to profit or loss.

Depreciation is calculated to write-off the cost or valuation of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as follows:

- Buildings and structure	25	- 40	years
- Steam generation plant in service	16	- 40	years
- Motor vehicles		6	-	8	years
- Others		3	-	6	years

Where parts of an item of property, plant and equipment have different useful lives, the cost or valuation of the item is allocated on a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reviewed annually.

- II-12 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Intangible assets

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Target Company has sufficient resources and the intention to complete development. The expenditure capitalised includes the costs of materials, direct labour, and an appropriate proportion of overheads and borrowing costs, where applicable (see note 2(q)). Capitalised development costs are stated at cost less accumulated amortisation and impairment losses (see note 2(f)). Other development expenditure is recognised as an expense in the period in which it is incurred.

Intangible assets that are acquired by the Target Company are stated at cost less accumulated amortisation (where the estimated useful life is finite) and impairment losses (see note 2(f)).

Amortisation of intangible assets with finite useful lives is charged to profit or loss on a straight-line basis over the assets' estimated useful lives. The following intangible assets with finite useful lives are amortised from the date they are available for use and their estimated useful lives are as follows:

- Software and others

10 years

Both the period and method of amortisation are reviewed annually.

Leased assets

At inception of a contract, the Target Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.

As a lessee

Where the contract contains lease component(s) and non-lease component(s), the Target Company has elected not to separate non-lease components and accounts for each lease component and any associated non-lease components as a single lease component for all leases.

At the lease commencement date, the Target Company recognises a right-of-use asset and a lease liability, except for short-term leases that have a lease term of 12 months or less and leases of low-value assets. When the Target Company enters into a lease in respect of a low-value asset, the Target Company decides whether to capitalise the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term.

Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred.

The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentives received. The right-of-use asset is subsequently stated at cost less accumulated depreciation and impairment losses (see notes 2(f). Depreciation of right-of-use assets is charged to profit or loss on a straight-line basis over the assets' lease term.

- II-13 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in the Target Company's estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the Target Company will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Credit losses and impairment of assets
1. Credit losses from financial instruments and contract assets

The Target Company recognises a loss allowance for expected credit losses (ECLs) on the following

items:

financial assets measured at amortised cost (including cash and cash equivalents, trade and other receivables);
contract assets as defined in IFRS 15 (see note 2(h));

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all expected cash shortfalls (i.e. the difference between the cash flows due to the Target Company in accordance with the contract and the cash flows that the Target Company expects to receive).

The expected cash shortfalls are discounted using the following discount rates where the effect of discounting is material:

fixed-ratefinancial assets, trade and other receivables and contract assets: effective interest rate determined at initial recognition or an approximation thereof;

The maximum period considered when estimating ECLs is the maximum contractual period over which the Target Company is exposed to credit risk.

In measuring ECLs, the Target Company takes into account reasonable and supportable information that is available without undue cost or effort. This includes information about past events, current conditions and forecasts of future economic conditions.

ECLs are measured on either of the following bases:

12-monthECLs: these are losses that are expected to result from possible default events within the 12 months after the reporting date; and
lifetime ECLs: these are losses that are expected to result from all possible default events over the expected lives of the items to which the ECL model applies.

Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs. ECLs on these financial assets are estimated using a provision matrix based on the Target Company's historical credit loss experience, adjusted for factors that are specific to the debtors and an assessment of both the current and forecast general economic conditions at the reporting date.

For all other financial instruments, the Target Company recognises a loss allowance equal to 12-month ECLs unless there has been a significant increase in credit risk of the financial instrument since initial recognition, in which case the loss allowance is measured at an amount equal to lifetime ECLs.

- II-14 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Significant increases in credit risk

In assessing whether the credit risk of a financial instrument has increased significantly since initial recognition, the Target Company compares the risk of default occurring on the financial instrument assessed at the reporting date with that assessed at the date of initial recognition. In making this reassessment, the Target Company considers that a default event occurs when (i) the borrower is unlikely to pay its credit obligations to the Target Company in full, without recourse by the Target Company to actions such as realising security (if any is held); or (ii) the financial asset is 90 days past due. The Target Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

failure to make payments of principal or interest on their contractually due dates;
an actual or expected significant deterioration in a financial instrument's external or internal credit rating (if available);
an actual or expected significant deterioration in the operating results of the debtor; and
existing or forecast changes in the technological, market, economic or legal environment that have a significant adverse effect on the debtor's ability to meet its obligation to the Target Company.

Depending on the nature of the financial instruments, the assessment of a significant increase in credit risk is performed on either an individual basis or a collective basis. When the assessment is performed on a collective basis, the financial instruments are grouped based on shared credit risk characteristics, such as past due status and credit risk ratings.

ECLs are remeasured at each reporting date to reflect changes in the financial instrument's credit risk since initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss. The Target Company recognises an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

Write-off policy

The gross carrying amount of a financial asset or contract asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Target Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs.

Impairment of other non-current assets

Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or, an impairment loss previously recognised no longer exists or may have decreased:

property, plant and equipment (other than properties carried at revalued amounts);
right-of-useassets; and
intangible assets.

If any such indication exists, the asset's recoverable amount is estimated.

- II-15 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Calculation of recoverable amount

The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

Recognition of impairment losses

An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).

Reversals of impairment losses

In respect of assets, an impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.

A reversal of an impairment loss is limited to the asset's carrying amount that would have been determined had no impairment loss been recognised in prior periods. Reversals of impairment losses are credited to profit or loss in the period in which the reversals are recognised.

Inventories and other contract costs
1. Inventories
  Inventories are assets of supplies to be consumed in the production process.
  Inventories are carried at the lower of cost and net realisable value.

The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Other contract costs

Other contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contract with a customer which are not capitalised as inventory (see note 2(g)), property, plant and equipment (see note 2(c)) or intangible assets (see note 2(d)).

Incremental costs of obtaining a contract are those costs that the Target Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained e.g. an incremental sales commission. Incremental costs of obtaining a contract are capitalised when incurred if the costs relate to revenue which will be recognised in a future reporting period and the costs are expected to be recovered. Other costs of obtaining a contract are expensed when incurred.

Costs to fulfil a contract are capitalised if the costs relate directly to an existing contract or to a specifically identifiable anticipated contract; generate or enhance resources that will be used to provide goods or services in the future; and are expected to be recovered. Costs that relate directly to an existing contract or to a specifically identifiable anticipated contract may include direct labour, direct materials, allocations of costs, costs that are explicitly chargeable to the customer and other costs that are incurred only because the Target Company entered into the contract (for example, payments to sub-contractors). Other costs of fulfilling a contract, which are not capitalised as inventory, property, plant and equipment or intangible assets, are expensed as incurred.

- II-16 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Capitalised contract costs are stated at cost less accumulated amortisation and impairment losses. Impairment losses are recognised to the extent that the carrying amount of the contract cost asset exceeds the net of (i) remaining amount of consideration that the Target Company expects to receive in exchange for the goods or services to which the asset relates, less (ii) any costs that relate directly to providing those goods or services that have not yet been recognised as expenses.

Amortisation of capitalised contract costs is charged to profit or loss when the revenue to which the asset relates is recognised. The accounting policy for revenue recognition is set out in note 2(p).

Contract assets and contract liabilities

A contract asset is recognised when the Target Company recognises revenue (see note 2(p)) before being unconditionally entitled to the consideration under the payment terms set out in the contract. Contract assets are assessed for expected credit losses (ECL) in accordance with the policy set out in note 2(f)(i) and are reclassified to receivables when the right to the consideration has become unconditional (see note 2(i)).

A contract liability is recognised when the customer pays non-refundable consideration before the Target Company recognises the related revenue (see note 2(p)). A contract liability would also be recognised if the Target Company has an unconditional right to receive non-refundable consideration before the Target Company recognises the related revenue. In such cases, a corresponding receivable would also be recognised (see note 2(i)).

For a single contract with the customer, either a net contract asset or a net contract liability is presented. For multiple contracts, contract assets and contract liabilities of unrelated contracts are not presented on a net basis.

When the contract includes a significant financing component, the contract balance includes interest accrued under the effective interest method (see note 2(p)).

Trade and other receivables

A receivable is recognised when the Target Company has an unconditional right to receive consideration. A right to receive consideration is unconditional if only the passage of time is required before payment of that consideration is due. If revenue has been recognised before the Target Company has an unconditional right to receive consideration, the amount is presented as a contract asset (see note 2(h)).

Receivables are stated at amortised cost using the effective interest method less allowance for credit losses (see note 2(f)).

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Target Company's cash management are also included as a component of cash and cash equivalents for the purpose of the consolidated cash flow statement. Cash and cash equivalents are assessed for expected credit losses (ECL) in accordance with the policy set out in note 2(f).

Trade and other payables

Trade and other payables are initially recognised at fair value. Trade and other payables are subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

Interest-bearingborrowings

Interest-bearing borrowings are measured initially at fair value less transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method. Interest expense is recognised in accordance with the Target Company's accounting policy for borrowing costs (see note 2(q)).

- II-17 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Employee benefits
Short-term employee benefits and contributions to defined contribution retirement plans.

Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the period in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

Income tax

Income tax for the period comprises current tax. Current tax is recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous periods.

Additional income taxes that arise from the distribution of dividends are recognised when the liability to pay the related dividends is recognised.

Current tax assets are offset against current tax liabilities, if the Target Company has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:

- in the case of current tax assets and liabilities, the Target Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously; or
- in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:
- - the same taxable entity; or
  - different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the current tax liabilities on a net basis or realise and settle simultaneously.
Provisions and contingent liabilities
Provisions are recognised when the Target Company has a legal or constructive obligation arising as a result

of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

Revenue and other income

Income is classified by the Target Company as revenue when it arises from the sale of goods, the provision of services or the use by others of the Target Company's assets under leases in the ordinary course of the Target Company's business.

Revenue is recognised when control over a product or service is transferred to the customer, or the lessee has the right to use the asset, at the amount of promised consideration to which the Target Company is expected to be entitled, excluding those amounts collected on behalf of third parties. Revenue excludes value added tax or other sales taxes and is after deduction of any trade discounts.

- II-18 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Where the contract contains a financing component which provides a significant financing benefit to the customer for more than 12 months, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction with the customer, and interest income is accrued separately under the effective interest method. Where the contract contains a financing component which provides a significant financing benefit to the Target Company, revenue recognised under that contract includes the interest expense accreted on the contract liability under the effective interest method. The Target Company takes advantage of the practical expedient in paragraph 63 of IFRS 15 and does not adjust the consideration for any effects of a significant financing component if the period of financing is 12 months or less.

Further details of the Target Company's revenue and other income recognition policies are as follows:

Supply of steam

Revenue from supply of steam represents the fair value of the consideration received or receivable for steam sold in the ordinary course of the activities of the Target Company (net of VAT). Revenue is earned and recognised upon transmission of steam to the customers.

Sales of goods

Revenue is recognised when goods are delivered at the customers' premises which is taken to be the point in time when the customer has accepted the goods. Revenue excludes value added tax or other sales taxes and is after deduction of any trade discounts.

Interest income
Interest income is recognised as it accrues using the effective interest method.
Government grants

Government grants are recognised in the statements of financial position initially when there is reasonable assurance that they will be received and that the Target Company will comply with the conditions attaching to them. Grants that compensate the Target Company for expenses incurred are recognised as income in profit or loss on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Target Company for the cost of an asset are initially recognised as deferred income and are subsequently recognised in profit or loss over the useful life of the related asset.

Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

Related parties
1. A person, or a close member of that person's family, is related to the Target Company if that person:
2. 1. has control or joint control over the Target Company;
  2. has significant influence over the Target Company; or
  3. is a member of the key management personnel of the Target Company or the Target Company's parent.

- II-19 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

An entity is related to the Target Company if any of the following conditions applies:
1. The entity and the Target Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
2. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
3. Both entities are joint ventures of the same third party.
4. One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
5. The entity is a post-employment benefit plan for the benefit of employees of either the group or an entity related to the group.
6. The entity is controlled or jointly controlled by a person identified in (a).
7. A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
8. The entity, or any member of a group of which it is a part, provides key management personnel services to the group or to the group's parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

Segment reporting

Operating segments, and the amounts of each segment item reported in the Historical Financial Information, are identified from the financial information provided regularly to the Target Company's most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Target Company's business.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

3 REVENUE AND SEGMENT REPORTING

The principal activity of the Target Company is steam generation and supply business. Further details regarding the Target Company's principal activities are disclosed in note 3(b).

Disaggregation of revenue
Disaggregation of revenue from contracts with customers by major products or service lines is as follows:

								Nine months ended
	Year ended 31 December			30 September
	2016	2017			2018		2018	2019
								(unaudited)
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Revenue from contracts
with customers within
the scope of IFRS 15
- Steam supply	161,064		169,175			184,446		129,927	146,240
- Others	129		189			77		57	179

	161,193		169,364			184,523		129,984	146,419

- II-20 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Disaggregation of revenue from contracts with customers by the timing of revenue recognition and by geographic markets is disclosed in notes 3(b) and 3(c) respectively.

The Target Company's customer base is concentrated and includes four customers with whom transactions have exceeded 10% of the Target Company's revenues, and revenues from sales to these customers amounted to approximately RMB160,734,000, RMB168,979,000, RMB183,871,000, RMB129,552,000 (unaudited) and RMB145,903,000 in the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 30 September 2019, respectively. Details of concentration of credit risk regarding from the Target Company's customers are set out in note 21.

Segment reporting

The Target Company is principally engaged in one operating segment, steam generation and supply. All revenue is recognised at a point in time from external customers. Accordingly, no segment information is presented.

Geographic information

All the revenue from customers is derived from the customers located in Tianjin and all non-current assets are located in Tianjin. Accordingly, no segment analysis based on geographical location is presented.

4	OTHER NET INCOME
									Nine months ended
		Year ended 31 December			30 September
		2016	2017			2018		2018	2019
									(unaudited)
		RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
	Government grants
	(including amortisation
	of deferred income, see
	note 18)	5,414		6,006			8,604		3,425	4,318
	Net gain/(loss) on disposal
	of non-current assets	(2,342)	-	-	-	3
	Others	25		(590)		20		(31)	3

		3,097		5,416			8,624		3,394	4,324

- II-21 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

5 PROFIT BEFORE TAXATION

Profit before taxation is arrived at after charging:

									Nine months ended
		Year ended 31 December			30 September
		2016	2017			2018		2018	2019
									(unaudited)
		RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
(a)	Finance costs
	Interest on bank loans
	and other
	borrowings	9,401		7,863			7,175		5,474		4,754
	Less: interest expense
	capitalised into
	construction in
	progress	(278)	(193)		-	-	(124)
	Other interest expense	7		6			10		7		7

		9,130		7,676			7,185		5,481		4,637
(b)	Staff costs


	Contributions to
	defined contribution
	retirement plan	-	31			78		58		82
	Salaries, wages and
	other benefits	39		919			1,217		869		1,217

		39		950			1,295		927		1,299
(c)	Other items


	Amortisation of
	intangible assets	4		7			16		14		14
	Depreciation
	- owned property,
	plant and equipment	12,364		14,415			14,359		10,859		10,658
	- right-of-use assets
	for properties	1,374		1,374			1,374		1,030		1,030

		13,738		15,789			15,733		11,889		11,688
	Auditor's


	remuneration	17		17			17		-	-
	Fuel consumed	63,997		98,523			105,400		74,536		73,763
	Outsourcing operation	16,811		16,932			18,549		13,630		14,870

- II-22 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

6 INCOME TAX IN THE STATEMENT OF PROFIT OR LOSS

Taxation in the statements of profit or loss represents:

								Nine months ended
	Year ended 31 December			30 September
	2016	2017			2018		2018	2019
								(unaudited)
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Current tax
Provision for the
year/period	8,049		1,757			3,533		1,500	5,609

Reconciliation between tax expense and accounting profit at applicable tax rates:

								Nine months ended
	Year ended 31 December			30 September
	2016	2017			2018		2018	2019
								(unaudited)
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Profit before taxation	32,196		6,391			14,132		5,999	22,420
Notional tax on profit


before taxation	8,049		1,598			3,533		1,500	5,605
Tax effect of
non-deductible expenses	-	159			-	-	4

Actual tax expense	8,049		1,757			3,533		1,500	5,609

The Target Company was subject to the statutory income tax rate of 25% during the Relevant Periods.

7 DIRECTORS' EMOLUMENTS

During the year ended 31 December 2016, no fees, salaries, allowances and other benefits, discretionary bonus and retirement scheme contributions were paid/payable to the directors of the Target Company.

The emoluments paid or payable to directors for the year ended 31 December 2017 and 2018 and the nine months ended 30 September 2018 and 2019, respectively were as follows:

For the year ended 31 December 2017

			Salaries,
			allowances					Retirement
	Directors'	and benefits	Discretionary		scheme
	fees	in kind		bonuses	contributions	Total
	RMB'000	RMB'000		RMB'000		RMB'000	RMB'000
Name of director
Li Zhijun	-	153		381		15		549

- II-23 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
For the year ended 31 December 2018
				Salaries,
				allowances						Retirement
		Directors'	and benefits	Discretionary			scheme
		fees	in kind		bonuses	contributions	Total
		RMB'000	RMB'000		RMB'000			RMB'000	RMB'000
Name of director
Li Zhijun		-	300		301		39		640
Liu Hanwu (appointed on
31 December 2018)		-	276		220		39		535

		-	576		521		78		1,175


For the nine months ended 30 September 2019
				Salaries,
				allowances						Retirement
		Directors'	and benefits	Discretionary			scheme
		fees	in kind		bonuses	contributions	Total
		RMB'000	RMB'000		RMB'000			RMB'000	RMB'000
Name of director
Li Zhijun		-	220		226		27		473
Liu Hanwu		-	202		165		27		394

		-	422		391		54		867

For the nine months ended 30 September 2018 (unaudited)

			Salaries,
			allowances					Retirement
	Directors'	and benefits	Discretionary		scheme
	fees	in kind		bonuses	contributions	Total
	RMB'000	RMB'000		RMB'000		RMB'000	RMB'000
Name of director
Li Zhijun	-	211		226		29		466

During each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 30 September 2019, there were no amounts paid or payable by the Target Company to the directors or any of the individuals as set out in note 8 below as an inducement to joint or upon joining the Target Company or as a compensation for loss of office. There was no arrangement under which a director waived or agreed to waive any remuneration during the year.

- II-24 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

8 INDIVIDUALS WITH HIGHEST EMOLUMENTS

There were nil, 2, 3, 2 (unaudited) and 3 employees directly hired by the Target Company for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 30 September 2019. Of the individuals directly hired by the Target Company, nil, 1, 2, 1 (unaudited) and 2 are directors for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 30 September 2019 whose emoluments are disclosed in note 7. The emolument in respect of individuals hired directly by the Target Company and who is not director is as follows:

							Nine months ended
	Year ended 31 December			30 September
	2016	2017			2018	2018	2019
							(unaudited)
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Salaries and other
emoluments	-	110			59	206		196
Discretionary bonuses	-	197			51	165		154
Retirement scheme
contributions	-	15			9	29		27

	-	322			119	400		377

The emoluments of the nil, 1, 1, 1 (unaudited) and 1 individual for each of the years ended 31 December 2016, 2017 and 2018 and the nine months ended 30 September 2018 and 30 September 2019 directly hired by the Target Company are within the following bands:

							Nine months ended
	Year ended 31 December	30 September
	2016	2017		2018		2018	2019
							(unaudited)
	Number of	Number of	Number of	Number of	Number of
	individuals	individuals	individuals	individuals	individuals
HKDNil - HKD1,000,000	-	1		1		1		1

- II-25 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
9	PROPERTY, PLANT AND EQUIPMENT
								Steam
			Buildings				generation
			and				plant in	Motor			Construction
			structure				service	vehicles	Others		in progress	Total
			RMB'000				RMB'000	RMB'000	RMB'000		RMB'000	RMB'000
	Cost:
	At 1 January 2016	22,423			252,341		882		1,435		15,790		292,871
	Additions		-		116		-	359		21,303		21,778
	Disposals		-		(3,900)	-	-		-	(3,900)
	At 31 December 2016
	22,423			248,557		882		1,794		37,093		310,749
		- - - - - - - - -	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Additions		-		295		120		58		2,105		2,578
	Transfer from CIP	7,652			31,546		-	-	(39,198)	-
	At 31 December 2017
	30,075			280,398		1,002		1,852			-	313,327
		- - - - - - - - -	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Additions		-		6		-	37		2,587		2,630
	Transfer from CIP	1,523			616		-	355		(2,494)	-
	Disposals		-				-	-	(28)		-	(28)
	At 31 December 2018
	31,598			281,020		1,002		2,216		93		315,929
		- - - - - - - - -	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Additions		-		22		278		66		24,873		25,239
	Disposals		-				-	(92)	-		-	(92)
	At 30 September 2019
	31,598			281,042		1,188		2,282		24,966		341,076
		- - - - - - - - -	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Accumulated
	depreciation:
	At 1 January 2016	(3,347)		(45,067)	(574)	(1,027)		-	(50,015)
	Charge for the year	(786)		(11,227)	(111)	(240)		-	(12,364)
	Written back on disposal		-		1,209		-	-		-	1,209
	At 31 December 2016
	(4,133)		(55,085)	(685)	(1,267)		-	(61,170)
		- - - - - - - - -		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Charge for the year	(786)		(13,242)	(41)	(346)		-	(14,415)
	At 31 December 2017
	(4,919)		(68,327)	(726)	(1,613)		-	(75,585)
		- - - - - - - - -		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Charge for the year	(1,042)		(13,180)	(56)	(81)		-	(14,359)
	Written back on disposal		-				-	-	26			-	26
	At 31 December 2018
	(5,961)		(81,507)	(782)	(1,668)		-	(89,918)
		- - - - - - - - -		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Charge for the period	(812)		(9,624)	(53)	(169)		-	(10,658)
	Written back on disposal		-				-	87		-		-	87
	At 30 September 2019
	(6,773)		(91,131)	(748)	(1,837)		-	(100,489)
		- - - - - - - - -		- - - - - - - - -		- - - - - - -		- - - - - - -		- - - - - - - - -		- - - - - - -
	Net book value:
	At 31 December 2016	18,290			193,472		197		527		37,093		249,579
	At 31 December 2017

	25,156			212,071		276		239			-	237,742
	At 31 December 2018

	25,637			199,513		220		548		93		226,011
	At 30 September 2019

	24,825			189,911		440		445		24,966		240,587

Note: The Target Company has applied IFRS 16 Leases consistently throughout the Relevant Periods. The Target Company has elected not to recognise a right-of-use asset and a lease liability for short-term leases and leases of low-value assets.

- II-26 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
10 INTANGIBLE ASSETS
		Software
		and others
		RMB'000
Cost:
At 1 January 2016	37
Additions	5
At 31 December 2016
42
	- - - - - - - - - - - - - -
Additions	107
At 31 December 2017
149
	- - - - - - - - - - - - - -
Additions	17
At 31 December 2018
166
	- - - - - - - - - - - - - -
Additions	41
At 30 September 2019
207
	- - - - - - - - - - - - - -
Accumulated amortisation:
At 1 January 2016	9
Charge for the year	4
At 31 December 2016
13
	- - - - - - - - - - - - - -
Charge for the year	7
At 31 December 2017
20
	- - - - - - - - - - - - - -
Charge for the year	16
At 31 December 2018
36
	- - - - - - - - - - - - - -
Charge for the period	14
At 30 September 2019
50
	- - - - - - - - - - - - - -
Net book value:
At 31 December 2016	29
At 31 December 2017

129
At 31 December 2018

130
At 30 September 2019

157

- II-27 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
11 RIGHT-OF-USE ASSETS FOR PROPERTIES
										As at
					As at 31 December			30 September
		2016			2017	2018		2019
			RMB'000		RMB'000	RMB'000	RMB'000
Cost:
At the beginning of the year/period	68,687			68,687			68,687		68,687

At the end of the year/period	68,687			68,687			68,687		68,687
		- - - - - - - - - - -		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Accumulated amortisation:
At the beginning of the year/period	(5,266)	(6,640)	(8,014)	(9,388)
Amortisation for the year/period	(1,374)	(1,374)	(1,374)	(1,030)

At the end of year/period		(6,640)	(8,014)	(9,388)	(10,418)
		- - - - - - - - - - -	- - - - - - - - - - -			- - - - - - - - - - -		- - - - - - - - - - -
Net book value
At the end of the year/period	62,047			60,673			59,299		58,269

Right-of-use assets for properties of the Target Company represent the land use right in the PRC.

12 INVENTORIES

Inventories in the statements of financial position of the Target Company comprise:

							As at
		As at 31 December			30 September
	2016	2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Inventories
- Fuel	9,093	9,122		4,553		13,309
- Goods and supplies	334	474		305		487

	9,427	9,596		4,858		13,796

The analysis of the amount of inventories recognised as an expense and included in profit or loss is as follows:

							As at
		As at 31 December			30 September
	2016	2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Fuel consumed	63,997	98,523		105,400		73,763

- II-28 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
13 TRADE AND BILL RECEIVABLES
								As at
				As at 31 December			30 September
	2016		2017	2018		2019
		RMB'000		RMB'000	RMB'000	RMB'000
Accounts receivable, net of
loss allowance	5,845		4,233		5,002		2,283

All of the trade and bill receivables are expected to be recovered or recognised as expense within one year.

Ageing analysis

As of each end of the Relevant Periods, the ageing analysis of trade debtors and bills receivable, based on the invoice date and net of loss allowance, is as follows:

							As at
		As at 31 December			30 September
	2016	2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Within 1 month	5,845	4,283		5,002		2,283

Trade receivables are generally due within 10 days from the date of billing. Further details on the Target Company's credit policy and credit risk arising from trade debtors and bills receivable are set out in note 21(a).

14	OTHER RECEIVABLES AND ASSETS
										As at
					As at 31 December			30 September
			2016		2017	2018		2019
			RMB'000		RMB'000	RMB'000	RMB'000
	Receivables from related party	23,516		28,559		3		-
	Value added tax recoverable	2,697		4,557		6,180		8,029
	Income tax recoverable	1,257			-	-	-
	Others	587		599		451		65

			28,057		33,715		6,634		8,094

15 CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise:

							As at
		As at 31 December			30 September
	2016	2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Cash at bank and on hand	16,584	2,014		19,995		56,431

- II-29 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Reconciliation of liabilities arising from financing activities

The table below details changes in the Target Company's liabilities from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are liabilities for which cash flows were, or future cash flows will be, classified in the Target Company's cash flow statements as cash flows from financing activities.

		Loans and		Dividends		Interest
		borrowings		payable		payables		Total
		RMB'000		RMB'000		RMB'000
At 1 January 2016	196,000					-	293		196,293
	- - - - - - - - - - -				- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes from financing
cash flows:
Proceeds from new bank loans	30,500					-		-	30,500
Repayment of bank loans	(56,330)		-		-	(56,330)
Interest paid		-		-	(9,443)	(9,443)
Dividends paid to equity owners
of the Target Company		-	(19,475)		-	(19,475)
Total changes from financing

cash flows	(25,830)	(19,475)	(9,443)	(54,748)
	- - - - - - - - - - -				- - - - - - - - - - -		- - - - - - - - - - -		- - - - - - - - - - -
Other changes:
Interest incurred		-		-	9,401		9,401
Dividends proposed		-	19,475			-	19,475
Total other changes
	-	19,475		9,401		28,876
	- - - - - - - - - - -	- - - - - - - - - - -		- - - - - - - - - - - - - - - - - - - - - -
At 31 December 2016	170,170					-	251		170,421
	- - - - - - - - - - -				- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes from financing
cash flows:
Proceeds from new bank loans	20,000					-		-	20,000
Repayment of bank loans	(36,805)		-		-	(36,805)
Interest paid		-		-	(7,890)	(7,890)
Dividends paid to equity owners
of the Target Company		-	(8,000)		-	(8,000)
Total changes from financing

cash flows	(16,805)	(8,000)	(7,890)	(32,695)
	- - - - - - - - - - -				- - - - - - - - - - -		- - - - - - - - - - -		- - - - - - - - - - -
Other changes:
Interest incurred		-		-	7,863		7,863
Dividends proposed		-	8,000			-	8,000
Total other changes
	-	8,000		7,863		15,863
	- - - - - - - - - - -	- - - - - - - - - - -		- - - - - - - - - - - - - - - - - - - - - -
At 31 December 2017	153,365					-	224		153,589
	- - - - - - - - - - -				- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes from financing
cash flows:
Proceeds from new bank loans	20,000					-		-	20,000
Repayment of bank loans	(47,425)		-		-	(47,425)
Interest paid		-		-	(7,212)	(7,212)
Dividends paid to equity owners
of the Target Company		-	(5,000)		-	(5,000)
Total changes from financing

cash flows	(27,425)	(5,000)	(7,212)	(39,637)
	- - - - - - - - - - -				- - - - - - - - - - -		- - - - - - - - - - -		- - - - - - - - - - -

- II-30 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
			Loans and			Dividends			Interest
			borrowings			payable			payables			Total
			RMB'000			RMB'000			RMB'000
Other changes:
Interest incurred			-			-	7,175		7,175
Dividends proposed			-	5,000					-	5,000
Total other changes
		-	5,000			7,175		12,175
		- - - - - - - - - - -	- - - - - - - - - - -			- - - - - - - - - - - - - - - - - - - - - -
At 31 December 2018		125,940						-	187		126,127
		- - - - - - - - - - -				- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes from financing
cash flows:
Proceeds from new bank loans	70,000						-			-	70,000
Repayment of bank loans		(37,940)			-			-	(37,940)
Interest paid			-			-	(4,756)	(4,756)
Total changes from financing

cash flows		(32,060)			-	(4,756)	(36,816)
		- - - - - - - - - - -				- - - - - - - - - --	- - - - - - - - - --	- - - - - - - - - - -
Other changes:
Interest incurred			-			-	4,754		4,754

Total other changes			-			-	4,754		4,754
		- - - - - - - - - - -	- - - - - - - - - - -			- - - - - - - - - - - - - - - - - - - - - -
At 30 September 2019		158,000						-	185		158,185


			Loans and			Dividends			Interest
			borrowings			payable			payables			Total
			RMB'000			RMB'000			RMB'000
(Unaudited)
At 1 January 2018		153,365						-	224		153,589
		- - - - - - - - - - -				- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes from financing
cash flows:
Proceeds from new bank loans	20,000						-			-	20,000
Repayment of bank loans		(29,198)			-			-	(29,198)
Interest paid			-			-	(5,505)	(5,505)
Dividends paid to equity owners
of the Target Company			-	(5,000)			-	(5,000)
Total changes from financing

cash flows		(9,198)	(5,000)	(5,305)	(19,703)
		- - - - - - - - - - -				- - - - - - - - - - -			- - - - - - - - - - -		- - - - - - - - - - -
Other changes:
Interest incurred			-			-	5,474		5,474
Dividends proposed			-	5,000					-	5,000

Total other changes			-	5,000			5,474		10,474
		- - - - - - - - - - -	- - - - - - - - - - -			- - - - - - - - - - - - - - - - - - - - - -
At 30 September 2018 (unaudited)	144,167						-	193		144,360

- II-31 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

16 LOANS AND BORROWINGS

At 31 December 2016, 2017 and 2018 and 30 September 2019, the loans and borrowings were repayable as follows:

					As at 31 December				As at
								30 September
		2016		2017	2018		2019
			RMB'000		RMB'000	RMB'000		RMB'000
Within 1 year or on demand	36,805		47,425		50,940		76,596
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -		- - - - - - - - - - -
After 1	year but within 2 years	27,425		30,940		25,000		36,127
After 2	years but within 5 years	80,940		75,000		50,000		41,731
After 5	years	25,000			-	-	3,546

		133,365		105,940		75,000		81,404
		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
		170,170		153,365		125,940		158,000

At 31 December 2016, 2017 and 2018 and 30 September 2019, the loans and borrowings were analysed as follows:

		As at 31 December			As at
				30 September
	2016	2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Secured and guaranteed bank loans	140,000	120,000		100,000		88,000
Unsecured bank loans	30,170	33,365		25,940		70,000

	170,170	153,365		125,940		158,000

The Target Company's non-currentsecured and guaranteed bank loans from China Development Bank was secured by trade receivables of the Target Company and guaranteed by its former equity owner Tianjin Jinneng Investment Company (天津市津能投資有限公司) and current equity owner Tianjin Lingang Public Utilities Development Co., Ltd. (天津臨港公用事業發展有限公司).

17	TRADE AND OTHER PAYABLES
			As at 31 December			As at
					30 September
		2016	2017	2018		2019
		RMB'000	RMB'000	RMB'000	RMB'000
	Payables for purchase of
	property, plant and equipment	5,347	3,569		79		12,234
	Trade payable to third parties	1,651	1,581		1,982		1,733
	Deposit received	784	896		1,459		773
	Interest payable	251	224		187		185
	Payables for other taxes	6	6		327		671
	Others	564	366		110		261

		8,603	6,642		4,144		15,857

All of the trade and other payables (including amounts due to related parties) are expected to be settled or recognised as income within one year or are repayable on demand.

- II-32 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

As of the end of each reporting period, the ageing analysis of trade payable (which are included in trade and other payables), based on the invoice date, is as follows:

								As at
			As at 31 December			30 September
		2016	2017	2018		2019
		RMB'000	RMB'000	RMB'000	RMB'000
	Within 3 months	1,651	1,581		1,982		1,733
18	DEFERRED INCOME


								As at
			As at 31 December			30 September
		2016	2017	2018		2019
		RMB'000	RMB'000	RMB'000	RMB'000
	Government grants	42,924	40,361		37,464		35,292

The Target Company received grants from the local government on the construction of the heating pipelines and discharge facilities in 2011, 2013 and 2016 which have been recognised as deferred income and are subsequently recognised in profit or loss over the useful life of the related assets.

19 INCOME TAX IN THE STATEMENT OF FINANCIAL POSITION

Current taxation in the statement of financial position represents:

								As at
			As at 31 December			30 September
	2016			2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Provision for income tax for the
year/period	8,049			1,757		3,533		5,609
Provisional income tax
(paid)/received	(12,799)	245		(2,570)	(6,357)

	(4,750)	2,002		963		(748)
Balance of Profits Tax provision
relating to prior years	3,493			(1,257)	745		1,708

	(1,257)	745		1,708		960

- II-33 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

20 CAPITAL AND RESERVES

Dividends
1. Dividends payable to equity owners of the Target Company attributable to the year/period

						As at
		As at 31 December			30 September
	2016	2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Final dividend proposed after
the end of the reporting
year/period	8,000	5,000		-	-

	8,000	5,000		-	-

The final dividend proposed after the end of the reporting period has not been recognised as a liability at the end of the reporting period.

Dividends payable to equity owners of the Target Company attributable to the previous financial year, approved and paid during the year/period

							As at
		As at 31 December			30 September
	2016	2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Final dividend in respect of
the previous financial year,
approved and paid during
the year/period	19,475	8,000		5,000		-

Nature and purpose of reserves
1. Capital reserve
  The capital reserve comprises capital premium contributed by equity owners in capital injection.
2. Statutory surplus reserves

According to the Company Law of the PRC, the Target Company's articles of association, the Target Company appropriates 10% of each year's net profit under Accounting Standards for Business Enterprises issued by the Ministry of Finance of the People's Republic of China ("PRC GAAP") to the statutory surplus reserve. The Target Company has the option to cease provision for such reserve when it reaches 50% of the registered paid-in capital. Upon the approval from relevant authorities, this reserve can be used to make up any losses incurred or to increase paid-in capital. Except for offsetting against losses, this reserve cannot fall below 25% of the registered paid-in capital after being used to increase paid-in capital.

Distributable reserves

Payment of future dividends will be determined by the Board of Directors. The payment of the dividends will depend upon, the future earnings, capital requirements and financial conditions and general business conditions of the Target Company. As at 31 December 2016, 2017 and 2018 and 30 September 2019, the aggregate amount of reserves available for distribution to the equity owners of the Target Company is RMB40,843,000, RMB36,994,000, RMB41,522,000 and RMB58,333,000, respectively.

- II-34 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Following the establishment of the Target Company, under the Company Law of the PRC and the Target Company's Articles of Association, net profit after tax as reported in the statutory financial statements prepared in accordance with the accounting rules and regulations of the PRC can only be distributed as dividends after allowances have been made for the following:

1. Making up prior years' cumulative losses, if any;
2. Allocations to the reserve fund as set out in note 20(b) above; and
3. Allocations to the discretionary common reserve if approved by the equity owners/shareholders.
Capital management

The Target Company's primary objectives when managing capital are to safeguard the Target Company's ability to continue as a going concern, so that it can continue to provide returns for owners.

The Target Company actively and regularly reviews and manages its capital structure to maintain a balance between the higher owner returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.

The Target Company monitors its capital structure on the basis of an adjusted net debt-to-capital ratio. For this purpose, adjusted net debt is defined as total debt (which includes interest-bearing loans and borrowings) plus unaccrued proposed dividends, less cash and cash equivalents. Adjusted capital comprises all components of equity, less unaccrued proposed dividends.

The Target Company's adjusted net debt-to-capital ratio at the end of the current and previous reporting periods as follows:

		As at 31 December			As at
				30 September
	Note	2016		2017			2018	2019
		RMB'000	RMB'000	RMB'000	RMB'000
Current liabilities:
Loans and borrowings
(current portion)	16	14,000		20,000			20,000		40,000
Current portion of other
non-current loans and
borrowings	16	22,805		27,425			30,940		36,596
Non-current liabilities:
Loans and borrowings
(non-current portion)	16	133,365		105,940			75,000		81,404

Total debt		170,170		153,365			125,940		158,000
Add: Proposed dividends	20(a)	8,000		5,000			-	-
Less: Cash and cash
equivalents	15	(16,584)	(2,014)		(19,995)	(56,431)
Adjusted net debt
	161,586		156,351			105,945		101,569


Total equity		149,871		146,505			152,104		168,915
Less: Proposed dividends	20(a)	(8,000)	(5,000)		-	-
Adjusted capital
	141,871		151,505			152,104		168,915
Adjusted net


debt-to-capital ratio		114%		103%			70%		60%

The Target Company is not subject to externally imposed capital requirements.

- II-35 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

21 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Exposure to credit, liquidity and interest rate risks arise in the normal course of the Target Company's business.

The Target Company's exposure to these risks and the financial risk management policies and practices used by the Target Company to manage these risks are described below.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the company. The Target Company's credit risk is primarily attributable to trade receivables. The Target Company's exposure to credit risk arising from cash and cash equivalents and restricted deposits is limited because the counterparties are banks and financial institutions with high credit rating, for which the Target Company considers to have low credit risk.

Trade receivables

The Target Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer rather than the industry or country in which the customers operate and therefore significant concentrations of credit risk primarily arise when the company has significant exposure to individual customers. At the 31 December 2016, 2017 and 2018 and 30 September 2019, 46%, 22%, 24% and 28%of the total trade receivables was due from the Target Company's largest customer and all the trade receivables were due from the five largest customers.

Individual credit evaluations are performed on all customers requiring credit over a certain amount. These evaluations focus on the customer's past history of making payments when due and current ability to pay and take into account information specific to the customer as well as pertaining to the economic environment in which the customer operates. Trade receivables are due within 10 days from the date of billing. Debtors with balances that are more than 1 months past due are requested to settle all outstanding balances before any further credit is granted. Normally, the Target Company does not obtain collateral from customers.

The Target Company measures loss allowances for trade receivables at an amount equal to lifetime ECLs, which is calculated using a provision matrix. As the Target Company's historical credit loss experience does not indicate significantly different loss patterns for different customer segments, the loss allowance based on past due status is not further distinguished between the Target Company's different customer bases.

The Target Company's exposure to credit risk and ECLs for trade receivables was immaterial.

Liquidity risk

The Target Company's policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and readily realisable marketable securities and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.

- II-36 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

The following tables show the remaining contractual maturities at the end of the reporting period of the Target Company's non-derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the end of the reporting period) and the earliest date the Target Company can be required to pay:

As at 30 September 2019

Contractual undiscounted cash outflow

More than

Within

1 year but

2 years but

Carrying

1 year or

less than

More than

amount at

on demand

2 years

5 years

Total

30 September

RMB'000

Trade and other

payables

15,857

Interest-bearing

bank loans

78,200

38,721

47,343

5,973

170,237

158,000

94,057

38,721

47,343

5,973

186,094

173,857

As at 31 December 2018

Contractual undiscounted cash outflow

More than

Within

1 year but

2 years but

Carrying

1 year or

less than

More than

amount at

on demand

2 years

5 years

Total

31 December

RMB'000

Trade and other

payables

4,144

Interest-bearing

bank loans

52,139

27,054

57,783

136,976

125,940

56,283

27,054

57,783

141,120

130,084

As at 31 December 2017

Contractual undiscounted cash outflow

More than

Within

1 year but

2 years but

Carrying

1 year or

less than

More than

amount at

on demand

2 years

5 years

Total

31 December

RMB'000

Trade and other

payables

6,642

Interest-bearing

bank loans

48,681

33,347

88,512

170,540

153,365

55,323

33,347

88,512

177,182

160,007

- II-37 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

As at 31 December 2016

Contractual undiscounted cash outflow

More than

Within

1 year but

2 years but

Carrying

1 year or

less than

More than

amount at

on demand

2 years

5 years

Total

31 December

RMB'000

Trade and other

payables

8,603

Interest-bearing

bank loans

37,667

29,640

95,087

31,954

194,348

170,170

46,270

29,640

95,087

31,954

202,951

178,773

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Target Company's interest rate risk arises primarily from long-term borrowings. Borrowings issued at variable rates and fixed rates expose the Target Company to cash flow interest rate risk and fair value interest rate risk respectively. The Target Company's interest rate profile as monitored by management is set out below.

Interest rate profile

The following table details the interest rate profile of the Target Company's borrowings at the end of the reporting period:

	As at 31 December 2016	As at 31 December 2017
	Effective			Effective
	interest rate			interest rate
	%	RMB'000	%	RMB'000
Fixed rate borrowings:
Bank loans	4.35%	14,000		N/A	-
Variable rate borrowings:
Bank loans	4.35%~4.90%	156,170		4.13%~4.90%	153,365

Total borrowings		170,170			153,365
Fixed rate borrowings as a


percentage of total
borrowings		8.23%			-

- II-38 -

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET COMPANY
	As at 31 December 2018	As at 30 September 2019
	Effective			Effective
	interest rate			interest rate
	%	RMB'000	%	RMB'000
Fixed rate borrowings:
Bank loans	N/A	-	N/A	-
Variable rate borrowings:
Bank loans	4.79%~4.90%	125,940		4.35%~4.90%	158,000

Total borrowings		125,940			158,000
Fixed rate borrowings as a


percentage of total
borrowings		-		-

Sensitivity analysis

At 31 December 2016, 2017 and 2018 and 30 September 2019, it is estimated that a general increase/decrease of 100 basis points in interest rates, with all other variables held constant, would have decreased/increased the Target Company's profit after tax and retained profits by approximately RMB1,171,000, RMB1,150,000, RMB945,000 and RMB888,750.

The sensitivity analysis above indicates the exposure to cash flow interest rate risk arising from floating rate non-derivative instruments held by the Target Company at the end of the reporting period, and the impact on the Target Company's profit after tax (and retained profits) is estimated as an impact on interest expense or income of such a change in interest rates. The analysis is performed on the same basis in Relevant Periods.

Fair value measurement

As at 31 December 2016, 2017 and 2018 and 30 September 2019, the carrying amounts of trade and bill receivables, other receivables and assets and trade and other payables were not materially different from their fair values.

22 COMMITMENTS

Capital commitments outstanding at 31 December 2016, 2017 and 2018 and 30 September 2019 not provided for in the Historical Financial Information were as follows:

							As at
			As at 31 December			30 September
	2016	2017		2018	2019
	RMB'000		RMB'000	RMB'000	RMB'000
Contracted for	2,618		1,454		-	3,593
Authorised but not contracted for	-		-	-	18,200

	2,618		1,454		-	21,793

- II-39 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

23 MATERIAL RELATED PARTY TRANSACTIONS

Key management personnel remuneration

Remuneration for key management personnel of the Target Company, including amounts paid to the Target Company's directors as disclosed in note 7 and certain of the highest paid employees as disclosed in note 8, is as follows:

							Nine months period
	Year ended 31 December			ended 30 September
	2016	2017			2018	2018	2019
							(unaudited)
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Short-term employee
benefits	-	841			1,207	808		1,163
Post-employment benefits	-	30			87	58		81

	-	873			1,294	866		1,244

Total remuneration is included in "staff costs" (see note 5(b)).

Related party balances and transactions

The related parties of the Target Company that had transactions with the Target Company are as follows:

Names of related parties	Nature of relationship
Tianjin Energy Investment Group Co. Ltd. ("Tianjin	ultimate controlling party
Energy Group") 天津能源投資集團有限公司
Tianjin Lingang Public Utilities Development	equity owner
Co., Ltd. 天津臨港公用事業發展有限公司
Tianjin Jinneng Investment Company 天津市津能投	Former equity owner
資有限公司
Tianjin Chentang Thermoelectricity Co. Ltd. 天津陳	a subsidiary of Tianjin Energy Group
塘熱電有限公司
Tianjin Jinneng Fuel Co., Ltd. 天津市津能燃料有限	a subsidiary of Tianjin Energy Group
公司
Tianjin Jinneng Engineering Management Co. Ltd.	a subsidiary of Tianjin Energy Group
天津市津能工程管理有限公司
Settle Center of Tianjin Energy Resources	a subsidiary of Tianjin Energy Group
Investment Group Co., Ltd. 天津能源投資集團有
限公司結算中心
Tianjin Energy Group Finance Co. Ltd. 天津能源集	a subsidiary of Tianjin Energy Group
團財務有限公司

The English translation of the companies' name are for reference only. The official name of the companies are in Chinese.

- II-40 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Related party balances
1. Cash deposits in a related party

						As at
		As at 31 December			30 September
	2016	2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Deposit in Tianjin Energy
Group Finance Co. Ltd.	-	-	19,088		49,342

Other receivables and assets comprised the following balances due from related parties:

							As at
		As at 31 December			30 September
	2016	2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Amount due from Settle
Center of Tianjin Energy
Resources Investment
Group Co., Ltd.	23,516	28,559		3		-

Other payables and liabilities and guarantees provided to the Target Company comprised the following:

Guarantees provided by former and current equity owners for the Target Company's bank loans balances at the end of the reporting period.

							As at
		As at 31 December			30 September
	2016	2017	2018		2019
	RMB'000	RMB'000	RMB'000	RMB'000
Amount due to Tianjin Energy
Group and its subsidiaries	677	35		-	202
Guarantees provided by
former and current equity
owners for the Target
Company's bank loans
balances at the end of the
reporting period	140,000	120,000		100,000		88,000

Related party transactions

				Nine months period
	Year ended 31 December		ended 30 September
	2016	2017	2018	2018	2019
				(unaudited)
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Purchase of goods from
Tianjin Energy Group
and its subsidiaries	81,798	115,305	36,834	36,834	-
Services provided by
Tianjin Energy Group
and its subsidiaries	10,084	9,099	9,457	6,971	7,664

- II-41 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

24 NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD

The Novel Coronavirus Pneumonia outbreak (the "COVID-19 Outbreak") since early 2020 has brought about additional uncertainties in the Target Company's operating environment and may impact the Target Company's operations and financial position.

The Target Company has been closely monitoring the impact from the COVID-19 Outbreak on the Target Company's businesses and has commenced to put in place various contingency measures. The directors of the Company confirm that these contingency measures include but not limited to assessing the readiness of the steam generation plant and revisiting the progress of the construction in progress, reassessing the adequacy and suitability of the Target Company's existing suppliers inventory and increase monitoring of the business environment of the Target Company's customers. The Target Company will keep the contingency measures under review as the COVID-19 Outbreak situation evolves.

As far as the Target Company's businesses are concerned, the COVID-19 Outbreak may cause decrease on user's demand of the steam, but the directors of the Company consider that such impact could be reduced by the Target Company's expedition of the steam generation and supply process upon the cessation of the COVID-19 Outbreak. In addition, the COVID-19 Outbreak may also impact the repayment abilities of the Target Company's debtors and the willingness of the customers to procure the Target Company's generated steam, which in turn may result in impairment losses on trade receivables and property, plant and equipment in future periods. These possible impacts have not been reflected in the Historical Financial Information, and the actual impacts may differ from estimates adopted in the Historical Financial Information as the COVID-19 Outbreak situation continues to evolve and when further information may become available.

25 IMMEDIATE AND ULTIMATE CONTROLLING PARTY

At 30 September 2019, the directors consider the immediate parent and ultimate controlling party of the Target Company to be Tianjin Jinneng Binhai Heating Group Co., Ltd. (天津津能濱海供熱集團有限公司) and Tianjin Energy Group, which are incorporated in the PRC. These entities do not produce financial statements available for public use.

26 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE PERIOD BEGINNING 1 JANUARY 2019

Up to the date of issue of the Historical Financial Information, the IASB has issued a number of amendments and a new standard, IFRS 17, Insurance contracts, which are not yet effective for the period beginning 1 January

2019 and which have not been adopted in the Historical Financial Information. These include the following:

Effective for accounting periods beginning on or after

Revised Conceptual Framework for Financial Reporting	1	January 2020
Amendments to IFRS 9, IAS 39 and IFRS 7, Interest Rate Benchmark Reform	1	January 2020
Amendments to IFRS 3, Definition of a business	1	January 2020
Amendments to IAS 1, Presentation of financial statements, and IAS 8,	1	January 2020
Accounting policies, changes in accounting estimates and errors,
Definition of a material
IFRS 17, Insurance contracts	1	January 2021
Amendments to IAS 1, Classification of Liabilities as Current or Non-current	1	January 2022
Amendments to IFRS 10 and IAS 28, Sale or contribution of assets between	To be determined
an investor and its associate or joint venture

The Target Company is in the process of making an assessment of what the impact of these developments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the financial statements.

SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target Company in respect of any period subsequent to 30 September 2019.

- II-42 -

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

1. Introduction

The following unaudited pro forma financial information of the Enlarged Group, Tianjin Tianbao Energy Co., Ltd. (the "Company") and its subsidiaries (collectively the "Group"), together with Tianjin Jinneng Lingang Thermal Power Co., Ltd. (the "Target Company"), comprising the unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group as at 30 June 2019, has been prepared by the directors of the Company in accordance with paragraphs 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") for the purpose of illustrating the effect of the proposed acquisition of 51% equity interests in the Target Company by the Company and proposed provision of guarantee for the Target Company (the "Proposed Acquisition"), as if the Proposed Acquisition had been completed on 30 June 2019.

The unaudited pro forma financial information has been prepared using accounting policies consistent with that of the Group and is based on the consolidated statement of financial position of the Group at 30 June 2019 as extracted from the Group's condensed consolidated financial statements for the six months ended 30 June 2019 as set out in the published interim report of the Group for the six months ended 30 June 2019 as mentioned in the "Financial Information of the Group" section in Appendix I to this circular after making certain pro forma adjustments as described below. Narrative descriptions of the pro forma adjustments of the Proposed Acquisition that are (i) directly attributable to the Proposed Acquisition concerned and not relating to future events or decisions; and (ii) factually supportable, is summarised in the notes below.

The unaudited pro forma financial information has been prepared for illustrative purposed only and, because of its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group had the Proposed Acquisition been completed as at the specified dates or any future date.

The unaudited pro forma financial information of the Enlarged Group should be read in conjunction with the historical financial information of the Group as set out in the published interim report of the Group for the six months ended 30 June 2019, and other financial information included elsewhere in the circular.

- III-1 -

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

2. Unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group as at 30 June 2019

(Expressed in RMB)

											Unaudited pro
											forma
											consolidated
											statement of
			The Target							assets and
	The Group as	Company as at							liabilities of the
	at 30 June	30 September	Other Pro forma		Enlarged
	2019		2019		Adjustments		Group
	RMB'000	RMB'000	RMB'000	RMB'000		RMB'000
	Note 3(a)	Note 3(b)	Note 3(c)	Note 3(d)
Non-current assets
Property, plant and equipment	341,568		240,587		3,298				-	585,453
Goodwill	-	-	978				-	978
Right-of-use assets for
properties	15,153		58,269		(2,637)	-	70,785
Intangible assets	1,781		157		-	-	1,938

	358,502		299,013		1,639				-	659,154
	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Current assets
Inventories	4,071		13,796		-	-	17,867
Trade and bill receivables	26,000		2,283		-	-	28,283
Other receivables and assets	2,389		8,094		-	-	10,483
Cash and cash equivalents	140,957		56,431		(100,876)	-	96,512
Contract assets	82		-	-	-	82

	173,499		80,604		(100,876)	-	153,227
	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Current liabilities
Loans and borrowings
(current portion)	-	40,000		-	-	40,000
Trade and other payables	22,619		15,857		-	2,560	41,036
Contract liabilities
(current portion)	19,791		-	-	-	19,791
Salary and welfare payables	1,161		593		-	-	1,754
Lease liabilities
(current portion)	424		-	-	-	424
Current taxation	-	960		-	-	960
Current portion of non-current
loans and borrowings	-	36,596		-	-	36,596
Dividends payable	12,798		-	-	-	12,798

	56,793		94,006		-	2,560	153,359
	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- III-2 -

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

									Unaudited pro
									forma
									consolidated
									statement of
			The Target					assets and
	The Group as	Company as at					liabilities of the
	at 30 June	30 September	Other Pro forma	Enlarged
	2019		2019		Adjustments	Group
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
	Note 3(a)	Note 3(b)	Note 3(c)	Note 3(d)
Non-current liabilities
Loans and borrowings
(non-current portion)	-	81,404		-	-	81,404
Deferred income	11,004		35,292		(26,469)	-	19,827
Deferred tax liabilities	3,035		-	165		-	3,200
Other non-current liabilities	155,174		-	-	-	155,174
Contract liabilities
(non-current portion)	7,168		-	-	-	7,168
Lease liabilities
(non-current portion)	49		-	-	-	49

	176,430		116,696		(26,304)	-	266,822
	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
NET ASSETS	298,778		168,915		(72,933)	(2,560)	392,200

3. Notes to the Unaudited Pro Forma Financial Information

The balances were extracted from the Group's condensed consolidated financial statements for the six months ended 30 June 2019 as set out in the published interim report for six months ended 30 June 2019.
The balances were extracted from the Accountants' Report of the Target Company in Appendix II to this Circular.
The identifiable assets and liabilities of the Target Company to be acquired by the Group will be accounted for in the consolidated financial statements of the Enlarged Group at fair value (adjusted) under the acquisition accounting in accordance with International Financial Reporting Standard ("IFRS") 3, Business Combination.
Pro forma adjustments made represent:

	Notes	RMB'000
Consideration:
Cash Consideration	(i)	100,876

Add: Non-controlling interest		95,982
Less: adjusted fair value of the net assets acquired	(ii)	(195,880)
Goodwill arising from the Proposed Acquisition
(iii)	978

The consideration for the Proposed Acquisition will be satisfied by payment of cash by the Company within thirty business days after the execution of the equity transfer agreement.

- III-3 -

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

1. The fair value adjustments represent the revaluation of property, plant and equipment, land use right and deferred income amounted to RMB3,298,000, RMB(2,637,000) and RMB26,469,000, separately. The fair value is determined by the lowest consideration for the sell and purchase of state-owned assets, of which the valuation of the property, plant and equipment was obtained using the asset-based based approach and valuation of land use right was obtained using the market approach.
  Other fair value adjustments represent relevant deferred tax impact arouse from fair value adjustments amounted to RMB(165,000). The turnaround effect of last few days transactions for the year/period end of Relevant Periods which was not reflected in independent valuation report amounted to RMB(1,751,000), which was relevant to the normal business activities such as fuel consuming, sales of steam and collection of account receivables etc, leading to an immaterial difference between the fair value of the Target Company's net assets as at 30 September 2019 as stated in the independent valuation report, and the adjusted fair value used for the preparation of the pro forma financial information.
2. The excess of the sum of consideration and non-controlling interest over the fair value of the net identifiable assets of the Target Company is recognised as goodwill. The pro forma goodwill represents 0.5% of the fair value of the net assets acquired, 0.3% of the total assets of the Group and 0.1% of the pro forma total assets of the Enlarged Group.
3. The amounts of goodwill and fair value of the identifiable assets and liabilities of the Target Company on the completion date are subject to (i) the completion of the valuation of the fair value of the identifiable assets and liabilities of the Target Company on the completion date and (ii) the financial position of the Target Company on the completion date. Accordingly, the amounts of goodwill and fair value of the identifiable assets and liabilities of the Target Company may be different from the amounts used in preparation of the unaudited pro forma financial information presented above.
The adjustment represents the estimated costs related to the acquisition including fee to legal advisers, financial adviser, reporting accountants, valuer, printer and other expenses.
No adjustment has been made to the pro forma financial information to reflect any trading results or other transactions of the Enlarged Group entered into subsequent to 30 June 2019.

- III-4 -

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the text of a report received from the reporting accountants, KPMG, Certified Public Accountants, Hong Kong, in respect of the Group's pro forma financial information for the purpose in this circular.

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

TO THE DIRECTORS OF TIANJIN TIANBAO ENERGY CO., LTD.

We have completed our assurance engagement to report on the compilation of pro forma financial information of Tianjin Tianbao Energy Co., Ltd. (the "Company") and its subsidiaries (collectively the "Group") by the directors of the Company (the "Directors") for illustrative purposes only. The pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities as at 30 June 2019 and related notes as set out in Part A of Appendix III to the circular dated 12 March 2020 (the "Circular") issued by the Company. The applicable criteria on the basis of which the Directors have compiled the pro forma financial information are described in Part A of Appendix III to the Circular.

The pro forma financial information has been compiled by the Directors to illustrate the impact of the proposed acquisition of 51% equity interest in Tianjin Jinneng Lingang Thermal Power Co., Ltd. (the "Proposed Acquisition") on the Group's financial position as at 30 June 2019 as if the Proposed Acquisition had taken place at 30 June 2019. As part of this process, information about the Group's financial position as at 30 June 2019 has been extracted by the Directors from the interim financial report of the Group for the six months ended 30 June 2019, on which an review report has been published.

Directors' Responsibilities for the Pro Forma Financial Information

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

- III-5 -

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

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.

The 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" issued by the HKICPA 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 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 pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements ("HKSAE") 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 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 purpose of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the 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 pro forma financial information.

The purpose of pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on the unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the events or transactions at 30 June 2019 would have been as presented.

- III-6 -

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

A reasonable assurance engagement to report on whether the 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 pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

the related pro forma adjustments give appropriate effect to those criteria; and
the pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants' judgement, having regard to the reporting accountants' understanding of the nature of the Group, the event or transaction in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the pro forma financial information.

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

Opinion

In our opinion:

the pro forma financial information has been properly compiled on the basis stated;
such basis is consistent with the accounting policies of the Group, and
the adjustments are appropriate for the purposes of the pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

KPMG

Certified Public Accountants 8th Floor, Prince's Building 10 Chater Road

Central, Hong Kong

12 March 2020

- III-7 -

APPENDIX IV	MANAGEMENT DISCUSSION AND
	ANALYSIS ON THE TARGET COMPANY

The following management discussion and analysis should be read in conjunction with the accountants' report of the Target Company for each of the years ended December 31, 2016, 2017 and 2018 and for the nine months ended September 30, 2019.

BUSINESS REVIEW

The Target Company is principally engaged in steam production and supply business in the Binhai New District in Tianjin.

The primary asset of the Target Company is the Site and the Site was acquired by the Target Company by way of direct purchase from the Tianjin Binhai New District Planning and Land Bureau* (天津市濱海新區規劃和國土資源管理局) on November 8, 2011 and developed by itself. The Site mainly consists of the production facility of the Target Company. The production facility has a gross floor area of approximately 24,608 square metres and includes all necessary equipment, such as steam boilers and desulfurization equipment, for the Target Company to carry on its business and for the production and supply of steam. As at the Latest Practicable Date, certain coal boilers at the Site were in the process of being upgraded, which is an on-going construction project expected to complete in due course.

The Target Company is located in the Grain and Oil Industrial Park of the Lingang Economic Zone, and provides heating services for surrounding enterprises.

Lingang Economic Zone is the largest integrated grain and oil processing base in northern China. In 2013, the Grain and Oil Industry Park of Lingang Economic Zone was officially identified as one of the first batch of new industrialization demonstration bases (for grains, oils and foods) in Tianjin. There is an efficient and convenient railway transportation network in the industrial park, which saves logistics costs and time for the enterprises situated in the industrial park.

The Target Company engages in the public utility sector, mainly providing steam for the production process of the enterprises in the Grain and Oil Industrial Park. Steam is an important medium of energy required for industrial production, particularly for production in the chemical, metallurgy, papermaking, printing and dyeing, food and pharmaceutical industries. As companies and factories situated in the Grain and Oil Industrial Park of the Lingang Economic Zone engages in a variety of production sectors, taking into account that the economic radius of steam transportation network is generally three to four kilometers due to factors such as pressure drop, temperature drop, loss and construction cost during steam transportation, the Target Company is well-positioned and well equipped to capture business opportunities in the Gran and Oil Industrial Park of the Lingang Economic Zone and serves the enterprises nearby. At the same time, there is no unified steam pricing model in Tianjin and enterprises negotiate steam supply prices according to the government's guidance. As a major steam supplier in the Grain and Oil Industrial Park of the Lingang Economic Zone, the Target Company may negotiate supply prices and maximize profits accordingly.

- IV-1 -

APPENDIX IV	MANAGEMENT DISCUSSION AND
	ANALYSIS ON THE TARGET COMPANY

Accordingly, after taking into account its geographical location and business characteristics, the development of the Target Company mainly depends on the operations, business needs and development of its neighbouring enterprises. The Target Company's revenue mainly drives from customers engaging in the food, grain and oil industries. The audited revenue of the Target Company were approximately RMB161.2 million, RMB169.4 million, RMB184.5 million and RMB146.4 million for the years ended 2016, 2017 and 2018 and the nine months ended September 30, 2019, respectively. Based on a survey on the future development of the neighbouring customers, the Directors expect that the revenue of the Target Company will continue to remain steady in the near future.

FINANCIAL REVIEW

1. Financial Performance

For each of the years ended December 31, 2016, 2017 and 2018 and the nine months ended September 30, 2019, the Target Company had only one major reportable business segment, which was steam generation and supply.

Revenue

For the nine months ended September 30, 2019, the Target Company recorded revenue of approximately RMB146.4 million, representing an increase of approximately RMB16.4 million, or 12.6% from the revenue of approximately RMB130.0 million recorded for the nine months ended September 30, 2018. For the year ended December 31, 2018, the Target Company recorded revenue of approximately RMB184.5 million, representing an increase of approximately RMB15.1 million, or 8.9% from the revenue recorded for the year ended December 31, 2017. For the year ended December 31, 2017, the Target Company recorded revenue of approximately RMB169.4 million, representing an increase of approximately RMB8.2 million, or 5.1% from the revenue of approximately RMB161.2 million recorded for the year ended December 31, 2016. Such increase was mainly attributable to the increase of income generated from steam supply by the Target Company during the relevant periods as a result of increase in demand of steam, revision of prices and reduction in applicable VAT rate.

Cost of Sales

For the nine months ended September 30, 2019, the Target Company incurred cost of sales of approximately RMB118.0 million, representing an increase of approximately RMB1.2 million, or 1.0% from the cost of sales of approximately RMB116.8 million incurred for the nine months ended September 30, 2018. For the year ended December 31, 2018, the Target Company incurred cost of sales of approximately RMB164.7 million, representing an increase of approximately RMB9.9 million, or 6.4% from the cost of sales incurred for the year ended December 31, 2017. Such increase was mainly attributable to the increase of steam generated and sale of steam by the Target Company during the

- IV-2 -

APPENDIX IV	MANAGEMENT DISCUSSION AND
	ANALYSIS ON THE TARGET COMPANY

relevant periods. For the year ended December 31, 2017, the Target Company incurred cost of sales of approximately RMB154.8 million, representing an increase of approximately RMB36.9 million, or 31.3% from the cost of sales of approximately RMB117.9 million incurred for the year ended December 31, 2016, mainly due to the significant increase of purchase price of raw materials such as coal.

Gross Profit

For the nine months ended September 30, 2019, the Target Company recorded gross profit of approximately RMB28.4 million, representing an increase of approximately RMB15.3 million, or 116.8% from the gross profit of approximately RMB13.1 million recorded for the nine months ended September 30, 2018. For the year ended December 31, 2018, the Target Company recorded gross profit of approximately RMB19.8 million, representing an increase of approximately RMB5.2 million, or 35.6% from the gross profit recorded for the year ended December 31, 2017. Such increase was mainly attributable to the increase of steam generated and sale of steam by the Target Company and revision of prices and reduction in certain tax rates during the relevant periods.

For the year ended December 31, 2017, the Target Company recorded gross profit of approximately RMB14.6 million, representing a decrease of approximately RMB28.7 million, or 66.3% from the gross profit of approximately RMB43.3 million recorded for the year ended December 31, 2016. Such decrease was mainly attributable to the significant increase of purchase price of raw materials such as coal.

Other Net Income

For the nine months ended September 30, 2019, the Target Company recorded other net income of approximately RMB4.3 million, representing an increase of approximately RMB0.9 million, or 26.5% from the other net income of approximately RMB3.4 million recorded for the nine months ended September 30, 2018. For the year ended December 31, 2018, the Target Company recorded other net income of approximately RMB8.6 million, representing an increase of approximately RMB3.2 million, or 59.3% from the other net income recorded for the year ended December 31, 2017. For the year ended December 31, 2017, the Target Company recorded other net income of approximately RMB5.4 million, representing an increase of approximately RMB2.3 million, or 74.2% from the other net income of approximately RMB3.1 million recorded for the year ended December 31, 2016. Such increase was mainly attributable to the increase in government grants and income generated from disposal of non-current assets such as boilers and equipment for the upgrade of the Target Company during the relevant periods.

- IV-3 -

APPENDIX IV	MANAGEMENT DISCUSSION AND
	ANALYSIS ON THE TARGET COMPANY

Administrative Expenses

For the nine months ended September 30, 2019, the Target Company incurred administrative expenses of approximately RMB5.9 million, representing an increase of approximately RMB0.6 million, or 11.3% from the administrative expenses of approximately RMB5.3 million incurred for the nine months ended September 30, 2018. For the year ended December 31, 2018, the Target Company incurred administrative expenses of approximately RMB7.4 million, representing an increase of approximately RMB1.1 million, or 17.5% from the administrative expenses incurred for the year ended December 31, 2017. For the year ended December 31, 2017, the Target Company incurred administrative expenses of approximately RMB6.3 million, representing an increase of approximately RMB0.5 million, or 8.6% from the administrative expenses of approximately RMB5.8 million incurred for the year ended December 31, 2016.

The administrative expenses of the Target Company mainly comprise of remuneration of employees, security fee, management fee, transportation fee and amortisation of fixed assets. The increase in administrative expenses was mainly attributable to increase in remuneration of employees due to increase in number of employees during the relevant periods.

Interest Income

For the nine months ended September 30, 2019, the Target Company generated interest income of approximately RMB201,000, representing a decrease of approximately RMB40,000, or 16.6% from the interest income of approximately RMB241,000 generated for the nine months ended September 30, 2018. For the year ended December 31, 2018, the Target Company generated interest income of approximately RMB295,000, representing a decrease of approximately RMB53,000, or 15.2% from the interest income generated for the year ended December 31, 2017. For the year ended December 31, 2017, the Target Company generated interest income of approximately RMB348,000, representing a decrease of approximately RMB405,000, or 53.8% from the interest income of approximately RMB753,000 generated for the year ended December 31, 2016.

The decrease in interest income was mainly attributable to the decrease in interest income contributed by the reduction in the average balance of the cash at bank during the relevant periods as a result of repayment of bank loans by the Target Company.

Interest Expense

For the nine months ended September 30, 2019, the Target Company incurred interest expense of approximately RMB4.6 million, representing a decrease of approximately RMB0.9 million, or 16.4% from the interest expense of approximately RMB5.5 million incurred for the nine months ended September 30, 2018. For the year ended December 31, 2018, the Target Company incurred interest expense of

- IV-4 -

APPENDIX IV	MANAGEMENT DISCUSSION AND
	ANALYSIS ON THE TARGET COMPANY

approximately RMB7.2 million, representing a decrease of approximately RMB0.5 million, or 6.5% from the interest expense incurred for the year ended December 31, 2017. For the year ended December 31, 2017, the Target Company incurred interest expense of approximately RMB7.7 million, representing a decrease of approximately RMB1.4 million, or 15.4% from the interest expense of approximately RMB9.1 million generated for the year ended December 31, 2016.

The decrease in interest expense was mainly attributable to the repayment of bank loans by the Target Company and the decrease in outstanding bank loans during the relevant periods.

Income Tax Expenses

For the nine months ended September 30, 2019, the Target Company incurred income tax expenses of approximately RMB5.6 million, representing an increase of approximately RMB4.1 million, or 273.3% from the income tax expenses of approximately RMB1.5 million incurred for the nine months ended September 30, 2018. For the year ended December 31, 2018, the Target Company incurred income tax expenses of approximately RMB3.5 million, representing an increase of approximately RMB1.7 million, or 94.4% from the income tax expenses incurred for the year ended December 31, 2017. Such increase was consistent with the increase in profit from operation of the Target Company during the relevant periods.

For the year ended December 31, 2017, the Target Company incurred income tax expenses of approximately RMB1.8 million, representing a decrease of approximately RMB6.2 million, or 77.5% from the income tax expenses of approximately RMB8.0 million incurred for the year ended December 31, 2016. Such decrease was consistent with the decrease in profit from operation of the Target Company for the year ended December 31, 2017.

Profit for the Period

For the nine months ended September 30, 2019, the Target Company recorded profit of approximately RMB16.8 million, representing an increase of approximately RMB12.3 million, or 273.3% from the profit of approximately RMB4.5 million recorded for the nine months ended September 30, 2018. For the year ended December 31, 2018, the Target Company recorded profit of approximately RMB10.6 million, representing an increase of approximately RMB6.0 million, or 130.4% from the profit recorded for the year ended December 31, 2017. Such increase was mainly attributable to the increase in revenue and other net income during the relevant periods.

For the year ended December 31, 2017, the Target Company recorded profit of approximately RMB4.6 million, representing a decrease of approximately RMB19.5 million, or 80.9% from the profit of approximately RMB24.1 million recorded for the

- IV-5 -

APPENDIX IV	MANAGEMENT DISCUSSION AND
	ANALYSIS ON THE TARGET COMPANY

year ended December 31, 2016. Such decrease was mainly attributable to the increase in supply of steam but offset by increase in purchase price of raw materials such as coal for the year ended December 31, 2017.

2. Liquidity and Financial Resources

As at December 31, 2016, the Target Company had net current assets of approximately RMB14.5 million. As at December 31, 2017, the Target Company had net current liabilities of approximately RMB5.7 million, mainly due to decrease in cash and increase in loans. The net current liabilities of the Target Company increased to approximately RMB20.9 million as at December 31, 2018, mainly due to the increase in short term loans due within one year according to the relevant repayment schedule and situation, and increase in cash. The net current liabilities of the Target Company decreased to approximately RMB13.4 million as at September 30, 2019, mainly due to increase in current assets as a result of bulk purchase of raw materials such as coal during the period in light of potential traffic conditions, and the recategorization of certain bank loans as current liabilities according to the relevant repayment schedule and situation.

For the nine months ended September 30, 2019, the Target Company recorded a net cash and cash equivalent inflow of approximately RMB36.4 million, mainly attributable to net cash generated from financing activities as a result of repayment of bank loans and decrease in repayment of interests, and net cash generated from operating activities, offset by net cash used in investing activities due to payment for the purchase of property, plant and equipment.

For the year ended December 31, 2018, the Target Company recorded a net cash and cash equivalent inflow of approximately RMB18.0 million, mainly due to net cash generated from operating activities as a result of increase in profit with relatively stable procurement cost and prices for raw materials such as coal, offset by net cash used in financial activities as a result of repayment of bank loans and interests. For the year ended December 31, 2017, the Target Company recorded a net cash and cash equivalent outflow of approximately RMB14.6 million, mainly due to repayment of loans and interests and payment of dividends.

For the year ended December 31, 2016, the Target Company recorded a net cash and cash equivalent inflow of approximately RMB8.9 million, mainly due to net cash generated from operation but offset by net cash used in financing activities and repayment of loans and interests and payment of dividends.

As at December 31, 2016, 2017 and 2018 and September 30, 2018 and 2019, the Target Company had cash and cash equivalents of approximately RMB16.6 million, RMB2.0 million, RMB20.0 million, RMB32.3 million and RMB56.4 million, respectively.

As at December 31, 2016, 2017 and 2018 and September 30, 2019, the bank and other loans of the Target Company was approximately RMB170.2 million, RMB153.4 million, RMB125.9 million and RMB158.0 million, respectively, of which approximately RMB36.8

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APPENDIX IV	MANAGEMENT DISCUSSION AND
	ANALYSIS ON THE TARGET COMPANY

million, RMB47.4 million, RMB50.9 million and RMB76.6 million was current and approximately RMB133.4 million, RMB105.9 million, RMB75.0 million and RMB81.4 million was non-current. As at September 30, 2019, RMB88.0 million was secured and guaranteed bank loans and it was secured by the trade receivables of the Target Company and guaranteed by a previous shareholder of the Target Company and Lingang Public Utilities.

All of the Target Company's borrowings are denominated in RMB and generally at fixed interest rates.

Save as disclosed above, the Target Company did not have any other mortgages or charges as at December 31, 2016, 2017, 2018 and September 30, 2019, respectively.

The total equity of the Target Company as at December 31, 2016, 2017, 2018 and September 30, 2019 was approximately RMB149.9 million, RMB146.5 million, RMB152.1 million and RMB168.9 million, respectively.

3. Gearing Ratio

The gearing ratio of the Target Company is calculated as the balance of liabilities as at the end of the relevant period divided by the balance of Shareholders' equity as at the end of the relevant period. As at December 31, 2016, 2017, 2018 and September 30, 2019, the gearing ratio of the Target Company was approximately 1.48%, 1.38%, 1.12% and 1.25%, respectively.

4. Contingent Liabilities

The Target Company did not have any material contingent liabilities as at December 31, 2016, 2017, 2018 and September 30, 2019.

5. Financial Risk Management

For the years ended December 31, 2016, 2017 and 2018 and the nine months ended September 30, 2019, the Target Company was mainly exposed to credit, liquidity and interest rate risks arising in its normal course of business. For details of the exposure to such risks and the relevant risk management policies and practices adopted by the Target Company, please refer to note 21 of the accountants' report on the Target Company as set out in Appendix II to this circular.

As the operations of the Target Company were principally based in PRC for the years ended December 31, 2016, 2017 and 2018 and the nine months ended September 30, 2019, the principal assets and liabilities of the Target Company were denominated in RMB and therefore the Target Company considered that it did not have any material exposure to fluctuations in exchange rate and no hedging measures were taken.

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APPENDIX IV	MANAGEMENT DISCUSSION AND
	ANALYSIS ON THE TARGET COMPANY

6. Material Acquisition and Disposal

During the years ended December 31, 2016, 2017 and 2018 and the nine months ended September 30, 2019, there was no material acquisition or disposal by the Target Company.

7. Significant Investments

As at December 31, 2016, 2017 and 2018 and September 30, 2019, save and except for the Site, which according to the valuation report prepared by Cushman & Wakefield Limited, is of value of approximately RMB197.3 million as at January 31, 2020 and is intended to be retained by the Target Company for production purposes, the Target Company did not have other significant investments. The development of the Site in the coming year is expected to be funded by bank loans and internal resources of the Target Company.

8. Employees and Remuneration Policies

For the years ended December 31, 2016, 2017 and 2018 and the nine months ended September 30, 2019, the staff costs of the Target Company was approximately RMB39,000, RMB950,000, RMB1.3 million and RMB1.3 million, respectively, and the average number of employees on an annual basis was approximately nil, 2, 3 and 3, respectively. As the business operations of the Target Company is mainly subcontracted to subcontractors, the number of employees directly employed by the Target Company remained low during the relevant periods. Employee benefits of all forms of considerations were given in exchange for services rendered by employees or compensation paid in order to terminate the employment relationship. Employee benefits mainly include remuneration, bonuses, insurances and allowances.

In addition, it is expected that the aggregate remuneration payable and benefits in kind receivable by the directors of the Target Company would not be varied as a result of the Acquisition.

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APPENDIX V

PROPERTY VALUATION REPORT

The following is the text of a letter and valuation report prepared for the purpose of incorporation in this circular received from Cushman & Wakefield Limited, an independent property valuer, in connection with its opinion of market value in existing state of the Site in the PRC as at January 31, 2020.

16th Floor

Jardine House

1 Connaught Place

Central

Hong Kong

March 12, 2020

The Directors

No. 35 Haibinba Road

Tianjin Port Free Trade Zone

Tianjin City

PRC

Dear Sirs,

Re: The Site - the production facility located at No. 418, Haihe Middle Road, Lingang Economic Zone, Binhai New District, Tianjin, the PRC with a site area of 86,004.70 square metres and a total gross floor area of 24,607.96 square metres (the "Site").

INSTRUCTIONS, PURPOSE & VALUATION DATE

In accordance with the instructions from Tianjin Tianbao Energy Co., Ltd. (the "Company") for us to prepare market valuation of the Site held by Tianjin Jinneng Lingang Thermal Power Co., Ltd.* (天津津能臨港熱電有限公司)* (the "Target Company") in the People's Republic of China (the "PRC"), we confirm that we have carried out inspection, made relevant enquiries and obtained such further information as we considered necessary for the purpose of providing you with our opinion of the market value in existing state of the Site as at January 31, 2020 (the "valuation date").

The Target Company is a company with limited liability established in the PRC on May 8, 2009, which is owned as to 49% and 51% by Lingang Public Utilities and Tianjin Jinneng Binhai Heating Group Co., Ltd.* (天津津能濱海供熱集團有限公司) respectively. It is principally engaged in the production and supply of steam in Tianjin, the PRC.

For identification only

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APPENDIX V

PROPERTY VALUATION REPORT

DEFINITION OF MARKET VALUE

Our valuation of the Site represents its market value which in accordance with HKIS Valuation Standards 2017 published by The Hong Kong Institute of Surveyors ("HKIS") is defined as "the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion".

VALUATION BASIS & ASSUMPTIONS

Our valuation excludes an estimated price inflated or deflated by special terms or circumstances such as a typical financing, sale and leaseback arrangement, special considerations or concessions granted by anyone associated with the sale, or any element of special value available only to a specific owner or purchaser.

In the course of our valuation of the Site situated in the PRC, with reference to the PRC legal opinion dated February 14, 2020 of the Company's legal adviser, King & Wood Mallesons (北京市金杜律師事務所), we have prepared our valuation on the basis that transferable land use rights in respect of the Site for its specific term at nominal annual land use fees have been granted and that any premium payable have already been fully paid. We have relied on the information and advice given by the Company and the PRC legal opinion, regarding the title to the Site and the interest in the Site. In valuing the Site, we have prepared our valuation on the basis that the owner has enforceable title to the Site and has free and uninterrupted rights to use, occupy or assign the Site for the whole of the unexpired terms as granted.

No allowance has been made in our valuation for any charges, pledges or amounts owing on the Site nor any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is valued on the basis that the Site is free from encumbrances, restrictions and outgoings of any onerous nature which could affect its value.

We have valued the whole interest in the Site.

METHOD OF VALUATION

In valuing the Site which is held by the Target Company for owner-occupation in the PRC, in the absence of relevant market data to arrive at the market value of the Site by means of market-based evidence, we have valued the Site by Depreciated Replacement Cost Approach which requires a valuation of the market value of the land in its existing use by Direct Comparison Approach by making reference to comparable sales evidences as available on the market; and an estimate of the new replacement cost of the buildings and structures, from which deductions are made to allow for the age, condition and functional obsolescence. The reported market value by Depreciated Replacement Cost Approach only apply to the whole of the Site as a unique interest, and no piecemeal transaction of the Site is assumed.

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APPENDIX V

PROPERTY VALUATION REPORT

For ease of reference, Depreciated Replacement Cost Approach comprises the valuations of (a) the land; and (b) the buildings and structures erected thereon. The land is valued by Direct Comparison Approach whist the buildings and structures are valued by Cost Approach.

In valuing the Site, we have complied with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the HKIS Valuation Standards 2017.

SOURCE OF INFORMATION

In the course of our valuation, we have relied to a considerable extent on the information given by the Target Company and have accepted advice on such matters as planning approvals or statutory notices, easements, tenure, identification of the Site, construction cost, site and floor areas and all other relevant matters.

Dimensions, measurements and areas included in the valuation report are based on the information provided to us and are therefore only approximations. We have had no reason to doubt the truth and accuracy of the information provided to us by the Target Company which is material to the valuation. We were also advised by the Target Company that no material facts have been omitted from the information provided.

We would point out that the copies of documents provided to us are mainly compiled in Chinese characters and the transliteration into English represents our understanding of the contents. We would therefore advise the Company to make reference to the original Chinese edition of the documents and consult your legal adviser regarding the legality and interpretation of these documents.

TITLE INVESTIGATION

We have been provided by the Target Company with copies of documents in relation to the current title to the Site. However, we have not been able to conduct searches to verify the ownership of the Site; we have not inspected the original documents to ascertain any amendments which may not appear on the copies handed to us. We are also unable to ascertain the title of the Site in the PRC and we have therefore relied on the advice given by the PRC Legal Adviser and the Company.

SITE INSPECTION

Our Tianjin Office valuers, Mr. Robert RM Liang and Ms. Eileen Wang (over 10 years' experience in the PRC), have inspected the exterior and, wherever possible, the interior of the Site on January 20, 2020. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report that the Site is free from rot, infestation or any other structural defects. No test was carried out to any of the services. Moreover, we have not carried out investigation on site to determine the

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APPENDIX V

PROPERTY VALUATION REPORT

suitability of the soil conditions and the services etc. for any future development. Our valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary costs or delays will be incurred during the construction period.

Unless otherwise stated, we have not carried out on-site measurements to verify the Site and floor areas of the Site and we have assumed that the areas shown on the copies of the documents handed to us are correct.

CURRENCY

Unless otherwise stated, all monetary amounts indicated herein our valuation are in Renminbi (RMB) which is the official currency of the PRC.

We attach herewith the valuation report.

Yours faithfully,

For and on behalf of

Cushman & Wakefield Limited

Philip C Y Tsang

Registered Professional Surveyor (General Practice)

Registered China Real Estate Appraiser

MSc, MHKIS

Director

Note: Mr. Philip C Y Tsang is Registered Professional Surveyor who has over 27 years' experience in the valuation of properties in the PRC.

- V-4 -

APPENDIX V

PROPERTY VALUATION REPORT

VALUATION REPORT

The Site held by the Target Company in the PRC

The Site

Description and tenure

	Market value in
Particulars of	existing state as at
occupancy	January 31, 2020

The Site - the production facility located at No. 418, Haihe Middle Road, Lingang Economic Zone, Binhai New District, Tianjin, the PRC with a site area of 86,004.70 square metres and a gross floor area of 24,607.96 square metres

Notes:

The Site comprises the production facility of the Target Company with a site area of 86,004.70 square metres and a total gross floor area of 24,607.96 square metres mainly erected in 2011.

The site is located at No. 418, Haihe Middle Road, Lingang Economic Zone. Lingang Economic Zone, also known as Lingang Industrial Park, is a large-scaleindustrial park. There are industrial plants in the nearby area such as Taiyuan Binhai Heavy Machinery Company (太原濱海重型機械公司) and Louie Dafu (Tianjin) Food Technology Co. Ltd. (路易達孚(天津)食品科技有限責任公司).

According to the Target Company, the Site is for public utilities use. There is no environmental issues and litigation dispute; there is no plan to change the use of the Site.

The land use rights of the Site have been granted for a term of 50 years due to expire on February 21, 2062 for public utilities use.

As per the	RMB197,300,000
information provided	(RENMINBI ONE
by the Target	HUNDRED NINETY
Company, the Site are	SEVEN MILLION
currently used for the	THREE HUNDRED
production and supply	THOUSAND)
of steam.

According to Real Estate Title Certificate No. (2018) 1001222 dated July 2, 2018, the land use rights of the Site with a site area of 86,004.70 square metres has been granted to the Target Company for a term of 50 years due to expire on February 21, 2062 for public facilities use. The building ownership of the Site with a total gross floor area of 24,607.96 square metres has been vested in the Target Company for non-residential use.
According to State-owned Land Use Rights Grant Contract No. TJ12262011004 dated November 8, 2011, the land use rights of the Site is granted as below:

Grantee:	Tianjin Jinneng Lingang Thermal Power Co., Ltd. (天津津能臨港熱電有限
	公司)
Site Area:	86,004.70 square metres
Land Use Term:	50 years for public utilities use
Land Purchase Price:	RMB66,653,643
Plot Ratio:	>0.7

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APPENDIX V

PROPERTY VALUATION REPORT

According to Business Licence (its unified social credit code is 911201166877273016) dated January 10, 2019, the Target Company was established on May 8, 2009 as a limited liability company with a registered capital of RMB100,000,000.
According to the PRC legal opinion:
1. The Target Company has obtained Real Estate Title Certificate No. Jin (2018) Bin Hai Xin Qu Lin Gang Jing Ji Qu Bu Dong Chan Quan Di 1001222 Hao for the land with site area of 86,004.70 square metres and for the buildings with total gross floor area of 24,607.96 square metres;
2. The land use term is due to expire on February 21, 2062 for public utilities use;
3. There are no mortgages, guarantees, other encumbrances or dispute on the land use rights and building ownership;
4. The Target Company legally owns the above-mentioned land use rights and building ownership, and has the right to possess, use, transfer, lease, mortgage or otherwise dispose of such land use rights and building ownership during the validity period of the Real Estate Title Certificate.
The status of the title and grant of major approvals and licence in accordance with the information provided by the Target Company and the opinion of the PRC legal adviser:

Real Estate Title Certificate	Yes
State-owned Land Use Rights Grant Contract	Yes
Business Licence	Yes

- V-6 -

APPENDIX VI

GENERAL INFORMATION

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 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.

SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, to the knowledge of the Directors, the persons (other than a Director, Supervisor or chief executive of the Company) who have an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO and as recorded in the register required to be kept under section 336 of the SFO were as follows:

			Number of
			Shares/	Percentage of
			underlying	relevant class	Percentage of
Name of			Shares held	of share	total share
Shareholders	Types of Shares	Capacity	(Share)	capital	capital
			(Note 2)	(%)	(%)
Tianbao Holdings	Domestic Shares	Beneficial owner	109,606,538	(L)	94.81	68.54
(Note 1)
TFIHC (Note 1)	Domestic Shares	Interest of a	115,600,907	(L)	100.00	72.29
		controlled
		corporation
Yuan Andy Yun	H Shares	Beneficial owner	7,250,000	(L)	16.36	4.53
Nan

Notes:

Tianbao Holdings is interested in 109,606,538 Domestic Shares, and Tianbao Investment is interested in 5,994,369 Domestic Shares. Since Tianbao Holdings and Tianbao Investment are wholly-owned subsidiaries of TFIHC, TFIHC is deemed to be interested in the Domestic Shares held by Tianbao Holdings and Tianbao Investment by virtue of the SFO.
The letter "L" denotes the relevant person's long position in such Shares.

- VI-1 -

APPENDIX VI

GENERAL INFORMATION

Save as disclosed, so far as is known to the Directors, there is no person (other than a Director, Supervisor or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO and as recorded in the register required to be kept under section 336 of the SFO.

DISCLOSURE OF INTERESTS
Interests of Directors and Supervisors

As at the Latest Practicable Date, no Director, Supervisor or chief executive of the Company had any interest or short position in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including those taken or deemed as their interests or short positions in accordance with such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules, to be notified to the Company and the Stock Exchange.
As at the Latest Practicable Date, none of the Directors or Supervisors had a service contract with any member of the Group which does not expire or is not terminable by such member of the Group within one year without payment of compensation (other than statutory compensation).
As at the Latest Practicable Date, none of the Directors or Supervisors had any direct or indirect material interest in any asset which have been, since December 31, 2018 (being the date to which the latest published audited financial statements of the Company were made up), 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.
There is no contract or arrangement subsisting at the date of this circular in which any of the Directors or Supervisors is materially interested and which is significant in relation to the business of the Group.

IV. DIRECTORS' INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors or their respective close associates (as defined under the Listing Rules) had interests in a business, apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with the business of the Group.

- VI-2 -

APPENDIX VI

GENERAL INFORMATION

EXPERTS' QUALIFICATIONS AND CONSENTS

The followings are the qualifications of the experts who have given opinions or advices which are contained in this circular:

Name	Qualification
KPMG	Certified public accountants
Cushman & Wakefield Limited	Independent property valuer

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter(s), report(s), certificate(s) and/or opinion(s) (as the case may be) and the references to their names included herein in the form and context in which it is respectively included.

Each of the experts named above confirmed that as at the Latest Practicable Date, it did not have any beneficial shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, nor did it have any direct or indirect interests in any assets which have been, since December 31, 2018 (being the date to which the latest published audited consolidated financial statements of the Group were made up), acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

VI. LITIGATION

Neither the Company nor its subsidiary is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against the Company or its subsidiary.

VII. MATERIAL CONTRACTS

The Group has entered into the following contracts (not being contracts entered into in the ordinary course of business) within the two years preceding the date of this circular which is or may be material:

the Equity Transfer Agreement;
the underwriting agreement dated April 13, 2018 relating to the conditional offering by the Company of the H Shares for subscription by the public in Hong Kong entered into among the Company, the sole sponsor, the sole global coordinator, the joint bookrunners, the joint lead managers and the public offer underwriters;

- VI-3 -

APPENDIX VI

GENERAL INFORMATION

the underwriting agreement dated April 19, 2018 relating to the conditional placing of the H Shares with selected professional, institutional and other investors entered into between, among others, the Company, the group of placing underwriters and the sole global coordinator;
the non-competition deed dated April 4, 2018 entered into between Tianbao Holdings, TFIHC and the Company;
the deed of indemnity dated April 4, 2018, entered into between the Company, Tianbao Holdings and TFIHC, pursuant to which Tianbao Holdings and TFIHC agreed to give certain indemnities in the Group's favour; and
the cornerstone investment agreement dated March 29, 2018 entered into between the Company, Tsinlien Group Company Limited and Orient Securities (Hong Kong) Limited pursuant to which Tsinlien Group Company Limited has agreed to subscribe for such number of H Shares that may be purchased for an amount of HK$18 million at the offer price for subscription of the conditional offering by the Company of the H Shares.

VIII. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at 40th Floor, Sunlight Tower, No. 248 Queen's Road East, Wanchai, Hong Kong unless (i) a tropic cyclone warning signal number 8 or above is hoisted, or (ii) a black rainstorm warning signal is issued, except public holidays, for a period of 14 days from the date of this circular:

the Articles of Association;
the letter from the Board, the text of which is set out on pages 5 to 19 of this circular;
the annual report of the Company for the financial year ended December 31, 2018;
the Prospectus;
the accountants' report on the financial information of the Target Company prepared by KPMG, the text of which is set out in Appendix II of this circular;
the report from KPMG in respect of the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix III of this circular;
the property valuation report prepared by Cushman & Wakefield Limited, the text of which is set out in Appendix V to this circular;

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APPENDIX VI

GENERAL INFORMATION

the material contracts referred to in the paragraph headed "VIII. Material Contracts" in this Appendix;
the written consents referred to in the paragraph headed "V. Experts' Qualifications and Consents" in this Appendix; and
this circular.

IX. MISCELLANEOUS

The registered address of the Company is at No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, PRC.
The headquarters/principal place of business of the Company in the PRC is at No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, PRC.
The principal place of business of the Company in Hong Kong is at 40th Floor, Sunlight Tower, No. 248 Queen's Road East, Wanchai, Hong Kong.
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, Wan Chai, Hong Kong.
The company secretary of the Company is Mr. Lau Kwok Yin, who is a member of the Hong Kong Institute of Certified Public Accountants and a Chartered Financial Analyst charterholder.
In the event of any inconsistencies, the English text of this circular, the notice of EGM and proxy form shall prevail over the Chinese text.

- VI-5 -

APPENDIX VII

NOTICE OF EGM

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

Tianjin Tianbao Energy Co., Ltd.*

天津天保能源股份有限公司

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1671)

NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING IN

2020 TO BE HELD ON MAY 8, 2020

NOTICE IS HEREBY GIVEN that the second extraordinary general meeting (the "EGM") of Tianjin Tianbao Energy Co., Ltd.* (the "Company") in 2020 will be held at 10 a.m. on May 8, 2020 (Friday) at the meeting room, 3/F, No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, the PRC, for the purpose of considering and, if thought fit, passing the following resolutions:

ORDINARY RESOLUTIONS

1. (a) To consider, approve, confirm and ratify the the execution of the Equity Transfer Agreement, and to approve the Acquisition and all transactions contemplated thereunder; and

To generally and unconditionally authorize any one of the Directors or the authorized persons of the Company to do all such acts and things, to sign and execute all such documents or agreements for and on behalf of the Company and to do such other things and to take all such actions as he considers necessary, appropriate, desirable and expedient for the purpose of or in connection with the implementation and completion of all the transactions contemplated under the Acquisition and the Equity Transfer Agreement, including without limitation, to agree to such variations, amendments or waiver of documents or any terms thereof which are not fundamentally different from those as provided in the Equity Transfer Agreement or matters relating thereto, as he may consider to be desirable and are in the interest of the Company and its Shareholders as a whole, and to seek all regulatory approvals as required to effect the completion of the Acquisition.

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APPENDIX VII

NOTICE OF EGM

2. To consider and approve the provision of the Guarantee by the Company to China Development Bank for the Target Company according to the terms of the Equity Transfer Agreement.

By order of the Board

Tianjin Tianbao Energy Co., Ltd.*

Zhou Shanzhong

Chairman

Tianjin, the People's Republic of China, March 12, 2020

Notes:

The register of members of the Company will be closed from April 8, 2020 to May 8, 2020 (both days inclusive), during which period no transfer of Shares of the Company can be registered. Holders of Shares who wish to attend and vote at the EGM must lodge all transfer documents accompanied by the relevant share certificates to (in case of H Shareholders) the H Share Registrar of the Company, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, or (in case of Domestic Shareholders) the head office of the Company in the PRC, No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, the PRC no later than 4:30 p.m. on April 7, 2020.
Shareholders who are entitled to attend and vote at the EGM may appoint one or more proxies to attend and vote on their behalves. A proxy needs not to be a shareholder of the Company.
In order to be valid, the proxy form of Shareholders for the EGM must be deposited by hand or by post to (in case of H Shareholders) the H Share Registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, or (in case of Domestic Shareholders) the head office of the Company in the PRC, No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, the PRC not less than 24 hours before the time for holding the EGM or any adjournment thereof for taking the poll. If the proxy form is signed by a person under a power of attorney or other authority, a notarial copy of that power of attorney or authority shall be deposited at the same time as mentioned in the proxy form. Completion and return of the proxy form will not preclude Shareholders from attending and voting in person at the EGM or any adjourned meetings thereof should they so wish.
Shareholders or their proxies shall provide their identification documents when attending the EGM. In case of a corporate Shareholder, its proxy or other person authorized to attend the meeting with a resolution passed by the board of directors or other decision-making authorities of which the Shareholder is a member, should provide a copy of such resolution.
In case of joint holders, the vote of the senior joint Shareholder who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint Shareholder(s) and for this purpose seniority will be determined by the order in which the names stand on the register of members of the Company in respect of the joint shareholding.
Shareholders who intend to attend the EGM should complete the reply slip for the EGM and return it by hand or by post to (in case of H Shareholders) the H Share Registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, or (in case of Domestic Shareholders) the head office of the Company in the PRC, No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, the PRC on or before April 18, 2020.
The on-site EGM is expected to take no more than half of a working day. Shareholders attending the EGM shall be responsible for their own travel and accommodation expenses.
The address of the head office of the Company in the PRC is No. 35 Haibinba Road, Tianjin Port Free Trade Zone, Tianjin City, the PRC.
Unless otherwise stated, capitalised terms used in this notice shall have the same meanings as those defined in the circular of the Company dated March 12, 2020.

As of the date of this notice, the Board comprises Mr. Zhou Shanzhong, Mr. Xing Cheng, Mr. Mao Yongming and Mr. Peng Chong as executive Directors; Mr. Wang Xiaotong and Ms. Dong Guangpei as non-executive Directors; and Mr. Chan Wai Dune, Mr. Han Xiaoping and Ms. Yang Ying as independent non-executive Directors.

For identification purposes only

- VII-2 -

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Tianjin Tianbao Energy Co. Ltd. published this content on 11 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 March 2020 08:36:31 UTC

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Apr. 04	Tianjin Tianbao Energy Unit Renews Natural Gas Procurement Contract for Another Year	MT
Mar. 27	Tianjin Tianbao Energy Co., Ltd. Proposes Not to Declare Final Dividend for the Year Ended December 31, 2023	CI

Tianjin Tianbao Energy Co., Ltd.

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Tianjin Tianbao Energy : MAJOR TRANSACTION ACQUISITION OF 51% EQUITY INTEREST IN TIANJIN JINNENG LINGANG THERMAL POWER CO., LTD., PROPOSED PROVISION OF GUARANTEE FOR TIANJIN JINNENG LINGANG THERMAL POWER CO., LTD., AND NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING IN 2020

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