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Loss attributable to equity shareholders of the Company for the year increased to RMB1,183.4 million in 2014, as compared with RMB247.8 million in 2013. The loss included the one-off and predominately non-cash loss arising from the loss on disposal of a subsidiary, reduction of deferred tax assets and impairment losses on interest in an associate, property, plant and equipment and prepayments and other receivables in the total amount of RMB372.7 million.

EXTRACT OF INDEPENDENT AUDITOR’S REPORT

The independent auditor of the Company will issue a disclaimer of opinion on the consolidated financial statements of the Group. The below section set out an extract of independent auditor’s report regarding the consolidated financial statements of the Group for the year ended 31 December 2014:

Basis for disclaimer of opinion

Limitation of scope in respect of certain consolidated statement of financial position items in prior year

The consolidated financial statements of the Group for the year ended 31 December 2013 were audited by another auditor whose report dated 31 March 2014 expressed a disclaimer of opinion in respect of the matters as described below. The predecessor auditor was unable to obtain sufficient audit evidence to ascertain the following matters: (a) the actual originating source or the payees and the nature of the bank receipts of RMB471,567,000 into the Group’s bank account during the year ended 31 December 2013 in relation to settlement of trade receivable balances due from several customers of Shanxi HunYuan Ruifeng Coal Co., Ltd. (“Ruifeng”) and the accuracy and recoverability of the outstanding trade receivable balances of RMB264,029,000 due from these customers as at 31 December 2013; (b) validity of the leasing income of RMB137,500,000 from certain tenants of Ruifeng for the year ended 31 December 2013 and the related outstanding trade receivable balance of RMB68,750,000 as at 31 December 2013; (c) the actual originating source or the payees or the nature of the bank receipts of RMB132,270,000 and RMB463,819,000 during the year ended 31 December 2013 and the period from 1 January 2014 to 31 March 2014 respectively in relation to settlement of trade receivable balances due from several customers of the Group and the accuracy and recoverability of the outstanding trade receivable balances of RMB752,933,000 due from these customers as at 31 December 2013 (the “Trade Receivables”); (d) the recoverability of an outstanding balance of RMB622,327,000 due from non-controlling shareholders (the “Amount Due from NCI”) as at 31 December 2013; and (e) the nature and recoverability of prepayments of RMB161,460,000 as at 31 December 2013 which was purported to be prepayments to certain suppliers for purchase of goods (the “Prepayments”).

In relation to above matters (a) and (b), as described in Note 32 to the consolidated financial statements, the Company disposed of its entire equity interest in Ruifeng on 29 December 2014 and recognised a loss of RMB162,585,000 (the “Loss of Ruifeng Disposal”). In relation to above matter (c), the Trade Receivable were settled during the year ended 31 December 2014. In relation to above matter (d), during the year and subsequent to the year ended 31 December 2014, non-controlling shareholders have made settlements amounting to RMB285,226,000. In relation to above matter (e), the Prepayments of RMB135,171,000 were utilised during the year ended 31 December 2014. A provision for impairment of the remaining Prepayments of RMB26,289,000 was made during the year (the “Loss of Prepayments”). Because of the unavailability of reliable financial information, we were unable to obtain sufficient appropriate audit evidence and were unable to carry out alternative audit procedures to satisfy ourselves about the balances as of 31 December 2013 mentioned in matter (a) to (e) above. Any adjustments to these balances as of 31 December 2013 would have a consequential effect on the Loss of Ruifeng Disposal, Loss of Prepayments, if any, for the years ended 31 December 2014, and the related elements making up the consolidated statement of changes in equity, the consolidated statement of cash flows and the related disclosures in the financial statements.

Disclaimer of opinion

Because of the significance of the matters described in the basis for disclaimer of opinion paragraphs, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion as to whether the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2014 and of the Group’s loss and cash flows for the year then ended in accordance with International Financial Reporting Standards and as to whether the consolidated financial statements have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

Emphasis of matter

Without qualifying our opinion, we draw attention to Note 1(c) to the consolidated financial statements which indicates that the Group incurred a consolidated net loss of RMB1,292,313,000 during the year ended 31 December 2014 and, as of that date, the Group had net current liabilities of RMB5,278,281,000. These conditions, along with other matters as set forth in Note 1(c) to the consolidated financial statements, indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern.

Other matter

The consolidated financial statements of the Group for the year ended 31 December 2013 were audited by another auditor who expressed a disclaimer of opinion as described above, on those statements on 31 March 2014.