Han's Europe AGEngelberg
Independent Assurance Reporton cash-flows for the Project in Engelbergto the Board of Directors
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Independent Assurance Report
on cash flows for the Project in Engelberg to the Board of Directors ofHan's Europe AGEngelbergWe have been engaged by Han’s Europe AG to perform assurance procedures to provide reasonable assurance oncash flows for the Kurpark Engelberg project and the project related administration and management (the “Project”) byHan's Europe AG (the “Company”) for the period between 1 October 2011 to 30 June 2019.The Project consisted of acquisition of land and existing properties, namely Europ?ischer Hof, in Engelberg and con-struction activities. The Company was granted the final construction permit in 2016. Han's Laser Technology Co., Lim-ited, Hong Kong has provided approximately CHF 134 million funding to the Company for the Project in the period 1 Oc-tober 2011 to 30 June 2019.
Purpose to the assurance engagement is to determine whether there is reasonable assurance that the cash flows fromHan’s Laser Technology Co. Limited, Hong Kong to the Han’s Investment Holding AG and then to the Company (each ofthese three entities controlled by Han’s Laser Technology Industry Group Co Ltd, incorporated in Shenzhen, China) havebeen used solely for the Project, and those cash flows have not been used outside the Project, specifically no cash-flowshave been transferred to Han’s Holdings Group Ltd (an entity incorporated in Shenzhen, China and not controlled byHan’s Laser Technology Industry Group Co Ltd, incorporated in Shenzhen, China). Further purpose is whether such cashflows were recorded accurately in accordance with article 957 sqq. of the Swiss Code of Obligations (SCO), together theCriteria.Management’s responsibility
The Management of the Company is responsible for the bookkeeping of the Project in accordance with the Criteria. Thisresponsibility includes the design, implementation and maintenance of the internal control system related to the cashflows for the Project that they are free from material misstatement, whether due to fraud or error. Furthermore, the Man-agement is responsible for the selection and application of the Criteria and adequate record keeping.
Auditor’s responsibilityOur responsibility is to perform an assurance engagement and to express an opinion on the cash flows for the Project.We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000(Revised) “Assurance engagements other than audits or reviews of historical financial information”. Those standardsrequire that we plan and perform our procedures to obtain reasonable assurance whether the cash flows for the con-struction of the Project have been used solely for the Project as noted in the second paragraph as well as whether suchcash flows were recorded accurately, in all material aspects, in accordance with the article 957 sqq. SCO.Based on risk and materiality considerations, we performed our assurance procedures to obtain sufficient and appropri-ate assurance evidence. The assurance procedures selected depend on the assurance practitioner’s judgement.We performed the following assurance procedures, among others:
?We obtained bank confirmations from the Swiss banks of Han’s Investment Holding AG and the Company as per 31December 2011 to 2018 and 30 June 2019.?We traced the Project related cash flows from Han’s Laser Technology Co., Limited, Hong Kong to Han’s InvestmentHolding AG and then to the Company.?We reconciled the data as outlined in the “Total cash used in the construction of the Project” in Annex 1, prepared byHan’s Europe AG, to data derived from the underlying condensed construction records (?Baubescheinigung?) or therespective asset purchase agreements.
?We reconciled the data as outlined in “Total other cash used in or dedicated for the Project” in Annex 1, prepared byHan’s Europe AG, to supporting documents.?We reconciled the payments made by the Company for the Project to payment requests of the general contractor.?We reviewed documents from the sub-contractors relating to the Project supporting the payment requests from thegeneral contractor.?We inquired Company’s management of the internal control process established by the Company, supported by ex-ternal service providers (in particular the general contractor and a trustee), for the Project in respect of the approval ofthe invoices of the general contractor and the subcontractors for the Project and the related payments from the Com-pany to the general contractor.
?We tested the internal control process related to the Project established by the Company, supported by external ser-vice providers (in particular the general contractor and a trustee), in respect of the approval of the invoices of the gen-eral contractor and the subcontractors for the Project and the related payments from the Company to the general con-tractor.Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Account-ants issued by the International Ethics Standards Board for Accountants and by EXPERTsuisse-Swiss Institute of Certi-fied Accountants and Tax Consultants, which is founded on fundamental principles of integrity, objectivity, professionalcompetence and due care, confidentiality and professional behaviour.Our firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of qual-ity control including documented policies and procedures regarding compliance with ethical requirements, professionalstandards and applicable legal and regulatory requirements.We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
OpinionIn our opinion, the cash flows from Han’s Laser Technology Co. Limited, Hong Kong to the Han’s Investment Holding AGand then to Han's Europe AG for the Project for the period between 1 October 2011 to 30 June 2019 have been usedsolely for the Project, as noted in second paragraph, and are recorded accurately, in all material respects, in accordancewith the Criteria.
Restriction of use and purposeOur report is intended solely for the purpose set forth in this report and for the information of the Board of Directors ofHan's Europe AG. As a result, the report about cash flows for the Project by Han's Europe AG may not be suitable foranother purpose. This report should not be distributed to or used by any other parties for any other purpose, except thata copy of this report may be provided to Han's Investment Holding AG, Engelberg (the parent company) or Han’s LaserTechnology Industry Co. Limited, Hong Kong. We have been informed, that this report is distributed to China SecuritiesRegulatory Commission (Shenzhen) in relation to the purpose set forth in the second paragraph. We do not assume re-sponsibility towards or accept liability to any person for the contents of this report other than with the Company.PricewaterhouseCoopers AG
Bruno Rossi
Andreas K?giBasel, 3 October 2019Enclosures: Annex 1: Cash used in the Project in Engelberg from 1 October 2011 to 30 June 2019
Annex 1:
Cash used in the Project in Engelberg from 1 October 2011 to 30 June 2019
BKP
1)
| BKP1) | CATEGORY | TOTAL in CHF |
| 0 | Plot (including existing buildings) | 13'067'800 |
| 1 | Preparation works (terrain, ground, etc.) | 13'835'037 |
| 2 | Building (shell work & expansion work & technical installations) | 49'465'855 |
| 29 | Design and planning costs | 27'653'264 |
| 3 | Operating equipment | 2'071'425 |
| 4 | Environment | 28'881 |
| 5 | Construction other costs | 13'152'312 |
| 9 | Internal design decoration | 1'516'244 |
| Total cash used in the construction of the project | 120'790'817 | |
| Total other cash used in or dedicated for the project2) | 13'857'579 | |
| Total | 134'648'396 |
1)BKP refers to the categories of the condensed construction record (”Baubescheinigung”)The data presented is derived from the condensed construction record2)
The total cash used in or dedicated for the Project mainly consists of:
Cash in the bank, equity, receivables against third parties,administration and management expenses.