深南电A(000037)深南电Ｂ2004年年度报告摘要（英文版）

SHENZHEN NANSHAN POWER STATION CO., LTD. SHENZHEN NANSHAN POWER STATION CO., LTD. SUMMARY OF ANNUAL REPORT 2004 ＮＯ．：２００５－６ §1. Important Notes 1.1 The Board of Directors of Shenzhen Nanshan Power Station Co., Ltd. (hereinafter referred to as the Company) and its directors individually and collectively accept full responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there is neither any omission of material facts, untrue presentations, nor any misleading statement contained in the information herein. The summary of annual report 2004 is abstracted from the annual report; the investors are suggested to read the full text of annual report to understand more details. 1.2 Independent Director Huang Sujian was absent from the Board meeting personally because he went abroad due to business and authorized Independent Director Zhou Chengxin to attend and exert voting right on his behalf. 1.3 PricewaterhouseCoopers Certified Public Accountants respectively audited the Company’s financial report and issued the standard unqualified Auditor’ s Report for the Company. 1.4 Chairman of the Board Wei Wende, General Manager Fu Bo, CFO Lu Xiaoping and Head of Financial Dept. Chen Xueshun hereby confirm that the Financial Report enclosed in the Annual Report is aut hentic and complete. §2. Company Profile 2.1 Basic information Short form of the stock Shen Nan Dian A, Shen Nan Dian B Stock code 000037, 200037 Listed stock exchange Shenzhen Stock Exchange Registered address and Office address No.18, Yueliangwan Avenue, Nanshan District, Shenzhen 16/F-17/F, Hantang Building, OCT, Nanshan District, Shenzhen, Guangdong Post code Post code of registered address: 518052 Post code of office address: 518053 Internet web site of the Company Nil E-mail public@nspower.com.cn 2.2 Contact person and method Securities Affairs Secretary of the Board Representative Name Fu Bo Hu Qin -1- SHENZHEN NANSHAN POWER STATION CO., LTD. Contact address 16/F-17/F, Hantang Building, OCT, 16/F-17/F, Hantang Building, Nanshan District, Shenzhen, OCT, Nanshan District, Guangdong Shenzhen, Guangdong Telephone 0755-26003698 0755-26003683 Fax 0755-26003629 0755-26003683 E-mail fb@nspower.com.cn huqin@nspower.com.cn §3. Summary of Accounting Data and Financial Indexes 3.1 Major accounting data Unit: RMB’000 Increase/decrease 2002 2004 2003 over last year（％） Turnover 2,432,712 1,863,937 30.51 1,622,904 Other income 111,839 94,556 18.28 50,883 Profit before tax 487,551 546,587 -10.81 511,014 Profit attributable to 444,582 475,995 -6.60 365,642 shareholders Increase/decrease At the end of At the end of At the end of from the end of 2004 2003 2002 previous year（％） Shareholder’s equity 1,708,136 1,519,821 12.39 1,274,445 Net cash inflows arising 414,049 369,313 12.11 746,712 from operating activities 3.2 Difference of net profit audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable Unit: RMB CAS IAS Net profit 439,697,156.26 444,582,000.00 -2- SHENZHEN NANSHAN POWER STATION CO., LTD. Note: In 2004, the reason for the difference amounting to RMB 4,885,000 between domestic consolidated net profit and overseas net profit is as follows: 1. The method of accounting disposal for dividend of RMB 44,852,700 given up by Jinbiwan Company is different. In the accounts calculated based on Chinese Accounting Standard, the Company carried forward net amount amounting to RMB 42,951,100 after deducting enterprise income tax payable totally RMB 1,901,600 from dividend of RMB 44,852,700 given up by Jinbiwan Company into credit of public reserve according to relevant regulation of accounting system in 2003; but in the account calculated based on Hong Kong Accounting Standard, the Company took net amount amounting to RMB 42,951,100 after deducting enterprise income tax payable totally RMB 1,901,600 from dividend of RMB 44,852,700 given up by Jinbiwan Company as Negative Goodwill dividing 15 years into income of each year according to Hong Kong GAAP; the current income transferred-into in 2003 was RMB 2,863,400, while the current income transferred-into in this year was RMB 2,863,400. Explanation on the difference 2. The method of accounting disposal for the difference amounting to RMB 30,330,800 between the investment cost caused by the Company’s purchasing 49% equity of Xindianli Company held by Jinbiwan Company under proportion of shareholder ’s equity of the invested company the Company should share is different. In the accounts calculated based on Chinese Accounting Standard, the Company transferred the credit difference of equity investment totaling to RMB 30,330,800 as reserve for equity investment into the credit of Public Reserve according to Implementation of Accounting System for Enterprise Business and Answers (II) of Relevant Problems of Related Accounting Rule promulgated by the State Ministry of Finance, but in the account calculated based on Hong Kong Accounting Standard, the Company averagely amortized the credit balance difference of equity investment totaling to RMB 30,330,800 as Negative Goodwill dividing 15 years into income of each year according to Hong Kong GAAP; the current income transferred-into in 2003 was RMB 2,022,100, while the current income transferred-into in this year was RMB 2,022,100. §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital (Unit: share) Increase / decrease in Before the After the this time (+, -) change change Subtotal I. Unlisted Shares 1. Sponsor’ s shares 312,853,274 312,853,274 Including: 85,538,864 85,538,864 State-owned shares 30,829,682 30,829,682 Including: State shares 54,709,182 54,709,182 State-owned legal person shares 113,783,159 113,783,159 Domestic legal person shares 113,531,251 113,531,251 Foreign legal person shares -3- SHENZHEN NANSHAN POWER STATION CO., LTD. Others 2. Raised legal person shares 61,700,661 61,700,661 3. Inner employees’shares 4. Preference shares or others Total unlisted shares 374,553,935 374,553,935 II. Listed shares 1. RMB ordinary shares 64,846,135 64,846,135 2. Domestically listed foreign shares 108,565,928 108,565,928 3. Foreign listed foreign shares 4. Other Total listed shares 173,412,063 173,412,063 III. Total shares 547,965,998 547,965,998 The amount of shares offered by funds, inner employees’shares traded in the counter, shares offered by strategic investor and shares offered ordinary juridical person should be disclosed respectively □Applicable √Inapplicable 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulation share Total number of shareholders at the end of report year 25,252 Particulars about shares held by the top ten shareholders Number of Nature of Increase / Holding shares Type of shares share shareholders decrease in Proportion Full name of Shareholders at the year-end (Circulating/No pledged/ (State -owned the report (%) (share) n-circulating) frozen shareholder/foreign year (share) (share) shareholder) SHENZHEN GUANGJU 0 Other ELECTRONIC INVESTMENT CO., 0 125,845,702 22.97% Non-circulating LTD. HONG KONG NAM HOI 0 Foreign shareholder 0 83,748,408 15.28% Non-circulating (INTERNATIONAL) LIMITED SHENZHEN ENERGY GROUP 0 State-owned 0 62,697,297 11.44% Non-circulating CO., LT D. shareholder SHENZHEN STATE POWER 0 Other SCIENCE AND TECHNOLOGY 0 54,709,180 9.98% Non-circulating DEVELOPMENT CO., LTD. TENGDA PROPERTY CO., LTD. 0 47,553,343 8.68% Non-circulating 0 Foreign shareholder MORGAN STANLEY INT’L Circulating Unknown Foreign shareholder Unclear 9,832,708 1.79% (CHINA)-FIRM SKANDIA GLOBAL FUNDS PLC 2,185,670 4,741,041 0.87% Circulating Unknown Foreign shareholder NATIONAL SOCIAL INSURANCE Circulating Unknown Other 1,005,933 3,189,431 0.58% FUND 101 PORTFOLIO -4- SHENZHEN NANSHAN POWER STATION CO., LTD. AGRICULTURAL BANK OF Circulating Unknown Other CHINA-CHANGSHENG DEVELOPMENTS Unclear 3,094,151 0.56% WELL-CHOSEN SECURITIES INVESTMENT FUND INDUSTRIAL AND Circulating Unknown Other COMMERCIAL BANK OF CHINA － GUOLLIAN ANDERSON Unclear 2,933,406 0.54% SMALL WELL-CHOSEN SECURITIES INVESTMENT FUND Particulars about shares held by the top ten shareholders of circulation share Full name of Shareholders Holding circulation share at the year-end Type (A-share, B-share, H-share or others) MORGAN STANLEY INT’L 9,832,708 B-share (CHINA)-FIRM SKANDIA GLOBAL FUNDS PLC 4,741,041 B-share NATIONAL SOCIAL INSURANCE 3,189,431 A-share FUND 101 PORTFOLIO AGRICULTURAL BANK OF CHINA-CHANGSHENG DEVELOPMENTS 3,094,151 A-share WELL-CHOSEN SECURITIES INVESTMENT FUND INDUSTRIAL AND COMMERCIAL BANK OF CHINA － GUOLLIAN ANDERSON 2,933,406 A-share SMALL WELL-CHOSEN SECURITIES INVESTMENT FUND CHINA SOUTHERN SECURITIES 2,798,684 B-share (HONG KONG) LIMITED DEUTSCHE BANK AG LONDON 2,315,376 B-share TOYO SECURITIES ASIA 2,252,215 B-share LIMITED-A/C CLIENT NEITENG SECURITIES CO., LTD. 2,135,864 B-share INDUSTRIAL AND COMMERCIAL BANK OF CHINA － PUFENG 1,820,187 A-share SECURITIES INVESTMENT FUND Explanation on associated (1) Shenzhen Energy Group Co., Ltd. holds 30,829,682 shares on behalf of the State. relationship among the top ten (2) Shenzhen Energy Group Co., Ltd., the Company’s No. 3 shareholder indirectly holds shareholders or consistent 100% equity of Hong Kong Nam Hoi (International) Limited, the Company’s No. 2 action shareholder as well as the Company’s foreign legal person shareholder. (3) The Company was unknown whether there exists associated relationship or consistent action among the other shareholders. -5- SHENZHEN NANSHAN POWER STATION CO., LTD. 4.3 Particulars about the controlling shareholders and actual controller of the Company 4.3.1 Particulars about change in the controlling shareholders and actual controller of the Company □Applicable √Inapplicable 4.3.2 Introduction of especial situation for the controlling shareholder and other actual controller The Company has no holding shareholder. Shenzhen Energy Group Co., Ltd. is the actual largest shareholder of the Company, its legal representative is Gao Zimin; date of foundation: July 15, 1985, registered capital: RMB 955,555,556; enterprise type: company with limited liability; business scope: development, production and purchase and sale of conventionality energy (including electricity, heat, coal, oil and gas) and new energy; design, construction, management and operation of various energy project; facility and its fittings, equipments, aluminum, timber and cement and other raw materials demanded by energy project; operation of import and export business (transacted according to SMGSZ Zi No. 147 document); operating personnel training, consultation prepared for energy projects and other relevant service business (specific projects subject to approval by the authority); technology development, transfer and service of environments protection; investing and operating transportation business (highway, littoral and oceanic) of fuel, raw material and equipment demanded by energy projects, management of property (operated by property management qualification certificate), lease of owned property. 4.3.3 Property right and controlling relationship between the actual controller of the Company and the Company is as follows: Shenzhen Energy Group Co., Ltd. 11.44% 100% 15.28% Shenzhen Nanshan Power Station Co., Ltd. Hong Kong Nam Hoi (International) Limited §5. Particulars about Directors, Supervisors and Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Holding Holding Reason for Names Titles Sex Age Office Term shares at the shares at the change year-begin year-end Jun. 17, 2003- Liu Deyu Chairman of the Board Male 58 0 0 Dec. 17, 2004 Vice Chairman of the Jun. 17, 2003- Wang Jianbin Male 41 0 0 Board Jun. 17, 2006 -6- SHENZHEN NANSHAN POWER STATION CO., LTD. Vice Chairman of the Jun. 17, 2003- Cui Jichun Male 48 0 0 Board Jun. 17, 2006 Jun. 17, 2003- Zhang Renyi Director, GM Male 44 0 0 Dec. 17, 2004 Jun. 17, 2003- Yu Chunling Director Female 39 0 0 Jun. 17, 2006 Jun. 17, 2003- Li Li Director Male 61 0 0 Jun. 17, 2006 Jun. 17, 2003- Zhao Xiao Director Male 59 0 0 Jun. 17, 2006 Jun. 17, 2003- Zhong Chengli Director Male 57 0 0 Jun. 17, 2006 Jun. 17, 2003- Sun Yulin Director Male 53 0 0 Jun. 17, 2006 Jun. 17, 2003- Huang Sujian Independent Director Male 49 0 0 Jun. 17, 2006 Jun. 17, 2003- Liu Zhanjun Independent Director Male 46 0 0 Jun. 17, 2006 Jun. 17, 2003- Zhou Chengxin Independent Director Male 49 0 0 Jun. 17, 2006 Sep. 3, 2004- Xu Jing’an Independent Director M ale 63 0 0 Jun. 17, 2006 Nov. 29,2004- Yu Xiufeng Independent Director Male 40 0 0 Jun. 17, 2006 Chairman of the Jun. 17, 2003- Zhu Tianfa Supervisory Male 55 0 0 Jun. 17, 2006 Committee Jun. 17, 2003- Ji Ming Supervisor Male 48 0 0 Jun. 17, 2006 Jun. 17, 2003- Zhou Qun Supervisor Male 40 0 0 Jun. 17, 2006 Jun. 17, 2003- He Yingyi Supervisor Male 48 0 0 Jun. 17, 2006 Jun. 17, 2003- Li Yongsheng Supervisor Male 32 0 0 Jun. 17, 2006 Jun. 17, 2003- Wang Rendong Employee Supervisor Male 43 0 0 Jun. 17, 2006 Jun. 17, 2003- Xu Shichun Employee Supervisor Male 53 0 0 Jun. 17, 2006 Deputy GM, Secretary Jun. 17, 2003- Fu Bo Male 42 0 0 of the Board Jun. 17, 2006 Aug. 17,2003- Zhu Wei Deputy GM Male 47 0 0 Jun. 17, 2006 Lin Qing Deputy GM Female 40 Oct. 17,2003- 0 0 -7- SHENZHEN NANSHAN POWER STATION CO., LTD. Jun. 17, 2006 Aug. 17,2003- 0 Lu Xiaoping CFO Male 42 0 Jun. 17, 2006 16,301 Purchasing Aug. 17,2003- from the Sun Shoulin Chief Engineer Male 58 0 Jun. 17, 2006 secondary market 5.2 Particulars about directors and supervisors holding the post in Shareholding Company √Applicable □Inapplicable Drawing the payment Title in Shareholding Name Name of Shareholding Company Office term or allowance from the Company Company (Yes / No) Deputy General Liu Deyu Shenzhen Energy Group Co., Ltd. Nov. 1, 1997 to now Yes Manager Shenzhen Guangju Electronic Chairman of the Wang Jianbin Feb. 1, 1999 to now Yes Investment Co., Ltd. Board Shenzhen State Power Science And Chairman of the Board July 1, 2003 to now Cui Jichun Yes Technology Development Co., Ltd. General Manager Apr. 1, 2001 to now Head of Planning & Yu Chunling Shenzhen Energy Group Co., Ltd. Apr. 1, 2003 to now Yes Development Dept. Li Li Tengda Property Co., Ltd. Chairman of the Board Jan. 1, 1992 to now Yes Zhao Xiao Shenzhen Energy Group Co., Ltd. Chief Engineer Nov. 1, 2001 to now Yes Shenzhen Guangju Electronic Zhong Chengli Chairman of the Board Sep. 1, 2000 to now Yes Investment Co., Ltd. Shenzhen State Power Science And Deputy General Sun Yulin Dec. 1, 1999 to now Yes Technology Development Co., Ltd. Manager Zhu Tianfa Shenzhen Energy Group Co., Ltd. Chief Accountant Nov. 1, 2001 to now Yes Shenzhen Guangju Electronic Ji Ming General Manager Sep. 1, 2000 to now Yes Investment Co., Ltd. Assistant General Zhou Qun Shenzhen Energy Group Co., Ltd. Manager and Director Sep. 1, 2003 to now Yes of General Office Shenzhen State Power Science And Manage of Market He Yingyi Apr. 1, 2000 to now Yes Technology Development Co., Ltd. Dept. Li Yongsheng Tengda Property Co., Ltd. Manager Jan. 1, 1994 to now Yes 5.3 Particulars about the annual remuneration of directors, supervisors and senior executives Total annual remuneration RMB 4,900,000 Total annual remuneration of the top three RMB 1,150,000 directors drawing the highest payment Total annual remuneration of the top three senior RMB 2,600,000 -8- SHENZHEN NANSHAN POWER STATION CO., LTD. executives drawing the highest payment Allowance of independent director RMB 100,000 per person/ year Other treatment of independent directors The Company took the relevant fees such as traffic cost, boarding cost, researching cost and studying cost occurred due to work. Name of directors and supervisors receiving no Director Wei Wende, Wang Jianbin, Cui Jichun, Yu payment or allowance from the Company Chunling, Zhao Xiao, Zhong Chengli, Sun Yulin, Li Li, Huang Sujian, Liu Zhanjun, Zhou Chengxin, Xu Jing’an, Yu Xiufeng received no pay from the Company; Supervisor of the Company, namely Zhu Tianfa, Ji Ming, He Yingyi, Zhou Qun and Li Yongsheng received no pay from the Company. Payment Number of persons RMB 900,000 ～ RMB 950,000 1 RMB 800,000 ～ RMB 850,000 5 RMB 650,000 ～ RMB 700,000 1 RMB 400,000 ～ RMB 450,000 1 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period 1. Scope of main operations and operation The operation scope of the Company is electricity and heat supply for production and operation. The Company engages in related technology consultancy and technology service of power plant. The main operations are electricity supply using gas-steam combined circulation power generation sets . Presently, the Company are building and operating gas power plant and electricity project in Shenzhen, Zhongshan, Dongguan and other areas, which are the power loading center in Zhujiang Delta. In addition, it supply power for the users through the power plants in these areas. In 2004, the national economy increased rapidly and the demand for electricity was great. The east coastal area and the areas of Zhujiang Delta, Guangdong, where the economy develops relatively fast in the country, experienced short supply of power. This led to the situation of demand exceeding supply in the power market. In 2004, the actual power supply in Shenzhen was 37.232 billion KWH, an increase of 20.99% over the same period last year. The network electricity of local gas power plant reached 11.673 billion KWH, and increase of 27.78% over the same period last year. In the whole year, the highest load of the city reached 6.85 million KW, an increase of 18.10% over the same period last year, which was an increase of 1.05 million KW. This created good external conditions for the Company. (1) Electricity Production The Company captured the good opportunity of power market well. It organized major maintainence when the electricity demand was reletively small, ensuring the machines in good condition during the fastigium. It overfulfilled all the tasks in the whole year. Besides, after the new power generation sets of Shennandian (Zhongshan) -9- SHENZHEN NANSHAN POWER STATION CO., LTD. Company completed and put into operation, the Company’ s equity installed capacity volume reached to 1.11 million KW, which further improved the Company’s scale in the field of gas power generation. In the report period, Nanshan Power Plant realized power generation reached 37.4129 billion KWH, and increase of 18.95%, overfulfilling the power generation objection set by the Board at the beginning of the year. Moreover, it rewrote the record of annual power generation of the plant. In the face of the roaring international fuel price, the Company adopted a scaled approach and flexible purchase means. The average fuel price in the whole year was RMB 1,832.21/ton, and increase of RMB 151.81/tone. The average fuel price was RMB 3,114.16/ton, an increase of RMB 807.56/ton. The fuel price has increased by RMB 122.1347million in the whole year. To stand the pressure of the rise in the price of gas, the Company strictly controled the power generation production in each procedures. The average network fuel consumption of power generation set was 196.12 gram/KWH, an decrease of 2.91 gram/KWH, resulting in the decrease of RMB 19.217 million. To ensure the security of the power generation set, the Company actually realized maintainence fee amounting to RMB 77.234 million (including the cross-year maintenace fee for power generation equipment in the year beginning was RMB 69.5987 million), and increase of RMB 18.6587 million compared with last year. (2) Non-electricity Production The engineering Company contracted the the project of stage one and stage two in Fushan Shankou Plant, the first stage engineering of Shennandian (Zhongshan) Company and the first stage of Shenzhen Fuhuade Plant, altogether four consolidated circulating power generation sets of construction general contract and technology services.All the construction have been completed as planned, totally income from realizing main operatins amounting to RMB 58.2 million and net profit RMB 38.26 million. Xiefu Company operated fuel amounting to 1.4274 million tons, hitting its historical high. It realized profit from mian operations amounting to RMB 60.6026 million and net profit amounting to RMB 24.7451 million. In the report period, the Company established OHSAS18000 Occupation Health and Security Management System. Xifu Company and the Company jointly set up “Purchasing Center of Oil Products”, further strengthened internal management and safety of production operation, effectively ensured the supplying of fuel to subsidiary power plants of the Company. In the report period, due to increase of electricity generation and increase of income from contract for project, the turnover reached to RMB 2,432,712,000, an increase of 30.51% compared with the last year; due to continual raise of price of fuel in international oil products market, the cost of fuel has increased to RMB 1,391,848,000, an increase of 36.01% compared with the last year. Along with the enlarging of the Company’s scale resulted in increase of period expenses and decrease of subsidy income corresponding, profit before tax was RMB 487,551,000, a decrease of 10.80% compared with the last year. In addition, because the Company totally obtained income tax drawback amounting to RMB 51,640,000 from homemade equipment purchased due to the 1st and 2nd phase of project of “substituting the big for - 10 - SHENZHEN NANSHAN POWER STATION CO., LTD. the small”, thus profit attributable to shareholders was RMB 444,582,000, a decrease of 6.60% compared with the last year. 6.2 Statement of main operations classified according to industries or products Unit: RMB’0000 Main operations classified according to industries Classified according to Income from Cost of Gross Increase/decrease Increase/decrease Increase/decrease industries or products main main profit ratio in income from in cost of main in gross profit ratio operations operations (%) main operations operations over the over the last year over the last year last year (%) (%) (%) Production and supply a decrease of of power, steam and hot 221,801.15 175,464.20 20.89% 19.00% 28.69% 6.03% water Other 21,470.10 17,788.72 17.15% Including: related 0.00 0.00 transactions Main operations classified according to products Sales of electric power a decrease of 221,801.15 175,464.20 20.89% 19.00 28.69% 6.03% Contract for project 21,470.10 17,788.72 17.15% Including: related 0.00 0.00 transactions Pricing rules for related Naught transactions Necessity and durative Naught of related transactions Including: total amount of related transactions that the listed company sold products or supplied labor service to the controlling shareholder and its subsidiaries was RMB 0.00 in the report period. 6.3 Particulars about main operations classified according to areas Unit: RMB’0000 Areas Income from main operations Increase/decrease in income from main operations over the last year (%) Shenzhen 243,271.25 30.51% 6.4 Particulars about the customers of purchase and sales Unit: RMB’0000 Total amount of purchase Proportion in the total 46,445.17 92.91% of the top five suppliers amount of purchase Total amount of sales of the Proportion in the total 221,801.15 100.00% top five sales customers amount of sales - 11 - SHENZHEN NANSHAN POWER STATION CO., LTD. 6.5 Operation of share-holding companies □Applicable √Inapplicable 6.6 Explanation on reasons of material changes in main operations and its structure □Applicable √Inapplicable 6.7 Explanation on reasons of material changes in profitability capability of main operations (gross profit ratio) than that in the last year □Applicable √Inapplicable 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year □Applicable √Inapplicable Analysis to reasons of material changes in the whole financial position than that in the last year □Applicable √Inapplicable 6.9 Explanation on the past, current and future important effects of the material changes in production and operation environment, macro-policies and regulations on the Company’ s financial position and operating results √Applicable □Inapplicable 1. Rising demand for power In accordance with forecast of State Grid Cooperation of China, in 2005, the national electricity comsumption will increse by about 10.5% , the electricity demand reached to 2391 billion KWH, an increase of 260 billion KWH comparied with the year 2004; the situation of Guangdong Province’ s power supply was more tensity comparied with the year 2004, the electricity comsumption of the whole province will reach to 270.9 billion KWH, up 13.5% over the last year; Guangdong Province’ s electric power load is forecasted to increase by 6 million KW, the shortage of power supply is about 4.5 million KWH, thus, Guangdong Province will become the most tensional area in the national power supply, and will continually display all- yearly and all- net shortage of power; in 2005, Shenzhen’ s highest power network load is forecasted to reach to 7.9 million KW, the peak shortage of power will reach 0.6 million KW. The flinty situation of power supply created the favorable external conditions for actively striving for power generation. 2. Rise in the fuel price In 2004, because the price of international oil market break historical recorder with the persistent high price, the cost of fuel needed for power generation increased by 122,134,700 than the same period of the last year, and added to the Company’s power production cost. 6.10 Completion of the profit estimation □Applicable √Inapplicable 6.11 Completion of the business plan □Applicable √Inapplicable 6.12 Application of the raised proceeds - 12 - SHENZHEN NANSHAN POWER STATION CO., LTD. □Applicable √Inapplicable Particulars about the changed projects □Applicable √Inapplicable 6.13 Application of the proceeds not raised through shares offering √Applicable □Inapplicable Unit: RMB’0000 Name of projects Amount of Progress of Earnings of projects projects projects The 1st stage project of In the report period with no income Shennandian (Zhongshan) 120,000.00 100% Power Co., Ltd. Technology Improving Project Income realized, but cannot be 5,000.00 100% by using residual power divided for accounting Shenzhen Shennandian The Company realized net profit Engineering Technology Co., 1,000.00 100% amounting to RMB 38,260,000 Ltd. The 1st stage of Shennandian In construction period without in (Dongguan) Weimei Power 102,874.65 20% come Co., Ltd. Total 228,874.65 - - 6.14 Explanation of the Board of Directors on the “Qualified Opinion” made by the Certified Public Accountants □Applicable √Inapplicable 6.15 Business plan as of the next year of the Board of Directors (If it has) √Applicable □Inapplicable 1. NSRD will be more market-oriented in 2005, depending on previous advantages in this industry, keep gas turbine generation as business core, and more proactive to explore relevant business to shape a new comprehensive industry chain in fuel trade, electric power production, engineer construction, facility maintenance, technology service and professional training. Shenzhen will still keep the core position of business scope in the coming year, while more attention will also given to Zhongshan and Dongguan to enlarge local investment based on proactive and stable principles, that will establish a new status in triangular balance to support business development in Pearl River Delta area. 2. With “standardized management ”as a major topic to implement manage innovation and system reformation, the Company will explore a new far-sighted operation and management system, also keep NSRD original characteristics, balanced standard and efficient in order to meet the demands of collectivize operation and sustainable development, perfect modern enterprise management system, strength human recourse management, and establish a learning-style enterprise with harmonious and proactive enterprise culture, cultivate core competition of the Company. - 13 - SHENZHEN NANSHAN POWER STATION CO., LTD. 3. The Company will put production and operation plan of subordinate enterprises into headquarters collectivity management. According to the analysis of electric power operation, supply and demand situation of 2005, the Company will insure 6.24 billion KWH power generations based on the Company actually production capacity. 4. With the tenet of “safety first, cost priority”, the Company will reinforce safety management. Take a lesson from “4.30”accident happened in Nanshan power station No.10 engineer, the Company will invest RMB 20 million and RMB19 million to facility maintenance and technology innovation, respectively, to enhance and adva nce comprehensive maintenance of power production facility, establish a health safety management system and network. 5. Establish “Purchasing Center for Materials”, sort out supply chain management system, listed fuel supply and work for purchasing large amount of materials of all subsidiaries and secondary organs into plan management, put purchasing scale advantage into full play, and realize effective share of resources; actively enlarge petroleum supply channel, explore more scientific and advanced purchasing method, avoid market risk, reduce purchasing costs and ensure timely supply for productive materials. 6. Fully implement financial budget management, control every item of costs and expenses effectively and dig out inner potentiality; establish “Fina ncial Supervision Center”, which arrange bank loan of the Company and controlling subsidiaries, strengthen centralized management of capital, effectively avoid financial risks, and reduce financial expenses; according to the need of investment program of the Company, conduct financing of capital market timely, reduce debt ratio, and insure steady development of the Company. 7. The Company established human resources department, strengthened human recourses management function, remade human resources manage ment strategy in need of wholly operation and development strategy, established scientific post holding system and achievement management system, and promoted all-around achievement level of the Company; organized and developed management training and special skills training, and promoted management level and comprehensive qualities roundly. 8. The Company propelled project construction of Gaobu Power Plant amain, tried to realize two sets of united circling system respectively in the second half of Sept. and Oct., 2005 respectively would put into production and generate power, and created economic benefits as soon as possible. 9. Shen Nandian (Zhongshan) Company tried to realize commercial operation of 1st Phase of “Substituting the Big for the Small” technology innovation project, meanwhile, it actively searched for support of Guangdong Province and Zhongshan Municipal Government, and tried to get the net electricity price, which faciliated enterprise operation; under the permittance conditions, it applied for listing items for 2nd Phase of “Substituting the Big for the Small”technology innovation project. 10. The Company accomplished share equity transfer and debts reorganzation of Zhongshan Zhongfa Power Co., Ltd. and Zhongshan Jiafa Power Co., Ltd. owned by Zhongshan Power Development Company and sorted out ownership relationship. 11. The Company actively followed constrcution rate of Guangdong Province LNG - 14 - SHENZHEN NANSHAN POWER STATION CO., LTD. Clearing Energy Sources Project and developed oil-change- into- gas project of Nanshan Power Plant; meanwhile, the Company did preparetory work for buring natural gas instead of Zhongshan New Plant and Gaobu Power Plant, and prepared for genenrating power bu using natural gas as soon as possible. 12. In the principle of “active, reliable and creaful”, the Company would propel all-round power united aupply project of Nanshan Power Plant for prepare for supplying gas offically, ewhich would be an chance to accumulate project production and operating experinces, avtively paied attention to devlopment pulse of Guangdong Province Power United Supply Industry, and put the industry as a research direction of devlopment of the Company in the future. 13. The project company would introduce advanced project management pattern, strenthened safety management and quality supervision of constrcution to insure every ittem of contrcting project construction task safely, high efficently and all wool and a yard wide. Profit estimation of the next year □Applicable √Inapplicable 6.16 The preplan on the profit distribution and capitalization of capital public reserve of the Board of Directors √Applicable □Inapplicable Audited by Guangzhou Yangcheng CPAs Co., Ltd. according to the Independent Auditing Standards for Chinese Certified Public Accountants, the net profit realized by the parent company in 2004 was RMB 445,589,396.54. After the statutory public reserve was provided based on 10% of the net profit amounting to RMB 44,558,939.65, and the public welfare fund was provided based on 5% of the net profit amounting to RMB 22,279,469.83 in accordance with the relevant provisions of the Articles of Association, the balance was RMB 378,750,987.06. Plus the undistributed profit carried down from 2003 amounting to RMB 502,587,864.88, subtract the cash dividends distributed last year amounting to RMB 256,448,087.06, the total profit available for distribution to the shareholders in 2004 was RMB 624,890,764.88. After the consolidation, the net profit of the Company in 2004 was RMB 439,697,156.26. After provision of the statutory public reserve amounting to RMB 73,008,885.88 (the Parent Company RMB 44,558,939.65; consolidated subsidiaries RMB 28,449,946.23) and public welfare fund amounting to RMB 36,504,442.95 (the Parent Company RMB 22,279,469.83; consolidated subsidiaries RMB 14,224,973.12), the balance was RMB 330,183,827.43. Plus the undistributed profit carried down from 2003 amounting to RMB 434,227,101.70, subtract the cash dividends distributed last year amounting to RMB 256,448,087.06, the profit available for distribution to the shareholders after consolidation in 2004 was RMB 507,962,842.07. Audited by PricewaterhouseCoopers Certified Public Accountants, the net profit realized in 2004 based on the calculation according to Hong Kong Accounting Standards was RMB 444,582,000. Less the statutory public reserve provided based on 10% of the net profit amounting to RMB 44,559,000 and public reserve provided - 15 - SHENZHEN NANSHAN POWER STATION CO., LTD. based on 5% of the net profit amounting to RMB 22,279,000 according to the regulations of the People’ s Republic of China, plus the undistributed profit carried down from the previous year amounting to RMB 450,757,000 and less the difference arising from the consolidation of the subsidiaries amounting to RMB 59,205,000 and the conversion into capital public reserve amounting to RMB 4,885,000, subtract the cash dividends distributed last year amounting to RMB 256,448,000, the profit available for distribution to the shareholders in 2004 was RMB 507,963,000. Based on the above calculation result, the profit available for distribution to the shareholders after the domestic consolidation in 2004 was RMB 507,962,842.07, and the domestic parent company’ s profit available for distribution to the shareholders was RMB 624,890,764.88; the profit available distribution to the shareholders outside the People’s Republic of China was RMB 507,963,000. According to the relevant provisions of the State Ministry of Finance (Financial- Accounting Zi (1995) No. 31 and China Securities Regulatory Commission (CSRC Letter (1994) No. 1), based on the principle of soundness and the lower of the two, the profit available for distribution to shareholders was worked out according to the domestic consolidation in 2004, namely RMB 507,962,842.07. The preplan on profit distribution in 2004 is: allotting cash to all shareholders (total share capital is 547,965,998 shares) at the rate of RMB 5.00 (tax included) for every 10 shares, totaled RMB 273,982,999, and the balance is carried forward to the next year. The Company shall not convert capital reserve into share capital in the year. The above proposal is subject to Shareholders’General Meeting 2004 for review and approval before implementation. The preplan on the profit that has no t been appropriated for cash profit distribution □Applicable √Inapplicable §7. Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets √Applicable □Inapplicable Unit: RMB’0000 Contribution Assets Debts and to net profit of ownership Liabilities the Company Profit Related Explain principle of involved involved Transaction The assets Date of Sale of the assets or loss transaction pricing in the in the parties sold sale price sold from the from or no assets assets year-beginning sale transferred transferred to the date of or not or not sale Wuhan Iron 5B gas May 15, & Steel wheel 2,000.00 0.00 536.28 No 2004 Construction power - 16 - SHENZHEN NANSHAN POWER STATION CO., LTD. Project generation Negotiation price Yes Yes # Group Co., sets ( 21, # # Ltd. 22, 23) of Nanshan Power Plant 7.1, 7.2 Influence on consistence of business and stability of managers caused by the issues involved Liquidize assets of the Company, attain to the object of maintenance and appreciation of assets value and increase the available field square of Nanshan power Co., Ltd.. 7.3 Significant guarantees √Applicable □Inapplicable Unit: RMB’0000 Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries) Guarantee Name of the Date of happening Complete Amount of Guarantee for related Company (date of signing Guarantee term Implementation guarantee type party (yes or guaranteed agreement) or not not) Total amount of guarantee in the report period 0.00 Total balance of guarantee at the end of the report period 0.00 Guarantee of the Company for the controlling subsidiaries Total amount of guarantee for controlling subsidiaries in the report period 0.00 Total balance of guarantee for controlling subsidiaries at the end of the report 20,000.00 period Particulars about the external guarantee of the Company (Including the guarantee for the controlling subsidiaries) Total amount of guarantee 20.000.00 The proportion of the total amount of guarantee in the net assets of the 0.00 Company Particulars about the guarantees out of line Total amount of guarantee for other related parties, which the Company or 0.00 controlling shareholders held less than 50% The debts guarantee amount provided for the guarantee of which the 20,000.00 assets-liability ratio exceeded 70% Proport ion of total amount of guarantee in net assets of the Company exceeded No 50% (Yes of No) Total amount of guarantee breaking regulations 20,000.00 7.4 Significant related transactions 7.4.1 Current Sales and Purchase □Applicable √Inapplicable 7.4.2 Current related credits and liabilities - 17 - SHENZHEN NANSHAN POWER STATION CO., LTD. √Applicable □Inapplicable Unit: RMB’0000 Related parties Providing capital to related parties Providing capital to the listed company by related parties Amount Balance Amount Balance Shenzhen Xiefu Power Supply 0.00 0.00 16.48 323.53 Co., Ltd. Shenzhen Moon Bay Renhe 0.00 0.00 63.93 80.94 Industrial Co., Ltd. Shenzhen Energy 0.00 0.00 0.00 55.33 Group Co., Ltd. Baizhuoli Petroleum Co., 0.00 0.00 0.00 709.51 Ltd. Total 0.00 0.00 80.41 1,169.31 Including: In the report period, the amount of capital of the listed company provided for controlling shareholders and its subsidiaries was RMB 0.00, and the balance was RMB 0.00. 7.5 Entrusted assets management □Applicable √Inapplicable 7.6 Implementation of commitments √Applicable □Inapplicable 1. From Nov. 4, 2002, the Company began to accept case investigation by Shenzhen Inspection Bureau of CSRC. The Company committed disclosing inspection result timely to investors. The Company implemented the relevant commitment. Please refer to the details in contents of (VII) of this Section. 2. In the report period, shareholders holding over 5% shares of the Company had no other commitment. 7.7 Significant lawsuits and arbitrations □Applicable √Inapplicable 7.8 Particulars about duties performance of Independent Directors Particulars about the independent directors attending the Board Name of This year times Presence in Entrusted Absence Notes Independent of attending the person presence (Times) Directors Board meeting (times) Liu Aiqun 4 3 0 1 Huang Sujian 7 4 3 0 Liu Zhanjun 7 6 1 0 - 18 - SHENZHEN NANSHAN POWER STATION CO., LTD. Zhou Chengxin 7 7 0 0 Xu Jingan 3 3 0 0 Yu Xiufeng 1 1 0 0 Particulars about the independent directors proposed different opinions about the relevant matters of the Company □Applicable √Inapplicable §8. Report of the Supervisory Committee √Applicable □Inapplicable (I) Work of the Supervisory Committee According to relevant regulations of Company Law and the Articles of the Association, the Supervisory Committee seriously fulfilled its duties. In the report period, the Supervisory Committee held 6 meetings and attended all meetings of the Board with the details as follows: 1. The 7th meeting of the 4th Supervisory Committee of the Company was held on Mar. 4, 2004, which examined and approved Work Report 2003 of General Manager, Financial Settling Report 2003, Report on Withdrawing Impairment Losses for Each Item of Assets of the Company in 2003, Preplan on 2003 Profit Distribution and Capital Reserve Conversion into Capital Reserve, 2003 Annual Report and its Summary, 2003 Auditing Report (domestic and overseas version) and work Report 2003 of the Supervisory Committee. 2. The 8th meeting of the 4th Supervisory Committee of the Company was held on Apr. 13, 2004, which examined and approved Work Report on Production, Operation and Management of the Company in 1st Quarter of 2004, 1st Quarterly Financial Settling Report of 2004, 2004 1st Quarterly Report and 2004 Plan on Evaluation and Encouragement and Punishment of Goal of Salary and Production Operation. The attendants seriously studied Several Opinions on Propelling Reform and Opening- up and Steady Development of Capital Market promulgated by the State Council. 3. The 9th meeting of the 4th Supervisory Committee of the Company was held on Aug. 1, 2004, which heard and examined and approved Report on Business Development of Shenzhen Shen Nandian Fuel Engine Project Technology Co., Ltd., Proposal on Investing Dongguan Gaobu Natural Gas Fuel Engine Power Plant, Proposal on Investing and Setting up Shen Nandian (Dongguan) Weimei Power Co., Ltd., Report on Progress of Zhejiang Ruian Fuel Engine Power Station Project, Report on Transfer #21, # 22, #23 Fuel Engines of the Company, Proposal on Revising Assets Trustee Contract of Shenzhen Xindianli Industrial Co., Ltd., and Proposal on Suggesting Holding 1st Provisional Shareholders’General Meeting of the Company in 2004. The meeting also examined Report on Safety Production and Fuel Engine Accidents of the Company. Meanwhile, the attendants also heard Report on Joining the Bidding of Trinidad and Tobago Natural Gas Power station. - 19 - SHENZHEN NANSHAN POWER STATION CO., LTD. 4. The 10th meeting of the 4th Supervisory Committee of the Company was held on Aug. 10, 2004, which examined and approved Report on Production, Operation and Management of the Company in metaphase of 2004, Financial Settling Plan in metaphase of 2004, 2004 Semi-annual Report and its Summary (domestic and overseas version), and Proposal on Establishing , Proposal on Revising of the Company, Proposal on Supplementing Candidates for Independent Directors and Proposal on Suggesting Holding 2nd Provisional Shareholders’General Meeting of the Company in 2004. The meeting also examined Proposal on Increasing Capital on Shenzhen Energy Environmental Protection Co., Ltd.. 5. The 11 th meeting of the 4th Supervisory Committee of the Company was held on Oct. 15, 2004, which examined and approved Work Report on Production, Operation and Management of the Company in 3rd Quarter of 2004, 3rd Quarterly Financial Settling Report of 2004, 2004 3rd Quarterly Report and its Summary (domestic and overseas version) 6. The Provisional meeting of the 4th Supervisory Committee of the Company was held on Oct. 27, 2004, which examined and approved Proposal on Revising of the Company, Proposal on Supplementing Candidates for Independent Directors and Proposal on Suggesting Holding 3rd Provisional Shareholders’general Meeting in 2004. (II) The Supervisory Committee’ s independent opinions on the following events 1. The Company’s operation according to laws In the report period, the Supervisory Committee attended all meetings of the Board of Directors and seriously supervised on all decisions, material operations and investments and implementations of resolutions made by Shareholders’ General Meeeting, and executed duties of supervisors. The Supervisory Committee considered, the Company could develop all productive and operative business according to the State and local laws and regulations and the Articles of Association. The Company step by step established and consummated legal person administration structure. The decision- making procedures of the Company need further standardizing. Directors and managers of the Company still abided by regulations of relevant laws, regulations and the Articles of the Association of the Company in executing the duties of the Company. However, at the same time, former individual executive of the Company didn’t fulfill the obligations and report to the Board and Directors according to the relevant laws and regulations, in providing external guarantee for Xiefu Comopany controlled by the Company. At present, under the coordinate work of the new Board and new operating team, there was no future trouble about the matter. The Supervisory Committee required the Company further sounded and consummated every item of inner control and management system, which standardized and rationalized the daily work of the Company. 2. Inspecting the Company’ s finance In 2004, the Supervisory Committee seriously checked auditors’report submitted by CPAs engaged by the Company and other accounting materials submitted by the - 20 - SHENZHEN NANSHAN POWER STATION CO., LTD. Company. The Supervisory believed, the Company can implement finance and tax policies of the State and paid attention to financial management. Guangzhou Yangcheng CPAs Co., Ltd. and PricewaterhouseCoopers Certified Public Accountants presented unqualified auditor’ s report for the Company, which truly reflect the finance, operating results and cash flow of the Company. The Supervisory Committee required the Company seriously standardized operating activities, absorbed lessons, reported timely about significant operating activities, strengthened financial supervision, made relevant system about financial supervision and risk safeguard of enterprise as soon as possible, and strictly operated according to relevant regulations of the Articles of the Association. 3. Use of raised proceeds The actual project put in with the latest raised proceeds of the Company accorded with the project committed. 4. Transactions of purchase and sale of assets of the Company In the report period, the Company transferred three 5B gas wheel power generation sets (# 21, # 22, # 23) of Nanshan Power Plant to Wuhan Iron & Steel Construction Project Group Co., Ltd.. With respect to this, the Supervisory Committee required at the 9th meeting of 4th Board, in the process of selling assets and transferring share equity, the Company must conduct assets evaluation, as the reference for the decision- making of the Board, and also as the gist for fairness and rationality of assessment on disposing and purchasing and transferring assets and share equity and on achievements of management team. The Supervisory Committee required, the Company conducted sale and purchase of assets strictly according to lawful and normal procedures in the future. 5. Related transactions The Supervisory Committee believed, according to the annual Auditor’s Report presented by Guangzhou Yangcheng CPAs Co., Ltd., in the report period, there existed no behaviors out of line about capital current and transaction between the Company and related parties. The related transactions of the Company occurred also took the principle of market fair transaction into consideration. According to the market price of the same kind of product, the Company determined the transaction price. After the examination and approval of the Board of the Company and Shareholders’General Meeting, the transaction price was fair and reasonable, which didn’t do harm to the interest of the Company. 6. Clearing of Beneficial Fund The Supervisory Committee required the Company carried out the relevant contents of ZJZGZ[2004] No. 14 Notification on Rectification swiftly and tried to complete clearing work in the first half of 2005. §9. Financial Report 9.1 Auditing opinions Auditing opinions : Standard unqualified auditor’s opinions 9.2 Financial Statements 9.2.1CONSOLIDATED PROFIT AND LOSS ACCOUNT - 21 - SHENZHEN NANSHAN POWER STATION CO., LTD. FOR THE YEAR ENDED 31 DECEMBER 2004 Note 2004 2003 RMB’000 RMB’000 Turnover 3 2,432,712 1,863,937 Other revenues 3 111,839 94,556 2,544,551 1,958,493 Fuel costs (1,391,848) (1,023,375) Construction costs (179,809) - Staff costs 4 (119,611) (85,859) Depreciation of fixed assets (157,442) (137,831) Amortisation of intangible assets (8,643) (2,055) Operating lease expenses - equipment (38,204) (30,375) Repairs and maintenance expenses (111,178) (59,291) Other operating expenses 5 (37,505) (62,190) Operating profit 500,311 557,517 Finance costs 6 (26,775) (12,367) Share of profit of associated companies 14,015 1,437 Profit before taxation 487,551 546,587 Taxation 7 (29,277) (70,592) Profit after taxation 458,274 475,995 Minority interests (13,692) - Profit attributable to shareholders 444,582 475,995 Dividend 8 273,983 256,448 Earnings per share - basic 9 RMB0.81 RMB0.87 9.2.2 CONSOLIDATED BALANCE SHEET - 22 - SHENZHEN NANSHAN POWER STATION CO., LTD. AS AT 31 DECEMBER 2004 Note 2004 2003 RMB’000 RMB’000 Intangible assets 10 (19,653) (61,045) Fixed assets 11 1,206,501 1,314,880 Construction in progress 12 1,247,505 231,976 Interests in associated companies 13 16,536 3,622 Investment securities 14 71,885 71,885 Deferred tax assets 25 9,280 - Current assets Inventories 15 249,409 150,316 Trade receivable s 234,363 216,190 Amount due from a minority shareholder 17 11,680 23,530 Other receivables, deposits and prepayments 114,076 58,042 Bank balances and cash 16 581,651 494,178 1,191,179 942,256 Current liabilities Trade payable s 92,758 5,476 Amount due to a customer on construction contract 18 20,499 - Amounts due to associated companies 19 4,000 3,238 Amount due to a related company 20 13,865 13,865 Other payables and accrued charges 71,008 140,348 Taxation payable 28,676 48,657 Bank loans, unsecured 21 1,252,734 622,329 1,483,540 833,913 Net current (liabilities)/assets (292,361) 108,343 Total assets less current liabilities 2,239,693 1,669,661 Financed by: Share capital 22 547,966 547,966 Reserves 23 652,207 521,098 Retained earnings 24 Proposed final dividend 273,983 256,448 Others 233,980 194,309 Shareholders’funds 1,708,136 1,519,821 Minority interests 102,033 19,840 Bank loans, unsecured 21 429,524 130,000 2,239,693 1,669,661 - 23 - SHENZHEN NANSHAN POWER STATION CO., LTD. 9.2.3 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2004 2004 2003 Note RMB’000 RMB’000 Total equity as at 1 January 1,519,821 1,274,445 Declaration of dividend 24 (256,448) (230,146) Profit for the year 444,582 475,995 Exchange differences 23 181 60 Utilisation of public welfare fund 23 - (533) Total equity as at 31 December 1,708,136 1,519,821 9.2.4 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 2004 2003 Note RMB’000 RMB’000 Operating activities Cash received from customers 2,792,668 2,137,328 Cash received for the government grants 57,566 - Cash paid to suppliers (1,787,233) (1,269,047) Cash paid to and on behalf of employees (109,180) (104,481) Other cash received 3,533 15,750 Other cash payments (432,517) (327,847) Net cash inflow generated from operations 26(a) 524,837 451,703 Interest paid (52,442) (17,934) PRC income tax paid (58,346) (64,456) Net cash inflow from operating activities 414,049 369,313 Investing activities Purchase of fixed assets and payments for construction in progress and intangible assets (1,107,201) (582,762) - 24 - SHENZHEN NANSHAN POWER STATION CO., LTD. Purchase of interest in a subsidiary from minority shareholder - (56,320) Sale of fixed assets 13,704 - Dividend received from an associate company 909 - Dividend received from investment securities - 867 Interest received 3,849 5,033 Repayment of loan to/(loan to) a minority shareholder 20,000 (20,000) Net cash outflow from investing activities (1,068,739) (653,182) Net cash outflow before financing (654,690) (283,869) Financing activities 26(b) New loans raised 1,552,258 752,329 Repayment of loans borrowed (622,329) (335,000) Capital contribution from minority shareholders of subsidiaries 68,501 19,840 Dividend paid (256,448) (230,138) Net cash inflow from financing 741,982 207,031 Increase/(decrease) in cash and cash equivalents 87,292 (76,838) Cash and cash equivalents at 1 January 494,178 570,956 Effect of foreign exchange rate changes 181 60 Cash and cash equivalents at 31 December 16 581,651 494,178 9.3 Explanation on changes of accounting policy, accounting estimation and settlement compared with the latest annual report □Applicable √Inapplicable 9.4 Contents, correct amount, reason and its influence of significant accounting errors □Applicable √Inapplicable 9.5 Explanation on change of consolidated scope compared with the latest annual report √Applicable □Inapplicable (1) On Feb. 24, 2004, the Company and Southern Port Power Project (Hong Kong) Co., Ltd. invested together to construct Shenzhen Shen Nandian Fuel Engine Project Technology Co., Ltd. with the registered capital amounting to RMB 10 million and the Company held 60% share equity. This year, the subsidiary was listed into consolidation scope of accounting statements. (2) On Oct. 20, 2004, the Company and Xingdesheng Company, Xinyuan Co., Ltd., Dongguan Weimei Chinaware Industrial Park Co., Ltd., and Guangdong Province Dongguan Gaobu Industrial General Company invested together to construct Shen Nnadian (Dongguan) Weimei Power Co., Ltd. with the registered capital amounting to - 25 - SHENZHEN NANSHAN POWER STATION CO., LTD. USD 11.99 million. The Company held 40% share equity and Xingdesheng Company held 15% share equity. Because Xingdesheng Company was the subsidiary, of which the Company indirectly held 100% shareequity, the Company totally held 55% share equity of Shen Nandian(Dongguan). This year, the subsidiary was listed into consolidation scope of accounting statements. Board of Directors of Shenzhen Nanshan Power Station Co., Ltd. Mar. 8, 2004 - 26 -