深圳南山热电股份有限公司 2017 年半年度报告全文 深圳南山热电股份有限公司 Shenzhen Nanshan Power Co., Ltd. Semi-annual Report 2017 2017-045 August 2017 0 深圳南山热电股份有限公司 2017 年半年度报告全文 Section I Important Notice, Contents and Paraphrase Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Shenzhen Nanshan Power Co., Ltd. (hereinafter referred to as the Company) hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents. Chairman Yang Haixian, principal of the Company, Director GM Wu Dongxiang, person in charge of accounting works, CFO Huang Jian and Deputy GM Leng Jiwei (acting manager of the financial management dept.), person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of Semi-Annual Report 2017 is authentic, accurate and complete. Absent director Title for absentee Reasons Attorney Zhou Qun Director Work Yu Chunling Liao Nangang Independent director Work Pan Chengwei Concerning the forward-looking statements with future planning involved in the Semi-Annual Report, they do not constitute a substantial commitment for investors. Investors are advised to exercise caution of investment risks. The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either. 1 深圳南山热电股份有限公司 2017 年半年度报告全文 The report has been prepared in both Chinese and English, for any discrepancies, the Chinese version shall prevail. Please read the full report seriously. 2 深圳南山热电股份有限公司 2017 年半年度报告全文 Content Section I Important Notice, Contents and Paraphrase .................................................................. 1 Section II Company Profile and Main Financial Indexes .............................................................. 6 Section III Summary of Company Business .................................................................................... 9 Section IV Discussion and Analysis of the Operation ................................................................... 11 Section V Important Events ............................................................................................................ 22 Section VI Changes in shares and particular about shareholders............................................... 52 Section VII Preferred Stock ............................................................................................................ 55 Section VIII Particulars about Directors, Supervisors, Senior Executives and Employees ..... 55 Section IX Corporate -bond ............................................................................................................ 56 Section X Financial report .............................................................................................................. 56 Section XI Documents available for reference .............................................................................. 56 3 深圳南山热电股份有限公司 2017 年半年度报告全文 Paraphrase Items Refers to Definition Company, the Company, Shen Nan Dian Refers to Shenzhen Nanshan Power Co., Ltd. Shen Nan Dian Zhongshan Co., Refers to Shen Nan Dian (Zhongshan) Electric Power Co., Ltd. Shen Nan Dian Dongguan Co., Refers to Shen Nan Dian (Dongguan) Weimei Electric Power Co., Ltd Shen Nan Dian Engineering Co., Refers to Shenzhen Shennandian Turbine Engineering Technology Co., Ltd. Shen Nan Dian Environment Protection Co., Refers to Shenzhen Shen Nan Dian Environment Protection Co., Ltd. Server Co., Refers to Shenzhen Server Petrochemical Supplying Co., Ltd. New Power Co., Refers to Shenzhen New Power Industrial Co., Ltd. Singapore Company Refers to Shen Nan Energy (Singapore) Co., Ltd. Nanshan Thermal Plant Refers to Nanshan Thermal Plant of Shenzhen Nanshan Power Co., Ltd. Zhongshan Nam Long Power Plant of Shen Nan Dian (Zhongshan) Zhongshan Nam Long Power Plant Refers to Electric Power Co., Ltd. Dongguan Gaobu Power Plant of Shen Nan Dian (Dongguan) Weimei Dongguan Gaobu Power Plant Refers to Electric Power Co., Ltd. Shenzhong Properties Company Refers to Zhongshan Shenzhong Real Estate Investment Properties Co., Ltd. Shenzhong Development Company Refers to Zhongshan Shenzhong Real Estate Development Co., Ltd. Syndisome Company Refers to Hong Kong Syndisome Co., Ltd. Jiangxi Nuclear Power Company Refers to CPI Jiangxi Nuclear Power Co.,Ltd. NAM HOI Refers to HONG KONG NAM HOI (INTERNATIONAL) LTD. Hong Kong Energy Refers to Shenzhen Energy (Hong Kong) International Co.,LTD. Shen Energy Group Refers to Shenzhen Energy Co., Ltd. Energy Group Refers to Shenzhen Energy Group Co., Ltd. Guangju Industrial Refers to Shenzhen Guangju Industrial Co., Ltd. Guangju Holding Refers to Shenzhen Guangju Investment Holding (Group) Co., Ltd. Guangju Energy Refers to Shenzhen Guangju Energy Co., Ltd. Kehuitong Refers to Shenzhen Kehuitong Investment Holding Co., Ltd. Paipu Technology Refers to Shenzhen Paipu Energy Technology Development Co.,LTD. Oufuyuan Technology Refers to Shenzhen Oufuyuan Technology Co., Ltd. Xingzhong Group Refers to Zhongshan Xingzhong Group Co., Ltd. Independent financial advisor, CMS Refers to China Merchants Securities Co., Ltd. 4 深圳南山热电股份有限公司 2017 年半年度报告全文 Shenzhen Pengxin Assets Appraisal Land & Real Estate Appraisal Co., Appraisal institute, Pengxin Appraisal Refers to Ltd. Auditing institute, Ruihua CPA, Accounting Refers to Ruihua Certified Public Accounts (LLP) Institute Deheng, Perennial Legal Adviser Refers to Beijing Deheng (Shenzhen) Law Firm Jin Du, Special Legal Adviser Refers to Beijing Jin Du (Shenzhen) Law Firm CSRC Refers to China Securities Regulatory Commission Shenzhen Securities Regulatory Commission of China Securities Securities regulatory bureau Refers to Regulation Commission SZ Stock Exchange, Exchange Refers to Shenzhen Stock Exchange SOTCBB Refers to Shenzhen United Property And Share Rights Exchange Company Law Refers to Company Law of The People’s Republic of China Securities Law Refers to Securities Law of The People’s Republic of China Rules of Listing Refers to Rules of Shenzhen Stock Exchange for the Listing of Stocks Articles of association Refers to Article of Association of Shenzhen Nanshan Power Co., Ltd. Except the special description of the monetary unit, the rest of the Yuan, ten thousand Yuan, one hundred million Refers to monetary unit is RMB Yuan, ten thousand Yuan Reporting period Refers to 1 Jan. 2017 to 30 Jun. 2017 5 深圳南山热电股份有限公司 2017 年半年度报告全文 Section II Company Profile and Main Finnaical Indexes I. Company Profile Short form of the stock Shen Nandian A, Shen Nandian B Code for share 000037, 200037 Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in 深圳南山热电股份有限公司 Chinese) Short form of the Company 深南电 (in Chinese) (if applicable) Foreign name of the Company Shenzhen Nanshan Power Co., Ltd. (if applicable) Short form of foreign name of Shen Nan Dian the Company (if applicable) II. Contact person and ways Secretary of the Board Rep. of securities affairs Name Zhang Jie Jiang Yuanyuan 16/F-17/F, Hantang Building, OCT, 16/F-17/F, Hantang Building, OCT, Contact adds. Nanshan District, Shenzhen, Guangdong Nanshan District, Shenzhen, Guangdong Province Province Tel. 0755-26948888 0755-26948888 Fax. 0755-26003684 0755-26003684 E-mail investor@nspower.com.cn investor@nspower.com.cn III. Others 1. Way of contact Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or not □ Applicable √ Not applicable Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period, found more details in Annual Report 2016. 2. Information disclosure and preparation place Whether information disclosure and preparation place changed in reporting period or not 6 深圳南山热电股份有限公司 2017 年半年度报告全文 □ Applicable √ Not applicable The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation place for semi-annual report have no change in reporting period, found more details in Annual Report 2016. IV. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data or not □ Yes √ No Increase/decrease in this report Current period Same period of last year y-o-y Operating revenue (RMB) 872,962,697.33 697,688,267.08 25.12% Net profit attributable to shareholders of -22,629,201.38 -56,454,746.24 -59.92% the listed company (RMB) Net profit attributable to shareholders of the listed company after deducting -25,113,210.11 -66,068,598.18 -61.99% non-recurring gains and losses (RMB) Net cash flow arising from operating -65,448,855.27 183,680,275.33 -135.63% activities (RMB) Basic earnings per share (RMB/Share) -0.04 -0.09 -55.56% Diluted earnings per share (RMB/Share) -0.04 -0.09 -55.56% Weighted average ROE -1.30% -10.96% -88.14% Increase/decrease in this End of current period End of last period report-end over that of last period-end Total assets (RMB) 3,043,070,710.89 4,363,703,614.03 -30.26% Net assets attributable to shareholder of 1,920,084,701.54 1,942,713,902.92 -1.16% listed company (RMB) V. Difference of the accounting data under accounting rules in and out of China 1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not applicable The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period. 2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not applicable 7 深圳南山热电股份有限公司 2017 年半年度报告全文 The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or Chinese GAAP (Generally Accepted Accounting Principles) in the period. VI. Items and amounts of extraordinary profit (gains)/loss √Applicable □ Not applicable In RMB Item Amount Note Gains/losses from the disposal of non-current asset (including the Loss from disposal of non-current -160,729.35 write-off that accrued for impairment of assets) assets Governmental subsidy calculated into current gains and losses (while closely related with the normal business of the Company, Government grants with assets 2,217,711.99 excluding the fixed-amount or fixed-proportion governmental concerned are amortized subsidy according to the unified national standard) The part-individual amount, has Switch back of the impairment for receivables which has 480,710.97 collected which has been impairment test independently accrual for bad debts Other non-operating income and expenditure except for the -5,484.22 Donation mostly aforementioned items Less: impact on income tax - Impact on minority shareholders’ equity (post-tax) 48,200.66 Total 2,484,008.73 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons □ Applicable √ Not applicable 8 深圳南山热电股份有限公司 2017 年半年度报告全文 Section III Summary of Company Business I. Main businesses of the Company in the reporting period Does the Company need to comply with the disclosure requirement of the special industry No The company is specialized in power and thermal supply, as well as providing technical consulting and technical services for power stations. The company has three wholly-owned or holding gas turbine plants, which equipped with seven sets of 9E gas steam combined cycle power generating units, with total installed capacity up to 1260 MW (Nanshan Thermal Power Plant: 3×180 MW, Zhongshan Nam Long Power Plant : 2×180 MW, Dongguan Gaobu Power Plant: 2×180 MW). These three gas turbine plants are all located in the power load center of Pearl River Delta area, which are the main peaking power sources in their areas. During the reporting period, the Company is specialized in business of gas-steam combined cycle power generation, and its subsidiary Nanshan Thermal Plant, Zhongshan Nam Long Power Plant and Dongguan Gaobu Power Plant are all in the state of normal production and operation. The Company strives to achieve more power by focusing on generating equipment maintenance and operation management. Adapt to the reform situation of electricity market, Zhongshan Nam Long Power Plant actively to be a participator in 2017 electricity bilateral negotiation and monthly concentrated competition. In the half year of 2017, the total power generation of its subsidiary plants was up to 1346 million kwh (among which, Nanshan Thermal Plant has generated electricity of 703 million kwh, Zhongshan Nam Long Power Plant has generated electricity of 375 million kwh, and Dongguan Gaobu Power Plant has generated 267 million kwh), with 26.98% year-on-year growth, completing 44.32 percent of its annual plan. Besides the primary business in power generation, the Company actively developed businesses in related areas. Shen Nan Dian Engineering Company, an affiliate enterprise of the Company, has been expanding its business scope in technical advice and technical services of gas turbine power plant construction projects at home and abroad. Shen Nan Dian Environment Protection Company is devoted to sludge drying for sewage treatment plant by utilizing the residual heat of gas turbine power generation, which reduces the volume of sludge, achieves harmless treatment and comprehensive utilization of resources. II. Major changes in main assets 1. Major changes in main assets Major assets Note of major changes Equity assets N/A Fixed assets N/A Intangible assets N/A 9 深圳南山热电股份有限公司 2017 年半年度报告全文 The expenses of technical improvement from Shen Nan Dian Zhongshan Company Construction in process increased 2. Main overseas assets □ Applicable √ Not applicable III. Core Competitiveness Analysis Does the Company need to comply with the disclosure requirements of the special industry No Since its establishment, the Company, adhering to the traditional spirit of exploration, innovation and initiative, has taken the lead in carrying out such technical modification projects of energy-saving and exhaust-reducing as low nitrogen combustion retrofit based on the completion of transition to clean energy of the power fuel for its subsidiary gas turbine power plant, so as to minimize the influences of power generation on the environment. By implementing the circular economy projects of sludge desiccation and combined cooling heating and power supplying, the Company has been striving for transition from a single power generation enterprise to a comprehensive utilization of resources enterprise and a comprehensive energy service provider. Affected by the macro-economic situation and the common problems existed in combustion industry, the Company has been suffering a great operating pressures these years, but its core competitiveness formed in the operation and development progress in more than twenty years, are still the basis for the sustainable existence and development sought by the Company. (Details of core competitiveness analysis can be found in 2016 Annual Report) 10 深圳南山热电股份有限公司 2017 年半年度报告全文 Section IV Discussion and Analysis of the Operation I. Introduction In the first half of 2017, China's macro economy continued a steady development trend, the supply side structural reform, economic transformation development, and innovation development were gradually presenting their effects, the energy structure continued to be optimized, the pace of transformation was accelerated, and the development quality and efficiency was constantly improved. The industrial economy of Guangdong province maintained the stability, the electricity demand kept a steady growth, and the electricity supply and demand was overall balanced. According to the statistics and analysis of relevant departments, from January to June, the total electricity consumption of the whole province reached 268.2 billion KWH, an increase of 4.6% on a year-on-year basis. However, due to the large increase in power generation capacity of the thermal power generating units, the new capacity continued to increase, the total quantity of electricity overall power was in surplus, the monthly centralized trading of electric power generation side had intense competition, the whole province's peak demand for gas turbine power generation was limited, so the gas turbine power generation was still subject to large restrictions. Although the company turned losses into gains in 2016 through the implementation of major asset sales, which improved the company's asset quality and financial situation to a certain extent, the company's main business and operating conditions did not fundamentally change. As a power company taking gas turbine power generation as the main business, the company was still facing enormous pressure in production and operation under the influence of still high fuel costs, limits in electric power generation, and other industrial common problems. During the reporting period, by taking the legitimate and standard operation and safety and environmental protection as the premise and the improvement of management efficiency as the core objective, the company orderly promoted all work as planned: the first is to pay close attention to safety production and environmental and economic operation of subordinate power plants, and achieve the safe "four no" and environmental standards; the second is to actively participate in the bilateral consultation transactions and monthly centralized competitive transactions of the electricity market in Guangdong province so as to maximumly promote the production efficiency; the third is to closely follow the national fiscal and monetary policy, broaden the financing channels, optimize the assets and debt structure, and guarantee the company's capital chain security; the fourth is to comprehensively carry out the cost-effective activities to further reduce the costs and strive to improve the profitability of main business; the fifth is to cooperate with the government departments and related units to carry out the preliminary work of land acquisition and storage, and make the greatest efforts to protect the interests of shareholders and employees; the sixth is to seriously study the industrial policy, regulatory policies and industry dynamics, combine with the national power system reform and energy structure optimization, actively look for development opportunities of new projects related to the main business, and strive to explore approaches for the company’s going concern and healthy development. During the reporting period, the company did everything possible to improve the profitability of main business 11 深圳南山热电股份有限公司 2017 年半年度报告全文 and strived to improve the company's operating conditions, but the electricity price could not completely cover the operating costs, resulting in an operating loss in the first half year. In the first half of 2017, the company achieved operating income of RMB 872,962,700, net profit of RMB -22,629,000 attributable to shareholders of listed companies, earnings per share of RMB -0.04, reduced losses of about 59% on a year-on-year basis. II. Main business analysis Found more in “I. Introduction” in “Discussion and Analysis of the Operation”. Y-o-y changes of main financial data In RMB Y-o-y Same period of Current period increase/dec Reasons for changes last year rease Operating revenue 872,962,697.33 697,688,267.08 25.12% Mainly due to the increase of generating revenue The corresponding costs increased for soaring generating Operating costs 827,761,559.33 639,919,822.75 29.35% capacity Server Company stop the trading business of oil-gas, and there are no expenses occurred; the sludge disposal Sales expenses 1,413,079.30 2,453,390.26 -42.40% expenses from Shen Nan Dian Environment Company declined Administration 41,191,218.46 44,677,104.53 -7.80% The taxes expenses declined. expenses Finance expenses 31,679,390.45 96,448,656.12 -67.15% The loan scale drop greatly in the period Total profit from Shen Nan Dian Engineering Company Income tax expenses 920,495.87 1,085,010.53 -15.16% declined R & D revenue 0.00 0.00 -- Net cash flow The enterprise income tax for year of 2016- 220 million arising from -65,448,855.27 183,680,275.33 -135.63% Yuan are paid in the period operating activities Net cash flow The expenses of technical reform of CHP from Shen Nan arising from -39,051,315.46 -10,793,452.51 261.81% Dian Zhongshan Company increased investment activities Net cash flow arising from -964,425,970.10 -94,007,456.64 925.90% The loans paid to Bank increased financing activities Net increase of cash Net cash flow arising from operation and financing -1,069,082,845.45 78,992,283.10 -1453.40% and cash equivalent activities declined Constitution of main business In RMB 12 深圳南山热电股份有限公司 2017 年半年度报告全文 Increase or Increase or Increase or decrease of decrease of decrease of gross Operating Operating cost Gross profit ratio operating revenue operating cost profit ratio over revenue over same period over same period same period of of last year of last year last year According to industries Energy industry 842,021,424.05 805,217,714.14 4.37% 26.47% 30.39% -2.87% Engineering labor 8,009,910.63 6,823,762.90 14.81% 56.59% 24.74% 21.76% Sludge drying 21,001,109.13 15,028,862.36 28.44% -17.68% -10.98% -5.39% According to products Power marketing 842,021,424.05 805,217,714.14 4.37% 26.47% 30.39% -2.87% Engineering labor 8,009,910.63 6,823,762.90 14.81% 56.59% 24.74% 21.76% Sludge drying 21,001,109.13 15,028,862.36 28.44% -17.68% -10.98% -5.39% According to region Shenzhen 469,038,193.54 446,580,150.51 4.79% 22.67% 38.69% -11.00% Zhongshan 230,274,355.22 218,124,213.93 5.28% 25.04% 18.17% 5.51% Dongguan 171,719,895.05 162,365,974.96 5.45% 32.16% 21.76% 8.08% III. Analysis of the non-main business √Applicable □ Not applicable In RMB Amount Ratio in total profit Note Whether be sustainable Long-term equity investment Investment income -1,019,420.00 3.42% Yes income Changes in fair - -- - value Asset impairment -480,710.97 1.61% Bad debt losses switch back No Non-operating 5,796.00 -0.02% Penalty incomes No income Non-operating Disposal of non-current 172,009.57 -0.58% No expenditure assets IV. Assets and liability 1. Major changes of assets composition In RMB End of the Period End of same period of last year Ratio changes Notes of major changes Amount Ratio in Amount Ratio in 13 深圳南山热电股份有限公司 2017 年半年度报告全文 total assets total assets Monetary fund 335,157,601.97 11.01% 1,415,550,406.02 32.44% -21.43% Repayment of bank loans Account Increase in electricity 278,471,957.15 9.15% 166,808,672.42 3.82% 5.33% receivable receivable Inventory 85,411,086.12 2.81% 80,684,079.57 1.85% 0.96% - Investment 2,900,509.11 0.10% 2,998,577.91 0.07% 0.03% - property Long-term equity 19,285,644.18 0.63% 20,305,064.18 0.47% 0.16% - investment 1,483,246,258.4 Fix assets 48.74% 1,544,562,696.68 35.40% 13.34% Decrease in total assets 5 The expenses of technical Construction in reform of CHP from Shen 41,288,936.94 1.36% 8,008,476.13 0.18% 1.18% process Nan Dian Zhongshan Company increased Short-term loans 248,050,000.00 8.15% 796,840,000.00 18.26% -10.11% Repayment of bank loans Long-term loans 26,940,000.00 0.89% 343,900,000.00 7.88% -6.99% Repayment of bank loans 2. Assets and liability measured by fair value □ Applicable √ Not applicable 3. Assets rights restricted till end of the period Not applicable. V. Investment 1. Overall situation In January 2010, the Company invested to CPI Jiangxi Nuclear Power Co., Ltd. in nuclear power project and holds 5% stake. As to the end of the reporting period, the investment of the Company amounted to RMB 59, 315,000. The preparatory work of the project is in progress. 2. The major equity investment obtained in the reporting period □ Applicable √ Not applicable 3. The major non-equity investment doing in the reporting period □ Applicable √ Not applicable 14 深圳南山热电股份有限公司 2017 年半年度报告全文 4. Financial assets investment (1) Securities investment □ Applicable √ Not applicable The Company had no securities investment in Period. (2) Derivative investment □ Applicable √ Not applicable The Company has no derivatives investment in Period. VI. Sales of major assets and equity 1. Sales of major assets □ Applicable √ Not applicable The Company has no sales of major assets in Period-end. 2. Sales of major equity □ Applicable √ Not applicable VII. Analysis of main Holding Company and stock-jointly companies In RMB Industry Main products Register Operating Operating Name Type Total assets Net Assets Net profit involved or service capital revenue profit Technology development regarding to application of remaining heat Shen Nan (excluding RMB Dian New Power restricted 277,071,574 162,189,64 123,257,499 28,431,721 28,431,721. Subsidiary 113.85 Power industry items) and .21 8.84 .23 .14 14 million Company power generation with remaining heat. Add: power generation 15 深圳南山热电股份有限公司 2017 年半年度报告全文 through burning machines. Shenzhen Shen Nan Environm Dian RMB 79 125,727,154 96,671,948. 21,001,109. 2,409,832. 3,212,489.0 Subsidiary ental Sludge drying Environmen million .82 68 13 32 2 protection t Protection Co., Ltd. Engaged in the technology consultant service of gas-steam combined cycle power plant (station), maintenance and overhaul Shenzhen Engineeri of running Shennandia ng and equipment for n Turbine RMB 10 17,635,515. 12,815,772. 8,009,910.6 -418,923.9 Subsidiary technical gas-steam -418,923.97 Engineering million 78 73 3 7 advisory combined Technology services cycle power Co., Ltd. plant (station). Import and export of goods and technology (excluding distribution and monopolized commodity of the State) Shenzhen Self-operation Server of fuel oil or RMB 53.3 138,510,697 101,939,01 -3,327,228. -3,325,598. Petrochemic Subsidiary Energy import agent 501,462.84 million .51 6.91 77 77 al Supplying business; Co., Ltd Trading(manu 16 深圳南山热电股份有限公司 2017 年半年度报告全文 facture, storage and transportation excluded) of diesel, lubricating, liquefied petroleum gas, natural gas, compressed gas & liquefied gas and chemical products(che mical hazard excluded); investment, construction and technical assistance of relevant supporting facility of liquefied petroleum gas and natural gas; import and export of cargo and technologies, domestic trading(mono polized commodity and commodity under special government control excluded); leasing business. Licensing 17 深圳南山热电股份有限公司 2017 年半年度报告全文 project: fuel oil warehousing (refined oil products excluded); ordinary freight, cargo specific transportation (container) and cargo specific transportation (pot-type) Power generation by burning machines, power generation by remaining heat, power supply and heat supply Shen Nan (excluding Dian Power pipeline RMB 746.8 776,092,282 -60,348,668 230,866,147 -13,622,30 -13,385,377 (Zhongshan Subsidiary industry network of million .96 .49 .88 5.89 .59 ) Power Co., heat supply), Ltd. lease of dock and oil storage (excluding oil products, dangerous chemicals and inflammable and explosive materials). Shen Nan Construction Dian Power and operation US $ 35.04 734,946,852 116,935,511 171,896,422 -12,478,36 -12,478,369 (Dongguan) Subsidiary industry of natural gas million .49 .99 .01 9.20 .20 Weimei power plants. Electric 18 深圳南山热电股份有限公司 2017 年半年度报告全文 Power Co., Ltd Shen Nan Oil product Energy trading, spare US $ 0.9 345,038,107 342,519,98 -794,007.0 Subsidiary Trade 0 -794,007.00 (Singapore) part of the gas million .26 5.93 0 Co., Ltd. turbine agent Development, building & operating and management of the nuclear power project; producing electricity and relevant products; foreign trade CPI Jiangxi operation(excl RMB Nuclear Stock jointly Nuclear uding the 3,432,870,3 1,167,270,0 1167.27 / / / Power Co., company power import and 68.44 00.00 million Ltd. export business of cargo exercise state-run trading management); (except for the projects with special permission from the State) VIII. Structured vehicle controlled by the Company □ Applicable √ Not applicable IX. Prediction of business performance from January – September 2017 Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the warning of its material change compared with the corresponding period of the last year and explanation on reason 19 深圳南山热电股份有限公司 2017 年半年度报告全文 □ Applicable √ Not applicable X. Risks and countermeasures 1. Main business: According to the judgment on the supply and demand trend of 2017 in Guangdong and Shenzhen electricity market, the three subsidiary power plants will continue to suffer great pressures from production and operation because of single gas and steam combined cycle power generation. The power dispatch department shall continue to execute the principle of economic dispatch in the case that the electricity supply and demand situation of Shenzhen and Guangdong has still not had any fundamental changes, so the space for generating more electricity from gas turbine units is quite limited; On the other hand, the pace of market-oriented reform on the electricity has been stepped up, which making the market much more competitive and also bringing some opportunities for gas turbine generation plant, with much more challenges followed as well. The Company will play an important role of Guangdong gas turbine special committee, make an effort to seek support from grid corporations and governments at all levels, striving for much more electricity generation. At the same time, by urging the subsidiary power plant to improve the reliability of generation units, Dongguan Gaobu power plant is accelerating the implementation of combined heat and power generation project, and Zhongshan Nam Long Power Plant is accumulating the experiences of bilateral negotiation trade and monthly competitive trade, aims for creating better environment for more power generation. 2. Safety production: various degrees of ageing signs of the power generating equipment in the subsidiary power plants of the Company continue to emerging, potential failures and security risks are increasing by years, which raise higher demands on equipment management and service input; the age structure of the Company is gradually ageing, so their working enthusiasm and sense of responsibility are getting weak, In addition that the Company is constantly getting involved in business distress, Nanshan Thermal Power Plant is facing the risk of shut down because of the land purchasing and storage issue and the development prospects of the Company are not clear yet, all of which have a negative effect on the working enthusiasm of the employees, has brought a great challenge to the security management of the Company. The Company shall strengthen the maintenance and regular examination of the equipment, enhance the security education and training of the employees, improve the responsibility system of safety production, strictly implement safety management system, raise the awareness of safety and responsibility of personnel at all levels, to ensure the normal operation of equipment and eliminate the potential failures and accidents in the bud. 3. Fuel procurement: the Company and its subsidiary Zhongshan Nam Long Power Plant and Dongguan Gaobu Power Plant have respectively signed a long-term gas purchasing contract with Guangdong Trading Subsidiary and Zhuhai trading Subsidiary of China National Offshore Oil Gas and Power Corporation (Referring to CNOOC). Even though the crude oil price of the international market has declined in recent years, there are many uncertainties existed in the trend of future, which bring uncertainty to the gas price linked with international oil price, meanwhile, it will have an effect on the execution of the contract for the reason of electric quantity. The Company shall make all efforts to get the support from CNOOC in terms of gas price discount and contract execution, striving to avoid relevant risks and take effective measures to minimize fuel costs. 4. Capital guarantee: Though the fiancial status has improved after sales of substantial assets and fund pressures are reduced, however, in front of the firece operation situation, the Company has a deficit in first half of the year, the issues in financing and soaring costs are counld not be solved radically. The company shall strengthen the communication with banks and other financial institutions, striving for their supports of financing; on the other hand, we shall work hard to expand financing channels and raise funds from multiple sides, to make sure the safety of the capital chain and minimize the financial expense. 5. The stability of the core professional: in the past over twenty years since established, the Company has attracted and cultivated a group of professional personnel with higher quality in the major of gas turbine. Because of the operational losses in recent years, plus the high living cost in Shenzhen, brain drain is becoming a serious issue to the Company, even though the current professional personnel and management team are able to meet the demands of normal production, management and operation, it is not excluded there is a possibility of brain drain before the operation situation of the Company has not got any fundamental improvement. The Company will further enhance the management of human resources, improve the fixing post and salary distribution system, 20 深圳南山热电股份有限公司 2017 年半年度报告全文 reinforce the employee trainings and cultivation of backup professional personnel, and focus the limited resources on incenting the core personnel teams. While standardizing management and improving working requirements, we shall pay attention to concern employees with humanization, create a harmony and pleasant work atmosphere to strengthen the cohesive force of the Company. 6. On-going business: Although we achieved a dramatically reduction in losses in the first half year, the Company has appeared the operating losses. Main business orientation and operation status of the Company has a fundamental shift. There is an uncertainty in achiving the operation target for year of 2017, furthermore, Nanshan Themeral Plant has risks of close or relocation for the land reserves in Qianhai, sustainable operation of the Company still faces major challenges. The Company shall improve the profitability of its main business and overall operating efficiency by means of strengthening the management of stock assets. At the same time, the Company shall actively explore diversified business modes and new development opportunities related to our main business, seek for creating a sound condition for sustainable operation and health growth. The Company reminds investors to pay attention to the above possible principal risks and other risks the Company may face, and carefully make rational investment decisions. 21 深圳南山热电股份有限公司 2017 年半年度报告全文 Section V Important Events I. In the report period, the Company held annual shareholders’ general meeting and extraordinary shareholders’ general meeting 1. Shareholders’ General Meeting in the report period Ratio of investor Session of meeting Type Date Date of disclosure Index of disclosure participation “Resolution Notice of Annual General Meeting 2016” No.:2017-025, Annual General published on “China AGM 38.96% 2017-04-21 2017-04-22 Meeting of 2016 Securities Journal” “Securities Times” “Hong Kong Commercial Daily” and Juchao Website 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore □ Applicable √ Not applicable II. Profit distribution plan and capitalizing of common reserves plan for the Period □ Applicable √ Not applicable The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for the semi-annual year. 22 深圳南山热电股份有限公司 2017 年半年度报告全文 III. Commitments that the Company, shareholders, actual controller, offeror, directors, supervisors, senior management or other related parties have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period √Applicable □ Not applicable Type of Commitment Commitmen Implementat Commitments Promise commitme Content of commitments date t term ion nts Commitments for Share Merger Reform Commitments in report of acquisition or equity change Commitment made The Commitment Letter of the Truthfulness, Accuracy and Completeness of the Related Information of in the material Reorganization assts The company and all the directors, supervisors and senior managers of our company promise to assure reorganization of the truthfulness, accuracy and completeness of the related information of the reorganization as well as The transferring 75% the application documents. We make the following commitment that there is no false statement, Company Until the equity of misleading representation or material omission, and jointly and separately accept responsibilities. We and whole completion Shenzhong promise that all the signatures as well as seals are true and effective, and the copies are in agreement with directors, Other 2016-10-31 of this major Completed Properties the originals. We promise that all the information provided by our company and all the directors, supervisors asset Company and supervisors and senior managers of our company are true, correct and complete original written and senior restructuring Shenzhong Real information or copied information, and the copied information or the copies are in complete agreement executives Estate with the originals. The signatures and seals of all the documents are true without any false record, Development misleading statement or major omissions. If the information is investigated by the judicial authority or Company China's Securities Regulatory Commission because of any false record, misleading statement or major respectively omissions in any of our information in this deal, all the shareholders of the boarders, supervisors and 23 深圳南山热电股份有限公司 2017 年半年度报告全文 senior managers of our company shall stop selling their shares, and shall hand in their account of the shares and the written applications of stopping selling them to the board of directors within two working days, and the board of directors will apply locking the information of the identity and account to the Stock Exchange and registered clearing company; if beyond the time limit, after checking, the Boarder of Directors will directly report the information of the identity and account to the Stock Exchange and registered clearing company. If not, the stock exchange and registered clearing company will lock the related shares directly. If there is anything that is illegal, the Boarder of Directors of the Company and all the directors thereof promise the locked parts of shares shall be used for compensation. The Commitment Letter of the Truthfulness, Accuracy and Completeness of the Information Provided As the counterparty of this recombination, Shenzhen Oufuyuan Technology Co., Ltd.(referred to as the Oufuyuan “company” in this paragraph) and the directors, supervisors and senior managers of our company make Technology Until the the following commitment: The information provided by our company as well as we ourselves are all and whole completion true, accurate and complete, without any false statement, misleading representation or material omission, directors, Other 2016-10-31 of this major Completed the copied information or the copies are in complete agreement with the originals and the signatures and supervisors asset seals of all the documents are true. If not, and if determined by the judiciary that we may cause any loss and senior restructuring to the related company, Shenzhen Nanshan Power Co., Ltd. or their investors, audit, evaluators or the executives agency of financial advisers or anything related, the company and we are willing to take any legal responsibility. The Commitment Letter of No Penalty and Credit Situation in the Last Three Years The company and all the directors, supervisors and senior managers of our company make the following The commitment: 1. The Company is under standardized operation during the last three years, so there is not Company any illegal capital take-up or external guarantee or anything like that. 2. Since June 25, 2015 when the Until the and whole company received "the Supervision Letter on Shenzhen Nanshan Power Co., Ltd" [2015] No. 69 issued completion directors, Other by the company's management department of Shenzhen Stock Exchange, which was about not disclosing 2016-10-31 of this major Completed supervisors the revision of performance forecast, the company and all the directors, supervisors and senior managers asset and senior of our company have neither experienced any administrative penalty or criminal penalty, nor punished or restructuring executives investigated by Shenzhen Stock Exchange or any other authorities. We have never been punished, investigated or gone under custody by the Stock Exchange or Securities Regulatory Commission or any other authorities. If there is anything wrong in the statement above, the Company and the Boarder of 24 深圳南山热电股份有限公司 2017 年半年度报告全文 Directors will jointly and separately accept any legal responsibilities related. The Commitment Letter of No Penalty and Credit Situation in the Last Five Years Oufuyuan Oufuyuan Technology of Shenzhen (referred to as the “company” in this paragraph) and all the directors, Technology Until the supervisors and senior managers of The Company state solemnly to Shenzhen Nanshan Power Co., Ltd. and whole completion and the relevant intermediary that: 1. The Company and I personally haven’t experienced any directors, Other 2016-10-31 of this major Completed administrative penalty related to Stock Exchange or criminal penalty, and were never involved in any supervisors asset major civil action or arbitration matters related to finance. 2. We have never been punished, investigated and senior restructuring or gone under custody by China Securities Regulatory Commission or any other authorities as a result of executives not paying off huge debts or not fulfilling promises. The Commitment Letter of Not Violating Rule No.13 of Interim Provisions on strengthening the supervision of abnormal stock transactions related to the major asset restructuring of listed companies Oufuyuan Oufuyuan Technology of Shenzhen(referred to as the “company” in this paragraph) and all the directors, Technology Until the supervisors and senior managers of The Company make the following commitment: 1. The Company and whole completion and I personally haven’t been investigated or registered due to insider dealing in the major asset directors, Other 2016-10-31 of this major Completed restructuring of this transaction; 2. The Company and I personally haven’t been investigated or supervisors asset registered due to insider dealing in any major asset restructuring by and senior restructuring China Securities Regulatory Commission or any other authorities in the last thirty-six months. If executives The Company or I break the above promise, The Company or I will surely bear the loss caused to Shenzhen Nanshan Power Co., Ltd. The Commitment Letter of Not Existing Related Relation Oufuyuan As the counterparty of this transaction, Oufuyuan Technology of Shenzhen(referred to as the “company” Technology in this paragraph) makes the following commitment: The company and all the directors, supervisors , and whole Until the senior managers of our company, the actual controller of The Company have no incidence relation with directors, completion the directors, supervisors , senior managers of Shenzhen Nanshan Power Co., Ltd. or any shareholder supervisors, Other 2016-10-31 of this major Completed holding more than 5% of the shares of Shenzhen Nanshan Power Co., Ltd.(including Shenzhen Energy senior asset Co., Ltd., HONG KONG NAM HOI (INTERNATIONAL) LTD, Shenzhen Guangju Industrial Co., Ltd) executives restructuring as well as Shenzhong Property Company or Shenzhong Development Company, so there is no connected and actual transaction. If the above statement is not true, The Company and I personally will take the related controller responsibilities. 25 深圳南山热电股份有限公司 2017 年半年度报告全文 The The Commitment Letter of Not Existing Connected Relation Company Until the The company and all the directors, supervisors, senior managers of The Company makes the following and whole completion commitment: The company and all the directors, supervisors , senior managers of The Company have directors, Other 2016-10-31 of this major Completed no incidence relation with the counterparty of this transaction, Oufuyuan Technology of Shenzhen, so supervisors asset there is no connected transaction. If the above statement is not true, The Company and I personally will and senior restructuring take the related responsibilities. executives Shenzhong The Commitment Letter of Not Existing Connected Relation Properties Until the Company, Shenzhong Properties Company and Shenzhong Real Estate Development Company (referred to as the completion Shenzhong Other “company” in this paragraph) as the target company in this reorganization, we makes the following 2016-10-31 of this major Completed Real Estate commitment: the Company have no incidence relation with the counterparty of this transaction, asset Developmen Oufuyuan Technology of Shenzhen, so there is no connected transaction. If the above statement is not restructuring t Company true, The Company and I personally will take the related responsibilities. Shenzhen Energy The Commitment Letter of Not Existing Connected Relation Until the Group Co., Shenzhen Energy Group Co., Ltd. Co., Ltd., NAM HOI and Guangju Industrial (referred to as the completion Ltd. Co., “company” in this paragraph) as the shareholder of Shen Nan Dian, with over 5% shares held, we makes Other 2016-10-31 of this major Completed Ltd., NAM the following commitment: the Company have no incidence relation with the counterparty of this asset HOI, transaction, Oufuyuan Technology of Shenzhen, so there is no connected transaction. If the above restructuring Guangju statement is not true, The Company and I personally will take the related responsibilities. Industrial The Commitment Letter of the Legitimateness of the Sources of Funds As the counterparty of this transaction, Oufuyuan Technology of Shenzhen (referred to as the “company” Until the in this paragraph) makes the following commitment: The company's transferee of the equity interest paid completion Oufuyuan Other and the repayment of interest and the interest and other related debt funds are all from the company's 2016-10-31 of this major Completed Technology own funds or raised legally. All the sources of funds are legal, and have effective and full right of asset disposal, which is in agreement with the rules of China Securities Regulatory Commission or any other restructuring related laws or rules. 26 深圳南山热电股份有限公司 2017 年半年度报告全文 The Commitment Letter of Not Violating Rule No.13 of Interim Provisions on strengthening the The supervision of abnormal stock transactions related to the major asset restructuring of listed companies Company The company and all the directors, supervisors, senior managers of The Company make the following Until the and whole commitment: 1. The Company and I personally haven’t been investigated or registered due to insider completion directors, Other dealing in the major asset restructuring; 2. The Company and I personally haven’t been investigated or 2016-10-31 of this major Completed supervisors registered due to insider dealing in any major asset restructuring by China Securities asset and senior Regulatory Commission or any other authorities in the last thirty-six months. If The Company or I break restructuring executives the above promise, The Company or I will surely bear the loss caused to Shenzhen Nanshan Power Co., Ltd. The Commitment Letter of the Restructuring Involving the Real Estate Business The whole Until the All the directors, supervisors and senior managers of The Company make the following commitment: If directors, completion the target company proposed to be sold in this recombination were punished or investigated for illegal supervisors Other 2016-10-31 of this major Completed actions like undisclosed idle land, real estate speculation, insisting on a conservative way in selling a real and senior asset estate or price rigging, and caused any loss to The Company or investors, I will surely compensate the executives restructuring loss caused according to the demand of relevant laws or rules or securities regulatory authority . The Commitment Letter of the Integrity of the Underlying Assets As the seller of this major assets reorganization, The company makes the following commitment: 1. The company legally holds the underlying assets, and there is no case of entrusted ownership, trust holdings or any other third party that holds shares; There is no pledge, guarantee or any third party rights in the underlying assets and there is no situation of dispute, judicial security measures or enforcement Until the measures, such as restrictions, block or prohibition of the transfer. 2. The company makes the following completion The commitment: If the underlying assets cannot be transferred or processed for necessary changes because Other 2016-10-31 of this major Completed Company the company has no right to dispose of assets, or other rights are limited due to the underlying assets of asset the underlying asset ownership cannot be transferred or shall go through the modification formalities, the restructuring company is willing to bear the corresponding legal responsibility in the right to judicial departments according to their authority after confirmation of the losses caused by the related parties. 3. By the date of this letter of commitment issued, Shenzhong Property Company and Shenzhong Development Company have no situation of false investment or anything that affects its legal existence, and there are no pending or foreseeable litigations, arbitrations or administrative penalties affecting this transaction. 27 深圳南山热电股份有限公司 2017 年半年度报告全文 The Commitment Letter of the Truthfulness, Accuracy and Completeness of the Information Provided Shenzhong Properties Company (referred to as the “company” in this paragraph) makes the following commitment: 1. The information related to this transaction provided by The Company are all true, accurate and complete, without any false statement, misleading representation or material omission,; 2. Until the Shenzhong We promise that all the information provided by The Company are true, correct and complete original completion Properties Other written information or copied information, and the copied information or the copies are in complete 2016-10-31 of this major Completed Company agreement with the originals. The signatures and seals of all the documents are true without any false asset record, misleading statement or major omissions. 3. The illustrations The Company provides are all true, restructuring correct and complete without any false record, misleading statement or major omissions; 4. The Company jointly and severally accepts responsibilities as to the truthfulness, accuracy and completeness of the content of this report. The Commitment Letter of No Illegal or Irregular Behaviors in the Last Three Years Shenzhong Properties Company (referred to as the “company” in this paragraph) promises: 1. The Company has never done anything that is greatly illegal or irregular, and has never received any Until the administrative punishment or criminal punishment. 2. The Company has never been punished as a result Shenzhong completion of violating the National Industrial Policy or the laws or rules related to environment protection, land Properties Other 2016-10-31 of this major Completed administration, or anti-monopoly. 3. The Company has neither been investigated by competent Company asset administrative authorities like China Securities Regulatory Commission because of illegal actions nor restructuring investigated by judicial authorities.4.The Company has no unfinished or any foreseen major court case or arbitration matters related to this transaction. 5. The Company does not have any matter that may influence the guarantee of operating capacity or commitment. Whole The Commitment Letter of No Major Violation of Relevant Laws directors, As the directors, supervisors and senior managers of Shenzhong Property Company, we make the Until the supervisors following commitment: 1. I have never done anything that is greatly illegal or irregular, and have never completion and senior received any administrative punishment or criminal punishment or arbitration related to finance. 2. I have Other 2016-10-31 of this major Completed executives never been investigated or registered because of inter-transaction of restructuring major assets and have asset of no unfinished cases. I haven’ neither been punished or investigated by competent administrative restructuring Shenzhong authorities like China Securities Regulatory Commission or the Stock Exchange because of illegal Properties actions like not repaying major debts or not fulfilling commitments or inter-transaction of restructuring 28 深圳南山热电股份有限公司 2017 年半年度报告全文 Company major assets nor given criminal sanctions by judicial authorities according to law. The Commitment Letter of the Truthfulness, Accuracy and Completeness of the Information Provided Shenzhong Real Estate Development Company (referred to as the “company” in this paragraph) makes the following commitment: 1. The information related to this transaction provided by The Company are all true, accurate and complete, without any false statement, misleading representation or material Until the Shenzhong omission,; 2. We promise that all the information provided by The Company are true, correct and completion Real Estate Other complete original written information or copied information, and the copied information or the copies are 2016-10-31 of this major Completed Developmen in complete agreement with the originals. The signatures and seals of all the documents are true without asset t Company any false record, misleading statement or major omissions. 3. The illustrations The Company provides restructuring are all true, correct and complete without any false record, misleading statement or major omissions; 4. The Company jointly and severally accepts responsibilities as to the truthfulness, accuracy and completeness of the content of this report. The Commitment Letter of No Illegal or Irregular Behaviors in the Last Three Years Shenzhong Real Estate Development Company (referred to as the “company” in this paragraph) makes the following commitment: 1. The Company has never done anything that is greatly illegal or irregular, Until the Shenzhong and has never received any administrative punishment or criminal punishment. 2. The Company has completion Real Estate never been punished as a result of violating the National Industrial Policy or the laws or rules related to Other 2016-10-31 of this major Completed Developmen environment protection, land administration, or anti-monopoly. 3. The Company has neither been asset t Company investigated by competent administrative authorities like China Securities Regulatory Commission restructuring because of illegal actions nor investigated by judicial authorities. 4. The Company has no unfinished or any foreseen major court case or arbitration matters related to this transaction. 5. The Company does not have any matter that may influence the guarantee of operating capacity or commitment. Whole The Commitment Letter of No Major Violation of Relevant Laws directors, As the directors, supervisors and senior managers of Shenzhong Development Company, we make the Until the supervisors following commitment: 1. I have never done anything that is greatly illegal or irregular, and has never completion and senior Other received any administrative punishment or criminal punishment or arbitration related to finance. 2. I have 2016-10-31 of this major Completed executives never been investigated or registered because of inter-transaction of restructuring major assets and have asset of no unfinished cases. I haven’ neither been punished or investigated by competent administrative restructuring Shenzhong authorities like China Securities Regulatory Commission or the Stock Exchange because of illegal 29 深圳南山热电股份有限公司 2017 年半年度报告全文 Real Estate actions like not repaying major debts or not fulfilling commitments or inter-transaction of restructuring Developmen major assets nor given criminal sanctions by judicial authorities according to law. t Company The Letter On the Equity Transfer Agreement under the Relevant Security Arrangements and The Commitment Letter of Expansion of the Scope of Real Estate Collateral Oufuyuan Technology of Shenzhen (referred to as the “company” in this paragraph) promises: 1. The company agrees and promises to have Shenzhong Development Company issue the letter of commitment to Shenzhen Nanshan Power Co., Ltd. to Nanshan Power Company and Xingzhong Group, and promises to allow the scope of the guarantee for the above mentioned real estate mortgage to be extended to be all the obligations of the company that have to be fulfilled according to the "Equity Transfer Agreement" and its supporting transaction documents (Including the obligations agreed upon in Article 4,5 and the second part of Article 6 in paragraph 2 of the" Equity Transfer Agreement "), and the term of the mortgage continues until the date of the cancellation of the mortgage. 2. I hope Shenzhen Oufuyuan Nanshan Power Co., Ltd. and Xingzhong Group can complete the provisions of Article 4 and 5 of the Until the Technology, "Equity Transfer Agreement" in the company that is about the replacement guarantee of the joint completion Shenzhong responsibility that Shenzhen Nanshan Power Co., Ltd provides to Zhongshan Branch of Huaxia Bank Other 2016-10-31 of this major Completed Real Estate Limited on behalf of "Shuimunianhua Garden Project" of Shenzhong Property Company and can asset Developmen provide RMB 420156083.84 of interest payable in paragraph 2 (Part 2) of Article 6 of the Equity restructuring t Company Transfer Agreement and the effective legal guarantee corresponding to the interest(including but not limited to bank performance bond and assets cover ) and submit the application documents for the cancellation of the mortgage of the original mortgage of Shenzhen Development Company to Zhongshan Real Estate Mortgage Registration Authority five working days after that. Shenzhong Real Estate Development Company (referred to as the “company” in this paragraph) makes the following commitment: From the date of the issue of this letter, the “seven places ten rooms” mortgage guarantee our company provided( The details can be seen in (six) the main assets, liabilities and external guarantees" of the "1 major assets," in the second part “Shenzhong Development Company” of the fourth chapter" the basic situation of "transactions" in "The report of the sale of major assets of Shenzhen Nanshan Power Limited(Revised version), released on 16 Nov. 2016 ") has extended to the obligations that Oufuyuan Technology should fulfill but have not fulfilled according to transaction 30 深圳南山热电股份有限公司 2017 年半年度报告全文 documents (Including the obligations agreed upon in Article 4.5 and the second part of Article 6 in paragraph 2 of the" Equity Transfer Agreement "), and the term of the mortgage continues until the date of the cancellation of the mortgage. Commitments make in initial public offering or re-financing Equity incentive commitment Other commitments for medium and small shareholders Implemented or Yes not (Y/N) 31 深圳南山热电股份有限公司 2017 年半年度报告全文 IV. Appointment and non-reappointment (dismissal) of CPA Financial report has been audit or not □ Yes √ No Not been audited V. Explanation from Board of Directors, Supervisory Committee for “Qualified Opinion” that issued by CPA □ Applicable √ Not applicable VI. Explanation from the Board for “Qualified Opinion” of last year’s □ Applicable √ Not applicable VII. Bankruptcy reorganization □ Applicable √ Not applicable No bankruptcy reorganization for the Company in Period. 32 深圳南山热电股份有限公司 2017 年半年度报告全文 VIII. Lawsuits Material lawsuits and arbitration √Applicable □ Not applicable Amount of money The results and Execution of the Predicted Advances in litigation The basic situation of litigation (Arbitration) involved effects of litigation litigation Disclosure date Disclosure index liabilities (Arbitration) (RMB’0000 (Arbitration) (Arbitration) ) As Sinopec CNOOC shipping fuel supply Co., Ltd. 5,112.82 No At the end of December The amount On 24 January 1 March The details can be (hereinafter referred to as Sinopec China Shipping 2016, Server Company received by Server 2017, Server 2016; 25 seen in Company) owed RMB 51,128,173.60 in the purchase of the received the "Civil Company will Company received August Announcement on company and delayed repayment, on 24 February 2016 Judgment" [(2016) increase RMB a total of RMB 2016; 10 the litigation Server Company filed the Whampoa District People's Yue01MZ No. 15716] 3,340,300 to the 55,696,080.66 September matters of Court of Guangzhou a civil complaint and other related from the Intermediate company's net profit (including 2016; 31 Shenzhen energy documents. On 16 May Whampoa Guangzhou District People's Court of attributable to payment for goods December resources Co., People's court heard the case. On 23 August, Server Guangzhou, shareholders of owed 2016; 26 Ltd. And On the Company received the "Civil Judgment" [(2016) Guangdong, dismissed Listed Companies in RMB51,128,173.6 January 2017 progress of the Yue0112MC No.858] from the Whampoa District the appeal and affirmed 2016, and will 0, overdue interest proceedings of the People's Court of Guangzhou, and judged that Sinopec the original judgment. increase RMB RMB Shenzhen energy China Shipping Company should pay Server Company On 24 January 2017, 86,800 to the 4,259,767.06, resources Co., RMB 51,128,173.60 and the loss of interest on overdue Server Company company's net profit acceptance fee of Ltd. on China payment within ten days since the judgment took effect, and received a total of RMB attributable to the first instance Securities , bear the case acceptance fee and property preservation fee. 55,696,080.66 shareholders of of case RMB Securities Times At the beginning of September 2016, Sinopec China (including payment for Listed Companies in 303,140.00 and and Hong Kong Shipping Company refused to accept the "Civil goods owed 2017. property Commercial Daily Judgment" [(2016)Yue0112MC No.858] from the RMB51,128,173.60, preservation fee and the Juchao Whampoa District People's Court of Guangzhou as final, overdue interest RMB RMB Information 33 深圳南山热电股份有限公司 2017 年半年度报告全文 so they submitted a civil complaint to the Whampoa 4,259,767.06, 5,000.00 )from website. Notice District People's Court of Guangzhou, and appealed to the acceptance fee of the Sinopec China number : Intermediate People's Court of Guangzhou, Guangdong. At first instance of case Shipping 2016-007, the end of December 2016, Xifu Company received the RMB 303,140.00 and Company in 2016-061, "Civil Judgment" [(2016) Yue 01 MZ No. 15716] from the property preservation accordance with 2016-073, Intermediate People's Court of Guangzhou, Guangdong, fee RMB the final judgment 2016-118, dismissed the appeal and affirmed the original judgment. 5,000.00 )from Sinopec of Guangzhou 2017-003. On 24 January, 2017, Server Company received a total of China Shipping intermediate RMB 55,696,080.66 from Sinopec China Shipping Company in people's Court of Company in accordance with the final judgment of accordance with the Guangdong. Thus, Guangzhou Intermediate People's Court of Guangdong. final judgment of the proceedings of Thus, the proceedings of the case of Server Company came Guangzhou intermediate the case of Server to an end. people's Court of Company came to Guangdong. Thus, the an end. proceedings of the case of Server Company came to an end. 34 深圳南山热电股份有限公司 2017 年半年度报告全文 IX. Penalty and rectification □ Applicable √ Not applicable No penalty and rectification for the Company in Period. X. Integrity of the Company and its controlling shareholders and actual controllers □ Applicable √ Not applicable XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan or other employee incentives □ Applicable √ Not applicable The Company has no equity incentive plan, employee stock ownership plans or other employee incentives in Period. XII. Major related transaction 1. Related transaction with routine operation concerned □ Applicable √ Not applicable The Company had no related transaction with routine operation concerned in Period. 2. Related transactions by assets acquisition and sold □ Applicable √ Not applicable No related transactions by assets acquisition and sold for the Company in Period. 3. Main related transactions of mutual investment outside □ Applicable √ Not applicable No main related transactions of mutual investment outside for the Company in Period. 4. Contact of related credit and debt √Applicable □ Not applicable Whether has non-operational contact of related liability and debts or not √ Yes □ No Claim receivable from related party: Whether Balance at Current Current Current Ending Related Relationshi has period-begi Causes newly recovery Interest rate interest balance (10 party p non-busines n (10 added (10 (10 thousand s capital thousand 35 深圳南山热电股份有限公司 2017 年半年度报告全文 occupying Yuan) (10 thousand thousand Yuan) or not thousand Yuan) Yuan) Yuan) Routine New Power Subsidiary current N -10,694.79 19,115.19 18,369.80 -9,949.40 Company account Shen Nan Routine Dian Subsidiary current N 54,758.38 10,000.00 0.00 7.00% 1,627.41 66,385.79 Zhongshan account Company Shen Nan Routine Dian Subsidiary current N 17,653.76 10,000.00 7.00% 618.33 28,272.09 Dongguan account Company Shen Nan Dian Routine Environme Subsidiary current N 1,604.44 585.81 1143.03 7.00% 8.63 1,055.85 nt account Protection Company Routine Singapore Subsidiary current N 145.69 145.69 Company account Influence on business performance and financial status of the Current assets RMB 224.4254 million increased in the Period. Company from related liabilities Debts payable to related party: Balance at Current Current Current Ending period-begin newly added recovery interest balance (10 Related party Relationship Causes Interest rate (10 thousand (10 thousand (10 thousand (10 thousand thousand Yuan) Yuan) Yuan) Yuan) Yuan) Routine Server Subsidiary current 2,000.00 7,000.00 2,004.29 5.60% 75.09 7,070.80 Company account Routine Syndisome Subsidiary current 384.27 4.10 13.03 375.34 Company account Influence on business Current liability RMB 50.6187 million increased in the Period performance and financial 36 深圳南山热电股份有限公司 2017 年半年度报告全文 status of the Company from related debts 5. Other related transactions √Applicable □ Not applicable On 23 February 2017, The Company held the eighteenth interim meeting of the board of directors by the way of communication voting, and considered and adopted "On the signing of a motor vehicle insurance agreement with Yongcheng property insurance Limited by Share Ltd"(hereinafter referred to as "Yongcheng insurance"), which allows the company and its subsidiaries to sign a 2017 annual motor vehicle insurance agreement with the insurance company and empowered the chairman of the board of directors of the company and the chairman of the board of directors or general manager of the subsidiaries to sign the motor vehicle insurance agreement of the year 2017. The total amount of the Agreement amounted to RMB 403,596, and the term of agreement is one year. As the company's chief executive officer, Mr. Zhao Xiangzhi served as chief executive officer of Yongcheng Insurance, according to the Provisions of the Stock Listing Rules of the Shenzhen Stock Exchange, the transaction between the company and Yongcheng Insurance constitutes a related party transaction. Inquiry in website Temporary notice Disclosure date Disclosure Website Found more in the Notice of Related Transaction with Alltrust Property Insurance Company Ltd.( Notice No.: 2017-006 ) Notice of Related Transaction with Alltrust 2017-2-25 released on China Securities Journal, Property Insurance Company Ltd. Securities Times, Hong Kong Commercial Daily and Juchao Website Notice No.: 2017-006 XIII. Non-business capital occupying by controlling shareholders and its related parties □ Applicable √ Not applicable No non-business capital occupied by controlling shareholders and its related parties in Period. XIV. Significant contract and implementations 1. Trusteeship, contract and leasing (1) Trusteeship √Applicable □ Not applicable In line with the Genset Asset Trusteeship Contract of Shenzhen New Power Industrial Co., Ltd. signed with New Power Company in December 2003, the Company was entrusted to operate and manage the power generation machine unit owned by its wholly-owned subsidiary New Power Company. The custody business service charge RMB 0.5247 million was obtained by the Company in reporting period. 37 深圳南山热电股份有限公司 2017 年半年度报告全文 (2) Contract □ Applicable √ Not applicable No contract for the Company in Period. (3) Leasing □ Applicable √ Not applicable No leasing for the Company in Period. 2. Major guarantees √Applicable □ Not applicable (1) Guarantees In 10 thousand Yuan Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries) Guarante Related Actual date of e for Name of the Announce Guarantee happening (Date Actual Guarantee Guarantee Implemen Company ment related of signing guarantee limit type term guaranteed disclosure limit ted (Y/N) agreement) party date (Y/N) Guarantee of the Company for the subsidiaries Guarante Related e for Name of the Announce Actual date of Actual Guarantee Guarantee Guarantee Implemen Company ment happening (Date of guarantee related type term guaranteed disclosure limit signing agreement) limit ted (Y/N) party date (Y/N) Shen Nan Dian General Zhongshan 2016-04-01 20,000 2016-5-11 8,740 2-year N Y assurance Company Shen Nan Dian General 2016-04-01 10,000 2016-08-25 955 1-year Y Y assurance Zhongshan 38 深圳南山热电股份有限公司 2017 年半年度报告全文 Company Shen Nan Dian General Zhongshan 2017-03-28 4,400 2017-05-27 2,594 5-year N Y assurance Company Shen Nan Dian General Zhongshan 2017-03-28 5,000 2017-04-13 1,850 1-year N Y assurance Company Shen Nan Dian General Dongguan 2017-03-28 10,000 2017-04-11 5,000 1-year N Y assurance Company Shen Nan Dian General Dongguan 2016-04-01 13,500 2017-03-14 3,500 1-year N Y assurance Company Shen Nan Dian General Dongguan 2015-04-25 20,000 2015-09-22 9,200 2-year N Y assurance Company Shen Nan Dian 2016-04-01 General Dongguan 10,000 2016-12-15 3,500 1-year N Y assurance Company Shen Nan Dian 2016-04-01 General Dongguan 5,000 2017-03-03 5,000 1-year N Y assurance Company Shen Nan Dian 2017-03-28 General Dongguan 5,000 2017-04-25 5,000 1-year N Y assurance Company Total amount of approving Total amount of actual guarantee for subsidiaries in 102,900 occurred guarantee for 45,339 report period subsidiaries in report period Total amount of approved 102,900 Total balance of actual 45,339 39 深圳南山热电股份有限公司 2017 年半年度报告全文 guarantee for subsidiaries at the guarantee for subsidiaries at end of reporting period the end of reporting period Guarantee of the subsidiary for the subsidiaries Guarante Related Actual date of e for Name of the Announce Guarantee happening (Date Actual Guarantee Guarantee Implemen Company ment related of signing guarantee limit type term guaranteed disclosure limit ted (Y/N) agreement) party date (Y/N) Total amount of guarantee of the Company Total amount of actual Total amount of approving 102,900 occurred guarantee in report 45,339 guarantee in report period period Total amount of approved Total balance of actual guarantee at the end of report 102,900 guarantee at the end of report 45,339 period period The proportion of the total amount of actually guarantee in the 23.61% net assets of the Company Including: Amount of guarantee for shareholders, actual controller and its - related parties The debts guarantee amount provided for the guaranteed parties whose assets-liability ratio exceed 70% directly or 45,339 indirectly Proportion of total amount of guarantee in net assets of the 0 Company exceed 50% Total amount of the aforesaid three guarantees 45,339 Explanations on possibly bearing joint and several liquidating N/A responsibilities for undue guarantees (if applicable) Explanations on external guarantee against regulated N/A procedures (if applicable) Explanation on guarantee with composite way (2) Guarantee outside against the regulation □ Applicable √ Not applicable 40 深圳南山热电股份有限公司 2017 年半年度报告全文 No entrust financing and entrust loans for the Company in reporting period. 41 深圳南山热电股份有限公司 2017 年半年度报告全文 3. Other material contracts √Applicable □Not applicable The book The value of assessed Name The date the value of of the The base The name The name contr Incide of assets the assets evalua date Bargain Whether of the of the act Pricing nce The performance by The date of signatur involved involved tion evaluati price(RMB’ connected Index contractin contracted obje principles relatio the end of the term disclosure e of the in the in the organi on (if 0000) transaction g company company ct n contract contract( contract(R zation( any) RMB’00 MB’0000) if any) 00)(if (if any) any) The China Liqu 2013-01 Composed of Composed N Not The relevant 2012-12-15 Notice of Purchasing Company offshore efied -15 liquefied natural of liquefied applic contract is now in Changyue Natural Gas oil and gas natur gas prices, the natural gas able operation (Notice No.: 2012-054) Refco al cost of prices, the released on China Group Ltd gas integrated cost of Securities Journal, Guangdon services and tax. integrated Securities Times, Hong g Branch services and Kong Commercial Daily tax. and Juchao Website 42 深圳南山热电股份有限公司 2017 年半年度报告全文 Shenzhen CNOOC Liqu 2013-12 Composed of Composed N Not The relevant 2013-11-30 Notice of Major Nanshan Refco efied -21 liquefied natural of liquefied applic contract is now in Contract (Notice No.: Power Group Ltd natur gas prices, the natural gas able operation 2013-044) released on Co., Ltd Guangdon al cost of prices, the China Securities Dongguan g Branch gas integrated cost of Journal, Securities Company services and tax. integrated Times, Hong Kong services and Commercial Daily and tax. Juchao Website Shenzhen CNOOC Liqu 2014-05 Composed of Composed N Not The relevant 2014-04-25 Notice of Major Nanshan Refco efied -31 liquefied natural of liquefied applic contract is now in Contract (Notice No.: Power Group Ltd natur gas prices, the natural gas able operation 2014-030) released on Co., Ltd Zhuhai al cost of prices, the China Securities Zhongsha Branch gas integrated cost of Journal, Securities n services and tax. integrated Times, Hong Kong Company services and Commercial Daily and tax. Juchao Website The Oufuyuan 2016 - -89,801. 4,464.0 0 Pengxi 201 6 - 6 The underlying RMB1030 N N On April 14, 2017, 2016-8-13; Relevant notice with company Technolog 75% 11 - 23 88 n - 30 asset pricing of million in accordance with 2016-8-29; material assets y Co., Ltd. of Evalua the transaction is the Equity Transfer reorganization found Agreement, 2016-9-7; stake tion based on an more in the follow of independent Oufuyuan 2016-9-19; notices (No.: 2016-049, Shen assessment of Technology paid the 2016-9-23; 2016-063, 2016-068, 43 深圳南山热电股份有限公司 2017 年半年度报告全文 zhon Pengxin, an remaining payables 2016-10-18; 2016-074, 2016-077, g evaluation of RMB 2016-11-16; 2016-078, 2016-079, Prop institution with 420,156,083.84 2016-11-23; 2016-084, 2016-102, erty securities (including the 2016-103, 2016-104, 2016-12-1; Com business amount of RMB 2016-107, 2016-113, pany qualifications, 331,066,153.79 that 2016-12-24; 2016-114, 2016-116, held and the should be paid to the 2017-4-18; 2017-024, 2017-032, by transaction price company and 2017-5-12; 2017-033, 2017-034) on the is based on the holding subsidiaries 2017-5-17; China Securities com final result of and the amount of Journal, Securities 2017-5-18. pany the listing and RMB 89,089,930.05 Times, Hong Kong and auction of the that should be paid Commercial Daily and 75% Shenzhen Stock to Xingzhong Juchao Website of Exchange. Group) and the the newly increased stake interest after June of 30, 2016. Up to May Shen 18, 2017, the zhon industrial and g commercial Dev registration of elop changes about the ment transfer of the 44 深圳南山热电股份有限公司 2017 年半年度报告全文 Com underlying assets in pany this major asset sale to Oufuyuan Technology has been completed, the transaction cost has been paid in accordance with the Equity Transfer Agreement, and the relevant joint guarantee liability and real estate mortgage registration procedures have been relieved which are in line with the "Equity Transfer Agreement" and relevant laws, regulations and regulatory 45 深圳南山热电股份有限公司 2017 年半年度报告全文 documents. This contract has been completed. 46 深圳南山热电股份有限公司 2017 年半年度报告全文 XV. Social responsibility 1. Fulfill the precise social responsibility for poverty alleviation The Company has no precision poverty alleviation temporary in the year, and no subsequent program either 2. Major environmental protection The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department Yes Pollutant Distribution Enterprise Main Number of Emission discharge Total Way of of the Total Excessive or pollutant discharge concentratio standard approved discharge discharge discharge emission subsidiary and features outlet n implemente emissions outlet d In plant area Shenzhen Concentrate of Nanshan emission Nanshan <25 mg. GB13223-2 Oxynitride 2 68.3 ton 280 ton 0 Power Co., from boiler Thermal /m 011 Ltd. uptake Power Plant Shenzhen Concentrate In plant area New Power emission of Nanshan <25 mg. GB13223-2 Oxynitride 1 34.2 ton 140 ton 0 Industrial from boiler Thermal /m 011 Co., Ltd. uptake Power Plant Shen Nan Dian Concentrate In plant area <25 mg. (Dongguan) emission GB13223-2 Oxynitride 2 of Gaobu 21.3 ton 438.9 ton 0 Weimei from boiler Power Plant /m 011 Power Co., uptake Ltd. Shen Nan Concentrate In plant area Dian <25 mg. emission of Nam GB13223-2 (Zhongshan Oxynitride 2 35.48 ton 824.4 ton 0 ) Power from boiler Long Power /m 011 uptake Plant Co., Ltd. Construction and operation of the pollution controlling instruments After the company’s three subordinate power plants completed the "oil to gas" and "low nitrogen combustion system improvement" a few years ago, the main pollutant is nitrogen oxides in exhaust gas, other pollutant emission is almost zero. The three power plants have installed on-line flue gas monitoring system for the waste heat boilers, commissioned the qualified specialist agency for management and operation, and effectively and real-timely networked with environmental protection department who has verified that all environmental emissions indicators of these three power plants meet the current national standards. XVI. Other major events √Applicable □ Not applicable 1.Transfer the major asset sale of stock rights held in Shenzhong Real Estate Company and Shenzhong Development Company. On April 14, 2017, in accordance with the Equity Transfer Agreement, Oufuyuan 47 深圳南山热电股份有限公司 2017 年半年度报告全文 Technology paid the remaining payables of RMB 420,156,083.84 (including the amount of RMB 331,066,153.79 that should be paid to the company and holding subsidiaries and the amount of RMB 89,089,930.05 that should be paid to Xingzhong Group) and the newly increased interest after June 30, 2016. As of the end of the reporting period, the industrial and commercial registration of changes about the transfer of the underlying assets in this major asset sale to Oufuyuan Technology has been completed, the transaction cost has been paid in accordance with the Equity Transfer Agreement, and the relevant joint guarantee liability and real estate mortgage registration procedures have been relieved which are in line with the Equity Transfer Agreement and relevant laws, regulations and regulatory documents (See details on the Notice on Progress of Major Asset Sale, Report on Implementation of Major Asset Sale, and Notice on Transfer Results of Underlying Asset of Major Asset Sale that the company disclosed on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on April 18, 2017, May 12, 2017, and May 17, 2017, notice number: 2017-024, 2017-032, 2017-033, 2017-034). 2.T102-0011, T102-0155 land acquisition and storage. During the reporting period, according to the resolution of the 11th Extraordinary Meeting of the 7th Board of Directors on September 5, 2016, the company set up a special working group on land acquisition and storage projects to cooperate with government departments and relevant units to carry out relevant preliminary work of land acquisition and storage, participate in relevant work meetings, and collect and arrange relevant information. On February 7, 2017, the company received the letter about Shenzhen Qianhai Investment Holding Company asking to offer the ownership data of Nanshan Power Plant and verify the draft mapping report and assess the site survey data (SQKH No. [2017] 28), required the company to check and reply the draft mapping report, the summary sheet about the assessment of the company’s site survey of the relocation and the inventory data about nursery stock, and the second renovation survey in written form, and provide the ownership verification data about buildings and land related to Nanshan Power Plant. However, due to the strong professionalism and heavy workload, lack of relevant professionals and equipment, and having no relevant professional qualifications, the company could not make detailed and professional judgments to the report contents but only could check the missing at present, therefore, the company’s can only be regarded as a reference for Shenzhen Qianhai Investment Holding Company and relevant intermediaries, but not as a basis. On March 7, the company replied the preliminary verification results and related ownership verification information by letter to Shenzhen Qianhai Investment Holding Company and made the above opinions. On June 22, the company learned on the official website of Urban Planning, Land & Resources Commission of Shenzhen Municipality (hereinafter referred to as Municipality Planning Land Commission) that it had published Shenzhen Land Preparation Plan in 2017 (hereinafter referred to as Land Preparation Plan) on its official website. In accordance with the relevant contents of Land Preparation Plan and its attached table, the 2017 Land Preparation Plan of the Authority of Qianhai Shenzhen-Hongkong Modern Service Industry Cooperation Zone of Shenzhen included the land of Nanshan Power Plant. On July 15, the company learned on the official website of Municipality Planning Land Commission that Municipality Planning Land Commission issued the Notice on the Publicity of Municipality Planning Land Commission about the Comprehensive Planning of China (Guangdong) Pilot Free Trade Zone Shenzhen Qianhai Shekou Zone on its official website (hereinafter referred to as the “Notice”), the publicity period was 30 natural days, from July 13, 2017 to August 11, 2017. According to the 48 深圳南山热电股份有限公司 2017 年半年度报告全文 “Notice” and its annex, the no longer needed infrastructure in Nanshan Power Plant and other zones should be shut down. On July 18, the company received the Letter about Proposal for Carrying out the Feasibility Research of Removing Nanshan Power Plant to Shenzhen-Shantou Cooperation Zone from Economy, Trade and Information Commission of Shenzhen Municipality, which suggested the company to seriously study the feasibility of removing Nanshan Power Plant to Shenzhen-Shantou Cooperation Zone. The company will further get to know the relevant circumstances, study the countermeasures, and make every effort to protect the legitimate rights and interests of listed companies and all shareholders. (See details on the Notice of Municipality Planning Land Commission on Shenzhen Land Preparation Plan in 2017, and the Notice on the Publicity of Municipality Planning Land Commission about the Comprehensive Planning of China (Guangdong) Pilot Free Trade Zone Shenzhen Qianhai Shekou Zone that the company disclosed on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on June 24 and July 15, 2017, notice number: 2017-035, 2017-037). 3.Apply for revocation of *ST risk admonition of the company's stock trading. According to the audit report of the company's 2016 Annual Standard Unqualified Opinion issued by Ruihua Certified Public Accountants (Special General Partnership), and in the light of Rule No. 13.2.10 of the Stock Listing Rules, the status that the company's stock trading is subject to *ST risk admonition has been eliminated, and there is no other case of *ST risk admonition. On March 24, 2017, the 10th meeting of the 7th Board of Directors of the company examined and approved the Full Text and Summary of 2016 Annual Report and the Proposal on Applying for Revocation of *ST Risk Admonition of the Company's Stock Trading. On April 13, the company’s Application for Revocation of *ST Risk Admonition of the Company's Stock Trading was checked and agreed by the Shenzhen Stock Exchange. According to the relevant provisions of the Stock Listing Rules, the company's stock trading should be suspended for one day since the opening on April 14, 2017 and resume since the opening on April 17, 2017, *ST risk admonition of the company's stock trading was revoked by the Shenzhen Stock Exchange, the stock short name was changed from “* ST Nandian A, *ST Nandian B” to “Shennandian A, Shennandian B”, stock code is still “000037,200037”, the price limit on stock trading day was changed from 5% to 10% (See details on the Notice on Revocation of *ST Risk Admonition of the Company's Stock Trading disclosed by the company on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on April 14, notice number: 2017-021). 4.Collect the refunds of “project technical renovation benefit fund”. The company disclosed the circumstances of “project technical renovation benefit fund” in the First Quarterly Report of 2016 published on April 27, 2016. In 2016, the company received the refunds of RMB 500,000 from “project technical renovation benefit fund” (See details on 2016 Annual Report and the First Quarterly Report of 2017 disclosed by the company on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on March 28, 2017 and April 25, 2017, notice number: 2017-009, 2017-028). During the reporting period, the company received the refunds of RMB 487,100 from “project technical renovation benefit fund”. 49 深圳南山热电股份有限公司 2017 年半年度报告全文 XVII. Major event of the subsidiaries √Applicable □ Not applicable 1. Heat supply network first-stage project of the cogeneration projects of Shennandian Zhongshan Company. During the reporting period, the project has completed the bidding for the construction and installation project, confirmed the successful bidder, and started construction on February 20, 2017. At present, the in-plant equipment installation and pipeline construction have been basically completed. The company will continue to urge Shennandian Zhongshan Company. to advance the project implementation progress as soon as possible in the premise of ensuring security, and strive to complete the project early. 2. Litigation matters of Server Company. After receiving the Civil Judgment [(2016) No.Y01MZ 15716] from Guangzhou Intermediate People's Court at the end of December 2016, Server Company received the full payment of RMB 55,696,080.66 (including the owned payment for goods of RMB 51,128,173.60, overdue payment interest of RMB 4,259,767.06, first instance litigation fee of RMB 303,140.00, and property preservation fee of RMB 5,000.00) from Sinopec Zhonghai Company according to the final judgment of Guangzhou Intermediate People's Court. Thus, the judicial proceedings for the litigation matters of Server Company terminated (See details on relevant notices disclosed by the company on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on December 31, 2016 and January 26, 2017, notice number: 2016-118,2017-003). 3. Bilateral consultation transactions and monthly centralized competition transactions of Shennandian (Zhongshan) Co., Ltd. During the reporting period, Shennandian (Zhongshan) Co., Ltd. carried out the bilateral consultation transactions and monthly centralized competition transactions according to the resolution of the 16th Extraordinary Meeting of the 7th Board of Directors, signed the bilateral consultation transactions contract with Guangdong Hua Wang Power Co., Ltd., and participated in the monthly centralized competition transactions, the turnover of electricity during the reporting period reached 110,973,430 KWH. 4. The cogeneration heating reconstruction project of Shennandian Dongguan Company. On March 24, 2017, the 10th meeting of the 7th Board of Directors of the Company examined and approved the Proposal on Investment in Cogeneration Heating Reconstruction Project of Holding Subsidiary Shennandian (Dongguan) Weimei Power Co., Ltd., and agreed Shennandian Dongguan Company to invest in the cogeneration heating reconstruction project, with total project investment of RMB 59,890,000 (See details on Resolution Notice of 9th Meeting of the 7th Board of Directors, Notice on Investment in Cogeneration Heating Reconstruction Project of Holding Subsidiary Shennandian (Dongguan) Weimei Power Co., Ltd. disclosed by the company on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on October 25, 2016 and March 28, 2017, notice number: 2016-086, 2017-017). During the reporting period, Shennandian Dongguan Company received the official reply of the routing scheme for centralized heat supply network project in Gaobu Town from Dongguan Urban and Rural Planning Bureau. In July 2017, Shennandian Dongguan Company has singed Pipeline Steam Gas Contract with Dongguan Weimei Ceramics Industrial Park Co., Ltd. 5. Server Company terminates the existing businesses. The company held the 11th meeting of the 7th Board of Directors on April 21, 2017, which considered and approved the Proposal on Terminating the Existing Businesses 50 深圳南山热电股份有限公司 2017 年半年度报告全文 of Shenzhen Server Energy Co., Ltd., agreed Server Company to terminate the existing businesses, and required the company to legitimately and normatively complete the internal management to effectively prevent risks (See details on relevant notices disclosed by the company on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on April 25, 2017, notice number: 2017-026). In addition to the above matters, for the Xinjiang assistance project of Guangdong province the company participated in 2013, the company intended to apply to National Association of Financial Market Institutional Investors for registering and issuing medium term note of no more than RMB 500 million (including RMB 500 million) and intended to issue corporation bonds by private placement of no more than RMB 2 billion (including RMB 2 billion), which had no progress or change during the reporting period. 51 深圳南山热电股份有限公司 2017 年半年度报告全文 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Share Capital 1. Changes in Share Capital In Share Before the Change Increase/Decrease in the Change (+, -) After the Change Capitali New zation Bonus Proportio Amount Proportion shares of Others Subtotal Amount shares n issued public reserve I. Restricted shares 12,993 0.0022% 12,993 0.0022% 1. Other domestic 12,993 0.0022% 12,993 0.0022% shareholding Domestic nature 12,993 0.0022% 12,993 0.0022% person shares II. Unrestricted shares 602,749,603 99.9978% 602,749,603 99.9978% 1. RMB Ordinary shares 338,895,157 56.2249% 338,895,157 56.2249% 2. Domestically listed 263,854,446 43.7751% 263,854,446 43.7751% foreign shares III. Total shares 602,762,596 100.00% 602,762,596 100.00% Reasons for share changed □ Applicable √ Not applicable Approval of share changed □ Applicable √ Not applicable Ownership transfer of share changes □ Applicable √ Not applicable Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period □ Applicable √ Not applicable Other information necessary to disclose or need to disclosed under requirement from security regulators □ Applicable √ Not applicable 2. Changes of restricted shares □ Applicable √ Not applicable 52 深圳南山热电股份有限公司 2017 年半年度报告全文 II. Securities issuance and listing □ Applicable √ Not applicable III. Number of shares and shares held In Share Total preference shareholders Total common shareholders at with voting rights recovered at 30,717 N/A period-end end of reporting period (if applicable) (note8) Particulars about common shares held above 5% by shareholders or top ten common shareholders Proportio Number of Amount of Amount of Number of share Nature of Changes in pledged/frozen n of common shares restricted un-restricted Shareholders shareholde reporting shares held at common common State of Amoun r period held period-end shares held shares held share t HONG KONG NAM HOI Overseas (INTERNATIONAL) 15.28% 92,123,248 92,123,248 corporate LTD State-own Shenzhen Guangju ed 12.22% 73,666,824 73,666,824 Industrial Co., Ltd. corporate State-own SHENZHEN ENERGY ed 10.80% 65,106,130 65,106,130 (GROUP) CO., LTD. corporate BOCI SECURITIES Overseas 1.54% 9,298,627 9,298,627 LIMITED corporate National Council for Social Security Fund – Other 1.29% 7,804,100 7,804,100 604 Domestic Zeng Ying nature 1.00% 6,049,070 6,049,070 person China Merchants State-own Securities (HK) Co., ed 0.93% 5,612,824 5,612,824 Limited corporate Domestic Zhang Heping nature 0.83% 5,025,900 5,025,900 person GUOTAI JUNAN Overseas SECURITIES(HONGKO 0.65% 3,906,540 3,906,540 corporate NG) LIMITED Domestic Li Baoqin nature 0.59% 3,558,514 3,558,514 person 1. Shenzhen Energy (Group) Co., Ltd. holds indirectly 100% equities of Hong Explanation on associated relationship among the Kong Nam Hoi (International) Limited; 2. Among other social public aforesaid shareholders shareholders, the Company did not know whether there were associated relationships or belonging to consistent actors. Particular about top ten common shareholders with un-restrict shares held Amount of un-restrict common shares held at Type of shares Shareholders period-end Type Amount 53 深圳南山热电股份有限公司 2017 年半年度报告全文 Domestically HONG KONG NAM HOI 92,123,248 listed foreign 92,123,248 (INTERNATIONAL) LTD shares RMB ordinary Shenzhen Guangju Industrial Co., Ltd. 73,666,824 73,666,824 shares RMB ordinary SHENZHEN ENERGY (GROUP) CO., LTD. 65,106,130 65,106,130 shares Domestically BOCI SECURITIES LIMITED 9,298,627 listed foreign 9,298,627 shares National Council for Social Security Fund – RMB ordinary 7,804,100 7,804,100 604 shares Domestically Zeng Ying 6,049,070 listed foreign 6,049,070 shares Domestically China Merchants Securities (HK) Co., 5,612,824 listed foreign 5,612,824 Limited shares RMB ordinary 3,785,600 shares Zhang Heping 5,025,900 Domestically listed foreign 1,240,300 shares Domestically GUOTAI JUNAN 3,906,540 listed foreign 3,906,540 SECURITIES(HONGKONG) LIMITED shares RMB ordinary 511,300 shares Li Baoqin 3,558,514 Domestically listed foreign 3,047,214 shares Expiation on associated relationship or 1. Shenzhen Energy (Group) Co., Ltd. holds indirectly 100% equities of Hong Kong consistent actors within the top 10 un-restrict Nam Hoi (International) Limited; 2. Among other social public shareholders, the common shareholders and between top 10 Company did not know whether there were associated relationships or belonging to un-restrict common shareholders and top 10 consistent actors. common shareholders Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period □Yes √No Top ten common shareholders or top ten common shareholders with un-restrict shares not held have a buy-back agreement dealing in reporting period IV. Changes of controlling shareholders or actual controller Pursuit to the definition of controlling shareholder in Rules Governing the Stock Listing, the Company has no controlling shareholder and actual control, and there are no changes in such condition during the Period 54 深圳南山热电股份有限公司 2017 年半年度报告全文 Section VII. Preferred Stock The Company had no preferred stock in the reporting. 55 深圳南山热电股份有限公司 2017 年半年度报告全文 Section VIII. Directors, Supervisors and Senior Executives I. Changes of shares held by directors, supervisors and senior executives Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report 2016. II. Resignation and dismissal of directors, supervisors and senior executives Directors, supervisors and senior executives have no changes in the period, found more in Annual Report 2016 Section IX Corporation Bonds Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when annual report approved for released or fail to cash in full on due Nil Section X. Financial Report Whether the semi-annual report have been audited or not □ Yes √ No The financial report of the semi-annual report has not been audited (attached) XI. Documents Available for Reference I. Original semi-annual Report of 2017 carried with the personnel signature of Legal Representative; II. Accounting Statements carried with the signature and seals of the person in charge of the Company (Legal Representative), person in charge of accounting (General Manager and CFO) and person in charge of accounting department (chief accountants); III. All the original Company’s documents and public notices disclosed in Securities Times, China Securities Journal and Hong Kong Commercial Daily in the report period; IV. Place for inspection: Shenzhen Stock Exchange, Secretariat of the Board of Director of the Company. 1 深圳南山热电股份有限公司 2017 年半年度报告全文 Consolidated Balance Sheet In RMB/CNY Liabilities and owners’ Asset 2017-6-30 2016-12-31 2017-6-30 2016-12-31 equity Current assets: Current liabilities: Monetary funds 335,157,601.97 1,415,550,406.02 Short-term loans 248,050,000.00 796,840,000.00 Notes receivable 1,000,000.00 600,000.00 Notes payable 174,611,736.38 292,275,804.17 Accounts 278,471,957.15 166,808,672.42 Accounts payable 17,603,109.95 6,329,078.85 receivable Accounts paid in Accounts received in 125,561,569.76 43,663,090.22 - - advance advance Interest receivable - - Wage payable 42,851,231.21 45,823,790.61 Dividend - - Taxes payable 5,761,277.78 234,534,017.11 receivable Other receivables 43,276,954.73 395,804,901.21 Interest payable 2,968,349.35 4,580,481.81 Inventories 85,411,086.12 80,684,079.57 Dividend payable - - Long-term debt Other accounts investment due within 1 - - 73,735,361.86 79,532,095.96 payable year Other current Long-term liabilities 492,600,667.67 548,542,780.69 386,400,000.00 463,000,000.00 assets due within 1 year Total current Total current assets 1,361,479,837.40 2,651,653,930.13 951,981,066.53 1,922,915,268.51 liabilities Non-current assets: Non-current liabilities: Financial assets 59,315,000.00 59,315,000.00 Long-term loans 26,940,000.00 343,900,000.00 available for sale Long-term account - - Accrual liabilities 26,832,397.88 27,100,000.00 receivable Long-term equity 19,285,644.18 20,305,064.18 Deferred income 44,060,356.16 45,818,868.15 investment Investment Other non-current 2,900,509.11 2,998,577.91 - - property liabilities Total non-current Fixed assets 1,483,246,258.45 1,544,562,696.68 97,832,754.04 416,818,868.15 liabilities Construction in 41,288,936.94 8,008,476.13 Total liabilities 1,049,813,820.57 2,339,734,136.66 progress Disposal of fixed - - Owners’ equity: asset Intangible assets 49,775,760.02 51,081,104.21 Share capital 602,762,596.00 602,762,596.00 Long-term Capital public expenses to be - - 362,770,922.10 362,770,922.10 reserve apportioned Deferred income Other comprehensive 2,896,583.01 2,896,583.01 - - tax asset income Other non-current Surplus public 22,882,181.78 22,882,181.78 332,908,397.60 332,908,397.60 asset reserve Total non-current 1,681,590,873.49 1,712,049,683.90 Retained profit 621,642,785.84 644,271,987.22 asset Total owner’s equity attributable to parent 1,920,084,701.54 1,942,713,902.92 Company Minority interests 73,172,188.78 81,255,574.45 Total shareholders’ 1,993,256,890.32 2,023,969,477.37 2 深圳南山热电股份有限公司 2017 年半年度报告全文 equity Total liabilities and Total assets 3,043,070,710.89 4,363,703,614.03 3,043,070,710.89 4,363,703,614.03 shareholders’ equity Balance Sheet of the Company In RMB/CNY Liabilities and owners’ Asset 2017-6-30 2016-12-31 2017-6-30 2016-12-31 equity Current assets: Current liabilities: Monetary funds 195,020,156.38 1,119,323,850.36 Short-term loans - 460,000,000.00 Notes receivable - - Notes payable 77,806,343.97 168,066,042.58 Accounts 121,558,333.20 54,934,957.47 Accounts payable 215,406.16 427,800.87 receivable Accounts paid in Accounts received in 42,825,691.96 14,823,585.50 - - advance advance Interest receivable - - Wage payable 27,459,690.19 27,224,865.99 Dividend - - Taxes payable 557,636.52 222,340,992.27 receivable Other receivables 962,762,650.45 1,094,134,273.27 Interest payable 329,366.67 1,546,004.16 Inventories 75,038,443.34 72,731,417.64 Dividend payable - - Long-term debt Other accounts investment due within 1 - - 210,675,264.25 170,040,022.78 payable year Other current Non current liabilities 425,180,296.55 447,404,211.11 207,000,000.00 123,000,000.00 assets due within one year Total current 1,822,385,571.88 2,803,352,295.35 Total current liabilities 524,043,707.76 1,172,645,728.65 assets Non-current assets: Non-current liabilities: Financial assets 59,315,000.00 59,315,000.00 Long-term loans 1,000,000.00 305,500,000.00 available for sale Long-term equity 691,982,849.76 691,982,849.76 Deferred income 24,990,623.61 26,051,964.27 investment Investment Other non-current - - - - property liabilities Total non-current Fixed assets 223,816,829.01 229,535,920.87 25,990,623.61 331,551,964.27 liabilities Construction in 922,185.90 709,640.09 Total liabilities 550,034,331.37 1,504,197,692.92 progress Disposal of fixed - - Owners’ equity: asset Intangible assets 3,391,405.77 4,056,650.19 Share capital 602,762,596.00 602,762,596.00 Long-term expenses to be - - Capital public reserve 289,963,039.70 289,963,039.70 apportioned Deferred income Other comprehensive - - - - tax asset income Other non-current - - Surplus public reserve 332,908,397.60 332,908,397.60 asset Total non-current 979,428,270.44 985,600,060.91 Retained profit 1,026,145,477.65 1,059,120,630.04 asset Total shareholders’ 2,251,779,510.95 2,284,754,663.34 3 深圳南山热电股份有限公司 2017 年半年度报告全文 equity Total liabilities and Total assets 2,801,813,842.32 3,788,952,356.26 2,801,813,842.32 3,788,952,356.26 shareholders’ equity Consolidated Profit Statement In RMB/CNY Item Jan-Jun 2017 Jan-Jun 2016 I. Total operation income 872,962,697.33 697,688,267.08 Including: operation income 872,962,697.33 697,688,267.08 II. Total operation cost 905,059,018.04 786,599,259.71 Including: operation cost 827,761,559.33 639,919,822.75 Operation tax and surcharge 3,494,481.47 3,100,286.05 Sales expense 1,413,079.30 2,453,390.26 Management expense 41,191,218.46 44,677,104.53 Financial expense 31,679,390.45 96,448,656.12 Loss of assets impairment -480,710.97 - Add: Changing income of fair value (Loss is listed with “-”) - - Investment income (Loss is listed with “-”) -1,019,420.00 -1,082,859.84 Including: Investment income on affiliated company and joint - - venture Other income 3,489,863.10 - III. Operating profit (Loss is listed with “-”) -29,625,877.61 -89,993,852.47 Add: Non-operating income 5,796.00 11,821,340.67 Including: Disposal gains of non-current asset - - Less: Non-operating expense 172,009.57 223,276.08 Including: Disposal loss of non-current asset 160,729.35 203,276.08 IV. Total Profit (Loss is listed with “-”) -29,792,091.18 -78,395,787.88 Less: Income tax expense 920,495.87 1,085,010.53 V. Net profit (Net loss is listed with “-”) -30,712,587.05 -79,480,798.41 Net profit attributable to owner’s of parent company -22,629,201.38 -56,454,746.24 Minority shareholders’ gains and losses -8,083,385.67 -23,026,052.17 VI. Net after-tax of other comprehensive income - - Net other comprehensive income after-tax attributable to - - owners of parent company Net other comprehensive income after-tax attributable to - - minority shareholder VII. Total comprehensive income -30,712,587.05 -79,480,798.41 Total comprehensive income attributable to owners of -22,629,201.38 -56,454,746.24 4 深圳南山热电股份有限公司 2017 年半年度报告全文 parent Company Total comprehensive income attributable to minority -8,083,385.67 -23,026,052.17 shareholders VIII. Earnings per share: - - (i) Basic earnings per share -0.04 -0.09 (ii) Diluted earnings per share -0.04 -0.09 Profit Statement of the Company In RMB/CNY Item Jan-Jun 2017 Jan-Jun 2016 I. Operation income 328,400,559.49 157,986,763.09 Less: Operation cost 353,421,168.22 166,953,311.54 Tax and surcharge 698,660.66 2,292,405.28 Sales expense - - Management expense 19,400,916.35 10,141,654.95 Financial expense -10,302,383.72 20,469,396.42 Loss of assets impairment -480,710.97 - Add: Changing income of fair value (Loss is listed with - - “-”) Investment income (Loss is listed with “-”) - Including: Investment income on affiliated company - - and joint venture Other income 1,520,540.66 - II. Operating profit (Loss is listed with “-”) -32,816,550.39 -41,870,005.10 Add: Non-operating income 1,000.00 1,307,580.66 Including: Disposal gains of non-current asset - - Less: Non-operating expense 159,602.00 194,564.89 Including: Disposal loss of non-current asset 159,602.00 194,564.88 III. Total Profit (Loss is listed with “-”) -32,975,152.39 -40,756,989.33 Less: Income tax expense - IV. Net profit (Net loss is listed with “-”) -32,975,152.39 -40,756,989.33 V. Other comprehensive income VI. Total comprehensive income -32,975,152.39 -40,756,989.33 Consolidated Cash Flow Statement In RMB/CNY 5 深圳南山热电股份有限公司 2017 年半年度报告全文 Item Jan-Jun 2017 Jan-Jun 2016 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor services 905,687,628.86 695,513,877.94 Write-back of tax received 1,458,413.85 1,743,744.64 Other cash received concerning operating activities 376,088,275.79 160,068,046.28 Subtotal of cash inflow arising from operating activities 1,283,234,318.50 857,325,668.86 Cash paid for purchasing commodities and receiving labor service 1,015,783,468.71 555,303,978.14 Cash paid to/for staff and workers 63,335,884.67 61,305,844.68 Taxes paid 247,951,334.11 30,835,131.42 Other cash paid concerning operating activities 21,612,486.28 26,200,439.29 Subtotal of cash outflow arising from operating activities 1,348,683,173.77 673,645,393.53 Net cash flows arising from operating activities -65,448,855.27 183,680,275.33 II. Cash flows arising from investing activities: Cash received from recovering investment - - Cash received from investment income - - Net cash received from disposal of fixed, intangible and other - - long-term assets Other cash with investment concerned from disposal subsidiary and - - other operational unit Other cash received concerning investing activities - - Subtotal of cash inflow from investing activities - - Cash paid for purchasing fixed, intangible and other long-term assets 39,051,315.46 8,793,452.51 Cash paid for investment - 2,000,000.00 Other cash paid concerning investing activities - - Subtotal of cash outflow from investing activities 39,051,315.46 10,793,452.51 Net cash flows arising from investing activities -39,051,315.46 -10,793,452.51 III. Cash flows arising from financing activities Cash received from loans 229,440,000.00 1,280,654,173.08 Other cash received concerning financing activities 11,309,958.60 5,300,000.00 Subtotal of cash inflow from financing activities 240,749,958.60 1,285,954,173.08 Cash paid for settling debts 1,171,790,000.00 1,269,750,000.00 Cash paid for dividend and profit distributing or interest paying 33,385,928.70 98,901,671.12 Other cash paid concerning financing activities - 11,309,958.60 Subtotal of cash outflow from financing activities 1,205,175,928.70 1,379,961,629.72 Net cash flows arising from financing activities -964,425,970.10 -94,007,456.64 IV. Influence on cash due to fluctuation in exchange rate -156,704.62 112,916.92 V. Net increase of cash and cash equivalents -1,069,082,845.45 78,992,283.10 Add: Balance of cash and cash equivalents at the period-begin 1,389,482,327.86 1,016,326,480.06 VI. Balance of cash and cash equivalents at the period-end 320,399,482.41 1,095,318,763.16 Cash Flow Statement of the Company 6 深圳南山热电股份有限公司 2017 年半年度报告全文 In RMB/CNY Item Jan-Jun 2017 Jan-Jun 2016 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor services 448,272,760.70 342,239,636.46 Write-back of tax received - - Other cash received concerning operating activities 450,213,916.09 151,825,184.86 Subtotal of cash inflow arising from operating activities 898,486,676.79 494,064,821.32 Cash paid for purchasing commodities and receiving labor service 518,637,387.55 174,513,170.41 Cash paid to/for staff and workers 33,867,598.79 36,039,930.28 Taxes paid 226,823,834.53 8,352,022.41 Other cash paid concerning operating activities 348,786,679.61 107,008,226.49 Subtotal of cash outflow arising from operating activities 1,128,115,500.48 325,913,349.59 Net cash flows arising from operating activities -229,628,823.69 168,151,471.73 II. Cash flows arising from investing activities: Net cash received from disposal of fixed, intangible and other long-term assets - - Other cash received concerning investing activities - - Subtotal of cash inflow from investing activities - - Cash paid for purchasing fixed, intangible and other long-term assets 37,751.00 240,505.60 Cash paid for investment - 2,000,000.00 Net cash received from subsidiaries and other units obtained - - Other cash paid concerning investing activities - - Subtotal of cash outflow from investing activities 37,751.00 2,240,505.60 Net cash flows arising from investing activities -37,751.00 -2,240,505.60 III. Cash flows arising from financing activities Cash received from absorbing investment - - Cash received from loans - 1,020,000,000.00 Other cash received concerning financing activities - 5,300,000.00 Subtotal of cash inflow from financing activities - 1,025,300,000.00 Cash paid for settling debts 680,500,000.00 1,170,000,000.00 Cash paid for dividend and profit distributing or interest paying 14,136,466.93 71,429,240.83 Other cash paid concerning financing activities - - Subtotal of cash outflow from financing activities 694,636,466.93 1,241,429,240.83 Net cash flows arising from financing activities -694,636,466.93 -216,129,240.83 IV. Influence on cash due to fluctuation in exchange rate -652.36 1,643.96 V. Net increase of cash and cash equivalents -924,303,693.98 -50,216,630.74 Add: Balance of cash and cash equivalents at the period-begin 1,119,323,850.36 675,408,711.65 VI. Balance of cash and cash equivalents at the period-end 195,020,156.38 625,192,080.91 7 深圳南山热电股份有限公司 2017 年半年度报告全文 Consolidated Statement on Changes of Owners’ Equity In RMB/CNY Amount in Jan-Jun 2017 Amount in 2016 Equity attributable to Shareholder of parent company Equity attributable to Shareholder of parent company Item Minority’s Total owners’ Minority’s Total owners’ Share Capital Surplus Retained Share Capital Surplus Retained equity equity equity equity capital reserve reserves profit capital reserve reserves profit I. Balance 602,762,59 362,770,92 332,908,39 644,271,98 81,255,574 2,023,969,47 602,762,59 362,758,55 332,908,39 -662,422,848 -87,095,894 548,910,805. at the end 6.00 2.10 7.60 7.22 .45 7.37 6.00 4.21 7.60 .24 .29 28 of last year Add: Changes of - - - - - - - - - - - - accounting policy II. Balance at the 602,762,59 362,770,92 332,908,39 644,271,98 81,255,574 2,023,969,47 602,762,59 362,758,55 332,908,39 -662,422,848 -87,095,894 548,910,805. beginning 6.00 2.10 7.60 7.22 .45 7.37 6.00 4.21 7.60 .24 .29 28 of this year III. Increase/ -22,629,201 -8,083,385 -30,712,587. 1,306,694,83 168,351,46 1,475,058,67 - - - - 12,367.89 - Decrease in .38 .67 05 5.46 8.74 2.09 this year (i) Total comprehen -22,629,201 -8,083,385 -30,712,587. 1,306,694,83 -41,936,393 1,264,758,44 - - - - - - sive .38 .67 05 5.46 .97 1.49 income (ii) Owners’ - - - - - - - - - - - - devoted 8 深圳南山热电股份有限公司 2017 年半年度报告全文 and decreased capital 1. Owners’ - - - - - - - - - - - - devoted capital 2. Other - - - - - - - - - - - - (III) Profit - - - - - - - - - - - - distribution 1. Withdrawal - - - - - - - - - - - - of surplus reserves 2. Distributio n for - - - - - - - - - - owners (or shareholder s) 3. Other - - - - - - - - - - - - (IV) Carrying forward - - - - - - - - - - - - internal owners’ equity 210,287,86 210,300,230. (V) Other - - - - - - - 12,367.89 - - 2.71 60 IV. Balance 602,762,59 362,770,92 332,908,39 621,642,78 73,172,188 1,993,256,89 602,762,59 362,770,92 332,908,39 644,271,987. 81,255,574. 2,023,969,47 at the end 9 深圳南山热电股份有限公司 2017 年半年度报告全文 of the 6.00 2.10 7.60 5.84 .78 0.32 6.00 2.10 7.60 22 45 7.37 Period 10 深圳南山热电股份有限公司 2017 年半年度报告全文 Statement on Changes of Owners’ Equity of the Company In RMB/CNY Amount in Jan-Jun 2017 Amount in 2016 Item Capital Surplus Total owners’ Capital Surplus Retained Total owners’ Share capital Retained profit Share capital reserve reserves equity reserve reserves profit equity I. Balance at the end of 602,762,596.0 289,963,039.7 332,908,397.6 1,059,120,630.0 288,857,244.2 332,908,397.6 -225,983,568. 2,284,754,663.34 602,762,596.00 998,544,669.43 last year 0 0 0 4 2 0 39 Add: Changes of - - - - - - - - - - accounting policy II. Balance at the 602,762,596.0 289,963,039.7 332,908,397.6 1,059,120,630.0 288,857,244.2 332,908,397.6 -225,983,568. 2,284,754,663.34 602,762,596.00 998,544,669.43 beginning of this year 0 0 0 4 2 0 39 III. Increase/ Decrease 1,285,104,198 1,286,209,993.9 - - - -32,975,152.39 -32,975,152.39 - 1,105,795.48 - in this year .43 1 (i) Total 1,285,104,198 1,285,104,198.4 - - - -32,975,152.39 -32,975,152.39 - - - comprehensive income .43 3 (ii) Owners’ devoted - - - - - - - - - - and decreased capital 1. Owners’ devoted - - - - - - - - - - and capital 2. Other - - - - - - - - - - (III) Profit distribution - - - - - - - - - - 1. Withdrawal of - - - - - - - - - - surplus reserves 2. Other - - - - - - - - - - (IV) Carrying forward - - - - - - - - - - internal owners’ equity 1. Capital reserves conversed to share - - - - - - - - - - capital) 2. Surplus reserves conversed to share - - - - - - - - - - capital (V) Other - - - - - - 1,105,795.48 - - 1,105,795.48 11 深圳南山热电股份有限公司 2017 年半年度报告全文 IV. Balance at the end 602,762,596.0 289,963,039.7 332,908,397.6 1,026,145,477.6 289,963,039.7 332,908,397.6 1,059,120,630 2,284,754,663.3 2,251,779,510.95 602,762,596.00 of the year 0 0 0 5 0 0 .04 4 12 Shenzhen Nanshan Power Co., Ltd. Notes to financial statement semi-annual 2017 I. Company Profile Shenzhen Nanshan Power Co., Ltd (hereinafter called as “Company”) was reorganized to be a joint-stock enterprise from a foreign investment enterprise on 25 November 1993, upon the approval of General Office of Shenzhen Municipal Government with Document Shen Fu Ban Fu [1993] No.897. After approved by Document Shen Zhu Ban Fu [1993] No.897 issued by Shenzhen Securities Regulatory Office, on 3 January 1994, the Company offered 40,000,000 RMB common shares and 37,000,000 domestically listed foreign shares in and out of China. And the RMB common shares (A-stock) and domestically listed foreign listed shares (B-stock) were listed in Shenzhen Securities Exchange successively on July 1, 1994 and Nov. 28, 1994. Headquarter of the Company located on 16/F, 17/F, Han Tang Building, OCT, Nanshan District, Shenzhen City, Guangdong Province, P.R.C. The financial statement was approved and decided by the Broad of the Company on 4 August 2017. Totally 9 subsidiaries included in consolidate scope for year of 2017, the consolidated scope of the company in this year has not changed compared with the last year. Found more in Note VIII.-“equity in other body”. The Company together with its subsidiaries (hereafter referred as the Company) is mainly engaged in businesses as production of power and heat, plant constructional, oil trader, property developmental, construction technology consultation and sludge drying. II. Preparation basis of Financial Statements 1. Basis of preparation The Group’s financial statements have been prepared based on the going concern assumption. The financial statements have been prepared based on actual transactions and events, in accordance with the Accounting Standards for Business Enterprises- Basic Norms (Ministry of Finance Order No.33 Issued, Ministry of Finance Order No.76 Revised) promulgated by the Ministry of Finance of PRC on 15 February 2006 and 42 specific accounting standards, the subsequently promulgated application guidelines of the Accounting Standards for Business Enterprises, interpretations and other related rules of the Accounting Standards for Business Enterprises (hereinafter referred to as “ASBEs”), and the disclosure requirements of the “Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15- General Requirements for Financial Reports” (revised in 2010) of China Securities - 13 - Regulatory Commission. The Group’s financial statements have been prepared on an accrual basis in accordance with the ASBEs. Except for certain financial instruments, the financial statements are prepared under the historical cost convention. In the event that depreciation of assets occurs, a provision for impairment is made accordingly in accordance with the relevant regulations. III. Declaration of obedience to corporate accounting principles The Financial Statements are up to requirements of corporate accounting principles, and also a true and thorough reflection to the Group together with its financial information as financial position on 30th June 2017, and the Company together with its operation results, and cash flow for the semi-annual of 2017. In addition, the financial statements of the Group also comply with, in all material respects, the disclosure requirements of the “Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15--General Requirements for Financial Reports” revised by the China Securities Regulatory Commission in 2014 and the notes thereto. IV. The main accounting policies and accounting estimates The Company and its subsidiaries are mainly engaged in power and thermal generation, construction of power plant, fuel trading, engineering technology consultancy and sludge desiccation operation. According to the actual production and operation characteristics, the Company and its subsidiaries establish certain specific accounting policies and accounting estimates in respect of their transactions and matters such as sales revenue recognition pursuant to relevant business accounting principles. Details are set out in Note 24 Description of revenue items under section IV. For explanation on material accounting judgment and estimate issued by the management, please refer to Note 30 Material accounting judgment and estimate under section IV. 1. Accounting period Accounting period of the Group divide into annual and medium-term, and the medium-term is the reporting period that shorter than one completed accounting year. The Group’s accounting year is Gregorian calendar year, namely from 1st January to 31st December. 2. Operating cycle Normal operating cycle refers to the period from purchase of assets used for processing to realization of cash or cash equivalents. Our operation cycle is 12 months which is also serving as the standard for current or non- current assets and liabilities. 3. Bookkeeping standard currency - 14 - RMB is the currency in the Group’s main business economic environment and the bookkeeping standard one, which is adopted in preparation of the financial statements. 4. Accounting treatment on enterprise combine under the same control and under the different control Enterprise combination refers to a trading or event that two or over two independent enterprise/s combined to one reporting body. The combination was divided into enterprise consolidation under the same control and the one not under the same control. (1) Consolidation of enterprises under the same control The enterprises involved in the consolidation are all under the final control of one party or parties and the control is not temporary. That is the corporate consolidation under the common control. For a business combination involving enterprises under common control, the party that, on the combination date, obtains control of another enterprise participating in the combination is the absorbing party, while that other enterprise participating in the combination is a party being absorbed. The combination date is the date on which one combining enterprise effectively obtains control of the other combining enterprises. Assets and liabilities obtained by the absorbing party are measured at their carrying amount at the combination date as recorded by the party being merged. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate nominal value of shares issued as consideration) is charged to the capital reserve (share capital premium). If the capital reserve (share capital premium) is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. Cost incurred by the absorbing party that is directly attributable to the business combination shall be charged to profit or loss in the period in which they are incurred. (2) Consolidation of enterprises not under the same control The enterprises involved in the consolidation are ones not under the same final control of the common party or parties before and after the consolidation. That is the corporate consolidation under the different control. For a business combination not involving enterprises under common control, the party that, on the acquisition date, obtains control of another enterprise participating in the combination is the acquirer, while that other enterprise participating in the combination is the acquiree. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. For business combination involving entities not under common control, the cost of a business combination is the aggregate of the fair values, on the date of acquisition, of assets given, liabilities incurred or assumed, and equity instruments issued by the acquirer to be paid by the acquirer, in exchange for control of the acquire plus agency fee such as audit, legal service and - 15 - evaluation consultation and other management fees charged to the profit or loss for the period when incurred. As equity or bond securities are issued by the acquirer as consideration, any attributable transaction cost is included in their initial costs. Involved or contingent consideration charged to the combination cost according to its fair value on the date of acquisition, the combined goodwill would be adjusted if new or additional evidence existed about the condition on the date of acquisition within twelve months after the acquisition date, which is required to adjust the contingent consideration. The combination cost incurred by the acquirer and the identifiable net assets acquired from the combination are measured at their fair values. Where the cost of a business combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets on the acquisition date, the difference is recognized as goodwill. Where the cost of a business combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the acquirer shall first reassess the measurement of the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of combination. If after such reassessment the cost of combination is still less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is charged to profit or loss for the period. Where the acquiree’s deductible temporary difference acquired by the acquirer is not yet recognized as it does not satisfy the recognition conditions of the deferred income tax assets on the acquisition date, but new or additional information proves that the relevant circumstances have already existed on the acquisition date within twelve months after the acquisition date, which estimates that the economic benefits incurred from the deductible temporary difference at the acquisition date of acquirer can be realized, then the relevant deferred income tax assets will be recognized, and the goodwill will be reduced at the same time, if the goodwill is not sufficient to be absorbed, any excess shall be recognized in the profit or loss for the period. Except as disclosed above, the deferred income tax assets related to the business combination are charged to the profit or loss for the period. For a business combination not under common control is finished by a stage-up approach with several transactions, these several transactions will be judged whether they fall within “transactions in a basket” in accordance with the judgment standards on “transactions in a basket” as set out in the Notice of the Ministry of Finance on Issuing Accounting Standards for Business Enterprises Interpretation No. 5 (Cai Kuai [2012] No. 19) and Article 51 of the “Accounting Standards for Business Enterprise No.33- Consolidated Financial Statement” (see Note IV. 5(2)). If they fall within “transactions in a basket”, they are accounted for with reference to the descriptions as set out in the previous paragraphs of this section and Note IV. 13 “Long-term equity investments”, and if they do not fall within “transactions in a basket”, they are accounted for in separate financial statements and consolidated financial statements: - 16 - In separate financial statement, the sum between carrying value of the equity investment prior to acquisition date and cost of additional investment made on the acquisition date is deemed to be the initial investment cost of this investment. Other comprehensive income recognized for equity investment held prior to combination date under equity method shall be accounted for when the Company disposes of this investment on the same basis as the investee directly disposes of relevant assets or liabilities, which means that other than the changes arising from re-measuring the acquiree’s net liabilities or net assets under defined benefit plan under equity method, it shall be included in investment income of the current period. In consolidated financial report, for equity of bought party held before purchasing, re-measured by fair value on purchased date, and the difference of fair value and its book value should reckoned into current investment income; Other comprehensive income recognized for equity investment held prior to combination date under equity method shall be accounted for when the Company disposes of this investment on the same basis as the investee directly disposes of relevant assets or liabilities, which means that other than the changes arising from re-measuring the acquiree’s net liabilities or net assets under defined benefit plan under equity method, it shall be included in investment income of the current period dated purchasing day. 5. Preparation methods for corporate consolidated statements (1) Determining principle for consolidated financial report scope The scope is determined on the basis of control. Control refers to the Company possess rights over the investee party, and enjoyed variable return through participate in the relevant activities of the investee party, and the Company has ability to impact the amount of returns by using the rights over investee party. The consolidated scope includes the Group and all the subsidiaries. Subsidiary is referring to the enterprise or the subject controlled by the Company. Once change of relevant facts and conditions results in change to relevant factors involved in the above definition, the Company will make further assessment. (2) Preparation methods for corporate consolidated statements Subsidiaries are consolidated from the date on which the Group obtains net assets and the effective control of decision making of production and operation are deconsolidated from the date that such control ceases. For disposal of subsidiaries, the operating results and cash flows of such subsidiaries before the date of disposal are properly included in the consolidated income statement and consolidated cash flow statements; for disposal of subsidiaries during the reporting period, no adjustment shall be made to the opening balance of the consolidated balance sheet. For those subsidiaries acquired through business combination not under common control, the operating results and cash flows after the acquisition date have been properly included in the consolidated income statements and consolidated cash flow statements. No adjustments shall be - 17 - made to the opening balance and the comparative figures of the consolidated financial statements. For those subsidiaries acquired through business combination under common control and acquiree absorbed through combination, the operating results and cash flows from the beginning of the consolidation period to the consolidation date are also presented in the consolidated income statement and the consolidated cash flow statements. The comparative figures presented in the consolidated financial statements are also adjusted accordingly. The financial statements of the subsidiaries are adjusted in accordance with the accounting policies and accounting period of the Company in the preparation of the consolidated financial statements, where the accounting policies and the accounting periods are inconsistent between the Company and the subsidiaries. For subsidiaries acquired from business combination not under common control, the financial statements of the subsidiaries will be adjusted according to the fair value of the identifiable net assets at the acquisition date. All intra-group significant balances, transactions and unrealized profit are eliminated in the consolidated financial statements. As for the subsidiary’s shareholders’ equity and the parts that does not owned the Group in current net gains/losses, listed out independently as minority shareholders’ equity and minority shareholders gains/losses in item of shareholders’ equity and net profit contained in consolidated financial statement separately. The amount attributable to minority shareholders’ equity of current net loss/gains of subsidiaries is listed in the net profit item of consolidated profit as minority shareholders’ equity. When the share of losses attributable to the minor shareholders has exceeded their shares in the owners’ equity at the beginning of term attributable to minority shareholders in the subsidiary, the balance shall offset the minor shareholders’ equity. For control rights loss in original subsidiary for partial equity investment disposal or other reasons, the remained equity should re-measured based on the fair value at date of control losses. The difference between the net assets of original subsidiary share by proportion held that sustainable calculated since purchased date and sum of consideration obtained by equity disposal and fair value of remain equity, reckoned into the current investment income of control rights loss. Other comprehensive income relating to equity investment in original subsidiary shall be accounted for, upon lost of control, under the same basis as the acquiree would otherwise adopt when relevant assets or liabilities are disposed directly by the acquiree, which means that other than the changes arising from re-measuring the original subsidiary’s net liabilities or net assets under defined benefit plan, it shall be included in investment income of the current period. The remaining equity interests are measured subsequently according to “Accounting Standard for Business Enterprises No. 2 – Long-term Equity Investments” or “Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments”. See Note IV.13 “Long-term equity investments” or Note IV.9 “Financial instruments” for details. - 18 - When the Company disposes of equity investment in a subsidiary by a stage-up approach with several transactions until the control over the subsidiary is lost, it shall determine whether these several transactions related to the disposal of equity investment in a subsidiary until the control over the subsidiary is lost fall within “transactions in a basket”. Usually, these several transactions related to the disposal of equity investment in a subsidiary are accounted for as transactions in a basket when the terms, conditions and economic impacts of these several transactions meet the following one or more conditions: ① these transactions are entered into at the same time or after considering their impacts on each other; ② these transactions as a whole can reach complete business results; ③ the occurrence of a transaction depends on at least the occurrence of an other transaction; ④ an individual transaction is not deemed as economic, but is deemed as economic when considered with other transactions. If they are not transactions in a basket, each of which are accounted for in accordance with applicable rules in “partial disposal of long-term equity investment of a subsidiary without losing control over a subsidiary” (see Note IV. 13 (2) ④) separately, and “the control over a subsidiary is lost due to partial disposal of equity investment or other reasons” (see the preceding paragraph). When several transactions related to the disposal of equity investment in a subsidiary until the control over the subsidiary is lost fall within transactions in a basket, each of which is accounted for as disposal of a subsidiary with a transaction until the control over a subsidiary is lost; however, the different between the amount of disposal prior to the loss of control and the net assets of a subsidiary attributable to the disposal investment shall be recognized as other comprehensive income in consolidated financial statements and transferred to profit or loss for the period at the time when the control is lost. 6. Classification of joint arrangement and accounting treatment on conduct joint operation Joint arrangement refers to such arrangement as jointly controlled by two or more participators. The Company classifies joint arrangement into joint operation and joint venture according to the rights it is entitled to and obligations it assumes. Under joint operation, the Company is entitled to relevant assets under the arrangement and assumes relevant liabilities under the arrangement. Joint venture refers to such joint arrangement under which the Company is only entitled to the net assets of the arrangement. Equity method is adopted for investment in joint ventures, and it is accounted for under the accounting policies set out in Note 13(2) ② “long term equity investment under equity method” under section IV. As a joint party under joint operation, the Company recognizes the assets and liabilities it separately holds and assumes, the assets and liabilities it jointly holds and assumes under the proportion, the revenue from disposal of the output which the Company is entitled to under the - 19 - proportion, the revenue from disposal of the output under the proportion and the separately occurred expenses as well as expenses occurred for joint operations under its proportion. For injection to or disposal of assets of joint operations (other than those assets constituting business operation) or for purchase of assets from joint operations, gain or loss arising from the transaction is only recognized to the extent it is attributable to other parties to the joint operation before the joint operation is sold to any third party. In case that assets occur asset impairment loss under Business Accounting Principle No.8-Assets Impairment, the Company recognizes this loss in full in connection with injection to or disposal of assets of joint operations, and recognizes this loss based on the proportion in connection with purchase of assets from joint operations. 7. Determination criteria of cash and cash equivalent Cash and cash equivalents of the Group include cash on hand, deposits readily available for payment purpose and short-term (normally fall due within three months from the date of acquisition) and highly liquid investments held the Group which are readily convertible into known amounts of cash and which are subject to insignificant risk of value change. 8. Foreign currency business and foreign currency statement translation (1) Foreign currency business translation Foreign currency transactions are translated into the Company’s functional currency at the spot rate on transaction date (generally refers to the middle rate of prevailing foreign exchange rate released by the PBOC) when the transactions are initially measured. However, foreign currency exchange business or transaction involving foreign currency exchange occurred by the Company are translated into functional currency at the effective exchange rate adopted. (2) Translation of foreign currency monetary items and foreign currency non-monetary items On balance sheet date, foreign currency monetary items are translated at the spot rate as of balance sheet date, and the exchange difference shall be included in current period gains and losses, except①exchange difference arising from foreign currency special borrowings relating to purchasing assets satisfying capitalization conditions is stated under capitalization principle of borrowing expenses; ②exchange difference arising from hedge instruments used as effective hedging of net investment in overseas operation (such difference shall be included in other comprehensive income and recognized as current period gains and losses when the net investment is disposed); and ③exchange difference arising from change of carrying balance of available for sale foreign currency monetary items other than amortized cost is included in other comprehensive income. When preparing consolidated financial statement involving overseas operation, in case there is foreign currency monetary items which substantially constitute net investment in overseas - 20 - operation, the exchange difference arising from exchange rate fluctuation shall be included in other comprehensive income; and shall transfer to gains and losses from disposal for the current period when the overseas operation is disposed of. Non-monetary items measured in historical cost are still measured by sum on the bookkeeping standard currency at the current exchange rate. The items measured by the fair value are converted at the current rate on the fair value recognition day. The difference is dealt as the fair value change and reckoned into the current loss/gain or recognized as the other consolidated income and reckoned into the reserve. (3) Translation of foreign currency financial statement When preparing consolidated financial statement involving overseas operation, in case there is foreign currency monetary items which substantially constitute net investment in overseas operation, the exchange difference arising from exchange rate fluctuation shall be included in other comprehensive income as “translation difference of foreign currency statement”; and shall transfer to gains and losses from disposal for the current period when the overseas operation is disposed of. Foreign currency financial statement for overseas operation is translated into RMB statement by the following means: assets and liabilities in balance sheet are translated at the spot rate as of balance sheet date; owner’s equity items (other than undistributed profit) are translated at the spot rate prevailing on the date of occurrence. Income and expense items in profit statement are translated at the spot rate prevailing on the date of transactions. Beginning undistributed profit represents the translated ending undistributed profit of previous year; ending undistributed profit is allocated and stated as several items upon translation. Upon translation, difference between assets, liabilities and shareholders’ equity items shall be recorded as foreign currency financial statement translation difference and recognized as other comprehensive income. In case of disposal of overseas operation where control is lost, foreign currency financial statement translation difference relating to the overseas operation as stated under shareholders’ equity in balance sheet shall be transferred to current gains and losses of disposal in full or under the proportion it disposes. Foreign currency cash flow and cash flow of overseas subsidiary are translated at the spot rate prevailing on the date of occurrence of cash flow. Influence over cash from exchange rate fluctuation is taken as adjustment items to separately stated in cash flow statement. The beginning figure and previous year actual figures are stated at the translated figures in previous year financial statement. If the Company loses control over overseas operation due to disposal of all the owners’ equity or part equity investment in the overseas operation or other reasons, foreign currency financial - 21 - statement translation difference relating to the overseas operation attributable to owners’ equity of parent company as stated under shareholders’ equity in balance sheet shall be transferred to current gains and losses of disposal in full. If the Company reduces equity proportion while not loses control over overseas operation due to disposal of part equity investment in the overseas operation or other reasons, foreign currency financial statement translation difference relating to the disposed part will be vested to minority interests and will not transfer to current gains and losses. When disposing part equity interests of overseas operation which is associate or joint venture, foreign currency financial statement translation difference relating to the overseas operation shall transfer to current disposal gains and losses according to the disposed proportion. 9. Financial instruments Financial asset or financial liability is recognized when the Company becomes a party to financial instrument contract. Financial assets and liabilities are initially measured at fair value. For financial assets and liabilities at fair value through profit or loss, the relevant transaction fee shall be included in profit or loss directly. For other types of financial assets and liabilities, the relevant transaction fee is included in initial measurement amount. (1) Recognition of fair value for financial assets and financial liabilities Fair value represents the price that market participator can receive for disposal of an asset or he should pay for transfer of a liability in an orderly transaction happened on the measurement date. As for instrument in active market, the fair value is adopted according to the quotation in the active market. Quote in active market refers to the price easy to obtain regularly from exchange; broker’s agency, industry association and pricing service authority etc., and such quote represent a price that actually occurred in market trading during the fair transaction. As for the instruments not in the active market, the fair value is recognized by the estimation technology. The technology is composed of the price in the latest fair trade, fair value according to the fundamentally same instruments, cash flow discount and stock price-setting model. (2) Classification, recognition and measurement of financial assets By way of buying and selling the financial assets in a regular way, recognition and derecognition are carried out according to the accounts on the transaction day. Financial assets are divided into financial assets at fair value through profit or loss, held-to-maturity investments, loans and accounts receivable and available for-sale financial assets when they are initially recognized. Financial assets are initially recognized at fair value. For financial assets classified as fair value through profit or loss, relevant transaction costs are directly recognized in profit or loss for the period. For financial assets classified as other categories, relevant transaction costs are included in the amount initially recognized. - 22 - ① Financial assets carried at fair value through profit or loss for the current period They include financial assets held for trading and financial assets designated as at fair value through profit or loss for the current period. Financial assets may be classified as financial assets held for trading if one of the following conditions is met: A. the financial assets is acquired or incurred principally for the purpose of selling it in the near term; B. the financial assets is part of a portfolio of identified financial instruments that are managed together and for which there is objective evidence of a recent pattern of short-term profit-taking; or C. the financial assets is a derivative, excluding the derivatives designated as effective hedging instruments, the derivatives classified as financial guarantee contract, and the derivatives linked to an equity instrument investment which has no quoted price in an active market nor a reliably measured fair value and are required to be settled through that equity instrument. A financial asset may be designated as at fair value through profit or loss upon initial recognition only when one of the following conditions is satisfied: A. Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise result from measuring assets or recognizing the gains or losses on them on different bases; or B. The financial asset forms part of a group of financial assets or a group of financial assets and financial liabilities, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is reported to key management personnel on that basis. Financial assets carried at fair value through profit or loss for the current period is subsequently measured at fair value. The gain or loss arising from changes in fair value and dividends and interest income related to such financial assets are charged to profit or loss for the current period. ② Held-to-maturity investments They are non-derivative financial assets with fixed maturity dates and fixed or determinable payments that the Company has positive intent and ability to hold to maturity. Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. Gain or loss on derecognition, impairment or amortization is recognized through profit or loss for the current period. The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income or expense over each period based on the effective interest of a financial asset or a financial liability (including a group of financial assets or financial liabilities). The effective interest is the rate that discounts future cash flows from the financial asset or financial liability over its expected life or (where appropriate) a shorter period to the carrying amount of the financial asset or financial liability. - 23 - In calculating the effective interest rate, the Company will estimate the future cash flows (excluding future credit losses) by taking into account all contract terms relating to the financial assets or financial liabilities whilst considering various fees, transaction costs and discounts or premiums which are part of the effective interest rate paid or received between the parties to the financial assets or financial liabilities contracts. ③ Loans and receivables They are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets, including bills receivable, accounts receivable, the Group classifies interest receivable, dividends receivable and other receivables as loans and receivables. Loans and receivables are measured subsequently at the amortized cost by using the effective interest rate method. Gains or losses incurred at the time of derecognition, impairment or amortization are charged to profit or loss for the current period. ④ Available-for-sale financial assets They include non-derivative financial assets that are designated in this category on initial recognition, and the financial assets other than the financial assets at fair value through profit and loss, loans and receivables and held-to-maturity investments. The closing cost of available-for-sale debt instruments are determined based on amortized cost method, which means the amount of initial recognition less the amount of principle already repaid, add or less the accumulated amortized amount arising from the difference between the amount initially recognized and the amount due on maturity using effective interest rate method, and less the amount of impairment losses recognized. The closing cost of available-for-sale equity instruments is equal to its initial acquisition cost. Available-for-sale financial assets are subsequently measured at fair value. The gain or loss on change in fair value are recognized as other comprehensive income and charged to capital reserves, except for impairment loss and exchange differences arising from foreign monetary financial assets and amortized cost which are accounted for through profit or loss for the current period. The financial assets will be transferred out of the financial assets on derecognition and accounted for through profit or loss for the current period. However, equity instrument investment which is not quoted in active market and whose fair value cannot be measured reliably, and derivative financial asset which is linked to the equity instrument and whose settlement is conditional upon delivery of the equity instrument, shall be subsequently measured at cost. Interests received from available-for-sale financial assets held and the cash dividends declared by the investee are recognized as investment income. (3) Impairment of financial assets - 24 - Except for financial assets accounted at fair value and variation accounted into current gain/loss account, the Group undertakes inspection on the book value of other financial assets at each balance sheet day, whenever practical evidence showing that impairment occurred with them, impairment provisions are provided. The Group performs impairment test separately on individual financial assets with major amounts; for financial assets without major amounts, the Group performs impairment test separately or inclusively in a group of financial assets with similar characteristics of risks. Those financial assets (individual financial assets with or without major amounts) tested separately with no impairment found shall be tested again along with the group of financial assets with similar risk characteristics. Financial assets confirmed for impairment individually shall not be tested along with the group of financial assets with similar risk characteristics. ① Impairment of held-to-maturity investments and loans and receivables The carrying amount of financial assets measured as costs or amortized costs are subsequently reduced to the present value discounted from its projected future cash flow. The reduced amount is recognized as impairment loss and recorded as profit or loss for the period. After recognition of the impairment loss from financial assets, if there is objective evidence showing recovery in value of such financial assets impaired and which is related to any event occurring after such recognition, the impairment loss originally recognized shall be reversed to the extent that the carrying value of the financial assets upon reversal will not exceed the amortized cost as at the reversal date assuming there is no provision for impairment. ② Impairment of available-for-sale financial assets In the event that decline in fair value of the available-for-sale equity instrument is regarded as “severe decline” or “non-temporary decline” on the basis of comprehensive related factors, it indicates that there is impairment loss of the available-for-sale equity instrument. When the available-for-sale financial assets impair, the accumulated loss originally included in the capital reserve arising from the decrease in fair value was transferred out from the capital reserve and included in the profit or loss for the period. The accumulated loss that transferred out from the capital reserve is the balance of the acquired initial cost of asset, after deduction of the principal recovered, amortized amounts, current fair value and the impairment loss originally included in the profit or loss. After recognition of the impairment loss, if there is objective evidence showing recovery in value of such financial assets impaired and which is related to any event occurring after such recognition in subsequent periods, the impairment loss originally recognized shall be reversed. The impairment loss reversal of the available-for-sale equity instrument will be recognized as other consolidated income, and the impairment loss reversal of the available-for-sale debt - 25 - instrument will be included in the profit or loss for the period. When an equity investment that is not quoted in an active market and the fair value of which cannot be measured reliably, or the impairment loss of a derivative financial asset linked to the equity instrument that shall be settled by delivery of that equity instrument, then it will not be reversed. (4) Recognition basis and measurement method for transfer of financial assets As for the financial assets up to the following conditions, the recognition termination is available: ①Termination of the contract right to take the cash flow of the financial assets; ② transferred to the transferring-in part nearly all risk and compensation; ③ all risk and compensation neither transferred nor retained, and with the give-up of the control over the financial assets. As for financial assets of almost all risk and compensation neither transferred nor retained, and without the give-up of the control over the financial assets, it was recognized according to the extension of the continual entry into the transferred financial assets and relevant liabilities are correspondingly recognized. The continual entry into the transferred financial assets is risk level which the enterprise faces up to due to the assets changes. As for the whole transfer of the financial assets up to the recognition termination conditions, the book value of the transferred assets, together with the difference between the consideration value and the accumulative total of the fair value change of the other consolidated income, is reckoned into the current gain/loss. As for the partial transfer of the financial assets up to the recognition termination conditions, the book value of the transferred assets is diluted on the relative fair value between the terminated part and the un-terminated part; and reckoned into the current loss/gain is the difference between the sum of the consideration value and the accumulative sum of the valuation change ought to be diluted into the recognition termination part but into the other consolidated income, and the above diluted book value, is reckoned into the current loss/gain. For financial assets that are transferred with recourse or endorsement, the Group needs to determine whether the risk and rewards of ownership of the financial asset have been substantially transferred. If the risk and rewards of ownership of the financial asset have been substantially transferred, the financial assets shall be derecognized. If the risk and rewards of ownership of the financial asset have been retained, the financial assets shall not be derecognized. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, the Group shall assess whether the control over the financial asset is retained, and the financial assets shall be accounted for according to the above paragraphs. (5) Categorizing and measuring of financial liabilities At initial recognition, financial liabilities are classified into financial liabilities measured by fair - 26 - value with changes counted into current gains/losses and other financial liabilities. Financial liabilities are initially recognized at fair value. For financial liabilities classified as fair value through profit or loss, relevant transaction costs are directly recognized in profit or loss for the period. For financial liabilities classified as other categories, relevant transaction costs are included in the amount initially recognized. ① Financial liabilities at fair value through profit or loss for the period The criteria for a financial liability to be classified as held for trading and designated as financial liabilities at fair value through profit or loss are the same as those for a financial asset to be classified as held for trading and designated as financial assets at fair value through profit or loss. Financial liabilities at fair value through profit or loss for the period are subsequently measured at fair value. The gain or loss arising from changes in fair value and dividends and interest income related to such financial liabilities are included in profit or loss for the period. ② Other financial liabilities Derivative financial liabilities which are linked to equity instruments that are not quoted in an active market and the fair value of which cannot be measured reliably measured, and which shall be settled by delivery of equity instruments are subsequently measured at cost. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Gains or losses arising from derecognition or amortization is recognized in profit or loss for the period. ③ Financial Guarantee Contracts and loan commitment Financial guarantee contracts other than those designated as financial liabilities at fair value through profit or loss or loan commitment other than those designated measured by fair value and with its variation for gains/losses reckoned as well as the loans lower than the market rates are initially recognized at fair value, and shall be subsequently measured at the higher of the following: the amount determined in accordance with Accounting Standard for Business Enterprises No. 13 “Contingencies” and the amount initially recognized less cumulative amortization recognized in accordance with the principles set out in “Accounting Standard for Business Enterprises No. 14- Revenue”. (6) Termination recognition of financial liabilities Only is released the whole or part of the current duties, the termination of the liabilities or part of it is available. The Group (the creditor) signed the agreement with the debtor: the existing liabilities are replaced by the bearing of the new liabilities; and the contract terms are fundamentally different of the new liabilities and the existing ones; the termination of the recognition of the existing ones is available; and the recognition of new ones is available. - 27 - As for the whole or partial termination of the recognition of the liabilities, the difference between the book value of the part of recognition termination and the consideration value paid (including the non-cash assets transferred out or the liabilities newly beard) is reckoned into the current loss/gain. (7) Derivatives and embedded derivatives Derivative instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value. Any gains or losses arising from changes in fair value of derivatives are taken directly to profit or loss for the period, except for derivative instruments that are designated as hedging instruments and which are highly effective in hedging, gains or losses arising from changes in their fair value are taken to the profit or loss for the period in accordance with the hedge accounting requirement based on the nature of hedging relationships. For combined instruments contain embedded derivatives which are not designated as financial assets or financial liabilities at fair value through profit or loss, and the embedded derivative and the main contract does not have a material relation in terms of risk and economic attributes, and when an individual instrument which is the same as the embedded derivative can be defined as derivative, the embedded derivative shall be separated from the combined instrument and treated as an individual derivative. If the embedded derivative cannot be separately measured at acquisition or subsequent balance sheet date, the combined instrument shall be designated as financial assets or financial liabilities at fair value through profit or loss. (8) Balance-out between the financial assets and liabilities As the Group has the legal right to balance out the financial liabilities by the net or liquidation of the financial assets, the balance-out sum between the financial assets and liabilities is listed in the balance sheet. In addition, the financial assets and liabilities are listed in the balance sheet without being balanced out. (9) Equity instrument The equity instrument is the contract to prove the holding of the surplus stock of the assets with the deduction of all liabilities in the Group. The Company issues (including refinancing), repurchases, sells or cancels equity instruments as movement of equity. No fair value change of equity instrument would be recognized by the Company. Transaction fees relating to equity transactions are deducted from equity. The Group’s all distribution (shares dividend excluded) to the holders of the stock instrument will decrease the shareholders’ equity. The Group does not recognize the fair value change sum of the stock instrument. 10. Account receivable - 28 - Account receivable included account receivable and other account receivable. (1) Recognition of bad debt provision The Group reviews carrying value of account receivables on balance sheet date, and make impairment provision for account receivables which are proven to be impaired by the following objective evidences: ①debtor experiences material financial difficulties; ②debtor is in breach of contract terms (for instance: default or expiration of payment for principal or interest); ③ debtor is likely to face bankruptcy or other financing restructuring; ④other objective evidence showing account receivables are impaired. (2) Provision for bad debt reserves ① Recognition criteria and accrual method on accounts with major amount and withdrawal bad debt provision independely The single account receivable above RMB 2 million is recognized as single substantive account receivable The Company takes the independent impairment test on the single substantive account. As for the account receivable without the impairment in the test, it is included in the account receivable portfolio of the similar credit risk characters for the impairment test. As for the account receivable with the recognition of impairment loss, it is not included in the account receivable portfolio of the similar credit risk characters for the impairment test ② Determination bases for account receivables for which bad debt provision is made according to category of credit risks, and provision for bad debt The Group determines categories of account receivables according to the similarity of credit risk characteristics. Account receivables consist of those with insignificant single amount and those with significant single amount which is not impaired based on separate impairment test. The Group is of the view that account receivables with insignificant single amount and those with significant single amount which is not impaired based on separate impairment test are exposed to low credit risks, thus it is not necessary to make bad debt provision, unless there is evidence showing that account receivables have relatively substantial credit risks. ③ Account receivables with insignificant single amount for which bad debt provision is made separately For account receivables with insignificant single amount, if there is evidence showing that account receivables are exposed to relatively substantial credit risks, bad debt provision shall be made for such account receivables under specific identification method. (3) Reversal of bad debt If there is objective evidence showing recovery in value of account receivables impaired and which is related to any event occurring after such recognition, the impairment loss originally - 29 - recognized shall be reversed to the extent that the carrying value of the account receivables upon reversal will not exceed the amortized cost as at the reversal date assuming there is no provision for impairment. 11. Inventory (1) Categories of inventory The Company’s inventory mainly consists of fuels, raw materials and developing products in process and so on. (2) Valuation method of inventory delivered The inventories are initially measured at cost. The costs of developing products include land grant fee, expenditures for auxiliary facilities, expenses on construction and installation, borrowing costs incurred before the completion of the subject project and other related expenses during the course of the development. Other cost of inventories comprises purchase costs, processing costs and other costs incurred in bringing the inventories to their present location and condition. The actual cost of the property development products delivered is recognized by the individual valuation method. The actual cost of other inventories delivered is recognized by the weighted average method. (3) Recognition of net realizable value of inventory, and accrual methods of preparation for depreciation On the balance sheet day, the inventory is measured by the lower one between the cost and the net realizable value. As the net realizable value is lower than the cost, the inventory depreciation provision is accrued. The net realizable value is balance of the estimated sale price less the estimated forthcoming cost upon the completion, the estimated sale expense, and the relevant tax in the daily activities. Upon the recognition of net realizable value of the inventory, the concrete evidence is based on and the purpose of holding the inventory and the influence of events after the balance sheet day are considered. As for the inventory of large sum and lower price, the inventory depreciation provision is accrued by the inventory categories. As for the inventory related to the product series produced and sold in the same district, of the same or similar final use or purpose and impossible to be separated from the other items, the provision is consolidated and accrued. The provision for other inventory is accrued by the difference between the cost and net realizable value. Upon the accrual of the inventory depreciation provision, if the previous influence factors on the inventory deduction disappeared, which resulted in the net realizable value being higher than its - 30 - book value; the accrual is transferred back within the previous accrual of the provision and reckoned into the current gain/loss. (4) The inventory system is perpetual inventory system. 12. Non-current assets and disposal groups held for sale If the Group takes back its book value mainly by selling (including the non-monetary assets exchange with commercial substance, the same as below) rather than noncontinuous use of a non-current asset or disposal group, it shall be divided into the held-for-sale category. The specific criteria are to meet the following conditions: a certain non-current asset or disposal group can be sold immediately under the current conditions based on the practice of selling such assets or disposal groups in similar transactions; the Company has made resolutions on the sale plan and has obtained decided purchase commitments; the sale is expected to be completed within one year. Thereinto, the disposal group refers to a set of assets that are disposed along with all the others as a whole by sale or other methods in a transaction and the liabilities that are directly related to those assets transferred in the transaction. The group of assets or asset groups to which the disposal group belongs share the goodwill achieved in the business combination in accordance with the Accounting Standards for Business Enterprises No. 8 - Impairment of Assets, the disposal group should include the goodwill assigned to the disposal group. When the initial measurement or the remeasurement at the balance sheet date of the Group is divided into the non-current asset and disposal group held for sale, if the book value is higher than the net amount after subtracting the selling fees from the fair value, write down the book value to the net amount after subtracting the selling fees from the fair value, the write-down amount is recognized as asset impairment losses and is included in the current profits and losses, meanwhile making provisions for impairment of assets held for sale. For the disposal group, the recognized assets impairment losses firstly offset the book value of goodwill in the disposal group, then offset the book value of various non-current assets specified by the measurement applicable for Accounting Standards for Business Enterprises No. 42 - Non-current Assets, Disposal Group, and Discontinued Operation Held for Sale (Hereinafter referred to as the Guidelines Held for Sale) in the disposal group. If the net amount after subtracting the selling fees from the fair value of the disposal group at the subsequent balance sheet date has an increase, the amount of the previous write-down should be restored and transferred back in the amount of assets impairment loss recognized by non-current assets and applicable for held-for-sale standards after being classified as the held-for-sale, the transferred amount should be included in the current profits and losses, and increase its book value in proportion according to the proportion of book value of various non-current assets applicable for the measurement and specification of held-for-sale standards in the disposal group except for the goodwill; the book value of which the goodwill has been offset and the assets impairment losses confirmed before - 31 - the non-current assets applicable for the measurement and specification of held-for-sale standards being classified as available-for-sale assets cannot be transferred back. The non-current assets held for sale or the non-current assets in the disposal group shall not be accrued for depreciation or amortization, continue to confirm the indebted interest and other expenses in the disposal group held for sale. When the non-current assets or disposal groups no longer meet the requirements of held-for-sale categories, the Company shall not continue to classify them as the held-for-sale categories or remove the non-current assets from the held-for-sale disposal group, and measure according to the lower one of the following: (1) For the book value before being classified as held-for-sale category, the amount of the depreciation, amortization or impairment that should be confirmed when not being classified as held-for-sale category according to the assumptions after being adjusted; (2) Recoverable amount. 13. Long-term equity investment Long-term equity investments under this section refer to long-term equity investments in which the Company has control, joint control or significant influence over the investee. Long-term equity investment without control or joint control or significant influence of the Group is accounted for as available-for-sale financial assets or financial assets measured at fair value with any change in fair value charged to profit or loss. Details on its accounting policy please refer to Note 9. “Financial instruments” under section IV. Joint control is the Company’s contractually agreed sharing of control over an arrangement, which relevant activities of such arrangement must be decided by unanimously agreement from parties who share control. Significant influence is the power of the Company to participate in the financial and operating policy decisions of an investee, but to fail to control or joint control the formulation of such policies together with other parties. (1) Determination of investment cost For a long-term equity investment acquired through a business combination involving enterprises under common control, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity investment and the cash paid, non-cash assets transferred as well as the book value of the debts borne by the absorbing party shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. If the consideration of the merger is satisfied by issue of equity securities, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial - 32 - statements of the ultimate controlling party on the date of combination. With the total face value of the shares issued as share capital, the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall be used to offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. For business combination resulted in an enterprise under common control by acquiring equity of the absorbing party under common control through a stage-up approach with several transactions, these transactions will be judged whether they shall be treat as “transactions in a basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a transaction in obtaining control. If they are not belong to “transactions in a basket”, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity investment and the aggregate of the carrying amount of the long-term equity investment before merging and the carrying amount the additional consideration paid for further share acquisition on the date of combination shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive income recognized as a result of the previously held equity investment accounted for using equity method on the date of combination or recognized for available-for-sale financial assets will not be accounted for. For a long-term equity investment acquired through a business combination involving enterprises not under common control, the initial investment cost of the long-term equity investment shall be the cost of combination on the date of acquisition. Cost of combination includes the aggregate fair value of assets paid by the acquirer, liabilities incurred or borne and equity securities issued. For business combination resulted in an enterprise not under common control by acquiring equity of the acquiree under common control through a stage-up approach with several transactions, these transactions will be judged whether they shall be treat as “transactions in a basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a transaction in obtaining control. If they are not belong to “transactions in a basket”, the initial investment cost of the long-term equity investment accounted for using cost method shall be the aggregate of the carrying amount of equity investment previously held by the acquiree and the additional investment cost. For previously held equity accounted for using equity method, relevant other comprehensive income will not be accounted for. For previously held equity investment classified as available-for-sale financial asset, the difference between its fair value and carrying amount, as well as the accumulated movement in fair value previously included in the other comprehensive income shall be transferred to profit or loss for the current period. - 33 - Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit, legal service, and valuation and consultation fees, and other related administration expenses are charged to profit or loss in the current period at the time such expenses incurred. The long-term equity investment acquired through means other than a business combination shall be initially measured at its cost. Such cost is depended upon the acquired means of long-term equity investments, which is recognized based on the purchase cost actually paid by the Company in cash, the fair value of equity securities issued by the Group, the agreed value of investment contract or agreement, the fair value or original carrying amounts of the non-monetary asset exchange transaction which the asset will be transferred out of the Company, and the fair value of long-term equity investment itself. The costs, taxes and other necessary expenses that are directly attributable to the acquisition of the long-term equity investments are also included in the investment cost. For additional equity investment made in order to obtain significant influence or common control over investee without resulted in control, the relevant cost for long-term equity investment shall be the aggregate of fair value of previously held equity investment and additional investment cost determined according to “Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments”. (2) Follow-up measurement and gain/loss recognition As for the long-term equity investment with common control (except for the common operators ) over or significant influence on the invested units, measured by the cost method. In addition, long-term equity investment to the invested units that control by the Company adopted the cost method for calculation in financial statement. ① Long-term equity investment checked by the cost Upon the cost check, the investment is valuated on the initial cost. In addition to the actual prices or the announced but yet undistributed cash dividend or profit in consideration valuation, the current investment return is recognized by the announced cash dividend or profit by the invested units. ② Long-term equity investment checked by the equity When equity basis is adopted, if the initial cost of the long-term equity investment is greater than the share of fair value of the receiver’s recognizable net asset, the initial investment cost of the long-term equity investment will not be adjusted; if the initial cost of the long-term equity investment is less than the share of fair value of the receiver’s recognizable net asset, the balance shall be counted into current income account, and the cost of long-term equity investment shall be adjusted. Under the equity method, investment gain and other comprehensive income shall be recognized based on the Group’s share of the net profits or losses and other comprehensive income made by - 34 - the investee, respectively. Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carrying amount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend distributed by the investee. In respect of the other movement of net profit or loss, other comprehensive income and profit distribution of investee, the carrying value of long-term equity investment shall be adjusted and included in the capital reserves. The Group shall recognize its share of the investee’s net profits or losses based on the fair values of the investee’s individual separately identifiable assets at the time of acquisition, after making appropriate adjustments thereto. In the event of inconformity between the accounting policies and accounting periods of the investee and the Company, the financial statements of the investee shall be adjusted in conformity with the accounting policies and accounting periods of the Company. Investment gain and other comprehensive income shall be recognized accordingly. In respect of the transactions between the Group and its associates and joint ventures in which the assets disposed of or sold are not classified as operation, the share of unrealized gain or loss arising from inter-group transactions shall be eliminated by the portion attributable to the Company. Investment gain shall be recognized accordingly. However, any unrealized loss arising from inter-group transactions between the Group and an investee is not eliminated to the extent that the loss is impairment loss of the transferred assets. In the event that the Group disposed of an asset classified as operation to its joint ventures or associates, which resulted in acquisition of long-term equity investment by the investor without obtaining control, the initial investment cost of additional long-term equity investment shall be the fair value of disposed operation. The difference between initial investment cost and the carrying value of disposed operation will be fully included in profit or loss for the current period. In the event that the Group sold an asset classified as operation to its associates or joint ventures, the difference between the carrying value of consideration received and operation shall be fully included in profit or loss for the current period. In the event that the Company acquired an asset which formed an operation from its associates or joint ventures, relevant transaction shall be accounted for in accordance with “Accounting Standards for Business Enterprises No. 20 “Business combination”. All profit or loss related to the transaction shall be accounted for. Recognition of the share of net loss by the investment receiver shall be limited to when the book value of long-term equity investment and other long-term equity forms substantial net investment has been reduced to zero. Beside, if the Company is responsible for other losses of the investment receiver, predicted liability shall be recognized upon the prediction of responsibilities and recorded into current investment loss account. If the receiver realized net profit in the period thereafter, the share of gains is recovered after making up of share of losses which has not been recognized. For long equity investment in associate and joint venture held by the Company prior to first - 35 - implementation of the new accounting principles on 1 January 2007, equity investment debtor difference relating to the investment (if any) shall be amortized and included in current gains and losses against the remaining period under straight line method. ③ Acquisition of minority equity When preparing consolidated financial statements, the difference between the increase in long-term equity investment due to acquisition of minority interest of a subsidiary and the share of net asset of the subsidiary since the acquisition date (or combination date) calculated under the new ownership ratio shall be adjusted to the capital surplus, when capital surplus is insufficient, the excess shall be adjusted to retained profits. ④ Disposal of long-term equity investment In these consolidated financial statements, where the parent company disposes part of its subsidiary without loss of control, the difference between the consideration received and the share of net asset for the disposed portion of long-term equity investment shall be recognized in shareholders’ equity; where the parent company disposes part of its subsidiary with loss of control, the accounting treatment should be in accordance with the accounting policies stated at Note IV 5 (2) “Preparation of consolidated financial statements”. For disposal of long-term equity investment in other situations, the difference between the considerations received and the carrying amount of the disposed investment shall be recognized in profit or loss. In respect of long-term equity investment at equity with the remaining equity interest after disposal also accounted for using equity method, other comprehensive income previously under owners’ equity shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee on pro rata basis at the time of disposal. The owners’ equity recognized for the movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution of investee) shall be transferred to profit or loss for the current period on pro rata basis. In respect of long-term equity investment at cost with the remaining equity interest after disposal is also accounted for at cost, other comprehensive income recognized due to measurement at equity or recognition and measurement for financial instruments prior to obtaining control over investee shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee and carried forward to current gains and losses on pro rata basis. The movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution of investee) shall be transferred to profit or loss for the current period on pro rata basis. In the event of loss of control over investee due to partial disposal of equity investment by the - 36 - Group, in preparing separate financial statements, the remaining equity interest which can apply common control or impose significant influence over the investee after disposal shall be accounted for using equity method. Such remaining equity interest shall be treated as accounting for using equity method since it is obtained and adjustment was made accordingly. For remaining equity interest which cannot apply common control or impose significant influence over the investee after disposal, it shall be accounted for using the recognition and measurement standard of financial instruments. The difference between its fair value and carrying amount as at the date of losing control shall be included in profit or loss for the current period. In respect of other comprehensive income recognized using equity method or the recognition andmeasurement standard of financial instruments before the Group obtained control over the investee, it shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee at the time when the control over investee is lost. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset of investee accounted for and recognized using equity method) shall be transferred to profit or loss for the current period at the time when the control over investee is lost. Of which, for the remaining equity interest after disposal accounted for using equity method, other comprehensive income and other owners’ equity shall be transferred on pro rata basis. For the remaining equity interest after disposal accounted for using the recognition and measurement standard of financial instruments, other comprehensive income and other owners’ equity shall be fully transferred. In the event of loss of common control or significant influence over investee due to partial disposal of equity investment by the Group, the remaining equity interest after disposal shall be accounted for using the recognition and measurement standard of financial instruments. The difference between its fair value and carrying amount as at the date of losing common control or significant influence shall be included in profit or loss for the current period. In respect of other comprehensive income recognized under previous equity investment using equity method, it shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee at the time when equity method was ceased to be used. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset of investee accounted for and recognized using equity method) shall be transferred to profit or loss for the current period at the time when equity method was ceased to be used. The Group disposes its equity investment in subsidiary by a stage-up approach with several transactions until the control over the subsidiary is lost. If the said transactions belong to “transactions in a basket”, each transaction shall be accounted for as a single transaction of disposing equity investment of subsidiary and loss of control. The difference between the - 37 - disposal consideration for each transaction and the carrying amount of the corresponding long-term equity investment of disposed equity interest before loss of control shall initially recognized as other comprehensive income, and subsequently transferred to profit or loss arising from loss of control for the current period upon loss of control. 14. Investment real estate Investment real estate is defined as the real estate with the purpose to earn rent or capital appreciation or both, including the rented land use rights and the land use rights which are held and prepared for transfer after appreciation, the rented buildings. Besides, vacant buildings held by the Company for operating or lease purposes would be also stated as investment property provided that board of directors (or similar authority) pass written resolution which definitely expresses that the buildings will be held for operating or lease purposes and the intention for holding will not change shortly. Investment real estate is measured according to the initial cost. The follow-up expenses that are related to investment real estate, if the economic interests related to the assets are is likely to inflow cost and its costs can be reliably measured, shall be included in the cost of investment real estate. The other follow-up expense shall be included in the current gains/losses. The Company adopts the cost model to have follow-up measurements of the investment real estate, and to conduct depreciation or amortization according to the policies that are in consistent with the land use rights. Impairment test method and impairment provision method in relation to investment property is detailed in Note IV.20 “Long term assets impairment”. Where property for own use or inventory transfers to investment property, or investment property transfers to property for own use, carrying value before such transfer shall be taken as book value after such transfer. In the event that an investment property is converted to an owner-occupied property, such property shall become fixed assets or intangible assets since the date of its conversion. In the event that an owner-occupied property is converted to real estate held to earn rentals or for capital appreciation, such fixed assets or intangible assets shall become an investment property since the date of its conversion. Upon the conversion, investment property which is measured at cost is accounted for with the carrying value prior to conversion, and investment property which is measured at fair value is accounted for with the fair value as of the conversion date. If an investment property is disposed of or if it withdraws permanently from use and no economic benefit will be obtained from the disposal, the recognition of it as an investment property shall be terminated. When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of the property net of the carrying amount and - 38 - related tax and surcharges is recognized in profit or loss for the current period. 15. Fixed assets (1) Recognition conditions for the fixed assets Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providing services, lease or for operation & management, and have more than one fiscal year of service life. The fixed assets recognized on the condition of economy benefit probably in-flow into the Company and the cost should measured reliably only. Initial measurement shall be conducted on fixed assets according to the actual cost when obtain them and also considering the expected costs for disposal. (2) Depreciation of various fixed assets From the next month since reaching the intended use state, depreciations on fixed assets shall be accounted by using the method of average life length except the steam turbine generating unit that accounted by withdrawal the working volume method. Life expectancy, expected net impairment value and annual depreciation rate of all assets are as follows: Item Life expectancy Salvage value rate Annual depreciation rate Houses and buildings 20 years 10% 4.50% Equipment (fuel machinery group excluded) 15-20 years 10% 4.5%-6% Equipment-fuel machinery group (note) 10% The work quantity method Transportation tools 5 years 10% 18% Other equipment 5 years 10% 18% Estimated salvage value refers to the amount of value retrieved after deducting of predicted disposal expense when the expected using life of a fixed asset has expired and in the expected state of termination. Note: gas turbine generator set is provided with depreciation under workload method, namely to determine the depreciation amount per hour of gas turbine generator set based on equipment value, predicted net remaining value and predicted generation hours. Details are set out as follows: Name of the Company Fixed assets Depreciation amount (RMB/Hour) Generating unit 1# 391.26 The Company Generating unit 3# 397.15 Generating unit 7# 4,214.73 Shenzhen New Power Industrial Co., Ltd.(“New Generating unit 10# Power”) 2,134.37 Shen Nan Dian (Zhongshan) Power Co., Generating unit 1# 4,246.00 Ltd.(“Zhongshan Power”) Generating unit 3# 4,160.83 Shen Nan Dian (Dongguan) Weimei Power Co., Generating unit 1# 4,490.64 Ltd.(“Weimei Power”) Generating unit 3# 4,217.56 (3) Impairment test on fixed asset and providing of impairment provision Found more in Note IV-20.”Impairment of long-term assets”. (4) Recognition basis and measurement method of fixed assets under finance lease Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Title may or may not eventually be transferred. - 39 - The depreciation policy for fixed asset held under finance lease is consistent with that for its owned fixed asset. When a leased asset can be reasonably determined that its ownership will be transferred at the end of the lease term, it is depreciated over the period of expected use; otherwise, the leased asset is depreciated over the shorter period of the lease term and the period of expected use. (5) Other remarks Concerning the follow-up expenses related to fixed assets, if the relevant economy benefit of fixed assets probably in-flow into the Company and can be measured reliably, reckoned into cost of fixed assets and terminated the recognition of the book value of the parts that been replaced. Others follow-up expenses should reckoned into current gains/losses while occurred. Terminated the recognition of fixed assts that in the status of disposal or pass through the predicted usage or without any economy benefits arising from disposal. Income from treatment of fixed asset disposing, transferring, discarding or damage, the balance after deducting of book value and relative taxes is recorded into current income account. The Company re-reviews useful life, expected net residual value and depreciation method of fixed assets at least at each year end. Any change thereof would be recorded as change of accounting estimates. 16. Construction-in-progress Cost of construction in process is determined at practical construction expenditures, including all expenses during the construction, capitalized loan expenses before the construction reaches useful status, and other relative expenses. It is transferred to fixed asset as soon as the construction reaches the useful status. Impairment testing method and accrual method for impairment reserves found in Note IV-20”Impairment of long-term assets” 17. Borrowing expenses Borrowing expenses include interest, amortisation of discounts or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. Borrowing expenses that can be directly attributed for purchasing or construction of assets that are complying with capitalizing conditions start to be capitalized when the payment of asset and borrowing expenses have already occurred, and the purchasing or production activities in purpose of make the asset usable have started; Capitalizing will be terminated as soon as the asset that complying with capitalizing conditions has reached its usable or saleable status. The other borrowing expenses are recognized as expenses when occurred. Interest expenses practically occurred at the current term of a special borrowing are capitalized - 40 - after deducting of the bank saving interest of unused borrowed fund or provisional investment gains; Capitalization amounts of common borrowings are decided by the weighted average of exceeding part of accumulated asset expenses over the special borrowing assets multiply the capitalizing rate of common borrowings adopted. Capitalization rates are decided by the weighted average of common borrowings. During the capitalization period, exchange differences on a specific purpose borrowing denominated in foreign currency shall be capitalized. Exchange differences related to general-purpose borrowings denominated in foreign currency shall be included in profit or loss for the current period. Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale. Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months, until the acquisition, construction or production of the qualifying asset is resumed. 18. Intangible assets (1) Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Company. An intangible asset shall be initially measured at cost. The expenditures incurred on an intangible asset shall be recognized as cost of the intangible asset only if it is probable that economic benefits associated with the asset will flow to the Company and the cost of the asset can be measured reliably. Other expenditures on an item asset shall be charged to profit or loss when incurred. Land use right acquired shall normally be recognized as an intangible asset. Self-constructed buildings (e.g. plants), related land use right and the buildings shall be separately accounted for as an intangible asset and fixed asset. For buildings and structures purchased, the purchase consideration shall be allocated among the land use right and the buildings on a reasonable basis. In case there is difficulty in making a reasonable allocation, the consideration shall be recognized in full as fixed assets. An intangible asset with a finite useful life shall be stated at cost less estimated net residual value and any accumulated impairment loss provision and amortized using the straight-line method over its useful life when the asset is available for use. Intangible assets with indefinite life are not amortized. - 41 - The Group shall review the useful life of intangible asset with a finite useful life and the amortization method applied at least at each financial year-end. A change in the useful life or amortization method used shall be accounted for as a change in accounting estimate. For an intangible asset with an indefinite useful life, the Group shall review the useful life of the asset in each accounting period. If there is evidence indicating that the useful life of that intangible asset is finite, the Company shall estimate the useful life of that asset and apply the accounting policies accordingly. (2) Impairment test method of intangible assets & calculation method of depreciation reserve Found more in Note IV-20”Impairment of long-term assets”. 19. Long-term expenses to be amortized Long-term amortizable expenses are those already occurred and amortizable to the current term and successive terms for over one year. Long-term amortizable expenses are amortized by straight-line method to the benefit period. 20. Impairment of long-term assets The Group will judge if there is any indication of impairment as at the balance sheet date in respect of non-current non-financial assets such as fixed assets, construction in progress, intangible assets with an infinite useful life, investment properties measured at cost, and long-term equity investments in subsidiaries, joint ventures and associates. If there is any evidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwill, intangible assets with an indefinite useful life and intangible assets beyond working conditions will be tested for impairment annually, regardless of whether there is any indication of impairment. If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, the impairment provision will be made according to the difference and recognized as an impairment loss. The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset. An asset’s fair value is the price in a sale agreement in an arm’s length transaction. If there is no sale agreement but the asset is traded in an active market, fair value shall be determined based on the bid price. If there is neither sale agreement nor active market for an asset, fair value shall be based on the best available information. Costs of disposal are expenses attributable to disposal of the asset, including legal fee, relevant tax and surcharges, transportation fee and direct expenses incurred to prepare the asset for its intended sale. The present value of the future cash flows expected to be derived from the asset over the course of continued use and final disposal is determined as the amount discounted using an appropriately selected discount rate. Provisions for assets impairment shall be made and recognized for the - 42 - individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group shall determine the recoverable amount of the asset group to which the asset belongs. The asset group is the smallest group of assets capable of generating cash flows independently. For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financial statements shall be allocated to the asset groups or group of assets benefiting from synergy of business combination. If the recoverable amount is less than the carrying amount, the Group shall recognize an impairment loss. The amount of impairment loss shall first reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups, and then reduce the carrying amount of other assets (other than goodwill) within the asset group or set of asset groups, pro rata on the basis of the carrying amount of each asset. An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequent period in respect of the restorable value. 21. Staff remuneration Staff remuneration includes short term staff remuneration, post office benefit, dismissal benefit and other long term staff benefits, among which: Short term staff remuneration mainly consists of salary, bonus, allowance and subsidy, staff benefits, medical insurance, maternity insurance, work related injury insurance, housing funds, labor unit fee and education fee, non-monetary benefits, etc. short term staff remuneration actually happened during the accounting period in which staff provides services to the Company is recognized as liability, and shall be included in current gains and losses or relevant asset cost. Non-monetary benefits are measured at fair value. Post office benefits mainly consist of defined withdraw plan and defined benefit plan. Defined withdraw plan mainly includes basic pension insurance, unemployment insurance and annuity, and the contribution payable is included in relevant asset cost or current gains and losses when occurs. When the Company terminates the employment relationship with employees before the end of the employment contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, the Company shall recognize employee compensation liabilities arising from compensation for staff dismissal and included in profit or loss for the current period, when the Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labor relationship plans and employee redundant proposals; and the Company recognize cost and expenses related to payment of compensation for dismissal and restructuring, whichever is earlier. However, if the compensation for termination of employment is not expected to be fully paid within 12 months from the reporting period, it shall be accounted for other long-term staff remuneration. - 43 - The early retirement plan shall be accounted for in accordance with the accounting principles for compensation for termination of employment. The salaries or wages and the social contributions to be paid for the employees who retire before schedule from the date on which the employees stop rendering services to the scheduled retirement date, shall be recognized (as compensation for termination of employment) in the current profit or loss by the Group if the recognition principles for provisions are satisfied. For other long-term employee benefits provided by the Company to its employees, if satisfy with the established withdraw plan, then the benefits are accounted for under the established withdraw plan, otherwise accounted for under defined benefit scheme. 22. Accrued liabilities When responsibilities connected to contingent issues meet the follow conditions at the same time, than recognized as accrued liability: (1) the liability is the current liability that undertaken by the Company; (2) the liability has the probability of result in financial benefit outflow; and (3) the responsibility can be measured reliably for its value. At balance sheet day, with reference to the risks, uncertainty and periodic value of currency that connected to the contingent issues, the predicted liabilities are measured according to the best estimation on the payment to fulfill the current responsibility. If the expenses for clearing of predictive liability is fully or partially compensated by a third party, and the compensated amount can be definitely received, it is recognized separated as asset. The compensated amount shall not be greater than the book value of the predictive liability. (1) Contact in loss Contact in loss is identified when the inevitable cost for performance of the contractual obligation exceeds the inflow of expected economic benefits. When a contract in loss is identified and the obligations thereunder are qualified by the aforesaid recognition criterion for contingent liability, the difference of estimated loss under contract over the recognized impairment loss (if any) of the subject matter of the contract is recognized as contingent liability. (2) Restructuring obligations For detailed, official and publicly announced restructuring plan, the direct expenses attributable to the restructuring are recognized as contingent liabilities, provided that the aforesaid recognition criterion for contingent liability is met. For restructuring obligations arising from disposal of part business, the Company will recognise the obligations relating to restructuring only when it undertakes to dispose part business (namely entering into finalized disposal agreement). 23. Share-based Payments (1) Accounting treatment - 44 - Share-based payment refers to a transaction in which an enterprise grants equity instruments or undertakes equity-instrument- based liabilities in return for services from employee or other parties. The share-based payments shall consist of equity-settled share-based payments and cash-settled share-based payments. ① Equity-settled Share-based Payment The equity-settled share-based payment in return for employee services shall be measured at the fair value of the equity instruments granted to the employees as at the date of grant. For equity instruments that cannot be exercised until the services are fully rendered during vesting period or specified performance targets are met, within the vesting period, the fair value of such instrument shall, based on the best estimate of the number of exercisable instruments, be calculated with the straight- line method and recognized in relevant costs or expenses. For equity instruments that may be exercised immediately after the grant, the fair value of such instrument shall, on the date of the grant, be recognized in relevant costs or expenses with the increase in the capital reserve accordingly. On each balance sheet date during the vest period, the Company makes the best estimate based on subsequent information such as the latest available information about change of number of exercisable employees, thus to amend the number of equity instruments which are expected to be exercisable. Impact of the above estimate is included in relevant cost or expense for the current period, with corresponding adjustment in capital reserve. The equity-settled share-based payment in return for services from other parties, if the fair value of services from other parties can be reliably measured, shall be measured at the fair value of such services as at the date of acquisition; if the fair value of services from other parties cannot be reliably measured but the fair value of equity instruments can be reliably measured, shall be measured at the fair value of such equity instruments as at the date of acquisition of such services recognized in relevant costs or expenses with the increase in the capital reserve accordingly. ② Cash-settled Share-based Payment The cash-settled share-based payment shall be measured at the fair value of liabilities identified on the basis of shares or other equity instruments undertaken by the Group. For the instruments that may be exercised immediately after the grant, the fair value shall, on the date of the grant, be recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For instruments that cannot be exercised until the services are fully provided during vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and the corresponding - 45 - liabilities at the fair value of the liability incurred by the Group. The Group shall, on each balance sheet date and on each account date prior to the settlement of the relevant liabilities, re-measure the fair values of the liabilities and include the changes in the profit or loss for the period. (2) Accounting treatment in respect of the modification and termination of share-based payment scheme If any modification made by the Group to the share-based payment scheme increases the fair value of the equity instrument awarded, services obtained shall be increased accordingly. The increase in fair value of such equity instrument equals to the difference between the fair values before and after the date of modification. If any modification reduces the total fair value of share-based payment or is otherwise unfavorable to employees, services obtained shall be treated as if such modification had never been made, unless the Group has canceled part or the entire equity instrument award. During the vesting period, where an equity instrument award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized for the award is included immediately into the profit or loss for the period and capital reserve is recognized. Where employees or other parties are permitted to choose to fulfill non-vesting conditions but have not fulfilled during the vesting period, equity instrument award are deemed cancelled. (3) Accounting for share based payment concerning the Company, its shareholders or actual controllers As for share based payment concerning the Company, its shareholders or actual controllers, with either the settlement entity or service-acceptance entity in the Company or not, it is accounted for in our consolidated financial statement under the following provisions: ① for settlement entity making settlement with its own equity instruments, the transaction is accounted for as equity settled share based payment, otherwise it shall be accounted for as cash settled share based payment. If the settlement entity is an investor of the service-acceptance entity, the transaction is recognized as long term equity investment in the service-acceptance entity based on the fair value of the equity instruments as at the grant date or the fair value of assumed liabilities, with recognition of capital reserve (other capital reserve) or liabilities. ② If service-acceptance entity is not obliged to settle or grant its own equity instruments to its employees, the share based payment transaction is accounted for as equity settled share based payment. If service-acceptance entity is obliged to settle or the equity instruments granted to its employee are not the own instruments of the entity, the share based payment transaction is accounted for as cash settled share based payment. - 46 - For intra-company share based payment transactions, if the service-acceptance entity and settlement entity are not the same enterprise, the share based payment transaction shall be recognized and measured in the respective financial statement of the two entities under the aforesaid principles. 24. Income When significant risks and rewards of ownership of goods have been transferred to buyer, no continuous management right regularly related to ownership is retained, no effective control is conducted on goods sold, moreover, amount of income may be measured in a reliable way, relevant economic profit may have flown into enterprise and relevant incurred cost or to be incurred may be measured in a reliable way, implementation of goods sales revenue will be confirmed. Detail recognization according to specific revenue: (1) Power sales revenue The Group generates electricity by thermal power, and realizes sales through incorporation into Guangdong power grid. As for power sales, the Group realizes revenue when it produces electricity and obtains the grid power statistics table confirmed by the power bureau. (2) Revenue from providing labor service Under the condition of service providing business can be estimated in a reliable way, relevant economic benefit is likely to flow into enterprise, completion degree of business may be estimated in a reliable way and relevant incurred cost and to be incurred may be measured in a reliable way, the revenue from labor service providing recognized. Relevant service revenue may be confirmed by the Company as percentage-of-completion method on balance sheet date. Completion degree of service business will be determined as share of incurred service cost in estimated general cost. If result of service providing business can’t be estimated in a reliable way, service revenue should be confirmed as amount of incurred service cost expected to be compensated, where incurred service cost is taken as period charge. If no compensation is expected for incurred service cost, income won’t be confirmed. 25. Government subsidy Government subsidy refers to the monetary asset and non-monetary asset that the Company obtains from the government free of charge, excluding the capital that the government invests as an investor and enjoys the corresponding owner's equity. Government subsidies are divided into the asset-related government subsidy and the income-related government subsidy. If the government subsidy is a monetary asset, it shall be measured according to the received or receivable amount. If the government subsidy is a non-monetary asset, it shall be measured at fair value. If the fair value cannot be obtained reliably, it shall be measured according to the - 47 - nominal amount. Government subsidy measured by nominal amount is directly included in the current profits and losses. The government subsidy related to the assets is recognized as deferred income and is recorded into the current profits and losses or the book value of the relevant assets in a reasonable and systematic manner within the useful life of the relevant assets. Revenue-related government grants are used to compensate for the related costs or losses incurred during the subsequent period and are recognized as deferred income and are recognized in the current profit or loss or related expenses during the period of recognition of the relevant cost expense or loss; Incurred costs or losses incurred, directly included in the current profits and losses or offset the relevant costs. For the government subsidy containing both asset-related parts and income-related parts at the same time, distinguish the different parts and make the accounting treatment, classify the parts which are difficult to be distinguished as the income-related government subsidy. The government subsidy related to the Company’s daily activities is included in other incomes or offsets related costs in accordance with the essence of economic business; while the government subsidy unrelated to the Company’s daily activities is included in non-operating income and expenditure. When the recognized government subsidy needs to be refunded or has balance of related deferred income, offset the book balance of related deferred income, and include the excess parts in the current profits and losses or (the asset-related government subsidy for offsetting the book value of underlying assets in initial recognition) adjust the book value of assets; directly include these belong to other situations in the current profits and losses. The basis for confirming the relevant public subsidies of the Company and its subsidiaries is as follows: Shenzhen Shennandian Environmental Protection Co., Ltd. (Hereinafter referred to as the "Environmental Protection Company"), a subsidiary of the Company, is a sludge treatment unit, according to the (CS No. [2015] 78) notice of Ministry of Finance and the State Administration of Taxation about printing and issuing the "comprehensive utilization of resources and labor services VAT discounts directory", Environmental Protection Company can enjoy the value-added tax refund policy for sludge treatment with 70% recognized as the public subsidy income. 26. Deferred income tax asset/ deferred income tax liability (1) Current income tax On balance sheet date, current income tax liability (or asset) formed during and before current - 48 - period will be measured as amount of income tax payable (or repayable) as specified by tax law. Assessable income on which current income expense is based represents the profit before tax for the year upon adjustment against relevant tax rules. (2) Deferred income tax asset & deferred income tax liability For balance of book value of some asset/liability item and its tax base, or temporary difference derived from balance of book value and tax base of the item, which is not confirmed as asset or liability but tax base can be fixed as specified by tax law, deferred income tax asset & deferred income tax liability will be confirmed in balance sheet liability approach. Deferred income tax liabilities are not recognized for taxable temporary differences related to: the initial recognition of goodwill; and the initial recognition of an asset or liability in a transaction which is neither a business combination nor affects accounting profit or taxable profit (or deductible loss) at the time of the transaction. In addition, the Group recognizes the corresponding deferred income tax liability for taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, except when both of the following conditions are satisfied: the Company able to control the timing of the reversal of the temporary difference; and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are not recognized for deductible temporary differences related to the initial recognition of an asset or liability in a transaction which is neither a business combination nor affects accounting profit or taxable profit (or deductible loss) at the time of the transaction. In addition, the Group recognizes the corresponding deferred income tax asset for deductible temporary differences associated with investments in subsidiaries, associates and joint ventures to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized, except when both of the following conditions are satisfied: it is not probable that the temporary difference will reverse in the foreseeable future; and it is not probable that taxable profits will be available in the future, against which the temporary difference can be utilized. For deductible loss and taxation decrease which can be carried over to following fiscal year, relevant deferred income tax asset may be confirmed subject to amount of taxable income which is likely to be acquired to deduct deductible loss and taxation decrease in the future. On balance sheet day, those deferred income tax assets and income tax liabilities, according to the tax law, calculation will be on tax rate applicable to retrieving period of assets or clearing of liabilities. On balance sheet day, verification will be performed on the book value of differed income tax assets. If it is not possible to obtain enough taxable income to neutralize the benefit of differed - 49 - income tax assets, then the book value of the differed income tax assets shall be reduced. Whenever obtaining of taxable income became possible, the reduced amount shall be restored. (3) Income tax expenses Income tax expense includes current income tax and deferred income tax. Current deferred income tax and deferred income tax expenses or income shall reckoned into current gains/losses other that those current income tax and deferred income tax with transactions and events concerned, that reckoned into shareholder’s equity directly while recognized as other comprehensive income; and the book value of the goodwill adjusted for deferred income tax arising from enterprise combination (4) Offset of income tax When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assets and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis. When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis. 27. Leasing Finance lease is to virtually transfer all risks and rewards related to ownership of asset, the ownership is may transfer ultimately or not. Leases other than finance lease are operating leases. (1) Lease business with the Company as the rentee The rental is reckoned into the relevant assets cost or the current loss/gain in the straight-line method. The initial direct expenses are reckoned into the current gain/loss, or the actual rental into the current loss/gain. (2) Lease business with the Company as the renter The rental is reckoned into the relevant assets cost or the current loss/gain in the linear way. The initial direct substantive expenses are capitalized and reckoned into the current gain/loss, or the actual rental into the current loss/gain. The initial direct small expenses are reckoned into the current actual gain/loss, or the actual rental into the current loss/gain. (3) Financing lease business with the Group recorded as lessee On the beginning date of the lease, the entry value of leased asset shall be at the lower of the fair value of the leased asset and the present value of minimum lease payment at the beginning date - 50 - of the lease. Minimum lease payment shall be the entry value of long-term accounts payable, with difference recognized as unrecognized financing expenses. In addition, initial direct costs attributable to leased items incurred during the process of lease negotiation and signing of lease agreement shall be included in the value of leased assets. The balance of minimum lease payment after deducting unrecognized financing expenses shall be accounted for long-term liability and long-term liability due within one year. Unrecognized financing expenses shall be recognized as financing expenses for the current period using effective interest method during the leasing period. Contingent rent shall be included in profit or loss for the current period at the time it incurred. (4) Financing lease business with the Group recorded as lessor On the beginning date of the lease, the entry value of lease receivable shall be the aggregate of minimum lease receivable and initial direct costs at the beginning date of the lease. The unsecured balance shall be recorded. The aggregate of minimum lease receivable, initial direct costs and unsecured balance and the different between their present value shall be recognized as unrealised financing income. The balance of lease receivable after deducting unrecognized financing income shall be accounted for long-term debt and long-term debt due within one year. Unrecognized financing income shall be recognized as financing income for the current period using effective interest method during the leasing period. Contingent rent shall be included in profit or loss for the current period. 28. Other main accounting policies and estimations (1) Discontinued operation The discontinued operation refers to the component that meets one of following conditions and has been disposed by the Company or classified as held-for-sale and can be individually distinguished when operating and preparing the financial statements: ① the component represents an independent main Business or a major operating area; ② the component is a parts that intends to dispose or arrange an independent main business or a major operating area; ③ the component is a subsidiary obtained only for re-sale. For details of the accounting treatment methods of discontinued operation, please refer to Annotation IV. 12 “Classify as assets held for sale”. (2) Debt restructures ① Obligation of recording debt restructuring as debtor For debt liquidated with cash, balance between book value of debt to be restructured and amount of actual payment will be included in current gain and loss. On the contrary, for debt liquidated with non-cash asset, balance between book value of debt to be restructured and fair value of non-cash asset transferred will be included in current gain and loss. Balance between fair value - 51 - of non-cash asset transferred and book value of debt to be restructured will be included in current gains and loss. When debt is transferred to capital, balance between book value of debt to be restructured and fair value of loaner’s share derived from disclaim will be included in current gains and loss. When other terms of debt are modified, fair value of debt after modification will be taken as entry value of restructured debt. Balance between book value of debt prior to restructuring and debt restructured will be included in current gain and loss. When combination of multiple modes is applied, book value of debt to be restructured will be offset by cash for payment, fair value of non-cash asset transferred and fair value of loaner’s share successively, then applicable method under modification mentioned above will be applied. ② Obligation of recording debt restructuring as loaner For debt liquidated with cash, balance between book balance of credit to be restructured and cash received will be included in current gain and loss. On the contrary, for debt liquidated with non-cash asset, balance between book balance of credit to be restructured and fair value of non-cash asset received will be included in current gain and loss. When debt is transferred to capital, balance between fair value of loaner’s share and book balance of credit to be restructured will be included in current gain and loss. When other terms of debt are modified, fair value of credit after modification will be taken as book value of credit to be restructured. Balance between book balance of debt prior to restructuring and book value of credit restructured will be included in current gain and loss. When combination of multiple modes is applied, book balance of credit to be restructured will be offset by cash received, fair value of] non-cash asset received and fair value of loaner’s share successively, applicable method under modification mentioned above will be applied. When depreciation reserve has been accrued in credit to be restructured, accrual depreciation reserve will be offset by balances above. Remnant after offset will be included in current gain and loss. 29. Changes in significant accounting policies and accounting estimates (1) Changes in accounting policies Changes in accounting policies caused by the implementation of new Accounting Standards for Business Enterprises On April 28, 2017, the Ministry of Finance issued the Accounting Standards for Business Enterprises No. 42 - Non-current Assets, Disposal Group, and Discontinued Operation Held for Sale, which has been implemented in all enterprises that carry out the Accounting Standards for Business Enterprises from May 28, 2017. On May 10, 2017, the Ministry of Finance revised the Accounting Standards for Business Enterprises No. 16 - Government Subsidy, which has been - 52 - implemented in all enterprises that carry out the Accounting Standards for Business Enterprises from June 12, 2017. In accordance with the requirements of the Ministry of Finance, the company has revised the company's major accounting policies accordingly. The major accounting policy changes adopted in the current financial reports have been approved by the resolution of the 19th extraordinary meeting of the 7th Board of Directors and the 12th extraordinary meeting of the 7th Board of Supervisors on August 3, 2017. (2) Change of accounting estimate No changes of accounting estimate in the period 30. Major accounting judgment and estimation When using the accounting policies discussed in note IV, the Group needs to made judgment, estimation and assumption for carrying value of certain items which cannot be measured adequately due to inherent uncertainty of economic activities. Such judgment, estimation and assumption are based on historical experiences of the Group’s management, together with consideration of other relevant factors. These judgments, estimations and assumption would affect the reported amount of income, expense, asset and liability and disclosure of contingent liabilities on balance sheet date. However, actual results resulting from the uncertainty of these estimates may differ from the current estimation made by management of the Company, which would in turn lead to material adjustments to the carrying value of assets or liabilities which will be affected in future. The Group conducts regular re-review on the aforesaid judgment, estimation and assumption on a continued operation basis. If the change of accounting estimation only affect current period, the affected amount is recognized in the period when change occurs. If the change affects current and future periods both, the affected amount is recognized in the period when change occurs and future periods. On balance sheet date, major aspects in the statement need to judge, estimate and consumption by the Company are as: (1) Fixed assets are provided for depreciation by output method The Group recognizes depreciation for unit electricity based on values of power generation machine sets, projected power sales volume and projected net remaining value, and provides for depreciation according to depreciation of unit electricity and actual power sales volume. Taking into account the prevailing industry policies, technologies, consumption, allocation method of power management authorities and past experiences, and the Group management believes that it is adequate for utilization life of such power generation machine sets, projected power sales volume, projected net remaining value and provision method for depreciation. If the future actual power sales volume differs substantially from the projected one, the Group would make - 53 - adjustment to unit electricity depreciation, which would bring affects to the depreciation expenses included in profit and loss for the current and future periods. (2) The provisional estimated value of fixed assets As for the power generation machine sets and related buildings reaching the condition for intended use, due to the long construction period of power plant projects, high prices and long completion settlement time, they are accounted provisional based on project budget, project pricing or project actual costs before process of project completion settlement. And upon such settlement, the Company adjusts the original provisional value according to the actual costs. If provisional estimated values of power generation machine sets and related buildings differ materially from the actual costs, the Company may have to make corresponding adjustments to the values of fixed assets. (3) Provision for bad debts The Group use allowance method to state bad debt losses according to the accounting policies of accounts receivable. Impairment of receivables is based on the assessment of the recoverability of accounts receivable. Identification of impairment of receivables requires management judgments and estimates. The differences between actual results and the original estimate will affect the book value of accounts receivable as well as the recognition or reversal of provision for bad debts in the period in which the estimate is changed. (4) Allowance for inventories Under the accounting policies of inventories and by measuring at the lower of cost and net realizable value, the Group makes allowance for inventories that have costs higher than net realizable value or become obsolete and slow moving. Write-down of inventories to their net realizable values is based on the salability of the evaluated inventory and their net realizable values. Identification of inventories requires management to make judgments and estimates on the basis of obtaining conclusive evidence, and considering the purpose of holding inventory and the events after balance sheet date. The differences between actual results and the original estimate will affect the book value of inventories as well as the recognition or reversal of provision for inventories in the period in which the estimate is changed. (5) Impairment provision for non-financial non-current assets The Company makes judgment on each balance sheet date on whether there is indication of impairment in respect of non-current assets other than financial assets. Intangible assets with indefinite useful life shall also be further tested for impairment when there is indication of impairment, in addition to the annual impairment test. Other non-current assets other than financial assets would be test for impairment when there is indication showing its carrying value in not likely to be recovered. - 54 - Impairment exists when carrying value of asset or assets group is higher than recoverable amount, namely the higher of fair value less disposal cost and present value of expected future cash flow. The calculation of the fair value less costs of disposal is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. In assessing value in use, significant judgments are exercised over the asset’s production, selling price, related operating expenses and discount rate to calculate the present value. All relevant materials which can be obtained are used for estimation of the recoverable amount, including the estimation of the production, selling price and related operating expenses based on reasonable and supportable assumptions. The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating units and also to choose a suitable discount rate in order to calculate the present value of those cash flows. (6) Depreciation and amortisation Assets such as investment properties, fixed assets and intangible assets are depreciated and amortised over their useful lives under straight line method after taking into account residual value. The estimated useful lives of the assets are regularly reviewed to determine the depreciation and amortisation costs charged in each reporting period. The useful lives of the assets are determined based on historical experience of similar assets and the estimated technical changes. If there have been significant changes in the factors used to determine the depreciation or amortisation, the rate of depreciation or amortisation is revised prospectively. (7) Deferred income tax assets Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred income tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies. (8) Early retirement pension plan and supplementary social pension plan Expense and liability resulted from early retirement pension plan and supplementary social pension plan are determined based on a variety of assumptions, including the discount rate, the growth rate of average medical cost, the growth rate of retired employees’ subsidies and other factors. Differences between actual and estimated results will be recognized accordingly as - 55 - current expense. Although management believes that the assumptions are reasonable, the changes in actual empirical value and assumptions will affect the amount of expenses and the balance of liabilities resulted from early retirement pension plan and supplementary social pension plan. (9) Projected liability Provision for product quality guarantee, estimated onerous contracts, and delay delivery penalties shall be recognized in terms of contract, current knowledge and historical experience. If the contingent event has formed a practical obligation which probably results in outflow of economic benefits from the Group, a projected liability shall be recognized on the basis of the best estimate of the expenditures to settle relevant practical obligation. Recognition and measurement of the projected liability significantly rely on the management’s judgments inconsideration of the assessment of relevant risks, uncertainties, time value of money and other factors related to the contingent events. In addition, the Company would project liabilities for after-sale quality maintenance commitment provided to customers in respect of goods sold, maintained and reconstructed by the Company. Recent maintenance experience of the Company has been considered when projecting liabilities, while the recent maintenance experience may not reflect the future maintenance. Any increase or decrease of this provision may affect profit or loss for future years. V. Taxes 1. Main taxation items and its tax rate Taxation items Tax rate Output tax calculated based on the 6%, 11%, 13% or 17% of the taxable income, VAT VAT based on the difference after deducted the current input tax City maintenance tax Taxed by 5% and 7% of the turnover tax actually paid Education surtax Taxed by 3% of the turnover tax actually paid Local education surtax Taxed by 2% of the turnover tax actually paid Enterprise income tax Taxed by 16.5% to 25% of the taxable income amount As for the taxed by residual value, paid with the 1.2% of the residual value after Real estate tax original value deducted 30%; as for the taxed by house rental, taxed with 12% of the rental income Land-use tax of town 2.5 Yuan ~ 9Yuan per square meter for the land area actually occupied - 56 - Tax by the Value-added amount from transferring state-owned land use right , landing Land VAT construction and its affiliates with four super-rate progressive tax rate Rate for the income tax for the Company and subsidiaries as: Taxpaying body Rate of income tax Shenzhen Nanshan Power Co.,Ltd. (“The Company”) 25% Shenzhen New Power Industrial Co., Ltd. (“New Power”) 25% Shenzhen Shennan Power Gas Turbine Engineering Technique Co., Ltd. (“Engineering 25% Company”) Shenzhen Server Energy Co., Ltd. (“Shenzhen Server”) 25% Shenzhen Shennan Power Environment Protection Co., Ltd. (“Environment Protection 25% Company”) Shennandian (Zhongshan) Power Co., Ltd. (“Zhongshan Power”) 25% Shennandian (Dongguan) Weimei Power Co., Ltd. (“ Weimei Power”) 25% Shennan Energy (Singapore) Co., Ltd. (“ Singapore company”) 17% Zhongshan Shennandian Storage Co., Ltd. (“Shen Storage ”) 25% Hongkong Syndisome Co., Ltd. (“Syndisome”) 16.50% 2. Taxes preferential and approvals Name of the Relevant regulation and policies Approval Approval Exemption Period of Tax company basis institution documents range validity ” Notice of adjustment and Environment VAT free for perfection on resources Not Not VAT Protection Not applicable sludge comprehensive usage and labor applicable applicable Co., treatment VAT policy”(CS No.115[2011]) Shenzhen Notice on "contents of products Provincial Resource Environment with comprehensive utilization of Office, 2015-8-1 SGSQHBA comprehensive VAT Protection resources and value-added tax SAT to No.[2015]0002 utilization of Co., privilege of labour service" (CS (Qianhai 2018-7-31 VAT refund No. [2015] 78) SAT) ” Arrangement of avoidance of double-taxation and prevention of Levy income Enterprise tax free in mainland China and Not tax by 10% of Not income SYNDISOME Not applicable Hong Kong Special applicable total share applicable tax Administrative Region”(GSH No. interests 884[2006]) Enterprise State Tax Shen Guo Sui No enterprise ’Enterprise Income Tax Law of Not income SYNDISOME Bureau of Nan Kou Jiao income tax People’s Republic of China” applicable tax Nanshan Bei Zi No.: should pay for - 57 - Distict [2011]0011 the dividend Shenzhen before 31 December 2007 Note: "Notice about adjusting and improving the products with comprehensive utilization of resources and value-added tax policy of labour service" (CS No. [2011] 115) has been abolished since July 1, 2015, the preferential policy of exempting environmental companies from added-value tax of labour services for sludge treatment has been abolished since August 2015, and environmental companies enjoy the drawback policy of added-value tax for comprehensive utilization of resources in accordance with the notice about printing and distributing "contents of products with comprehensive utilization of resources and value-added tax privilege of labour service" (CS No. [2015] 78). VI. Annotation of the items in consolidate financial statement With respect to the notes item (including Main item annotations of Financial Statements) disclosed below, unless otherwise specified, “year-beginning” refers to 1 January 2017 (in RMB/CNY) 1. Monetary fund Item 30 June 2017 1 January 2017 Cash on hand 112,358.49 78,112.86 Bank savings 319,842,865.25 1,350,850,474.24 Other monetary fund 15,202,378.23 64,621,818.92 Total 335,157,601.97 1,415,550,406.02 Including: total amount saving aboard 6,347,163.26 6,369,994.14 Note: among the above other monetary capital, there are totally 14,758,119.56 Yuan guarantee draft margin and guarantee deposit included (on 31 December 2016: 26,068,078.16 Yuan). 2. Note receivable Item 30 June 2017 1 January 2017 Bank acceptance 1,000,000.00 600,000.00 3. Account receivable (1) Account receivable classified according to types: 30 June 2017 Bad debt Book Balance Type provision Book Proport Amou Proport value Amount ion (%) nt ion (%) - 58 - Account receivable with individual major amount and withdrawal bad 3,474,6 3,474, 1.22 100.00 - debt provision independently 13.06 613.06 Accounts receivable with minor amount and accounts receivable with 269,666 269,666 94.88 - - major amount found no devaluation after individual devaluation test ,323.36 ,323.36 Account receivable with individual minor amount but withdrawal bad 11,075, 2,270, 8,805,6 3.90 20.50 debt provision independently 730.61 096.82 33.79 284,216 5,744, 278,471 Total 100.00 2.02 ,667.03 709.88 ,957.15 (Continued) 1 January 2017 Bad debt Type Book Balance provision Book Proport Amou Proport value Amount ion (%) nt ion (%) Account receivable with individual major amount and withdrawal bad 3,474,6 3,474, 2.01 100.00 - debt provision independently 13.06 613.06 Accounts receivable with minor amount and accounts receivable with 158,003 158,003 91.57 - - major amount found no devaluation after individual devaluation test ,038.63 ,038.63 Account receivable with individual minor amount but withdrawal bad 11,075, 2,270, 8,805,6 6.42 20.50 debt provision independently 730.61 096.82 33.79 172,553 5,744, 166,808 Total 100.00 3.33 ,382.30 709.88 ,672.42 (2) Age analysis of account receivable: 30 June 2017 1 January 2017 Age Amount Proportion (%) Amount Proportion (%) Within 1year 277,423,537.19 97.61 115,655,678.86 67.03 1 to 2years 1,023,600.00 0.36 51,570,173.60 29.89 2 to 3years 1,137,145.51 0.40 695,145.51 0.40 Over 3 years 4,632,384.33 1.63 4,632,384.33 2.68 Total 284,216,667.03 100.00 172,553,382.30 100.00 (3) Accrual for bad debt provision ① Other account receivable with individual major amount and withdrawal bad debt provision independently Withdrawal Account receivable Carrying amount Bad debt provision Reasons proportion (%) Shenzhen Petrochemical Products Bonded Trading Co., 3,474,613.06 3,474,613.06 100.00 Ltd. Un-collectible Total 3,474,613.06 3,474,613.06 100.00 ② Account receivable with individual minor amount but withdrawal bad debt provision independently at period-end Withdrawal proportion Account receivable Book Balance Bad debt provision (%) - 59 - Account of engineering receivable 9,697,248.34 891,614.55 9.19 Amount of oil sales receivable 146,915.10 146,915.10 100.00 Amount of dry mud sales receivable 69,900.10 69,900.10 100.00 Gas supply 138,067.07 138,067.07 100.00 Subsidy receivable 1,023,600.00 1,023,600.00 100.00 Total 11,075,730.61 2,270,096.82 20.50 (4) There are no account receivable of the shareholders or related party who hold over 5 %( 5% included) voting rights in report period. (5)Top 5 companies in account receivables Proportion in total account Name of the company Relationship Amount Age receivable (%) The third Guangdong Power Grid Co. Ltd. 139,817,482.80 Within 1year 49.19 party The third Shenzhen Power Supply 121,555,444.20 Within 1year 42.77 party The third Shenzhen Water Bureau 12,545,975.03 Within 1year 4.41 party China Machinery Engineering The third 2,901,317.16 Within 1year 1.02 Corporation party The third China Solibase Development Co., Ltd. 1,137,145.51 2-3 years 0.40 party Total 277,957,364.70 97.80 4. Account paid in advance (1) Account paid in advance classified according to age: 30 June 2017 1 January 2017 Account age Amount Proportion (%) Amount Proportion (%) Within 1year 125,499,982.82 99.95 43,583,360.72 99.81 1 to 2years - - 18,304.20 0.04 2 to 3years 37,386.94 0.03 37,225.30 0.09 Over 3 years 24,200.00 0.02 24,200.00 0.06 Total 125,561,569.76 100.00 43,663,090.22 100.00 (2) Top five account paid in advance by collector Total top five account paid in advance by collector on 30 June 2017 amount to 117,943,018.57 Yuan, a 93.93% in total year-end account paid in advance 5. Other account receivable (1) Other account receivable classified according to type: 30 June 2017 Type Bad debt Book Balance Book provision value - 60 - Propor Propor Amoun Amoun tion tion t t (%) (%) 20,341 20,341 Other account receivable with individual major amount and 100.0 ,666.4 27.08 ,666.4 - withdrawal bad debt provision independently 0 6 6 Other accounts receivable with minor amount and accounts 42,891 42,891 receivable with major amount found no devaluation after individual ,260.7 57.10 - ,260.7 devaluation test 3 3 11,888 11,502 Other account receivable with individual minor amount but withdrawal bad 385,69 debt provision independently ,447.9 15.82 ,753.9 96.76 4.00 8 8 75,121 31,844 43,276 100.0 Total ,375.1 ,420.4 42.39 ,954.7 0 7 4 3 (Continued) 1 January 2017 Bad debt Book Balance provision Type Book Propor Propor Amoun value Amount tion tion t (%) (%) 20,341 20,34 Other account receivable with individual major amount and 100.0 ,666.4 4.75 1,666. - withdrawal bad debt provision independently 0 6 46 Other accounts receivable with minor amount and accounts 395,41 395,41 receivable with major amount found no devaluation after individual 9,207. 92.36 - - 9,207. devaluation test 21 21 12,369 11,98 Other account receivable with individual minor amount but withdrawal bad 385,69 debt provision independently ,158.9 2.89 3,464. 96.88 4.00 5 95 428,13 32,32 395,80 100.0 Total 0,032. 5,131. 7.55 4,901. 0 62 41 21 ① Other account receivable with individual major amount and withdrawal bad debt provision independently Other account receivable Carrying amount Bad debt provision Proportion (%) Reason Huiyang County Kangtai Industrial Company 14,311,626.70 14,311,626.70 100.00 Un-collectible Shandong Jinan Power Equipment Factory 3,560,000.00 3,560,000.00 100.00 Un-collectible Individual income tax 2,470,039.76 2,470,039.76 100.00 Un-collectible Total 20,341,666.46 20,341,666.46 100.00 ② Account receivable with individual minor amount but withdrawal bad debt provision independently at period-end - 61 - Withdrawal Item Carrying amount Bad debt provision proportion (%) Dormitory amount receivable 2,083,698.16 1,736,004.16 83.31 Deposit receivable 1,312,974.95 1,312,974.95 100.00 Bureau of Finance of Zhongshan Municipality 219,192.00 219,192.00 100.00 Administrative Office of Nanshan District Shenzhen 50,000.00 12,000.00 24.00 Individual 7,498,997.87 7,498,997.87 100.00 Other 723,585.00 723,585.00 100.00 Total 11,888,447.98 11,502,753.98 96.76 (2)Bad debt provision withdrawal ,collected or switch back in the Period Bad debt provision switch back in the period amounting to 480,710.97 Yuan (3) No other account receivable verified actually in the period (4) Other account receivable classified according to age: 30 June 2017 1 January 2017 Account age Amount Proportion (%) Amount Proportion (%) Within 1year 18,520,492.11 24.65 69,364,710.56 16.20 1 to 2years 406,379.85 0.54 267,084,650.63 62.39 2 to 3years - - 36,407,431.32 8.50 Over 3 years 56,194,503.21 74.81 55,273,240.11 12.91 Total 75,121,375.17 100.00 428,130,032.62 100.00 (5) There are no other account receivable of the shareholders who hold over 5 %( 5% included) voting rights in report period. (6) Account receivable from related parties found more in NoteX-5. Account receivable/payable with related party (7) Top five other account receivables at year-end balance listed by arrears party Proportio n in total Name of the other Relationship Amount Duration Year-end balance of bad debt provision company account receivable (%) Huiyang Kangtai Non-relate 14,311,626.7 Over 3 Industrial 19.05 14,311,626.70 d party 0 years Company Within 1year, Managed account of Related 12,760,967.3 1-2 years, 2-3 Huidong Server years , Over 16.99 party 3 - 3 years Within 1year, Huidong Server Related 11,203,421.4 1-2 years, 2-3 Harbor Company years, Over 3 14.91 party 4 - years Non-relate Over 3 Individual 7,498,997.87 9.98 7,498,997.87 d party years Individual income Non-relate Over 3 2,470,039.76 3.29 2,470,039.76 tax d party years - 62 - 48,245,053.1 Total 64.22 24,280,664.33 0 6. Inventory (1) Classification of inventory 30 June 2017 1 January 2017 Item Depreciation Depreciation Book Balance Book value Book Balance Book value provision provision Fuels 9,550,237.88 9,190,295.09 359,942.79 9,464,593.90 9,190,295.09 274,298.81 Raw 128,581,641.24 43,530,497.91 85,051,143.33 126,083,472.44 45,673,691.68 80,409,780.76 materials Total 138,131,879.12 52,720,793.00 85,411,086.12 135,548,066.34 54,863,986.77 80,684,079.57 (2) Inventory falling price reserve Decreased Carrying balance on 30 Type 2017.1.1 Accrual Switch back Written-off June 2017 Fuels 9,190,295.09 - - - 9,190,295.09 Raw materials 45,673,691.68 - - 2,143,193.77 43,530,497.91 Total 54,863,986.77 - - 2,143,193.77 52,720,793.00 (3) Accrual basis and reasons for switch back or written-off Reasons for Item Specific basis Reasons for switch back written-off Fuels Cost higher than the net realizable value Not-applicable Not-applicable Raw materials Cost higher than the net realizable value Not-applicable Raw materials reception 7. Other current assets Item 30 June 2017 1 January 2017 VAT input tax deductible 485,743,671.15 541,521,707.47 Enterprise income tax deductible 6,826,996.52 6,991,073.22 Other 30,000.00 30,000.00 Total 492,600,667.67 548,542,780.69 8. Financial assets available for sale (1) Financial assets available for sale 30 June 2017 1 January 2017 Item Book Depreciatio Book value Book Depreciatio Book value - 63 - Balance n reserves Balance n reserves Equity instrument available for 61,815,000.0 2,500,000.0 59,315,000.0 61,815,000.0 2,500,000.0 59,315,000.0 sale 0 0 0 0 0 0 61,815,000.0 2,500,000.0 59,315,000.0 61,815,000.0 2,500,000.0 59,315,000.0 Including: measured by cost 0 0 0 0 0 0 61,815,000.0 2,500,000.0 59,315,000.0 61,815,000.0 2,500,000.0 59,315,000.0 Total 0 0 0 0 0 0 (2) Measured by cost Book Balance Depreciation reserves Investee company +, 30 June +, 30 June Year-begin 2017 Year-begin 2017 - - 59,315,000.0 59,315,000.0 CPI Jiangxi Nuclear Power Co., Ltd. - - - - 0 0 Shenzhen Petrochemical Products Bonded Trading 2,500,000.0 2,500,000.0 2,500,000.00 - 2,500,000.00 - Co., Ltd. 0 0 61,815,000.0 61,815,000.0 2,500,000.0 2,500,000.0 Total - - 0 0 0 0 Continued Investee company Shareholding ratio in investee company (%) Cash bonus CPI Jiangxi Nuclear Power Co., Ltd. 5.00 - Shenzhen Petrochemical Products Bonded Trading Co., Ltd. 4.00 - 9. Long-term equity investment +,- Investment Balance of gains/losses depreciation Investee company 1 January 2017 30 June 2017 Other reserves on 30 recognized by June 2017 equity method Affiliated business Huidong Server(Note) 20,305,064.18 -1,019,420.00 - 19,285,644.18 - Total 20,305,064.18 -1,019,420.00 - 19,285,644.18 - Note: up to 30 June 207, 20% equity of the Huidong Server was pledged to Jiahua Building Product (Shenzhen) Co., Ltd. with 2-year term; found more in Note VI-25. Accrual liability. 10. Investment real estate House, Land use Construction in Item Total buildings right process I. Original book value 1. 1 January 2017 9,708,014.96 - - 9,708,014.9 - 64 - 6 2.Current increased - - - - 3.Current decreased - - - - 9,708,014.9 4. 30 June 2017 9,708,014.96 - - 6 II. accumulated depreciation and accumulated - amortization 6,709,437.0 1. 1 January 2017 6,709,437.05 - - 5 2. Current increased 98,068.80 - - 98,068.80 (1) accrual or amortization 98,068.80 - - 98,068.80 3. Current decreased - - - - 6,807,505.8 4. 30 June 2017 6,807,505.85 - - 5 III. depreciation provision - 1. 1 January 2017 - - - - 2. Current increased - - - - 3.Current decreased - - - - 4. 30 June 2017 - - - - IV. Book value - 2,900,509.1 1. 30 June 2017 2,900,509.11 - - 1 2,998,577.9 2. 1 January 2017 2,998,577.91 - - 1 11. Fixed assets (1) Fixed assets Machinery Transportation Item House and buildings Other equipment Total equipment tools I. Original book value 1. 1 January 2017 450,244,770.68 4,034,616,019.71 25,822,932.64 48,091,071.95 4,558,774,794.98 2. Current increased (1) Purchase - 167,010.55 - 312,983.89 479,994.44 (2) Construction in process transfer-in - - - 18,396.23 18,396.23 (3) increased by enterprise combination - - - - - 3. Current decreased (1) Disposal or scrap - - 1,580,000.00 27,293.50 1,607,293.50 4. 30 June 2017 450,244,770.68 4,034,783,030.26 24,242,932.64 48,395,158.57 4,557,665,892.15 II. Accumulated depreciation 1. 1 January 2017 269,499,416.09 2,533,047,315.62 21,619,835.46 39,924,321.56 2,864,090,888.73 - 65 - 2. Current increased (1) accrual 6,386,890.97 54,496,070.93 282,792.87 488,344.78 61,654,099.55 3. Current decreased (1) Disposal or scrap - - 1,422,000.00 24,564.15 1,446,564.15 4. 30 June 2017 275,886,307.06 2,587,543,386.55 20,480,628.33 40,388,102.19 2,924,298,424.13 III. impairment provision 1. 1 January 2017 14,860,025.13 135,261,184.44 - - 150,121,209.57 2. Current increased (1) accrual - - - - - 3. Current decreased (1) Disposal or scrap - - - - - 4. 30 June 2017 14,860,025.13 135,261,184.44 - - 150,121,209.57 IV. Book value 1. 30 June 2017 159,498,438.49 1,311,978,459.27 3,762,304.31 8,007,056.38 1,483,246,258.45 2. 1. January 2017 165,885,329.46 1,366,307,519.65 4,203,097.18 8,166,750.39 1,544,562,696.68 (2) Idle fixed assets temporary Accumulate Original Impairment Item d Book value Note book value provision depreciation Houses and 31,597,904.7 15,120,684.0 9,207,985.5 7,269,235.1 Wharf, processing workshop of heavy oil buildings 7 9 7 1 652,812,119. 549,337,857. 62,687,582. 40,786,679. Processing equipment of heavy oil and Equipment 46 67 11 68 generation unit 684,410,024. 564,458,541. 71,895,567. 48,055,914. Total 23 76 68 79 (3) Fixed assets without property license obtained Item Book value Reasons Booster station 5,567,100.88 Procedures uncompleted Steam turbine workshop 2,014,811.08 Procedures uncompleted Chemical water tower 3,327,665.86 Procedures uncompleted Treatment shop for heavy oil 650,123.93 Procedures uncompleted Start-up boiler house 146,191.99 Procedures uncompleted Fire pump room 339,374.37 Procedures uncompleted Circulating water pump house 2,134,592.90 Procedures uncompleted Comprehensive building 3,557,285.99 Procedures uncompleted - 66 - Production and inspection building 5,745,308.85 Procedures uncompleted Administrative building 5,907,084.49 Procedures uncompleted Mail room of the main entrance 239,379.05 Procedures uncompleted Turbine building and annex building 11,874,881.41 Procedures uncompleted Plant’s ventilating system 617,106.19 Procedures uncompleted Office building 5,905,100.34 Procedures uncompleted Comprehensive building 1,318,339.76 Procedures uncompleted Draft cooling tower 3,815,333.90 Procedures uncompleted Chemical water workshop and foundation of water 1,813,309.39 tank Procedures uncompleted Industry pool and industry pump house 795,826.68 Procedures uncompleted Start-up boiler house 132,976.27 Procedures uncompleted Oil treatment room and oil un-loading platform 337,538.98 Procedures uncompleted Comprehensive building canteen 333,824.85 Procedures uncompleted Total 56,573,157.16 - 67 - 12. Construction in process (1) Construction in process 30 June 2017 1 January 2017 Item Book Balance Impairment provision Book value Book Balance Impairment provision Book value Oil to Gas Works 32,871,600.26 32,871,600.26 - 32,871,600.26 32,871,600.26 - Cogeneration of heat and electricity Project 39,010,014.92 - 39,010,014.92 6,378,207.05 - 6,378,207.05 Other technical innovation project 2,278,922.02 - 2,278,922.02 1,630,269.08 - 1,630,269.08 Total 74,160,537.20 32,871,600.26 41,288,936.94 40,880,076.39 32,871,600.26 8,008,476.13 (2) Changes of significant projects in construction in the year Transferred fixed Other decrease Item Budget 1 January 2017 Increase of this year 30 June 2017 assets in this year in the year Oil to Gas Works 74,400,000.00 32,871,600.26 - - - 32,871,600.26 Cogeneration of heat and electricity Project 70,000,000.00 6,378,207.05 32,631,807.87 - - 39,010,014.92 Technological transformation project 1,630,269.08 667,049.17 18,396.23 - 2,278,922.02 Total 144,400,000.00 40,880,076.39 33,298,857.04 18,396.23 - 74,160,537.20 (3) Impairment provision Item 1 January 2017 Increase Decreased 30 June 2017 Reasons of accrual Oil to Gas Works 32,871,600.26 - - 32,871,600.26 In idle condition (4) Idle construction in progress temporary 30 June 2017 1 January 2017 Item Book Balance Impairment provision Net book value Book Balance Impairment provision Net book value 68 Oil to Gas Works 32,871,600.26 32,871,600.26 - 32,871,600.26 32,871,600.26 - 69 13. Intangible assets Item Land use right Software Total I. Original book value 1. 1 January 2017 91,253,625.27 3,678,109.85 94,931,735.12 2. Current increased - (1) purchase - - 3. Current decreased - (1) disposal - - - 4. 30 June 2017 91,253,625.27 3,678,109.85 94,931,735.12 II. Accumulated amortization 1. 1 January 2017 40,330,677.73 3,519,953.18 43,850,630.91 2. Current increased - (1) accrual 1,158,789.87 146,554.32 1,305,344.19 3. Current decreased - (1) disposal - - - 4. 30 June 2017 41,489,467.60 3,666,507.50 45,155,975.10 III. Impairment provision 1. 1 January 2017 - - - 2. Current increased (1) accrual - - - 3. Current decreased (1) disposal - - - 4. 30 June 2017 - - - IV. Book value 1. 30 June 2017 49,764,157.67 11,602.35 49,775,760.02 2. 1 January 2017 50,922,947.54 158,156.67 51,081,104.21 14. Deferred income tax assets Item 30 June 2017 1 January 2017 Deferred income tax assets: Bad debt provision of account receivable 1,137,023.19 1,137,023.19 Other provision for bad debts of accounts receivable 180,896.25 180,896.25 Staff salary payable 830,621.00 830,621.00 Provision for devaluation of long-term equity investment 625,000.00 625,000.00 Others 123,042.57 123,042.57 Total 2,896,583.01 2,896,583.01 15. Other non-current assets 70 Item 30 June 2017 1 January 2017 Project of LNG(Note) 22,882,181.78 22,882,181.78 Note: the project was jointly constructed by Weimei Power Company and Guangdong Dapeng Liquid Natural Gas Co., Ltd.(hereinafter referred to as Dapeng LNG). According to the contract signed between the two parties, before the project involved by this construction acquired approval from the relevant national authorities, the ownership belongs to both parties. After such approval, Dapeng LNG will acquire LNG project. Thus, Weimei Power Company recorded it under the item of “other non-current assets”. 16. Short-term loans Item 30 June 2017 1 January 2017 Guarantee loans 248,050,000.00 336,840,000.00 Credit loans - 460,000,000.00 Total 248,050,000.00 796,840,000.00 17. Note payable Type 30 June 2017 1 January 2017 Trade acceptance 102,245,428.22 169,909,496.01 Bank acceptance 72,366,308.16 122,366,308.16 Total 174,611,736.38 292,275,804.17 18. Account payable (1) Details of account payable Item 30 June 2017 1 January 2017 Natural gas 12,293,434.69 - Materials 1,942,420.02 4,394,883.47 Electricity 1,701,661.49 776,036.94 Engineering funds 1,363,320.00 - Others 302,273.75 1,158,158.44 Total 17,603,109.95 6,329,078.85 (2)There is no fund of shareholders with 5 %( including 5%) or more of the voting shares in the Group in the report period. 19. Wages payable (1) Wages payable Item 1 January 2017 Increase this year Decrease this year 30 June 2017 I. Short-term remuneration 42,179,004.09 61,814,731.25 65,303,922.31 38,689,813.03 71 II. Post-employment welfare-defined 3,644,786.52 7,387,534.20 6,870,902.54 4,161,418.18 contribution plans III. Severance Pay - 1,154,351.00 1,154,351.00 - IV. Other welfare due within one year - - - - Total 45,823,790.61 70,356,616.45 73,329,175.85 42,851,231.21 (2) Short-term remuneration Item 1 January 2017 Increase this year Decrease this year 30 June 2017 1. Wages, bonuses, allowances and 40,079,675.77 49,505,659.50 54,089,841.62 35,495,493.65 subsidies 2. Welfare for employee - 313,606.75 313,606.75 - 3. Social insurance 150,775.44 3,324,820.61 2,947,269.14 528,326.91 Including: Medical insurance 119,411.34 3,092,969.14 2,763,335.34 449,045.14 Work injury insurance 13,170.69 152,721.19 128,336.67 37,555.21 Maternity insurance 18,193.41 78,730.28 55,197.13 41,726.56 Wages in arrears - 400.00 400.00 - 4. Housing provident fund 526,844.24 7,449,118.61 6,834,456.40 1,141,506.45 5.Union funds and staff education 1,421,708.64 1,221,525.78 1,118,748.40 1,524,486.02 expenses Total 42,179,004.09 61,814,731.25 65,303,922.31 38,689,813.03 (3) Defined contribution plans Item 1 January 2017 Increase this year Decrease this year 30 June 2017 1. Basic Endowment insurance 313,776.62 7,290,043.52 6,776,736.70 827,083.44 2. Unemployment insurance 8,567.90 97,490.68 94,165.84 11,892.74 3. Enterprise annuities 3,322,442.00 - - 3,322,442.00 Total 3,644,786.52 7,387,534.20 6,870,902.54 4,161,418.18 20. Taxes payable Item 30 June 2017 1 January 2017 VAT 1,826,302.47 7,535,988.38 Business tax 63,353.11 43,587.02 Enterprise income tax 756,419.16 221,361,456.61 Individual income tax 1,453,685.25 1,398,796.46 72 Land-use tax of town 211,254.75 1,382,357.33 Real estate tax 1,393,390.51 2,540,753.95 Others 56,872.53 271,077.36 Total 5,761,277.78 234,534,017.11 21. Interest payable Item 30 June 2017 1 January 2017 Long-term loan interest of installment and interest charges 329,366.67 777,615.30 Interest payable of short-term loan 2,638,982.68 3,802,866.51 Total 2,968,349.35 4,580,481.81 22. Other account payable Item 30 June 2017 1 January 2017 Project expense 22,124,130.56 27,401,064.40 Quality guarantee deposit 3,073,138.31 6,852,462.21 Equipment amount 5,879,380.27 610,987.63 Land use right charge 532,838.78 1,575,676.60 Fund of the Board 516,720.25 479,659.27 Accrued expenses 35,434,732.69 34,865,705.80 Other 6,174,421.00 7,746,540.05 Total 73,735,361.86 79,532,095.96 23. Non-current liability due within one year Item 30 June 2017 1 January 2017 Long-term loans due within one year (Note VI-24) 386,400,000.00 463,000,000.00 Total 386,400,000.00 463,000,000.00 24. Long-term loans Item 30 June 2017 1 January 2017 Guarantee loans 205,340,000.00 378,400,000.00 Credit loans 208,000,000.00 428,500,000.00 Less: Long-term loans due within one year 386,400,000.00 463,000,000.00 Total 26,940,000.00 343,900,000.00 73 25. Accrued liabilities Item 1 January 2017 Increased Decreased 30 June 2017 Offering guarantee outside 27,100,000.00 - 267,602.12 26,832,397.88 Note: On 29 November 2013, Shenzhen Server and Jiahua Building Products (Shenzhen) Co., Ltd. (Jiahua Building) signed a supplementary term aiming at equity transfer over equity attribution and division of Yapojiao Dock, which belongs to Shenzhen Server, Huidong Server, and Huidong Nianshan Town Government as well as its subordinate Nianshan Group. In order to solve this remaining historic problem, Shenzhen Server saved RMB 12,500,000.00 in condominium deposit account as guarantee. In addition, Server pledged its 20% of equity holding from Huidong Server to Jiahua Architecture with pledge duration of 2 years. The amount of collateral on loans could not exceed RMB 15,000,000.00. Relevant losses with the event concerned predicted amounting to RMB 26,832,397.88 ended as 30 June 2017 26. Deferred income Item Content 30 June 2017 1 January 2017 Deferred income Government grants with assets concerned 44,060,356.16 45,818,868.15 Including, items with government grants involved: Amount Subsidies Other Assets /income Liability 1 January 2017 reckoned in other 30 June 2017 related increased changes revenue Subsidy for energy-saving 5,785,125.30 - 213,412.41 - 5,571,712.89 Assets related technology reform Subsidy for low-nitrogen 998,245.87 - 32,757.46 - 965,488.41 Assets related transformation project Treasury subsidies 3,591,250.00 - 127,500.00 - 3,463,750.00 Assets related for sludge drying Support fund of recycling economy 9,392,282.71 - 323,501.46 - 9,068,781.25 Assets related for sludge drying Subsidy for project of low-nitrogen transformation for 25,539,848.23 - 1,276,992.42 - 24,262,855.81 Assets related welcoming the Universidad Support fund of enterprise 270,196.04 - 30,588.24 - 239,607.80 Assets related informationalization Funded of energy efficiency improvement for 241,920.00 259,200.00 12,960.00 - 488,160.00 Assets related electric machine in SZ Total 45,818,868.15 259,200.00 2,017,711.99 - 44,060,356.16 74 27. Share capital Changes in this year(+ -) Item 1 January 2017 New Capitalizing 30 June 2017 Bonus shares from Other Subtotal shares issued reserves Total shares 602,762,596.00 - - - - - 602,762,596.00 28. Capital reserve Item 1 January 2017 Increase in the year Decrease in the year 30 June 2017 Capital premium 233,035,439.62 - - 233,035,439.62 Other capital reserve 129,735,482.48 - - 129,735,482.48 Other 362,770,922.10 - - 362,770,922.10 29. Surplus reserve In RMB Item 1 January 2017 Increase in the year Decrease in the year 30 June 2017 Legal surplus reserve 310,158,957.87 - - 310,158,957.87 Discretionary surplus reserve 22,749,439.73 - - 22,749,439.73 Total 332,908,397.60 - - 332,908,397.60 30. Retained profit Item 30 June 2017 1 January 2017 Retained profit of last year before adjusted 644,271,987.22 -662,422,848.24 Total retained profit adjusted (increased with +, decreased with -) - - Retained profit at beginning of the year after adjusted 644,271,987.22 -662,422,848.24 Add: net profit attributable to shareholders of parent company -22,629,201.38 1,306,694,835.46 Retained profit at year-end 621,642,785.84 644,271,987.22 31. Operating income and operating cost 2017 2016 Item Income Cost Income Cost Main business 871,032,443.81 827,070,339.40 696,432,490.71 639,919,822.75 Other business 1,930,253.52 691,219.93 1,255,776.37 - Total 872,962,697.33 827,761,559.33 697,688,267.08 639,919,822.75 75 32. Business tax and surcharge Item 2017 2016 Business tax - 2,293,256.16 City maintenance tax 1,076,429.84 588,923.60 House duty 918,709.23 - Stamp tax 344,854.98 - Educational surcharge 953,710.38 218,106.29 Land use tax 200,777.04 - Total 3,494,481.47 3,100,286.05 33. Management expenses Item 2017 2016 Salary 20,156,152.48 18,521,671.62 Taxes 1,732,410.66 - Leasing expenses 3,014,660.30 3,059,267.02 Entertainment expense 1,654,048.96 2,291,471.63 Expenses for agency appointment 1,160,974.45 1,431,405.29 Vehicles expenses 1,837,717.51 1,787,476.46 Expenses from the Board 1,006,497.20 831,272.04 Housing fund 1,736,661.05 1,631,837.77 Depreciation expense 1,351,420.01 1,393,866.06 Amortization of intangible assets 938,591.10 996,580.98 Specific expenses 119,679.73 725,901.21 Environmental expense 900,528.44 881,445.19 Sundry expenses 1,283,195.42 1,513,103.98 Expenses for enterprise culture 87,511.70 206,852.84 Property expense 447,758.12 440,711.08 Office expenses 166,523.48 222,645.08 Pension insurance 2,184,952.61 1,939,815.87 Communication charge 598,622.04 656,333.14 Business traveling charge 216,806.54 315,788.30 Stock charge 40,377.36 364,249.31 Medicare 867,818.90 803,609.31 76 Item 2017 2016 Labor union dues 457,849.20 391,539.68 Personnel education fund 141,084.34 248,847.24 Others 821,787.52 2,289,002.77 Total 41,191,218.46 44,677,104.53 34. Financial expenses Item 2017 2016 Interest expenditure 39,088,778.10 99,068,132.04 Less : interest income 7,910,187.73 3,436,770.19 Exchange gains/losses 184,715.46 142,337.41 Others 316,084.62 674,956.86 Total 31,679,390.45 96,448,656.12 35. investment gains/losses Item 2017 2016 -1,019,420.00 -1,082,859.84 Disposal of long-term equity - - Total -1,019,420.00 -1,082,859.84 36. Impairment of Assets Item 2017 2016 Loss on bad debt -480,710.97 - Total -480,710.97 - 37. Other Item 2017 2016 Government bond subsidy for sludge drying 1,276,992.42 - Support fund of enterprise informationalization 30,588.24 - Subsidy for energy-saving technology reform 246,169.87 - Government bond subsidy for sludge drying 127,500.00 - 77 Item 2017 2016 Support fund of recycling economy for sludge drying 323,501.46 - Energy efficiency improvement for electric machine 12,960.00 - VAT refund 1,272,151.11 - Other 200,000.00 - Total 3,489,863.10 - 38. Non-operating income Item 2017 2016 Government grant - 11,821,340.67 Others 5,796.00 - Total 5,796.00 11,821,340.67 39. Non-operating expense Item 2017 2016 Expenses from external donation 10,000.00 20,000.00 Total loss from disposal of non-current assets 160,729.35 203,276.08 Including: Gains and loss of disposal of fixed assets 160,729.35 203,276.08 Other 1,280.22 - Total 172,009.57 223,276.08 40. Income tax expenses Item 2017 2016 Current income tax measured by tax law and relevant regulation 920,495.87 1,085,010.53 41. Cash flow statement (1) Cash received with other operating activities concerned Item 2017 2016 Open credit received 367,531,301.56 - Fuels subsidy income - 143,718,571.29 Others 8,556,974.23 16,349,474.99 78 Total 376,088,275.79 160,068,046.28 (2) Cash paid for other operating activities Item 2017 2016 Expense on agency appointment 1,160,974.45 1,431,405.29 Fund for the Board 1,006,497.20 831,272.04 Leasing expense 3,462,418.42 3,499,978.10 Entertainment expense 1,654,048.96 2,291,471.63 Vehicles expense 1,837,717.51 1,787,476.46 Enterprise culture 87,511.70 206,852.84 Communication fee 598,622.04 656,333.14 Environment protection fee 900,528.44 881,445.19 Others 10,904,167.56 14,614,204.60 Total 21,612,486.28 26,200,439.29 (3) Cash received with financing activities concerned Item 2017 2016 Deposit received 11,309,958.60 5,300,000.00 (4) Cash paid with other financing activities concerned Item 2017 2016 Deposit paid 11,309,958.60 - 42. Supplementary information on cash flow statement (1) Regulate the net profit into the cash flow of operating activities Supplementary information 2017 2016 1. Regulate the net profit into the cash flow of operating activities Net profit -30,712,587.05 -79,480,798.41 Add: Asset impairment provision -480,710.97 - Depreciation of fixed assets 61,654,099.55 60,423,429.56 Amortization of intangible assets 1,305,344.19 1,371,786.63 Amortization of long-term deferred expenses - - Loss (gain) from disposing fixed assets, intangible assets 160,729.35 203,276.08 and other long-term assets 79 Supplementary information 2017 2016 Abandonment loss from fixed assets - - Financial expenses(gain) 39,088,778.10 93,011,885.93 Investment loss(gain) 1,019,420.00 1,082,859.84 Decrease (increase) of deferred income tax assets - - Decrease (increase)of inventory -4,727,006.55 -15,266,212.19 Decrease (increase) of receivable operating items 214,908,295.24 25,688,718.89 Increase (decrease) of payable operating items -347,665,217.13 96,645,329.00 Net cash flow from operation activities -65,448,855.27 183,680,275.33 2. Major investment and financing activities not involving cash income and expenditure: Debt capitalization - - Convertible company bond due within one year - - Fixed assets acquired under finance leases - - 3. Net change of cash and cash equivalents: Year-end balance 320,399,482.41 1,095,318,763.16 Less: Balance of cash at period-begin 1,389,482,327.86 1,016,326,480.06 Net increase of cash and cash equivalents -1,069,082,845.45 78,992,283.10 (2) Composition of cash and cash equivalent Item 2017 2016 I. Cash 320,399,482.41 1,095,318,763.16 Including: Cash on hand 112,358.49 182,118.71 Bank savings available for payment needed 319,842,865.25 1,090,492,069.20 Other monetary capital available for payment needed 444,258.67 4,644,575.25 II. Cash equivalent III. Balance of cash and cash equivalent at period-end 320,399,482.41 1,095,318,763.16 43. Assets of ownership or use right restricted Item 30 June 2017 Restricted reason Monetary Fund 14,758,119.56 Bid bond Total 14,758,119.56 44. Foreign currency 80 Item 30 June 2017 Conversion rate RMB converted Monetary fund Including: USD 876,850.08 6.77 5,938,902.24 Euro 976.71 7.75 7,569.11 HKD 654,452.32 0.87 568,000.55 SGD 5,794.81 4.91 28,472.78 VII. Change of consolidate scope Nil VIII. Equity in other entity 1. Equity in subsidiaries (1) Composition of the Group Main operation Registration Business Shareholding ratio Subsidiary Acquired way place place nature (%) Shenzhen Server (note ) Shenzhen Shenzhen Trading 50 Establishment Power New Power Company Shenzhen Shenzhen 100 Establishment generation Zhongshan Power Power Zhongshan Zhongshan 80 Establishment Company generation Engineering Engineering Company Shenzhen Shenzhen 100 Establishment consulting Power Weimei Power Company Dongguan Dongguan 70 Establishment generation Environment Protection Shenzhen Shenzhen Engineering 100 Establishment Company Singapore company Singapore Singapore Trading 100 Establishment Shen Storage Zhongshan Zhongshan Storage 80 Establishment Import & SYNDISOME Hong Kong Hong Kong export 100 Not under the same control trading Note : The Company holds 50% equity of Shenzhen Server, and takes majority voting rights in Shenzhen Server, thus, the Company owes substantial control; Shenzhen Server included in the consolidate scope of the financial statement. 81 (2) Important non-wholly-owned subsidiary Gains/losses Dividend announced Share-holding ratio of attributable to Subsidiary to distribute for Ending equity of minority minority (%) minority in the minority in the Period Period Zhongshan Power -2,677,075.52 - -12,069,733.70 Company 20 Weimei Power Company -3,743,510.76 - 35,080,653.60 30 (3) Main finance of the important non-wholly-owned subsidiary 30 June 2017 Subsidiary Non-current Non-current Current assets Total assets Current liability Total liability assets liability Zhongshan Power 161,092,160.90 615,000,122.06 776,092,282.96 803,963,750.15 32,477,201.30 836,440,951.45 Company Weimei Power 195,490,973.66 539,455,878.83 734,946,852.49 618,011,340.50 618,011,340.50 - Company (Continued) 1 January 2017 Subsidiary Non-current Non-current Current assets Total assets Current liability Total liability assets liability Zhongshan Power 138,059,135.37 608,395,920.72 746,455,056.09 748,234,975.82 45,183,371.17 793,418,346.99 Company Weimei Power 237,095,978.47 558,501,453.51 795,597,431.98 666,183,550.79 666,183,550.79 - Company (Continued) 2017 Subsidiary Total comprehensive Cash flow from Operation Income Net profit income operation activity Zhongshan Power 230,866,147.88 -13,385,377.59 -13,385,377.59 -14,568,572.01 Company Weimei Power Company 171,896,422.01 -12,478,369.20 -12,478,369.20 -6,869,702.57 82 (Continued) 2016 Subsidiary Total comprehensive Cash flow from operation Operation Income Net profit income activity Zhongshan Power 184,769,854.45 -17,740,015.11 -17,740,015.11 3,753,922.35 Company Weimei Power Company 130,208,928.16 -25,003,456.60 -25,003,456.60 195,626.20 2. Equity in joint venture and cooperative enterprise Joint venture and Share-holding ratio (%) cooperative Main operation Registered Business Accounting treatment place place nature enterprise Directly Indirectly Huidong Server Huizhou Huizhou Wharf 40 Equity method Note: The 60% equity of Huidong Server, held by controlling subsidiary Shenzhen Server are transferred on 9 December 2013, the other 40% equity will re-measured by appraisal value when losing the controlling right. XI Risks associated with financial instruments The Company's main financial instruments include equity investment, borrowings, accounts receivable, accounts payable, etc., see details of each financial instrument in related items of this annotation xi. The risks associated with these financial instruments and the risk management policies adopted by the Company to reduce these risks are described as below. The management of the Company manages and monitors these risk exposures to ensure that the above risks are controlled within the limit range. The Company uses the sensitivity analysis technique to analyze the possible impact of the risk variable on the current profit and loss or the shareholders' equity. Since any risk variable rarely changes in isolation, and the correlation existing among the variables shall have a significant effect on the final amount of changes about a certain risk variable, therefore, the following proceeds by assuming that the change in each variable is independent. (i) Risk management objectives and policies The objective of the Company's risk management is to gain a proper balance between risks and profits, minimize the negative impact of risks on the Company's operating results, and maximize the benefits of shareholders and other equity investors. Based on the risk management objective, the 83 basic strategy of the Company's risk management is to identify and analyze the risks faced by the Company, establish appropriate bottom line to bear the risks and carry out risk management, and timely and reliably supervise the risks so as to control the risks within the limit range. 1 Market risk (1) Foreign exchange risk Foreign exchange risk refers to the risk of losses due to exchange rate changes. The Company’s foreign exchange risk is mainly related to the US dollar. On June 30, 2017, except for the balance of foreign currency monetary items, the assets and liabilities of the Company are RMB balance. The foreign exchange risk arising from the assets and liabilities of such foreign currency balances may have an impact on the Company's operating results. (2) Interest rate risk - cash flow change risk The Company's cash flow change risk of financial instruments arising from interest rate change is mainly related to the floating interest rate bank loans (see details in annotation xi, 16, annotation xi, 23). Interest rate risk sensitivity analysis: The interest rate risk sensitivity analysis is based on the following assumptions: Changes in market interest rates affect the interest income or expense of financial instruments with variable interest rate; For financial instruments with fixed rate by fair value measurement, the changes in market interest rates only affect their interest income or expense; For derivative financial instruments designated as hedging instruments, the changes in market interest rates affect their fair value, and all interest rate hedging prediction is highly effective; Calculate the changes in fair value of derivative financial instruments and other financial assets and liabilities by using the cash flow discount method at the market interest rate at the balance sheet date. On the basis of above assumptions, in case that other variables keep unchanged, the pre-tax effect of possible reasonable changes in interest rates on current profits and losses and shareholders' equity is as follows: 2017 2016 Rate changes Net profit Shareholder’ interest Net profit Shareholder’ interest 5% increased 1,952,727.44 1,698,182.60 4,718,003.20 4,448,821.87 84 5% decreased -1,952,727.44 -1,698,182.60 -4,718,003.20 -4,448,821.87 2. Credit risk On June 30, 2017, the maximum credit risk exposure that could cause financial loss to the Company is mainly due to the failure of the other party to fulfill the obligations, resulting in losses to the Company's financial assets, including: The book value of financial assets confirmed in the consolidated balance sheet; for the financial instrument measured by fair value, the book value reflects its risk exposure but not the maximum risk exposure, and its maximum risk exposure will change with the changes in future fair value. To reduce the credit risk, the Company has set up a team to determine the credit lines, examine and approve the credit, and perform other monitoring procedures to ensure that necessary measures are taken to recover the expired claims. In addition, the Company reviews the recovery of each account receivable at each balance sheet date to ensure that sufficient provision for bad debts is made for uncollectible funds. As a result, the Company's management believes that the Company's credit risk has been greatly reduced. The company's working capital is deposited in banks with high credit ratings, so the credit risk of working capital is rather low. 3. Liquidity risk In managing the liquidity risk, the Company keeps the cash and cash equivalents that the management considers to be sufficient and supervise them so as to meet the Company's operating needs and reduce the impact of fluctuations in cash flows. The Company’s management monitors the use of bank loans and ensures to comply with the loan agreement. The Company uses bank loans as the main source of funds. X. Related party and related transactions 1. Parent company of the Group Share holding proportion of any shareholder of the Company didn't reach 50%, and couldn't form a holding relationship of the Company through any methods. The Company has no parent company. 2. Subsidiaries of the Company Found more in 1. Subsidiary in Note VIII 3. Joint venture and affiliated enterprise of the Group Found more in 2. Equity in joint venture or affiliate business in Note VIII 4. Other related party 85 Other related party Relationship with the Group Shareholders have major influence on the Shenzhen Energy Group Co., Ltd. (“Energy Group ”) Company Dongguan Weimei Ceramics Industrial Park Co., Ltd. (” Weimei Ceramics”) Minority shareholders of the subsidiaries Subsidiary of ultimate controller of Energy Shenzhen Mawan Powr Co., Ltd. (“Mawan Power Company”) Group Subsidiary of ultimate controller of Energy Shenzhen Moon Bay Oil Harbour Co., Ltd. (“Moon Bay Oil Company”) Group Subsidiary of ultimate controller of Energy Shenzhen Energy Group Holding Co., Ltd. (” Energy Holding”) Group Shenzhen Pipe Energy Technology Development Co., ltd. (“Pipe Technology”) Others Related party Alltrust Insurance Co., Ltd. (“Alltrust Insurance”) Other Related party Director of the Company and other senior executives Key management staff 5. Account payable/receivable from related parties (1) Account receivable 30 June 2017 1 January 2017 Item Bad debt Bad debt Book balance Book balance provision provision Other account receivable: Huidong Server 11,203,421.44 - 11,022,401.44 - Huidong Server managed account 12,760,967.33 - 12,930,850.20 - Total 23,964,388.77 - 23,953,251.64 - XI. Commitment 1. Major commitment Till the balance sheet day, the condition of irrevocable operating lease contract the Group externally signed is as follow: In RMB Item 30 June 2017 1 January 2017 Minimum lease payments of irrevocable operating lease: The first year after balance sheet day 1,504,396.50 1,504,396.50 The second year after balance sheet day 1,544,359.37 1,517,717.46 86 The third year after balance sheet day 1,557,680.33 1,557,680.33 Subsequent years 58,949,941.56 59,728,781.72 Total 63,556,377.76 64,308,576.01 2. Contingency Nil XII. Events Occurring after the Balance Sheet Date Nil XIII. Other important events 1. Segment information (1) Determining basis and accounting policies of reportable segments According to the Group's internal organization structure, management requirements and internal reporting system, the Group's business is divided into three operating segments including power and heat supply, fuel oil trade and other business, the Group's management periodically evaluates the operating results of these segments so as to determine the allocation of resources and assess their performances. Segmental reporting information is disclosed in accordance with the accounting policies and measurement standards adopted by each segment for reporting to the management, the measurement basis keep pace with the accounting and measurement basis used for preparing financial statements. (2) Financial information of reportable segment Power supply and heat Offset between Item Fuel oil trade Other Total supply segments Main business 842,021,424.05 - 29,011,019.76 - 871,032,443.81 income Main business cost 814,221,686.15 21,852,625.26 9,003,972.01 827,070,339.40 138,510,697.5 488,400,777.8 3,043,070,710.8 Total assets 4,589,924,551.98 2,173,765,316.46 1 6 9 1,049,813,820.5 Total liabilities 2,119,368,548.69 36,571,680.60 36,393,070.52 1,142,519,479.24 7 2. Other events Nil XIV. Note to main items of financial statements of the Parent Company 1. Account receivable (1) Classification of accounts receivable 30 June 2017 Category Bad debt Book value Book Balance provision 87 Proporti Am Proporti Amount on (%) ount on (%) Account receivable with individual major amount and withdrawal bad debt - - - - - provision independently Accounts receivable with minor amount and accounts receivable with major 121,558, 121,558, 100.00 - - amount found no devaluation after individual devaluation test 333.20 333.20 Account receivable with individual minor amount but withdrawal bad debt - - - - - provision independently 121,558, 121,558, Total 100.00 - - 333.20 333.20 (Continued) 1 January 2017 Bad debt Category Book Book Balance provision value Proporti Am Proporti Amount on (%) ount on (%) Account receivable with individual major amount and withdrawal bad debt - - - - - provision independently Accounts receivable with minor amount and accounts receivable with major 54,934, 54,934, 100.00 - - amount found no devaluation after individual devaluation test 957.47 957.47 Account receivable with individual minor amount but withdrawal bad debt - - - - - provision independently 54,934, 54,934, Total 100.00 - - 957.47 957.47 (2) Age analysis of account receivable 30 June 2017 1 January 2017 Age Amount Proportion (%) Amount Proportion (%) Within 1year 121,555,444.20 100.00 54,932,068.47 99.99 1 to 2years - - - - 2 to 3years - - - - Over 3 years 2,889.00 0.00 2,889.00 0.01 Total 121,558,333.20 100.00 54,934,957.47 100.00 (3) There are no account receivable of the shareholders who hold over 5 %(5% included) voting rights in report period. (4) Top five account receivables at period-end balance listed by arrears party The total amount of the Company’s top 5 year end balance of receivables in this year collected by debtors is 121,558,333.2 Yuan, accounting for 100% of the total amount of year end balance of receivables; the total amount of year end balance of the corresponding provision for bad debts is 0.00 Yuan. 2. Other account receivable (1) Other account receivable classified 88 30 June 2017 Bad debt Category Book Book Balance provision value Proport Amoun Proport Amount ion (%) t ion (%) Other account receivable with individual major amount and withdrawal bad 16,781, 16,781, 1.70 100.00 - debt provision independently 666.46 666.46 Other accounts receivable with minor amount and accounts receivable with 962,414 962,414 97.20 - - major amount found no devaluation after individual devaluation test ,956.45 ,956.45 Other account receivable with individual minor amount but withdrawal bad 10,895, 10,547, 347,694 1.10 96.81 debt provision independently 670.98 976.98 .00 990,092 27,329, 962,762 Total 100.00 2.76 ,293.89 643.44 ,650.45 (Continued) 1 January 2017 Bad debt Category Book Book Balance provision value Proport Amoun Proport Amount ion (%) t ion (%) Other account receivable with individual major amount and withdrawal bad 16,781,6 16,781, 1.50 100.00 - debt provision independently 66.46 666.46 Other accounts receivable with minor amount and accounts receivable with 1,093,78 1,093,78 97.49 - - major amount found no devaluation after individual devaluation test 6,579.27 6,579.27 Other account receivable with individual minor amount but withdrawal bad 11,376,3 11,028, 347,694. 1.01 96.94 81.95 687.95 00 debt provision independently 1,121,94 27,810, 1,094,13 Total 100.00 2.48 4,627.68 354.41 4,273.27 ①Other account receivable with individual major amount and withdrawal bad debt provision independently Accruing Other account receivable Book value Bad debt provision Accrual reason proportion (%) Huiyang Kangtai Industrial 14,311,626.70 14,311,626.70 100.00 Company Un-collectible Individual income tax 2,470,039.76 2,470,039.76 100.00 Un-collectible Total 16,781,666.46 16,781,666.46 100.00 ②Other account receivable with individual minor amount but withdrawal bad debt provision independently Accruing Other account receivable Book balance Bad debt provision proportion(%) 89 Dormitory amount receivable 2,083,698.16 1,736,004.16 83.31 Deposit receivable 1,312,974.95 1,312,974.95 100.00 Personal account receivable 7,498,997.87 7,498,997.87 100.00 Total 10,895,670.98 10,547,976.98 96.81 (2) Bad debt provision accrual, collected or switch-back in the period There are no bad debt provision accrual in the period, and switch –back 480,710.97 Yuan for bad deb tprovision (3) No other accounts receivable that had actually written off in the period (4) Other account receivable classified according to age 30 June 2017 1 January 2017 Age Amount Proportion (%) Amount Proportion (%) Within 1year 201,377,659.81 20.34 156,165,893.62 13.92 1 to 2years 277,175,416.66 27.99 490,525,842.08 43.72 2 to 3years - 83,463,099.08 7.44 Over 3 years 511,539,217.42 51.67 391,789,792.90 34.92 Total 990,092,293.89 100.00 1,121,944,627.68 100.00 (5) Receivable from related parties proportio n in total Relationship with the other Name of the company Amount Year account Company receivable (%) 663,857,897.6 Within 1year to Over 3 Zhongshan Power Company Subsidiary 67.05 3 years 282,720,933.1 Within 1year to Over 3 Weimei Power Company Subsidiary 28.56 0 years Environment Protection Subsidiary 10,558,482.89 1 year 1.07 Company Singapore company Subsidiary 1,456,971.99 Over 3 years 0.15 958,594,285.6 Total 96.82 1 (6) Top 5 other account receivables at period-end listed by arrears party proportio n in total Relationship with the Balance of other Name of the company Amount Year bad debts account Company provision receivabl e (%) 663,857,897.6 Zhongshan Power Company Related party 1-3 years 67.05 - 3 90 282,720,933.1 Weimei Power Company Related party 1-3 years 28.56 - 0 Huiyang Kangtai Industrial Over 3 14,311,626.7 Non-related party 14,311,626.70 1.45 Company years 0 Within Environment Protection Company Related party 10,558,482.89 1.07 - 1year Over 3 Dormitory receivable Non-related party 2,083,698.16 0.21 1,736,004.16 years 973,532,638.4 16,047,630.8 Total 98.33 8 6 3. Long-term investment (1) Category of long-term equity investment 30 June 2017 1 January 2017 Item Impairme Impairme Book Book nt Book value nt Book value Balance Balance provision provision 691,982,849. 691,982,849. 691,982,849. 691,982,849. Investment to subsidiary - - 76 76 76 76 Investment to joint venture and affiliate - - - - - - enterprise 691,982,849. 691,982,849. 691,982,849. 691,982,849. Total - - 76 76 76 76 (2) Investment to subsidiary Impairment Impairment Increased in Decreased in provision provision Investee company 1 January 2017 30 June 2017 the Year the Year accrual in the Year-end Year balance Shenzhen Server 26,650,000.00 - - 26,650,000.00 - - New Power 71,270,000.00 - - 71,270,000.00 - - Company Zhongshan Power 410,740,000.00 - - 410,740,000.00 - - Company Engineering 6,000,000.00 - - 6,000,000.00 - - Company Weimei Power 115,319,049.76 - - 115,319,049.76 - - Company Singapore 6,703,800.00 - - 6,703,800.00 - - 91 company Environment Protection 55,300,000.00 - - 55,300,000.00 - - Company Total 691,982,849.76 - - 691,982,849.76 - - 4. Operation revenue/operation cost 2017 2016 Item Revenue Cost Revenue Cost Main business 316,769,674.55 351,127,940.47 142,039,101.44 166,953,311.54 Other business 11,630,884.94 2,293,227.75 15,947,661.65 - Total 328,400,559.49 353,421,168.22 157,986,763.09 166,953,311.54 5. Supplement of cash flow statement Supplement information 2017 2016 (1) Net profit adjusted as cash flow from operation activities: Net profit -32,975,152.39 -40,756,989.33 Add: Assets for impairment -480,710.97 - Depreciation of fixed assets 5,591,404.56 5,041,783.76 Amortization of intangible assets 665,244.42 720,120.18 Amortization of long-term expenses to be amortized - - Loss from disposal of fixed assets, intangible assets and other 159,602.00 194,564.88 long-term assets Abandonment loss from fixed assets Financial expenses (income) 16,331,788.60 70,526,525.68 Decrease of inventory (increased) 2,307,025.70 -558,403.95 Decrease of operational receivable (increased) 58,970,055.19 88,283,021.55 Increase of operational payable (decreased) -280,198,080.80 44,700,848.96 Other - - Net cash flow from operation activities -229,628,823.69 168,151,471.73 2. Major investment and financing activities not involved with cash income and expenses: 3. Net changes of cash and cash equivalent: Balance of cash and cash equivalent at period-end 195,020,156.38 625,192,080.91 92 Less: period-beginning balance of cash and cash equivalent 1,119,323,850.36 675,408,711.65 Net increase of cash and cash equivalent -924,303,693.98 -50,216,630.74 XV. Supplementary information 1. Statement of non-recurring gains/losses Item 2017 2016 Gains/losses from the disposal of non-current asset -160,729.35 -203,276.08 Governmental subsidy calculated into current gains and losses, with closely related with the normal business of the Company, excluding 2,217,711.99 9,839,892.03 the fixed-amount or fixed-proportion governmental subsidy according to the unified national standard) Gain/loss of debt reorganization - - Switch-back of the impairment reserves of receivables that has 480,710.97 - impairment test independently Natural gas import VAT refund - - Other non-operating income and expenditure except for the -5,484.22 1,961,448.64 aforementioned items Subtotal 2,532,209.39 11,598,064.59 Impact on income tax - -246,556.08 Impact on minority shareholders’ equity (post-tax) -48,200.66 -1,737,656.57 Total 2,484,008.73 9,613,851.94 2. ROE and EPS EPS Weighted average ROE Profit in the Period (%) Basic EPS Diluted EPS Net profit attributable to shareholders of the listed -1.17% -0.04 -0.04 company Net profit attributable to shareholders of the listed -1.30% -0.04 -0.04 company after deducting non-recurring gains and losses 93