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深南电B:2011年年度报告(英文版)2012-04-24  

						Shenzhen Nanshan Power Co., Ltd.                            Full Text of Annual Report 2011




               SHENZHEN NANSHAN POWER CO.,LTD


                    2011 Annual Report

                                   Report Ref.: 2012-012




                                     April 24, 2012




                                             -1-
       Shenzhen Nanshan Power Co., Ltd.                                                  Full Text of Annual Report 2011


                                             Important Prompt
       The board of directors, board of supervisors as well as the directors, supervisors and senior
managers of the Company guarantee that the data in this report are correct, true, free of misleading
statement and misstatement, and undertake individual and joint responsibilities on the authenticity,
accuracy and integrity.
       Director Huangpu Han and director Jiang Xiaojun failed to attend the meeting for public reasons,
and authorized director Yu Chunling and vice board chairman Sun Yulin to attend the meeting and
exercise voting power respectively. The board meeting has reviewed and passed the whole text of the
2010 annual report.
       Deloitte provides the Company with an audit report which has explanatory paragraphs without
qualified opinions. The board of directors and board of supervisors of the Company also specify relevant
items in details and the investors shall read carefully.
       Yang Haixian, president of the Company, Fu Bo, executive director as well as Lu Xiaoping, chief
financial officer, and Huang Jian, manager of financial management department declare that: the financial
report in the annual report is true and complete.
       This report is compiled in both Chinese and English, and the Chinese version will prevail if there is
any difference or deviation between the two versions.




                                                     Contents

I. Brief Introduction to the Company---------------------------------------------------------------------------------3
II. Abstract of Accounting Data and Business Data----------------------------------------------------------------5
III. Capital Share Alternation and Shareholder information-------------------------------------------------------8
IV. Director, Supervisor, Senior Manager as well as Employer ------------------------------------------------12
V. Organization Structure of the Company-------------------------------------------------------------------------21
VI. Brief Introduction to the general Meeting of Shareholders--------------------------------------------------26
VII. Report of Board of Directors-----------------------------------------------------------------------------------26
VIII. Report of Board of Supervisors--------------------------------------------------------------------------------39
Ⅸ. Important Items----------------------------------------------------------------------------------------------------41
Ⅹ. Financial Report---------------------------------------------------------------------------------------------------47
Ⅺ. Further References------------------------------------------------------------------------------------------------48




                                                           -2-
         Shenzhen Nanshan Power Co., Ltd.                                   Full Text of Annual Report 2011



                                 I. Brief Introduction to the Company

(I)       Legal Name In Chinese: 深圳南山热电股份有限公司
          Legal Name in English: SHENZHEN NANSHAN POWER CO., LTD
(II)      Corporate representative: Yang Haixian
(III)     Secretary of board of directors: Hu Qin
          Telephone: (0755) 26948888
          Fax: (0755) 26003684
          Email: investor@nspower.com.cn
          Contact address: Building 16 and 17, Hantang Mansion, Huaqiao Town, Nanshan District,
                               Shenzhen, China
(IV)      Registered address: No. 2097, Moon bay Blvd, Nanshan District, Shenzhen, China
          Postal code: 518052
          Business address: Building 16 and 17, Hantang Mansion, Huaqiao Town, Nanshan District,
                               Shenzhen, China
          Postal code: 518053
          Website: http://www.nsrd.com.cn
          Email: public@nspower.com.cn
(V)       Designated newspapers for information disclosure: Secutimes, China Securities Journal and
          Hong Kong Commercial Daily
          Website designated by China Securities Regulatory Committee for publishing the annual report:
          http://www.cninfo.com.cn
          The annual report is prepared and kept by: Secretariat of board of directors
(VI)      Stock Exchange: Shenzhen Stock Exchange
          Short name and code of share: SND A 000037
                                            SND B 200037
(VII)     Other information
          Initial registration date: April 6th, 1990
          Initial registered address: Nanshan Jiaoju, Nanshan District, Shenzhen
(IV)      Registration address after alternation: No. 2097, Moon bay Blvd, Nanshan District, Shenzhen,
                                                    China
          Number of the business license for corporate: 440301501125497
          Tax registration number: YSWZ 440305930100069 No. (14)
          Code of organization: 61881512-1
          The accounting firm designated by the Company: Deloitte
          Business address: Building 30, Bund Center, No. 222. East Yan An Road, Shanghai, China

(VIII)    Explanation:
          Company, and the Company: SHENZHEN NANSHAN POWER CO., LTD
          Server Company: Shenzhen server Petrochemical Supplying Co., Ltd. with 50% shares held by
          the Company
          New Electric Power Company: Shenzhen New Electric Power Industry Co., Ltd with 100%
          shares held by the Company
          Singapore Company: Shennan Energy (Singapore) Co., Ltd with 100% shares held by the
          Company
          HONGKONG SYNDISOME CO.,LTD: Hong Kong Syndidome Co., Ltd
          Shenzhen Nanshan Power Engineering Co., Ltd. : Shenzhen Nanshan Power Gas Turbine
          Engineering Technology Co., Ltd with 100% shares held by the Company
          Shenzhen Nanshan Power (Zhongshan) Co., Ltd: Shenzhen Nanshan Power (Zhongshan)
          Electrical Power Co., Ltd with 80% shares held by the Company
          Shenzhen Nanshan Power (Dongguan) Company: Shenzhen Nanshan Power (Dongguan) Weimei
          Electrical Power Co., Ltd with 70% shares held by the Company
          Shenzhen Nanshan Power (Zhongshan) Environmental Protection Company: Shenzhen Nanshan
          Power Environmental Protection Co., Ltd. with 100% shares held by the Company
          Energy Environmental Protection Company: Shenzhen Energy Environment Engineering Co.,
          Ltd. with 10% shares held by the Company

                                                   -3-
     Shenzhen Nanshan Power Co., Ltd.                                       Full Text of Annual Report 2011
       Nanshan Power Plant: Nanshan Power Plant of Shenzhen Nanshan Power Co., Ltd. It is the
       secondary organization of the Company
       Zhongshan Nanlang Power Plant: Zhongshan Nanlang Power Plant of Shenzhen Nanshan Power
       (Zhongshan) Electrical Power Co., Ltd
       Dongguan Gaobu Power Plant: Dongguan Gaobu Power Plant of Shenzhen Nanshan Power
       (Dongguan) Weimei Electrical Power Co., Ltd, with 70% shares held by the Company
       Shenzhong Property Company: Zhongshan Shenzhong Real Estate Investment Co., Ltd with
       75% shares held by the Company
       Shenzhong Real Estate Company: Zhongshan Shenzhong Real Estate Development Co., Ltd with
       75% shares held by the Company
       Jiangxi Xinchang Company: CPI JIANGXI XINCHANG POWER GENERATION CO.,LTD.
       with 30% shares held by the Company
       Jiangxi Pengze Eletronuclear Company: China Power Investment Jiangxi Eletronuclear Co., Ltd
       with 5% shares held by the Company
       CSRC: China Securities Regulatory Committee
       Shenzhen Securities Regulatory Commission: Shenzhen Regulatory Authority of China
       Securities Regulatory Committee
       Shenzhen Stock Exchange: Shenzhen Stock Exchange
       Designated newspapers: Secutimes, China Securities Journal and Hong Kong Commercial Daily

       RMB: All the base currency of the financial data and monetary unit in the financial report refers
       to RMB except for special explanation.




                       II. Abstract of Accounting Data and Business Data

  (I) Main Accounting Data of the year                                    (Unit:RMB Yuan)
                      Item                                                 Amount
Operating profit                                                                     -1,489,309,387.55
Total profit                                                                             22,255,754.48
Net profit of the shareholders of the public listed
                                                                                         17,529,063.37
company
Net profit of the shareholders of the public listed                                    -288,696,800.75
company excluding non-recurring profit and loss
Net cash flow generated by operational activities                                       272,285,341.26
  Item and value excluding non-recurring profit and loss            (Unit: RMB)
                             Items                                         Amount
 Net profit                                                                                9,031,612.15
 Less: Income from disposal of non-current assets                                        113,277,953.88
       Governmental subsidy charged to the gain or loss of the
 present period (excluding the governmental subsidy closely
 related to enterprise’s business, and enjoyed based on norm
 or fixed amount according to national uniform standard                                      245,208.34
       Carry-back of accounts receivable depreciation reserve                              1,185,260.28
 conducted depreciation test separately
       Reimbursement of VAT for import of natural gas                                    214,622,872.15
      Other non-operating income and expenditure except for                                4,988,236.41
 the abovementioned items
      Influenced amount of income tax of non-recurring profit                              -8,532,710.17
 or loss
      Net (loss) / profit attributing to the parent company after                       -316,755,208.74
 deduction of non-recurring profit or loss


                                                           -4-
          Shenzhen Nanshan Power Co., Ltd.                                                       Full Text of Annual Report 2011
        Where:
        Attributed to the stockholders of parent company                                                     -288,696,800.75
        Influenced amount of minor stockholders’ equity (after tax)                                          -28,058,407.99

    (II)     Adjustment on Profit and Net Assets According to International Accounting Standards
             In the report period, there are no differences on the net profits and net assets at home and aboard.

    (III) Main Accounting Data and Financial Index of the Past Three Years
    1. Main Accounting Data of the Latest Three Years                      (Unit: RMB Yuan)
                  Item                             2011                            2010                          2009
           Operating income                      2,415,817,730.35               1,601,730,465.30               1,867,829,757.71
              Total profit                           22,255,754.48                -98,645,669.78                 131,976,361.23
            Net profit of the
       shareholders of the public                     17,529,063.37               -114,638,678.20                 74,088,210.90
            listed company

            Net profit of the
       shareholders of the public
                                                    -288,696,800.75               -240,261,931.27                 55,625,824.88
       listed company excluding
      non-recurring profit and loss


      Net cash flow generated by
                                                     272,285,341.26                 25,897,944.97                348,353,702.91
        operational activities

                  Item
              Total assets                         5,452,746,682.91               5,278,954,349.90             4,926,596,324.59

     Equity of shareholders of the
                                                   1,753,371,551.83               1,735,842,488.46             1,850,481,166.66
        public listed company

             Capital share                           602,762,596.00                602,762,596.00                602,762,596.00




    2. Main Financial Index of the Latest Three Years

                                                                                                                     2009
                         Items                                   2011                     2010              Before           After
                                                                                                          adjustment      adjustment
        Basic earnings per share (RMB/share)                           0.03            -0.19                      0.12            0.12
       Diluted earnings per share (RMB/share)                  Inapplicable         Inapplicable          Inapplicable    Inapplicable
 Basic earnings of each share excluding non-recurring
             profit and loss (RMB/share)                               -0.48           -0.40                     0.09              0.09
  The weighted average net assets returns ratio (%)                     1.00           -6.38                     4.09              4.09
The weighted average net assets returns ratio excluding
           non-recurring profit and loss (%)                           -16.55          -13.37                    3.07              3.07
 Net cash flow generated by each share of operational
                activities (RMB/share)                                  0.45              0.04                   0.58            0.58
                                                                                                                 End of 2009
                         Item                                End of 2011            End of 2010             Before          After
                                                                                                          adjustment     adjustment
Net asset of each share of the shareholders of the public
                                                                        2.91           2.88                      3.06              3.07
                 listed company (RMB)


           (IV) Attached Table of the Profit Statement in the Reporting Period
                                                                                               Earnings per share
                                             Weighted average net assets
   Profit in the reporting period                                                    Basic earnings of    Diluted earnings
                                                  income rate (%)
                                                                                        per share             per share


                                                                 -5-
               Shenzhen Nanshan Power Co., Ltd.                                                      Full Text of Annual Report 2011
Net profit attributed to common
                                                                                1.00                       0.03                 Inapplicable
stockholders of the Company
Net profit attributed to common
stockholders of the Company after
                                                                           -16.55                         -0.48                 Inapplicable
deduction of non-recurring profit
and loss

          (V) Statement of asset depreciation reserve

                                                                                      Decrease of current year
                                       Opening book       Increase of current      Carried back     Charge-off               Closing book
                Items                    balance                 year                                                          balance
  I. Bad debt reserve
                                         34,896,098.38         2,361,004.16        1,185,260.28                     -         36,071,842.26
  II.   Inventory       depreciation
  reserve                                65,924,126.88        15,854,028.57                     -      3,599,675.45           78,178,480.00

  III.    Long-term        equity
  investment depreciation reserve         2,500,000.00                      -                   -                   -          2,500,000.00

  IV. Fixed asset depreciation
  reserve                                32,981,137.38         6,265,762.65                     -      2,654,224.03           36,592,676.00
  V. Depreciation reserve        of
  construction in progress               14,790,696.15           226,400.00                     -                   -         15,017,096.15

  VI.       Intangible        assets
  depreciation reserve                    5,115,063.71                      -                   -                   -          5,115,063.71
  VII.     Other        depreciation
  reserves                                1,633,199.83                      -                   -      1,633,199.83                          -
  Total
                                        157,840,322.33        24,707,195.38        1,185,260.28        7,887,099.31          173,475,158.12




                                III. Information on Capital Stock Alteration and Stockholders

           (I) Capital stock alteration
      1. Table of capital stock alternation (As of December 31, 2011)                               (Unit: share)

                                                                                shares Increased or
                                            Before the alternation                decreased in the           After the alternation
                Contents                                                          alternation (+,-)

                                          Number            Ratio (%)                  Others             Number                Ratio (%)
      I. Shares with limited sales
                                                18,263                  0.003                                       18,263                  0.000
      conditions
      1. Shares held by state
      2.     Shares     held   by
                                                      0                    0                                            0                        0
      state-owned corporate
      3. Shares held by other
      domestic capitals
      Wherein: shares held by
      other domestic non-state
      corporate
      Shares held by domestic
      natural persons
      4. Shares held by foreign
      capitals
      Wherein: shares held by
      foreign corporate

                                                                  -6-
            Shenzhen Nanshan Power Co., Ltd.                                                        Full Text of Annual Report 2011
   Shares held by domestic
   natural persons

   5. Shares of executives                      18,263                  0.003                                    18,263                  0.003

   II. Shares with unlimited
                                           602,744,333                99.998                                602,744,333                 99.998
   sales condition

   1. Ordinary shares                      338,894,012                  56.22                               338,894,012                  56.24
   2. Domestically limited
                                           263,850,321                  43.77                               263,850,321                  43.77
   foreign shares
   3. Foreign share listed
   overseas
   4. Others
   III. Total shares                       602,762,596                      100                     0       602,762,596                      100
   [Note] ―Shares held by senior executives‖ among the shares with limited sales conditions at the end of the
   reporting period are the A shares held by deputy general manager Zhang Jie and supervisor Peng Bo, and
   B share held by supervisor Li Huiwen, and all the shares are frozen.

   2. Alternation table of shares with limited sales conditions                                     (Unit: share)
                        Shares with      Shares with        Shares with         Shares with
                       limited sales    limited sales      limited sales       limited sales                              Date for
     Name of                                                                                     Reason for limited
                          at the          condition          condition         condition at                               releasing
    shareholder                                                                                        sales
                       beginning of    released in the     increased in       the end of the                            limited sales
                         the year           year              the year             year

  Zhang Jie                  12,993                0                    0              12,993       Legal conditions          -

  Peng Bo                      1,145               0                    0               1,145       Legal conditions

  Li Huiwen                    4,125               0                    0               4,125       Legal conditions

  Total                      18,263                0                    0              18,263


   (II) Share Issuing and Listing
   1.     The Company did not issue shares and derivative securities in the past three years.
   2.     In the reporting period, alternation of the total shares and structure, and alternation of the asset and
          liabilities structure are not caused due to presenting shares, turning to increase share capitals,
          offering shares, further issuing new shares, issuing shares in a non-public way, exercising warrants,
          implementing share ownership incentive plan, jointing enterprises, transferring convertible bonds,
          listing internal employee shares, issuing bonds or other causes.
   3.     There are no existing internal employee shares in the Company.

   (III) Shareholders and Actual Controllers
   1.     At the end of the reporting period, the total number of the Company’s shareholders is 44,421,
          including 28,735 A share shareholders, decreased by 391 over the previous year, and 15,686 is B
          share shareholders, decreased by 456 over the previous year.
   2.     Shareholding information of the shareholders (As of December 31, 2011) (Unit: share)

     Total stockholders                                                           44,421
Shareholding of the top ten shareholders
                                                                                     Total number Number of shares Number of shares
                                                         Nature of Shareholdin
              Name of shareholder                                                          of     with limited sales which are pledged
                                                       stockholders  g ratio
                                                                                     shareholders     condition          or frozen
                                              State-owned
Shenzhen Guangju Investment Holding Co., Ltd                                16.72% 100,769,712                      0                    0
                                               corporate
Hong Kong Nanhai Foreign Firm (International) Overseas
                                                                            15.28%     92,123,248                   0                    0
Co., Ltd                                       corporate
                                              State-owned
Shenzhen Energy Corporation                                                 10.80%     65,106,130                   0                    0
                                               corporate
                                               Overseas
Tengda Property Co., Ltd                                                     8.20%     49,426,518                   0                    0
                                               corporate


                                                                  -7-
            Shenzhen Nanshan Power Co., Ltd.                                                    Full Text of Annual Report 2011
State Grid Shenzhen Energy Development Group State-owned
                                                                        5.97% 35,999,805                       0                   0
Co., Ltd                                              corporate
                                                         Domestic
Yan Tiangong                                                            0.53%      3,201,310                   0            Unknown
                                                    natural person
                                                         Domestic
Li Weiping                                                              0.39%      2,376,301                   0            Unknown
                                                    natural person
                                                         Overseas
Jinbang Securities Co., Ltd.                                            0.25%      1,500,000                   0            Unknown
                                                         corporate
                                                         Domestic
Wu Shuhua                                                               0.22%      1,351,400                   0            Unknown
                                                    natural person
                                                         Overseas
Naito Securities Co., Ltd.                                              0.20%      1,214,586                   0            Unknown
                                                         corporate
        Shareholding condition of the top ten shareholders with unlimited sale condition
                                                     Number of shares with unlimited sales
               Name of shareholder                                                                         Type of share
                                                                   condition
Shenzhen Guangju Investment Holding Co., Ltd                                     100,769,712                    RMB common share
Hong Kong Nanhai Foreign Firm (International)
                                                                                  92,123,248       Domestically listed foreign share
Co., Ltd
Shenzhen Energy Corporation                                                       65,106,130                    RMB common share
Tengda Property Co., Ltd                                                          49,426,518       Domestically listed foreign share
State Grid Shenzhen Energy Development Group
                                                                                  35,999,805                    RMB common share
Co., Ltd
Yan Tiangong                                                                       3,201,310       Domestically listed foreign share
Li Weiping                                                                         2,376,301       Domestically listed foreign share
Jinbang Securities Co., Ltd.                                                       1,500,000       Domestically listed foreign share
Wu Shuhua                                                                          1,351,400                    RMB common share
Naito Securities Co., Ltd.                                                         1,214,586       Domestically listed foreign share
                                                  1. Shenzhen Energy Corporation holds 100% shares of Hong Kong Nanhai
Explanations on the incidence relation and        Foreign Firm (International) Co., Ltd
consistent actions of the above shareholders      2. The Company does not know whether the above social public shareholders
                                                  have incidence relation or belong to the persons acting in concert or not.

   3. Information of dominant shareholders and actual controllers
   The Company does not have the dominant shareholders and actual controllers and it is not changed in the
   reporting period.

   4. The first majority shareholder of the Company
   The first majority shareholder of the Company is not altered in the reporting period.

   In the reporting period, Shenzhen Energy Co., Ltd directly and indirectly holds 157,229,378 shares of the
   Company, which accounts for 26.08% of the total shares of the Company, and remains as the first
   majority shareholder of the Company.
   Legal representative: Gao Zimin; date of foundationL July 15, 1985; registration capital: 955,555,556
   RMB; business type: limited liability company; business scope: developing, producing, purchasing and
   selling various normal energies (including power, heat, coal, oil and gas) and new energies, designing,
   constructing, managing and operating various energy engineering projects, operating equipments and
   accessories, apparatuses, aluminum materials, wood materials, cement and other materials needed by the
   energy engineering project, operating import-export services (handled as per SMGSZZ No. 147
   Document), operating the services of personnel training and consulting matched with the energy
   engineering, as well as other relevant services (report or declare additionally for details), developing and
   transferring environmental protection technologies, and providing technical service, investing and
   operating the transportation services on the fuels, materials and equipments needed by the energy project.
   Property management (operating with the property management qualification certificate) and own
   property leasing.

          Chart of property right and control relationship between major stockholders and the Company:
         Explanation of the names in the diagram below:
         The Company: Shenzhen Nanshan Power Co., Ltd
         Shenzhen Energy Group: Shenzhen Energy Corporation
          Nanhai Foreign Firm: Hong Kong Nanhai Foreign Firm (International) Co., Ltd
         Guangju Industry: Shenzhen Guangju Industry Co., Ltd.
         Hong Kong Tengda: Tengda Property Co., Ltd


                                                                -8-
          Shenzhen Nanshan Power Co., Ltd.                                                              Full Text of Annual Report 2011
       State Grid Energy: State Grid Shenzhen Energy Development Group Co., Ltd
       Hong Kong Energy: Shenzhen Energy (Hong Kong) International Co., Ltd.
       Guangju Energy: Shenzhen Guangju Energy Co., Ltd
       Shennan Group: Shenzhen Shennan Petroleum (Group) Co., Ltd
        Kehuitong: Shenzhen Kehuitong Investment Holding Co., Ltd Shenzhen Guangju Investment
        Holding Co., Ltd
                                            Shenzhen Nanshan State-owned Assets Supervision and Administration Commission


                                                                       100%

                                                        Kehuitong


                                                          46.34%
  Shenzhen State-owned Assets
Supervision and Administration Commission      Shennan Group                        Mr. Li Li                     State Property Management
                                                                                                              Commission of the State Counil

    75%                                                  57.61%                     100%                      100%
                 100%
  Energy Group                   Hong Kong Energy     Guangju Energy        Peace Country International Limited              State Grid


                                       100%                         100%                         100%                          100%


                        Nanhai Foreign Firm               Guangju Holding           Hong Kong Tengda                 State Grid Energy


    10.80%                      15.28%                    16.72%                       8.20%                       5.97%

                                                               The Company




 5. Other shareholders holding more than 10% (inclusive 10%) corporate shares
 (1)      Shenzhen Guangju Investment Holding Co., Ltd, which was established on May 31, 1989 with a
          registration capital of 0.111 billion RMB, holds 16.72% of shares; its corporate representative is
          Wang Jianbin and its property is liability limited company. Its operating scope includes industrial
          projects and power investment (the detailed projects are additionally reported or declared).
 (2)      Hong Kong Nanhai Foreign Firm (International) Co., Ltd, established on May 15, 1985 holds
          15.28% of shares; and its operating scope is investment.




                     IV. Directors, Supervisors, Senior Managers and Employees
 (I) Basic Information
 1. Board Members




                                                                    -9-
          Shenzhen Nanshan Power Co., Ltd.                                               Full Text of Annual Report 2011
                                                                                                                Whether
                                                                                              Pretax reward
                                                                                                              getting from
                                                          Shareholdin Shareholdin              sum got from
                                       Starting                                                                    the
                                                   Ending   g at the    g at the Alternation the Company in
 Name        Post        Gender Age      date                                                                 shareholder
                                                    date beginning of beginning of cause       the reporting
                                                                                                              unit or other
                                                            the year    the year                period (ten
                                                                                                             associated unit
                                                                                             thousand RMB)
                                                                                                                 or not
  Yang
           President     Male    55     2011.5     2014.5                  0        0                   74.13            No
 Haixian
    Li                                             2014.5
         Vice-presiden
Hongshe                  Male    48     2011.5                             0        0                       0           Yes
                t
    ng
   Sun Vice-presiden                               2014.5
                         Male    60     2011.5                             0        0                       0           Yes
  Yulin         t
           Director                                2014.5
  Fu Bo     General      Male    49     2011.5                             0        0                   66.85            No
           manager
Huangpu                                            2014.5
           Director      Male    57     2011.5                             0        0                       0           Yes
   Han
    Yu                                             2014.5
           Director      Female 46      2011.5                             0        0                       0           Yes
Chunling
  Zhou                                             2014.5
           Director      Male    47     2011.5                             0        0                       0           Yes
   Qun
  Chen                                             2014.5                  0        0
           Director      Female 48      2011.5                                                              0           Yes
 Lihong
  Jiang                                            2014.5                  0        0
           Director      Male    47     2011.5                                                              0           Yes
 Xiaojun
         Independent                               2014.5                  0        0                     6.94           No
Li Zheng                 Male    54     2011.5
            director
  Wang                                             2014.5
         Independent
Xiaodon                  Male    51     2011.5                             0        0                     6.94           No
            director
     g
  Wang Independent                                 2014.5
                         Male    51     2011.5                             0        0                     6.94           No
Junsheng director
   Wu    Independent                               2014.5
                         Female 47      2011.5                             0        0                    11.90           No
 Xiaolei    director
  Tang Independent                                 2014.5
                         Male    51     2011.5                             0        0                     6.94           No
 Tianyun    director
   Pan                                             2014.5
         Independent
Chengwe                  Male    65     2011.5                             0        0                     6.94           No
            director
     i
  Total                                                                    0        0                  187.58
        [Note] The standard of allowance for independent directors is 100,000 Yuan/ year (after tax) for
  each person. After re-election in May 2011, the allowance for new independent directors in 2011 was
  58,300 Yuan/ person (after tax). Where, independent director Wu Xiaolei was re-elected, and acquired
  allowance for independent directors 100,000 Yuan (after tax) in 2011.
         2. Current members of the board of supervisors
                                                                                             Pretax reward     Whether
                                                         Shareholdin Shareholdin           sum got from the getting from
                                      Starting    Ending   g at the    g at the Alternation Company in the the shareholder
  Name     Position Gender Age
                                        date       date beginning of beginning of cause     reporting period unit or other
                                                           the year    the year              (ten thousand associated unit
                                                                                                 RMB)           or not
 Zhao      Chief                      2011.5      2014.5
                      Male      53                                  0           0                          0            Yes
Xiangzhi supervisor
  Ma                                  2011.5      2014.5
Fengmin Supervisor    Female    49                                     0        0                           0           Yes
   g
   Ji                                 2011.5      2014.5
Yuanhon Supervisor    Female    47                                     0        0                           0           Yes
   g
 Wang                                 2011.5      2014.5
         Supervisor   Male      43                                     0        0                           0           Yes
 Difei
 Zheng Employee                       2011.5      2014.5
                      Male      47                                     0        0                       37.67           No
 Dalei supervisor

                                                              - 10 -
          Shenzhen Nanshan Power Co., Ltd.                                                  Full Text of Annual Report 2011
          Employee                2011.5 2014.5
  Peng Bo             Male  38                                   1,527       1,527       Note            35.40            No
          supervisor
     Li   Employee                2011.5 2014.5                                                                           No
                     Female 49                                   5,500       5,500        note           35.96
  Huiwen supervisor
          Employee                2011.5 2014.5                                                                           No
  Tao Lin             Male  44                                          0        0                       31.90
          supervisor
   Total                                                         7,027       7,027                      140.93
   [Note] The shares held by employee supervisor Peng Bo was purchased from a secondary market before
   he worked as employee supervisor of the Company; wherein 382 shares have met the conditions of
   releasing restrictions on sale and 1,145 shares still belong to legal shares restricted to be sold. The shares
   held by employee supervisor Li Huiwen was purchased from a secondary market before he worked as
   employee supervisor of the Company; wherein 1,375 shares have met the conditions of releasing
   restrictions on sale and 4,125 shares still belong to legal shares restricted to be sold.
            3. Current senior managers
                                                                                               Pretax reward       Whether
                                                        Shareholding Shareholding             sum got from the getting from the
                                      Starting
                                                 Ending    at the       at the    Alternation Company in the shareholder
 Name          Post     Gender Age      date
                                                  date beginning of beginning of     cause    reporting period unit or other
                                                          the year     the year                 (ten thousand associated unit
                                                                                                    RMB)             or not
            Managing                  2011.5     2014.5
 Fu Bo                  Male     49                                0            0                         66.85             No
             director
             Deputy                   2011.5     2014.5
Lin Qing     general    Female   47                                     0        0                        59.59               No
            manager
             Deputy                   2011.5     2014.5
 Ji Ming     general    Male     55                                     0        0                        59.56               No
            manager
             Deputy                   2011.5     2014.5
Zhang Jie    general    Female   43                            17,325       17,325       Note             59.59               No
            manager
             Deputy                   2011.5     2014.5
Zhu Wei      general    Male     54                                     0        0                        59.76               No
            manager
 Wang         Chief                   2011.5     2014.5
                        Male     50                                     0        0                        59.66               No
Rendong     engineer
              Chief                   2011.5     2014.5
   Lu
            financial   Male     49                                     0        0                        59.56               No
Xiaoping
             officer
        Secretar                      2011.5     2014.5
         y to the
 Hu Qin                 Female   44                                     0        0                        44.90               No
        board of
        directors
  Total                                                        17,325       17,325                       469.47
   [Note] The shares held by the deputy general manager, Zhang Jie was purchased from a secondary market
   before he worked as the deputy general manager of the Company; wherein 4,332 shares have met the
   conditions of releasing restrictions on sale and 12,993 shares are still legal shares limited to sell.


            4. Incumbency of current directors and supervisors at stockholders’ units
  Name                   From                                     Post                              Working period
  Yang
          Shenzhen Energy Corporation         Party committee member and director                 From September 2008 till now
 Haixian
   Li
                                              Managing director of Shenzhen Guangju
Hongshen Shenzhen Guangju Energy Co., Ltd                                                                  Since October 2009
                                              Energy Co., Ltd.
    g
          State   Grid    Shenzhen     Energy Bureau-level researcher of State Grid
Sun Yulin                                                                                                            Since 2010
          Development Group Co., Ltd          International Development Co., Ltd.
Huangpu
          Shenzhen Energy Corporation         Deputy general manager                                         Since May 2006
  Han
   Yu                                         General manager of Shenzhen Energy
          Shenzhen Energy Corporation                                                                                Since 2009
Chunling                                      (Hong Kong) International Co., Ltd.


                                                               - 11 -
          Shenzhen Nanshan Power Co., Ltd.                                                     Full Text of Annual Report 2011
                                                 Board chairman       of   Shenzhen   Energy
Zhou Qun Shenzhen Energy Corporation                                                                                   Since 2006
                                                 Finance Co., Ltd.
  Chen Shenzhen Guangju Investment     Holding
                                                 Deputy general manager                                                Since 2005
 Lihong Co., Ltd.
  Jiang State      Grid  Shenzhen      Energy State Grid International Development Co.,
                                                                                                                       Since 2009
 Xiaojun Development Group Co., Ltd.          Ltd. Deputy general manager
  Zhao
         Shenzhen Energy Corporation             Chief accountant                                               Since April 2001
Xiangzhi
   Ma
         Shenzhen Energy Corporation             Employee supervisor                                        Since November 2011
Fengming
    Ji   Shenzhen Guangju Investment   Holding Deputy general manager, secretary to the
                                                                                                                 Since May 2008
Yuanhong Co., Ltd.                             board of directors
  Wang State       Grid  Shenzhen       Energy Director of Shenzhen Business Office, State
                                                                                                                       Since 2005
  Difei Development Group Co., Ltd.            Grid International Development Co., Ltd.

   5. Main working experiences of the current directors, supervisors and senior managers as well as their
   full-time or part-time office performances in other units except the shareholding company.
         (1) Board members
         Mr. Yang Haixian, born in 1956, president, senior economic engineer, senior administration engineer
   and MBA, used to hold a position of deputy regimental commander of PLA, had has successively worked
   as deputy chief of the office of Shenzhen municipal party committee’s economic working department,
   deputy chief of the office and deputy director of Shenzhen-based unit working committee of Shenzhen
   municipal party committee, general manager assistance and member of party committee of Shenzhen
   Energy Co., Ltd as well as the convener of board of directors of Shenzhen Western Company; and now
   holds the posts of member and director of the party committees of Shenzhen Municipal Energy Group
   Co., Ltd and Shenzhen Energy Group Co., Ltd, president of Singapore Company and director of Energy
   Environmental Protection Company, as well as representative of fourth Shenzhen Municipal People's
   Congress and the member of Economic Work Committee of Shenzhen Municipal Standing Committee of
   People's Congress.
         Mr. Li Hongsheng, born in 1963, vice board chairman, master of engineering of Tianjin University,
   had has successively worked as deputy general manager of Zhongyuan (Hong Kong) Property Co., Ltd,
   deputy general manager of Zhongyuan (Hong Kong) Industry and Trade Holdings Co., Ltd, director of
   Shenzhen Nanshan Petroleum (Group) Co., Ltd, director and chief financial officer of Shenzhen Guangju
   Energy Co., Ltd, director and executive deputy general manager of Shenzhen Guangju Energy Co., Ltd,
   and now acts as managing director of Shenzhen Guangju Energy Co., Ltd, as well as the director of
   Shenzhen Nanshan Petroleum (Group) Co., Ltd.
         Mr. Sun Yulin, born in 1951, vice president and senior engineer, had has successively worked as
   secretary of minister of clerical office of Ministry of Water Resources and Power, deputy director general
   and party secretary of China Electricity Council as well as deputy general manager, general manager and
   senior engineer of Shenzhen Dianlian Power Industrial Company from 1985 to 1999; Party group
   member and deputy general manager of Shenzhen State Power Technology Development Co., Ltd.,
   party committee secretary and deputy general manager of State Grid Shenzhen Energy Development
   Group Co., Ltd as well as deputy director of State Grid Shenzhen-based Economic Development Liaison
   Office from 2000 to 2007; and deputy general manager and Party group member (bureau level) of State
   Grid International Development Co., Ltd. from 2008 to 2010. And now, he is a bureau-level researcher of
   State Grid International Development Co., Ltd..
         Mr.. Fu Bo, managing director and MBA, born in 1962, graduated from the specialty of aero-engine,
   Xi’an Air Force Engineering University, served as lecturer of aviation mechanical engineering department,
   Xi’an Air Force Engineering University from 1984 to 1993, has successively worked as secretary of
   general manager, vice director and director of the office, secretary of the board of directors and deputy
   general manager of the Company since August 1993, has held the post of general manager of the
   Company since January 2005, and now has held the concurrent posts of presidents of Shenzhen Nanshan
   Power (Zhongshan) Company and Shenzhen Nanshan Power (Dongguan) Company, as well as director of
   Singapore Company.
         Mr. Huang Fuhan, born in 1954, director, senior engineer and master of engineering, graduated from
   the specialty of thermal energy and power, Xi’an Thermal Power Research Institute, used to be the vice
   director of the autoimmunization office of Xi’an Thermal Power Research Institute, has successively
   worked as assistant chief engineer, vice manager and manager of Ma Bay Power Plant, Shenzhen Ma Bay
   Power Company, vice manager and director of overhauling department of Power Generation Branch,
   Shenzhen Energy, manager of Moon Bay Gas Turbine Power Plant, general manager of Shenzhen

                                                             - 12 -
      Shenzhen Nanshan Power Co., Ltd.                                         Full Text of Annual Report 2011
Nanshan Power Co., Ltd, manager, vice-president and vice secretary of party committee of Guangshen
Shajiao B Power Company, director of preparing office, secretary of party branch and manager of Eastern
Power Plant, Shenzhen Energy Co., Ltd, assistant general manager, chief engineer and deputy general
manager of Shenzhen Energy Co., Ltd, and now acts as deputy general manager of Shenzhen Energy Co.,
Ltd.
      Miss Yu Chunling, born in 1965, director, senior engineer, on-job postgraduate of economics of
Beijing University, graduated from the specialty of power plant construction structure engineering,
Wuhan University of Hydraulic and Electrical Engineering, has successively worked as technician and
civil engineering contract engineer of engineering department of Guangdong Nuclear Power Heying Co.,
Ltd, project manager of Shenzhen Energy Investment Holding Co., Ltd, vice business director, business
director of office as well as minister of fuel trade department, minister and party branch secretary of
planning and developing department as well as director and party branch secretary of pumped-storage
preparing office of Shenzhen Energy Group Co., Ltd, and now acts as general manager of Shenzhen
Energy (Hong Kong) International Co., Ltd.
      Mr. Zhou Qun, born in 1964, director, economic engineer and Bachelor of Science of East China
Institute of Technology, used to work in Shenzhen Geological Bureau, Shenzhen Nanshan Investment
Management Corporation, Shenzhen Municipal State-owned Assets Management Office and Shenzhen
Investment Management Corporation, has successively worked as assistant engineer, office director,
deputy director general, assistant minister of secretariat of board of directors, had has successively
worked as secretary of board of directors, general manager assistant and office director of Shenzhen
Energy Group Co., Ltd, preparing office director of Shenzhen Pumped-storage Power Station, president
of Huizhou City Gas Co., Ltd., president of Huizhou Fengda Power Co., Ltd, and executive director and
general manager of Shenzhen Energy Investment Holding Co., Ltd, and now holds the posts of party
committee member of Shenzhen Energy Group Co., Ltd as well as board chairman of Shenzhen Energy
Finance Co., Ltd. (revised)
      Miss Chen Lihong, born in 1963, director, and accountant, graduated from junior college, has ever
worked for Shenzhen Nanshan Petroleum (Group) Co., Ltd, and Shenzhen Guangju Energy Co., Ltd as
financial manager and general manager assistant successively, and now acts as deputy general manager of
the Company. She is a supervisor of the fourth and fifth board of supervisors of Shenzhen Nanshan Power
Co., Ltd.
      Mr. Jiang Xiaojun, born in 1964, director, doctoral postgraduate, senior accountant, has ever acted as
deputy manager of financial department of China Power Investment Co., Ltd. (China Power International
Co., Ltd.); manager of financial and property right management department of Shenzhen State Power
Technology Development Co., Ltd.; manager in Shenzhen Economic Development Liaison Division and
deputy chief accountant of State Power Corporation; chief accountant of Shenzhen State Power
Technology Development Co., Ltd.; chief accountant of State Grid Shenzhen Energy Development Group
Co., Ltd.; and chief accountant of State Grid International Development Co., Ltd.. He is now a deputy
general manager and Party organization member of State Grid International Development Co., Ltd.
      Mr. Li Zheng, born in 1957, independent director, bachelor of law science, and practicing lawyer,
worked as full-time lawyer at Zhejiang Jinhua Law Firm in 1983; acted as senior researcher at China
(Shenzhen) Comprehensive Development and Research Institute in May 1991, and doubled as part-time
lawyer of China Legal Service Center and Shenzhen Tianping Law Firm during this period; acted as
partner and practicing lawyer of Guangdong Renren Law Firm in 1996; and has acted as practicing
lawyer of Guangdong Shentiancheng Law Firm since August 2010.
      Mr. Wang Xiaodong, independent director, has dealt with law business since 1987. He obtained
attorney’s license in 1988, and the Certificate of Qualification for Lawyer to Deal with Securities Legal
Business issued by China Securities Regulatory Committee and the Ministry of Justice in 1993. Later
from May 2008 to April 2010, he acted as a member of the Tenth and Eleventh Issuance Audit Committee
under China Securities Regulatory Commission; from 1989 to 2004, he acted as lawyer and partner of
Dandong Foreign-involved, Shenzhen Xinda, Shenzhen Jingtian Law Firm, and Guangdong Bohe Law
Firm respectively; since 2005, he has been a lawyer partner of GrandHall Legal Group (Shenzhen) Law
Firm, and where, from May 2008 to April 2010, e acted as a full-time member of the Tenth and Eleventh
Issuance Audit Committee under China Securities Regulatory Commission.
      Mr. Wang Junsheng, born in 1960, independent director and senior economists, began to work in
September 1978, and has ever acted as section chief of Materials Division, Asian Games Village
Department, the 11th Asian Games Organization Committee; the manager of comprehensive operation
department of Beijing International Power Development and Investment Co., Ltd.; and deputy general
manager of China Industrial Trust Investment Co., Ltd. Now, he is a researcher of China Economic and


                                                    - 13 -
      Shenzhen Nanshan Power Co., Ltd.                                        Full Text of Annual Report 2011
Technical Research and Consulting Co., Ltd., and doubles as standing director of the Society of
Management Science of China; part-time professor of the Government Management College, Central
University of Finance and Economics; part-time professor of the School of Finance and Economy, China
Renmin University; part-time professor of Financial College, Hunan University; part-time professor of
Economic Management College, Beijing University of Technology; and deputy director researcher of
Economic Research Center, National Academy of Education.
     Miss Wu Xiaolei, born in 1964, independent director, doctor of economic, and ICMC, owns the
bachelor of arts, MB A and doctor of economic. She entered the capital market in 1991, has ever held the
posts of senior management in many famous listed companies and large-scale enterprise groups. She was
appointed by CMB to hold the posts of director and executive vice-president of CMB International
Capital Corporation Limited in 2005. Now, she holds the posts of deputy general manager of
Headquarters Investment Banking Division of CMB, vice-chairman of Shenzhen Association of
Management Consultants, vice-chairman of Association of Women Entrepreneurs, as well as the director
of China Reform Council.
     Mr. Tang Tianyun, born in 1960, independent director and senior accountant, has ever worked as
Chinese certified public accountant at Shekou Zhonghua Certified Public Accountants. From 1991 to
2006, he successively acted as director and doubled as secretary to the board of directors, chief financial
officer and deputy general manager of Huayuan Industry (Group) Co., Ltd.; since 2007, he has acted as
director general of financial development strategy of Qingdao Haier Investment and Development Co.,
Ltd.; and since June 2009, he has successively assumed as director and senior vice president of Haier
New York Life Insurance Co., Ltd.
     Mr. Pan Chengwei, born in 1946, independent director, joined in China Ocean Shipping (Group)
Company in 1965, and successively acted as general manager of the group’s financial department,
general manager of financial department of COSCO (Hong Kong) Group Co., Ltd., managing director of
COSCO (Hong Kong) Real Estate Co., Ltd, managing director of COSCO (Hong Kong) Industry and
Trade Co., Ltd., and chief representative of Shenzhen Representative Office of COSCO (Hong Kong)
Group. From 1997 to 2004, he acted as director of Shenzhen Shennan Petroleum (Group) Co., Ltd.; from
2001 to 2004, he acted as director and chief financial officer of Shenzhen Guangju Energy Co., Ltd.; and
from 2005 to 2008, he acted as managing director of COSCO (Cayman) Fuqing Co., Ltd., and doubled
as fuel futures compliance manager of COSCO. Now, he is retired.
     (2) Members of the board of supervisors
     Mr. Zhao Xiangzhi, born in 1958, chief supervisor and senior accountant, acted as deputy section
chief of Financial Division of State-operated No. 5127 Factory in 1990; deputy section chief (section
chief level) of Planning Division and secretary to CPC branch of State-operated No. 5127 Factory in 1992;
deputy chief accountant and section chief of financial division of China Yanxing Shenzhen Co., Ltd. In
1993-1996; chief financial officer accredited by Shenzhen Investment Management Co., Ltd. to the
Energy Group, as well as director, disciplinary committee member, director general of audit department,
and supervisor of Shenzhen Energy Group successively in 1996-2003; and manager of financial
management department of Shenzhen Energy Corporation and chairman of the board of supervisors of
Shenzhen Energy Investment Co., Ltd. in 2003-2007. Since 2007, he has acted as board chairman and
secretary to Party committee of Shenzhen Guangshen Shajiao B Power Co., Ltd., and disciplinary
committee member of Shenzhen Energy Group Co., Ltd.; and since May 2011, he has acted as chief
accountant of Shenzhen Energy Group Co., Ltd.
     Miss Ma Fengming, born in 1962, supervisor, master postgraduate, senior accountant and certified
public accountant, acted as lecturer in university, practicing certified public accountant of CPA firm, and
financial principal of foreign-funded enterprise in 1989-1995; and successively acted as accountant of
Audit Supervision Department of Shenzhen Energy Corporation, manager of Financial Department of
Mawan Power Generation General Factory, director accountant of Planning Investment Department, vice
manager of Audit Supervision Department, and deputy manager of Audit Department of Shenzhen Energy
Group Co., Ltd. in 1995-2008. Now, she is an employee director and senior audit management manager
of Audit Management Department of Shenzhen Energy Group Co., Ltd.; director of Shenzhen Moon Bay
Oil and Post Affairs Co., Ltd.; supervisor of State Power Nanning Power Generation Co., Ltd.; supervisor
of Shenzhen Energy Corporation; and supervisor of Shenzhen Shenneng Energy Management Co., Ltd.
     Miss Ji Yuanhong, born in 1967, supervisor and economists, worked at Shenzhen FIYTA (Group)
Co., Ltd. from July 1989 to 1999. Since August 1999, she has acted secretary to the board of directors of
Shenzhen Guangju Energy Co., Ltd.; since May 2008, she has acted as deputy general manager of
Shenzhen Guangju Energy Co., Ltd.; and since March 2012, she has acted as director of Shenzhen
Guangju Energy Co., Ltd.


                                                   - 14 -
       Shenzhen Nanshan Power Co., Ltd.                                            Full Text of Annual Report 2011
      Mr. Wang Difei, born in 1968, supervisor and accountant with a bachelor degree, had has
successively worked as accountant of financial department, Zhejiang Provincial Electric Power Industry
Bureau, deputy manger of accounting department, Zhejiang Beilun Power Generation Plant, deputy
manger of State Grid Shenzhen Science and Technology Industrial Trade Company, Ningbo Branch,
deputy general manager of Guiguan Heshan Power Generation Co., Ltd of China Datang Corporation,
manger of planning development department and human resource department of State Grid Shenzhen
Science and Technology Development Co., Ltd as well as manager of the general manager working
department of State Grid Shenzhen Energy Development Group Co., Ltd, and now holds the posts of
Shenzhen business office director of State Grid International Development Limited.
      Mr. Zheng Dalei, born in 1964, employee supervisor and senior engineer, graduated from the major
of Thermal Engineering Measurement and Automation of Northeast China Institute Of Electric Power
Engineering. He worked at Heilongjiang Fulaerji Power Generation General Factory, Thermal
Engineering Branch in 1985-1990; worked at Qiqihaer No. 2 Machine Tool Factory, Equipment Division
in 1990-1994; worked at Shenzhen Nanshan Power Co., Ltd. as special personnel and manager of thermal
control department, director of thermal control branch, and director of electric control branch
successively since 1994; acted as chief engineer of Shenzhen Nanshan Power Zhongshan Company in
2003-2007; and has acted as chief engineer of Nanshan Thermal Power Plant since April 2007. In 2007,
2008 and 2010, he was titled as Excellent Management Cadre of the Company respectively.
        Mr. Peng Bo, born in 1973, employee supervisor, engineer, master postgraduate, graduated from
the major of Electric System Automation of Huazhong University of Science and Technology, and then
obtained the diploma of postgraduate and academic degree of master in the major of business
management from the same university. Since 1994, he has successively acted as the Company’s engineer
of gas turbine thermal control examination and repair specialty, supervisor in charge of labor and capital,
assistant to office director, and deputy manager of HR Department, etc. Since April 2007, he has acted as
Manager of HR Department. Now, he is a supervisor of the subordinated company Shenzhong Real Estate
Company. In 2007, he was titled as Excellent Management Cadre of the Company; and in 2008, he was
titled as excellent CPC member by Guangju Energy Party Committee.
        Miss Li Huiwen, born in 1962, employee supervisor, accountant, graduated from the major of
Accounting, Jiangxi College of Finance and Economy. She worked at Financial Division of Nanchang
Machine Tool Repair and Manufacturing Factory in 1980-1989; and acted as chief accountant of
Shenzhen Changming Garment Manufacturing Co., Ltd. in 1989-1993. Later since 1993, she has
successively acted as principal in charge of accounting of the Financial Department of the Company, and
chief financial officer of subordinated Xiefu Company, etc. Since May 2005, she has always acted as
chief financial officer and manager of financial department of subordinated enterprise Shenzhen Nanshan
Power Dongguan Company. In 2007 and 2009, she was titled as Excellent Management Cadre of the
Company respectively.
        Mr. Tao Lin, born in 1967, employee supervisor, economist and MBA, graduated from the major of
Electric System and Automation of Shanghai Jiaotong University, and later studied for MBA of Tsinghua
University. From July 1989 to February 1991, he worked at Dalian Electric Bureau; from February to
December 1991, he worked at Shenzhen Mawan Electric Power Co., Ltd. Since January 1992, he has
successively acted the Company’s office secretary, office director, secretary to the board of directors, as
well as general manager of subordinated enterprise Xiefu Company, etc. Since April 2007, he has always
acted as director and general manager of the subordinated enterprise Shenzhen Nanshan Power
Shenzhong Real Estate. In 2007, he was titled as Excellent Manager of the Company.
     (3) Senior managers
      Mr. Fu Bo is managing director. For details, see the previous director resume.
      Miss Lin Qing, deputy general manager, born in 1964, senior engineer with a master degree,
graduated from the specialty of Power System and Its Automation of Hunan University, taught in the
Power Department, Changsha University of Science and Technology since 1985, worked in the
engineering department of Guangdong Daya Bay Nuclear Power Station since 1990, successively hold
the posts of secretary of comprehensive department and business director of general administrative office
of Shenzhen Energy Company, Shenzhen Western Power Company, minister of the party department,
official labor unit president, office director, party branch secretary of office, director of labor union office,
party committee member, and general manger assistant of Shenzhen Energy Corporation, etc, since
December 1991, and now acts as deputy general manager of the Company as well as president of Xiefu
Company.
      Mr. Ji Ming, deputy general manager, born in 1956, senior engineer and master of management, was
successively graduated from Changchun University of Science and Technology as well as Fudan


                                                      - 15 -
      Shenzhen Nanshan Power Co., Ltd.                                       Full Text of Annual Report 2011
University, held the post of Shenzhen Nanshan Petroleum (Group) Co., Ltd from 1994 to 1999, held the
posts of deputy general manger of Shenzhen Guangju Energy Co., Ltd and the general manager of
Shenzhen Guangju Power Investment Co., Ltd since 1999, held the post of deputy general manager of the
Company since December 2006, and now holds the posts of president of Shenzhong Real Estate
Company, Shenzhong Property Company, Shenzhen Nanshan Power Environmental Protection Company,
vice-president of Shenzhen Nanshan Power (Zhongshan) Co., Ltd, and Shenzhen Nanshan Power
Engineering Co., Ltd. as well as director of Singapore Company.
      Miss Zhang Jie, deputy general manager, born in 1968, Master of Psychology of Beijing University,
graduated from the specialty of British and American Literature in the Foreign Language Department of
Zhengzhou University, and then studied in the specialty of applied psychology in the Psychology
Department, Beijing University, used to work in Henan Provincial Seismological Bureau as a translator,
worked in the financial department and office of the Company since October 1990, has successively
worked as secretary, office director, general manager assistant and employee supervisor of the Company
since 1993, held the post of deputy general manager of the Company since December 2006, and now
holds the posts of Shenzhen Nanshan           Power (Zhongshan) Co., Ltd, Shenzhen Nanshan Power
(Dongguan) Company and Singapore Company.
      Mr. Zhu Wei, deputy general manager and engineer, born in 1957, graduated from Guangdong
Electric Power School, used to work in Guangdong Xinfengjiang Power Plant; then in 1985, he studied in
Nanjing Institute of Technology and obtained a junior college degree; since 1990 he has successively
worked as assistant minister of development department, minister of supply department and general
manager assistant of the Company, obtained on-job master degree during this period; and since August
2003, he has held the post of deputy general manager of the Company.
      Mr. Wang Rendong, chief engineer, born in 1961, graduated from the specialty of thermal power of
Power Department, Huazhong University of Science and Technology, and then obtained a master degree
on the specialty of economic management of Huazhong University of Science and Technology, used to
work in the planning department of Beijing Electrical Planning and Design Institute of State Ministry of
Water Resources and Power, transferred and assigned to Shenzhen Huadian Southern Development
(Group) Company in June 1988, successively held the post of minister of operating department, minister
of engineering department, assistant chief engineer, general manager assistant and employee supervisor of
the Company since 1990, held the post of chief engineer of the Company since December 2006, and now
holds the concurrent posts of president and managing director of Shenzhen Nanshan Power Engineering
Co., Ltd. , as well as director of Shenzhen Nanshan Power (Dongguan) Company and Singapore
Company.
      Mr. Lu Xiaoping, chief financial officer, born in 1962, senior accountant and master of Zhongnan
University of Economics and Law, used to work in Chashi Town People’s Government, Hengyang
County, Hunan Province, Hunan Hengyang Oil and Pump Nozzle Plant as well as Shenzhen Pengji
Industrial Development Company, held the post of deputy manager of financial department of Shenzhen
Zhongshen International Corporation from 1995 to 1998, held the posts of accountant and director of
Shenzhen Energy Corporation since December 1998, and has held the post of chief financial officer of the
Company since August 2003, and now holds the concurrent posts of director of Shenzhong Real Estate
Company and Shenzhong Property Company.
      Miss Hu Qin, born in 1967, secretary of board of directors, engineer and economist, graduated from
the specialty of applied chemistry in the Thermal Power Engineering Department of Wuhan University of
Hydraulic and Electrical Engineering, and then studied for a master degree in the specialty of finance in
Nankai University. She has ever acted as the counselor of Thermal Power Engineering Department of
Wuhan University of Hydraulic and Electrical Engineering (Wuhan University now); successively
worked at the engineering department, operating department, office and investment department of the
Company. Since March 2005, she has acted as secretary of board of directors as well as director of
secretariat of board of directors of the Company, and now doubles as director of New Power Company
and independent director of Shenzhen Wanxun Automatic Control Co., Ltd.
      6. Annual Remuneration
      According to relevant regulation of Articles of Association, the remuneration of directors and
supervisors is decided by the general meeting of shareholders and the remuneration of the senior
managers is decided by the board of directors. In the reporting period, the senior managers of the
Company all get paid in the Company.
      The allowance paid by the Company to independent directors in the reporting period is as shown in
―IV. Directors, Supervisors, Senior Management Personnel and Employees‖. Related expenses incurred
by independent directors for work, including expenses for traffic, accommodation, investigation, survey


                                                  - 16 -
      Shenzhen Nanshan Power Co., Ltd.                                      Full Text of Annual Report 2011
and meeting, etc., shall be undertaken by the Company separately.
       Besides board chairman Yang Haixian, managing director Fu Bo, employee supervisors Zheng
Dalei, Peng Bo, Li Huiwen and Tao Lin who acquire remuneration from the Company, Li Hongsheng,
Sun Yulin, Huangpu Han, Yu Chunling, Zhou Qun, Chen Lihong, Jiang Xiaojun among the members of
the board of directors, as well as Zhao Xiangzhi, Ma Fengming, Ji Yuanhong, Wang Difei among the
members of the board of supervisors acquire remuneration from the Company.
      Related expenses incurred by directors and supervisors for duty performance, including expenses for
traffic, accommodation, investigation, survey and meeting, etc., shall be undertaken by the Company
separately.
      The pretax remuneration of the current director, Supervisor, Senior Manager in the reporting period
is 7,311,300 RMB in total.
      7. Off-post and recruitment situation
      (1) On Jan. 13, 2011, Mr. Wang Jianbin resigned from the posts of the Company’s vice board
chairman and director for reason of work.
      (2) On May 25, 2011, at the 2nd Interim Meeting of Stockholders’ Conference in 2011, Yang Haixian,
Li Hongsheng, Sun Yulin, Fu Bo, Huangpu Han, Yu Chunling, Zhou Qun, Chen Lihong, and Jiang
Xiaojun were elected as members of the Company’s Sixth Board of Directors; Zhao Xiangzhi, Ma
Fengming, Ji Yuanhong, Wang Difei were elected as members of the Sixth Board of Supervisors, and they
formed the Company’s Sixth Board of Supervisors together with the four employee representative
supervisors elected at the Workers’ Congress on May 13, 2011.
      (3) On May 25, 2011, at the 1st Meeting of the Sixth Board of Directors, director Yang Haixian was
elected as chairman of the Sixth Board of Directors; directors Li Hongsheng and Sun Yulin were elected
as vice chairman of the Sixth Board of Directors; Miss Hu Qin was employed as secretary to the Sixth
Board of Directors. At the 1st Meeting of the Sixth Board of Directors, Zhao Xiangzhi was elected as
chief supervisor of the Sixth Board of Supervisors.
      (4) On July 8, 2011, at the 2nd Meeting of the Sixth Board of Directors, Mr. Fu Bo was employed as
the Company’s general manager, with an office term of three years; Miss Lin Qing, Mr. Ji Ming, Miss
Zhang Jie, and Mr. Zhu Wei were elected as the Company’s deputy general managers; Mr. Wang Rendong
was elected as the Company’s chief engineer; and Mr. Lu Xiaoping was elected as the Company’s chief
financial officer. Their office term is three years respectively.

     (II) Employees
     As of Dec. 31, 2011, the Company had 327 employees on payroll (excluding those from controlling
subsidiaries), slightly less than that in 2010. Specialty composition: 74 operating personnel, 64
examination and repair personnel, 18 materials supply personnel, 18 financial personnel, and 65
administrative personnel; education degree: 98 persons having education background of junior college
degree, 109 persons holding bachelor’s degree, and 27 persons holding master’s degree and above.
     The Company executes the social insurance system of Shenzhen, and needs not to undertake
expenses for employees having left and retired.


                                    V. Corporate Governance Structure

     (I) Corporate governance
     In the reporting period, according to the requirements of related laws and rules, like Company Law,
Securities Law, Rules for Governing Listed Companies, Administrative Measures for Information
Disclosure of Listed Companies, and Rules for Listing of Stocks with Shenzhen Stock Exchange, etc., the
Company has perfected its corporate governance structure constantly, persisted in law-abiding business
operation and management. The Company’s corporate governance structure meets the requirements of the
abovementioned laws and rules actually. In the reporting period, the Company’s governance is as shown
below:
     1. Establishment of internal control system
     (1) In 2011, the Company perfected its financial accounting management system according to the
requirements of related financial laws and rules, and combining with its own actual situations. In the
reporting period, the Company combed through the existing financial accounting management systems,
perfected partial accounting systems in shortage, and drafted the System of Investigating the
Responsibilities for Behaviors Violating Financial Accounting Management System, Measures for
Management of Fixed Assets, Regulations on Management of Intangible Assets, Fund Plan Management


                                                  - 17 -
      Shenzhen Nanshan Power Co., Ltd.                                        Full Text of Annual Report 2011
System, Financial Seals Management System, and Guaranty Management System, etc., which will be
issued and executed after being examined and approved by the Company or the board of directors.
       2. Special governance in reporting period
      (1) According to the requirements on the Company’s reelection of the board of directors and the
board of supervisors in the Opinions of Supervision on Shenzhen Nanshan Power Co., Ltd. (SZJGSZ
[2011] No. 7) issued by Shenzhen Securities Regulatory Commission, the Company convened special
meeting of major stockholders in time, and researched and made related program for re-election of the
board of directors and the board of supervisors. On March 11, 2011, the Company held the 39th Meeting
of the Fifth Board of Directors, and deliberated and passed the Proposal on Recommending Director
Candidates for the Company’s Sixth Board of Directors. On the same date, the Company held the 32nd
Meeting of the Fifth Board of Supervisors, and deliberated and passed the Proposal on Recommending
Supervisor Candidates for the Company’s Sixth Board of Supervisors. On May 25, 2011, the Company
held the 2nd Interim Meeting of Stockholders’ Conference in 2011, elected members for the Company’s
Sixth Board of Directors and Sixth Board of Supervisors, completed the re-election of the board of
directors and the board of supervisors smoothly, and selected the board chairman and vice board chairman,
as well as the chairman and vice chairman of the board of supervisors. On July 8, at the 2nd Meeting of
the Sixth Board of Directors, the Company employed a new management team.
      (2) According to the Notification on Well Performing the Work Related to Internal Control
Specification Pilots of Listed Companies in Shenzhen issued by Shenzhen Securities Regulatory
Commission, the Company has established special working body, made Plan for Implementation of
Internal Control Specification, and employed a professional consulting company by means of competitive
tendering to participate in risk evaluation and internal control system building. As of the end of 2011, the
Company has completed the internal control diagnosis, risk identification, flow sorting out, and internal
control system formulation, etc. aiming at the Company and its 9 subordinated companies involved in
consolidated financial statements, and realized the internal control specification construction flow with
―diagnosis- combing through – optimization - solidification‖ as main line; meanwhile, under the
instruction of professional consulting institution, the Company has designed internal control
self-evaluation mechanism, and developed internal control self-evaluation.
      (3) According to the Notification on Examination of Shenzhen Nanshan Power Co., Ltd. issued by
Shenzhen Securities Regulatory Commission, the Company has accepted the field examination of
Shenzhen Securities Regulatory Commission in terms of corporate governance, information disclosure,
and basic financial accounting work, etc. since 2008. The Company has paid much attention to and
cooperated actively with this tour inspection, organized related special meetings and provided various
documents according to requirements. At present, the Company is rectifying the problems existing
according to the tour inspection opinions issued by Shenzhen Securities Regulatory Commission.
      (4) According to the Notification on Fulfilling the Spirit of ―Special Meeting on Information
Disclosure of Listed Companies in Shenzhen‖ issued by Shenzhen Securities Regulatory Commission,
the Company organized directors, supervisors and senior managers to attend the ―Training on Preventing
and Controlling Behaviors Violating Laws and Rules Such As Inside Transaction, etc.‖ on Oct. 14, 2011,
and submitted training report and record to Shenzhen Securities Regulatory Commission after completion
of training.
      (5) Problems existing and rectification measures
      ① Organize to fulfill rectification according to the requirements of the Opinions of Supervision on
Field Examination of Shenzhen Nanshan Power Co., Ltd. issued by Shenzhen Securities Regulatory
Commission.
      ② Description about reporting non-open information to the number one major stockholder
      A) The Company’s production technology department sends the daily power generation to the
number one major stockholder’s power asset management department directly; after being examined and
approved by the principal of the Company’s production technology department and leader in charge, the
production technology department submits power production barrier report, accident report, and monthly
safety briefing to the number one major stockholder on the 15th day of each month.
      B) According to the requirements of the Notification on Printing and Issuing Procedure Document
―Management of Property Right Representatives Dispatched by the Group‖ (SN[2009] No. 45) issued by
the number one major stockholders, before the meetings of the board of directors/ supervisors, the
secretary office under the board of directors will submit the proposals discussed and revised at the work
meeting of general manager to the directors/ supervisors dispatched by the number one major stockholder,
and meanwhile, file such proposals with its property right legal department and administrative
management department.


                                                   - 18 -
       Shenzhen Nanshan Power Co., Ltd.                                         Full Text of Annual Report 2011
     The Company has made a written commitment to Shenzhen Securities Regulatory Commission on
disclosing non-standard governance and submitting the name list of non-open information graspers.
Meanwhile, the Company’s number one major stockholder has signed the Written Commitment on
Strengthening Non-open Information Management. In the reporting period, in the precondition of
requiring related transistors to strictly fulfill the responsibility of confidentiality, the Company has filed
the information on non-open information submission and name list of non-open information graspers with
Shenzhen Securities Regulatory Commission before the 10th day each month.

      (II) Duty performance of independent directors
       In the reporting period, strictly in accordance with the Company Law , Rules for Governing Listed
Companies, Guiding Opinions on Establishing Independent Director System in Listed Companies,
Regulations on Strengthening the Protection of Rights and Interests of Social Public Stock Holders,
Working System of Independent Directors, etc., as well as the Articles of Association, all independent
directors of the Company have performed their duties in earnest, given full play to their functions as
independent directors, and maintained the lawful rights and interests of all stockholders, especially
plentiful medium-sized and minor stockholders.
       1. Establishment and perfection of related work systems of independent directors
       The Company made the Work System of Independent Directors and Work System for Annual
Report of Independent Directors of the Company in May 2002 and April 2008 respectively.
       2. Duty performance of independent directors
       The Company has 6 independent directors at present, exceeding 1/3 of total directors, and this meets
the requirement of Guiding Opinions on Establishing Independent Director System in Listed Companies
issued by China Securities Regulatory Committee. In the reporting period, the Company’s independent
directors have performed duties in a loyal way according to the regulations of the Working System of
Independent Directors, and Working System for Annual Report of Independent Directors, etc. They have
examined the major associated transactions and other important matters requiring the opinions of
independent directors, presented written opinions of independent directors, deliberated all the proposals
submitted to the board of directors in earnest, and voted through all the proposals.
       (1) They have attended all the meetings of the board of directors held by the Company, deliberated
related proposals, and signed for confirmation of resolutions made at the meeting.
      The Company has held 14 meetings of the board of directors in the present year, including 3
meetings adopting voting by communication. The information on attendance of independent directors:
        Name of
                                                                                      Failing to attend
      independent Required Actual                   By          By
                                                                                     meeting personally
    directors of the number of number of communicat entrusting             Absent
                                                                                          for twice
     fifth board of attendees attendees             ion        others
                                                                                     continuously or not
        directors
    Huang Jianxin         6             5            1           1            0              No
          Zhou
                          6             5            1           1            0              No
        Chengxin
       Xu Jing’an        6       5             1                1            0              No
      Yu Xiufeng          6       5             1                2            0              Yes
       Wu Xiaolei         6       5             1                0            0              No
        Name of
                                                                                      Failing to attend
      independent Required Actual                   By          By
                                                                                     meeting personally
    directors of the number of number of communicat entrusting             Absent
                                                                                          for twice
    sixth board of attendees attendees              ion        others
                                                                                     continuously or not
        directors
        Li Zheng          8             6            2           0            0              No
          Wang
                          8       6             2                0            0              No
       Xiaodong
          Wang
                          8             6            2           0            0              No
        Junsheng
       Wu Xiaolei         8             6            2           1            0              No
     Tang Tianyun         8             6            2           1            0              No
    Pan Chengwei          8             6            2           1            0              No

                                                     - 19 -
       Shenzhen Nanshan Power Co., Ltd.                                         Full Text of Annual Report 2011
      Independent director Yu Xiufeng failed to attend the 40th and 41st Meetings of the Fifth Board of
Directors personally for reason of business, and authorized independent director Zhou Chengxin to attend
and exercise voting power on behalf of him.
      (2) Independent directors have participated in the auditing of the Company’s annual report actively,
and brought forward precious opinions and suggestions on the compilation of annual report.
       (3) Independent directors have issued independent opinions on the Company’s internal control
self-evaluation, external guaranty, and associated transactions, etc. in 2011.
      (4) Independent directors have paid close attention to progress of the contract for oil options, made
necessary solutions to coping with jurisdiction when requiring the Company to seek for settlement
through negotiation, and fulfilled the obligation of information disclosure in earnest according to the
requirements of regulatory department at all levels.

      (III) Separation of the Company from the number one major stockholder in terms of business,
asset, personnel, institution, and financial affairs, etc. in the reporting period
      The Company’s number one major stockholder exercises its rights as an investor through
stockholders’ conference according to laws. The Company is completely separated from the number one
major stockholders in terms of business, asset, personnel, institution, and financial affairs, etc., and owns
independent and complete ability of business and autonomous operation.
      1. In terms of business, the Company is completely independent of the number one major
stockholder. The number one major stockholder and its subordinated units deal wit business same as or
similar to that of the Company, but are completed separated from the Company in business operation and
management.
      2. In terms of asset, the Company’s assets are independent and integrate, and the ownership of which
is clear. In the reporting period, the number one major stockholder did not occupy or dominate the
Company’s assets, or interment the Company’s operation and management of assets.
      3. In terms of personnel, the Company’s personnel are independent of that of number one major
stockholder. The Company’s management personnel, financial principal and secretary to the board of
directors don’t assume any post at the number one major stockholder’s unit.
      4. In terms of institution, the Company’s board of directors, board of supervisors, and other internal
institutions operate independently. Number one major stockholder and its functional departments don’t
have superior-inferior relationship with the Company and its functional departments, have never sent any
business-related plan and command to the Company and its subordinated institutions, or affect the
independent operation and management of the Company and its subordinated institutions in any form.
      5. In terms of financial affairs, the Company has established and perfected financial and accounting
management systems, and executed independent accounting according to the requirements of related laws
and rules. The Company’s number one major stockholder has not intervened the Company’s financial and
accounting activities.

     (IV) Assessment and excitation mechanism for senior management personnel
     In the reporting period, the Company’s board of directors has still adopted the proposal of
rewarding and punishment linked with business performance, etc. for assessing and exciting senior
management personnel.

       (V) Self-evaluation on the Company’s internal control
      For details, please refer to the Self-evaluation Report on Internal Control disclosed by the Company
at www.Cninfo.com.cn. Conclusion:
      According to the regulations and requirements of the Basic Specifications for Enterprises’ Internal
Control and its supporting directions, and combining with daily supervision and special supervision, the
Company’s present internal control system could basically meet the Company’s management
requirements and development demand, ensure the authenticity, legality, and integrity of the Company’s
accounting documents; and provide effective guarantee for the safety and integrity of the Company’s
properties. The Company could file and disclose related information in an authentic, correct, integrate and
timely way according to the information disclosure contents and format regulated in related laws, rules
and articles of association.
      In the reporting period, the Company has obtained certain achievements in internal control, but still
has space for improvement in terms of corporate governance, accounting, and information disclosure, etc.
Next step, we will hammer at the following work:
    (I) Perfect the internal control system continuously, and execute related internal control systems


                                                    - 20 -
      Shenzhen Nanshan Power Co., Ltd.                                         Full Text of Annual Report 2011
strictly according to the requirements of the Basic Specifications for Enterprises’ Internal Control and
related documents; revise and perfect the Company’s internal control systems, optimize business flow,
and improve the internal control systems continuously according to the changes in related laws and rules
as well as upon the demand of the Company’s development in time.
     (II) Take effective actions to further strengthen the normalization and standardization of related
accounting of financial statements, make definite accounting policies meeting the Company’s actual
situations, and perfect related departments’ responsibility of instruction and supervision.
     (III) Strengthen the examination and supervision on fulfillment of internal control systems, execute
normative operation continuously, and rectify any defect discovered in time; strengthen the learning and
training of internal control specifications and systems, raise the executive force, further prevent and
control risks, and promote the sustained and healthy development of the Company.

                          VI. Brief Introduction to Stockholders’ Conference

      In the reporting period, the Company held six interim meetings of stockholders’ conference, and
2010 annual meeting of stockholders’ conference, as shown below:
      (I) The 1st interim meeting of stockholders’ conference 2011
      On Jan. 13, 2011, the Company held the 1st interim meeting of stockholders’ conference 2011. The
resolutions of this meeting were published at the Company’s specified newspapers, and discloses at the
website specified by China Securities Regulatory Commission on Jan. 14, 2011 (the specified newspapers
for the Company’s information disclosure: China Securities Journal, Securities Times and Hong Kong
Commercial Daily; Internet website specified by China Securities Regulatory Commission:
http://www.cninfo.com.cn, same below).
      (II) The annual meeting of stockholders’ conference 2011
      On May 10, 2011, the Company held the annual meeting of stockholders’ conference 2010. The
resolutions of this meeting were published at the Company’s specified newspapers, and discloses at the
website specified by China Securities Regulatory Commission on May 11, 2011.
      (III) The 2nd interim meeting of stockholders’ conference 2011
      On May 25, 2011, the Company held the 2nd interim meeting of stockholders’ conference 2011. The
resolutions of this meeting were published at the Company’s specified newspapers, and discloses at the
website specified by China Securities Regulatory Commission on May 26.
      (IV) The 3rd interim meeting of stockholders’ conference 2011
      On July 27, 2011, the Company held the 3rd interim meeting of stockholders’ conference 2011. The
resolutions of this meeting were published at the Company’s specified newspapers, and discloses at the
website specified by China Securities Regulatory Commission on July 28, 2011.
      (V) The 4th interim meeting of stockholders’ conference 2011
      On Sept. 30, 2011, the Company held the 4th interim meeting of stockholders’ conference 2011. The
resolutions of this meeting were published at the Company’s specified newspapers, and discloses at the
website specified by China Securities Regulatory Commission on Oct. 1, 2011.
      (VI) The 5th interim meeting of stockholders’ conference 2011
      On Oct. 14, 2011, the Company held the 5th interim meeting of stockholders’ conference 2011. The
resolutions of this meeting were published at the Company’s specified newspapers, and discloses at the
website specified by China Securities Regulatory Commission on Oct. 15, 2011.
      (VII) The 6th interim meeting of stockholders’ conference 2011
      On Dec. 18, 2011, the Company held the 6th interim meeting of stockholders’ conference 2011. The
resolutions of this meeting were published at the Company’s specified newspapers, and discloses at the
website specified by China Securities Regulatory Commission on Dec. 20, 2011.


                                   VII. Report of the Board of Directors

     (I) Retrospection upon the Company’s business operation in the reporting period
     The Company’s business scope covers production and operation of power supply and heat supply, as
well as related technical consulting and technical services for power plants (stations). The Company owns
three solely-funded or controlling gas turbine power plants in Shenzhen, Zhongshan and Dongguan, and
the three power plants are all the main power sources in central electric charge areas in Pearl River Delta;
meanwhile, the Company has participated in the investment and construction of nuclear power projects.
     In 2011, under the circumstances that the reform of 9E gas-turbine electric rate reform of


                                                    - 21 -
      Shenzhen Nanshan Power Co., Ltd.                                          Full Text of Annual Report 2011
Guangdong Province was not completed yet, the power generation cost and grid-connected electric rate
were still in serious reverse position, the provincial and municipal electric rate subsidy was in serious
lagging state, and the national energy-conservation and environmental-protection policies became
increasingly strict, the Company was faced with the austere situation of suffering from loss once again.
The new board of directors put forward the objectives of ―surely preventing the Company from loss‖ and
―ensuring the safety of the Company’s capital chain‖, and required the Company to organize the
fulfillment of such objectives comprehensively. Under the great supports of stockholders, and after joint
efforts of the whole staff, the Company realized in 2011 the sales income of 2,415,817,700 Yuan (RMB,
same below), non-operating income of 1,516,790,900 Yuan, gross profit of 22,255,800 Yuan, and net
profit attributed to the parent company of 17,529,100 Yuan; completed the business objective of turning
loss into profit in 2011, and guaranteed the Company’s survival and development.
      In the reporting period, the Company has completed power generation of 3.732 billion kwh
accumulatively, increased by 39.62% over the same period of last year, and completed 107.52% of annual
planned index. Where, Nanshan Thermal Power Factory (including New Power) completed power
generation of 2.094 billion kwh (totally power generation with natural gas as fuel), increased by 17.05%
over the same period of last year; the grid-connected electricity was 2.041 billion kwh, accounting for
48.16% of Shenzhen low-voltage thermal power adjustment, and around 25% market share of this
factory’s installed capacity; Shenzhen Nanshan Power Zhongshan Company completed power generation
of 818 million kwh, increased by 1473.08% over the same period of last year; ShenNan Dongguan
Company completed power generation of 820 million kwh, decreased by 1.44% over the same period of
last year.
      As of Dec. 31, 2011, the Company’s consolidated gross assets reached up to 5452746700 Yuan,
increased by around 3.29% over the beginning of year; the Company’s stockholders’ equity was
1887811000 Yuan, and where, the stockholders’ equity attributed to the parent company was 1753371600
Yuan, decreased by around 2.31% over the previous year.
      In 2011, the Company realized sales income of 2415817700 Yuan, increased by 50.83% over the
previous year; non-operating income of 1516790900 Yuan, and gross profit of 22255800 Yuan, increased
by 120901500 Yuan over the previous year; the net profit attributed to the parent company of 17529100
Yuan, increased by 132167800 Yuan over the previous year, mainly due to the increase of power
generation and income from reimbursement of tax for purchasing of natural gas, as well as income from
transfer of stock equity in Jiangxi Xinchang Company and Energy Environmental Protection Company,
with earning per share of 0.03 Yuan, increased by 0.22 Yuan over the previous year.
      2. Composition of operating income and operating profit in reporting period
                                                                                (Unit: Ten thousand Yuan)
                                                                  Increase or Increase or Increase or
                                                                 decrease of decrease of decrease of
                                                       Gross       operating    operating       gross
     By industry or        Operating    Operating
                                                      interest      income      cost over     profit rate
         product            income         cost
                                                      rate (%)      over the       the         over the
                                                                   previous     previous       previous
                                                                   year (%)     year (%)       year (%)
   Electric      power
                             217,665.47  337,708.27       -55.15         39.51        52.79        -13.48
   production
   Heating       power
                                 833.84    1,325.15       -58.92        -23.81       -10.95        -22.94
   production
   Project
                               5,255.68    3,782.39        28.03        117.46       267.51        -29.39
   contracting
   Sludge treatment            2,792.93    1,491.78        46.59             -            -               -
  Others                   15,033.85     14,662.85            2.47   2,227.76       3,596.21          -36.26


                                                                                (Unit: Ten thousand Yuan)
                                                                      Increase or decrease of operating
             By area                     Operating income              income over the previous year
 Shenzhen                                           143,882.81                                    26.40
 Zhongshan                                            48,781.53                                1,456.46
 Dongguan                                             46,072.35                                    8.25


                                                     - 22 -
                Shenzhen Nanshan Power Co., Ltd.                                                 Full Text of Annual Report 2011
         Abroad                                                           2,845.08                                  3,377.05

             3. Main suppliers and customers
             The Company’s core business is power production. The main raw materials for power generation are
        natural gas, and spare products and parts for equipment maintenance, etc. In 2011, the gross purchasing
        amount of the Company’s top five suppliers was 3390623000 Yuan, accounting for 97.47% of annual
        gross purchasing amount. In Shenzhen, the Company’s gross sales amount of power was 1299467000
        Yuan, and the electric power was completely sold to Guangdong Grid Corporation Shenzhen Power
        Supply Bureau; in Zhongshan, the gross sales amount of power was 458628100 Yuan, and the electric
        power was completely sold to Guangdong Grid Corporation; in Dongguan, the gross sales amount of
        power was 418284200 Yuan, and the electric power was completely sold to Guangdong Grid Corporation.
             4. Financial condition
             (1) Changes of asset-liability structure in the reporting period
                                                                                                 (Unit: Yuan)
                                    Dec. 31, 2011                                    Dec. 31, 2010                    Growth rate of
       Item                                   Proportion among                                Proportion among       proportion among
                           Amount                                          Amount                                      total assets %
                                                total assets %                                  total assets %

Total assets               5,452,746,682.91                                5,278,954,349.90
Monetary fund               695,095,052.12               12.75              601,386,814.04                11.39                    1.36
Accounts
receivable                  934,640,019.03
                                                         17.14              518,392,276.69
                                                                                                           9.82                    7.32
Advance payment              31,576,397.23                0.58               13,529,901.89                 0.26                    0.32
Other      accounts
receivable                  124,599,842.72
                                                          2.29               20,450,149.23
                                                                                                           0.39                     1.90
Inventory                  1,258,195,597.25              23.07             1,352,372,212.06               25.62                    -2.55
Long-term equity
investment                   37,315,000.00
                                                          0.68              306,208,274.30
                                                                                                           5.80                    -5.12
Fixed assets               2,227,103,579.26              40.84             2,169,226,270.73               41.09                     0.25
Construction        in
progress                     46,866,969.48
                                                          0.86              196,729,476.64
                                                                                                           3.73                    -2.87
Intangible assets            63,807,538.62                1.17               64,236,931.51                 1.22                    -0.05
Short loan                 3,265,824,953.89              59.89             3,112,400,000.00               58.96                     0.93
Notes payable                43,820,200.00                0.80                                                                      0.80
Accounts payable            214,748,889.66                3.94               61,115,438.61                 1.16                     2.78
Taxes payable              -521,900,793.90               -9.57              -501,193,418.09               -9.49                    -0.08
Other    accounts
payable                     358,597,380.00
                                                          6.58              288,768,647.34
                                                                                                           5.47    1.11
Long-term loan              26,000,000.00               0.48           186,000,000.00           3.52              -3.04
            (1) Monetary fund increased over the beginning of year, mainly because of many cash inflows from
       operating activities and investment activities in the present year;
            (2) Accounts receivable increased over the beginning of year, mainly because of increase of
       subsidies receivable;
            (3) Advance payment increased over the beginning of year, mainly because of the increase of
       advance payment or purchasing natural gas;
            (4) Other accounts receivable increased over the beginning of year, mainly because of the accounts
       receivable for transfer of stock equity in Jiangxi Xinchang Company in the present year;
            (5) Inventory decreased over the beginning of year, mainly because of disposal of fuel oil in the
       present year;
            (6) Long-term equity investment decreased over the beginning of year, mainly because of the
       transfer of stock equity in Jiangxi Xinchang Company and Energy Environmental Protection Company in
       the present year;
            (7) Fixed assets decreased over the beginning of year, mainly because of the increase of fixed assets
       in the present year;
            (8) Construction in progress decreased over the beginning of year, mainly because of that sludge
       drying project is transferred into fixed assets in the present year;
             (9) Short loan increased over the beginning of year, mainly because of the increase of bank loans;

                                                                 - 23 -
              Shenzhen Nanshan Power Co., Ltd.                                              Full Text of Annual Report 2011
             (10) Notes payable increased over the beginning of year, mainly because of the new bills opened in
       the present year;
            (11) Accounts payable increased over the beginning of year, mainly because of the increase of
       accounts payable for fuel gases in the present year;
            (12) The balance of taxes payable in the present year was negative, mainly because of the increase of
       VAT payable debit amount;
            (13) Other accounts payable increased over the beginning of year, mainly because of the increase of
       construction cost payable;
            (14) Long-term loan decreased over the beginning of year, mainly because of the decrease of
       long-term loans in the present year.

       (2) Changes in financial data like operating expenses, management expenses, financial costs, and income
       tax, etc. in the reporting period
                                                                                                (Unit: Yuan)
                   Item
                                                 2011                     2010                 Increase/ decrease ratio %
            Operating expense                       818,301.34               860,503.71                          -4.90%
          Management expense                     97,538,885.64             95,926,428.20                            1.68%
              Financial costs                204,297,949.90               128,297,803.98                         59.24%
        Loss on asset depreciation               23,521,935.10             11,194,836.04                       110.11%
                                                                                                      Increase by RMB
           Return on investment
                                                 23,329,325.70            -49,130,454.11               51,459,800 Yuan
          Non-operating income             1,516,790,851.26               832,316,848.06                         82.24%
        Non-operating expenditure                 5,225,709.23               573,905.21                        810.55%
               Income tax                        13,224,142.33             24,787,762.05                        -46.65%
       [Note] Main reasons for changes over the previous year:
       (1) Financial costs increased over the previous year, mainly because of the increase of interest
       expenditure in the present year;
       (2) Loss on asset depreciation increased over the previous year, mainly because of the increase of
       inventory depreciation reserve and fixed asset depreciation reserve in the present year;
       (3) Return on investment increased over the previous year, mainly because of the transfer of stock equity
       in Jiangxi Xinchang Company and Energy Environmental Protection Company in the present year;
       (4) Non-operating income increased over the previous year, mainly because of the increase of income
       from the fuel subsidies and reimbursement of VAT for import of natural gas;
       (5) Non-operating expenditure increased over the previous year, mainly because of the increase of fixed
       assets retired in the present year.
       (6) Income tax decreased over the previous year, mainly because of the decrease of carry back of deferred
       income tax asset in the present year.


            (3) Change of financial data about cash flow of the Company in the reporting period
                                                                                                            (Unit: Yuan)
                                                   2011                                     2010                      Increase or
                                                                                                                        decrease
                                                              Structure                                 Structure      percent of
Item
                                        Amount               proportion            Amount              proportion       structure
                                                                  %                                         %         proportion
                                                                                                                            %
Cash inflow from operating
activities                             3,958,355,123.14           44.96          2,688,135,460.20           40.07             4.89
Where: Cash received from
selling commodities and
providing labor services               2,862,823,434.28           72.32          2,288,118,410.70           85.12           -12.80
Cash outflow from operating
activities                             3,686,069,781.88           42.05          2,662,237,515.23           41.12             0.93


                                                             - 24 -
              Shenzhen Nanshan Power Co., Ltd.                                     Full Text of Annual Report 2011
Where: Cash paid for
purchasing commodities and
receiving labor services              3,458,138,395.82         93.82      2,398,061,926.94         90.08             3.74
Net cash flow from operating
activities                              272,285,341.26        717.82         25,897,944.97         11.02        706.80
Net      cash    flow    from
investment activities                     72,743,109.23       191.77       -165,100,769.06        -70.25        262.02
Net cash flow from financing
activities                             -306,341,205.69      -807.60         374,701,759.98        159.43       -967.03

          In 2011, the Company’s consolidated net cash flow was 37932200 Yuan, where,
          The net cash flow from operating activities was 272285300 Yuan. Precisely, the cash inflow from
     operating activities was 3958355100 Yuan, including 2862823400 Yuan received from electric rate
     income and providing labor services, 870805700 Yuan received from fuel subsidy income, and
     214622900 Yuan received from reimbursement of VAT for import of natural gas, etc.; in addition, the cash
     outflow from operating activities was 3686069800 Yuan, including 3458138400 Yuan paid for raw
     materials and labor services received, 122494600 Yuan paid to employees, and 85020700 Yuan for
     payment of various taxes, etc.
          The net cash flow from investment activities was 72743100 Yuan. Precisely, the cash inflow from
     investment activities was 239592100 Yuan, including 110682600 Yuan received as fee for transfer of
     stock equity in Jiangxi Xinchang Company, 123078900 Yuan received as fee for transfer of stock equity
     in Energy Environmental Protection Company, and 5830600 Yuan received from disposal of assets; in
     addition, the cash outflow from investment activities was 166849000 Yuan, including 118968000 Yuan
     paid for investing in the projects like DLN low-nitrogen combustion reconstruction, sludge drying, and
     cycling economy composite, etc., and 47881000 Yuan paid for capital increase of Shenzhen Nanshan
     Power Environmental Protection Company at the beginning of year.
          The net cash flow from financing activities was -306341200 Yuan, mainly because of the repayment
     of bank loans and the increase of financing cost.
          5. Business operation and achievements of main controlling companies and equity-participation
     enterprises
          (1) New Power Company: Its main business scope covers afterheat utilization technology
     development, and power generation with afterheat, its registered capital is 113.85 million Yuan, and the
     Company holds 75% shares in it. On Dec. 31, 2011, this company’s gross asset was 1270568800 Yuan,
     increased by 41.33% over the beginning of year; the net asset was 185330300 Yuan, decreased by 1.58%
     over the beginning of year. In 2011, this company realized income from main businesses of 404234100
     Yuan, decreased by -44.77% over the previous year; and the net profit was -2971500 Yuan.
          (2) Shenzhen Nanshan Power Zhongshan Company: Its main business scope covers gas turbine
     power generation, afterheat power generation, power supply and heat supply (excluding heat supply
     pipeline) projects, its registered capital is 396.80 million Yuan, and the Company holds 55% shares of it.
     On Dec. 31, 2011, the Company’s gross asset was 1119126300 Yuan, increased by 13.74% over the
     beginning of year; the net asset was -197105000 Yuan, decreased by 45.21% over the beginning of year.
     In 2011, the Company realized income from main businesses of 487815300 Yuan, decreased by 2.41%
     over previous year; and the loss was -61371200 Yuan, decreased by 57.66% over the previous year,
     mainly due to clean energy transportation of ―oil altered into gas‖ and the great decrease in overhaul of
     generator sets and power generation.
          (3) Shenzhen Nanshan Power Dongguan Company: Its main business scope covers gas turbine
     power generation, afterheat power generation, and power supply, etc., its registered capital is USD35.04
     million, and the Company holds 70% shares of it. On Dec. 31, 2011, the Company’s gross asset was
     1155502300 Yuan, decreased by 2.31% over the beginning of year; the net asset was 323148400 Yuan,
     decreased by 33.66% over the beginning of year. In 2011, the Company realized income from main
     businesses of 460723500 Yuan, increased by 8.25% over previous year; and the net profit was 14969600
     Yuan, decreased by 70.49% over the previous year.
          (4) Shenzhen Nanshan Power Engineering Co., Ltd.: Its main business scope covers technical
     consulting service of fuel gas- steam combined circular power plant (station) construction engineering,
     and examination & repair and maintenance of operating equipment of fuel gas-steam combined circular
     power plants (stations), its registered capital is 10 million Yuan, and the Company holds 60% shares of it.
     On Dec. 31, 2011, the Company’s gross asset was 170279300 Yuan, decreased by 2.37% over the
     beginning of year; the net asset was 58635600 Yuan, decreased by 58.28% over the beginning of year. In
     2011, the Company realized income from main businesses of 54715800 Yuan, increased by 122.70% over

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       Shenzhen Nanshan Power Co., Ltd.                                         Full Text of Annual Report 2011
previous year; and the net profit was11868300 Yuan, decreased by 23.80% over the previous year.
     (5) Xiefu Company: Its main business scope covers the purchasing and sale of diesel oil, heavy oil
and lubricating oil, its registered capital is 53.30 million Yuan, and the Company holds 50% shares of it.
On Dec. 31, 2011, the Company’s gross asset was 101959300 Yuan, decreased by 1.67% over the
beginning of year; the net asset was 84719900 Yuan, increased by 2.18% over the beginning of year. In
2011, the Company realized income from main businesses of 35992300 Yuan, decreased by 29.61% over
previous year; and the net profit was 1697200 Yuan, increased by 5.82% over the previous year.
     (6) Shenzhong Real Estate Company: Its main business scope covers real estate development, realty
management, sale of self-possessed commodities, rental, and real estate investment, etc., and the
Company holds 75% shares of it. On Dec. 31, 2011, the Company’s gross asset was 1055633500 Yuan,
increased by 0.87% over the beginning of year; the net asset was 81288600 Yuan, increased by 1.23%
over the beginning of year. In 2011, the Company realized gross profit of 985100 Yuan.
     (7) Shenzhong Real Estate Company: Its main business scope covers real estate development, realty
management, sale of self-possessed commodities, rental, and real estate investment, etc., and the
Company holds 75% shares of it. On Dec. 31, 2011, the Company’s gross asset was 136167300 Yuan,
increased by 0.63% over the beginning of year; the net asset was 69432600 Yuan, decreased by 9.7% over
the beginning of year. In 2011, the Company realized gross profit of -7456000 Yuan.
     (8) Shenzhen Nanshan Power Environmental Protection Company: Its main business scope covers
cycling economy operation and sludge drying project, its registered capital is 97 million Yuan, and the
Company holds 70% shares of it. On Dec. 31, 2011, the Company’s gross asset was 155503600 Yuan, the
net asset was 74650400 Yuan, and financial cost was 4161500 Yuan. In 2011, the Company realized gross
profit of -3716700 Yuan.

     (II) Prospect on Future Development
      1. Business environment analysis
     In 2012, China suffers from greater pressure of downward economic growth, so does Guangdong
Province. The growth rate of GDP drops back from 10% in 2011 to 8.5%. The growth rate of industrial
electricity consumption of the whole province is estimated to drop from 10.7% in 2011 to 6.6%, and the
space is limited for power generation enterprises to relieve operation pressure by dint of the growth in
electricity quantity. The power generation cost of 9E combustion engine and the electricity rate are still in
reverse position, the deep-layer conflicts like electricity price formation mechanism, etc. are not solved
thoroughly, and demand of grids on peak power generation has dropped greatly, so the Company is still
faced with extremely austere operation environment.
     However, along with the stable and rapid growth of our economy, China has taken accelerating the
cultivation of strategic emerging industries as pioneering and pillar industries, and provided opportunities
for power generation industry to solidify and expand the industrial advantages of energy conservation and
environmental protection, etc. As one of the national second batch of cycling economic pilot units, the
Company’s subordinated company Nanshan Thermal Power Factory will raise its profit-making level by
making the best of cycling economic projects with obvious effect of comprehensive energy utilization,
such as cooling-heating-power supply, and sludge drying, etc. Dongguan Gaobu Power Plant and
Zhongshan Nanlang Power Plant will accelerate the construction of thermal-electricity generation after
completing oil-altered-to-gas engineering of generator sets, and further raise the Company’s core
competitiveness. Meanwhile, along with China’s recovery of examination and approval on nuclear power,
Jiangxi Pengze Nuclear Power Project participated by the Company will optimize the Company’s
industrial structure, and create conditions for the Company’s sustainable development.
     2. Key work in 2012
     In the face of the extremely difficult operation situation this year, the key point for ensuring the
Company’s stable and sustained operation in 2012 is to lower the cost effectively, control various
expenditures strictly, ensure the safety of funds, and strive for timely realization of subsidies and tax
preferences. So, the Company will focus on the following work in 2012:
     (1) Strengthening comprehensive safety governance, and ensuring the overall safety of the
Company
     Year 2012 is the Company’s year of normalized environmental protection management. The
Company must persist in the guideline of ―safety first, prevention prevailing, and comprehensive
governance‖ in safety work, firmly set up the concept of ―people based, and safety development‖,
strengthen the enterprise’s responsibility as safety production entity, further build up high-efficiency and
perfect safety management and control system, raise the systemization, normalization and standardization
level of safety work, realize safe and environmental-protection production, and provide important


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       Shenzhen Nanshan Power Co., Ltd.                                         Full Text of Annual Report 2011
guarantee for the Company’s production operation and sustainable development.
      (2) Accelerating the adjustment and optimization of industrial structure, raising the
profit-making level, and the ability of survival and sustainable development
      As one of the national second batch of cycling economic pilot units, the Company has formed the
industrial chain of comprehensive cascade energy utilization along with that sludge drying project and
cooling-heating-power supply demonstration project are put into commercial operation successively. In
2012, the Company will accelerate structure adjustment and optimization, strengthen supply guarantee
ability, construct a safe, stable, economical and clean system of modern energy industry, and raise the
profit-making level and sustainable development ability.
      (3) Strengthening financial budget, fulfilling the preferential policies of allowance for power
generation and tax reimbursement for natural gas, and ensuring the safety of capital chain
      Ensuring the safety of capital chain is still one of the important works in the Company’s operating
activities in 2012. The Company will make effort to expand financing channel, strengthen uniform
management of capital in the system, and get done with risk monitoring in advance. Meanwhile, the
Company will strengthen budgetary management continuously, control expenditure of cost strictly,
strengthen the dunning for electricity rate subsidies and tax preferences, and relieve capital pressure.
       (4) Optimizing the Company’s normative governance, and further raising the Company’s
       governance level
      In 2012, according to the requirements of supervision on listed companies, the Company will boost
the internal control construction actively, further optimize normative management, and raise its overall
governance level. The Company will get done with the Company’s inside transaction prevention and
control practically, establish and perfect financial principal management system, complete the internal
control construction related to financial reports on time, and disclose self-evaluation report in semi-annual
report 2012 according to requirements of Shenzhen Securities Regulatory Commission. Meanwhile,
according to the Supervision Opinions on Field Examination of Shenzhen Nanshan Power Co., Ltd.
(SZJGSZ [2012] No. 21) issued by Shenzhen Securities Regulatory Commission, the Company will
organize rectification aiming at some non-normative behaviors of the Company in terms of corporate
governance, information disclosure, internal control, financial management, and accounting since 2008,
and ensure the effective execution of resolutions made by stockholders’ conference and board of
directors.

     (III) Investments
      1. Investment of funds raised
     In the reporting period, the Company didn’t raise fund, and didn’t have the situation that the fund
raised before the reporting period was extended to use in the reporting period.
     2. Investment of non-raised funds
     None.

      (IV) Description of the board of directors about the items not involved in non-standard audit
report of CPA Firm
      In 2011, for the Contract for Options of Oil Products signed by and between the Company and Jierun
(Singapore) Private Corporation (―Jierun Corporation‖) in March 2008, the auditor presented an audit
report with qualified opinions on emphasized matters (for matters involved, please refer to ―IX. Important
Matters (VII) Major Contracts and Implementation --- 5. The Company’s major disputes in the reporting
period).
      Based on the legal opinions of independent practicing lawyer on the abovementioned matter, the
board of directors considers that, 1) two confirmation letters and transaction have been terminated by both
parties; 2) the Company does not know any information on or basic evidence proving that the disputes on
the contract for options have been submitted to judicial procedures, there are many uncertain factors in
the progress of this matter, and it’s unavailable to estimate the subsequential development progress,
amount of loss, and possible result of the disputes on the contract for options; and 3) whereas the final
result cannot be estimated reasonably and reliably, the estimated liability shall not be confirmed in the
financial statements 2011.
      The matter involved in non-standard qualified opinion does not obviously violate the regulations of
accounting standard, systems and related information disclosure specifications.
      The Company will follow up the treatment of this matter, and maintain stockholders’ rights and
interests practically. The Company’s board of directors will check the abovementioned stand point and
related accounting treatment in time according to related progress of this matter. Also, the Company will


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      Shenzhen Nanshan Power Co., Ltd.                                       Full Text of Annual Report 2011
implement the obligation of information disclosure in time aiming at the progress of the abovementioned
matter.

     (V) Daily work of the board of directors
     1. Meetings
     In the reporting period, the board of directors held 14 meetings in total, as shown below:
     (1) On Jan. 13, 2011, the Company organized to hold the interim meeting of the fifth board of
directors. The resolutions of this meeting were published at the Company’s specified newspapers, and
discloses at the website specified by China Securities Regulatory Commission on Jan. 15, 2011 (the
specified newspapers for the Company’s information disclosure: China Securities Journal, Securities
Times and Hong Kong Commercial Daily; Internet website specified by China Securities Regulatory
Commission: http://www.cninfo.com.cn, same below).
     (2) On Mar. 11, 2011, the Company organized to hold the 39th meeting of the fifth board of directors.
The resolutions of this meeting were published at the Company’s specified newspapers, and discloses at
the website specified by China Securities Regulatory Commission on May 4, 2011.
     (3) On Apr. 13, 2011, the Company organized to hold the 31st meeting of the fifth board of directors.
The resolutions of this meeting were published at the Company’s specified newspapers, and discloses at
the website specified by China Securities Regulatory Commission on Apr. 15, 2011.
     (4) On Apr. 21, 2011, the Company organized to hold the 41st meeting of the fifth board of directors.
The resolutions of this meeting were published at the Company’s specified newspapers, and discloses at
the website specified by China Securities Regulatory Commission on Apr. 23, 2011.
     (5) On Apr. 28, 2011, the Company organized to hold the interim meeting of the fifth board of
directors (voting by communication). The resolutions of this meeting were published at the Company’s
specified newspapers, and discloses at the website specified by China Securities Regulatory Commission
on Apr. 30, 2011.
     (6) On May 20, 2011, the Company organized to hold the 42nd meeting of the fifth board of directors.
The resolutions of this meeting were published at the Company’s specified newspapers, and discloses at
the website specified by China Securities Regulatory Commission on June 3, 2011.
     (7) On May 25, 2011, the Company organized to hold the 1st meeting of the sixth board of directors.
The resolutions of this meeting were published at the Company’s specified newspapers, and discloses at
the website specified by China Securities Regulatory Commission on Aug. 17, 2011.
     (8) On July 8, 2011, the Company organized to hold the 2nd meeting of the sixth board of directors.
The resolutions of this meeting were published at the Company’s specified newspapers, and discloses at
the website specified by China Securities Regulatory Commission on Oct. 16, 2011.
     (9) On Aug. 5, 2011, the Company organized to hold the 3rd meeting of the sixth board of directors.
The resolutions of this meeting were published at the Company’s specified newspapers, and discloses at
the website specified by China Securities Regulatory Commission on Aug. 9, 2011.
     (10) On Sept. 8, 2011, the Company organized to hold the 4th meeting of the sixth board of directors.
The resolutions of this meeting were published at the Company’s specified newspapers, and discloses at
the website specified by China Securities Regulatory Commission on Sept. 14, 2011.
     (11) On Sept. 26, 2011, the Company organized to hold the interim meeting of the sixth board of
directors (voting by communication). The resolutions of this meeting were published at the Company’s
specified newspapers, and discloses at the website specified by China Securities Regulatory Commission
on Sept. 28, 2011.
     (12) On Oct. 14, 2011, the Company organized to hold the 5th meeting of the sixth board of directors.
The resolutions of this meeting were published at the Company’s specified newspapers, and discloses at
the website specified by China Securities Regulatory Commission on Oct. 15, 2011.
     (13) On Oct. 19, 2011, the Company organized to hold the 6th meeting of the sixth board of directors
(voting by communication). The resolutions of this meeting were published at the Company’s specified
newspapers, and discloses at the website specified by China Securities Regulatory Commission on Oct.
21, 2011.
     (14) On Dec. 1, 2011, the Company organized to hold the 3rd interim meeting of the sixth board of
directors (voting by communication). The resolutions of this meeting were published at the Company’s
specified newspapers, and discloses at the website specified by China Securities Regulatory Commission
on Dec. 3, 2011.
      2. Execution of the resolutions of stockholders’ conference
     In the reporting period, the Company’s board of directors has developed the following work
successively according to related resolutions of stockholders’ conference: (1) providing guaranty for the


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       Shenzhen Nanshan Power Co., Ltd.                                         Full Text of Annual Report 2011
loans of its subordinated enterprises, etc.; (2) establishing a new board of directors and board of
supervisors, and completing the re-election work; (3) paying remuneration for the year 2010 to audit
institution; (4) employing audit institution for the year 2011; (5) transferring 10% stock equity in
Shenshen Energy Environmental Protection Company; and (6) transferring 30% stock equity in CPI
Jiangxi Xinchang Power Generation Co., Ltd.
      3. Duty performance report of audit committee
      In the reporting period, according to the requirements of supervisory institution as well as the
Company’s Detailed Rules for Implementation of Audit Committee, and Regulations on Annual Report of
Audit Committee, the Company’s audit committee under the board of directors has implemented its duty
in earnest, assisted the board of directors to do work, and deliberated the Company’s audit report in the
reporting period as well as employment of CPA Firm, etc. Now, the work of audit committee is
summarized as follows:
      (1) In the reporting period, the audit committee held 3 meetings in total.
      (2) Audit the Company’s financial information, and supervise and urge the auditing of annual report.
       ①In the reporting period, the Company’s audit committee and the annual audit institution Deloitte
Touche Tohmatsu CPA Ltd negotiated with each other on important matters in auditing of financial
statements 2010, and communicated with each other on the financial auditing problems encountered in
work item by item. Meanwhile, the audit committee required the Company to get done with the annual
audit 2010 strictly according to the requirements of supervisory department on list companies’
compilation of annual report 2010, and to do various works for disclosure of annual report according to
the schedule determined by Shenzhen Stock Exchange.
       ② Listen to and agree with the communication of Deloitte Touche Tohmatsu CPA Ltd with the
governance level on the audit report 2010 at the audit completion stage.
       ③ Audit and agree with Audit Report 2010 (not signed) and the Special Description about
Presenting the Audit Report with Qualified Opinions on Emphasized Matters of Shenzhen Nanshan
Power Co., Ltd., and agree to submit them to the Company’s board of directors for discussion.
      (3) Bring forward proposal on continuous employment or replacement of audit institution.
      It’s proposed to employ Deloitte Touche Tohmatsu CPA Ltd as the Company’s audit institution for
year 2011 continuously.
      (4) Deliberate the internal audit and internal control plan 2011.
      The audit committee has deliberated and agreed with the Company’s Plan for Internal Audit and
Control 2011, which requires the Company to carry out independent and objective examination,
supervision and evaluation on the authenticity, legality and efficiency of the financial revenue and
expenditure, economic activities, and economic matters of each functional department and subordinated
controlling enterprise. In terms of internal control, according to the requirements of Shenzhen Securities
Regulatory Commission, the Company shall complete implementation of internal control in regulated
time, employ professional consulting organ to participate in risk evaluation and internal control system
building, complete internal control evaluation, and improve the internal control system continuously.
      (5) Deliberate the proposal on remuneration for audit institution 2011.
      Whereas the rise of Chinese CPI in recent years and the corresponding increase of audit work
quantity in 2011, the audit committee has agreed to increase the auditing fee for year 2011 after careful
analysis and investigation.
      (6) Deliberate the proposal on terminating the Measures for Managing the Outlay of the Board of
Directors.
      Whereas some contents of the Company’s Measures for Managing the Outlay of the Board of
Directors don’t meet related regulations, audit committee has agreed to terminate it after discussion at the
meeting held on April 13, 2011, and has submitted the opinion to the board of directors for deliberation.
      4. Duty performance report of remuneration and assessment committee
      In the reporting period, the remuneration and assessment committee has developed work actively,
performed duties in earnest, held special meetings to deliberate the Proposal on Remuneration
Withdrawal and Assessment 2011 and the Duty Performance Report of Remuneration and Assessment
Committee, and heard the Report on Execution of Remuneration Withdrawal and Assessment Program
2010. The remuneration and assessment committee considers that, the execution of remuneration in 2010
and the proposal on remuneration withdrawal 2011 meet the overall principle determined by the board of
directors.
      Also, the remuneration and assessment committee has also audited the remuneration of the
Company’s directors, supervisors and senior management personnel, and considered that, the Company’s
payment of remuneration to directors, supervisors and senior management personnel in the present year


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       Shenzhen Nanshan Power Co., Ltd.                                                Full Text of Annual Report 2011
according to the remuneration withdrawal principles and payment standards determined by the board of
directors for the year 2010 meets the Company’s related remuneration policies and assessment standards.
      5. Profit distribution preplan 2011
      As audited by Deloitte Touche Tohmatsu CPA Ltd, the net profit attributed to listed company’s
stockholders in year 2011 was 17,529,063.37 Yuan. In 2011, the Company did not withdraw surplus
reserve.
      In order to raise the Company’s future earning power, its undistributed profit at the end of 2011, say
total 454,070,630.72 Yuan was carried forward to next year by combining with the Company’s current
operation status, in order to supplement the current capital necessary for daily operation.
      In 2011, the Company did not allocate profit, and did not have preplan for increase of capital stock
with capital reserve.

                      Cash bonus in the previous three years of the Company (filled out)
                                                                                                         (Unit: Yuan)
                                                                         Proportion among the
                                        Net profit attributed to listed  net profit attributed to
                 Amount of cash bonus company’s stockholders in the       listed company’s      Distributable profit in
                   (tax included)     consolidated financial statements   stockholders in the            the year
                                         in bonus distribution year      consolidated financial
                                                                               statements
     2010                        0.00                    -114,638,678.20                   0.00%         436,541,567.35
     2009                        0.00                      74,101,829.77                   0.00%         551,180,245.55
     2008                        0.00                      10,763,920.54                   0.00%         473,871,306.65
Proportion of accumulative cash bonus in the latest three years among the
annual average net profit of latest years (%)
      6. Information disclosure
      In the reporting period, the board of directors disclosed 75 various periodic and interim
announcements correctly in time.
      7. Execution of insider information graspers management system
      The Company has made the Information Disclosure Management System and the Insider
Information Graspers Registration System, and set fort the regulations on confidentiality of information.
When reporting information to the outside according to laws, the Company requires related personnel to
fill out the Insider Information Graspers Registration Form, and prompts related personnel to observe
related laws and rules. In the reporting period, when filing periodic reports, the Company has submitted
the Name List of Insider Information Graspers to Shenzhen Stock Exchange and Shenzhen Securities
Regulatory Commission, and filed the Form of Non-open Information Provided to Major Stockholders to
Shenzhen Securities Regulatory Commission respectively.
      8. Statement on internal control responsibility
      The board of directors hereby promises that, the Company’s Self-evaluation Report on Internal
Control 2011 is free of any false and misleading representation or major omissions, and the information
disclosed is authentic, accurate and integrate.

                                    VIII. Report of the Board of Supervisors

     (I) Work of the Board of Supervisors
     In line with national laws and rules as well as related regulations of the Articles of Association, the
board of supervisors has performed various duties in earnest. In the reporting period, the board of
supervisors held 13 meetings in total, attended all the meetings of the board of directors as non-voting
delegate, audited important proposals and presented written opinions. The concrete information on
meetings of the board of supervisors is as shown below:
     1. On Jan. 13, 2011, the Company held the 31st meeting of the fifth board of supervisors, which
deliberated and passed the Proposal on Change of Supervisors.
     2. On Mar. 11, 2011, the Company held the 32nd meeting of the fifth board of supervisors, which
deliberated and passed the Proposal on Recommending Candidates for Supervisors of the Company’s
Sixth Board of Supervisors.
     3. On Apr. 13, 2011, the Company held the 33rd meeting of the fifth board of supervisors, which
deliberated and passed the Work Report of the Board of Supervisors 2010, the Financial Settlement and
Analysis Report 2010, the Profit Allocation Preplan 2010, The Whole Paper and Abstract of Annual


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      Shenzhen Nanshan Power Co., Ltd.                                       Full Text of Annual Report 2011
Report 2010, the Self-evaluation Report on Internal Control 2010, and the Proposal on the Company’s
Bank Credit Extension Scale, External Guaranty, Entrusted Bank Loan or Direct Loan of Fund in the
System 2011.
     4. On Apr. 21, 2011, the Company held the 34th meeting of the fifth board of supervisors, which
deliberated and passed the First-quarter Financial Settlement Report 2011, and the Whole Paper and Text
of the First-quarter Report 2011.
     5. On Apr. 24, 2011, the Company held the interim meeting of the fifth board of supervisors, which
deliberated and passed the Plan for Implementation of Internal Control Specification of Shenzhen
Nanshan Power Co., Ltd.
     6. On May 20, 2011, the Company held the 35th meeting of the fifth board of supervisors, which
deliberated and passed the Proposal on Disposal of Bonus of Shenzhen Nanshan Power (Dongguan)
Weimei Power Co., Ltd.
     7. On May 25, 2011, the Company held the 1st meeting of the sixth board of supervisors, which
deliberated and passed the Proposal on Electing Chief Supervisor of the Company.
     8. On July 8, 2011, the Company held the 2nd meeting of the sixth board of supervisors, which
deliberated and passed the Proposal on Increasing the Line of Entrusted Bank Loan or Direct Loan of
Fund in the System.
     9. On Aug. 8, 2011, the Company held the 3rd meeting of the sixth board of supervisors, which
deliberated and passed the Semi-annual Financial Settlement and Analysis Report 2011, the Whole Paper
and Abstract of Semi-annual Report 2011 (Chinese-English Version).
     10. On Sept. 8, 2011, the Company held the 4th meeting of the sixth board of supervisors, which
deliberated and passed the Proposal on Capital Increase of Shenzhen Nanshan (Zhongshan) Power Co.,
Ltd., and the Proposal on Increasing the Line of External Guaranty, Entrusted Bank Loan or Direct Loan
of Fund in the System.
     11. On Oct. 14, 2011, the Company held the 5th meeting of the sixth board of supervisors, which
deliberated and passed the Proposal on Transferring 10% Stock Equity of Shenzhen Energy
Environmental Protection Co., Ltd.
     12. On Oct. 19, 2011, the Company held the 6th meeting of the sixth board of supervisors, which
deliberated and passed the Whole Paper and Text of the Third-quarter Report 2011.
     13. On Dec. 1, 2011, the Company held the 7th meeting of the sixth board of supervisors, which
deliberated and passed the Proposal on Paying Remuneration to Auditing Institution 2011, and the
Proposal on Transferring 30% Stock Equity of CPI Jiangxi Xinchang Power Generation Co., Ltd.

     II. Independent Opinions of the Board of Supervisors
     (I) The Company’s operation according to laws
     By supervising the Company’s directors and senior management personnel, the board of supervisors
considers that, in the reporting period, the Company’s board of directors and managerial level could
operate businesses in a lawful and normative way according to the regulations of national laws and rules,
as well as the articles of association. The Company has basically established and perfected the corporate
governance structure. The Company’s directors and senior management personnel could carry out
national laws and rules, articles of association, and resolutions made by stockholders’ conference and
board of directors, and could perform duties in a diligent way. No director or senior management
personnel have been discovered to commit any behavior damaging the benefits of the Company and
stockholders during their duty performance.
     (II) Inspection of the Company’s financial affairs
     In the reporting period, the Company’s board of supervisors has audited the Company’s periodic
reports, accounting statements and related documents, and considered that, the board of directors meets
the laws, administrative rules, and regulations of China Securities Regulatory Committee in terms of
compilation and auditing procedures of periodic reports, and no false record, misleading representation or
major omission is discovered in the data recorded.
     (III) Re-election of the board of supervisors
     1. On Jan. 13, 2011, the Company held the 31st Meeting of the Fifth Board of Supervisors,
deliberated the Proposal on Recommending Supervisor Candidates for the Fifth Board of Supervisors,
and agreed the nominating stockholder Shenzhen Guangju Investment Holding Co., Ltd. to recommend
Miss Ji Yuanhong as supervisor candidate of the Fifth Board of Supervisors.
     2. On Mar. 11, 2011, the Company held the 32nd Meeting of the Fifth Board of Supervisors,
deliberated the Proposal on Recommending Supervisor Candidates for the Company’s Sixth Board of
Supervisors, and agreed to nominate Mr. Zhao Xiangzhi, Miss Ma Fengming, Miss Ji Yuanhong, and Mr.


                                                   - 31 -
       Shenzhen Nanshan Power Co., Ltd.                                        Full Text of Annual Report 2011
Wang Difei as supervisor candidates of the Sixth Board of Supervisors.
     3. On May 25, 2011, the Company held the 1st Meeting of the Sixth Board of Supervisors, and
elected supervisor Zhao Xiangzhi as chief supervisor of the Sixth Board of Supervisors.
     (IV) Purchasing and sale of assets
     In the reporting period, the Company has transferred its 10% stock equity in Shenzhen Energy
Environmental Protection Co., Ltd.; and 30% stock equity in CPI Jiangxi Xinchang Power Generation
Co., Ltd..
     The board of supervisors considers, as concerning the abovementioned sale of assets in the reporting
period, the Company’s decision making procedure is lawful and proper, the transaction price is
determined on reasonable basis, no insider transaction is discovered, and such asset transactions don’t
damage other stockholders’ rights and interests or cause the loss of the Company’s properties, and instead,
they meet the Company’s actual demand.
     (V) Associated transactions
     The Company has transferred its 10% stock equity in Shenzhen Energy Environmental Protection
Co., Ltd. Shenzhen Energy Group Co., Ltd. de-listed successfully, and this formed associated transaction.
The board of supervisors considers that, in the reporting period, the Company’s associated transactions
have followed related regulations, the decision-making procedures are lawful, no insider transaction is
discovered, and such transactions don’t damage other stockholders’ equity and list companies’ benefit, or
cause the loss of the Company’s properties.
     (VI) Board of supervisors’ evaluation opinions on the Company’s internal control
     According to related regulations of China Securities Regulatory Committee and Shenzhen Stock
Exchange, in line with the basic principles of internal control, and according to its actual situations, the
Company has employed professional consulting institution, basically established and perfected relatively
complete internal control system, has not been discovered any serious defect and abnormality in internal
control, and ensured the safe, complete and effective use of its properties. In addition, the Company’s
internal control self-evaluation reflects the actual situation of its internal control in an authentic and
objective way.
     At present, the Company’s internal control organization is relatively complete. In the coming year,
the Company is expected to perfect its internal control mechanism, ensure its sustainable and healthy
development, and guarantee all stockholders’ benefits according to new regulations of national laws and
rules, departmental regulations, and normative documents, etc., as well as the internal control plan
approved by the Company’s board of directors.
     (VII) Opinions on the matters involved in non-standard qualified audit opinions
     1. The emphasized matters, as listed in the Special Description about the Audit Report with Qualified
Opinions on Emphasized Matters for Shenzhen Nanshan Power Co., Ltd. and the Audit Report 2011 of
Shenzhen Nanshan Power Co., Ltd. presented by Deloitte Touche Tohmatsu CPA Ltd, reflect the
possibility of responsibilities and compensations existing after termination of transactions.
     2. The board of directors’ Special Description about the Emphasized Matters Attached to the Audit
Report 2011 is agreed.

                                          IX. Important Matters

     (I) The Company did not have any important lawsuit and arbitration matter in the present year.

     (II) The Company did not have any matter related to bankruptcy and reorganization in the reporting
period.

     (III) The Company’s holding of stock equity in other listed companies, equity participation in
commercial banks, securities companies, insurance companies, trust companies, and futures companies,
etc.

      (IV) Acquisition and sale of assets, absorption and merger
     1. Listed transfer of 10% stock equity in Shenzhen Energy Environmental Protection Co., Ltd.
     On Oct. 14, 2011, the 5th Meeting of the Company’s Sixth Board of Directors deliberated and passed
the Proposal on Transfer of 10% Stock Equity in Shenzhen Energy Environmental Protection Co., Ltd.
(―Shenneng Environmental Protection Company‖), and agreed the Company to transfer its 10% stock
equity in Shenzhen Energy Environmental Protection Co., Ltd. at the listed price RMB 123078900 Yuan
(for details, please refer to the Company’s announcement dated at Oct. 15, 2011, and numbered as 2011


                                                    - 32 -
         Shenzhen Nanshan Power Co., Ltd.                                         Full Text of Annual Report 2011
 -059).
      On Oct. 31, 2011, the Company transferred its 10% stock equity in Shenzhen Energy Environmental
 Protection Co., Ltd. in an openly listed way at Shenzhen United Property And Share Rights Exchanged.
 During listing period, only Shenzhen Energy Group Co., Ltd. (―Shenzhen Energy‖) agreed to accept the
 transfer. According to related procedures of property transaction, the Company confirmed the
 qualification of Shenzhen Energy for accepting the transfer in writing on Nov. 29, 2011. Later on Dec. 1,
 2011, the Company signed the Contract for Transfer of 10% Stock Equity in Shenzhen Energy
 Environmental Protection Co., Ltd. with Shenzhen Energy. Shenzhen Energy Corporation holds 10.8%
 stock equity in the Company, and 63.74% stock equity in Shenzhen Energy, so this stock equity transfer
 forms associated transaction, and the Company disclosed the announcement on associated transaction on
 Dec. 2, 2011 (for details, please refer to the announcement numbered as 2011-069). The Company has
 received the full amount for equity transfer, namely RMB 123078900 Yuan, and completed the
 formalities for registration of industrial and commercial alterations on Jan. 6, 2012.
      2. Agreement-based transfer of 30% stock equity in CPI Jiangxi Xinchang Power Generation Co.,
 Ltd.
      On Dec. 1, 2011, the 3rd Interim Meeting of the Company’s Sixth Board of Directors deliberated and
 passed the Proposal on Transfer of 30% Stock Equity in CPI Jiangxi Xinchang Power Generation Co.,
 Ltd., and agreed the Company to transfer based on agreement its 30% stock equity in CPI Jiangxi
 Xinchang Power Generation Co., Ltd.(―Jiangxi Xinchang Company‖) to CPI Jiangxi Power Co.,
 Ltd.(―CPI Jiangxi Company‖) at the price of RMB 217024700 Yuan (for details, please refer to the
 Company’s announcement dated at Dec. 2, 2011, and numbered as 2011-074). On Dec. 18, 2011, the
 Company held the 6th Interim Meeting of Stockholders’ Conference in 2011, and deliberated and passed
 the Proposal on Transfer of 30% Stock Equity in CPI Jiangxi Xinchang Power Generation Co., Ltd. (for
 details, please refer to the announcement numbered as 2011-075).
      On Dec. 29, 2011, the Company and CPI Jiangxi Power Co., Ltd. signed the Contract for Transfer of
 Stock Equity in CPI Jiangxi Xinchang Power Generation Co., Ltd.. According to the Contract, CPI
 Jiangxi Company shall pay 51% fee for transfer of stock equity before Dec. 31, 2011, namely RMB
 110682600 Yuan, and pay off the remained 41% before April 1, 2012. As of Dec. 30, 2012, the Company
 has received 51% stock equity transfer fee from CPI Jiangxi Company, namely RMB110682600 Yuan,
 and completed the formalities for registration of industrial and commercial alterations.

        (V) Implementation of stock equity excitation plan
        In the reporting period, the Company did not implement the stock equity excitation plan.

        (VI) Important associated transactions
        1. Associated transactions related to daily operation
       In the reporting period, the Company did not have associated transaction related to daily operation.
       2. Associated transactions of assets purchasing and sale
        For details, please refer to ―IX. Important Matters (IV) Acquisition and sale of assets, absorption
 and merger --- 1. Listed transfer of 10% stock equity in Shenzhen Energy Environmental Protection Co.,
 Ltd.‖.
       3. Associated transactions of joint investments of the Company and associated parties
       For details, please refer to ―VII. Report of the Board of Directors, (III) Investments --- 2. Investment
 of non-raised funds (7) Shenneng Environmental Protection Company‖.
       4. Creditor’s rights, debts, and guaranty, etc. between the Company and associated parties (including
 subsidies not taken into consolidated scope)
       (1) Creditor’s rights and debts between the Company and associated parties
                                                                                                    (Unit: Yuan)
                                Relationshi       Fund provided by listed          Fund provided by associated
                                  p with      companies to associated parties       parties to listed companies
                                  listed        Account                            Account
  Name of associated parties    companies       incurred           Balance         incurred             Balance
Xiefu Company                   Subsidiary         -1,102.03      6,279,745.17    24,816,710.76      26,696,762.50
Shenzhen Nanshan Power
Zhongshan Company               Subsidiary    319,391,519.18     831,243,082.6
Shenzhong Real Estate
Company                         Subsidiary     -4,431,474.82    688,629,880.98
Shenzhen Nanshan Power          Subsidiary     56,264,962.17     56,264,962.17    20,921,006.08      81,036.534.88

                                                      - 33 -
          Shenzhen Nanshan Power Co., Ltd.                                               Full Text of Annual Report 2011
Engineering Co., Ltd.
Shenzhen Nanshan Power
Dongguan                         Subsidiary       14,578,623.18      85,437,069.99      131,773,022.23        131,773,022.23
New Power Company                Subsidiary                    0    597,875,904.41      306,190,948.20        776,413,945.94
Shenzhen Nanshan Power
Environmental Protection
Company                          Subsidiary       11,017,120.27      11,017,120.27       -1,129,973.65                     0
Xingdesheng Co., Ltd             Subsidiary           15,530.41          35,127.06          -86,530.14          1,682,266.99
Singapore Company                Subsidiary          107,588.53          138,660.87
                                 Stockholder
Energy Co., Ltd.                 ’s                                                                 0         14,586,000.00
                                 subsidiary
                                                                    2,276,921,553.5
Total                                            396,942,766.89                   2     482,485,183.48      1,032,188,532.54

  (2) Guaranty provided for associated parties
                                                                                                             (Unit: Yuan)
                The guaranteed                    Relation with listed company        Guaranteed amount (2011.12.31)
  Shenzhen     Nanshan   Power   Zhongshan                 Subsidiary                                  190,000,000.00
  Company
  Shenzhen Nanshan Power Dongguan Company                   Subsidiary                                      600,000,000.00
  Shenzhen Nanshan Power Environmental                      Subsidiary                                       46,000,000.00
  Protection Company
  New Power Company                                         Subsidiary                                       350,000,000.00
  Total                                                                                                    1,186,000,000.00



        (3) Independent directors’ description about and opinions on external guaranty
        According to related regulations of Notification on Normalizing the Current Accounts of Listed
  Companies and Associated Parties, and on External Guaranty of Listed Companies (ZJF [2003] No. 56
  Document), Notification on Normalizing External Guaranty Behaviors of Listed Companies (ZJF [2005]
  No. 120) and Notification on Information Disclosure of Listed Companies’ Fund Occupation and
  Delinquent Guaranty (SZJFZ [2004] No. 338), and after the Company’s investigation and data inquiry,
  we hereby issue special description about and opinions on the Company’s external guaranty:
        ① The fund transfer between the company and the affiliated parties belongs to normal operational
  fund transfer. There are no circumstances that the affiliated parties violate and misuse the fund of the
  listed company.
        ②As of Dec. 31, 2011, the balance of the Company’s external guaranty is RMB 1,186,000,000.00
  Yuan (bank loan guaranty provided by the Company for its controlling subsidiaries). The Company and
  its controlling subsidiaries don’t provide guaranty for stockholders and other associated parties, any
  non-corporate unit or individual; in addition, the Company has implemented the information disclosure
  obligation of external guaranty in earnest. 5. Other important associated transactions
        In the reporting period, the Company did not have other important associated transactions.

       (VII) Important contracts and implementation
       1. The Company’s trust, contracting, and leasing
       According to the Contract for Trust Operation of Gas Turbine- Steam Combined Cycling Afterheat
  Generator Set Assets signed in February 2003, the Company was entrusted to operate and manage the
  generator set assets owned by the sole subsidiary New Power Company. In the reporting period, the
  Company has received 16.34 million Yuan as service charge for asset custody. Except for this, the
  Company did not have other important trust, contracting and leasing.
        2. Important guaranty
        In the reporting period, the Company has implemented legal examination and approval procedures
  for external guaranty, as shown below:
                                                                                          (Unit: Yuan)
                                           External guaranty (excluding guaranty for subsidiaries)
                   Disclosure date               Date of actual                                                               Guaranty for
                                                                    Actual
      Name of      and number of      Line of      occurrence                   Guaranty        Guaranty      Implementation   associated
                                                                  amount of
   guaranty object announcement      guaranty        (date of                      type          period      completed or not parties or not
                                                                   guaranty
                      related to                   agreement                                                                   (yes or no)

                                                          - 34 -
       Shenzhen Nanshan Power Co., Ltd.                                                       Full Text of Annual Report 2011
                    guaranty line                    signing)
  Total line of external guaranty                                        Total amount incurred actually
   examined and approved in                                             of external guaranty in reporting
      reporting period (A1)                                                        period (A2)
  Total line of external guaranty                                        Total balance of actual external
examined and approved at the end                                        guaranty at the end of reporting
     of reporting period (A3)                                                      period (A4)
                                                            Guaranty for subsidiaries
                  Disclosure date                  Date of actual
                                                                                                                                Guaranty for
                   and number of                    occurrence        Actual
   Name of                            Line of                                       Guaranty      Guaranty      Implementation   associated
                   announcement                       (date of      amount of
guaranty object                      guaranty                                         type          period     completed or not parties or not
                      related to                    agreement        guaranty
                                                                                                                                 (yes or no)
                    guaranty line                     signing)
WeiMei Power      2011.4.15 and                                                  Credit
                                      10,000.00   Dec. 6, 2011        10,000.00                 6 months       No               No
Company           2011-012                                                       guaranty
WeiMei Power      2011.4.15 and                                                  Credit
                                       1,000.00   Feb. 14, 2011        1,000.00                 1 year         No               No
Company           2011-012                                                       guaranty
WeiMei Power      2011.4.15 and                                                  Credit
                                       9,000.00   Feb. 22, 2011        9,000.00                 1 year         No               No
Company           2011-012                                                       guaranty
WeiMei Power      2011.4.15 and                                                  Credit
                                      10,000.00   Dec. 2, 2011        10,000.00                 7 months       No               No
Company           2011-012                                                       guaranty
WeiMei Power      2011.4.15 and                                                  Credit
                                      10,000.00   Dec. 7, 2011        10,000.00                 7 months       No               No
Company           2011-012                                                       guaranty
WeiMei Power      2011.4.15 and                                                  Credit
                                       8,000.00   July 15, 2011        8,000.00                 1 year         No               No
Company           2011-012                                                       guaranty
WeiMei Power      2011.9.14 and                                                  Credit
                                      30,000.00   Dec. 29, 2011       10,000.00                 1 year         No               No
Company           2011-050                                                       guaranty
WeiMei Power      2011.4.15 and                                                  Credit
                                      20,000.00   Jan. 10, 2011        2,000.00                 1 year         No               No
Company           2011-012                                                       guaranty
ZhongShan         2011.4.15 and                                                  Credit
                                       5,000.00   Sept. 9, 2011        5,000.00                 1 year         No               No
Power Company     2011-012                                                       guaranty
ZhongShan         2011.4.15 and                                                  Credit
                                       5,000.00   Apr. 1, 2010         5,000.00                 1 year         No               No
Power Company     2011-012                                                       guaranty
ZhongShan         2011.4.15 and                                                  Credit
                                       9,000.00   Jan. 21, 2011        9,000.00                 1 year         No               No
Power Company     2011-012                                                       guaranty
Environmental
                   2011.4.15 and                                                   Credit
Protection                             1,000.00 Aug. 3, 2011            1,000.00                 1 year        No               No
                   2011-012                                                        guaranty
Company
Environmental
                   2011.4.15 and                                                   Credit
Protection                             8,000.00 Nov. 6, 2009            2,600.00                 3 years       No               No
                   2011-012                                                        guaranty
Company
Environmental
                   2011.4.15 and                                                   Credit
Protection                             3,000.00 July 22, 2011           1,000.00                 11 months     No               No
                   2011-012                                                        guaranty
Company
New Power          2011.4.15 and                                                Credit
                                       3,000.00 June 30, 2011           3,000.00               1 year          No               No
Company            2011-012                                                     guaranty
New Power          2011.4.15 and                                                Credit
                                       3,000.00   July 6, 2011         3,000.00                1 year          No               No
Company            2011-012                                                     guaranty
New Power          2011.4.15 and                                                Credit
                                       3,000.00   Aug. 25, 2011        3,000.00                1 year          No               No
Company            2011-012                                                     guaranty
New Power          2011.4.15 and                                                Credit
                                       1,000.00   Sept. 2, 2011        1,000.00                1 year          No               No
Company            2011-012                                                     guaranty
New Power          2011.9.14 and                                                Credit
                                      15,000.00   Dec. 22, 2011       10,000.00                1 year          No               No
Company            2011-050                                                     guaranty
New Power          2011.9.14 and                                                Credit
                                      15,000.00   Dec. 9, 2011        10,000.00                1 year          No               No
Company            2011-050                                                     guaranty
New Power          2011.9.14 and                                                Credit
                                       5,000.00   Oct. 27, 2011        5,000.00                1 year          No               No
Company            2011-050                                                     guaranty
     Total line of guaranty for                                         Total amount incurred actually
    subsidiaries examined and                               174,000.00 of guaranty for subsidiaries in                               118,600.00
 approved in reporting period (B1)                                           reporting period (B2)
     Total line of guaranty for
                                                                        Total balance of actual guaranty
    subsidiaries examined and
                                                           174,000.00      for subsidies at the end of                               118,600.00
  approved at the end of reporting
                                                                             reporting period (B4)
            period (B3)
                                     Gross amount of guaranty (namely total of the previous two items)
 Total line of guaranty examined                        174,000.00 Total amount actually incurred                                    118,600.00

                                                           - 35 -
         Shenzhen Nanshan Power Co., Ltd.                                                  Full Text of Annual Report 2011
  and approved in reporting period                                     of guaranty in reporting period
              (A1+B1)                                                             (A2+B2)
  Total line of guaranty examined                                      Total balance of actual guaranty
     and approved at the end of                            174,000.00 at the end of reporting period                         118,600.00
      reporting period (A3+B3)                                                    (A4+B4)
Proportion of actual gross guaranty (namely A4+B4) among the
                                                                                                                                67.64%
Company’s net assets
Where:
Amount of guaranty provided for stockholders, actual controllers and
                                                                                                                                   0.00
their associated parties (C)
Amount of debt guaranty provided directly or directly for the guaranteed
                                                                                                                             114,000.00
objects with asset-liability ratio of over 70% (D)
Amount of the part that gross guaranteed amount exceeds 50% of net
                                                                                                                              24,209.45
assets (E)
Total amount of the abovementioned three guaranties (C+D+E)                                                                  138,209.45
Description about the possible joint and several responsibilities for
discharging the outstanding guaranties



      3. In the reporting period, the Company has not entrusted others for cash asset management.
      4. Important contracts
      (1) After being deliberated and approved at the 36th Meeting of the Fifth Board of Directors, and the
  th
4 Interim Meeting of Stockholders’ Conference in 2010, both the Company and Shenzhen Nanshan
Power Dongguan Company plan to sign the contract for purchasing of natural gas with CNOOC
Oil—Gas Power Group Co., Ltd. Guangdong Trade Branch, CNOOC Oil Guangdong Branch respectively.
Where, the Company (solely-funded Nanshan Thermal Power Factory) has signed a two-year contract
(January 2011 – December 2012), and Shenzhen Nanshan Power Dongguan Company has signed a
three-year contract (January 2011- December 2013) (announcement number: 2010-048, 050, 058).
Related contracts are being implemented.
      (2)The 5th Meeting of the Company’s Sixth Board of Directors deliberated and passed the Proposal
on Transfer of 10% Stock Equity in Shenzhen Energy Environmental Protection Co., Ltd., and agreed the
Company to transfer its 10% stock equity in Shenzhen Energy Environmental Protection Co., Ltd. in a
listed way (for details, please refer to the Company’s announcement dated at Oct. 15, 2011 and numbered
as 2011-059).
      On Dec. 1, 2011, the Company and Shenzhen Energy Group Co., Ltd. signed the Contract for
Transfer of 10% Stock Equity in Shenzhen Energy Environmental Protection Co., Ltd. (for details, please
refer to the announcement numbered as 2011-069).
      (3) After being deliberated and approved at the 3rd Interim Meeting of the Company’s Sixth Board of
Directors and the 6th Interim Meeting of Stockholders’ Conference in 2011, the Company and CPI Jiangxi
Power Co., Ltd. signed the Contract for Stock Equity Transfer of CPI Jiangxi Xinchang Power Generation
Co., Ltd. on Dec. 29, 2011 (announcement number: 2011-074, 075).
      5. Important disputes in the reporting period
      In March 2008, the Company and Jierun (Singapore) Private Corporation (―Jierun Corporation‖)
signed two letters of confirmation on the contract of oil options (―Letter of Confirmation‖) numbered as
165723977102.11 and 165723968102.11.
      In 2009, the Company and Jierun Corporation conducted several rounds of negotiation on the
disputes about the two Letters of Confirmation based on not affecting both parties’ rights, but failed to
reach amicable settlement. On Nov. 27, 2009, Jierun Corporation entrusted Allen & Overy International
Law Firm (―Allen‖) to send us a letter, requiring the Company to pay USD79,962,943.00 for
compensating Jierun Corporation’s losses arising from its breach of contract, and the interest
USD3,736,958.66 as of Nov. 27, 2009. In case the Company fails to pay the aforesaid money, Jierun
Corporation shall reserve the right of lodging a complaint without further notification. Meanwhile, Jierun
Corporation entrusted Allen to send us another letter, bringing forward the proposal for amicable
settlement, namely making payment of only USD79,962,943.00 by 13 installments, with interest
exempted (for details, please refer to the announcement dated at Dec. 29, 2009 and numbered as 2009-
069). The Company sent a written reply on Jan. 25, 2010, and rejected the requirement of Jierun
Corporation on loss compensation, and required Jierun Corporation to undertake liabilities for breach of
contract, including but not limited to paying the account payable USD300,000 in October 2008 as well as
related interest USD16,862.52. Allen sent us a written reply on Feb. 26, 2010, refused to undertake any
responsibility for the Company, and persisted in its standpoint stated in the written reply dated at Nov. 27,

                                                          - 36 -
           Shenzhen Nanshan Power Co., Ltd.                                        Full Text of Annual Report 2011
   2009.
         On Mar. 31, 2011 and Feb. 6, 2012, Jierun Corporation sent us a letter to claim for the Company’s
   liability for breach of contract personally or by entrusting Allen, and the Company sent it a written reply
   on April 6, 2011 and Feb. 10, 2012 respectively, clearly rejected Jierun Corporation’s claim for
   compensation, and persisted in the opinions and claims in the written reply dated at Jan. 25, 2010.
         On Sept. 22, 2011, Jierun Corporation dispatched personnel to communicate with the Company’s
   related personnel on this dispute, but both parties failed to reach consensus.
         No progress is seen in this matter at present.

        (VIII) Implementation of commitments
        In the reporting period, the Company and its directors, supervisors, senior management personnel,
   and stockholders holding more than 5% (including 5%) shares don’t have new commitments or previous
   commitments extended to the reporting period and possibly having heavy impact on the Company’s
   operating result and financial conditions.

         (IX) Employment of CPA firm and payment of remuneration in the reporting period
         On May 10, 2011, according to the resolution of the annual meeting of stockholders’ conference
   2010, the Company agreed to continuously employ Deloitte Touche Tohmatsu CPA Ltd as the audit
   institution for the year 2011.
         Wit the authorization of the annual meeting of stockholders’ conference 2010, and after being
   deliberated and passed at the 3rd Interim Meeting of the Company’s Sixth Board of Directors, it’s agreed
   to pay Deloitte Touche Tohmatsu CPA Ltd 1.30 million Yuan as remuneration for auditing in 2011, and
   the Company shall undertake the traveling expenses during audit period.

       (X) The Company and its directors, supervisors, senior management personnel, stockholders,
   actual controllers, and acquirers were not subject to the investigation of authoritative institutions,
   compulsory actions of judicial and disciplinary inspection departments, and being sent to judicial
   organs or investigated into criminal responsibilities, etc. in the reporting period.

       (XI) The Company did not have other important events listed in Article 67 of Securities Law
   and Article 17 of Detailed Rules for Implementing Information Disclosure of Companies Issuing
   Stock Publicly (On Trial) in the reporting period.


        (XII) Investors investigation and interview accepted by the Company in reporting period
        In the reporting period, the Company gave priority to accepting individual investors’ consulting by
   telephone, and investors mainly consulted the Company’s performance, and production operation status,
   etc. When accepting interview and investors’ inquiry, the Company did not have such situations of
   revealing, disclosing or betraying the Company’s non-open important information separately to certain
   objects selectively, privately and in advance, but guaranteed the fairness of information disclosure. In total,
   the Company has accepted the field investigation of domestic and overseas stockholders and investors for
   once in total.

                                                                       Main contents discussed and documents
    Time          Place        Mode               Object
                                                                                      provided
                            Field                                        Proposal on increasing the line of
July 27,      Conference                       Securities
                         investigatio                               entrusted bank loan or direct loan of capital in
2011            room                  investor
                              n                                     the system


                                             X. Financial Statements
        The Company’s financial statements have been audited by Deloitte Touche Tohmatsu CPA Ltd, and
   the audit report with qualified opinions on matters emphasized. )

                                  XI. Catalog of Documents for Future Reference

        (I) Accounting statements bearing the signature and seal of legal representative, person in charge
   of accounting, and principal of accounting institution.

                                                        - 37 -
      Shenzhen Nanshan Power Co., Ltd.                                      Full Text of Annual Report 2011
     (II) Original audit report bearing the seal of CPA firm, and signature and seal of certified public
accountants.
     (III) Originals of all the Company’s documents disclosed publicly, and originals of announcements
made at Securities Times, China Securities Journal and Hong Kong Commercial Daily in the reporting
period, and original of
     (IV) Annual report publicized at overseas newspapers.


                                                                   Legal representative: Yang Haixian
                                                                    Shenzhen Nanshan Power Co., Ltd.
                                                                                         Apr. 24, 2012




                                                  - 38 -
Shenzhen Nanshan Power Co., Ltd.
Financial Statements and Audit Report
Year to December 31, 2011




           1
Shenzhen Nanshan Power Co., Ltd.                                                    English

Financial Statement and Audit Report
Year to December 31, 2011




Content                                                                    Page



Audit Report                                                               1-2


Parent Company Balance Sheet and Consolidated Balance Sheet                3-4


Parent Company and Consolidated Profit Statement                           5-6


Parent Company Cash Flow Statement and Consolidated Cash Flow Statement    7-8


Consolidated Statement of Changes in Shareholder Equity                   9 - 10


Annotations of Financial Statements                                       11 - 91




                                                          1
                                                 Audit Report
                                                                          D.S. Report (Audit) Zi. (12) NO. P1093

 General body of shareholders of Shenzhen Nanshan Power Co., Ltd:

      We have audited the accompanying balance sheet of Shenzhen Nanshan Power Co., Ltd (hereinafter referred to
as ―Nanshan Power Company‖) as of December 31, 2011, and the related consolidated income statement,
consolidated statement of changes in stockholders’ equity accounts and consolidated statement of cash flow for the
2011 then ended, as well as notes to financial statements.


 I. Responsibility of the Company’s Management for Financial Statements
      It is the responsibility of the management personnel in Shenzhen Nanshan Power Co., Ltd. to compile, list and
report the financial statement. Such responsibility should include (1) compilation of financial statement according to
the Accounting Principle for Business Enterprises and realization of fairness; (2) design, execution and maintenance
of necessary internal control so that the financial statement does not suffer from any serious mistaken report due to
malpractices or errors.

 II. Responsibility of Certified Public Accountants
      It’s our responsibility to give an audit opinion on these financial statements according to our audit. We
 conducted our audit in accordance with the Independent Auditing Standards for China Certified Public Accountants.
 Those Standards require that we abide by professional ethics, plan and perform the audit to obtain reasonable
 assurance for whether the financial statements are free of material misstatement or not.
       An audit is involved in executing auditing procedures to obtain audit evidence supporting the amounts and
 disclosures in the financial statements. The auditing procedures are selected according to the CPA’s judgment, and
 an audit also includes assessing the risk of any material misstatement in the financial statements due to fraud or
 mistake. During risk assessment, CPA take internal controls related to the compilation of financial statements and
 fair presentation into account for not giving an opinion on the effectiveness of internal controls but selecting
 suitable auditing procedures. An audit also includes evaluating the applicability of accounting policies selected by
 the Company’s management and the rationality of accounting estimates made by the Company’s management as
 well as evaluating the overall presentation of financial statements.
       We believe that we obtained adequate suitable audit evidence that provides a reasonable basis for our audit
 opinion.

 III. Opinion
      In our opinion, the financial statements give a true and fair view of the financial position of Nanshan Power
Company as of December 31, 2011, and of its consolidated performance and cash flow for the 2011 year then ended
in accordance with accounting standards for business enterprises.

  IV. Emphasis of Matter
      We hereby remind the users of the Company’s financial statements of paying attention to that, as stated in (VII)
―Contingencies‖ of Annotations of Financial Statements, the company hasn’t achieved a consensus with J. Aron
(Singapore) Private Company yet in respect of liabilities and compensations after the termination of an option
agreement, and both parties may solve the dispute between them in a judicial way. Because the final result of the
matter above can’t be reliably estimated, the Company didn’t identify estimated liability in the financial statements.
Nevertheless, the content of this paragraph doesn’t influence our audit opinion presented above.



 Deloitte Touche Tohmatsu CPA Ltd.                               Chinese Certified Public Accountant

            Shanghai, China


                                                                 Chinese Certified Public Accountant



                                                                                       April 20, 2012


                                                                                                                 -1-
Shenzhen Nanshan Power Co., Ltd                                                                                                 English

December 31, 2011

                                                  Consolidated Balance Sheet
                                                                                                                      Unit: RMB Yuan
                   Annot                        Beginning balan                               Annot                       Beginning balanc
      Item                 Ending balance                                     Item                    Ending balance
                   ation                              ce                                      ation                              e
 Current assets:                                                     Current liabilities:
 Monetary
                   (V)1       695,095,052.12       601,386,814.04      Short-term loans       (V)17   3,265,824,953.89       3,112,400,000.00
 capital
 Notes
                   (V)2                     -          700,000.00    Notes payable            (V)18      43,820,200.00                      -
 receivable
 Accounts
                   (V)3       934,640,019.03       518,392,276.69    Account payable          (V)19     214,748,889.66         61,115,438.61
 receivable
 Advance
                   (V)4        31,576,397.23        13,529,901.89    Deposit received         (V)20      14,586,000.00         39,274,341.26
 payment
 Other accounts
                   (V)5       124,599,842.72        20,450,149.23    Payroll payable          (V)21      32,691,674.04         45,432,950.70
 receivable
 Inventory         (V)6     1,258,195,597.25      1,352,372,212.06   Taxes payable            (V)22    (521,900,793.90)      (501,193,418.09)
 Other current                                                       Accrued interest
                   (V)7                     -         4,242,431.37                            (V)23      75,462,594.51         59,348,039.27
 assets                                                              payable
  Total current
                            3,044,106,908.35      2,511,073,785.28   Other payables           (V)24     358,597,380.00        288,768,647.34
 assets
                                                                     Noncurrent
 Noncurrent                                                          liabilities due within   (V)25      50,000,000.00         50,000,000.00
 assets:                                                             one year
 Long-term
                                                                     Total current
 equity            (V)8        37,315,000.00       306,208,274.30                                     3,533,830,898.20      3,155,145,999.09
                                                                     liabilities
 investment
 Investment real                                                     Noncurrent
                   (V)9         4,872,045.07          5,308,769.98
 estate                                                              liabilities:
 Fixed assets      (V)10    2,227,103,579.26      2,169,226,270.73   Long-term loans          (V)26      26,000,000.00        186,000,000.00
 Construction in                                                     Other noncurrent
                   (V)11       46,866,969.48       196,729,476.64                             (V)27       5,104,791.66          5,350,000.00
 process                                                             liabilities
 Intangible                                                          Total noncurrent
                   (V)12       63,807,538.62        64,236,931.51                                        31,104,791.66        191,350,000.00
 assets                                                              liabilities
 Long-term
 unamortized       (V)13           95,810.84           273,212.64    Total liabilities                3,564,935,689.86      3,346,495,999.09
 expenses
 Deferred
                                                                     Shareholder’s
 income tax        (V)14        3,714,114.31          4,624,405.14
                                                                     equity:
 assets
 Other
 noncurrent        (V)15       24,864,716.98        21,273,223.68    Stock capital            (V)28     602,762,596.00        602,762,596.00
 assets
 Total
 noncurrent                 2,408,639,774.56      2,767,880,564.62   Capital surplus          (V)29     363,629,927.51        363,629,927.51
 assets
                                                                     Surplus reserve          (V)30     332,908,397.60        332,908,397.60
                                                                     Undistributed profit     (V)31     454,070,630.72        436,541,567.35
                                                                     Total shareholder’s
                                                                     equity belonging to              1,753,371,551.83      1,735,842,488.46
                                                                     the parent company
                                                                     Minor shareholders’
                                                                                                        134,439,441.22        196,615,862.35
                                                                     equity
                                                                     Total shareholders’
                                                                                                      1,887,810,993.05      1,932,458,350.81
                                                                     equity
                                                                     Total liabilities and
 Total assets               5,452,746,682.91      5,278,954,349.90                                    5,452,746,682.91      5,278,954,349.90
                                                                     shareholders’ equity

Annotations are part of financial statements.

From the third page to the ninety-first page of financial report shall be signed by the following principles:


Legal Representative: ___________ Accountant in Charge: ________CFO _____Accounting Principal: ____________



                                                                                                                                       -2-
Shenzhen Nanshan Power Co., Ltd                                                                                             English

 December 31, 2011

                                                Balance Sheet of the Company
                                                                                                                 Unit: RMB Yuan
                                                 Balance at the
                                                                                                   Balance at the       Beginning
        Item         Note    Ending balance     beginning of the             Item           Note
                                                                                                   end of the year       balance
                                                     year

 Current assets:                                                     Current liabilities:

                                                                     Short-term
 Monetary capital              303,150,447.89      269,369,131.18                                   1,880,824,953.89   2,218,000,000.00
                                                                     borrowing
                     (XI)1
 Accounts
                               646,023,065.42      277,107,630.12    Account payable                 145,440,717.47        1,749,561.08
 receivable

                                                                     Account collected
 Advance payment                  489,676.70           455,623.51                                     14,586,000.00      14,586,000.00
                                                                     in advance

 Dividends                                                           Wages and welfares
                               654,140,866.58      597,875,904.41                                     16,426,938.52      26,713,770.75
 receivable                                                          payable

 Other receivable    (XI)2   1,525,724,625.88      894,247,309.68    Tax payable                    (414,050,692.13)   (436,158,042.22)

 Inventory                     112,185,828.84      166,594,071.43    Interest payable                   5,585,474.16       3,720,714.47

 Other current
                               205,000,000.00      393,003,940.43    Other payables                 1,064,365,847.79    490,528,945.93
 assets

 Total current                                                       Total current
                             3,446,714,511.31     2,598,653,610.76                                  2,713,179,239.70   2,319,140,950.01
 assets                                                              liabilities

 Non-current
                                                                     Total liability                2,713,179,239.70   2,319,140,950.01
 assets
                     (XI)3
 Long-term equity                                                    Stockholder’s
                               536,797,849.76      796,731,124.06
 investment                                                          equity

 Fixed assets                  327,435,225.16      316,444,713.69    Capital stock                   602,762,596.00     602,762,596.00

 Construction in
                                36,184,921.10       56,766,007.77    Capital reserve                 288,769,132.47     288,769,132.47
 process

 Intangible assets              10,658,977.27         9,318,739.90   Surplus reserve                 332,908,397.60     332,908,397.60

 Long-term                                                           Undistributed
                                    95,810.84          171,594.44                                    420,267,929.67     234,504,714.54
 deferred expense                                                    profits

 Total non-current                                                   Total shareholder’s
                               911,172,784.13     1,179,432,179.86                                  1,644,708,055.74   1,458,944,840.61
 assets                                                              equity

                                                                     Total liability and
 Total assets                4,357,887,295.44     3,778,085,790.62   shareholder’s                 4,357,887,295.44   3,778,085,790.62
                                                                     equity




                                                                                                                                   -3-
Shenzhen Nanshan Power Co., Ltd                                                                                        English

Year to December 31, 2011

                                                   Consolidated Income Statement
                                                                                                            Unit: RMB Yuan
                                                                                   Amount of current
                                     Item                               Note                               Amount of last year
                                                                                        year

 I Gross revenue                                                       (V)32         2,415,817,730.35         1,601,730,465.30
      Including: operation revenue                                                   2,415,817,730.35         1,601,730,465.30
 II Total cost                                                                       3,928,456,443.60         2,482,988,623.82
      Including: business cost                                         (V)32         3,589,704,382.71         2,239,345,909.35
                 business tax and surcharges                           (V)33            12,574,988.91             7,363,142.54
                 Selling expense                                                           818,301.34               860,503.71
                 Management fee                                        (V)34            97,538,885.64            95,926,428.20
                 Financial expense                                     (V)35           204,297,949.90           128,297,803.98
                 Loss from asset devaluation                           (V)36            23,521,935.10            11,194,836.04
         Add: income from investment                                   (V)37            23,329,325.70          (49,130,454.11)

              Including: income from investment on joint venture and
                                                                                      (90,201,890.81)          (49,082,776.11)
 cooperative enterprise

 III Operation profit                                                              (1,489,309,387.55)         (930,388,612.63)
      Add: non-business income                                         (V)38         1,516,790,851.26           832,316,848.06
      Less: non-business expense                                       (V)39             5,225,709.23               573,905.21
            Including: disposal loss on non-current liability                            4,985,709.23                16,537.00
 IV Total profit                                                                        22,255,754.48          (98,645,669.78)
      Less: income tax expense                                         (V)40            13,224,142.33            24,787,762.05
 V Net profit                                                                            9,031,612.15         (123,433,431.83)
      Net profit assigned to shareholders of parent company                             17,529,063.37         (114,638,678.20)
      Minority interest income                                                         (8,497,451.22)           (8,794,753.63)
 VI Earnings per share
        (I) Basic earnings per share                                   (V)41                     0.03                    (0.19)
        (II) Diluted earnings per share                                               Not applicable             Not applicable
 VII Other comprehensive income                                                                        -                         -
 VIII Total comprehensive income                                                         9,031,612.15         (123,433,431.83)

     Total comprehensive income assigned to shareholders of parent
                                                                                        17,529,063.37         (114,638,678.20)
 company

      Total comprehensive income assigned to minority shareholder                      (8,497,451.22)           (8,794,753.63)




                                                                                                                             -4-
Shenzhen Nanshan Power Co., Ltd                                                                       English

Year to December 31, 2011

                                                   Income Statement
                                                                                               Unit: RMB Yuan
                                                                            Amount of          Amount of last
                               Item                               Note
                                                                            current year          year

 I Operation revenue                                              (XI)4    990,279,741.52       426,971,872.85
      Less: business cost                                         (XI)4   1,598,330,636.84      765,825,140.43
           Business tax and surcharges                                        4,276,838.43        3,625,424.13
           Management expense                                               39,248,022.53        18,316,516.73
           Financial expense                                                80,500,949.95        44,656,802.83
           Loss from asset devaluation                                      16,041,488.47        12,092,537.18
      Add: income from invest                                     (XI)5    151,166,247.74       (49,130,454.11)

         Including: income from investment on joint venture
                                                                           (90,201,890.81)      (49,082,776.11)
 and cooperative enterprise

 II Operation profit                                                      (596,951,946.96)     (466,675,002.56)
      Add: non-business income                                             787,454,425.82       390,940,709.45
      Less: non-business expense                                              4,739,263.73                      -
           Including: disposal loss on non-current assets                     4,639,263.73                      -
 III Total interest                                                        185,763,215.13       (75,734,293.11)
      Less: income tax expense                                                             -     16,949,151.06
 IV Net profit                                                             185,763,215.13       (92,683,444.17)
 V Earnings per share
       (I) Basic earnings per share                                       Not applicable         Not applicable
      (II) Diluted earnings per share                                     Not applicable         Not applicable
 VI Other comprehensive income                                                             -                    -
 VII Total comprehensive income                                            185,763,215.13       (92,683,444.17)




                                                                                                           -5-
Shenzhen Nanshan Power Co., Ltd                                                                             English

 Year up to December 31, 2011

                                          Consolidated Statement of Cash Flow
                                                                                                     Unit: RMB Yuan
                                                                                  Amount of            Amount of last
                                Item                                 Note
                                                                                  current year              year
 I. Cash flow from operating activities
     Cash from selling commodities or offering labor service                    2,862,823,434.28      2,288,118,410.70

     Other cash received relating to operating activities           (V)42(1)    1,095,531,688.86        400,017,049.50

     Subtotal of cash inflows from operating activities                         3,958,355,123.14      2,688,135,460.20

       Cash paid for goods and services                                         3,458,138,395.82      2,398,061,926.94
     Cash paid to and for employees                                              122,354,380.02         106,943,679.13
      Cash paid for taxes and surcharges                                          85,020,697.83         135,374,801.61
      Cash paid for other operating activities                      (V)42(2)      20,556,308.21          21,857,107.55
     Subtotal of cash outflows from operating activities                        3,686,069,781.88      2,662,237,515.23
      Net cash flow from operating activities                                    272,285,341.26          25,897,944.97
 II. Cash flows from investing activities
      Cash received from recouping the capital outlay                            233,761,500.00                         -
      Net cash received from the disposal of fixed assets,
                                                                                    5,830,593.98         19,183,608.02
 intangible assets and other long-term assets
      Cash received from disposal of subsidiary or other
 operating business units                                                                        -       34,730,422.00
      Subtotal of cash inflows from investing activities                         239,592,093.98          53,914,030.02
      Cash paid to acquire or construct fixed assets, intangible
 assets and other long-term assets                                               118,967,984.75          91,699,799.08
      Cash paid for investment                                                    47,881,000.00         127,315,000.00
      Subtotal of cash outflows from investing activities                        166,848,984.75         219,014,799.08
      Net cash flows from investing activities                                    72,743,109.23       (165,100,769.06)
 III. Cash flows from financing activities

     Cash received from borrowings                                              4,606,524,953.89      3,954,400,000.00

     Cash received relating to other investing activities           (V)42(3)                     -       12,800,000.00
     Subtotal of cash inflows from financing activities                         4,606,524,953.89      3,967,200,000.00

     Cash repayments of debts                                                   4,613,100,000.00      3,381,120,000.00
      Dividends paid, profit distributed or interest paid                        247,230,099.58         136,540,083.21
      Thereof, dividend and profit paid by subsidiaries to minor
     shareholders                                                                                -                      -
      Cash payments relating to other investing activities          (V)42(4)      52,536,060.00          74,838,156.81
     Subtotal of cash outflows from financing activities                        4,912,866,159.58      3,592,498,240.02
      Net cash flows from financing activities                                  (306,341,205.69)        374,701,759.98
 IV. Effect of changes in foreign exchange rate on cash and
 cash equivalents                                                                   (755,066.72)          (474,222.48)
 V. Net increase of cash and cash equivalents                                     37,932,178.08         235,024,713.41
      Plus: beginning balance of cash and cash equivalents          (V)43(2)     591,386,814.04         356,362,100.63
 VI. Ending balance of cash and cash equivalents                    (V)43(2)     629,318,992.12         591,386,814.04



                                                                                                                 -6-
Shenzhen Nanshan Power Co., Ltd                                                                         English

 Year up to December 31, 2011

                                                 Cash Flow Statement
                                                                                                Unit: RMB Yuan
                                                                                 Amount of          Amount of last
                                Item                                   Note
                                                                                 current year           year
 I Cash flow from business operations
      Cash received from selling goods and providing services                   1,488,063,617.89      779,481,671.67
      Received other cash relating to business operations                         408,298,789.45      245,609,824.04
      Subtotal cash inflow from business operations                             1,896,362,407.34    1,025,091,495.71
      Cash paid for purchasing goods and receiving services                     1,438,945,047.77      931,517,958.88
      Cash paid for employees                                                      73,529,415.16       61,727,864.89
      Tax payments                                                                  4,324,863.93        5,562,742.97
      Cash paid for other things relating to business operations                   30,206,802.30       18,614,768.21
      Subtotal cash outflow for business operations                             1,547,006,129.16    1,017,423,334.95
      Net cash flow from business operations                                      349,356,278.18        7,668,160.76
 II Cash flow from investment activity
      Cash received from recouping the capital outlay                            233,761,500.00                      -
      Net cash received from disposing fixed assets, intangible
                                                                                     111,378.00                      -
 assets and other long-term assets
      Net cash received from disposing subsidiary and other
                                                                                                -      34,730,422.00
 business unit
      Received other cash relating to investment activity                        380,226,906.00       265,076,059.57
      Subtotal cash inflow from investment activity                              614,099,784.00       299,806,481.57
      Cash paid for purchasing fixed assets, intangible assets and
                                                                                  34,750,295.15        37,016,454.22
 other long-term assets
      Cash paid for investment                                                     56,841,000.00      127,315,000.00
      Cash paid for other things relating to investment activity                 591,135,987.91       418,080,000.00
      Subtotal cash outflow for investment activity                              682,727,283.06       582,411,454.22
      Net cash flow from investment activity                                     (68,627,499.06)    (282,604,972.65)
 III Cash flow from financial activity
      Cash received from loan                                                   2,788,924,953.89    2,658,000,000.00
      Received other cash relating to financial activity                          238,028,176.33                   -
      Subtotal cash inflow from financial activity                              3,026,953,130.22    2,658,000,000.00
      Cash paid for debt                                                        3,126,100,000.00    2,049,000,000.00
      Cash paid for distribution of dividend profit and profit or
                                                                                 147,832,985.16       100,257,551.56
 interest payment
      Subtotal cash outflow from financial activity                             3,273,932,985.16    2,149,257,551.56
      Net cash flow from financial activity                                     (246,979,854.94)      508,742,448.44
 IV Influence of change in exchange rate on cash and cash
                                                                                      32,392.53            (1,440.42)
 equivalents
 V Net increase on cash and cash equivalents                                      33,781,316.71       233,804,196.13
      Add: Balance of cash and cash equivalents at the beginning     (XI)6(2)
                                                                                 269,369,131.18        35,564,935.05
 of the year
                                                                     (XI)6(2)
 VI Balance of cash and cash equivalents at the end of the year                  303,150,447.89       269,369,131.18




                                                                                                             -7-
Shenzhen Nanshan Power Co., Ltd

Year end to December 31, 2011

                                                                           Statement of changes in consolidated stockholder equity
                                                                                                                                                                                                                   Unit: RMB
                                                                     Current amount                                                                                        Previous amount

                                Shareholders’ equity belonging to the parent company         Shareholders’                         Shareholders’ equity belonging to the parent company
           Item                                                                                  equity               Total                                                                              Minor                 Total
                                                                                              belonging to        shareholders’                                                                      shareholders’       shareholders’
                                  Stock           Capital        Surplus        Undistributed  the parent            equity             Stock        Capital       Surplus        Undistributed          equity               equity
                                capital          surplus         reserve           profit       company                               capital        surplus       reserve           profit

 I. Ending balance of                                           332,908,397.6                                      1,932,458,350.   602,762,596.0   363,629,927.   332,908,397.
                              602,762,596.00   363,629,927.51                   436,541,567.35   196,615,862.35                                                                    551,180,245.55      205,410,615.98      2,055,891,782.64
 previous year                                                              0                                                 81                0            51             60

 Plus: Change of
                                           -                -               -                -                -                 -               -              -              -                   -                    -                    -
 accounting policy

  Previous error correction                -                -               -                -                -                 -               -              -              -                   -                 -                       -


 II. Beginning balance of                                       332,908,397.6                                      1,932,458,350.   602,762,596.0   363,629,927.   332,908,397.
                              602,762,596.00   363,629,927.51                   436,541,567.35   196,615,862.35                                                                    551,180,245.55      205,410,615.98      2,055,891,782.64
 current year                                                               0                                                 81                0            51             60


 III. Increase/decrease in                                                                       (62,176,421.13    (44,647,357.76
                                           -                -               -    17,529,063.37                                                  -              -              -   (114,638,678.20)     (8,794,753.63)      (123,433,431.83)
 current year                                                                                                 )                 )


  (I) Net profits                          -                -               -    17,529,063.37   (8,497,451.22)     9,031,612.15                -              -              -   (114,638,678.20)     (8,794,753.63)      (123,433,431.83)


   (II) Other
                                           -                -               -                -                -                 -               -              -              -                   -                 -                       -
 comprehensive income


 Subtotal of Items (I) and
                                           -                -               -    17,529,063.37   (8,497,451.22)     9,031,612.15                -              -              -   (114,638,678.20)     (8,794,753.63)      (123,433,431.83)
 (II) above


 Capital paid in and
                                           -                -               -                -                -                 -               -              -              -                   -                 -                       -
 reduced by shareholders


 1. Capital paid in by
                                           -                -               -                -                -                 -               -              -              -                   -                 -                       -
 shareholders




                                                                                                                                                                                                                               -8-
Shenzhen Nanshan Power Co., Ltd

2. Amounts of
share-based payments
                                          -                -               -                -                -                -               -              -              -                -                -                  -
recognized in
shareholders' equity


3. Others                                 -                -               -                -                -                -               -              -              -                -                -                  -

                                                                                                (53,678,969.91   (53,678,969.91
  (IV) Profit distribution                -                -               -                -                                                 -              -              -                -                -                  -
                                                                                                             )                )


1. Appropriations to
                                          -                -               -                -                -                -               -              -              -                -                -                  -
surplus reserves


2. Distribution to                                                                              (53,678,969.91   (53,678,969.91
                                          -                -               -                -                                                 -              -              -                -                -                  -
shareholders                                                                                                 )                )

3. Others                                 -                -               -                -                -                -               -              -              -                -                -                  -


  (V) Internal
carry-forward of                          -                -               -                -                -                -               -              -              -                -                -                  -
shareholders' equity



1. Capital surplus
                                          -                -               -                -                -                -               -              -              -                -                -                  -
turned to stock capital


2. Surplus reserve turned
                                          -                -               -                -                -                -               -              -              -                -                -                  -
to stock capita


3. Surplus reserve used
                                          -                -               -                -                -                -               -              -              -                -                -                  -
for making up losses


4. Others                                 -                -               -                -                -                -               -              -              -                -                -                  -


 IV. Ending balance of                                         332,908,397.6                                     1,887,810,993.   602,762,596.0   363,629,927.   332,908,397.
                             602,762,596.00   363,629,927.51                   454,070,630.72   134,439,441.22                                                                  436,541,567.35   196,615,862.35   1,932,458,350.81
current period                                                             0                                                05                0            51             60




                                                                                                                                                                                                                      -9-
Shenzhen Nanshan Power Co., Ltd

Year up to December 31, 2011

                                                                                   Statement of changes in stockholder equity
                                                                                                                                                                                                              Unit: RMB
                                                                         Current amount                                                                               Previous amount
                Item                                                                                              Total                                                                                          Total
                                                                                            Undistributed                                                                                Undistributed
                                      Stock capital    Capital surplus Surplus reserve                        shareholders’       Stock capital                      Surplus reserve                        shareholders’
                                                                                              profit                                                Capital surplus                         profit
                                                                                                                 equity                                                                                         equity
 I. Ending balance of previous year   602,762,596.00    288,769,132.47     332,908,397.60    234,504,714.54   1,458,944,840.61     602,762,596.00    288,769,132.47     332,908,397.60    327,188,158.71     1,551,628,284.78

 Plus: Change of accounting policy                 -                 -                  -                 -                    -                -                 -                  -                   -                    -

  Previous error correction                        -                 -                  -                 -                    -                -                 -                  -                   -                    -
 II. Beginning balance of current
                                      602,762,596.00    288,769,132.47     332,908,397.60    234,504,714.54   1,458,944,840.61     602,762,596.00    288,769,132.47     332,908,397.60    327,188,158.71     1,551,628,284.78
 year
 III. Increase/decrease in current
                                                   -                 -                  -    185,763,215.13    185,763,215.13                   -                 -                  -    (92,683,444.17)     (92,683,444.17)
 year
  (I) Net profits                                  -                 -                  -    185,763,215.13    185,763,215.13                   -                 -                  -    (92,683,444.17)     (92,683,444.17)
    (II) Other comprehensive
                                                   -                 -                  -                 -                    -                -                 -                  -                   -                    -
 income
 Subtotal of Items (I) and (II)
                                                   -                 -                  -    185,763,215.13    185,763,215.13                   -                 -                  -    (92,683,444.17)     (92,683,444.17)
 above
 Capital paid in and reduced by
                                                   -                 -                  -                 -                    -                -                 -                  -                   -                    -
 shareholders
 1. Capital paid in by shareholders                -                 -                  -                 -                    -                -                 -                  -                   -                    -
 2. Amounts of share-based
 payments recognized in                            -                 -                  -                 -                    -                -                 -                  -                   -                    -
 shareholders' equity
 3. Others                                         -                 -                  -                 -                    -                -                 -                  -                   -                    -

   (IV) Profit distribution                        -                 -                  -                 -                    -                -                 -                  -                   -                    -
 1. Appropriations to surplus
                                                   -                 -                  -                 -                    -                -                 -                  -                   -                    -
 reserves
 2. Distribution to shareholders                   -                 -                  -                 -                    -                -                 -                  -                   -                    -

 3. Others                                         -                 -                  -                 -                    -                -                 -                  -                   -                    -
    (V) Internal carry-forward of
                                                   -                 -                  -                 -                    -                -                 -                  -                   -                    -
 shareholders' equity
 1. Capital surplus turned to
                                                   -                 -                  -                 -                    -                -                 -                  -                   -                    -
 stock capital
 2. Surplus reserve turned to stock
                                                   -                 -                  -                 -                    -                -                 -                  -                   -                    -
 capita
 3. Surplus reserve used for
                                                   -                 -                  -                 -                    -                -                 -                  -                   -                    -
 making up losses
 4. Others                                         -                 -                  -                 -                    -                -                 -                  -                   -                    -
  IV. Ending balance of current
                                      602,762,596.00    288,769,132.47     332,908,397.60    420,267,929.67   1,644,708,055.74     602,762,596.00    288,769,132.47     332,908,397.60    234,504,714.54     1,458,944,840.61
 period


                                                                                                                                                                                                                        - 10 -
(I)Company profile

      Shenzhen Nanshan Power Co., Ltd. (hereinafter referred to as ―the Company‖) is a limited liability company
      founded through the reorganization of a foreign-funded enterprise upon the approval by Shen Fu Ban Fu [1993]
      No. 897 Document of General Office of Shenzhen Municipal People's Government. When founded, the
      company had total 103,000,000.00 shares in RMB.

      With approval of S.Z.B. Fu [1993] NO. 179 Documents of original Shenzhen Security Management Office, our
      company separately issues 40 million shares of common stocks and 37 million shares of foreign stocks listed in
      domestic to investors at home and abroad, which were listed in Shenzhen Stock Exchange separately on July 1,
      1994 and November 28, 1994. After issuing, stock of our company changed to be 180 million shares. With stock
      bonus, stock of our company on December 31, 2011 is 602,762,596 shares.

      The Company is headquartered in Shenzhen City, Guangdong Province, China.

      The Company and its subsidiaries (hereinafter jointly referred to as ―the Group‖) are mainly engaged in power
      and supply production, power plant construction, fuel oil trading, real estate development, consultative
      engineering, sludge drying, etc.
      The Company doesn’t have any controlling shareholder or actual controller, and Shenzhen Energy Group Co.,
      Ltd. (hereinafter referred to as ―Energy Group‖ is the largest shareholder of the Company.



(II) Significant accounting policies, accounting estimates and previous errors of the Company

      1. Compilation basis of financial statements

      The group is in strict adherence to the Accounting Principle for Business Enterprises promulgated by the
      Ministry of Finance on February 15th, 2006. Besides, the group has exposed relevant financial information
      according to the General Stipulations of Information Exposure, Compilation and Report Regulations of
      Company with Open Security Issuance No. 15—Financial Report (2010 Revision).

      Continuous operation


      By the end of December 31, 2011, total amount of current liabilities of our group exceeds RMB 489,723,989.85
      than total current assets. Meanwhile, as stated in ―contingency‖ of note (VII), our company, in terms of liability
      and compensation affairs after termination of option contract, failed to reach a consensus with Jierun (Singapore)
      Private Company (hereinafter referred to as ―Jierun Company‖ ) as of the date when the financial report is
      proved to be disclosed. It is not ruling out resolving dispute by judiciary means. Unspent bank credit limit of our
      group is RMB 1,070,322,657.14, which can satisfy the capital demand of our group. Meanwhile, our company
      thinks that the issue stated in ―contingency‖ of note (VII) will not cause significant cash outflow in 2012.
      Therefore, this financial report is worked out on the basis of going-concern assumption.

      Bookkeeping Basis and Pricing Principle

      The Group takes accrual system as accounting basis. Except some financial instruments are measured by fair
      value, the financial statements take historical cost as valuation basis. If any asset depreciates, relevant
      depreciation reserve shall be accrued according to related regulations.




                                                                                                                  - 11 -
(II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

      Comply with Statement of Accounting Standard for Business Enterprise

      The financial statement gives a true and complete view of consolidated financial position of the Company as of
      December 31, 2011 and of its consolidated performance and cash flow for the 2011 year then ended in
      accordance with requirements of accounting standards for business enterprise.

      3. Fiscal period

      A fiscal year of the Group is a calendar year from Jan. 1 to Dec. 31.
      4. Account standard currency

      The Group takes Renminbi (RMB), the currency in major economic environment of the Group, as account
      standard currency. The financial statements were compiled in RMB.

      5. Accounting processes of mergers under common control and mergers not under common control

      A merger may be under common control or not.

      5.1 Mergers under common control


      Merger under common control means a merger upon which both or all of the participants are under the
      non-temporary final control of the same party or the same parties before and after the merger.

      Assets and liabilities that the merging party obtains upon the merger shall be measured according to the merged
      party’s book value of such assets and liabilities on the merger date. The balance between the book value of net
      assets the merging party obtains and the book value of consideration the merging party pays for the merger (or
      total face value of issued shares) shall be used for adjusting stock premium in capital surplus; if stock premium
      is not enough for write off, retained earnings shall be adjusted.

      All direct expenses the merging party spends for the merger shall be recorded in current profit and loss at the
      time of occurrence of such expenses.

      5.2 Mergers without under common control and relevant business reputation

      Merger without under common control means a merger upon which the participants are not under the final
      control of the same party or the same parties before and after the merger.




                                                                                                                  - 12 -
(II)   Significant accounting policies, accounting estimates and previous errors of the Company –
        Continued

       5. Accounting processes of mergers under common control and mergers not under common control
       – Continued

       5.2 Mergers without under common control and relevant business reputation– Continued

       Identifiable assets, liabilities or contingent liabilities obtained from the purchased party upon a merger shall be
       measured by fair value on the date of purchase. The combined cost is larger than the gap of acquiree’s
       identifiable fair value of net assets obtained in the merging. It is adopted as an asset, confirmed as commercial
       reputation and has to receive initial measurement and calculation according to the cost. If the merger cost is
       smaller than the fair value of all identifiable net assets obtained from the purchased party via the merger, the
       purchasing party shall recheck the fair value of identifiable assets, liabilities or contingent liabilities obtained
       from the purchased party and the measurement of merger cost, and then record the after-recheck balance in
       current profit and loss.

       Since the commercial reputation formed in the merging is independently listed and reported in the combined
       financial statement and calculated and measured according to the cost by deducting accumulative depreciation
       reserve; the commercial reputation has to at least implement depreciation test at the end of each year.

       That is to say, the account value of commercial reputation is amortized into the assets group or assets
       combination beneficiary from merging coordination effect as of the purchasing date. Impairment test shall be
       combined with related asset groups or combination of asset groups. Namely the book value of business
       reputation shall be apportioned to asset groups or combination of asset groups in a reasonable way as of the date
       of purchase, if the recoverable amount of the asset groups or combination of asset groups containing the
       apportioned business reputation is below relevant book value, loss from depreciation shall be identified. The
       amount of such loss from depreciation shall be used for writing off the book value of business reputation
       apportioned to the asset groups or combination of asset groups, and then offsetting the book value of other assets
       beyond the business reputation in the asset groups or combination of asset groups proportionally according to
       weight.

       Recoverable amount shall be the higher between the balance of fair value of depreciated assets minus the
       disposal expense or the present value of estimated future cash flow of depreciated assets. Fair value of assets
       shall be determined according to the price fixed in sales agreement of fair transaction; where an asset is not
       under a sales agreement but on an active market, its fair value shall be determined according to the buyer’s offer
       for such asset; Where an asset is neither under a sales agreement nor on an active market, its fair value shall be
       estimated on the basis of the optimal information available. Herein disposal expense covers legal fee, taxes and
       fees and handling charge related to asset proposal as well as direct expense for making the asset marketable; the
       present value of estimated future cash flow of depreciated asset shall be determined according to the discounted
       amount of estimated future cash flow that may be generated during continuous use and final disposal at a proper
       discount rate.

       The depreciation losses of commercial reputation are calculated into the profits and losses in the period upon
       occurrence; besides, they are not transferred back in the future accounting period.




                                                                                                                    - 13 -
       6. Compilation methods of consolidated financial statements

      The scope of consolidation of financial statements shall be determined on the basis of control. Herein control
      means a right upon which the Group can make decision on the financial and operation policies of another
      enterprise and gain profits from the operating activities of the enterprise herefrom.

      As for the subsidiary treated by the group, business achievements and cash flow before treatment date (date of
      losing control right) have been properly included in the combined profits statement and combined cash flow
      statement.

      As for the subsidiary obtained under different control conditions through merging, business achievements and
      cash flow as of purchasing date (date of obtaining control right) have been properly included in the combined
      profits statement and combined cash flow statement. It is not necessary to adjust the amount at beginning of
      period and contrast amount in the combined financial statement.

(II) Significant accounting policies, accounting estimates and previous errors of the Company -
       Continued

      6. Compilation methods of consolidated financial statements

      As for the subsidiary obtained under the same control conditions through merging, it is taken as subsidiary’s
      integration into the group combination scope as of control date by ultimate control party no matter whether
      merging has occurred at any time of report period. Business achievements and cash flow as of the earliest period
      of report have been properly included in the combined profits statement and combined cash flow statement.

      Significant accounting policies and fiscal periods of subsidiaries are determined according to the unified
      accounting policies and fiscal period of the Company.

      All major accounts and transactions between the Company and a subsidiary or subsidiaries are written off at the
      consolidation of financial statements.

      The share of subsidiary owner’s equity not belonging to mother company is adopted as the minority owner’s
      equity. In the combined balance sheet, owner’s equity is listed according to ―minority owner’s equity‖. The
      share of subsidiary net profits and losses in the period belonging to minority owner’s equity is listed in the
      combined profits statement under the net profit column according to ―minority owner’s equity‖.

      Part of owners’ equity of subsidiaries that doesn’t belong to the parent company shall be taken as minor
      shareholders’ equity and recorded under ―minor shareholders’ equity‖ of shareholders’ equity in a consolidated
      balance sheet. Part of current profit and loss of subsidiaries as minor shareholders’ equity shall be recorded in
      ―minor shareholders’ profits and losses‖ of net profits in a consolidated profit statement.

      Where a subsidiary’s loss borne by minor shareholders exceeds the shares of the minor shareholders in the
      beginning owners’ equity of the subsidiary, the surplus shall offset minor shareholders’ equity. As for purchasing
      of subsidiary minority stock right or transaction due to treatment of partial stock right investment but not losing
      subsidiary control right, it has to calculate as equity transaction, adjust the account value belonging to mother
      company owner’s equity and minority owner’s equity and reflect modification of relevant equity in the
      subsidiary. The gap between adjustment sum of minority owner’s equity and fair value of paid/received
      corresponding price is adopted to adjust the capital reserve; once the capital reserve is not enough to set off, it
      has to adjust the reservation benefits.

      Once it loses the control right to original subsidiary due to treatment of partial stock right investment or other
      reason, it has to calculate and measure the left stock right for the second time according to the fair value on
      control right losing date. The following gap is calculated into the investment benefits in the period losing
      control right: ―sum total of corresponding price in treatment of stock right and fair value of left stock right‖
      minus ―net assets share sustainably calculated as of purchasing date of original subsidiary according to the
      original stock ratio‖. Other comprehensive benefits related to the stock right investment of original subsidiary
      are transferred into the investment benefits in the period once losing control right.

                                                                                                                    - 14 -
      7. Determination criteria of cash and cash equivalents

      Cash means cash in treasury and bank deposits that may be used for payment at any moment. Cash equivalents
      mean short-term investments with strong liquidity, apt to converting into known amount of cash and bearing
      very small risk of value change.

(II) Significant accounting policies, accounting estimates and previous errors of the Company -
Continued

      8. Foreign currency operations

      For initial identification, foreign currency transactions are converted according to the spot exchange rate on the
      trading day.

      On the balance sheet date, foreign currency monetary items are converted to RMB according to the spot
      exchange rate on the date, all the balance of exchange arising from the difference between the spot exchange
      rate on the balance sheet date and that of previous balance sheet date or at initial identification, except (1) the
      balance of exchange of special foreign currency borrowings that conforms to capitalization requirements is
      capitalized during the capitalization period and recorded in the cost of related assets; (2) the balance of exchange
      of hedging instruments for evading foreign exchange risks is treated in hedging accounting methods; (3) the
      balance of exchange arising from available-for-sale foreign currency nonmonetary items (e.g. stocks) and the
      balance of exchange arising from book balance variations of available-for-sale monetary items exclusive of
      post-amortization cost are identified as other comprehensive incomes and recorded in capital surplus, shall be
      recorded in current profit and loss.

      Foreign currency nonmonetary items measured by historical cost are measured according to the account
      standard currency amount converted according to the spot exchange rate on the trading day. Foreign currency
      nonmonetary items measured by fair value are converted according to the spot exchange rate on the date of
      determination of fair value, and the balance between the converted account standard currency amount and
      original account standard currency amount is taken as fair value change (inclusive of change in exchange rate)
      and recorded in current profit and loss or identified as other comprehensive income and recorded in capital
      surplus.

      9. Financial instruments

      Once the group becomes one party of financial tools contract, it has to confirm one financial asset or financial
      liability. It has to calculate and measure financial assets and financial liabilities at the initial confirmation. As for
      the financial assets and financial liabilities calculated and measured according to fair value and whose
      modification is calculated into the profits and losses in the period, it has to directly calculate relevant transaction
      expense into the profits and losses column; as for other types of financial assets and financial liabilities, it has to
      calculate relevant transaction expense into the initial confirmation sum.

      9.1 Confirmation measures of fair value
      Fair value means the amount of asset exchange or repayment of debt conducted between both parties familiar
      with related situations in a voluntary way during a fair transaction. Where an active market of a financial
      instrument exists, the Group determines the fair value of such financial instrument according to the quotations
      on the active market. Where an active market of a financial instrument doesn’t exist, the Group determines the
      fair value of such financial instrument by estimation techniques. Herein estimate techniques include referring to
      the prices of latest market transactions between voluntary parties familiar with related situations, referring to
      current fair values of other financial instruments the same as the financial instrument in essence, cash flow
      discount method, option pricing model, etc.

      9.2 Actual interest rate method
      The actual interest rate method refers to calculation of amortization cost, interest income or expenditure in
      various periods according to the actual interest rate of financial assets and financial liabilities (including one
      group of financial assets and financial liabilities). The actual interest rate refers to the interest rate by converting
      ―future cash flow of financial assets and financial liabilities within the expected lasting period or applicable
      shorter period‖ into the current account value of financial assets and financial liabilities.

      During the calculation of actual interest rate, the group has to estimate the future cash flow
      (not consider future credit losses) on the basis of considering all the contract terms of
                                                                                                                        - 15 -
        financial assets and financial liabilities; at the same time, it has to consider various charges,
        transaction expenses and discount or premium paid or charged by various parties of financial
        assets or financial liabilities contracts and belonging to a part of actual interest rate.

(II) Significant accounting policies, accounting estimates and previous errors of the Company - Continued

       9. Financial instruments - Continued

        9.3 Classification, identification and measurement of financial assets

        At initial identification, financial assets are classified into financial assets that are measured by fair value and
        whose variation is recorded in current profit and loss; hold-to-maturity investment; loans and receivables;
        available-for-sale financial assets. For financial assets traded in a conventional way, their identification and
        identification termination shall accord with the accounts of the trading day.

        The financial assets of the Group include loans and receivables.

        Loans and receivables

        Herein loans and receivables mean non-derivative financial assets that have fixed or definable recoverable
        amount and for which there are no quotations on relevant active market. The loans and receivables as financial
        assets of the Group include bills receivable, accounts receivable, dividends receivable and other receivables, etc.

        Subsequent measurement is made for such loans and receivables according to actual interest rate and
        post-amortization cost. Gain or loss from identification termination, depreciation or amortization is recorded in
        current profit and loss.

        9.4 Depreciation of financial assets

        Except for the financial assets calculated and measured according to fair value and whose modification is
        calculated into the profits and losses in the period, the Group examines the book value of other financial assets
        on every balance sheet date, and accrue depreciation reserve if any objective evidence indicates a financial asset
        depreciates. It has revealed that objective evidence of financial assets depreciation refers to the matters occurred
        upon initial confirmation of financial assets, with certain influence on the expected future cash flow of financial
        assets and the enterprise can reliably calculate and measure the influence.

        The objective evidence of financial assets depreciation includes the following observable matters:

       (1) The issuer or debtor is trapped in a serious financial trouble;
       (2) The debtor breaches any of the contract provisions, e.g. fails to pay or delays the payment of interests or the
       principal;
       (3) The Group makes any concession against the debtor trapped in a financial trouble in consideration of
       economic, legal or other factors;
       (4) The debtor is likely to go bankrupt or carry out other financial reorganizations;
       (5) A financial asset can’t be traded on the active market any more because the issuer is trapped in a major
       financial trouble;
       (6) It’s impossible to identify whether the cash flow of certain asset in a combination of financial assets has
       decreased or not, but it’s found that the estimated future cash flow of such combination of financial assets as of
       initial identification has decreased indeed and such decrease is measurable after overall appraisal according to
       public data, including:
       - The paying ability of the debtor of this combination of financial assets has been worsened gradually;
       - An event that may make a debtor fail to pay for the combination of financial assets occurs in the country or
       region where the debtor is;
       (7)Any major unfavorable change occurs to technical, market, economic or legal environment or others in
       which releaser of equity tools operates its business, as a result, the investor of the equity instrument may fail
       to recover its cost of investment;
       (8) The fair value of the equity instrument investment drops sharply or in a non-temporary way;
       (9) Other objective evidences that show the depreciation of financial asset.



                                                                                                                     - 16 -
(II)   Significant accounting policies, accounting estimates and previous errors of the Company -
        Continued

       9. Financial instruments - Continued

       9.4 Depreciation of financial assets - Continued

       - Financial assets depreciation calculated and measured through amortization cost

       In case of depreciation in the financial assets calculated and measured through amortization cost, it has to
       reduce the account value and record in the expected future cash flow value confirmed according to original
       interest rate discount of financial assets (excluding in-occurred future credit losses) and confirm the reduced
       sum into depreciation losses and calculate into the profits and losses in the period. After the loss from
       depreciation of such financial asset has been identified, where any objective evidence indicates that the value of
       the financial asset has recovered and such recovery is objectively related to an event that occurs after the
       identification of loss, the originally identified loss from depreciation is written back, but the post-writeback
       book value shall not be larger than the post-amortization cost of the financial asset on the date of writeback on
       the assumption that no reserves are withdrawn for depreciation.

       The Group conducts impairment test for financial assets in a large individual amount; conduct separate
       impairment test for other financial assets or composite impairment test for a combination of financial assets with
       similar risk characteristics inclusive of other financial assets. For financial assets (no matter in a large individual
       amount or not) for which depreciation isn’t found through separate test, impairment test is repeated for a
       combination of financial assets with similar risk characteristics. Financial assets for which loss from
       depreciation has been identified separately shall be excluded from a combination of financial assets with similar
       risk characteristics under impairment test.

       9.5 Transfer of financial assets

       The identification of a financial asset will be terminated under any of the circumstances as follows: The contract
       right to receive the cash flow upon this financial asset terminates; (2) the financial asset has been transferred,
       and almost all of risks and returns upon the ownership of the financial asset has been transferred to the
       transferee; (3) the financial asset has been transferred, and the enterprise gives up the control of the financial
       assets although it neither transfers nor reserves almost all of risks and returns upon the ownership of the
       financial asset.

       Where the Company neither transfers or reserves almost all of risks and returns upon the ownership of a
       financial asset nor gives up the control of the financial asset, the financial asset is identified according to the
       extent of continuous involvement in the transferred financial asset, and related liabilities are identified. Herein
       the extent of continuous involvement in the transferred financial asset means the risk level on which the
       enterprise is upon the value change of the financial asset.

       Where the integral transfer of a financial asset meets the identification termination requirements, the balance
       between book value of transferred financial asset plus the consideration received upon the transfer and
       accumulative fair value change originally recorded in other comprehensive incomes is recorded in current profit
       and loss.

       Where the partial transfer of a financial asset meets the identification termination requirements, the book value
       of the transferred financial asset is apportioned to the part under identification termination and the rest, and the
       balance between consideration received upon the transfer plus accumulative fair value change apportioned to
       the identification termination part plus originally recorded in other comprehensive incomes and the apportioned
       book value above is recorded in current profit and loss.




                                                                                                                       - 17 -
(II)   Significant accounting policies, accounting estimates and previous errors of the Company -
        Continued

       9. Financial instruments - Continued

       9.6 Classification, recognition and measurement of financial liabilities

       The group has to confirm the released financial tools into financial liabilities or equity tools according to the
       essence of arrangement of financial tools contract and definition of financial liabilities and equity tools.

       At initial identification, financial liabilities are classified into financial liabilities that are measured by fair value
       and whose variation is recorded in current profit and loss and other financial liabilities.

       Financial liabilities of the Group belong to other financial liabilities.

       Other financial liabilities

       Consequent measurement is conducted for derivative financial liabilities that are linked with an equity
       instrument for which there are no quotations on the active market and fair value can’t be reliably measured and
       whose settlement is subject to the delivery of such equity instrument according to cost. Consequent
       measurement is conducted for other financial liabilities according to actual interest rate and post-amortization
       cost, gain or loss from identification termination or amortization is recorded in current profit and loss.

       9.7 Identification termination of financial liabilities

       The identification of a financial liability can’t be fully or partially terminated until all or part of the current
       obligations upon the financial liability has been dissolved. The Group (the debtor) signs an agreement with the
       creditor in respect of substituting new financial liability for existing financial liability, moreover, where the
       provisions of new financial liability are different from those of existing financial liability, the identification of
       existing financial liability shall be terminated, meanwhile, the new financial liability shall be identified.

       Where the identification of a financial liability is fully or partially terminated, the balance between the book
       value of the part under identification termination and the paid consideration (including noncash financial asset
       transferred out or new financial liability to be borne) is recorded in current profit and loss.

       9.8 Offset between financial assets and financial liabilities

       Where the Group has the legal right to offset identified financial asset and financial liability and can execute
       such legal right presently, meanwhile, plans to make net value settlement or encash the financial asset and pay
       off the financial liability, such financial asset and financial liability are recorded in the balance sheet according
       to the balance after offset. Under other circumstances, financial assets and financial liabilities shall be recorded
       respectively in a balance sheet rather than offset each other.

       9.9 Equity instruments

       Equity instrument means a contract that can certify the Group’s residual equity in assets after the deduction of
       all liabilities. During the release of equity tools, it has to deduct transaction expense in the received
       corresponding price and then increase owner’s equity.

       Various distributions (exclusive of stock dividend) of the Group to equity instrument holders bring in the
       decrease of shareholders’ equity. The Group doesn’t identify any fair value change of equity instrument.




                                                                                                                          - 18 -
(II)   Significant accounting policies, accounting estimates and previous errors of the Company –
       Continued

       10. Receivables

       10.1 Receivable account with serious single sum and single withdrawal of bad debt reserve


        Judgment basis or sum standard of          The Group identifies a receivable of RMB 2 million and above as
        serious single sum                         receivable in a large individual amount.
                                                   The Group conducts impairment test for receivables in a large
                                                   individual amount, and composite impairment test for a
        Withdrawal method of serious single        combination of financial assets with similar risk characteristics
                                                   inclusive of financial assets for which depreciation isn’t found
        sum and single withdrawal of bad debt      through separate test. Receivables for which loss from
        reserve                                    depreciation has been identified separately shall be excluded from
                                                   a combination of financial assets with similar risk characteristics
                                                   under impairment test.

       10.2 Receivable expense of withdrawal of bad debt reserve according to combination

        Combination confirmation basis
        Receivable expense with minor single       Receivable expense with minor single sum and with serious single
        sum and with serious single sum but        sum but without depreciation upon independent deprecation test
        without depreciation upon independent
        deprecation test


       10.3 Receivable expense with small single sum but with single withdrawal of bad debt reserve

                                                   Once evidence reveals that a certain receivable expense has rather
        Reason for single withdrawal of bad
                                                   large credit risks, it has to independently withdraw bad debt
        debt reserve
                                                   reserve for the receivable expense.
        Withdrawal method of bad debt              Individual determination method.
        reserve


       11. Inventories

       11.1 Classification of inventories

       Inventories of our group mainly include fuels, raw materials and developed products in process. The inventories
       are initially priced at the cost. Cost on developing products includes land transferring fees, expense on basic
       establishment, expense on construction installation work, borrowing costs incurred prior to completion of
       development project and other relevant expenses in the process of development etc. Other cost of inventories
       includes cost, processing cost and other expense incurred for transporting inventories to the current place and
       state.

       11.2 Pricing method on delivering inventories

       For delivering real estate development product, adopts specific identification to confirm its real cost. For
       delivering other inventories, adopt weighted average to confirm real cost of delivered inventories.




                                                                                                                      - 19 -
(II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

      11. Inventories–Continued

      11.3 Basis to determine net realizable value and withdrawal method of Inventory depreciation reserve

      On the balance sheet date, the inventories are measured by the less one of cost and net realizable value. When
      the net realizable value is less than cost, the Inventory depreciation reserve will be accrued. Variable NPV refers
      to the sum of estimated inventory sales price minus ―estimated cost, sales expense and relevant tax upon
      construction completion‖ in the daily activities. In the confirmation of inventory variable NPV, it has to adopt
      obtained evidence as the basis and consider the objective of owned inventory and influence of future matters of
      balance sheet.

      For the inventories with a large amount and lower unit price, the Inventory depreciation reserve is accrued as
      per the class of inventory. For the inventories that relate to the product series produced and sold in the same
      region, have the same or similar end use or purpose and that cannot be easily calculated individually from other
      items, the withdrawal of Inventory depreciation reserve will be combined. The Inventory depreciation reserve of
      other inventory is accrued according to the balance that the cost of individual inventory item exceeds the net
      realizable value.

      After withdrawal of inventory depreciation reserve, if the previous influencing factor of inventory write-down
      has disappeared, which leads to the net realizable value going above its book value, the writeback shall fall in
      the original accrued inventory depreciation reserve; the amount of writeback will be counted in the current
      profit and loss.

      11.4 Inventory accounting system

      The inventory accounting system is perpetual inventory system.



      12. Long-term equity investment

      12.1 Confirmation of investment cost

      As to the long-term equity investment formed by business combination, such as long-term equity investment
      obtained by business combination under the same control, the share of book value of stockholder's equity of the
      mergered party obtained on the date of acquisition is regarded as the initial development cost. With respect to
      the long-term equity investment obtained by business combination not under the same control, the combined
      cost is regarded as the development cost of long-term equity development. As for merging under numerous
      transactions and different control conditions, the cost of long-term stock right investment is the sum total
      between account value of assignee’s stock right investment before purchasing date and increased investment
      cost on purchasing date. The other equity investment other than the long-term equity investment formed by
      business combination is subject to initial measurement at cost.


      12.2 Subsequent calculation and measurement and profits & losses confirmation measures
      12.2.1. Long-term stock right investment calculated through cost method

      The group has to calculate long-term stock right investment of invested unit (without common control or serious
      influence, without quotation in the active market, fair value can not be reliably calculated and measured)
      according to the cost method; besides, the company financial statement has to calculate the long-term stock
      right investment of subsidiary according to the cost method. The subsidiary refers to the invested unit
      controllable by the group.

      During the calculation through cost method, it has to calculate the long-term stock right investment according to
      the initial investment cost; except for the expense paid in the investment obtaining or cash dividend or profit
      included in the corresponding price, announced but not distributed, it has to confirm the investment benefits in
      the period according to the cash dividend or profit announced and distributed by the invested unit.


                                                                                                                   - 20 -
(II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

      12. Long-term equity investment –Continued

      12.2.2. Long-term stock right investment calculated through equity method

      The group has to calculate the investment of cooperative enterprise and joint venture according to the equity
      method. Cooperative enterprise refers to the invested unit that group can impose serious influence; joint venture
      refers to the invested unit that group and other investors can implement common control.

      During the calculation through equity method and once initial investment cost of long-term stock right
      investment is larger than the investment and it has to enjoy the fair value of invested unit’s identifiable net
      assets, it does not adjust the initial investment cost of long-term stock right investment; once initial investment
      cost is smaller than the investment and it has to enjoy the fair value of invested unit’s identifiable net assets, it
      has to calculate gap into the profits and losses in the period and adjust the cost of long-term stock right
      investment.

      During the calculation through equity method, the investment profits and losses in the period are the net profits
      and losses realized by the invested unit for enjoyment or distribution in the year. During the confirmation of
      invested unit’s net profits and losses, it has to depend on the fair value of invested unit’s various identifiable
      assets and adjust and confirm to the invested unit’s net profits during the group accounting policies and period.
      The unrealized internal transaction profits and losses between group and cooperative enterprise and joint
      venture is set off according to the group’s stock ratio; it has to confirm the investment profits and losses on such
      a basis. However, the unrealized internal transaction losses between group and invested unit are not set off once
      it belongs to depreciation losses of transferred assets. As for other owner’s equity modification except for
      invested unit’s net profits and losses, it has to adjust the account value of long-term stock right investment,
      confirm as other comprehensive benefits and calculate into the capital reserve.

      During the confirmation of invested unit’s net losses, it has to adopt ―reduction of account value of long-term
      stock right investment and other essential long-term equity of invested unit’s net investment to zero‖ as the
      boundary. Besides, once the group bears additional loss obligations for the invested unit, it has to confirm
      expected liabilities according to the expected obligations and calculate into the investment losses in the period.
      Once the invested unit realizes net profits in the future, the group has to resume confirmation of benefits
      distribution share upon compensation of unconfirmed losses distribution share by benefits share.


      12.2.3. Disposal of long-term equity investment

      With respect to the disposal of long-term equity investment, the balance between its book value and actually
      acquired money is counted in the current profit and loss. As to the long-term equity investment calculated by
      equity method, the part counted in the shareholders equity at the time of disposal will be transferred to current
      profit and loss according to the corresponding proportion.

      12.3 Basis to determine the joint control and great influence on investee

      The ―control‖ refers to the power to decide on the financial and business policies of an enterprise, on the basis
      of which the benefits are gained from enterprise’s business activities. The ―joint control‖ denotes the control
      shared for some economic activity in terms of contract provisions; it merely exists under the circumstance of
      consensus of investors that share control power in the important financial and operating decisions concerning
      the economic activity. The ―great influence‖ refers to the right to participate in the decision-making of financial
      and business policies of an enterprise, but the enterprise cannot control or jointly control with other parties the
      formulation of the policies. In terms of identification whether to impose control or great influence on investee,
      the potential voting rights, including currently convertible company bonds and current exercisable share
      warrants held by investing enterprise and other parties, have been taken into account.




                                                                                                                     - 21 -
(II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

       12. Long-term equity investment –Continued

       12.4 Impairment test method & calculation method of depreciation reserve

       We check, on every balance sheet date, whether the long-term equity investment shows evidence of possible
       depreciation. If any, we will estimate its recoverable amount. If the recoverable amount of assets is less than its
       book value, the depreciation reserve will be accrued as per their balance and counted in the current profit and
       loss.
       Once the impairment loss of long-term equity investment is confirmed, it will not be reversed in the subsequent
       accounting period.

       13. Investment real estate

       The investment real estate refers to the real estate held for the purpose of gaining rental or capital appreciation
       or for the both purposes. It includes rental land use right, land use right held but to be transferred after
       appreciation, and rental buildings etc.

       The investment real estate is subject to the initial measurement at cost. As to the subsequent expenditure related
       to investment real estate, if the economic interest related to the assets is likely to flow in and its cost can
       calculated reliably, then it will be counted in the cost of investment real estate.

       We shall conduct subsequent measurement of investment real estate by the cost model, as well as depreciation
       or amortization according to the policy in accordance with building construction or land use right.

       We check, on every balance sheet date, whether investment real estate shows evidence of possible depreciation.
       If any, its recoverable amount will be estimated. The recoverable amount of assets is estimated on the basis of
       individual asset. If it is difficult to estimate the recoverable amount of individual asset, the recoverable amount
       of asset group will be determined on the basis of the belonging asset group of the asset. If the recoverable
       amount of the asset is less than its book value, the assets depreciation reserve will be accrued according to their
       balance and counted in the current profit and loss.

       Once the asset impairment loss of investment real estate is confirmed, it will not be reversed in the subsequent
       accounting period.

       The balance that disposal consideration such as selling, transfer, scrapping or damage or investment real estate
       deducts their book value and related taxation is counted in the current profit and loss.

       14 Fixed assets

       14.1 Conditions to confirm fixed assets

       The fixed assets refer to the tangible assets held for the purpose of commodity production, and provision of
       labor, rental or business management, with useful life exceeding a fiscal year. The related economic interests of
       the assets may flow into the group; besides, it can not confirm until reliable calculation and measurement of cost.
       It has to consider the fixed assets according to the cost and implement initial measurement and calculation in
       view of influence of expected abandonment expense elements.

       Once the economic interests related to fixed assets may possibly flow in and its cost can be reliably calculated
       and measured, it has to calculate subsequent expenditure related to fixed assets into the fixed assets cost and
       terminate confirmation of account value of replaced part. It has to calculate other subsequent expenditure into
       the profits and losses in the period upon occurrence.




                                                                                                                     - 22 -
(II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

       14. Fixed assets –Continued

       14.2 Depreciation method of fixed assets

       Since the follow-up month that intended serviceable condition for the fixed assets is achieved, except that the
       depreciation of gas turbine generator units is accrued by units-of-production method, the depreciation of other
       fixed assets will be accrued by straight-line method during useful life.
       The useful life, estimated net residual value and annual rate of depreciation are listed as below.

                                                                         Estimated      Net    Annual Rate of
        Category                                    Useful Life          Residual Value        Depreciation
        Building and structure                          20-40 years                    10%           2.25%-4.50%
        Machinery equipment (except gas
        turbine generator unit)
                                                         10-20 years                  5%-10%             4.5%-9%
        Machinery equipment – gas turbine
                                                                                        10%    Straight-line method
        generator unit (note)
        Conveyance                                        5-12 years                    10%              7.5%-18%
        Other equipment                                    5-8 years                    10%            11.25%-18%

       The estimated net residual value indicates that the fixed assets are assumed to be in the expected state that its
       useful life has run out. Currently, it is the amount obtained from the asset disposal of our group, from which the
       estimated disposal cost has been deducted.

       Note: gas-turbine generator is calculated and depreciated as per working capacity, that is to say, according to
       value of equipment, anticipated net residual value and total predicted working hours. The detailed list is as
       follows

                                                                                           Depreciation Amount
        Company name                                                   Fixes assets
                                                                                            (RMB Yuan/hour)
                                                                       No.1 Generator
                                                                                                          4,225.09
                                                                            Unit
                                                                       No.3 Generator
        The Company                                                                                       4,401.76
                                                                       Unit
                                                                       No.7 Generator
                                                                                                          4,407.11
                                                                       Unit
                                                                          No.10
        Shenzhen New Power Industrial Co., Ltd. (New                                                      3,954.47
                                                                       Generator Unit
        Power Company)
                                                                       No.1 Generator
                                                                                                          1,911.87
                                                                            Unit
                                                                       No.2 Generator
                                                                                                            688.66
        Shenzhen Nanshan Power (Zhongshan) Power Co.,                       Unit
        Ltd.                                                           No.3 Generator
                                                                                               1,902.68 - 1,937.99
                                                                            Unit
                                                                       No.4 Generator
                                                                                                            693.18
                                                                            Unit
                                                                       No.1 Generator
                                                                                                          2,009.43
                                                                            Unit
                                                                       No.2 Generator
                                                                                                            585.11
        Shenzhen Nanshan Power (Dongguan) Weimei Power                      Unit
        Co., Ltd. (―Weimei Power Company‖)                           No.3 Generator
                                                                                                          1,980.18
                                                                            Unit
                                                                       No.4 Generator
                                                                                                            585.08
                                                                            Unit

       14.3 Impairment test method of fixed assets & calculation method of depreciation reserve
                                                                                                                   - 23 -
We check, on every balance sheet date, whether the fixed assets show evidence of possible depreciation. If any,
its recoverable amount will be estimated. The recoverable amount of assets is estimated on the basis of
individual asset. If it is difficult to estimate the recoverable amount of individual asset, the recoverable amount
of asset group will be determined on the basis of the belonging asset group of the assets. If the recoverable
amount of the assets is less than its book value, the assets depreciation reserve will be accrued according to their
balance and counted in the current profit and loss.

Once the fixed asset impairment loss is confirmed, it will not be reversed in the subsequent accounting period.




                                                                                                             - 24 -
(II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

      14. Fixed Assets – Continued

      14.4 Other specifications

      As to the subsequent expenditure concerning fixed asset, if the economic interest related to the fixed asset is
      likely to flow in and its cost can be calculated reliably, then it will be counted in the fixed asset cost. And the
      recognition of book value of the replaced part will be terminated. The other subsequent expenditures besides
      this will be counted in the current profit and loss as it happens.

      Once the fixed assets are in the treatment status or expected utilization or treatment can not realize any
      economic interests, it has to ultimately confirm the fixed assets. The treatment income of fixed assets (sales,
      transfer, wastage or destruction) has to deduct the account value and relevant tax—the gap is calculated into the
      profits and losses in the period.

      15. Project under construction

      The cost of project under construction is determined according to the actual engineering expenditure, including
      the expenditure of all works occurring in the construction period, capital borrowing cost before project is up to
      the intended serviceable condition, and other related fees. It will be carried over to the fixed asset after the
      project is up to the intended serviceable condition.


      We check, on every balance sheet date, whether the project under construction shows evidence of possible
      depreciation. If any, its recoverable amount will be estimated. The recoverable amount of assets is estimated on
      the basis of individual asset. If it is difficult to estimate the recoverable amount of individual asset, the
      recoverable amount of asset group will be determined on the basis of the belonging asset group of the assets. If
      the recoverable amount of the assets is less than its book value, the assets depreciation reserve will be accrued
      according to their balance and counted in the current profit and loss.

      Once the impairment loss of project under construction is confirmed, it will not be reversed in the subsequent
      accounting period.

      16. Borrowing cost

      It can be directly classed under the borrowing cost for asset acquisition and construction or for production that
      accords with capitalization conditions. The capitalization will begin when both the asset expenditure and
      borrowing cost have been incurred, and the acquisition, construction or production activities necessary for asset
      reaching the intended serviceable condition or marketable state have begun. The capitalization will stop when
      the constructed or produced intended asset is up to serviceable condition or marketable state. The other
      borrowing cost will be recognized as expense as it happens in the current period.

      The amount obtained after the interest expenses of special borrowing actually incurred in the current period
      deducts the interest income of not yet used borrow money gained when it is saved in bank, or the amount of
      return on investment gained from temporary investment is capitalized. Generally, the amount of capitalization of
      borrowing is confirmed to be the result of the weighed average of assets expenditure (i.e. the part of special
      borrowing in excess of cumulative assets expenditure) being multiplied by capitalization rate of used general
      borrowing. The capitalization rate is determined according to the weighed average interest rate of general
      borrowing.




                                                                                                                      - 25 -
(II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

      17. Intangible assets

      17.1 Intangible assets

      Intangible assets include land use right and software etc.

      The intangible assets are subject to initial measurement at cost. Since the intangible asset of with limited useful
      life is operational, the balance that its original value deducts estimated net residual value and cumulative
      amount of accrued depreciation reserve is averagely amortized by stages by the straight-line method within the
      estimated useful life. In the case of uncertainty of useful life, the intangible asset will not be amortized.

      The useful life and amortization method of intangible asset with limited useful life is rechecked at the end of the
      period, it has to make adjustment once necessary.


      17.2 Impairment test method of intangible assets & calculation method of depreciation reserve

      We check, on every balance sheet date, whether the intangible asset with certain useful life shows evidence of
      possible depreciation. If any, its recoverable amount will be estimated. The recoverable amount of assets is
      estimated on the basis of individual asset. If it is difficult to estimate the recoverable amount of individual asset,
      the recoverable amount of asset group will be determined on the basis of the belonging asset group of the assets.
      If the recoverable amount of the assets is less than its book value, the assets depreciation reserve will be accrued
      according to their balance and counted in the current profit and loss.

      The intangible assets with uncertain useful life and those not yet up to the serviceable condition are subject to
      impairment test annually whether there is evidence of depreciation.

      Once the intangible asset impairment loss is confirmed, it will not be reversed in the subsequent accounting
      period.

      18. Long-term deferred expenses

      The long-term deferred expenses are those that have been incurred but should be amortized in the current period
      and subsequent periods for more than a year. The long-term deferred expenses are averagely amortized by
      stages in the estimated benefit period.

      19. Estimated liabilities

      Once relevant obligations related to matters are the group contemporary obligations and fulfillment of such
      obligations is likely to flow out economic interests and sum of obligations can be reliably calculated and
      measured, it has to confirm as expected liabilities.

      On the balance sheet date, in the consideration of the risk concerning contingencies, uncertainty, and time value
      of money etc, the estimated liabilities is calculated according to the optimal estimation that needs to be paid for
      the performance of current obligation. Once the currency time has serious value influence, it has to confirm the
      best estimation sum according to the sum upon flow-out and discount of expected future cash.

      In the event that the total or partly expectations that need to be paid for the settlement of estimated liabilities are
      compensated by a third party, the amount of compensation will be confirmed singly as an asset when it is
      confirmed basically that it can be received. Moreover, the amount of compensation confirmed must not exceed
      the book value of estimated liabilities.

(II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

      20. Revenue Recognition

                                                                                                                      - 26 -
       20.1 Goods sales revenue

       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.

       For revenue from real estate development product, on the condition that, both parties shall sign sale contract and
       put on records in land department; real estate development product has been finished and reached to the
       anticipated serviceable condition. And it is qualified for acceptance of relevant authorities and equipped with
       complete procedures; the buyer has paid stipulated payment on real state according to payment terms of sale
       contract and obtained qualification of joining in agreed in sale contract, that is to say when the seller received
       total payment on real estate or obtain the right of receive total payment on real estate and the relevant economic
       interest can totally inflow into the company, it is recognized to be sale revenue.

       20.2 Revenue from Providing Labor Service

       It can reliably calculate and measure the labor income; relevant economic interests are likely to flow into the
       enterprise; the transaction completion degree can be confirmed reliably; once the occurred and expected
       transaction cost can be reliably calculated and measured, it has to confirm the realization of labor income. The
       group has to confirm provided labor income on the balance sheet date according to the work completion
       percentage. The labor transaction progress is confirmed according to the ratio of occurred labor cost in the total
       estimated 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.


       21. Government grant

       Government grant means monetary and nonmonetary asset acquired from government for free except capital
       contributed by government as owner. It has to confirm the government subsidy once it can meet relevant
       government subsidy conditions and can be received.

       Monetary asset as government grant will be measured as amount received or receivable. Nonmonetary asset as
       government grant will be measured as fair value. If fair value can’t be acquired in a reliable way, it will be
       measured as notional sum. Government grant measured as notional sum will be included in the current profits
       and loss.

       Government grant related to asset will be confirmed as deferred income and equally distributed in service life of
       relevant asset to be included in current profit and loss.

       Government grant related to income used to compensate relevant expense and loss in future period will be
       confirmed as deferred income and included in current profit and loss in the period of confirming relevant cost.
       Government grant related to income used to compensate incurred relevant expense and loss will be directly
       included in current profit and loss.


       If confirmed government grant needs to be surrendered,for government grant with relevant balance of deferred
       income,book balance of relevant deferred income will be offset while remnant will be included in current profit
       and loss. On the contrary, for government grant without relevant deferred income, it will be directly in current
       profit and loss.

(II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued



                                                                                                                   - 27 -
      22. Deferred income tax asset/ deferred income tax liability

      The income tax includes period income tax and deferred income tax

      22.1 Current income tax

      On balance sheet date, current income tax liability (or asset) formed during and before current period will be
      measured as amount of income tax payable (or repayable) as specified by tax law.

      22.2 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.

      Generally, all the temporary differences have to confirm relevant deferred income tax; as for deductible
      temporary difference, the group is most likely to adopt ―taxable income adopted to deduct temporary
      difference‖ as the boundary and confirm relevant assets of deferred income tax. Besides, it does not confirm
      relevant assets or liabilities of deferred income tax for the temporary difference concerning initial confirmation
      of commercial reputation or initial confirmation of assets or liabilities in the transaction not incurred in the
      enterprise merging, without influence on accounting profits and taxable income (or deductible losses) upon
      occurrence.

      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.

      The group has to confirm the liabilities of deferred income tax incurred by temporary difference of taxable tax
      concerning subsidiary, cooperative enterprise and joint venture except that group can control the turning time of
      temporary difference and temporary difference is not likely to turn back within the foreseeable future. As for the
      deductible temporary difference concerning subsidiary, cooperative enterprise and joint venture, the group has
      to confirm the assets of deferred income tax only when temporary difference is likely to turn back in the
      foreseeable future and is expected to deduct taxable income of deductible temporary difference.

     On balance sheet date, deferred income tax asset/ liability will be measured as applicable tax rate during period
     of recovering relevant asset or paying relevant liability.

      Except for transaction directly calculated into other comprehensive benefits or owner’s equity, income tax and
      deferred income tax concerning relevant matters and calculated into other comprehensive benefits or owner’s
      equity as well as account value of adjustment commercial reputation of deferred income tax incurred by
      merging, the rest income tax and deferred income tax or benefits in the period are calculated into the profits and
      losses in the period.

      On balance sheet date, book value of deferred income tax asset will be reviewed. If it is likely to fail to acquire
      sufficient taxable income to deduct profit of deferred income tax asset, book value of deferred income tax asset
      will be written down. If it is likely to acquire sufficient taxable income to deduct profit of deferred income tax
      asset, such write-down amount shall be subsequently reversed.

(II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

      22. Deferred income tax assets/ Deferred income tax liabilities – Continued

      22.2 Deferred income tax assets/ Deferred income tax liabilities – Continued

       When possessing legal right to settle with net amount and intending to settle with net amount or acquire asset
       and pay for liability synchronously, we will present current income tax asset and current income tax liability as
       net amount following deduction.


                                                                                                                    - 28 -
       When possessing legal right to settle current income tax asset and current income tax liability with net amount,
       deferred income tax asset and deferred income tax liability are related to income tax collected from identical
       taxpaying body by identical tax revenue collection and management department or related to different taxpaying
       bodies, but in reverse period for every significant deferred income tax asset and deferred income tax liability,
       relevant taxpaying body intends to settle current income tax asset and current income tax liability with net
       amount or synchronously acquire asset and satisfy liability, we will present deferred income tax asset and
       deferred income tax liability as net amount following deduction

       23. Operating lease, finance lease

       Finance lease is to virtually transfer all risks and rewards related to ownership of asset. Leases other than
       finance lease are operating leases.

       23.1 Recording operating lease service as lessee

       Rental expense in every stage of lease term will be included in relevant cost of asset and current profit and loss
       as straight-line method. Initial direct cost will be included in current profit and loss. Perhaps some rent may be
       included in current profit and loss when actually incurred.

       23.2 Recording operating lease service as lessor

       Rental expense in every stage of lease term will be confirmed as current profit and loss as straight-line method.
       Large amount of initial direct cost to be capitalized when actually incurred will be included in current profit and
       loss as basic stages identical to that of recognition of rental income. Small amount of initial direct cost will be
       included in current profit and loss when actually incurred. Perhaps some rent may be included in current profit
       and loss when actually incurred.


       24. Other Significant Accounting Policy, Accounting Estimate and Compilation Method p of Financial
Statement

       24.1 Employee compensation

       Except for compensation due to rescission of employee’s labor relationship, the group has to confirm payable
       remuneration as liabilities during the accounting period.

       We will participate in social security system for employee set up by government department as specified,
       including basic pension insurance, medical insurance, and housing fund and other systems. Expenses involved
       will be included in relevant cost of asset and current profit and loss when actually incurred.

       We will sever labor relation with employee prior to expiration of labor contract, or encourage employee to
       voluntarily accept layoff and put forward suggestion on compensation. If we have formulated formal plan for
       severing labor relation or put forward voluntary layoff suggestion and plan to put into effect meanwhile the plan
       and suggestion can’t be withdrawn unilaterally, estimated liability produced by compensation for severing labor
       relation with employee will be confirmed and included in current profit and loss.

 (II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

24. Other Significant Accounting Policy, Accounting Estimate and Compilation Method p of Financial
Statement – Continued
       24.2 Debt restructuring

       24.2.1. Debtor’s obligation of recording debt restructuring

       For debt liquidated with cash, balance between book value of debt to be restructured and amount of actual
       payment will be included in current profit 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 profit and loss. Balance between fair value of non-cash asset transferred and book value of
       debt to be restructured will be included in current profit and loss. When debt is transferred to capital, balance

                                                                                                                       - 29 -
between book value of debt to be restructured and fair value of loaner’s share derived from disclaim will be
included in current profit and loss.

It has to transfer debts into debt–reorganization of capital. The margin between ―account value of
re-organization debts and fair value of share owned by creditor upon credit abandonment iscalculated into the
profits and losses in the period.

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 profit 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.

24.2.2. Creditor’s obligation of recording debt restructuring

For debt liquidated with cash, balance between book balance of credit to be restructured and cash received will
be included in current profit 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
profit 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 profit and loss.


It has to transfer debts into debt–reorganization of capital. The gap between ―fair value of debtor’s share and
account balance of re-organization credit‖ is calculated into the profits and losses in the period.

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 profit 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

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 profit and loss.




                                                                                                               - 30 -
 (II) Significant Accounting Policy, Accounting Estimate and Preliminary Mistake of the Company –Continued

       25. Utilize important judgment made in the process of accounting policy and critical assumption and
unconfirmed factor adopted by accounting estimate

       In the process that our group utilizes accounting policies stated in Note (II), due to uncertainty of business
       activity, our group is required to conduct judgment, estimate and assumption for book value of report items that
       can not be accurately measured. The judgment, estimate and assumption are based on historical experience of
       manager layer of our group, which are made with consideration of other relevant factors. There may be
       difference between practical result and estimate of our group. On the basis of above-mentioned going-concern
       judgment, estimate and assumption, our group conducts regular re-check. Influence number of changes in
       accounting estimate that only affect the current affairs shall be confirmed in the current period; influence
       number of changes in accounting estimate that will affect both the current affairs but also affairs in the future
       shall be confirmed in current period and future.

       - Critical assumption and unconfirmed factor adopted by accounting estimate

       On balance sheet date, critical assumptions and uncertainty in accounting estimate that possibly result in
       significant adjustment of book value of assets and liability in future mainly includes:

       Fixed assets is calculated and depreciated with output method

       Our group confirms depreciation in unit quantity of electricity according to value of generator unit, anticipated
       quantity of sold electricity and predicated net residual value and calculates according to depreciation in unit
       quantity of electricity and practical quantity of sold electricity. On the basis of current industrial policy,
       technology, loss, scheduling mode of electric management department and previous experience, management
       layer of our group think service life, anticipated quantity of sold electricity, predicted net residual value and
       depreciation method are suitable. If there is big difference between practical quantity of sold electricity in the
       future and anticipated quantity of electricity, our group will adjust depreciation in unit quantity of electricity.
       The adjustment will affect current period and period in the future is credited to depreciation expense of profit
       and loss.

       Temporary estimated value of fixed assets

       Due to long construction period, high construction cost and long completion and settlement time of power plant
       project, the generator unit and relevant construction building that reaches to anticipated utilization state shall be
       temporarily credited to book according to budgetary estimates, construction cost or practical cost etc. before
       transaction settlement for completion of project. After the procedure has been finished, adjust the original
       estimated value according to practical cost. If there are big difference between temporary estimated value and
       practical cost of generator unit and relevant construction building, it is necessary to conduct corresponding
       adjustment for value of fixed assets.




                                                                                                                      - 31 -
(III) Tax

      1. Main categories of taxes and tax rate

            Category                     Tax basis                                     Tax rate
                           Balance of current substituted          Substituted money on value-added tax is
       Value-added tax     money on value-added tax deducted       calculated with 13% or 17% of sale volume
                           current input value added tax           calculated according to provision of tax law
       Business tax        Business revenue                        3% or5%
       Urban
                           Value-added tax and business tax
       maintenance and                                             1%, 5% or 7%
                           actually paid
       construction ax
       Education           Value-added tax and business tax
       surcharge           actually paid                           3%
       Local education     Value-added tax and business tax
       surcharge           actually paid                           2%
       Business income
                           Taxable income                          From 16.5% to25%
       tax (note 1)
                           Added value from assignment of
       Land value
                           state land use right, construction on   Four-level progressive tax rate
       increment tax
                           the ground and its attachments.
                           Calculate according to balance of
                                                                   For payment in the light of calculated balance of
                           deducting 30% of original value of
       Building tax                                                real estate, tax rate is 1.2%; for payment in the
                           real estate; rental revenue of real
                                                                   light of calculated rental revenue, tax rate is 12%
                           estate
       City and town
                           Area of land actually occupied          RMB 4 per square meter
       land use tax

      Note 1: Income tax rate of our company and its subsidiary is listed as below:

              The name of the company and its subsidiary companies                      The income tax rate
                                                                                      2011              2010
       The company                                                                         24%               22%
       New Power Company                                                                   24%               22%
       ShenNan Electric Gas Turbine Engineering Technology Co., Ltd.
                                                                                             24%                  22%
       (―Engineering Company‖)
       ShenZhen XieFu Oil Supply Co., Ltd.(―Xiefu Oil Supply Company‖)                     24%                  22%
       ShenZhen ShenNan Environmental Protection Electricity Co.,
                                                                                             25%                  25%
       Ltd.(―Environmental Protection Company‖)
       ZhongShan Power Company                                                               24%                  22%
       WeiMei Power Company                                                                  24%                  22%
       ShenNan Energy(Singapore) Co., Ltd.(ShenNan Singapore Company)                        20%                  20%
       ShenZhong Real Estate Development Co., Ltd. in ZhongShan
                                                                                             25%                  25%
       City(―ShenZhong Development Company‖)
       ShenZhong Real Estate Investment and Purchase Co., Ltd. in
                                                                                             25%                  25%
       ZhongShan City(―ShenZhong Real Estate Purchase Company‖)
       HuiDong XieFu Port Comprehensive Development Co.,
                                                                                             25%                  25%
       Ltd(―HuiDong XieFu Company‖)
       HuiDong Harbour Development Co., Ltd(―HuiDong Harbour
                                                                                             25%                  25%
       Company‖)
       HongKong Syndisome Co., Ltd(―Syndisome Company‖)                                  16.5%                16.5%

      Our company, New Power Company, Engineering Company and Xiefu Oil Supply Company are enterprises that
      are established in special economic zone. Zhongshan Power Company and Weimei Power Company are
      foreign-funded enterprises that are engaged in production of energy. Before January 1, 2008, 15%, serves as tax
      rate of income tax, is applicable to our company and above-mentioned subsidiary. Since January 1, 2008, it is
      gradually transited to 25% national tariff within five years. The applicable tax rate for our company and
      above-mentioned subsidiary is 24%.


                                                                                                                  - 32 -
(III) Tax – Continued

      2. Tax preference and approval documents

                                                                          Approval
                             Relevant regulation and       Approval       document      Range of           Term of
Category   Company name            policy basis            authority       number       remission          validity
                            Income Tax Law of the
                            People’s Republic of                                     Since 2008,
                            China, Notification on                                    free charge       From January
Business
           Weimei Power     Implementing                                 Not          for two years     1, 2008 to
income                                                  Not applicable
           Company          Preferential Policy for                      applicable   and half          December 31,
tax
                            Business Income Tax of                                    income tax        2012
                            the State Council (G.F.                                   for three years
                            [2007] No. 39 document)
                            Income Tax Law of the
                            People’s Republic of                                     Since 2008,
                            China, Notification on                                    free charge       From January
Business   Zhongshan
                            Implementing                                 Not          for two years     1, 2008 to
income     Power                                        Not applicable
                            Preferential Policy for                      applicable   and half          December 31,
tax        Company
                            Business Income Tax of                                    income tax        2012
                            the State Council (G.F.                                   for three years
                            [2007] No. 39 document)
                            Notification on Adjusting
                            and Completing
                                                                                      Value-added
                            Value-added Tax Policy
           Environmental                                                              tax is free for
Value-ad                    for Product and Labor                        Not                            Not
           Protection                                   Not applicable                labor of
ded tax                     with Comprehensive                           applicable                     applicable
           Company                                                                    dealing with
                            Utilization of Resource
                                                                                      sludge
                            (Financial Tax [2011] No.
                            115)
                            Arrangement on
                            Protecting Income Tax
                                                                                      Income tax
                            From Double Tax or
                                                                                      paid
Business                    Evasion of Tax o in
           Xingdesheng                                                   Not          according         Not
income                      Mainland and the Hong       Not applicable
           Company                                                       applicable   10% of total      applicable
tax                         Kong Special
                                                                                      stock
                            Administration Region
                                                                                      dividend
                            (State Tax Letter [2006]
                            No. 884 Document)
                                                                         S.S. T. N.   Dividend is
                                                        Shenzhen
                                                                         Deduction    freely charged
Business                    Income Tax Law of the       Nanshan Office
           Xingdesheng                                                   B. Zi.       by income tax     Not
income                      People’s Republic of       of State
           Company                                                       [2011] No.   before            applicable
tax                         China                       Administration
                                                                         0011         December 31,
                                                        of Taxation
                                                                         Document     2007




                                                                                                          - 33 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

  (IV). Business Combination and Consolidated Financial Statements
        1. An Overview of Subsidiaries
         (1) Established and Invested Subsidiaries
                                                                                                                                                                                             Unite: RMB Yuan
                                                                                                                                                                              Wheth
                                                                                                                                                     Other
                                                                                                                                                                                 er
                                                                                                                                                    amount                                                 Amount in
                                                                                                                                                                              consol
                                            Regist                                                                                                  composi                                                  minority
                                                                                                                                   Real invested                               idate
           Full name of                      ered                                                                                                    ng net    Shar    Voti              Minority        shareholders
                               Type                    Core                                     Managing Scope                     amount at the                                the
         the subsidiaries                   locatio                 Registered                                                                      investm    ehol     ng             shareholders’    ’ equity used
                                                      busines                                                                       end of the                                financ
                                               n                     capital                                                                         ent of    ding    righ               equity             to offset
                                                         s                                                                             year                                      ial
                                                                                                                                                    subsidia   ratio    ts                               against their
                                                                                                                                                                              statem
                                                                                                                                                      ries      (%)    (%)                                  profit and
                                                                                                                                                                                ents
                                                                                                                                                                                                              loss of
           Xie Fu Oil                                 Trade                         Fuel sale and agent of fuel import                              0                         Yes                        0
                               Limited
           Company                                                 53,300,000.00                                                   26,650,000.00               50      50              45,441,989.78
                               liability    Shenzh
            (Noted)           company       en City
                                                      Electricit                    Technical development of application of                         0                         Yes                        0
              New                                     y                             residual heat; electricity generation from
           Electricity                                             113,850,000.00                                                  113,850,000.00              100     100             -
                            Joint venture   Shenzh    Generatio                     residual heat and combustion engine
           Company          (Hong Kong)     en City   n
                                                      Electricit                    Electricity generation from residual heat                       0                         Yes                        118,781,000.72
           Zhongshan                        Zhongs    y                             and combustion engine
           Electricity                                             396,800,000.00                                                  317,440,000.00              80      80              (39,421,000.72)
                            Joint venture    han      Generatio
           Company          (Hong Kong)      City     n
                                                      Engineeri                     Technology consultation and related                             0                         Yes                        0
                                                      ng           10,000,000.00
                                                                                    maintenance and examination of combined        13,520,000.00               100     100             -
           Engineering      Joint venture   Shenzh    Consolati                     recycle electricity generation from fuel gas
            Company         (Hong Kong)     en City   on                            and steam
                                                      Electricit   USD              Establishment and operation of natural gas                      0                         Yes                        0
             Weimei                                   y            35,040,000.00    power generation
            Electricity                                                                                                            208,102,049.76              70      70              96,944,507.36
                            Joint venture   Donggu    Generatio
            Company         (Hong Kong)     an City   n
          Environmental                               Engineeri                     Sludge drying                                                   0                         Yes                        0
                                                      ng           79,000,000.00                                                   79,000,000.00               100     100             -
            Protection      Joint venture   Shenzh
            Company         (Hong Kong)     en City
                               Limited                Harbor                        Establishment and operation of                                  0                         Yes
         Huidong Xiefu         liability    Huizho    Manage       8,620,000.00     comprehensive harbors and related              6,465,001.00                84      84              (6,094,480.45)    7,477,990.45
           Company            company       u City    ment                          equipment
           Huidong                                    Harbor                        Establishment and operation of                                  0                         Yes
                               Limited                Manage                        miscellaneous harbors, oil docks and fuel
            Harbor                                                 10,000,000.00                                                   5,500,000.00                55      55              (111,881.14)      4,611,881.14
                               liability    Huizho    ment                          farm and related equipments
           Company            company       u City


Note: The Company holds 50% of the shares of Xie Fu Oil Company and has a majority voting rights in the board of directors. Therefore, the Company has real control over it,
which is accordingly included into the consolidated financial statements.


                                                                                                                                                                                                                 - 34 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

(IV). Business Combination and Consolidated Financial Statements-Continued
        1. An Overview of Subsidiaries-Continued
          (2) Subsidiaries consolidated from companies under different control
                                                                                                                                                                                                      Unite: RMB

                                                                                                                                                                     Wheth
                                                                                                                                                                        er
                                                                                                                                                                     consol
                                    Regist                                                                                                                                                         Amount in
          Full name                                                                                                                                                   idate
                                     ered                                                                                     Other amount                                                          minority
            of the       Type                               Registered                                    Real invested                           Shareho   Votin      the
                                    locatio                                    Managing Scope                                 composing net                                     Minority          shareholders’
         subsidiaries                           Core         capital                                    amount at the end                          lding       g     financi
                                       n                                                                                      investment of                                    shareholder       equity used to
                                               business                                                    of the year                             ratio    rights      al
                                                                                                                               subsidiaries                                     s’ equity     offset against their
                                                                                                                                                    (%)      (%)     statem
                                                                                                                                                                                                profit and loss of
                                                                                                                                                                       ents
         Shennan        Limited     Singapo   Trade        SGD                                                                                                       Yes
                                                                            Agent for fuel, gas
         Singapore      liability   re                     1,500,000.00
                        compan
                                                                            turbine and its related            6,703,800.00                   -       100     100                          -            0
         Company        y
                                                                            spare parts
         Shenzhong      Limited     Zhongs    Housing      177,800,000.00   Housing     development,                                                                 Yes
         Real Estate    liability   han       developmen                    property    management,
                        compan      City      t                             sale,    tenancy    and
         Developme      y                                                   investment           on
                                                                                                                          -                   -        75      75              20,322,156.00       24,127,844.00
         nt                                                                 commercial housings
         Company
         Shenzhong      Limited     Zhongs    Housing      60,000,000.00    Housing      development,                                                                Yes
         Real Estate    liability   han       developmen                    property     management,
         Company
                        compan      City      t                             selling,   leasing   and                      -                   -        75      75              17,358,150.39            0
                        y                                                   investment            on
                                                                            commercial housings
         Xing   De      Limited     Hong      Import and   HKD              Import and export                                                                        Yes
         Sheng          liability   Kong      export       200,000.00
                        compan
                                                                                                                217,807.27                    -       100     100                          -            0
         Company        y


Note: On December 5, 2008, Shennan Singapore Company and Shen Ye Investment Management Co., Ltd (Shen Ye Investment Company) signed ―Transfer Agreement on Buying
    and Selling 200,000 Common Shares of HONGKONG SYNDISOME CO., LIMITED‖ (hereinafter ―Transfer Agreement‖) and transferred 100% of share ownership in Xing De
    Sheng Company (including the part Mrs Fubo holds) to Shen Ye Investment Company at the price of HKD 393,885,100.00. According to the Transfer Agreement, Shen Ye
    Investment Company shall pay HKD 1,000,000.00 on the sign date, and pay off the transfer amount within six months after signing the transfer agreement. By the authorized
    date of this financial report, Shen Ye Investment Company hasnot paid the total price of equity transfer, which is HKD 392,885,100.00. Therefore, the Company still has
    control over Xing De Sheng Company and accordingly includes it into the financial statements.




                                                                                                                                                                                                              - 35 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

 (V). Notes on consolidated financial statements
                 1. Monetary Capital
                                                                                                   Unit: RMB Yuan
                                     Amount at the end of the year            Amount in the beginning of the year
                                                Conve                                       Conve
                 Items             Foreign                                    Foreign
                                                rsion        RMB                             rsion         RMB
                                   currency                                   currency
                                                 rate                                         rate
         Cash:
         RMB                          175,127.11   1.0000       175,127.11       121,987.47     1.0000        121,987.47
         HKD                           82,656.91   0.8107        67,009.95         82,656.91    0.8509         70,332.77
         USD                             995.22    6.3009         6,270.78           995.22     6.6227          6,591.04
         Euro                           1,017.87   8.1625         8,308.37          1,017.87    8.8065          8,963.88
         Bank account:
         RMB                     618,132,096.26    1.0000   618,132,096.26    575,020,508.91    1.0000    575,020,508.91
         HKD                          826,105.97   0.8107       669,724.11      5,369,706.06    0.8509      4,569,082.89
         USD                       1,968,962.94    6.3009    12,406,234.51      1,658,289.85    6.6227     10,982,356.19
         SGD                           98,879.81   4.8679      481,337.03          22,144.87    5.1191        113,361.80
         Other monetary
         currency
         RMB                      63,144,299.99    1.0000    63,144,299.99     10,488,747.90    1.0000     10,488,747.90
         USD                             737.04    6.3009         4,644.01           737.04     6.6227          4,881.19
         Total                                              695,095,052.12                                601,386,814.04



        Note: Other monetary currency mentioned includes L/G deposit and B/G deposit, which adds up to the total
              amount of RMB 62,536,060.00 (December 31, 2010, RMB 10,000,000.00). The bank account contains
              the fixed deposit that will be expired in three months and will amount to RMB 3,240,000.00 (December
              31, 2010, RMB 0).

                 2. Notes Receivable

        Categories of Notes Receivable

                                                                                                     Unit: RMB Yuan
                                                                Amount at the end of the       Amount in the beginning
                            Categories                                   year                       of the year
         Bank acceptance                                                                   -                 700,000.00

        The Group does not have notes discounted but not yet due at the end of the year, or notes endorsed to transfer
        but not yet due at the end of the year.




                                                                                                                   - 36 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


 (V). Notes on consolidated financial statements-Continued
                 3. Accounts Receivable

                   (1) Accounts Receivable Disclosed in Categories

                                                                                                                                               Unit: RMB Yuan
                                                      Amount at the end of the year                                       Amount in the beginning of the year

                 Categories                   Book balance                     Bad debit reserve                    Book balance                      Bad debit reserve
                                                           Percent                             Percent                               Percent                       Percent
                                         Amount                               Amount                             Amount                           Amount
                                                           age (%)                             age (%)                               age (%)                       age (%)
         Account receivable
         that is a great single
         amount and accrues
                                         3,474,613.06          0.37           3,474,613.06      100.00          12,135,091.34           2.32     4,580,704.34         37.75
         bad debit reserve
         individually with this
         amount
         Account receivable
         that is not a great
         single amount, and
         that is a great single
                                       934,640,019.03         99.53                      -             -       508,090,413.69          97.08                   -             -
         amount but not
         depreciated through
         individual depreciation
         text
         Account receivable
         that is not a great
         single amount but                   946,915.10        0.10            946,915.10       100.00           3,138,555.10           0.60      391,079.10          12.46
         accrues bad debit
         reserve individually
         Total                         939,061,547.19        100.00           4,421,528.16          0.47       523,364,060.13         100.00     4,971,783.44             0.95



             The Group defines the account receivable of a great single amount as the account receivable with an
         amount over RMB 2,000,000.00 (including RMB 2,000,000.00)


       Explanation of age of account receivable

                                                                                                                                               Unit: RMB Yuan
                                              Amount at the end of the year                                          Amount in the beginning of the year
          Age of                               Percent                                                                      Percen
          account                                             Bad debit                                                                   Bad debit
                              Amount             age                              Book value               Amount            tage                             Book value
                                                               reserve                                                                     reserve
                                                (%)                                                                          (%)
         Less than
                          934,298,767.65         99.49                    -      934,298,767.65       508,292,525.93         97.12                    -     508,292,525.93
         1 year
         From 1
         year to 2             243,363.62          0.03                   -          243,363.62                       -           -                   -                      -
         years
         From 2to
                                         -            -                   -                     -          6,358,317.76        1.21        641,043.00          5,717,274.76
         3 years
         More than
                              4,519,415.92         0.48      4,421,528.16              97,887.76           8,713,216.44        1.67      4,330,740.44          4,382,476.00
         3 years
         Total            939,061,547.19        100.00       4,421,528.16        934,640,019.03       523,364,060.13        100.00       4,971,783.44       518,392,276.69




         (2) Account receivable that is not a great single amount but accrues bad debit reserve individually

                                                                                                                                               Unit: RMB Yuan
                                                                                   Amount of accrued
         Items of account receivable                      Book balance                                            Accrual ratio                  Explanation
                                                                                   bad debits reserve
         Account receivable of                                                                                                          Could not recover if overdue
                                                                800,000.00                     800,000.00                  100.00
         engineering
         Account receivable of oil sales                        146,915.10                     146,915.10                  100.00       Could not recover if overdue
         Total                                                  946,915.10                     946,915.10                  100.00



                                                                                                                                                                     - 37 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

 (V). Notes on consolidated financial statements-Continued

        3. Accounts Receivable-Continued
         (3) Transfer and receipt in this period

                                                                                                                           Unit: RMB Yuan
                                                                                                     Amount of
                                                       Reasons for          Evidence for
                                                                                               accumulated bad debits        Transferred and
             Items of account receivable               transfer and          bad debts
                                                                                               reserve before transfer       received amount
                                                          receipt             reserve
                                                                                                     and receipt
         Shenzhen Petrochemical Bonded
                                                                            Unreceived
         Trade Co., Ltd (Petrochemical                  Received                                           3,474,613.06                    48.28
                                                                             overdue
         Bonded Company)
         China National Electric Equipment                                  Unreceived
                                                        Received                                              626,043.00              626,043.00
         Corporation (CNEEC)                                                 overdue
         Dongguan Dongcheng Dongxing                                        Unreceived
                                                        Received                                              480,000.00              480,000.00
         Thermoelectricity Co., Ltd                                          overdue
         Sulige Gas Electricity Generation                                  Unreceived
                                                        Received                                               69,164.00               69,164.00
         Co., Ltd                                                            overdue
         Total                                                                                             4,649,820.06             1,175,255.28



         (4) No account from shareholders with more than 5% (including 5%) voting rights of the Company is
       receivable in the account receivable during the reporting period.

         (5) The Top Five Organizations in the List of Amount of Account Receivable
                                                                                                                           Unit: RMB Yuan
                                                                                                                 Percentage of the total amount of
            Name of the            Relation with the
                                                                   Amount                     Year limit                account receivable
            organization              Company
                                                                                                                                (%)
         Shenzhen Financial         Government                                                                                               60.09
                                                                      564,250,490.62       Less than 1 year
         Bureau                       sector
         Guangdong Power           Non-associated                                                                                           16.50
                                                                      154,924,810.94       Less than 1 year
         Grid Company                customer
         Zhongshan                  Government                                             Less than 1year                                  14.81
                                                                      139,076,486.80
         Financial Bureau             sector
         Dongguan Financial         Government                                                                                               6.72
                                                                       63,135,152.56       Less than 1year
         Bureau                       sector
         Shenzhen Water             Government                                                                                               0.51
                                                                        4,799,052.95       Less than 1year
         Authority                    sector
         Total                                                        926,185,993.87                                                        98.63


                 4. Prepaid Accounts
         (1)Prepaid Accounts Listed According to the Account Age

                                                                                                                           Unit: RMB Yuan
                                                            Amount at the end of the year                  Amount in the beginning of the year
                     Age of account                                               Percentage                                          Percentage
                                                              Amount                                          Amount
                                                                                      (%)                                                (%)
         Less than 1 year                                      31,358,682.53            99.31                     12,746,630.59              94.21
         From 1 year to 2 years                                        280.00                -                        542,468.58               4.01
         From 2s year to 3 years                                   84,031.98              0.27                         21,224.71               0.16
         More than 3 years                                        133,402.72              0.42                        219,578.01               1.62
         Total                                                 31,576,397.23           100.00                     13,529,901.89             100.00




                                                                                                                                           - 38 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


 (V). Notes on consolidated financial statements-Continued

        4. Prepaid Accounts-Continued

         (2) The Top Five Organizations in the List of Amount of Prepaid Account

                                                                                                       Unit: RMB Yuan
                                                             Relation with                                         Unsettled
                      Name of the organization               the Company         Amount            Time             reasons
                                                                                                                   Prepaid
                                                              Unrelated                          Less than 1
         Shenzhen Dapeng LNG Marketing Co., Ltd.                                16,271,809.11                     purchasing
                                                              supplier                              year
                                                                                                                   expense

                                                                                                                   Prepaid
         Guangdong Trade Company of CNOOC Gas &               Unrelated                          Less than 1
                                                                                 9,438,727.20                     purchasing
         Power Group Co., Ltd.                                supplier                              year
                                                                                                                   expense

                                                                                                                   Prepaid
                                                              Unrelated                          Less than 1
         Guangdong Guoyu Energy CO., Ltd.                                        1,576,538.26                     purchasing
                                                              supplier                              year
                                                                                                                   expense

                                                                                                                   Prepaid
                                                              Unrelated                          Less than 1
         Ningbo Lvyuan Natural Gas Electricity Co., Ltd.                         1,340,114.64                     purchasing
                                                              supplier                              year
                                                                                                                   expense

                                                                                                                   Prepaid
                                                              Unrelated                          Less than 1
         Xinao Energy Trade CO., Ltd.                                            1,070,048.83                     purchasing
                                                              supplier                              year
                                                                                                                   expense

         Total                                                                  29,697,238.04
          (3) No prepaid account is from shareholders with more than 5% (including 5%) voting rights of the Company
       in the prepaid account balance during the reporting period.

         (4) Prepaid accounts Disclosed According to Customers
                                                                                                        Unit: RMB Yuan
                                                                                                       Amount in the
                                                                          Amount at the end of      beginning of the year
                               Categories                                     the year
         Prepaid account with an individually significant amount                25,710,536.31                   4,504,321.11
         Prepaid account that does not have an individually
          significant amount but has a bigger credit risk after
          combination based on characteristics of credit risks                      133,402.72                   219,578.01


         Other relative prepaid amount which does not have an
         individually significant amount                                          5,732,458.20                  8,806,002.77

         Total                                                                   31,576,397.23                 13,529,901.89

        The Group defines the prepaid account with an amount over RMB 2,000,000.00(including RMB 2,000,000.00)
        as an individually significant prepaid amount. Account that is not individually significant, but has a bigger risk
        after combination based on credit risk characteristics, is a prepaid account which is not individually significant
        but has more than 3 years account age.

                 5. Other Accounts Receivable

         (1)Disclosure of Other Accounts Receivable



                                                                                                                        - 39 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

                                                                                                                    Unit: RMB Yuan

                                   Amount at the end of the year                      Amount in the beginning of the year
                            Book balance               Bad debit reserve                                      Book balance
     Categories
                                          Percen
                                                                               Percentage                                   Percent
                          Amount           tage                     Amount                                  Amount
                                                                                  (%)                                       age (%)
                                           (%)

Account receivable
that is a great single
amount and accrues
                          26,237,404.46     16.79   26,237,404.46     100.00   26,237,404.46      52.08   26,237,404.46      100.00
bad debit reserve
individually with this
amount


Account receivable
that is not a great
single amount, and
that is a great single
                         122,108,196.73     78.15               -          -   18,742,661.50      37.21               -           -
amount but not
depreciated through
individual
depreciation text

Account receivable
that is not a great
single amount but          7,904,555.63      5.06    5,412,909.64      68.48    5,394,398.21      10.71    3,686,910.48       68.35
accrues bad debit
reserve individually

Total                    156,250,156.82    100.00   31,650,314.10      20.26   50,374,464.17     100.00   29,924,314.94       59.40




                                                                                                                                      - 40 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


 (V). Notes on consolidated financial statements-Continued

        5. Other Accounts Receivable-Continued

        The Group defines other account receivable with an amount over RMB 2,000,000.00 (including RMB
        2,000,000.00) as individually significant other account receivable.

        Analysis of account age of other accounts receivable
                                                                                                          Unit: RMB Yuan
                                         Ending amount                               Amount in the beginning of the year
                                      Percen                                               Percen
         Accou                         tage   Bad debits                                     tage     Bad debits      Book
         nt age       Amount           (%)      reserve          Book value        Amount    (%)       reserve        value
         Less than    111,572,972.0                                                                                           14,174,958.2
                                         71.41               -   111,572,972.06    14,174,958.20    28.14                 -
         1 year                   6                                                                                                      0
         From 1
         year to 2    11,164,372.30       7.15      10,000.00     11,154,372.30     4,352,781.54     8.64                 -   4,352,781.54
         years
         From 2
         years to 3    1,672,519.64       1.07     173,524.12       1,498,995.52      81,091.50      0.16                 -     81,091.50
         years
         More than
                      31,840,292.82      20.37   31,466,789.98       373,502.84    31,765,632.93    63.06     29,924,314.94   1,841,317.99
         3 years
                      156,250,156.8                                                                                           20,450,149.2
                                        100.00   31,650,314.10   124,599,842.72    50,374,464.17   100.00     29,924,314.94
         Total                    2                                                                                                      3

        (2) Other account receivable that does not have an individually significant amount but is accrued bad debit
          reserve individually

                                                                                                                     Unit: RMB Yuan
                                                                            Amount of accrued       Accrual
         Contents of other account receivable        Book balance                                                         Reasons
                                                                             bad debit reserve       ratio
                                                                                                                  Part of the amount
                                                          3,278,632.28             1,404,953.09         42.85       could not recover if
         Deposit receivable                                                                                         overdue
                                                                                                                  Part of the amount
                                                          2,083,698.16             1,736,004.16         83.31     could not recover if
         Receivable dormitory fees                                                                                overdue
                                                                                                                  Could not recover if
                                                          1,496,448.19             1,496,448.19       100.00
         Consignment goods                                                                                        overdue
         Others                                                                                         74.16     Part of the amount
                                                          1,045,777.00              775,504.20                    could not recover if
                                                                                                                  overdue
         Total                                            7,904,555.63             5,412,909.64         68.48

         (3) Transfer and receipt in this period

                                                                                             Amount of
         Contents of other                                                                accumulated bad
              account                 Reasons for            Evidence for bad          debits reserve before      Transferred   and
            receivable            transfer and receipt        debits reserve            transfer and receipt      received amount
         Legal cost of
                                       Received            Unreceived overdue                       5,965.00                   5,965.00
          Peng Juncheng
         Loan of Peng
                                       Received            Unreceived overdue                       4,040.00                   4,040.00
         Juncheng
         Total                                                                                     10,005.00                  10,005.00

         (4) No account receivable is from shareholders with more than 5% (including 5%) voting rights of the
       Company in reporting period.


         (5) The Top Five Organizations in the List of Amount of Account Receivable

                                                                                                                                    - 41 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

                                                                                                         Unit: RMB Yuan
                                                                                                    Percentage of the total
                                               Relation with                            Age        other account receivable
             Name of the organization          the Company           Amount          limitation              (%)
         Jiangxi Electricity Subsidiary of       Unrelated
                                                                                     Less than
         China Electricity Investment            customer        106,342,100.00                                        68.06
                                                                                      1 year
         Group
                                              Project partner
                                                                                    More than
         Huiyang Kangtai Industrial Co.,                          14,311,626.70                                         9.16
                                                                                     3 years
         Ltd. (Note 1)
         Shenzhen Dapeng LNG                     Unrelated                            1 to 2
                                                                  10,032,000.00                                         6.42
         Marketing Co., Ltd.                      supplier                            years
         Shenzhen Shanshan Investment              Note 2                           More than
                                                                    5,895,738.00                                        3.77
         Management Company                                                          3 years
         Jinan Power Generation                  Unrelated                          More than
                                                                    3,560,000.00                                        2.28
         Equipment Factory                       customer                            3 years
         Total                                                   140,141,464.70                                        89.69

 (V) Notes on consolidated financial statements-Continued
                5. Other Account Receivable-Continued

        Note 1: is a project development expense which is paid for the Stone Lake Project, Bank of Henan, Huizhou
                City co-worked with Huiyang Kangtai Industrial Co., Ltd. In 1993.

        Note 2: With response to No.32 document issued by Shenzhen Government in 1994, Notice about adjustment
                on the state-owned equity ownership of Nanshan Thermoelectricity Co., Ltd., Nanshan Electronic
                Industrial Development Company transfer 23.47% of the shares it holds in the Company to Shenzhen
                Nanshan Investment Management Company in 1994. With response to No. 19 document issued by
                Shenzhen Nanshan District, Notice about transfer the ownership of the state-owned equity of Nanshan
                Thermoelectricity Co., Ltd., Shenzhen Nanshan Investment Management Company transfer the shares
                mentioned above back to Nanshan Electronic Industrial Development Company in 1995. The Company
                predicts that this amount is unable to receive; therefore it debits the bad debit reserve in total amount.
               6. Inventories

        (1) Classification of Inventory
                                                                                                         Unit: RMB Yuan
                                        Amount at the end of the year                Amount in the beginning of the year
                 Items         Book balance obsolete stocks      Book value     Book balance obsolete stocks      Book value
        Fuel                    33,903,196.77 9,299,403.20        24,603,793.57 164,666,409.63 3,121,172.54 161,545,237.09
        Raw materials          147,714,930.63 23,275,444.95 124,439,485.68 144,530,444.66 17,199,322.49 127,331,122.17
        Lands to be developed 1,154,755,949.8
                                              45,603,631.85 1,109,152,318.00 1,109,099,484.65 45,603,631.85 1,063,495,852.80
        (Noted )                            5
        Total                 1,336,374,077.2
                                              78,178,480.00 1,258,195,597.25 1,418,296,338.94 65,924,126.88 1,352,372,212.06
                                            5

       There is RMB 252,782,341.45 (December 31, 2010, RMB 229,163,561.16) used to offset against mortgage in
       inventory balance at the end of the year. For more details, please refer to note (5) 24.


        There is RMB 168,902,319.91 of the borrowing fees capitalized in inventory balance at the end of the year
        (December 31, 2010, RMB 124,204,731.24). The capitalized borrowing fees amounts to RMB 44,697,588.67
        with the capitalization rate of 6.14%.

     Note: is the land cost used to real estate development by Shenzhong Real Estate Development and Shenzhong
    Real Estate Company. By December 31, 2011, removement of the attached buildings has not finished.

         (2) Inventory Obsolete Stocks

                                                                                                        Unit: RMB Yuan

                                                                                                                       - 42 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

           Categories of        Beginning        Accrual amount            Depreciation this year
              inventory           balance           this year            Transfer         Write-off              Ending balance
         Fuel                   3,121,172.54       8,898,716.76                   -      2,720,486.10              9,299,403.20
         Raw materials         17,199,322.49       6,955,311.81                   -        879,189.35             23,275,444.95
         Lands to be
                               45,603,631.85                      -                      -                  -     45,603,631.85
         developed
         Total                 65,924,126.88        15,854,028.57                        -     3,599,675.45       78,178,480.00

 (V) Notes on consolidated financial statements-Continued
         6. Inventory-Continued

         (3) Status quo of inventory Obsolete Stocks

                                                                                                    Percentage of transferred
                                                                 Reasons for transfer the           amount in the inventory
                Items
                                 Evidence for accrued           inventory obsolete stocks           balance at the end of the
                               inventory obsolete stocks                this year                           year (%)
                             Cost is higher than the
         Fuel                                                                     Not applicable                  Not applicable
                             changeable net value
                             Cost is higher than the
         Raw materials                                                            Not applicable                  Not applicable
                             changeable net value
         Lands to be         Cost is higher than the
                                                                                  Not applicable                  Not applicable
         developed           changeable net value

                7. Other Current Assets
        Disclosure of Other Current Assets according to the category

                                                                                                                Unit: RMB Yuan
                                       Amount at the end of the year                     Amount in the beginning of the year
                                             Depreciation                                          Depreciation
               Categories         Amount        reserves          Net value            Amount         reserves         Net value
         Long term assets
         held to be sold                   -                -                 -      5,875,631.20    1,633,199.83     4,242,431.37
         (noted)

               Note: Balance at the beginning of the year refers to the residual heat electricity generation equipment,
which is planned to be sold and held by the Shenzhong Development Company.




                                                                                                                             - 43 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

(V) Notes on consolidated financial statements-Continued

8. Investment on Long Term Share Ownership
         Details of Investment on Long Term Share Ownership:
                                                                                                                                                                                                         Unit: RMB Yuan
                                                                                                                                                                           Explanation for
                                                                                                                                                      Percentage of     inconsistent between
                                                                                                                                   Shareholding                                                                Accrued
                                           Accoun                      Balance at the                                                                voting rights in    percentage of share     Depreciati
                                                                                           Changes about       Balance at the    percentage in the                                                            depreciatio   Cash bonus
                 Invested organization      ting    Investment cost   beginning of the                                                                  invested            ownership and            on
                                                                                         increase (decrease)   end of the year       invested                                                                 n reserves     this year
                                           method                          year                                                                       organization      percentage of voting      reserves
                                                                                                                                 organization (%)                                                              this year
                                                                                                                                                          (%)            right in the invested
                                                                                                                                                                             organization
         Jiangxi Electricity Subsidiary
         of China Electricity Investment   Equity
                                                    286,285,715.00    227,103,274.30     (227,103,274.30)                    -              30.00              30.00            Not applicable            -             -            -
         Group (Jiangxi Xinchang           method
         Company) (Note1)
         Petrochemical Bonded               Cost                                                                                                                                                  2,500,00
                                                      2,500,000.00      2,500,000.00                       -    2,500,000.00                 4.00               4.00            Not applicable                          -            -
         Company                           method                                                                                                                                                     0.00
         Shenzhen Energetic and
                                            Cost
          Environmental Co., Ltd. (Note              89,671,000.00     41,790,000.00      (41,790,000.00)                    -              10.00              10.00            Not applicable            -             -            -
                                           method
          2)
         Jiangxi Nuclear Power
         Subsidiary of China
                                            Cost
         Electricity Investment Group                37,315,000.00     37,315,000.00                       -   37,315,000.00                 5.00               5.00            Not applicable            -             -            -
                                           method
         (Jiangxi Nuclear Power
         Company)
                                                                                                                                                                                                  2,500,00
         Total                                      415,771,715.00    308,708,274.30     (268,893,274.30)      39,815,000.00                                                                                            -            -
                                                                                                                                                                                                      0.00
         Decrease:Depreciation
                                                                        2,500,000.00                       -    2,500,000.00
         reserves
         Net amount of long-term share
                                                                      306,208,274.30                           37,315,000.00
          ownership investment

        Note 1: On December 1, 2011, with permission by the 3rd temporary meeting, 6th Board of Directors, the Company signed the share ownership transfer contract with Jiangxi Electricity Subsidiary of
                 China Electricity Investment Company (China Electricity Investment Jiangxi Company).
                      30% of the shares of Jiangxi Xinchang Company held by the Company are agreed to transfer at the price of RMB 217,024,700.00. By December 29, 2011, the Company has received the
                 transfer amount of RMB 110,682,600.00. On December 31, 2011, Jiangxi Xinchang Company has completed procedure about registration of industry and commerce, which is related to this
                 share ownership transfer. With references to the professional law opinions from lawyers, executives of the Company consider that by December 31, 2011, the Company has been unable to
                 obtain profits and undertake risk from the share ownership.

        Note 2: On January 31, 2011, the Company pays RMB 47,881,000.00 for investment in the Energy and Environment Company according to Motion to increase the registered capital investment in
                 Energy and Environment CO., Ltd. On October 14, 2011, with permission of the 5th meeting in the 6th Board of Directors, the Company signed the transfer contract of share ownership with
                 Energy Group, and agreed to transfer the 10% shares it holds in Energy and Environment Company at a price of RMB 123,078,900.00. The Company has received the transferred amount on
                 December 13, 2011. On December 31, 2011, the Energy and Environment Company has completed related industrial and commercial change registration, which is associated with the
                 transfer of share ownership. Based on professional lawyers’ opinions, executives of the Company consider that by December 31, 2011, the Company has been unable to obtain profits and
                 undertake risks from the share ownership.


                                                                                                                                                                                                                            - 44 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

 (V) Notes on consolidated financial statements-Continued
                9. Invested Real Estate

        Note: Accrued depreciation of current year is RMB 436,724.91

                                                                                                                        Unit: RMB Yuan
                                                         Beginning
                              Items                                       Increase this year   Decrease this year         Ending book value
                                                         book value
         I. Original book value in total                 9,708,014.96                      -                        -          9,708,014.96
                     1. Houses and buildings             9,708,014.96                      -                        -          9,708,014.96
                     2. Using right of lands                          -                    -                        -                     -
         II. Accumulated depreciation and                                 436,724.91(Note                                      4,835,969.89
         accumulated amortization in total               4,399,244.98                   )                           -

                     1.Houses and buildings              4,399,244.98           436,724.91                          -          4,835,969.89
                     2. Using right of lands                          -                    -                        -                     -
         III. Book net value on invested real estate
           in total                                      5,308,769.98                                                          4,872,045.07

                     1. Houses and buildings             5,308,769.98                                                          4,872,045.07
                     2. Using right of lands                          -                                                                   -
         IV. Depreciation reserves on invested real                                        -                        -
              estate in total                                         -                                                                   -

                     1. Houses and buildings                          -                    -                        -                     -
                     2. Using right of lands                          -                    -                        -                     -
         V.      Book value on invested real estate in
              total                                      5,308,769.98                                                          4,872,045.07

                     1. Houses and buildings             5,308,769.98                                                          4,872,045.07
                     2. Using right of lands                          -                                                                   -

        Note: the depreciated amount adds up to RMB 436,724.91 this year.




                                                                                                                                      - 45 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V) Notes on consolidated financial statements-Continued

                  10. Fixed Assets

         (1) Changes on Fixed Assets
                                                                                                                   Unit: RMB Yuan
                       Items                  Beginning book value   Increase this year       Decrease this year     Ending book value
        I. Original book value in total         4,220,935,520.11 279,912,578.82(注 1) 40,226,451.02(注 2)              4,460,621,647.91
         Including: houses and buildings          447,729,795.72          50,895,000.19           14,210,577.61          484,414,218.30
              Machinery equipment               3,675,038,036.84        227,952,304.60             7,421,823.93        3,895,568,517.51
          Transportation    instruments             33,968,349.80            400,166.82            2,131,482.00           32,237,034.62
                Other equipments                    64,199,337.75            665,107.21           16,462,567.48           48,401,877.48
        II. Accumulated appreciation in                                Accrued amount of
          total                                 2,018,728,112.00     current year (Note 3)
                                                                                           32,185,281.68(Note 4)        2,196,925,392.65

         Including: houses and buildings          185,153,139.13          19,135,523.55            9,457,565.88          194,831,096.80
              Machinery equipment               1,754,084,729.67        187,944,084.77             5,836,758.62        1,936,192,055.82
          Transportation    instruments             27,898,786.75          1,337,166.96            2,080,980.49           27,154,973.22
                Other equipments                    51,591,456.45          1,965,787.05           14,809,976.69           38,747,266.81
        III. Book net value on fixed assets
          in total                              2,202,207,408.11                                                       2,263,696,255.26

         Including: houses and buildings          262,576,656.59                                                         289,583,121.50
              Machinery equipment               1,920,953,307.17                                                       1,959,376,461.69
          Transportation    instruments              6,069,563.05                                                          5,082,061.40
                Other equipments                    12,607,881.30                                                          9,654,610.67
        IV. Depreciation reserves in total          32,981,137.38          6,265,762.65            2,654,224.03           36,592,676.00
         Including: houses and buildings            25,686,723.89                         -        2,394,879.52           23,291,844.37
              Machinery equipment                    7,030,159.76          6,265,762.65               218,186.79          13,077,735.62
          Transportation    instruments                 85,146.84                         -             3,300.00              81,846.84
                Other equipments                       179,106.89                         -            37,857.72             141,249.17
        V. Book value on fixed assets in
         total                                  2,169,226,270.73                                                       2,227,103,579.26

         Including: houses and buildings          236,889,932.70                                                         266,291,277.13
              Machinery equipment               1,913,923,147.41                                                       1,946,298,726.07
          Transportation    instruments              5,984,416.21                                                          5,000,214.56
                Other equipments                    12,428,774.41                                                          9,513,361.50

        Note 1: RMB 2,680,222.14 for purchase and RMB 277,232,356.68 for engineering establishment are added.
        Note 2: RMB 40, 226,451.02 is decreased for purchase.
        Note 3: RMB 210,382,562.33 is depreciated this year.
        Note 4: RMB 32,185,281.68 is decreased for purchase.




                                                                                                                                - 46 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V) Notes on consolidated financial statements-Continued
10. Fixed Assets-Continued

         (2) Information about Lay over Fixed Assets

                                                                                                                                   Unit: RMB Yuan
                    Items                  Original Book          Accumulated         Depreciation       Book value                       Notes
                                               value              depreciation          reserves
         Balance at the
                                           466,268,043.17         405,890,620.56       8,329,271.25    52,048,151.36
         beginning of the year
          Including: houses and
                                             2,489,600.00              94,720.48       2,394,879.52                      -
                 buildings
          Machinery equipment              463,752,743.17         405,792,912.04       5,932,755.20    52,027,075.93           Generator set
         Transportation
                                                 3,200.00                        -          200.00            3,000.00
         instruments
            Other equipments                    22,500.00               2,988.04           1,436.53         18,075.43
         Balance at the end of
                                           577,639,507.90         483,610,796.33      11,886,196.41    82,142,515.16
         the year
          Including: houses and                                                                                                Wharf
                                            23,302,622.41           7,290,364.80                   -   16,012,257.61
                 buildings
          Machinery equipment                                                                                                  Heavy oil processing line
                                           553,917,537.49         475,943,018.33      11,886,196.41    66,088,322.75
                                                                                                                               and generating units
             Transportation
                                                           -                     -                 -                     -
              instruments
            Other equipments                  419,348.00             377,413.20                    -        41,934.80

         (3) Fixed Assets with uncompleted Certificate of Title

                                                                                                                                   Unit: RMB Yuan
                                                                                              Reasons for incomplete         Expected time for Transaction of
                      Items                 Original book value          Book value             Certificate of Title         Certificate of Title
         Booster stations                      11,416,072.09               7,866,297.56
         Turbine building                       4,221,136.27               2,977,230.28
         Water treatment building               7,050,395.16               4,935,155.86
         Heavy oil processing plant             1,357,924.60                 959,730.53
         Fire pump house                          709,475.99                 501,134.97
         Circulating water pump house           4,487,508.99               3,157,744.70
         Comprehensive building                 9,826,335.09               7,178,729.47
         Production        maintenance
         building                                9,860,653.25              7,993,537.65
         Administrative building               10,138,618.59               8,218,689.49
         Security room                            248,140.56                 236,825.40
         Master control room                                                                Inspection of the complete
                                                  387,221.96                 369,564.68     project is still executed
                                                                                                                             By the end of 2012
         Turbine and auxiliary buildings       24,770,257.87              18,087,262.09
         The plant ventilation system           1,287,247.17                 939,947.83
         Office building                       11,621,767.07               8,819,839.20
         Highly ventilated cooling
         tower                                   7,958,561.88              5,811,341.54
         Water treatment workshop and
         tank foundation                         3,782,455.60              2,761,949.17
         Industrial water pool and
         industrial water pump house             1,660,047.34              1,212,166.56
         Start up boiler house                     277,381.12                202,543.57
         Oil processing chamber, oil
         unloading platform
                                                 3,375,389.79              2,464,709.71
         Total                                114,436,590.39              84,694,400.26




                                                                                                                                                      - 47 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        11. Under-construction project

    (1) :Details of under-construction project are as below:
                                                                                                                                                          Unit: RMB Yuan
                                                        Amount at the end of the year                           Amount in the beginning of the year
                                                                               Depreciation                                               Depreciation
         Item                                           Book balance           reserves        Net book value   Book balance              reserves        Net book value
         Oil to gas engineering                         39,549,115.52          14,790,696.15   24,758,419.37    41,087,274.71             14,790,696.15   26,296,578.56
         Circular economy complex building project      -                      -               -                13,255,379.33             -               13,255,379.33
         Circular economy cold heat and power project   9,622,579.25           -               9,622,579.25     7,160,526.05              -               7,160,526.05
         Equipment transformation engineering           545,548.53             -               545,548.53       9,684,185.63              -               9,684,185.63
         Cogeneration project                           9,894,925.01           -               9,894,925.01     8,882,713.73              -               8,882,713.73
         Technology transformation engineering          -                      -               -                2,505,000.00              -               2,505,000.00
         Sludge desiccation project
                                                        -                     -                -                126,728,860.05           -                126,728,860.05

         Others
                                                        2,271,897.32          226,400.00       2,045,497.32     2,216,233.29             -                2,216,233.29

         Total                                          61,884,065.63         15,017,096.15    46,866,969.48     211,520,172.79          14,790,696.15    196,729,476.64




                                                                                                                                                                           - 48 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        11. Under-construction -continued

        (2) Change of important under-construction project
                                                                                                                                                                                                            Unit: RMB Yuan
                                                                                                                                                                                                 This
                                                                                                                                       Project
                                                                                                                                                                Interest     Among: this        year’s
                                                          Amount in the                                                              investment
                                                                           Increase in this         Transferred         Other                      Project    capitalized   year’s interest   interest      Capital        Amount at the
                  Item name                  Budget       beginning of                                                               proportion
                                                                                year                fixed assets       decrease                   progress   accumulative    capitalized       capitaliz     source         end of the year
                                                            the year                                                                     of
                                                                                                                                                             total amount      amount             ed
                                                                                                                                     budget(%)
                                                                                                                                                                                               rate(%)
         Oil to gas engineering          74,400,000.00    41,087,274.71    3,833,970.31         5,354,806.40       17,323.10         60.38        60.38      -              -                  -           自筹         39,549,115.52
         Circular economy complex
                                         35,000,000.00    13,255,379.33    14,192,758.35        27,448,137.68      -                 78.42        100.00     -              -                  -           自筹         -
         building project
         Circular economy cold heat
                                         30,000,000.00    7,160,526.05     2,462,053.20         -                  -                 32.08        32.08      -              -                  -           自筹         9,622,579.25
         and power project
         Equipment      transformation
                                                          9,684,185.63     2,720,338.33         11,858,975.43      -                                         -              -                  -           自筹         545,548.53
         engineering
         Cogeneration project                             8,882,713.73     2,468,583.44         1,338,680.00       117,692.16                                676,760.53     -                  -           自筹及借款   9,894,925.01
         Technology transformation
                                                          2,505,000.00     1,662,555.06         4,167,555.06       -                                         -              -                  -           自筹         -
         engineering
         Sludge desiccation project      190,535,670.40   126,728,860.05   25,956,138.15        152,050,904.13     634,094.07        80.13        100.00     -              -                  -           自筹         -
         DLN        low       nitrogen
                                         90,800,000.00    -                75,013,297.98        75,013,297.98      -                 82.61        100.00     -              -                  -           自筹         -
         transformation project
         Others                                           2,216,233.29     2,809,539.32         -                  2,753,875.29                              -              -                  -           自筹         2,271,897.32

         Total                                            211,520,172.79   131,119,234.14       277,232,356.68     3,522,984.62                              676,760.53     -                                           61,884,065.63


        (3)Depreciation reserves for under-construction project
                                                                                                                                                                                                              Unit: RMB Yuan
        Item                                                   Amount in the beginning        Increase in this year            Decrease in this year             Amount at the end of the Provision reasons
                                                               of the year                                                                                       year
        Oil to gas engineering                                 14,790,696.15                  -                                -                                 14,790,696.15            Note
        Quay transformation project                            -                              226,400.00                       -                                 226,400.00
        Total                                                  14,790,696.15                  226,400.00                       -                                 15,017,096.15

        Note: Approved by the twenty-sixth meeting of the fifth session of the Board of Directors, the company has closed down cycle unit 7 and 9, and according to independent
             professional assessment organization’s assessment result of their fair value, the oil to gas project provision for depreciation preparation of cycle unit 7 and 9 is RMB
             14,790,696.15.


                                                                                                                                                                                                                                  - 49 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

       12. Intangible assets
                                                                                                      Unit: RMB Yuan
                                                Beginning book                           Decrease in this   Ending     book
        Item                                                     Increase in this year
                                                balance                                  year               balance
        I. Total book original value            95,836,143.29    2,871,851.92(note 1)    -                  98,707,995.21
        Among: land-use right                   95,600,235.88    131,812.00              -                  95,732,047.88
                Software                        235,907.41       2,740,039.92            -                  2,975,947.33
        II. Cumulative total amortize           26,484,148.07    3,301,244.81(note 2)    -                  29,785,392.88
        Among: land-use right                   26,274,255.40    2,950,998.04            -                  29,225,253.44
                 Software                       209,892.67       350,246.77              -                  560,139.44
        III. Intangible assets total net book                                                               68,922,602.33
                                                69,351,995.22
        value
        Among: land-use right                   69,325,980.48                                               66,506,794.44
                Software                        26,014.74                                                   2,415,807.89
        IV. Total depreciation reserves         5,115,063.71     -                       -                  5,115,063.71
        Among: land-use right                   5,115,063.71     -                       -                  5,115,063.71
                Software                        -                -                       -                  -
        V. Intangible assets total book value   64,236,931.51                                               63,807,538.62
        Among: land-use right(note 3)           64,210,916.77                                               61,391,730.73
                Software                        26,014.74                                                   2,415,807.89

       Note1: Increase total RMB 131,811.66 for acquisition this year, and total RMB 2,740,040.26 for the
              transformation of under-construction projects.

       Note 2: This years’ intangible assets amortize is RMB 3,301,244.81.

       Note 3: Until December 31, 2011, the company’s property right of land use certificate is still in the process,
              book value of which is RMB 589,611.99 (December 31, 2010: RMB 693,506.00).




                                                                                                                         - 50 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        13. Long-term prepaid expenses
                                                                               Unit: RMB Yuan
                                      Amount in
                                                   Increased Amortized Other          Amount at
                                      the                                                       Other reasons
        Item                                        amount of amount of decreased the end of
                                      beginning of                                              for decrease
                                                    this year current year amount     the year
                                      the year
        Improved expenditure of
                                     273,212.64   -           177,401.80 -              95,810.84     Not Applicable
        operating lease fixed assets

        14. Deferred income tax assets

        (1) The confirmed deferred income tax assets
                                                                                Unit: RMB Yuan
                                                                   Amount at the end of Amount       in      the
         Item
                                                                   the year             beginning of the year
         Deferred income tax assets:

         Bad debt preparation for account receivable               1,105,382.04               983,843.73
         Bad debt preparation for other account receivable         1,010,200.86               1,012,702.11
         Inventory falling price reserves                          100,171.61                 749,081.41
         Employee payment payable                                  627,581.00                 1,014,310.56
         Preparation for long-term equity investments
                                                                   625,000.00                 625,000.00
         impairment
         Others                                                    245,778.80                 239,467.33
         Total                                                     3,714,114.31               4,624,405.14

        (2) The deductible temporary difference and deductible loss of unconfirmed deferred income tax asset
                                                                                                    Unit: RMB Yuan
                                                                    Amount at the end of Amount            in      the
         Item
                                                                    the year                  beginning of the year
         The deductible loss                                        484,508,965.20            560,035,409.20
         Deductible temporary differences                           192,293,490.13            168,277,128.89
         Total                                                      676,802,455.34            728,312,538.09

        Because of the uncertainty of this group’s future ability to obtain sufficient taxable income, the above
        deductible temporary difference and deductible loss are not confirmed as deferred income tax assets.
       (3) The deductible loss of unconfirmed deferred income tax assets will expire next year.
                                                                                                     Unit: RMB Yuan
                                                                  Amount at the end of the Amount           in     the
         Year
                                                                  year                          beginning of the year
         2011                                                     -                             77,662,096.83
         2012                                                     37,464,387.00                 37,464,387.00
         2013                                                     67,627,487.41                 67,627,487.41
         2014                                                     124,132,588.65                206,233,081.29
         2015                                                     171,048,356.67                171,048,356.67
         2016                                                     84,236,145.47                 -
         Total                                                    484,508,965.20                560,035,409.20




                                                                                                                 - 51 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        14. Deferred income tax assets- continued

        (4) The details of deductible temporary difference project
                                                                                                Unit: RMB Yuan
         Item                                                          Temporary difference amount
         Ending balance:
         Deductible temporary difference project:
         Bad debt preparation for account receivable                   4,421,528.16
         Bad debt preparation for other account receivable             4,040,803.43
         Inventory falling price reserves                              400,686.44
         Employee payment payable                                      2,510,324.00
         Preparation for long-term equity investments impairment       2,500,000.00
         Others                                                        983,115.22
         Total                                                         14,856,457.25
         Beginning balance:
         Deductible temporary difference project:
         Bad debt preparation for account receivable                   4,971,783.44
         Bad debt preparation for other account receivable             4,050,808.43
         Inventory falling price reserves                              3,121,172.54
         Employee payment payable                                      4,226,294.00
         Preparation for long-term equity investments impairment       2,500,000.00
         Others                                                        997,780.57
         Total                                                         19,867,838.98

        15. Other noncurrent assets
                                                                                    Unit: RMB Yuan
                                                                                     Amount in the beginning of
         Item                                          Amount at the end of the year the year
         LNG Liquefied natural gas project(note)       22,298,256.78                 21,273,223.68
         Prepaid land amount                           1,730,000.00                  -
         Prepaid project amount                        836,460.20                    -
         Total                                         24,864,716.98                 21,273,223.68

        Note: This project is built by Weimei Electric Power Company and Guangdong, Dapeng Liquefied Natural Gas
             (LNG) Co., Ltd. ( here after referred to as Dapeng Natural Gas Company). According to the contract
             signed by both parties, before the involved projects obtaining the approval from the related national
             authorities, both parties have its ownership. After related projects are approved by related national
             authorities, Dapeng Natural Gas Company will purchase LNG liquefied natural gas project, so Weimei
             Electric Power will be accounted as its noncurrent assets.




                                                                                                            - 52 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        16. Details of assets depreciation preparation
                                                                                             Unit: RMB Yuan
                                           Book balance in                        Decrease in this year          Book balance at
                                           the beginning of   Current      year   Turn back       Write off      the end of the
         Item                              the year           decrease                                           year
         I. Bad debt preparation           34,896,098.38      2,361,004.16        1,185,260.28    -              36,071,842.26
         II. Inventory falling price
                                           65,924,126.88      15,854,028.57       -               3,599,675.45   78,178,480.00
         preparation
         III. Preparation for long-term
         equity             investments    2,500,000.00       -                   -               -              2,500,000.00
         impairment
         IV. Fixed assets impairment
                                           32,981,137.38      6,265,762.65        -               2,654,224.03   36,592,676.00
         preparation
         V. Impairment preparation for
                                           14,790,696.15      226,400.00          -               -              15,017,096.15
         under-construction project
         VI.      Intangible      assets
                                           5,115,063.71       -                   -               -              5,115,063.71
         impairment preparation
         VII.     Other      impairment
                                           1,633,199.83       -                   -               1,633,199.83   -
         preparation
         Total                             157,840,322.33     24,707,195.38       1,185,260.28    7,887,099.31   173,475,158.12

        17. Short-term loan
                                                                                           Unit: RMB Yuan
        Item                                                               Amount at the end of the Amount in the beginning
                                                                           year                     of the year
        Guaranteed loan (note)
                                                                           1,110,000,000.00            700,000,000.00
        Credit loan                                                        2,155,824,953.89            2,412,400,000.00
        Total                                                              3,265,824,953.89            3,112,400,000.00

        Note: the company provides RMB 1,110,000,000.00 guaranteed loan for each subsidiary.

        18. Notes payable
                                                                                           Unit: RMB Yuan
        Category                                                           Amount at the end of the Amount in the beginning
                                                                           year                     of the year
        Bank acceptance bill                                               43,820,200.00                -

        The amount will expires in the next accounting period is RMB 43,820,200.00.




                                                                                                                            - 53 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        19. Account payable

        (1) The details of account payable are as below:
                                                                                                   Unit: RMB Yuan
         Item                                                                                    Amount    in the
                                                                          Amount at the end
                                                                                                 beginning of the
                                                                          of the year
                                                                                                 year
         Nakaumi Petroleum Gas and Electric Group Co., Ltd,,
                                                                          181,779,179.15         41,806,080.04
         Guangdong Trade Branch
         Shenyang Eric Electric Design College                            7,315,553.15           -
         Zhanjiang City Hengyuan Transportation Co. LTD                   5,646,006.85           1,502,327.83
         Shenzhen Nangang power engineering Co. Ltd                       3,779,052.00           9,160,098.52
         Guangzhou Dongli fuel gas Co. Ltd                                3,125,154.90           -
         Shenzhen Xixun transportation industry Co. Ltd                   2,559,469.44           -
         Fuxun Chinese Oil and Energy Equipment Factory                   1,253,000.00           -
         The new Austrian energy logistics Co., Ltd                       1,041,630.24           -
         Xingjiang Guanghui Liquefied natural gas (LNG) Co., Ltd,
                                                                          1,000,000.00           -
         Shanshan transportation Branch
         Wuxi Shijia Heat Energy Equipment Co., Ltd                       662,469.80             1,362,469.80
         Huasheng Filter (Shenzhen) Co., Ltd                              608,369.23             680,680.33
         Others                                                           5,979,004.90           6,603,782.09
         Total                                                            214,748,889.66         61,115,438.61

        (2) Account payable balance in this reporting period has no payable for shareholders with 5% or more voting
        shares of this company.
        (3) Large accounts payable aged over one year should have account payable description.

                                                                                                     The         amount
                                                           Account
                                                                        Reasons for failing to       repaid in the
         Supply name                       Amount          receivable
                                                                        pay                          future    in   the
                                                           age                                       balance sheet
         Shenzhen Nangang power                            One     to   The other party does         -
                                           3,779,052.00
         engineering Co. Ltd                               two years    not collect
         Wuxi Shijia Heat Energy                           One     to   The other party does         -
                                           662,469.80
         Equipment Co., Ltd                                two years    not collect
         Huasheng Filter (Shenzhen)                        One     to   The other party does         -
                                           538,800.00
         Co., Ltd                                          two years    not collect
         Total                             4,980,321.80                                              -

        20. Advanced receipts

        (1) Details of advanced receipts are below:
                                                                                   Unit: RMB Yuan
         Item                                                             Amount at the end Amount in the
                                                                          of the year         beginning of the
                                                                                              year
         Advanced unit capacity transfer amount                           14,586,000.00          14,586,000.00
         Advanced project amount                                          -                      24,210,498.66
         Advanced fuel gas amount                                         -                      477,842.60
         Total                                                            14,586,000.00          39,274,341.26
       (2) The advanced receipts balance in this reporting period has no advanced receipts from shareholders with 5%
                                                                                                                  - 54 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

or more voting shares of this company.

       (3) The advanced receipts balance of Shenzhen Energy Group Co., Ltd (Energy Shares) is RMB 14,586,000.00
       Yuan. The account receivable age is over 1 year. Because related projects have not been approved by
       National Development and Reform Committee and advanced receipts have not achieved sales, the end of the
       year has been carried forward income. Until the approval date of financial statements are, the above amounts are
       not carried forward income.
(V)Notes on consolidated financial statements- continued

        21. Employee payment payable
                                                                                                    Unit: RMB Yuan
         Item                                      Book balance in       Increase in this       Decrease in this      Book balance at
                                                   the beginning of      year                   year                  the end of the year
                                                   the year
         I. Wages, bonuses, allowances and
                                                   35,136,058.44         90,137,445.70          98,297,459.17         26,976,044.97
         subsidies
         II. Employee benefits                     -                     -                      -                     -
         III. Social insurance premiums            795,465.82            9,147,930.52           9,077,961.36          865,434.98
         Among: Medical insurance premiums         126,913.93            4,763,435.54           4,775,779.62          114,569.85
                  Old-age insurance                570,135.63            3,950,291.70           3,871,209.32          649,218.01
                  Unemployment insurance           36,930.79             172,638.23             170,947.74            38,621.28
                  Industrial injury insurance
                                                   59,996.94             241,024.92             239,454.68            61,567.18
         premium
                  Birth insurance premium          1,488.53              20,540.13              20,570.00             1,458.66
         IV. Housing fund                          1,828,835.46          7,611,961.70           8,810,973.17          629,823.99
         V. Union funds and employee education
                                                   1,715,337.35          1,910,950.26           1,932,666.89          1,693,620.72
         expenses
         VI. Non-monetary benefits                 -                     261,638.42             261,638.42            -
         VII. Compensation for the cancellation
                                                   -                     -                      -                     -
         of the labor relations
         VIII. Enterprise annuity                  5,926,920.26          463,630.48             3,880,226.74          2,510,324.00
         Others                                    30,333.37             79,546.28              93,454.27             16,425.38
         Total                                     45,432,950.70         109,613,103.36         122,354,380.02        32,691,674.04

        There is no delayed amount in employee payment payable.

        22. Tax payable
                                                                                                 Unit: RMB Yuan
         Item                                                                Amount at the end of the year     Amount in the beginning
                                                                                                               of the year
         Value-added tax                                                            (529,083,686.53)              (516,271,620.82)
         Business tax                                                                   2,835,558.63                  2,038,956.43
         Business income tax                                                          (2,823,965.65)                  8,069,776.38
         Individual income tax                                                          3,411,627.24                  1,646,774.92
         City and town land use tax                                                     1,128,579.70                  1,137,583.80
         Building taxes                                                                 2,084,520.46                  1,770,165.58
         Others                                                                           546,572.25                    414,945.62
         Total
                                                                                    (521,900,793.90)              (501,193,418.09)

        23. Interest payable
                                                                                                 Unit: RMB Yuan
                                                                               Amount at the end of the      Amount in the beginning of
                                     Item
                                                                                        year                         the year
          Staging payment of interests due and principle repayments of
                                                                                                45,825.00                     204,536.00
                           long-term loan interests
                      Short-term loan interests payable                                    75,416,769.51                   59,143,503.27
                                      Total                                                75,462,594.51                   59,348,039.27



                                                                                                                                     - 55 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        24. Other amount payable

        (1) The details of other amount payable are below:
                                                                                                   Unit: RMB Yuan
         Item                                                          Amount at the end of   Amount      in     the
                                                                       the year               beginning of the year
         Zhongshan Xingzhong Group Co., Ltd (Xingzhong
                                                                       182,152,108.65         182,152,108.65
         Group) (note 1)
         Dongguang Weimei Ceramic Industry park Co., Ltd
                                                                       36,385,912.01          -
         (Weimei Ceramic company)
         Shengzhen Nangang Power Engineering Co., Ltd                  32,426,503.00          6,417,095.00
         Zhongshan city bureau of finance (note 2)                     24,321,200.00          24,321,200.00
         Project fund                                                  17,267,313.76          15,750,790.11
         Temporary income options contracts fund(note 3)               13,248,696.81          13,905,656.99
         Xindi Energy Engineering Technology Co., Ltd Fuel gas
                                                                       11,411,059.79          12,967,790.11
         and Technology Branch
         Guarantee Money                                               10,554,569.41          7,384,578.88
         Shenzhen North Engineering Co., Ltd                           5,771,332.22           -
         Nanjing Nangang power Equipment Installation Co., Ltd         3,412,800.00           2,719,200.00
         The board of directors allowance                              1,947,795.34           2,928,060.85
         China Petroleum Chemical Construction Co., Ltd                1,688,000.00           -
         The Nakaumi petroleum gas and electric group Co.,
                                                                       1,420,854.92           -
         Ltd, Guangdong Trade Branch
         Guangdong Province Industry Equipment Installation
                                                                       1,416,349.41           -
         Company
         Shenzhen Hengfulin Building Decoration and Design
                                                                       1,402,704.46           -
         Engineering Co., Ltd
         Hangzhuo Boiler Factory Engineering Material Co., Ltd         1,340,189.74           2,486,189.74
         Wuxi Shijia Heat Energy Equipment Co., Ltd                    1,088,000.00           1,088,000.00
         Shenzhen Customs                                              -                      2,200,000.00
         Others                                                        11,341,990.48          14,447,977.01
         Total                                                         358,597,380.00         288,768,647.34

        Note 1: Shenzhong Developing Company’s borrowing from Xingzhong Group with its land-use rights and fixed
                assets as collateral
        Note 2: Shenzhong Developing Company’s borrowing from Zhongshan Municipal Bureau of Finance.

        Note 3: Details refer to annotation (VII) or related contingency.

        (2) Other amounts payable balance in this reporting period has on fund from shareholders with 5% or more
         voting shares of this company.

        (3) Other accounts payable with account duration over one year is RMB 256,961,536.35 (December 31, 2010,
        RMB 241,111,842.78), mainly is Shenzhong Developing Company’s borrowing from Zhongshan city’s Bureau
        of Finance.




                                                                                                                - 56 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        25. Noncurrent liabilities due within one year

        (1) Details of noncurrent liabilities due within one year are below

                                                                                                                             Unit: RMB Yuan
         Item                                                                               Amount at the end            Amount     in  the
                                                                                            of the year                  beginning of the
                                                                                                                         year
         Long-term loan due within one year                                                 50,000,000.00                50,000,000.00

        (2)     Long-term loan due within one year
                                                                                                                            Unit: RMB Yuan
         Item                                                                               Amount at the end            Amount     in the
                                                                                            of the year                  beginning of the
                                                                                                                         year
          Guaranteed loans(note)                                                            50,000,000.00                50,000,000.00

        Note: the company provides guarantee for Zhongshan Electric Power Company borrowing for RMB
        50,000,000.00

        (3) Long-term loans among the top five due within one year
                                                                                                                Unit: RMB Yuan
                                                                                                     Amount at the end of the year
                                                      Loan                                  Interest Foreign      Domestic
                          Loan units
                                                      starting         Loan                 rate     currency     currency
                                                      date             ending date Currency (%)      amount       amount
        Huaxia Bank Co., Ltd. Shenzhen
                                       2010.4.1                        2012.4.1       RMB         6.65                          50,000,000.00
        Branch

        26. Long-term loan

        (1) Long-term loan classification
                                                                                                                            Unit: RMB Yuan
         Item                                                                               Amount at the end            Amount in the
                                                                                            of the year                  beginning of the
                                                                                                                         year
         Guaranteed loans(note)                                                             26,000,000.00                186,000,000.00

        The annual interest rate for the above loans is 6.35%( the year of 2010:from 4.86% to5.94%)

        Note: the company provides guarantee for Environmental Company borrowing for RMB 26,000,000.00.

        (2) Long-term loan among the top five
                                                                                                                            Unit: RMB Yuan
                                                                                                                           Amount in the beginning
                                                                                       Amount at the end of the year
                                                                                                                                of the year
                                                                                                                          Forei
                                    Loan        Loan ending                Interest                                        gn
              Loan unit                                       Currency                 Foreign
                                starting date      date                    rate(%)                       Domestic         curre       Domestic
                                                                                       currency
                                                                                                     currency amount       ncy    currency amount
                                                                                        amount
                                                                                                                          amou
                                                                                                                            nt
          China Merchants
           Bank Co., LTD
                                2009.11.06      2017.09.20       RMB         6.35           -            26,000,000.00      -      36,000,000.00
          Shenzhen Jingtian
              Branch




                                                                                                                                           - 57 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        27. Other noncurrent liabilities
                                                                                                          Unit: RMB Yuan
                                                                                       Book balance at the end of   Book balance in the
         Item                                                                          the year                     beginning of the year
         National debt subsidies for sludge desiccation project                        4,866,250.00                 5,100,000.00
         Circular economy support funds for sludge desiccation project                 238,541.66                   250,000.00
         Total                                                                         5,104,791.66                 5,350,000.00

        28. Capital stock
                                                                                                          Unit: RMB Yuan
                                                              Change in this year
                                             Beginning        Stock                                                    Amount at the end of
         Item                                balance          distribution        Others              Subtotal         the year
         2011:
         I. Shares with limited conditions
         1. State shareholdings              -                -                  -                    -                -
         2. State-owned legal person
                                             -                -                  -                    -                -
         shares
         3. Other domestic capital
                                             12,993.00        -                  5,270.00             5,270.00         18,263.00
         holdings
         4. Foreign Shareholding             -                -                  -                    -                -
         Total share   with        limited
                                             12,993.00        -                  5,270.00             5,270.00         18,263.00
         conditions
         II. Shares without        limited
         condition
         1. RMB common stock                 338,895,157.00   -                  (1,145.00)           (1,145.00)       338,894,012.00
         2. Domestically listed foreign
                                             263,854,446.00   -                  (4,125.00)           (4,125.00)       263,850,321.00
         stock
         3. Overseas listed foreign stock    -                -                  -                    -                -
         4. Others                           -                -                  -                    -                -
         Total share without limited
                                             602,749,603.00   -                  (5,270.00)           (5,270.00)       602,744,333.00
         condition
         III. The sum of shares              602,762,596.00   -                  -                    -                602,762,596.00
         2010:
         I. Shares with limited conditions
         1. State shareholdings              -                -                  -                    -                -
         2. State-owned legal person
                                             -                -                  -                    -                -
         shares
         3. Other domestic capital
                                             12,993.00        -                  -                    -                12,993.00
         holdings
         4. Foreign Shareholding             -                -                  -                    -                -
         Total share   with        limited
                                             12,993.00        -                  -                    -                12,993.00
         conditions
         II. Shares without        limited
         conditions
         1. RMB common stock                 338,895,157.00   -                  -                    -                338,895,157.00
         2. Domestically listed foreign
                                             263,854,446.00   -                  -                    -                263,854,446.00
         stock
         3. Overseas listed foreign stock    -                -                  -                    -                -
         4. Others                           -                -                  -                    -                -
         Total share     without limited
                                             602,749,603.00   -                  -                    -                602,749,603.00
         conditions
         III. The sum of shares              602,762,596.00   -                  -                    -                602,762,596.00




                                                                                                                                        - 58 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        29. Capital surplus
                                                                                              Unit: RMB Yuan
         Item                                           Amount in the      Increase in this    Decrease in this   Amount in the
                                                        beginning of the   year                year               end of the year
                                                        year
         2011:
         Capital premium                                233,998,444.00     -                   -                  233,998,444.00
         Among: capital invested by investors           215,487,650.42     -                   -                  215,487,650.42
                The balance due to acquisition of                          -                   -
                                                        18,510,793.58                                             18,510,793.58
         minority stockholder’s interest
         Other capital surplus                          129,631,483.51     -                   -                  129,631,483.51
         Among: the original system transfer from the                      -                   -
                                                        129,631,483.51                                            129,631,483.51
         capital reserve
         Total                                          363,629,927.51     -                   -                  363,629,927.51
         2011:
         Capital premium                                233,998,444.00     -                   -                  233,998,444.00
         Among: capital invested by investors           215,487,650.42     -                   -                  215,487,650.42
                The balance due to acquisition of
                                                        18,510,793.58      -                   -                  18,510,793.58
         minority stockholder’s interest
         Other capital surplus                          129,631,483.51     -                   -                  129,631,483.51
         Among: the original system transfer from the
                                                        129,631,483.51     -                   -                  129,631,483.51
         capital reserve
         Total                                          363,629,927.51     -                   -                  363,629,927.51


        30. Features Surplus
                                                                                          Unit: RMB Yuan
         Item                         Amount in the         Increase in this       Decrease in this Amount in the end
                                      beginning of the      year                   year              of the year
                                      year
         2011:
         Legal features surplus       310,158,957.87        -                      -                        310,158,957.87
         Free features surplus        22,749,439.73         -                      -                        22,749,439.73
         Total                        332,908,397.60        -                      -                        332,908,397.60
         2010:
         Legal features surplus       310,158,957.87        -                      -                        310,158,957.87
         Free features surplus        22,749,439.73         -                      -                        22,749,439.73
         Total                        332,908,397.60        -                      -                        332,908,397.60




                                                                                                                             - 59 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        31. Undistributed profits
                                                                                                     Unit: RMB Yuan
         Item                                                           Amount                   Withdraw or distribution
                                                                                                 proportion
         2011:
         Year-beginning undistributed profits                           436,541,567.35
         Add: this year’s net profit which belongs to parent company
                                                                        17,529,063.37
         shareholders
         ) Less: withdraw of legal accumulated surplus(annotation 1)    -
         Common stock interest payable                                  -
         Year-end undistributed profits(annotation 2)                   454,070,630.72
         2010:
         Year-beginning undistributed profits                           551,180,245.55
         Add: this year’s net profit which belongs to parent company
                                                                        (114,638,678.20)
         shareholders
         Less: withdraw of legal accumulated surplus(annotation 1)      -
         Common stock interest payable                                  -
         Year-end undistributed profits(annotation 2)                   436,541,567.35

        Note 1: According to the articles of incorporation, legal features surplus withdrawal amount is 10% of the parent
                company’s net profits. The company’s legal features surplus accumulative amount accounts for 50% or
                more of the company’s registered capital, and it does not need to withdraw.

        Note 2: December 31, 2011, the group’s undistributed profits balance, including already extracted features
                surplus by subsidiary is RMB130,533,578.01( December31, 2010, RMB129,360,135.71)

        Note 3: The seventh meeting of the sixth session of the Board of Directors of the company approved that the
                company does not distribute profits and conduct capital reserve to capital in 2011

        32. Business income, business cost

        (1) Business income
                                                                               Unit: RMB Yuan
         Item                                                           This           year’s Last year’s occurrence
                                                                        occurrence amount      amount
         Main business income                                           2,294,084,960.04       1,598,409,186.21
         Other business income                                          121,732,770.31         3,321,279.09
         Business cost                                                  3,589,704,382.71       2,239,345,909.35




                                                                                                                   - 60 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        32. Business income, business cost-continued

        (2) Main business (industry)
                                                                                                     Unit: RMB Yuan
                                     This year’s occurrence amount         Last year’s occurrence amount
         Industry name               Business income Business cost          Business income        Business cost
         Energy industry             2,213,598,887.61 3,415,425,758.86      1,573,346,745.72       2,227,284,398.08
         Engineering services        27,271,138.96        15,060,357.05     24,168,960.49          10,292,026.88
         Other income                53,214,933.47        37,681,376.60     893,480.00             -
         Total                       2,294,084,960.04 3,468,167,492.51      1,598,409,186.21       2,237,576,424.96

        (3) Main business (product)
                                                                                                     Unit: RMB Yuan
                                     This year’s occurrence amount         Last year’s occurrence amount
         Product name                Business income Business cost          Business income        Business cost
         Sale of electric power      2,176,654,712.30 3,377,082,661.21      1,560,159,384.89       2,210,206,019.75
         Sale of heat power          8,338,395.95         13,251,499.50     10,943,567.41          14,880,927.70
         Sale of fuel oil            28,605,779.36        25,091,598.15     2,243,793.42           2,197,450.63
         Engineering services        27,271,138.96        15,060,357.05     24,168,960.49          10,292,026.88
         Sludge desiccation          27,929,280.47        14,917,789.76     -                      -
         Sale of equipment           25,285,653.00        22,763,586.84     -                      -
         Other income                -                    -                 893,480.00             -
         Total                       2,294,084,960.04 3,468,167,492.51      1,598,409,186.21       2,237,576,424.96

        (4) Main business (region)

                                                                                                      Unit: RMB Yuan
                                  This year’s occurrence amount            Last year’s occurrence amount
        Region name               Business income Business cost             Business income         Business cost
        Domestic                  2,265,634,158.00 3,444,875,457.59         1,591,909,186.21        2,234,953,049.75
        Foreign                   28,450,802.04        23,292,034.92        6,500,000.00            2,623,375.21
        Total                     2,294,084,960.04 3,468,167,492.51         1,598,409,186.21        2,237,576,424.96

        (5) The business income of the group’s top five customers
                                                                                          Unit: RMB Yuan
         Customer name                                   Business income                Proportion of all business
                                                                                        income
         Guangdong Province Electric Power
                                                         2,176,379,260.21               90.09
         Company
         Guangzhuo Yongmao Trade Co., Ltd.               70,617,503.44                  2.92
         Shenzhen Xiyang Petroleum and Chemical
                                                         41,275,312.26                  1.71
         Co., Ltd.
         Shenzhen Water Authorities                      27,929,280.47                  1.16
         Sandler Expert Limited                          25,285,653.00                  1.05
         Total                                           2,341,487,009.38               96.93




                                                                                                               - 61 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V)Notes on consolidated financial statements- continued

        33. Business taxes and surcharges
                                                                                                   Unit: RMB Yuan
                                  This        year’s   Last       year’s
                                  occurrence amount     occurrence
         Item                                           amount               Planned standard
                                                                             Amount to 3% or 5% of the tax
                                  6,358,100.85          6,047,498.46
         Business taxes                                                      income
         Taxes      for    city
         maintenance       and    3,544,640.66          1,183,686.70
         construction                                                        1%、5% or7% of the taxed circulation tax
         Others                   2,672,247.40          131,957.38
         Total                    12,574,988.91         7,363,142.54

        34. Management fees
                                                                                                   Unit: RMB Yuan
                                                          This year’s occurrence amount Last    year’s  occurrence
        Item
                                                                                         amount
        Wage                                              38,034,516.12                  34,589,977.46
        Tax                                               7,299,465.03                   7,612,290.47
        Leasing fee                                       6,978,347.03                   6,635,278.50
        Entertainment expenses                            5,258,373.43                   5,238,625.72
        Board of directors' expenses                      4,624,007.48                   3,202,198.76
        Transport costs                                   4,095,752.61                   3,837,816.94
        intermediary agency fee                           3,171,158.21                   4,275,658.85
        Amortization of intangible assets                 2,594,554.53                   2,202,783.34
        Depreciate fee                                    2,247,307.79                   2,436,676.40
        Environmental protection costs                    1,859,562.54                   1,831,180.96
        Welfare and food fee                              1,733,040.18                   1,606,501.90
        Property management fee                           1,653,733.44                   1,425,781.46
        Housing fund                                      1,546,088.90                   2,924,475.00
        Administrative expenses                           1,472,322.66                   1,156,724.97
        Corporate culture fee                             1,296,443.47                   1,578,280.85
        Old-age insurance                                 1,229,857.24                   1,057,475.80
        Warrant charges                                   1,006,927.40                   849,235.80
        Travelling expense                                959,815.57                     867,725.05
        Communication expense                             913,552.17                     914,866.59
        Medical insurance                                 675,601.30                     705,904.97
        Enterprise annuity                                206,040.48                     1,901,300.02
        Amortization of long-term prepaid expenses        157,950.10                     211,800.96
        Project checking fee                              130,397.00                     2,079,368.48
        Inventory profit                                  (4,871,794.87)                 (2,752,528.13)
        Others                                            13,265,865.83                  9,537,027.08
        Total                                             97,538,885.64                  95,926,428.20




                                                                                                                - 62 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011



(V).Notes on consolidated financial statements-Continued

        35. Financial expenses
                                                                                                     Unit: RMB Yuan
                                 Items                         Amount of current year           Amount of last year
         Interest expenses                                       246,051,596.92                  170,566,720.97
         Less: Capitalized interest expenses                      44,697,588.67                   43,671,973.12
         Less: Interest income                                     6,681,077.09                    3,212,235.52
         Exchange balance                                           475,293.52                     2,559,927.62
         Others                                                    9,149,725.22                    2,055,364.03
         Total                                                   204,297,949.90                  128,297,803.98

      36. Impairment loss of assets
                                                                                                   Unit: RMB Yuan
                         Items                                      Amount of current year        Amount of last year
I. Bad debt loss                                                        1,175,743.88               (1,401,978.50)
II. Losses on inventory depreciation                                   15,854,028.57                 4,589,340.59
III. Losses on fixed assets depreciation                                6,265,762.65                 5,620,433.76
I (V). Losses on construction in progress depreciation                   226,400.00                   753,840.36
(V). Losses on other assets depreciation                                      -                      1,633,199.83
Total                                                                  23,521,935.10                11,194,836.04

        37. Investment income

        (1) Detail investment income
                                                                                                   Unit: RMB Yuan
                                         Items                              Amount of current    Amount of last year
                                                                                 year
         Investment income on equity method                                   (90,201,890.81)         (49,082,776.11)
         Investment income on disposal of long-term equity                     113,531,216.51             (47,678.00)
         Total                                                                  23,329,325.70         (49,130,454.11)

       (2) Investment income on equity method                                                      Unit: RMB Yuan
                                       Amount of current           Amount of last     Reason on changes in the current
          Investment unit                     year                    year            year compared to last year
CPI JIANXI XINCHANG POWER                                                             Changes on net income of
                                          (90,201,890.81)           (49,082,776.11)
GENERATION CO.,LTD                                                                    Investment unit

        No significant limits exist in repatriation of investment income.




                                                                                                                - 63 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V). Notes on consolidated financial statements-Continued

        38、Non-operating income

    (1)Detail non-operating income
                                                                                                 Unit: RMB Yuan
                                                                                                Non-recurring profit
                                                   Amount of current       Amount of last       and loss amount in
                          Items                         year                  year                current period
         Total disposal gains and losses on
                                                          4,732,446.60         11,234,912.70             4,732,446.60
         non-current assets:
         Disposal gains and losses on fixed
                                                          4,732,446.60         11,234,912.70             4,732,446.60
         assets
         Government subsidy                           1,292,207,296.10      650,709,673.81                 245,208.34
         Value-added tax restitution on
                                                        214,622,872.15      140,642,403.84             214,622,872.15
         imported natural gas (Note 1)
         Compensation on unit capacity                               -       25,678,800.00                          -
         Others                                           5,228,236.41        4,051,057.71               5,228,236.41
         Total                                        1,516,790,851.26      832,316,848.06             229,561,210.10

        Note 1:Value-added tax restitutions on imported natural gas are RMB 151,365,319.02 and RMB 63,257,553.13
              this year, obtained from CNOOC Gas & Power Group(Guangdong Trade Branch) by Weimei Power
              company and our company respectively .

        (2)Detail government subsidy
                                                                                               Unit: RMB Yuan
Items                                                 Amount of current year            Amount of last year Notes
Income on fuel subsidy                                    636,055,900.00                    320,502,966.41         Note
                                                                                                                    1
                                                                                                                   Note
Income on fuel processing fees subsidy                    655,906,187.76                    330,156,707.40
                                                                                                                        2
Special funds on energy-saving                                      -                          50,000.00

National debt subsidy on sludge drying project              233,750.00                             -

Recycling economy supporting funds on sludge
                                                             11,458.34                             -
drying project
Total                                            1,292,207,296.10                     650,709,673.81

        Note 1: Income on fuel subsidy of the company in the year of 2011 is RMB 636,055,900.00 based on
               calculation method prescribed in Notification on Temporary Charges scheme on Fuel Processing Fees to
               Subsidy Local Gas Turbine Power Plant of peak generation by Shenzhen Municipal, Shenfubang [2010]
               No.74, Replied Letter on Definition of Shenzhen Gas Turbine Power Plant Subsidy Scheme in 2011 by
               Shenzhen Municipal, K. G. M.X.W. [2011] No.206, and Notification on Shenzhen Local Gas Turbine
               Power Plant Subsidy Management Temporary Method by Shenzhen Municipal, Shenfubang [2009]
               No.54.

        Note 2: Fuel processing subsidy for Zhongshan Company and Weimei Power company together in2011 are
                RMB 655,906,187.76 based on related provisions prescribed in Notice on Temporary Charges of Fuel
                Processing Fees (Yuefuhan [2008] No.31) by Guangdong Provincial Government and related
                documents by Bureau of Price in Guangdong Province.

(V).Notes on consolidated financial statements-Continued


                                                                                                                - 64 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

        39. Non-operating expenses
                                                                                                          Unit: RMB
                    Items                Amount of          Amount of last    Non-recurring profit and loss amount
                                         current year          year                     in current period
         Loss on disposal of fixed
                                           4,985,709.23          16,537.00                              4,985,709.23
         assets
         Loss      on     scrapped
                                                        -       477,348.21                                          -
         inventories
         Donation expenses                   240,000.00          80,000.00                                240,000.00
         Others                                       -              20.00                                         -
         Total                             5,225,709.23         573,905.21                              5,225,709.23

        40.Income tax expenses
                                                                                                    Unit: RMB Yuan
                                       Items                                   Amount of current     Amount of last
                                                                                    year                   year
         Current income tax calculated on tax law and related provisions          12,313,851.50          7,430,010.28
         Adjustment on deferred income tax                                           910,290.83        17,357,751.77
         Total                                                                    13,224,142.33        24,787,762.05

       The adjustment schedule of income tax expenses and accounting profits is as follows:
                                                                                                    Unit: RMB Yuan
                                       Items                                   Amount of current     Amount of last
                                                                                    year                   year
         Accounting profits                                                       22,255,754.48      (98,645,669.78)
         Income tax expenses calculated on 24% tax rate (Last year: 22%)           5,341,381.08      (21,702,047.35)
         Paying tax influence of non-deductible expenses                           1,108,326.18            555,815.88
         Paying tax influence of tax-free income                                  20,169,767.51          8,387,699.16
         Paying tax influence of unrecognized deductible losses and the
                                                                                   10,880,622.62       18,045,285.60
         contemporary differences
         Paying tax influence of unrecognized deductible losses and the
                                                                                 (36,005,107.29)      (7,400,516.36)
         contemporary differences n previous years
         Changes on deferred income tax assets/ debts balance in the
                                                                                      (43,577.10)       (176,102.80)
            beginning of the period due to tax rate adjustment
         Influences on different tax rate of subsidiaries                          11,772,729.33       10,128,476.87
         Paying tax influence of repatriation of recognized deferred income
                                                                                                -      16,949,151.05
         tax assets in previous years
         Income tax expenses                                                       13,224,142.33       24,787,762.05




                                                                                                                - 65 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V).Notes on consolidated financial statements-Continued

        41. Calculation on basic income per share and diluted income per share

       Net income attributed to shareholders of parent company in current period during calculation on basic income
 per share:
                                                                                                    Unit: RMB Yuan
                                    Items                             Amount of current year Amount of last year
        Net income attributed to shareholders of parent company in
                                                                               17,529,063.37          (114,638,678.20)
        current period
        Net income as a going-concern                                          17,529,063.37          (114,638,678.20)
        Net income as a terminated business                                                  -                       -

        Denominator is weighted average of outstanding ordinary shares during calculation on basic income per share:
                                                                                                        Unit: Share
                                       Items                                 Amount of current       Amount of last
                                                                                    year                  year
        Outstanding ordinary shares in the beginning of the year                     602,762,596         602,762,596
        Add: weighted outstanding ordinary shares in current year                                -                   -
        Less: weighted outstanding ordinary shares repurchased in current
                                                                                                 -                   -
        year
        weighted outstanding ordinary shares at the end of the year                  602,762,596         602,762,596

        Income per share
                                                                                                           Unit: RMB
                                          Items                                     Amount of current    Amount of last
                                                                                         year               year
        Calculation on net profit attributed to shareholders of parent company:
        Basic income per share                                                                   0.03             (0.19)
        Diluted income per share                                                      Not applicable      Not applicable
        Calculation on net profit attributed to shareholders of parent company as
        a going concern:
        Basic income per share                                                                    0.03            (0.19)
        Diluted income per share                                                        Not applicable    Not applicable
        Calculation on net profit attributed to shareholders of parent company as
        a terminated business:
        Basic income per share                                                                       -                 -
        Diluted income per share                                                        Not applicable    Not applicable

        No diluted potential ordinary shares are issued by the company. Therefore, income per diluted share is zero.




                                                                                                                  - 66 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V).Notes on consolidated financial statements-Continued

       42. Notes on Statement of Cash Flows

        (1)Cash received from operating activities
                                                                                          Unit: RMB Yuan
                                   Items                       Amount of current year   Amount of last year
         Income on fuel subsidy                                      870,805,655.00         223,691,620.79
         Special funds on economic development                                      -          1,500,000.00
         Interest income                                                6,681,077.09           3,740,184.55
         Value-added tax restitution on imported natural gas         214,622,872.15         140,642,403.84
         Compensation on unit capacity                                              -        25,678,800.00
         Special funds on energy-saving                                             -              50,000.00
         Others                                                         3,422,084.62           4,714,040.32
         Total                                                     1,095,531,688.86         400,017,049.50

        (2) Cash paid for operating activities
                                                                                          Unit: RMB Yuan
                                   Items                       Amount of current year   Amount of last year
         Leasing expenses                                          6,978,347.03           6,635,278.50
         Social expenses                                           5,258,373.43           5,238,625.72
         Fleet expenses                                            4,095,752.61           3,837,816.94
         Agency expenses                                           3,171,158.21           4,275,658.85
         Others                                                    1,052,676.93           1,869,727.54
         Total                                                    20,556,308.21          21,857,107.55

        (3)Cash received from financing activities
                                                                                          Unit: RMB Yuan
                                   Items                       Amount of current year   Amount of last year
         Guaranty funds received                                                    -        12,800,000.00

        (4) Cash paid for financing activities
                                                                                          Unit: RMB Yuan
                                   Items                       Amount of current year   Amount of last year
         Guaranty funds paid                                           52,536,060.00                        -
         Paid loans from third parties (Note)                                       -        74,838,156.81
         Total                                                         52,536,060.00         74,838,156.81

     Note: The loans paid back to Xingzhong Group and Bureau of Finance in Zhongshan Municipal by Shenzhong
Development Co., Ltd.




                                                                                                        - 67 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(V).Notes on consolidated financial statements-Continued

        43. Supplementary data on Statement of Cash Flows

        Supplementary data on Statement of Cash Flows:
                                                                                                  Unit: RMB Yuan
                                                                          Amount of current        Amount of last
                              Supplementary data
                                                                               year                     year
         1.Reconciling net income with cash flows from operating
         activities:
         Net income                                                             9,031,612.15      (123,433,431.83)
         Add: Impairment of Assets                                             23,521,935.10         11,194,836.04
              Depreciation of Fixed assets and investment property            210,819,287.24        178,247,111.12
              Amortization of intangible assets                                 3,301,244.81          3,263,423.08
              Amortization of long-term amortized expenses                        177,401.80            211,800.96
              Losses (gains) on disposal of fixed assets, intangible
                                                                                  253,262.63       (11,218,375.70)
          assets and other long-term assets
              Financial expenses(income)                                      201,354,008.25        127,368,970.33
              Investment Losses (income)                                     (23,329,325.70)         49,130,454.11
              Decrease(increase) in deferred income tax assets                    910,290.83         15,985,437.11
              Decrease(increase) in inventory                                  78,322,586.24       (11,760,843.34)
              Decrease(increase) in operating receivables                   (433,109,183.26)      (199,972,199.01)
              Decrease(increase) in operating payables                        201,032,221.17       (13,119,237.90)
         Net cash flows provided by operating activities                      272,285,341.26         25,897,944.97
         2.Non cash major investing and financing activities:
         Debt to capital conversion                                                           -                  -
         Convertible bonds due within one year                                                -                  -
         Fixed assets leased through financing                                                -                  -
         3.Changes in cash and cash equivalents
         Ending balance of cash and cash equivalents                          629,318,992.12       591,386,814.04
         Less: Beginning balance of cash and cash equivalents                 591,386,814.04       356,362,100.63
         Net increase in cash and cash equivalents                             37,932,178.08       235,024,713.41

        (2) Cash and cash equivalents
                                                                                              Unit: RMB Yuan
                                                      Amount in the beginning of the     Amount at the end of the
                           Items                                  year                            year
         I. Cash                                                      629,318,992.12                 591,386,814.04
                 Cash on hand                                             256,716.21                     207,875.16
                       Cash in bank                                   628,449,391.91                 590,685,309.79
         Other currencies on hand                                         612,884.00                     493,629.09
         II. Ending balance of cash and cash
           equivalents                                                 629,318,992.12                591,386,814.04




                                                                                                             - 68 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(VI).Related parties and related party transactions

         1. Parent company

         Parent company does not exist for the reason that share proportions of any shareholders do not exceed 50% and
         no control relation will be formed through other ways.

         2.Subsidiaries

         Detail of subsidiaries can be referred to appendix (IV).

         3. Other related parties

                                                                                                                       Organization
                          Other related parties                            Relation with the company
                                                                                                                          code
                                                                   Shareholder exerting significant influence
             Energy Group Co., Ltd.                                                                                     192189185
                                                                               on the company
             Weimei Ceramics Co., Ltd.                                      Minority shareholder                        72919361X
             Xingzhong Group                                                Minority shareholder                        733112675
             Shenzhen Mawan Power Co., Ltd, (―Mawan
                                                                    Subsidiaries of Energy Group Co., Ltd.              618816706
             Power Co., LTD‖)
             Shenzhen Moonport Oil Co., Ltd. (―Moonport
                                                                    Subsidiaries of Energy Group Co., Ltd.              618849428
             Oil Co., Ltd.‖)
             Energy Corporation                                     Subsidiaries of Energy Group Co., Ltd.              19224115-8
             Directors and Executives                                           Key managers                           Not applicable

         4. Related party transactions

         (1)Purchase & sale of commodities and provision & receipt of services

         Purchase of commodities and receipt of services schedule
                                                                                                                 Unit: RMB Yuan
   Related      Related      party Contents   Price     setting  and Amount of current year      Amount of last year
   Parties      transactions                  decision making of Amounts Proportion in the Amounts                Proportion in the
                                              related           party          same transactions                  same transactions
                                              transactions                     (%)                                (%)
Mawan Power Purchase of           Fuel        Price issued by charging -           -                21,140,652.48   0.98
Co., Ltd.   commodities                       departments or market
                                              price
Mawan Power receipt of            Pipe        Price issued by charging -           -                181,955.27      100.00
Co., Ltd.   services              expenses    departments or market
                                              price
Moonport Oil receipt of           Wharfage    Price issued by charging -           -                877,857.45      100.00
Co., Ltd.    services                         departments or market
                                              price

         (2)Related party financing

         This year:
                                                                                                                 Unit: RMB Yuan
                   Related parties            Financed amount       Beginning day      Ending day     Ending balance       Explanation

         Borrowing
               Xingzhong Group                 125,316,816.85         2011.01.01       2011.12.31     125,316,816.85         Renewal
               Xingzhong Group                  23,750,000.00         2011.01.01       2011.12.31      23,750,000.00         Renewal
               Xingzhong Group                  16,250,000.00         2011.01.01       2011.12.31      16,250,000.00         Renewal
               Xingzhong Group                  14,335,291.80         2011.01.01       2011.12.31      14,335,291.80         Renewal
               Xingzhong Group                   2,500,000.00         2011.01.01       2011.12.31      2,500,000.00          Renewal

                                                                                                                                - 69 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

             Weimei Ceramics Co.,      LTD         35,785,979.94             2011.07.16      2012.07.16       35,785,979.94

(VI).Related parties and                related party transactions -Continued

            4. Related party transactions -Continued

            (2) Related party financing-Continued

            Last year:
                                                                                                                  Unit: RMB Yuan
              Related parties         Financed amount           Beginning day        Ending day     Ending balance Explanation
             Borrowing
             Xingzhong
                                         125,316,816.85               2008.11.19     2010.12.31     125,316,816.85            Note
             Group
             Xingzhong                                            2009.10.15
                                          23,750,000.00                              2010.12.31       23,750,000.00
             Grouop
             Xingzhong                                            2009.03.27
                                          16,250,000.00                              2010.12.31       16,250,000.00
             Group
             Xingzhong                                            2008.12.29                                                  Note
                                          14,335,291.80                              2010.12.31       14,335,291.80
             Group
             Xingzhong                                            2009.03.27
                                              2,500,000.00                           2010.12.31           2,500,000.00
             Group

        Note: the amounts are borrowed in October 15, 2007 and November 19, 2007. The borrowing period is one year
which can be renewed at the end of period.

            (3) Asset transfer of related party
                                                                                                                         Unit: RMB Yuan
                                                                              Amount of current year               Amount of last year
                                       Related party                     Amounts            Proportion in       Amounts    Proportion in
 Related          Related party                              Price
                                        transaction                                         the        same                the        same
  party            transaction                              setting
                                          content                                           transactions                   transactions
                                                                                            (%)                            (%)
               10% share transfer
Energy         of Energy
                                                         Market
Group          Environmental           Asset transfer                       123,078,900.00            36.19                   -                  -
                                                         price
Co., Ltd.      Protection company
               shares

            (4)Remuneration for key managers
                                                                                                                         Unit: RMB Yuan
                                                Item                                         Amount of current
                                                                                                  year               Amount of last year
            Remuneration for key managers                                                         7,311,300.00                    7,162,700.00

            (5)Capital occupying fee
                                                                                                                                    Unit: RMB
                                                                               Amount of current year            Amount of last year
                                                  Related
                                    Related                                   Amounts     Proportion in       Amounts      Proportion in
                                                    party        Price
              Related party          party                                                the        same                  the       same
                                                 transactio     setting
                                  transaction                                             transactions                     transactions
                                                 n content
                                                                                                (%)                        (%)
                                  Capital
             Xingzhong                           Interest                    11,192,994.0
                                  occupying                      Note                               90.99     9,906,544.84              100.00
             Group                               expenses                               8
                                  fee
             Weimei               Capital
                                                 Interest
             Ceramics Co.,        occupying                      Note        1,108,570.13            9.01                 -                  -
                                                 expenses
             Ltd.                 fee

            Note: Capital occupying fee is calculated based on equivalent flow fund borrowing rate in bank.

                                                                                                                                         - 70 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011




                                      - 71 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(VI).Related parties and       related party transactions –Continued

        4. Related party transactions -Continued

        (5) Receivables and Payables of Related parties

        Payables of Related parties
                                                                                      Unit: RMB Yuan
               Items                 Related parties             Ending balance       Beginning balance
         Other payables       Xingzhong Group                     182,152,108.65          182,152,108.65
                              Weimei Ceramics Co., Ltd.            36,385,912.01                        -
         Prepaid amount       Energy Corporation                   14,586,000.00           14,586,000.00
         Interest payable     Xingzhong Group                      43,299,375.93           32,106,381.85


(VII).Contingency

        In March 2008, Contract confirmations (referred to as ―confirmation‖)of Contract 165723967102.11 and
        165723968102.11 had been signed between Jierun Corporation and the company.

        The validity period of first confirmation is from March 3, 2008 to December 31, 2008. And the confirmation
         consists of three option contracts. The company can obtain USD 300,000 each month (200,000 barrels*
         USD1.50 /barrel) when the floating price( Arithmetic average of closing price on light crude oil futures
         contracts in current month at New York Commodity Exchange during each deciding time limit) is higher than
         USD 63.50 each barrel; the company can obtain benefits of (floating price- USD 63.5 /barrel )*200,000
         barrels, when the floating price is higher than USD 62.00/barrel and lower than USD 63.50/barrel; the
         company shall pay USD or equivalents of (USD 62.00/barrel-floating price) *400,000 barrels to Jierun
         Corporation, when the floating price lower than USD 62.00/barrel.

          The validity period of second confirmation is from January 1, 2009 to October 31, 2009. And the confirmation
           consists of three option contracts. Jierun Corporation has the implement options before 1800 o’clock,
           December 30, 2008. The company can obtain USD 340,000 each month (200,000 barrels* USD1.70 /barrel)
           when the floating price is higher than USD 66.50 each barrel; the company can obtain benefits of (floating
           price- USD 64.8 /barrel )*200,000 barrels, when the floating price is higher than USD 64.80/barrel and lower
           than USD 66.50/barrel; the company shall pay USD or equivalents of (USD 64.50/barrel-floating price)
           *400,000 barrels to Jierun Corporation, when the floating price lower than USD 64.50/barrel.
From April to October 2008, Jierun Corporation has depended on the above two confirmation letters and paid 2.10
million USD (converted to RMB 14,352,083.46 RMB) to our company. Our company has calculated received expense
into ―other payable‖.




                                                                                                                 - 72 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(VII).Contingency - Continued
       On November 6, 2008, Jierun Corporation has sent a letter to the company and maintained that company has
       expressed fulfillment failure of the transaction according to the announcement on October 21st, 2008 and
       meeting opinions on October 29, 2008 and has constituted breach of contract. It has thus announced transaction
       termination. The company has replied to Jierun Corporation and expressed that company has never expressed
       fulfillment failure of the transaction and maintained that Jierun Corporation has personally rescinded the
       contract and refused to pay payable expense under the first copy of confirmation letter until October 2008—it
       has constituted breach of contract and the company has announced transaction termination. Although the two
       parties have terminated the confirmation letter and transaction by different reasons, yet they do not have any
       discrepancy in the termination fact of confirmation letter and transaction. After the transaction termination,
       Jierun Corporation has sent a letter and required the company to compensate for the transaction termination
       losses; at the same time, it has sent a letter to express hope for dispute settlement through commercial measures.
       The company has replied a letter and refused to accept Jierun Corporation’s compensation requirements; at the
       same time, it has sent another letter for negotiation. Later, the two parties have launched out numerous
       negotiations but failed to reach any common consensus. On November 27th, 2009, the company has received the
       letter from Allen and Overy LLP. The letter has described the above matters and required the company to
       compensate for Jierun Corporation’s losses of 79,962,943.00 USD and interest of 3,736,958.66 USD until
       November 27th, 2009. The company has replied a letter on January 25th, 2010 and refused to accept the losses
       compensation requirements.

        On March 31st, 2011, Jierun Corporation has sent another letter to the company and announced default expense
        of 79,962,943.00 USD and interest as of November 6th, 2008. It is willing to continue to cooperate with the
        company for settlement of this issue and has invited the company to raise settlement suggestions. At the same
        time, Jierun Corporation has emphasized its reservation of all the rights to this matter. The company has replied
        a letter on April 6th, 2011 and refused to accept Jierun Corporation’s losses compensation requirements and is
        willing to accept Jierun Corporation’s invitation and launch out negotiation under the prerequisite of not
        affecting their rights. Once the company management level judge negotiation failure, it does not eliminate
        dispute settlement possibility through judicial measures.

        On February 6, 2012, Jierun Corporation has sent a letter again to the company, asking for money in arrears of
        USD 83,699,901.66 and related interests. On February 10, 2012, the company has replied Jierun Corporation,
        not adopting the compensation requirements from Jierun Corporation and asking for payables of USD
        300,000.00 occurred since October 2008 and interests since November 7, 2008 under No. 165723967102.11
        confirmation. The company is willing to negotiate and settle the matter in the way which will not affect rights of
        both sides with the consideration of invitation from Jierun Corporation. If consensus cannot be reached, it is
        possible to settle the dispute by judicial methods.

        Board of directors in the company believes, based on the legal opinions from independent attorney:
        (1)Both two confirmations and transactions have been terminated by both parties.
        (2)It is impossible to estimate the possible settlements and results under current circumstance due to several
        indefinite factors in the matter.
        (3)Estimated liabilities shall not be recognized in the financial statements of 2011 due to the impossibly
        estimated results of the matter.

        Board of directors of the company will notify relevant accounting treatments timely based on the matter
        progress.




                                                                                                                    - 73 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(VIII).Commitments

        1、Capital commitments
                                                                                                                    Unit: RMB
                                        Items                                   Amount at the end of          Amount at the end
                                                                                    the year                    of the year
         Singed but unrecognized in financial statements
         - Commitment to purchase long-term assets                                         17,900,039.34           22,732,380.00

        2、Operating and leasing commitments

        Irrevocable operating and leasing contracts signed externally at the date of Balance Sheet are as follows:

                                                                                                                    Unit: RMB
                                          Items                                      Amount at the end       Amount at the end
                                                                                       of the year             of the year
         Minimum leasing payments of irrevocable operating and
          leasing
         First year after the date of Balance Sheet                                       3,378,118.33              4,394,861.29
         Second year after the date of Balance Sheet                                      6,133,712.63              1,376,850.00
         Third year after the date of Balance Sheet                                       1,427,596.50              1,389,536.63
         Years afterward                                                                 65,009,429.93             66,616,466.43
         Total                                                                           75,948,857.39             73,777,714.35


(IX).Subsequent events on Balance Sheet
                                                                                                              Unit: RMB Yuan
                                                                                           Effected amount on          Reasons
                                                                                          financial position and     impossible to
              Items                                   Content                                operating results         estimate
         Investment             On September 30, 2011, the fourth temporary general      None                       Not applicable
                           meeting of shareholders had been held and Motion on
                           Capital Increase to Shenzhen Nanshan (Zhongshan) Electric
                           Power Co., Ltd. had been approved to increase capital of
                           RMB 350,000,000 Yuanto Zhongshan Power Company, and
                           the shareholders shall contribute in accordance with the
                           stork right ratio. Among which, the company had been
                           assigned to offer RMB 192,500,000 Yuan for holding 55%
                           of the stock, and Xingdesheng Company had been assigned
                           to offer RMB 87,500,000 Yuan for holding 25% of the
                           stock and Xingzhong Group had been assigned to offer
                           RMB 70,000,000 Yuan for holding 20% of the stock

                                 Till the approval and submit day of the financial
                           statement, the company, Xingdesheng Company and
                           Xingzhong Group have already contributed the capital in
                           accordance with the resolution, relevant commercial and
                           industrial registration procedures are in progress.




(X) Other important matters

        1. Borrowing costs
                                                                                                               Unit: RMB Yuan
                             Item                        Amount of capitalized borrowing costs in            Capitalization rate
                                                                     current period
         Goods in stock                                                               44,697,588.67                                6.14
         Total capitalized borrowing costs in current                                 44,697,588.67
                                                                                                                                   - 74 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

         period
         Borrowing costs reckoned in the profits and
                                                       201,354,008.25
         losses in current period
         Total borrowing costs in current period       246,051,596.92




                                                                        - 75 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


 (X) Other important matters-Continued

        2. Segment report

        According to the internal organization structural, management requirements and internal reporting systems of
        our group, the operation business of the group is classified into four reporting segments, i.e. power and heat
        supply, fuel trade, power plant construction and other relevant business and real estate development. The
        management of the group regularly evaluates the operation results of the reporting segments, so as to decide to
        distribute resources to them and evaluate their achievements.

        The segment report information is disclosed according to the accounting policies and measuring standards
        adopted by all segments when reporting to the management, and such measuring bases are kept consistent with
        the accounting and measuring bases upon preparation of the financial statements.




                                                                                                                  - 76 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011
(Ⅹ)Other important matters - Continued

       2. Segment report–Continued

       (1) Segment report information
                                                                                                                                                                                                                      Unit: RMB Yuan
                                                                                                                          Power plant construction
                                                                                                                            and other relevant
        Items               Power and heat supply                   Fuel trade              Real estate development              business               Undistributed items              Inter-segment offset                     Total
                                                                                                                           Current
                          Current year     Last year       Current year    Last year       Current year   Last year         year      Current year    Last year       Current year    Last year       Current year    Last year       Current year
        Business
        income
        Foreign trade     2,314,110,50    1,574,029,       10,874,172      2,855,478.1                                    81,032,69    24,168,96                                                                     2,415,817,73         1,601,730,4
                                                                                                     -                -                              9,800,360.90     676,632.48                  -              -
        income                    3.62        394.14              .45                9                                         3.38         0.49                                                                             0.35               65.30
        Inter-segment     18,709,970.4    50,980,191       25,118,111      48,280,291.                                    2,159,000    400,000.0                       8,842,667.    (46,418,847.     (108,503,15
                                                                                                     -                -                               431,765.02                                                                  -                 -
        trade income                 7           .84              .94              20                                           .00            0                              56              43)           0.60)
        Total segment
                          2,332,820,47    1,625,009,       35,992,284      51,135,769.                                    83,191,69    24,568,96     10,232,125.9      9,519,300.    (46,418,847.     (108,503,15    2,415,817,73         1,601,730,4
        business                                                                                     -                -
                                  4.09        585.98              .39              39                                          3.38         0.49                2             04              43)           0.60)            0.35               65.30
        income
        Total statement
                          2,332,820,47    1,625,009,       35,992,284      51,135,769.                                    83,191,69    24,568,96     10,232,125.9      9,519,300.    (46,418,847.     (108,503,15    2,415,817,73         1,601,730,4
        business                                                                                     -                -
                                  4.09        585.98              .39              39                                          3.38         0.49                2             04              43)           0.60)            0.35               65.30
        income
       Subdivisional      3,561,094,22    2,308,545,       34,279,942      48,798,735.      226,978.3     1,869,851.      64,783,44    10,402,12     16,042,723.2      2,576,178.    (49,807,701.     (113,428,22    3,626,619,60         2,258,764,3
       expense                    3.49        723.04              .58              87               6            41            1.41         9.90                8             22              06)           6.80)            8.06               91.64
       Subdivisional
                          (1,228,273,7    (683,536,1        1,712,341.     2,337,033.5     (226,978.3     (1,869,851      18,408,25    14,166,83     (5,810,597.3      6,943,121.    3,388,853.6      4,925,076.2    (1,210,801,8         (657,033,9
       business profits
                                49.40)        37.06)               81                2             6)            .41)          1.97         0.59               6)             82               3                0          77.71)             26.34)
       (losses)
        Management        35,149,345.2    55,576,484.      5,614,666.      8,072,342.8      8,936,054.    8,142,739.      8,590,797    5,818,345.    39,248,022.5     18,316,516                                     97,538,885.6         95,926,428.
                                                                                                                                                                                                  -              -
        expense                      4            22                56               6             02            17             .29            22               3            .73                                                4                  20
        Financial         125,478,090.    84,071,406.      (706,457.3                       2,486,260.    4,967,564.      (2,033,28     (3,367,96    79,772,659.0     42,339,675     (699,316.26                     204,297,949.          128,297,80
                                                                           103,100.67                                                                                                                  184,022.52
        expenses                   52             43                1)                             10            21           6.22)         5.80)               7            .95               )                               90                3.98
        Investment                                          91,188,94                                                                                151,166,247.     (49,130,45     (219,025,86                     23,329,325.7          (49,130,45
                                      -                -                               -             -                -           -             -                                                                -
        return                                                   4.68                                                                                         74           4.11)           6.72)                                0               4.11)
                          (1,388,901,1    (823,184,0        87,993,07     (5,838,410.0     (11,649,29     (14,980,15      11,850,74    11,716,45     26,334,968.7     (102,843,5     (214,937,69      4,741,053.6    (1,489,309,3          (930,388,6
       Business profit
                                85.16)        27.71)             7.24               1)          2.48)          4.79)           0.90         1.17                8         24.97)           6.83)                8          87.55)              12.63)
       Non-business       719,183,406.    401,127,81       4,470,431.      8,189,147.5     5,178,379.      32,059,17      245,208.3                  787,454,425.     390,940,70                                     1,516,790,85          832,316,84
                                                                                                                                                -                                     259,000.00                 -
       income                       93          5.30                09               9             08           5.72              4                           82            9.45                                             1.26                8.06
       Non-business                                         151,519.7                                      477,348.2
                          4,974,189.48     82,090.00                             20.00               -                            -    14,447.00      100,000.00                -                 -              -   5,225,709.23         573,905.21
       expenditure                                                   5                                             1
                          (674,691,967     (422,138,3      92,311,988      2,350,717.5     (6,470,913      16,601,67      12,095,94     11,702,00    813,689,394.     288,097,18     (214,678,69       4,741,053.6   22,255,754.4          (98,645,66
       Total profit
                                   .71)        02.41)              .58               8            .40)          2.72           9.24          4.17             60            4.48           6.83)                 8              8               9.78)
                                          6,334,193.9      6,905,536.                                                     3,944,363    2,699,793.                     16,949,151     (233,088.11      (1,372,314.6   13,224,142.3         24,787,762.
       Income tax         2,607,330.76                                     131,919.99                -    45,018.34                                               -
                                                    2               60                                                          .08            41                            .06               )                7)              3                  05
                          (677,299,298     (428,472,4       85,406,45      2,218,797.5     (6,470,913     16,556,65       8,151,586    9,002,210.    813,689,394.     271,148,03     (214,445,60       6,113,368.3                         (123,433,4
       Net profit                                                                                                                                                                                                    9,031,612.15
                                   .47)        96.33)            1.98                9            .40)         4.38             .16            76             60            3.42           8.72)                 5                             31.83)



                                                                                                                                                                                                                                              - 77 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(Ⅹ)      Other important matters - Continued

          2. Segment report - Continued
                                                                                                                                                                                                                           Unit: RMB Yuan
                                                                                                                           Power plant construction
          Items               Power and heat supply               Fuel trade               Real estate development        and other relevant business        Undistributed items              Inter-segment offset                     Total
                          Current year      Last year     Current year    Last year      Current year      Last year      Current year Current year       Last year      Current year     Last year       Current year       Last year     Current year
 Total subdivisional     3,985,686,884. 3,582,479,751. 453,571,505 371,605,020          1,191,800,881. 1,181,805,033.     325,782,913 316,989,922        3,417,914,98 2,770,795,09       (3,922,010,48 (2,944,720,47        5,452,746,68 5,278,954,34
 assets                               83               19          .43            .14               62               59             .43            .55           1.73             5.82            4.13)            3.39)            2.91            9.90
 Total subdivisional      (1,009,701,74 (1,836,510,43 37,352,328. 40,784,255.           1,041,079,656. 1,024,612,894.     192,496,978 107,040,636        6,956,704,74 6,681,686,61       (3,652,996,28 (2,671,117,97        3,564,935,68 3,346,495,99
 liabilities                       0.93)            3.07)           55             24               08               65             .00            .33           9.96             9.00            1.80)            3.06)            9.86            9.09
 Additional
 information:
 Depreciation and
                         204,365,548.7    177,507,241.0    6,729,826.0   6,921,264.1                                       6,412,062.1                                                                                      214,297,933.    181,722,335.
 amortization                                                                              151,859.27       305,402.35                    498,420.22     2,136,442.90    1,815,083.66    (5,497,805.35)   (5,325,076.20)
                                     7                0              9             3                                                 7                                                                                               85              16
 expenses
                                                           1,156,388.1                                                     6,452,791.6    3,979,149.7    75,559,381.1    58,513,979.1    (94,568,915.1    (70,078,567.3
 Interest income         13,241,610.20     7,184,449.93                    31,081.69     4,839,821.07     3,582,142.30                                                                                                      6,681,077.09    3,212,235.52
                                                                     8                                                               0              5               8               6               4)               1)
                         135,181,513.9                                                                                     4,254,685.4                   149,170,488.    99,980,043.3    (94,568,915.1    (70,078,567.3     201,354,008.    126,894,747.
 Interest expenditure                     87,870,425.29              -              -    7,316,235.60     8,538,307.19                    584,539.38
                                     8                                                                                               4                            36                0               3)               1)              25              85
 Impairment loss
                                                                          (1,128,922.                                     (500,207.00     (1,401,978.                                                                       23,521,935.1    11,194,836.0
 confirmed in the        22,119,791.22    12,092,537.18    216,395.00                                -    1,633,199.83                                   1,736,004.16                -     (50,048.28)                 -
                                                                                  47)                                               )             50)                                                                                  0               4
 current period
 Investment benefits
 confirmed by
 long-term stock right                                                                                                                                   (90,201,890.8   (49,082,776.1                                      (90,201,890.8   (49,082,776.
                                      -                -             -              -                -                -               -              -                                                -                -
 investment as                                                                                                                                                      1)              1)                                                 1)            11)
 verified through
 equity method
                          92,860,116.2    68,581,424.4     2,006,340.                                                     26,855,475      13,869,338     13,125,516.2    16,949,852.9                     (1,350,000.00     133,931,267.    98,081,497.
 Capital expenditure                                                                -       33,820.00       30,882.00                                                                     (950,000.00)
                                     4               6             31                                                            .15             .28                4               1                                 )               94             65
 Wherein:
 Expenditure for                                           1,846,636.9                                                     26,661,096.    13,775,038.    13,073,934.4                                                       131,119,234.    70,271,665.0
                         90,487,566.56    49,825,059.85                             -                -                -                                                  7,621,566.91     (950,000.00)     (950,000.00)
 projects under                                                      8                                                             15             28                5                                                                14                4
 construction
 Expenditure for
                                                                                                                                                                                                                                            18,497,666.6
 purchasing fixed         2,372,549.68    18,756,364.61      27,891.67              -       33,820.00        30,882.00     194,379.00       94,300.00       51,581.79       16,120.00                 -    (400,000.00)     2,680,222.14
                                                                                                                                                                                                                                                       1
 assets
 Expenditure for
 purchasing                           -                -   131,811.66               -                -                -               -              -               -   9,312,166.00                 -                -      131,811.66    9,312,166.00
 intangible assets




                                                                                                                                                                                                                                            - 78 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


 (X) Other important matters-Continued

       3. Financial tools and risk management

       Major financial tools of our group include equity investment, deposits held in banks, loan, accounts receivable,
       other accounts receivable, accounts payable, other accounts payable and etc, of which the detailed explanation
       can be found in Note (V). Risk related to these financial tools and the policies of risk management adopted to
       reduce these risks of our group are illustrated as below. The management layer of our group manages and
       monitors these risk exposure to control the above risks in limited range.

       (1) Target and policy of risk management

       The target of our group to undertake risk management is to balance the risk and profit and reduce the negative
       influence of these risks to the operating performance of our group so as to maximize the profits of stockholders
       and other equity investors. Based on the target of the risk management, the basic strategy of our company’s risk
       management is to ensure and analyze all risks confronted before our group, establishing proper deadline of risk
       enduring, conducting risk management, reliably supervising all risks in time and controlling the risks in limited
       range

       1.1 Market risk

       1.1.1 Risk of foreign exchange

       Risk of foreign exchange refers to the risk of loss produced from the fluctuation in exchange rate. The enduring
       foreign exchange risk of our group is mainly related to the HKD, USD, Euro and SGD. Except part of
       subsidiaries conducting purchase and sale with HKD, USD, Euro and SGS, other major business of our group
       are evaluated and settled through RMB. On December 31, 2011, except the stated assets as below are remaining
       balance of HKD, USD, Euro and SGD, the asset and liability of our group are remaining balance of RMB. The
       foreign exchange risk produced from the asset and liability of the foreign currency’s remaining balance may
       influence the operating performance of our group.
                                                                                                    Unit: RMB Yuan
                                                                                                     Amount in the
                                                                        Amount at the end of        beginning of the
                                    Items                                      the year                   year
        Cash and money equivalent-USD                                           12,417,149.30           10,993,828.42
        Cash and money equivalent- Euro                                               8,308.37               8,963.88
        Cash and money equivalent-HKD                                               736,734.06           4,639,415.66
        Cash and money equivalent-SGD                                               481,337.03             113,361.80
        Other accounts receivable-USD                                             1,695,323.96           2,684,814.93
        Other accounts receivable-HKD                                                          -           434,063.79
        Other accounts receivable-SGD                                               463,465.14              15,679.80
        Accounts payable-USD                                                         49,740.70              52,281.05
        Other accounts payable-USD                                              13,859,889.14           13,172,461.88
        Other accounts payable-HKD                                                             -           508,226.00
        Other accounts payable-SGD                                                1,370,194.55           1,485,283.10

       Our group pays close attention to the influence on the foreign exchange risk of the fluctuation in exchange rate.
       So far, our group has not yet adopted any measures to avoid foreign exchange risk.




                                                                                                                  - 79 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

 (X ) Other important matters-Continued

       3. Financial tools and risk management-Continued

        Target and policy of risk management-Continued

       1.1.2. Interest rate risk- Risk of cash flow’s fluctuation

       The risk of cash flow’s fluctuation of the financial tools caused by the fluctuation of interest rate in our group
       has much to do with the bank loan’s floating interest rate. (Referring to the Note V for the detail) Our policy is
       to hold the floating rate of the loan and eliminate fluctuation risk of the interest rate caused by the fluctuation of
       interest rate.

       1.2 Credit risk

       December 31, 2011, the biggest credit risk exposure that probably causes financial loss of our group is mainly
       from the other party of the contract which can not fulfill the liabilities and lead to the financial loss.

       Our company examines and verifies the recovering condition of each single account receivable in every balance
       sheet date to count and draw sufficient preparation of bad debt in accordance with the fund that is unable to get
       recovered.

       Since the working capital of our company is stored in the bank with higher credit, the credit risk of working
       capital is lower.

       1.3 Liquidity risk

       While manage liquidity risk, our group keeps and monitors sufficient cash and money equivalent confirmed by
       management layer to satisfy the operating need and lower the influence from the floating of cash flow. The
       management layer monitors the utilization of bank loan and obeys the loan treaty.

       Our company regards bank loan as main source of funds. December 31, 2011, bank credit limit that has not been
       used is RMB 1,070,322,657.14(December 31, 2010: RMB 1,412,600,000.00Yuan).




                                                                                                                       - 80 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

( X ) Other important matters- Continued

        3. Financial tools and risk management- Continued

        (1) Target and policy of risk management-Continued

        1.3 Liquidity risk-Continued

         The financial asset and financial liability our company holds are analyzed as below according to the deadline of
the responsibilities on the contract that has not been discounted and still remained left.
                                                                                                      Unit: RMB Yuan
                         Items                        Within one year             1-5 years        More than 5 years
          Fund of currency                                 695,095,052.12                      -                      -
          Accounts receivable                              934,640,019.03                      -                      -
          Other accounts receivable                        124,599,842.72                      -                      -
          Short-term loan                                3,396,816,761.64                      -                      -
           Bill payable                                     43,820,200.00                      -                      -
          Accounts payable                                 214,748,889.66                      -                      -
          Interest payable                                  75,462,594.51                      -                      -
          Other accounts payable                           358,597,380.00                      -                      -
          Non-flow liability due in one
                                                            50,828,972.60                      -                      -
          year
          Long-term loan                                     1,790,880.00           7,163,520.00         27,285,508.38


        (2) Fair value

        The fair value of the financial assets and financial liabilities is determined according to the following methods:

         The fair value of the financial assets and financial liabilities with standard clauses and conditions and existing
            in the active market is determined respectively by referring to the current pricing and quotation of the
            active market;

         The fair value of other financial assets and financial liabilities (excluding derivative instruments) is determined
            according to the general pricing model based on the future cash flow discount method or by the observable
            current market transaction price;

         The fair value of the derivative instruments is determined by the public quotation of the active market. If
            public quotation does not exist, the fair value of the derivative instruments without option is estimated and
            determined with the future cash flow discount method based on the appropriate return curve; and the fair
            value of the derivative instruments with options is calculated and determined according to the option
            pricing model (e.g. the binomial model).

        The management of the group thinks the book value of the financial assets and financial liabilities measured by
        the amortized cost in the financial statements is close to the fair value of such assets and liabilities.




                                                                                                                     - 81 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

 ( X ) Other important matters- Continued

       3. Financial tools and risk management- Continued

       (3) Sensitivity analysis

       Our company adopts sensitivity analysis to technically analyze what kind of influence the rational and possible
       change of the risk variation produced on the current balance or the stockholders’ interest. Since no risk variation
       change isolatedly and the dependence existing in the variation plays an important role in the

       3.1 Risk of foreign exchange

       While other variation remaining invariable, the possible and rational fluctuation of exchange rate influence the
       current balance and stockholders’ interest before tax as below:
                                                                                                    Unit: RMB Yuan
                                                           This year                           Last year
                                             Influence on         Influence on     Influence on      Influence on
                                                 profit        rights and interest     profit         rights and
                         Fluctuation of                          of stockholders                      interest of
        Item             exchange rate                                                               stockholders
        All foreign 5%
        currency       Appreciation to           26,124.67               26,124.67  (183,593.81)         (183,593.81)
                       the RMB
        All foreign 5% Devaluation
                                               (26,124.67)             (26,124.67)    183,593.81           183,593.81
        currency       to the MB

       3.2 Interest rate risk

       3.2.1 Sensitivity analysis of interest rate risk is based on the below assumption:

        The change of market rate influences the interest income or fees of financial tools with changeable interest
            rate.

       3.2.2 On the basis of above assumption, with other variation remaining invariable, the rational fluctuation that
       interest rate may occurred influences the current balance and interests of stockholders before tax as below:
                                                                                                      Unit: RMB Yuan
                                                              This year                                 Last year
                                               Influence on       Influence on rights    Influence on       Influence on rights
                             Fluctuation of        profit           and interests of         profit           and interests of
        Item                  interest rate                          stockholders                              stockholders
        Loan with         Interest rate
        floating          floating 1 %        (24,070,000.00)         (24,070,000.00)   (21,400,000.00)        (21,400,000.00)
        interest rate     Upward
        Loan with         Interest rate
        floating          floating 1 %         24,070,000.00           24,070,000.00     21,400,000.00           21,400,000.00
        interest rate     downward




                                                                                                                          - 82 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


 (XI) Notes on Company’s financial statements

       1. Accounts receivable

       (1) Accounts receivable are exposed according to the categories:
                                                                                                                                     Unit: RMB Yuan
                                                 Amount at the end of the year                            Amount in the beginning of the year
                                                                      Preparation of                                            Preparation of bad
                                             Carrying amount              bad debt                      Carrying amount                debt
                                                         Proport Amou          Proport                              Proport                 Proport
                   Category                 Amount       ion (%)       nt      ion (%)                 Amount       ion (%)    Amount       ion (%)
        Accounts receivable with
        great single amount and
                                                          -            -          -            -                   -             -            -           -
        counting and drawing of bad
        debt preparation
        Accounts receivable with no
        great single amount or great
                                           646,023,065.42       100.00            -            -      277,107,630.12        100.00            -           -
        single amount without
        devaluation after test
        No major single amount but
        with accounts receivable of
                                                          -                       -            -                   -             -            -           -
        bad debt preparation counted
        and drawn of single term
        In total                           646,023,065.42       100.00            -            -      277,107,630.12        100.00            -           -


       Age analysis of accounts receivable as below:
                                                                                                                                     Unit: RMB Yuan
                                  Amount at the end of the year                                          Amounts in the beginning of year
                                                 Preparati                                                                Preparati
                                     Proport                    Carrying                                     Proport                    Carrying
         Age of            Amount                  on of                                           Amount                   on of
                                     ion (%)                    amount                                       ion (%)                      amount
         account                                 bad debt                                                                 bad debt
        With 1 year       645,982,237.80        99.99              -       645,982,237.80      277,104,741.12          100.00          -     277,104,741.12
        1~2 years              37,938.62         0.01              -            37,938.62                    -              -          -                  -
        2~3 years                      -             -             -                     -            2,889.00              -          -           2,889.00
        Over 3 year             2,889.00             -             -             2,889.00                    -              -          -                  -
        In total          646,023,065.42       100.00              -       646,023,065.42      277,107,630.12          100.00          -     277,107,630.12


       (2) There is no accounts receivable with great amount but counting and drawing bad debt preparation separately.

       (3) There is no balance of amount receivable of stockholders who hold over 5 %( containing 5 %) of vote stock.

       (4) Top five units with accounts receivable
                                                                                                                                     Unit: RMB Yuan
                                                         Relations with                                                          Proportion in the general
                      Name of units                      our company                  Amount              Age limit                accounts receivable
                                                          Government                                    Within one year
                                                                                 564,250,490.62                                                       87.34
        Shenzhen Bureau of Finance                        department
                                                           Irrelevant                                   Within one year
                                                                                  81,253,737.90                                                       12.58
        Guangdong Grid Corporation                         customer
                                                           Irrelevant                                   Within one year
                                                                                       194,386.50                                                       0.03
        Shenzhen University                                customer
        Zhongcai Energy Management                         Irrelevant                                   Within one year
                                                                                       170,887.80                                                       0.03
        Service.Co                                         customer
        Shenzhen Nanshan Meet                              Irrelevant                                   Within one year
                                                                                        91,458.00                                                       0.01
        Processing Factory                                 customer
        In total                                                                 645,960,960.82                                                       99.99




                                                                                                                                                     - 83 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(XI) Notes on Company’s financial statements -Continued

       2. Other accounts receivable

       (1) Other accounts receivable are exposed according to categories:
                                                                                                                                         Unit: RMB Yuan
                                                       Amount at the end of the year                                Amount in the beginning of the year

                   Category                   Carrying remaining            Preparation of bad debt           Carrying remaining          Preparation of bad debt
                                                                Proporti                      Proporti                        Proporti                    Proporti
                                              Amount                          Amount                         Amount                        Amount
                                                                 on(%)                        on (%)                          on (%)                      on (%)
        Other accounts receivable
        with great single amount and
                                             22,677,404.46         1.46    22,677,404.46       100.00      22,677,404.46         2.47    22,677,404.46     100.00
        counting and drawing of bad
        debt preparation
        Other accounts receivable
        with no great single amount
                                          1,523,503,252.69        98.19                  -            -   892,922,760.15        97.23                -              -
        or great single amount
        without devaluation after test
        Other accounts receivable
        with no great single amount
                                              5,362,330.44         0.35     3,140,957.25        58.57       2,729,502.62         0.30     1,404,953.09       51.47
        but preparation of counting
        and drawing of single term
        In total                          1,551,542,987.59       100.00    25,818,361.71         1.66     918,329,667.23       100.00    24,082,357.55        2.62


       Age analysis of other accounts receivable as below:
                                                                                                                                         Unit: RMB Yuan
                                         Amount at the end of the year                                     Amount in the beginning of the year

                                            Propo                                                                   Prop
        Age of                              rtion      Preparation            Carrying                              ortio        Preparation        Carrying
        account           Account            (%)       of bad debt            account               Account         n (%)        of bad debt        account
        Within
                        683,777,747.42        44.07                   -     683,777,747.42         55,697,645.24       6.06                  -      55,697,645.24
        one year
        1~2
                          46,951,064.34        3.03                   -      46,951,064.34        261,428,722.35      28.47                  -    261,428,722.35
        years
        2~3year
                        242,850,051.86        15.65          173,524.12     242,676,527.74        100,975,970.51      11.00                  -    100,975,970.51
        s
        Over 3
                        577,964,123.97        37.25    25,644,837.59        552,319,286.38        500,227,329.13      54.47      24,082,357.55    476,144,971.58
        years
                                                                                                                      100.0
        In total      1,551,542,987.59       100.00    25,818,361.71       1,525,724,625.88       918,329,667.23
                                                                                                                          0
                                                                                                                                 24,082,357.55    894,247,309.68


       (2) Other accounts receivable of which the single amount is not that great with bad debt preparation counted and
      drawn separately:
                                                                                                    Unit: RMB Yuan
                                                            Amount of
                                                                              Proportion of
         Content of other accounts       Carrying          counting and
                                                                              counting and            Reason
                 receivable               amount         drawing bad debt
                                                                                drawing
                                                            preparation
        Guarantee           deposit                                                          Overdue part cannot be
                                         3,278,632.28        1,404,953.09             42.85
        receivable                                                                           withdrawn
        Dormitory           amount                                                           Overdue part cannot be
                                         2,083,698.16        1,736,004.16             83.31
        receivable                                                                           withdrawn
        In total                         5,362,330.44        3,140,957.25             58.57

     (3) There is no balance of other amount receivable of stockholders who hold over 5 %( containing 5 %) of vote
     stock.

     (4) Top five units with other accounts receivable

                                                                                                                                                          - 84 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011
                                                                                                      Unit: RMB Yuan
                                                                                                      Proportion in the
                                    Relation with                                                     general accounts
           Name of company          our company             Amount                 Age limit           receivable (%)
        Shenzhong                  Subsidiary                                 Within 1 year to over               44.38
                                                            688,629,880.98
        Development Co., Ltd.                                                       3 years
        Zhongshan       Electric   Subsidiary                                 Within 1 year to over               40.36
                                                            626,243,082.60
        Power Co., Ltd.                                                             3 years
        Jiangxi      Zhongdian     Irrelevant
                                                            106,342,100.00       Within 1 year                     6.85
        Corporation                customer
        Weimei Electric Power      Subsidiary                                 Within 1 year and 1                  5.51
                                                             85,437,069.99
        Co., Ltd.                                                                 to 2 years
        Huiyang         Kangtai    Cooperation                                   Over 3 years                      0.92
        Industrial Corporation     party of the              14,311,626.70
                                   project
        Total                                              1,520,963,760.27                                       98.02

       (5) Accounts receivable of related party refers to the Note (XI) 7




                                                                                                                  - 85 -
 Shenzhen Nanshan Power Co., Ltd.

 Annotations of Financial Statements
 Year to December 31, 2011

 (XI) Notes on Company’s financial statements -Continued

                3. Long-term equity investment
                Detail of long-term equity investment as below:
                                                                                                                                                                                                   Unit: RMB Yuan
                                                                                                                                                                  Inconsistent        Prepa
                                                                                                                                  Share                                                        Counting and
                                                                                                                                              Proportion      explanation of share    ration
                                    Business                                                                                     holding                                                          drawing
                                                  Cost of          Beginning          Fluctuation of                                         of vote right     holding proportion       of                      Cash bonus in
           The invested entity     accounting                                                             Ending balance       proportion                                                       devaluation
                                                 investment         balance        increase ( decrease)                                       in invested        and vote right       deval                       this year
                                     method                                                                                    in invested                                                     preparation in
                                                                                                                                               unit (%)      proportion in invested   uatio
                                                                                                                                unit (%)                                                          this year
                                                                                                                                                                      unit              n
                                     Cost
Xiefu Oil Supply Co., Ltd.                       26,650,000.00     26,650,000.00                      -     26,650,000.00            50.00          50.00          Not applicable          -                -               -
                                    method
                                     Cost                                                                                                                           Not applicable
New Electric Power Co., Ltd.                     71,270,000.00     71,270,000.00                      -     71,270,000.00            75.00          75.00                                  -                -               -
                                    method
Zhongshan Electric Power Co.,        Cost                                                                                                                           Not applicable
                                                218,240,000.00    218,240,000.00                      -   218,240,000.00             55.00          55.00                                  -                -               -
Ltd.                                method
                                     Cost                                                                                                                           Not applicable
Engineering Company                               6,000,000.00      6,000,000.00                      -      6,000,000.00            60.00          60.00                                  -                -   56,264,962.17
                                    method
                                     Cost                                                                                                                           Not applicable
Weimei Electric Power Co., Ltd.                 115,319,049.76    115,319,049.76                      -   115,319,049.76             40.00          40.00                                  -                -   71,571,959.87
                                    method
                                     Cost                                                                                                                           Not applicable
Shennan Company Singapore                         6,703,800.00      6,703,800.00                      -      6,703,800.00          100.00          100.00                                  -                -               -
                                    method
Environmental Company( Note          Cost                                                                                                                           Not applicable
                                                 55,300,000.00     46,340,000.00         8,960,000.00       55,300,000.00            70.00          70.00                                  -                -               -
1)                                  method
                                     Cost                                                                                                                           Not applicable
Shenzhong Development Co., Ltd                                -                -                      -                    -         75.00          75.00                                  -                -               -
                                    method
                                     Cost                                                                                                                           Not applicable
Shenzhong Real Estate Co., Ltd.                               -                -                      -                    -         75.00          75.00                                  -                -               -
                                    method
Energy Environmental                 Cost                                                                                                                           Not applicable
                                                 89,671,000.00     41,790,000.00      (41,790,000.00)                      -         10.00          10.00                                  -                -               -
Company( Note 2 )                   method
                                     Cost                                                                                                                           Not applicable
Jiangxi Nuclear Power Co., Ltd                   37,315,000.00     37,315,000.00                      -     37,315,000.00             5.00           5.00                                  -                -               -
                                    method
                                   Right and                                                                                                                        Not applicable
Jiangxi Xinchang Co., Ltd ( Note
                                     profit     286,285,715.00    227,103,274.30     (227,103,274.30)                      -         30.00          30.00                                  -                -               -
2)
                                    method
                                                                                                                                                                                                                127,836,922.0
In total                                        864,873,564.76    796,731,124.06     (259,933,274.30)     536,797,849.76                                                                   -                -
                                                                                                                                                                                                                            4
Decrease: Devaluation
                                                                               -                                           -
preparation
Net amount of long-term equity
                                                                  796,731,124.06                          536,797,849.76
investment


                Note 1: On January 28, 2011, our company handed in the second segment capital 8,960,000.00 to environmental protection company. So far, the capital to
                        environmental protection company has been sufficient. The above contribution of capital has been inspected by Shenzhen Zhongfa Accounting Firm
                        which has provided capital verification report S.Z.F.(W)Y..Z.[2011] No.2.
                Note 2: Details refer to Note (V)8.

                                                                                                                                                                                                                - 86 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(XI) Notes on Company’s financial statements -Continued

        4. Operating income, operating cost

        (1) Operating income
                                                                                                   Unit: RMB Yuan
                                      Item                            Amount incurred in         Amount incurred in
                                                                          this year                  last year
         Major business income                                            903,571,321.23             385,171,238.11
         Other business income                                             86,708,420.29               41,800,634.74
         Operating cost                                                 1,598,330,636.84             765,825,140.43

        (2) Major business (different industries)
                                                                                                Unit: RMB Yuan
                                        Amount incurred in this year            Amount incurred in last year
                                       Operating       Operating cost      Operating income      Operating cost
           Name of industry             income
         Energy business              903,571,321.23  1,545,500,300.35          385,171,238.11        764,932,810.44

        (3) Major business (different products)
                                                                                                Unit: RMB Yuan
                                        Amount incurred in this year            Amount incurred in last year
                                       Operating       Operating cost      Operating income      Operating cost
            Name of products             income
         Electric power sale          897,391,552.02  1,537,625,216.47          383,410,977.08        758,156,861.40
         Heat power sale                6,179,769.21        7,875,083.88          1,760,261.03          6,775,949.04
         In total                     903,571,321.23  1,545,500,300.35          385,171,238.11        764,932,810.44

        (4) Major business (different areas)
                                                                                               Unit: RMB Yuan
                                        Amount incurred in this year            Amount incurred in last year
             Name of areas          Operating income   Operating cost       Operating income     Operating cost
        Inland                        903,571,321.23    1,545,500,300.35        385,171,238.11     764,932,810.44

        (5) Operating income of our top five customers:
                                                                                                    Unit: RMB Yuan
                                                                                         Proportion on the whole
                       Name of customer                      Operating income             operating income (%)
         Shenzhen Power Supply Bureau of
                                                                   897,391,552.02                              90.62
         Guangdong Power Grid Corporation
         Shenzhen Xiyang Petroleum Chemical
                                                                    41,275,312.26                               4.17
         Industry Co., Ld
         New Electric Power Company                                 22,586,300.24                               2.28
         Yuehe Petroleum Chemical Industry Co., Ltd.
                                                                     6,427,205.13                               0.65
         in Xiangzhou District, Zhuhai
         Shenzhen University                                           901,504.27                               0.09
         Total                                                     968,581,873.92                              97.81




                                                                                                               - 87 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(XI) Notes on Company’s financial statements -Continued

        5. Investment income

        (1) Detail of investment income
                                                                                                     Unit: RMB Yuan
                                      Item                                 Amount incurred in      Amount incurred in
                                                                               this year               last year
         Long-term investment income checked by cost method                   127,836,922.04                          -
         Long-term investment income checked by equity method                 (90,201,890.81)         (49,082,776.11)
         Investment income from the disposal of long-term
                                                                                113,531,216.51              (47,678.00)
         investment equity
         In total                                                               151,166,247.74          (49,130,454.11)

        (2) Long-term investment income checked by cost method
                                                                                                      Unit: RMB Yuan
                                                           Amount
                                   Amount incurred       incurred in         Reason of increased/decreased fluctuation
             Invested unit           in this year         last year                   comparing with last year
         Weimei        Electric                                            The subsidiary allocates dividend this year
                                       71,571,959.87                   -
         Power company                                                     while no allocation last year.
         Engineering company                                               The subsidiary allocates dividend this year
                                       56,264,962.17                   -
                                                                           while no allocation last year.
         Total                        127,836,922.04                   -

        (3) Long-term investment income checked by equity method
                                                                                                      Unit: RMB Yuan
                                                           Amount
                                   Amount incurred      incurred in last     Reason of increased/decreased fluctuation
              Invested unit          in this year            year                     comparing with last year
         Jiangxi      Xinchang                                              Referring to Note ( V) 37
                                      (90,201,890.81)   (49,082,776.11)
         Company

        There is no great limitation on the return of investment income.




                                                                                                                   - 88 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(XI) Notes on Company’s financial statements -Continued


        6. Updates of cash flow statement

        (1) Updates of cash flow statement
                                                                                                   Unit: RMB Yuan
                                                                              Amount of this       Amount of last
                                      Updates
                                                                                 year                    year
         1. Net profit is adjusted to be cash flow for operating
         business
         Net profit                                                             185,763,215.13      (92,683,444.17)
         Increase: preparation of asset devaluation                              16,041,488.47        12,092,537.18
              Depreciation of fixed asset                                        72,292,401.99        50,430,765.04
              Amortization of intangible asset                                    1,399,802.89         1,362,361.36
              Amortization of long-term deferred expanses                            75,783.60           113,200.92
              Loss( profit) through disposing fixed asset, intangible asset
                                                                                  4,609,078.93                    -
         and other long-term asset
              Financial expense( profit)                                         149,697,744.85       99,981,483.72
              Loss( Profit) of investment                                      (151,166,247.74)       49,130,454.11
              Decrease( increase) of deferred income tax asset                                -       16,949,151.06
              Decrease ( increase ) of stock                                      43,401,627.44       22,760,110.30
              Decrease ( increase ) of operating items receivable              (427,014,813.17)    (211,190,292.78)
              Increase (decrease) of operating items payable                     454,256,195.79       58,721,834.02
         Net amount of cash flow incurred in operating activity                  349,356,278.18        7,668,160.76
         2. Great investment and financing activity that are not
         involved in cash balance
         Conversion of debt into capital                                                       -                  -
         Changeable company debenture share due in one year                                    -                  -
         Financing to rent in fix assets                                                       -                  -
         3. Net fluctuation of cash and money equivalent
         Year-end remaining of cash and money equivalent                        303,150,447.89       269,369,131.18
         Decrease: Remaining in the beginning of year of cash and money
                                                                                269,369,131.18        35,564,935.05
         equivalent
         Net increasing amount of cash and cash equivalent                       33,781,316.71       233,804,196.13

        (2) Constitution of cash and money equivalent
                                                                                                   Unit: RMB Yuan
                                                                              Amount at the end     Amount in the
                                        Item                                     of the year       beginning of the
                                                                                                         year
         I. Cash                                                                303,150,447.89       269,369,131.18
         There into: value-cash                                                       73,554.85           48,656.09
                   Bank deposits used to pay at any time                        302,539,423.53       268,895,495.56
                   Other currency fund used to pay at any time                      537,469.51          424,979.53
         II. Year-end remaining of cash and money equivalent                    303,150,447.89       269,369,131.18




                                                                                                              - 89 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

(XI) Notes on Company’s financial statements -Continued
       7. Situation of related transaction

        (1)Purchase and sale of goods, provision and acceptance of labor service

        Goods purchase and service acceptance table:
                                                                                                                                 Unit: RMB Yuan
                                                                                Amount incurred in the current
                                                                                           year                        Amount incurred in last year
                                                                                                                                            The
                                                                                                                                       proportion in
                                                  Pricing method and                             The proportion                         the amount
                                Related            decision-making                              in the amount of                         of similar
                              transaction          process of related           Amount of            similar           Amount of        transaction
         Related party          content               transaction                money           transaction (%)        money               (%)
                                                 According to price
         Xiefu Oil Supply                        released by competent
                            Fuel purchase                                                   -                  -          9,560,336.80           0.77
         Company                                 department of refer to
                                                 market price
                                                 According to price
                            Warehousing
         Xiefu Oil Supply                        released by competent
                            and transport                                        6,449,632.14             100.00         12,102,818.98         100.00
         Company                                 department of refer to
                            cost
                                                 market price
                                                 According to price
         New electric                            released by competent          398,021,462.6
                            Fuel purchase                                                                  22.95        211,480,735.73          16.95
         power company                           department of refer to                     0
                                                 market price
                                                 According to price
         Mawan Electric     Charge for using     released by competent
                                                                                            -                  -            181,955.27         100.00
         Power Company      oil pipelines        department of refer to
                                                 market price
                                                 According to price
         Mawan Electric                          released by competent
                            Fuel purchase                                                   -                  -         21,140,652.48           1.69
         Power Company                           department of refer to
                                                 market price
                                                 According to price
         Yue Liangwan       Charge for using     released by competent
                                                                                            -                  -            877,857.45         100.00
         Oil Company        wharf                department of refer to
                                                 market price
                                                 According to price
         Zhongshan
                                                 released by competent
         Electric Power     Fuel purchase                                                   -                  -         17,499,373.95           1.40
                                                 department of refer to
         Company
                                                 market price


        Goods sale and service provision table:
                                                                                                                                   Unit:RMB Yuan

                                                                                     Amount incurred in current
                                                                                               year                     Amount incurred in last year
                                                                                                        The                                 The
                                                                                                   proportion in                      proportion in
                                                                                                    the amount                         the amount
                               Related             Pricing method and                                of similar                         of similar
                             transaction        decision-making process              Amount of      transaction         Amount of      transaction
         Related party         content            of related transaction              money             (%)              money              (%)
                                               According to price
         New electric       Charge for
                                               released by competent
         power              using flue                                              2,333,308.80            100.00     2,699,107.20          100.00
                                               department of refer to
         company            gas
                                               market price
                            Service charge     According to price released by
         New electric       for unit           competent department of refer
                                                                                      16,335,171.00          100.00      29,557,385.50        100.00
         power company      operating          to market price
                            trusteeship
                                               According to price released by
         New electric       Heating power
                                               competent department of refer           3,917,820.44           63.40         72,825.19           0.02
         power company      sale
                                               to market price
         Zhongshan                             According to price released by
         Electric Power     Materials sale     competent department of refer                      -                -      5,528,376.07          1.29
         Company                               to market price
                                               According to price released by
         Weimei Electric
                            Materials sale     competent department of refer           8,604,673.29            9.92       2,407,094.01          0.56
         Power Company
                                               to market price

                                                                                                                                               - 90 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011
                                            According to price released by
         Weimei Electric   Leasing
                                            competent department of refer     431,765.02    0.50   907,197.48    0.21
         Power Company     materials
                                            to market price
         Environmental                      According to price released by
         protection        Hot-water sale   competent department of refer    6,547,254.72   7.55            -       -
         company                            to market price
         Environmental                      According to price released by
                           Cooling water
         protection                         competent department of refer    2,379,392.46   2.74            -       -
                           sale
         company                            to market price
         Environmental                      According to price released by
         protection        Leasing land     competent department of refer    1,152,000.00   1.33            -       -
         company                            to market price
                                            According to price released by
                                            competent department of refer
         Environmental                      to market price
         protection        Tap-water sale                                      26,650.00    0.03            -       -
         company




                                                                                                                - 91 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(XI) Notes on Company’s financial statements -Continued

        7. Situation of related transaction-Continued

        (2)Situation of related trusteeship

        Trusteeship situation table:
                                                                                                                             Unit: RMB Yuan
                        The name
         The name of     of the                                                             The end date
          entrusting    entrusted    Transaction      Situation of the   Starting date of     of being     Pricing basis of trusteeship    Amount of
            party         party         types         entrusted asset    being entrusted     entrusted                income                money
                                                                                                           Calculating and determined
         New electric                                 Generators of
                        This        Trusteeship                                             November 31,   by 0.025 Yuan/KWH               16,335,17
           power                                       number II, X      January 1, 2011
                        company     income                                                     2011        according to generating              1.00
          company                                      and XI
                                                                                                           capacity
                                                                                                           Calculating and determined
         New electric                                 Generators of
                        This        Trusteeship                                             November 31,   by 0.025 Yuan/KWH               29,557,38
           power                                       number II, X      January 1, 2010
                        company     income                                                     2010        according to generating              5.50
          company                                      and XI
                                                                                                           capacity
                                                                                                           Apportionment according to
         New electric               Cost              Generators of
                        This                                                                November 31,     the capacity of the unit of   4,430,043.
           power                    apportionments     number II, X      January 1, 2011
                        company                                                                2011          the new electric power               28
          company                   (note)             and XI
                                                                                                             company
                                                                                                           Apportionment according to
         New electric               Cost              Generators of
                        This                                                                November 31,     the capacity of the unit of   9,664,570.
           power                    apportionments     number II, X      January 1, 2010
                        company                                                                2010          the new electric power               61
          company                   (note)             and XI
                                                                                                             company
                                                                                                           Apportionment according to
         New electric               expense           Generators of
                        This                                                                November 31,     the capacity of the unit of   17,476,97
           power                    allocation(note    number II, X      January 1, 2011
                        company                                                                2011          the new electric power             7.77
          company                   )                  and XI
                                                                                                             company
                                                                                                           Apportionment according to
         New electric               expense           Generators of
                        This                                                                November 31,     the capacity of the unit of   36,427,94
           power                    allocation(note    number II, X      January 1, 2010
                        company                                                                2010          the new electric power             3.27
          company                   )                  and XI
                                                                                                             company


        Note:According to Trusteeship Operating Contact of Generator Unit Asset of Shenzhen New Electric Power
            Industry Co., LTD signed by this company and New Electric Company on December 23, 2003, operation
            and management of 2#, 10# and 11# unit assets are all entrusted to this company. The content of entrusting
            operation includes: production plan, power generation dispatching, power measure and sale by proxy,
            collection of electricity and management of safe running of the equipment, etc., and works of purchasing,
            storage and management of consumption materials and necessary parts of repair and maintain, daily
            maintenance of power generation equipment and facilities, eliminating, he management and quality control
            of large and medium-sized repair engineering, and technological innovation and transformation of power
            generation equipments, etc.


             For fuel used for power generation, after being purchased by New Electric Power Company, should be
             submitted to the company for using as a whole, and list the cost according to actual fuel consuming amount
             of the unit owned by New Electric Power Company.

             For big repairing bills and prepared equipments, they should be purchased united by the company
             according to trusteeship contact, and will belong to cost of relevant unit and be calculated into unit cost of
             New Power Company in actual process.

             For expense that can’t be calculated into expense of New Power Company unit ( e.g. water and electricity
             expense, common asset depreciation and personnel salaries, etc.), should be divided to be shared by New
             Power Company and this company according to proportion of amount of power generated.

             This company and New Electric Power Company declare paying taxes according to the above sharing
             method.



                                                                                                                                              - 92 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(XI) Notes on Company’s financial statements -Continued


        7. Situation of related transaction-Continued

        (3)Related assurance situation

        Offering assurance
                                                                                             Unit: RMB Yuan
                                                                                            Completing of the
         Assurance                          Amount of      Starting date of   End date of
                         Secured party                                                       performance of
          provider                          assurance         assurance        assurance
                                                                                                assurance
            This       Weimei Electric
                                          100,000,000.00     2011.12.06       2012.06.06          No
          company      Power Company
            This       Weimei Electric
                                           10,000,000.00     2011.02.14       2012.02.12          No
          company      Power Company
            This       Weimei Electric
                                           90,000,000.00     2011.02.22       2012.02.12          No
          company      Power Company
            This       Weimei Electric
                                          100,000,000.00     2011.12.02       2012.07.20          No
          company      Power Company
            This       Weimei Electric
                                          100,000,000.00     2011.12.07       2012.07.20          No
          company      Power Company
            This       Weimei Electric
                                           80,000,000.00     2011.07.15       2012.07.15          No
          company      Power Company
            This       Weimei Electric
                                          100,000,000.00     2011.12.29       2012.12.29          No
          company      Power Company
            This       Weimei Electric
                                           20,000,000.00     2011.01.10       2012.01.10          No
          company      Power Company
                       Zhongshan
            This
                       Electric Power      50,000,000.00     2011.09.09       2012.09.09          No
          company
                       Company
                       Zhongshan
            This
                       Electric Power      50,000,000.00     2010.04.01       2012.04.01          No
          company
                       Company
                       Zhongshan
            This
                       Electric Power      90,000,000.00     2011.01.21       2012.01.21          No
          company
                       Company
                       Environmental
            This
                       protection          10,000,000.00     2011.08.03       2012.08.03          No
          company
                       company
                       Environmental
            This
                       protection          26,000,000.00     2009.11.06       2017.09.20          No
          company
                       company
                       Environmental
            This
                       protection          10,000,000.00     2011.07.22       2012.06.20          No
          company
                       company
            This       New Electric
                                           30,000,000.00     2011.06.30       2012.06.30          No
          company      Power Company
            This       New Electric
                                           30,000,000.00     2011.07.06       2012.07.06          No
          company      Power Company
            This       New Electric
                                           30,000,000.00     2011.08.25       2012.08.25          No
          company      Power Company
            This       New Electric
                                           10,000,000.00     2011.09.02       2012.09.02          No
          company      Power Company
            This       New Electric
                                          100,000,000.00     2011.12.22       2012.12.22          No
          company      Power Company

                                                                                                        - 93 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

            This      New Electric
                                        100,000,000.00   2011.12.29   2012.12.29   No
          company     Power Company
            This      New Electric
                                         50,000,000.00   2011.10.27   2012.10.27   No
          company     Power Company
            This      Weimei Electric
                                         40,000,000.00   2010.04.15   2011.02.03   Yes
          company     Power Company
            This      Weimei Electric
                                         27,000,000.00   2010.04.20   2011.02.03   Yes
          company     Power Company
            This      Weimei Electric
                                         40,000,000.00   2010.05.19   2011.02.03   Yes
          company     Power Company
            This      Weimei Electric
                                         25,000,000.00   2010.06.04   2011.02.03   Yes
          company     Power Company
            This      Weimei Electric
                                         22,000,000.00   2010.06.21   2011.02.03   Yes
          company     Power Company
            This      Weimei Electric
                                         40,000,000.00   2010.06.24   2011.02.03   Yes
          company     Power Company
            This      Weimei Electric
                                         40,000,000.00   2010.07.09   2011.02.03   Yes
          company     Power Company
            This      Weimei Electric
                                         22,000,000.00   2010.07.15   2011.02.03   Yes
          company     Power Company
            This      Weimei Electric
                                         44,000,000.00   2010.07.28   2011.02.03   Yes
          company     Power Company
            This      Weimei Electric
                                         80,000,000.00   2010.04.01   2011.04.01   Yes
          company     Power Company
            This      Weimei Electric
                                        100,000,000.00   2010.12.29   2011.12.29   Yes
          company     Power Company
            This      Weimei Electric
                                         60,000,000.00   2010.02.01   2011.07.29   Yes
          company     Power Company
            This      Weimei Electric
                                         40,000,000.00   2010.04.01   2011.07.29   Yes
          company     Power Company
                      Zhongshan
            This
                      Electric Power     50,000,000.00   2009.09.01   2011.09.01   Yes
          company
                      Company
                      Zhongshan
            This
                      Electric Power     25,000,000.00   2010.08.26   2011.08.26   Yes
          company
                      Company
                      Zhongshan
            This
                      Electric Power     40,000,000.00   2010.09.20   2011.09.20   Yes
          company
                      Company
                      Zhongshan
            This
                      Electric Power     35,000,000.00   2010.09.26   2011.09.26   Yes
          company
                      Company
                      Zhongshan
            This
                      Electric Power      5,000,000.00   2010.10.28   2011.10.28   Yes
          company
                      Company
                      Zhongshan
            This
                      Electric Power     35,000,000.00   2010.11.05   2011.11.05   Yes
          company
                      Company
                      Environmental
            This
                      protection         30,000,000.00   2010.03.30   2011.03.30   Yes
          company
                      company




                                                                                         - 94 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


 (XI) Notes on Company’s financial statements -Continued

        7. Situation of related transaction-Continued

        (4) Financial inter-bank lending of the related party

        The present year:
                                                                                                                 Unit: RMB
                              Inter-bank
          Related party                      Starting date    Due date    Ending balance              Illustrations
                           lending amount
         Borrowed
         Engineering
                             20,000,000.00   2011.08.25      2012.08.25    20,000,000.00
         company
         Engineering
                             60,000,000.00   2011.11.21      2012.11.21    60,000,000.00
         company
         Engineering                                                                       Borrowed fund from related party
                             60,000,000.00   2009.11.20      2011.11.17                -
         company                                                                           through banks
         Xiefu Oil
         Supply              15,000,000.00   2011.08.30      2012.08.29    15,000,000.00
         Company
         Xiefu Oil
         Supply              10,000,000.00   2011.07.18      2012.07.17    10,000,000.00
         Company
         Weimei Electric
                             30,000,000.00   2011.11.01      2012.11.01    30,000,000.00
         Power Company
         Weimei Electric
                           100,000,000.00    2011.10.14      2012.10.14   100,000,000.00
         Power Company
         New electric
                           130,000,000.00    2011.12.07      2012.12.07   130,000,000.00
         power company
         Shenzhong
         Development         40,000,000.00   2011.09.16      2012.09.16    40,000,000.00
         Company
         Open out
         Shenzhong                                                                         Exhibition period
         Development         70,040,000.00   2011.01.01      2011.12.31    70,040,000.00
         Company
         Shenzhong                                                                         Exhibition period
         Developemt          48,750,000.00   2011.01.01      2011.12.31    48,750,000.00
         Company
         Shenzhong                                                                         Exhibition period
         Developemt           7,500,000.00   2011.01.01      2011.12.31     7,500,000.00
         Company
         Shenzhong                                                                         Exhibition period
         Developemt        375,950,450.55    2011.01.01      2011.12.31   375,950,450.55
         Company
         Shenzhong                                                                         Exhibition period
         Developemt          43,005,307.50   2011.01.01      2011.12.31    43,005,307.50
         Company
         Shenzhong                                                                         Exhibition period
         Developemt          46,280,000.00   2011.01.01      2011.12.31    46,280,000.00
         Company
         Weimei Electric
                             71,571,959.87   2011.07.15      2013.07.15    71,571,959.87
         Power Company
         Weimei Electric                                                                   Loan issued to related party by
                             63,080,000.00   2010.07.26      2011.03.28                -
         Power Company                                                                     entrusting bank
         Zhongshan
                                                                                           Loan issued to related party by
         Electric Power      25,000,000.00   2011.03.02      2012.03.02    25,000,000.00
                                                                                           entrusting bank
         Company
         Zhongshan
                                                                                           Exhibition period of loan issued to
         Electric Power    180,000,000.00    2010.04.14      2012.04.14   180,000,000.00
                                                                                           related party by entrusting bank
         Company
         Zhongshan                                                                         Loan issued to related party by
         Electric Power      24,923,940.43   2009.12.24      2010.12.24                -   entrusting bank has been taken
         Company                                                                           back on January 17, 2011

                                                                                                                         - 95 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

         Zhongshan                                                                    Loan issued to related party by
         Electric Power   100,000,000.00   2011.01.18   2011.02.28                -   entrusting bank has been taken
         Company                                                                      back on March 28, 2011
         Zhongshan                                                                    Loan issued to related party by
         Electric Power    50,000,000.00   2010.06.12   2011.06.12                -   entrusting bank has been taken
         Company                                                                      back on June 09, 2011 in advance
         Zhongshan
                                                                                      Loan issued to related party by
         Electric Power    40,000,000.00   2010.09.20   2011.09.20                -
                                                                                      entrusting bank
         Company
         Zhongshan                                                                    Loan issued to related party by
         Electric Power    35,000,000.00   2010.09.28   2011.09.28                -   entrusting bank has been taken
         Company                                                                      back on September 10, 2011
         Zhongshan
         Electric Power    50,000,000.00   2010.04.01   2011.12.31    50,000,000.00   Exhibition period
         Company
         Zhongshan
         Electric Power    40,437,227.87   2010.04.01   2011.12.31    40,437,227.87   Exhibition period
         Company
         Zhongshan
         Electric Power    28,000,000.00   2010.04.01   2011.12.31    28,000,000.00   Exhibition period
         Company
         Zhongshan
         Electric Power    19,623,969.20   2010.04.01   2011.12.31    19,623,969.20   Exhibition period
         Company
         Zhongshan
         Electric Power    50,000,000.00   2011.04.25   2012.04.25    50,000,000.00
         Company
         Zhongshan
         Electric Power    40,000,000.00   2011.06.02   2012.06.02    40,000,000.00
         Company
         Zhongshan
         Electric Power    50,000,000.00   2011.06.10   2012.06.10    50,000,000.00
         Company
         Zhongshan
         Electric Power    60,000,000.00   2011.07.22   2012.07.22    60,000,000.00
         Company
         Zhongshan
         Electric Power    35,000,000.00   2011.09.08   2012.09.08    35,000,000.00
         Company
         Zhongshan
         Electric Power    50,000,000.00   2011.09.01   2012.09.01    50,000,000.00
         Company
         Zhongshan
         Electric Power    40,000,000.00   2011.09.06   2012.09.06    40,000,000.00
         Company
         Zhongshan
         Electric Power   100,000,000.00   2011.12.20   2012.12.20   100,000,000.00
         Company
         Environment
                                                                                      Has been taken back on December
         protection        10,000,000.00   2011.09.19   2012.09.19                -
                                                                                       29,2011
         company
         Environment
                                                                                      Has been taken back on December
         protection        10,000,000.00   2011.09.23   2012.09.23                -
                                                                                       29,2011
         company




                                                                                                                   - 96 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


 (XI) Notes on Company’s financial statements -Continued

        7. Situation of related transaction-Continued

        (4)Inter-bank of funds of related party-Continued

        Previous year:
                                                                                                  Unit: RMB Yuan
                             Inter-bank
                                              Starting
          Related party        lending                       Due date    Ending balance          Illustrations
                                                date
                               amount
         Borrowed
                                                                                          Borrowed fund from
         Engineering
                            60,000,000.00    2009.11.20     2011.11.17    60,000,000.00   related party through
         company
                                                                                          banks
         Open out
         Shenzhong                                                                        Expired, the exhibition
         Development        70,040,000.00    2009.10.14     2010.03.31    70,040,000.00   period is still in the
         Company                                                                          process
         Shenzhong                                                                        Expired, the exhibition
         Development        48,750,000.00    2009.04.25     2010.03.31    48,750,000.00   period is still in the
         Company                                                                          process
         Shenzhong                                                                        Expired, the exhibition
         Development         7,500,000.00    2009.04.05     2010.03.31     7,500,000.00   period is still in the
         Company                                                                          process
         Shenzhong                                                                        Expired, the exhibition
         Development       375,950,450.55    2009.11.18     2010.03.31   375,950,450.55   period is still in the
         Company                                                                          process
         Shenzhong                                                                        Expired, the exhibition
         Development        43,005,307.50    2009.12.28     2010.03.31    43,005,307.50   period is still in the
         Company                                                                          process
         Shenzhong                                                                        Expired, the exhibition
         Development        46,280,000.00    2009.01.01     2009.12.31    46,280,000.00   period is still in the
         Company                                                                          process
         Shenzhong
         Development        23,000,000.00    2009.05.19     2010.03.31                -
         Company
         Shenzhong
         Development        43,000,000.00    2009.10.09     2010.03.31                -
         Company
         Shenzhong                                                                        Has been taken back on
         Development         4,875,000.00    2009.08.29     2010.03.31                -   January 08, 2010 in
         Company                                                                          advance
         Weimei                                                                           Has been taken back on
         Electric Power     10,000,000.00    2008.10.28     2010.03.31                -   January 08, 2010 in
         Company                                                                          advance
         Weimei
                                                                                          Loan issued to related
         Electric Power    140,000,000.00    2009.07.28     2010.01.27                -
                                                                                          party by entrusting bank
         Company
         Weimei
                                                                                          Loan issued to related
         Electric Power    140,000,000.00    2010.01.27     2010.07.27                -
                                                                                          party by entrusting bank
         Company
         Weimei
                                                                                          Loan issued to related
         Electric Power     63,080,000.00    2010.07.26     2011.07.26    63,080,000.00
                                                                                          party by entrusting bank
         Company
         Weimei             50,000,000.00    2010.07.29     2011.07.29                -   Loan issued to related

                                                                                                                   - 97 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

         Electric Power                                                                  party by entrusting bank
         Company                                                                         has been taken back on
                                                                                         November 30, 2010
         Zhongshan                                                                       Expired, the exhibition
         Electric Power    50,000,000.00      2009.03.25   2010.03.31    50,000,000.00   period is still in the
         Company                                                                         process
         Zhongshan                                                                       Expired, the exhibition
         Electric Power    40,437,227.87      2008.09.26   2010.03.31    40,437,227.87   period is still in the
         Company                                                                         process
         Zhongshan                                                                       Expired, the exhibition
         Electric Power    28,000,000.00      2009.01.11   2010.03.31    28,000,000.00   period is still in the
         Company                                                                         process
         Zhongshan
                                                                                         Loan issued to related
         Electric Power   100,000,000.00      2009.12.24   2010.12.23    24,923,940.43
                                                                                         party by entrusting bank
         Company
         Zhongshan
                                                                                         Loan issued to related
         Electric Power   180,000,000.00      2010.04.14   2011.04.14   180,000,000.00
                                                                                         party by entrusting bank
         Company
         Zhongshan
                                                                                         Loan issued to related
         Electric Power    50,000,000.00      2010.06.12   2011.06.12    50,000,000.00
                                                                                         party by entrusting bank
         Company
         Zhongshan
                                                                                         Loan issued to related
         Electric Power    40,000,000.00      2010.09.20   2011.09.20    40,000,000.00
                                                                                         party by entrusting bank
         Company
         Zhongshan
                                                                                         Loan issued to related
         Electric Power    35,000,000.00      2010.09.28   2011.09.28    35,000,000.00
                                                                                         party by entrusting bank
         Company

        (5)Reward of key management personnel
                                                                                                 Unit: RMB Yuan
                                      Project name
                                                                           Amount incurred in Amount incurred in
                                                                             current year         last year
        Reward of key management personnel                                      7,311,300.00          7,162,700.00




                                                                                                              - 98 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(XI) Notes on Company’s financial statements -Continued

        7. Situation of related transaction-Continued

        (6)Charge for the use of funds
                                                                                                                            Unit: RMB Yuan
                                                                          Amount incurred in current
                                                                                    year                       Amount incurred in last year
                                                                                             The
                                                             Pricing                     proportion                                        The
                              Transactio
          Related party                                    method and                       in the                                    proportion in
                                n type                                                                      Amount of
                                               Related    decision-maki                   amount of                                  the amount of
                                                                                                            money
                                              transacti   ng process of                    similar                                       similar
                                                 on          related      Amount of      transaction                                   transaction
                                               content     transaction    money              (%)                                           (%)
                              Charge for
         Engineering          the use of       Interest
                                                              Note            3,065,486.67           2.04           2,270,800.00               2.27
         company              funds            expense

                              Charge for
         Weimei Electric      the use of       Interest
                                                              Note            1,773,022.23           1.18           4,869,834.11               4.87
         Power Company        funds            expense

                              Charge for
         Xiefu Oli Supply     the use of       Interest
                                                              Note             640,511.11            0.43                       -                 -
          Company             funds            expense

                              Charge for
         Zhongshan
                              the use of       Interest
         Electric Power                                       Note          37,033,727.95           47.10        21,258,779.30                36.00
                              funds            revenue
         Company
                              Charge for
         Shenzhong
                              the use of       Interest
         Development                                          Note          35,568,525.18           45.23        31,850,582.38                31.86
                              funds            revenue
         Company
                              Charge for
         Weimei Electric      the use of       Interest
                                                              Note            3,501,522.33           4.45                       -                 -
         Power Company        funds            revenue

                              Charge for
         Environment
                              the use of       Interest
         Protection                                           Note             364,444.44            0.46                       -                 -
                              funds            revenue
         Company


       Note:Charge for the use of funds is calculated according to borrowing rate of bank liquidity of the same level

        (7)Asset transfer situation of the related party
                                                                                                                           Unit: RMB Yuan
                                                                 Pricing          Amount incurred in current           Amount incurred in last
                                                               method and                   year                               year
                               Related
          Related                                             decision-maki                   The proportion                   The proportion
                             transaction                                                                              Amou
           party                                              ng process of                  in the amount of                  in the amount
                               content                                                                                 nt of
                                                Transactio       related         Amount of        similar                        of similar
                                                                                                                      money
                                                  n type       transaction        money       transaction (%)                 transaction (%)
                          Transfer 10% of
                          the equity of
                          Energy                Asset
         Energy                                                                  123,078,90
                          Environmental         transforma   Market price                                   36.19           -                     -
         Group                                                                         0.00
                          Protection            tion
                          Company held by
                          this company

        (8)Receivables and payables of the related party
        Receivables of the related party
                                                                                                                           Unit: RMB Yuan
                Project name                       Related party                      Ending balance                    Beginning balance
                                           Shenzhong Development
         Other receivables                 Company                                            688,629,880.98                        693,061,355.80

                                                                                                                                             - 99 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

                                 Zhongshan Electric Power
                                 Company                      626,243,082.60   181,927,622.99
                                 Weimei Electric Power
                                  Company                      85,437,069.99     7,778,446.81
                                 Environment protection
                                 company                       11,017,120.27                -
                                 Xiefu Oil Supply Company       6,279,745.17     6,280,847.20
                                 Shennan Sigapore Company         138,660.87        31,072.34
                                 Xing Desheng Company              35,127.06        19,596.65

         Dividends receivable    New Electric Power Company   597,875,904.41   597,875,904.41
                                 Engineering Company           56,264,962.17                -

                                 Zhongshan Electric Power
         Other current assets    Company                      205,000,000.00   329,923,940.43
                                 Weimei Electric Power
                                  Company                                  -    63,080,000.00




                                                                                      - 100 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


(XI) Notes on Company’s financial statements -Continued

        7. Situation of related transaction-Continued

        (7) Receivables and payables of the related party - Continued

        Payables of the related party
                                                                                                  Unit: RMB Yuan
            Project name                 Related party               Ending balance            Beginning balance
         Advance receipt          Energy shares                           14,586,000.00               14,586,000.00

         Account payables         Xiefu Oil Supply Company                    332,376.11                 849,813.37

                                  New Electric Power
                                                                          776,413,945.94             470,222,997.74
         Other payables           Company
                                  Weimei Electric Power
                                                                          131,773,022.23                           -
                                   Company
                                  Engineering Company                      81,036,534.88                 115,528.80
                                  Xiefu Oil Supply Company                 26,364,386.39               1,030,238.37
                                  Xingdesheng Company                       1,682,266.99               1,768,797.13
                                  Environment Protection
                                                                                        -              1,129,973.65
                                  Company

         Short-term borrowing     Engineering Company                                   -             60,000,000.00


XII. Approval of financial statements

        Financial statement of the company and combined financial statement are approved by the board of directors of
this company on April 20, 2012.




                                                                                                              - 101 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


1. Detailed statement of the irregular profits and losses
                                                                                                     Unit: RMB Yuan
                                                                                Amount incurred
                                                  Project                        in current year       Illustrations
 Disposal of profits and losses of non-current asset                              113,277,953.88
 Recon in the government grants of profits and losses of the current
 period(except for government grants that closely related with business
                                                                                      245,208.34
 events, and obtained according to national unified standard of ration and
 quantify)
 receivables impairment that is performed impairment test separately is
                                                                                     1,185,260.28
 getting to switch back


 Returned money of added tax on imports of natural gas                            214,622,872.15


 Other non-operating revenues and payments in addition to the above items            4,988,236.41
 Amount influenced by income tax                                                   (8,532,710.17)

  Amount influenced by minority stockholder's interest(after tax)                 (19,560,956.77)

 Total                                                                            306,225,864.12

2. Net asset income rate and earnings of per share
                                                                                                      Unit: RMB Yuan
                                                                                       Earnings of per share
                                             The weighted average net        Basic earnings of     Diluted earnings of
        Profit of report period                  assets yield (%)                per share               per share
 Net profit belongs to the common
                                                                    1.00                   0.03         Not applicable
 shareholders of the company
 Net profit belongs to the common
 shareholders of the company after
                                                                (16.55)                  (0.48)         Not applicable
 deducting irregular profits and
 losses




                                                                                                                - 102 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011


3. Illustrations of exceptional situations and reasons of main accounting statements project of the company
                                                                                                       Unit: RMB Yuan
                                                                     Amount of
            Report item          Year 2011          Year 2010
                                                                      variation                Reasons for difference

                                                                                  It is caused by much cash flow given rise by
 1      Monetary fund           695,095,052.12     601,386,814.04       15.58%
                                                                                  business activities and investment activities.

                                                                                  Notes receivable in the beginning of the year
 res2   Notes receivable                      -        700,000.00     (100.00%)
                                                                                  are already settled.
                                                                                  It is caused by increase of allowance
 3      Accounts receivable     934,640,019.03     518,392,276.69       80.30%
                                                                                  receivable of this year.
                                                                                  It is caused by advance payments of natural
 4      advance payments         31,576,397.23      13,529,901.89      133.38%
                                                                                  gas.
                                                                                  It is caused by amounts of equity transfer
        Other accounts
 5                              124,599,842.72      20,450,149.23      509.29%    receivable of Xinchang Company in Jiangxi
        receivable
                                                                                  Province.
 6      Inventory              1,258,195,597.25   1,352,372,212.06      (6.96%)   It is caused by disposal of fuel oil in this year.
                                                                                  It is caused by disposal of capital assets for
 7      Other current assets                  -      4,242,431.37     (100.00%)
                                                                                  sale held in the beginning of the year.
                                                                                  It is caused by transformation of equity of
        Long term equity
 8                               37,315,000.00     306,208,274.30      (87.81%)   Jiangxi Xinchang Company and Energy
        investment
                                                                                  Environment Protection Company in this year.
                                                                                  It is caused by the increase of capital asset of
 9      capital assets         2,227,103,579.26   2,169,226,270.73       2.67%
                                                                                  this year.
        Construction in                                                           It is caused by shifting the sludge drying
 10                              46,866,969.48     196,729,476.64      (76.18%)
        process                                                                   project to capital asset in this year.
        Long term deferred                                                        It is caused by the sharing of long term
 11                                  95,810.84         273,212.64      (64.93%)
        expenses                                                                  deferred expenses in the beginning of the year.
        Other noncurrent                                                          It is caused by increase of advance engineering
 12                              24,864,716.98      21,273,223.68       16.88%
        assets                                                                    payments and advance land payments.
        Short-term
 13                            3,265,824,953.89   3,112,400,000.00       4.93%    It is caused by increase of bank loans.
        borrowing
 14     Notes payable            43,820,200.00                   -     100.00%    It is caused by new issued bills of this year.
                                                                                  It is caused by receivable payments of natural
 15     Accounts receivable     214,748,889.66      61,115,438.61      251.38%
                                                                                  gas.
                                                                                  It is caused by decrease of advance
 16     Advance payments         14,586,000.00      39,274,341.26      (62.86%)
                                                                                  engineering payments of this year.
        Staff salaries                                                            It is caused by decrease of plan amount of this
 17                              32,691,674.04      45,432,950.70      (28.04%)
        payable                                                                   year.
                                                                                  It is caused by the increase of amount of the
 18     Tax payable            (521,900,793.90)   (501,193,418.09)       4.13%
                                                                                  debit side of payable value added tax .
                                                                                  It is caused by the increase of the base rate of
 19     Interest payable         75,462,594.51      59,348,039.27       27.15%
                                                                                  bank loan.
        Other amounts                                                             It is caused by the increase of payable
 20                             358,597,380.00     288,768,647.34       24.18%
        payable                                                                   engineering payments.
        Long-term                                                                 It is caused by decrease of long-term
 21                              26,000,000.00     186,000,000.00      (86.02%)
        borrowing                                                                 borrowing in this year.
        Undistributed                                                             It is caused by the increase of net profit in this
 22                             454,070,630.72     436,541,567.35        4.02%
        profits                                                                   year.
        minority
                                                                                  It is caused by the decrease of net profit of
 23     stockholder's           134,439,441.22     196,615,862.35      (31.62%)
                                                                                  non-wholly owned subsidiary company.
        interest
                                                                                  It is caused by revenue increase in power sales,
 24     Operation revenue      2,415,817,730.35   1,601,730,465.30      50.83%
                                                                                  fuel sales, equipment sales and sludge drying.
                                                                                  It is caused by the cost decrease in power sales,
 25     Operating costs        3,589,704,382.71   2,239,345,909.35      60.30%
                                                                                  fuel sales, equipment sales and sludge drying.
        Sales tax and extra                                                       It is caused by the increase of city maintenance
 26                              12,574,988.91       7,363,142.54       70.78%
        charges                                                                   and construction tax and others of this year.
                                                                                  It is caused by the increase of interest expense
 27     Financial expense       204,297,949.90     128,297,803.98       59.24%
                                                                                  of this year.
 28     Loss from asset          23,521,935.10      11,194,836.04      110.11%    It is caused by the increase of plan amount of

                                                                                                                             - 103 -
Shenzhen Nanshan Power Co., Ltd.

Annotations of Financial Statements
Year to December 31, 2011

       devaluation                                                              inventory revaluation reserve and impairment
                                                                                of fixed assets
                                                                                It is caused by transformation of equity of
 29    Investment income         23,329,325.70     (49,130,454.11)   147.48%    Jiangxi Xinchang Company and Energy
                                                                                Environment Protection Company in this year.
                                                                                It is caused by the increase of fuel subsidies
       Non-business
 30                            1,516,790,851.26    832,316,848.06     82.17%    income and returned amount of value added
       income
                                                                                tax on natural gas import of this year.
       Non-business                                                             It is caused by the increase of abandonment
 31                               5,225,709.23         573,905.21    810.55%
       expenditure                                                              loss of capital asset in this year.
                                                                                It is caused by the decrease returning of
 32    Income tax expense        13,224,142.33      24,787,762.05    (46.51%)
                                                                                deferred income tax assets of this year.
       Net profit belongs to
 33    the shareholders of       17,529,063.37    (114,638,678.20)   115.29%    It is caused by net earnings of this year.
       the parent company




                                                                                                                             - 104 -