ENERCHINA HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)
(Stock Code: 622)
2007 Interim Results Announcement
Financial Highlights:
For the six months ended 30 June 2007
● Group’s turnover from continuing operation decreased by 15.2% to HK$617.2
million
● Group’s gross profit from continuing operation decreased by 34.5% to HK$58.1
million
● Net loss attributable to the equity holders of the Company amounted to HK$42.5
million
● Loss per share of HK0.89 cents
The board of directors (the “Board”) of Enerchina Holdings Limited (the “Company”)
announced the unaudited consolidated interim results of the Company and its subsidiaries
(collectively the “Group”) for the six months ended 30 June 2007.
—1—

CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007

Six months ended
NOTES 30.6.2007 30.6.2006

HK$’000 HK$’000
(Unaudited) (Unaudited
and
re-presented)
Continuing operation
Turnover 3 617,177 727,600
Cost of sales (559,081) (638,873)
Gross profit 58,096 88,727
Other income 33,534 22,592
Administrative expenses (24,876) (25,313)
Other expenses (1,996) (151)
Finance costs 4 (31,225) (34,025)
Share of results of associates 23,927 —
Profit before taxation 57,460 51,830
Taxation 5 (90) (481)
Profit for the period from continuing operation 57,370 51,349
Discontinued operation 6
Loss for the period from discontinued
operation (108,571) (196,546)
Loss for the period (51,201) (145,197)
Attributable to:
Equity holders of the Company (42,481) (88,256)
Minority interests (8,720) (56,941)
(51,201) (145,197)
Dividends 7 — 48,376
HK cents HK cents
(Loss) earnings per share 8
From continuing and discontinued
operations
— Basic (0.89) (1.82)
— Diluted (0.88) (1.81)
From continuing operation
— Basic 1.18 1.06
— Diluted 1.18 1.06
— 2 —

CONDENSED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2007
NOTES 30.6.2007 31.12.2006

HK$’000 HK$’000
(Unaudited) (Audited)
Non-current assets
Property, plant and equipment 1,396,128 3,732,306
Prepaid lease payments 40,932 189,730
Intangible assets — 136,527
Goodwill 316,580 1,914,164
Interest in associates 2,404,369 644,940
Available-for-sale investments 1,486 172,014
4,159,495 6,789,681

Current assets
Inventories 164,568 232,599
Prepaid lease payments 1,693 5,605
Trade and other receivables, deposits and
prepayments 9 311,361 698,444
Amount due from minority shareholders of a
subsidiary — 4,421
Investments held for trading 19,150 94,954
Pledged bank deposits — 20,038
Bank balances and cash 373,473 957,395
870,245 2,013,456

Current liabilities
Trade, notes and other payables 10 495,354 737,766
Loans from minority shareholders of a
subsidiary — 25,352
Taxation payable 8,922 90,768
Borrowings — amount due within one year 506,708 602,042
1,010,984 1,455,928

Net current (liabilities) assets (140,739) 557,528
Total assets less current liabilities 4,018,756 7,347,209
Non-current liabilities
Borrowings — amount due after one year 390,912 2,501,099
Deferred taxation — 43,140
390,912 2,544,239

Net assets 3,627,844 4,802,970
— 3 —

30.6.2007 31.12.2006
HK$’000 HK$’000
(Unaudited) (Audited)
Capital and reserves
Share capital 47,918 48,299
Reserves 3,579,353 3,640,464
Equity attributable to equity holders of the
Company 3,627,271 3,688,763
Equity component of share option reserve of a
listed subsidiary — 14,002
Minority interests 573 1,100,205
Total equity 3,627,844 4,802,970
— 4 —

1. BASIS OF PREPARATION
The Company is incorporated in Bermuda as an exempted company with limited liability and its shares are
listed on
The principal activity of the Group is supply of electricity. The Group was also engaged in sale and
distribution of liquefied petroleum gas and natural gas (“Gas Fuel”) and construction of gas pipelines,
which were discontinued in the current period (see note 6).
The condensed consolidated financial statements have been prepared in accordance with the applicable
disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock
Exchange and with Hong Kong Accounting Standard 34 Interim Financial Reporting.
At 30 June 2007, the Group had net current liabilities of HK$141 million and reported a net decrease in cash
and cash equivalents of HK$592 million for the six months then ended. The net decrease is mainly due to
the de-consolidation of the gas fuel business since 1 March 2007. The Group’s current liabilities as at 30
June 2007 included its interest-bearing bank loans of HK$507 million that are repayable within twelve
months from the balance sheet date. The Group has started discussion with the relevant banks for
refinancing of such loans and the relevant banks have expressed their intention to provide refinancing of
the outstanding loans. The directors of the Company are confident that the Group will be able to meet its
financial obligations when they fall due in the foreseeable future and be able to operate as a going concern.
Accordingly, the directors are satisfied that it is appropriate to prepare the Group’s condensed consolidated
financial statements on a going concern basis.
2. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis except for
certain financial instruments which are measured at fair values.
The accounting policies used in the condensed consolidated financial statements are consistent with those
followed in the preparation of the Group’s annual financial statements for the year ended 31 December
2006.

In the current interim period, the Group has applied, for the first time, the following new standard,
amendment and interpretations (“new HKFRSs”) issued by the Hong Kong Institute of Certified Public
Accountants (“HKICPA”), which are effective for the Group’s financial year beginning on 1 January 2007.
HKAS 1 (Amendment) Capital disclosures
1
HKFRS 7 Financial instruments: Disclosures
1
HK(IFRIC) — INT 7 Applying the restatement approach under HKAS 29 Financial
Reporting in Hyperinflationary Economies
2
HK(IFRIC) — INT 8 Scope of HKFRS 2
3
HK(IFRIC) — INT 9 Reassessment of embedded derivatives
4
HK(IFRIC) — INT 10 Interim financial reporting and impairment
5
1
Effective for annual periods beginning on or after 1 January 2007
2
Effective for annual periods beginning on or after 1 March 2006
3
Effective for annual periods beginning on or after 1 May 2006
4
Effective for annual periods beginning on or after 1 June 2006
5
Effective for annual periods beginning on or after 1 November 2006
The adoption of these new HKFRSs had no material effect on the results or financial position of the Group
for the current or prior accounting periods. Accordingly, no prior period adjustment has been recognised.
The Group has not early applied the following new standards or interpretations that have been issued but
are not yet effective.
— 5 —

2. PRINCIPAL ACCOUNTING POLICIES — continued
HKAS 23 (Revised) Borrowing costs
1
HKFRS 8 Operating segments
1
HK(IFRIC) — INT 11 HKFRS 2 - Group and treasury share transactions
2
HK(IFRIC) — INT 12 Service concession arrangements
3
1
Effective for annual periods beginning on or after 1 January 2009
2
Effective for annual periods beginning on or after 1 March 2007
3
Effective for annual periods beginning on or after 1 January 2008
The directors of the Company anticipate that the application of these standards or interpretations will have
no material impact on the results and the financial position of the Group.
3. SEGMENT INFOMRATION

The Group is primarily engaged in the supply of electricity. The Group was also involved in gas fuel
business which was discontinued on 28 February 2007 (see note 6).
Segment information about these businesses is presented below:
Business segments
Six months ended 30 June 2007
Continuing operation
Discontinued
operation
Electricity
supplies Total
Gas fuel
business Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
TURNOVER 617,177 617,177 421,459 1,038,636
RESULT

Segment result 48,004 48,004 (5,046) 42,958
Other income 33,534 1,804 35,338
Corporate expenses (14,935) — (14,935)
Finance costs (31,225) (24,609) (55,834)
Loss on deemed disposal arising from
dilution of interest in associates (1,845) — (1,845)
Loss on disposal and deemed disposal of
subsidiaries — (77,201) (77,201)
Loss on deemed disposal arising from
dilution of interest in subsidiaries — (6,212) (6,212)
Share of results of associates 23,927 3,155 27,082
Profit (loss) before taxation 57,460 (108,109) (50,649)
Taxation (90) (462) (552)
Profit (loss) for the period 57,370 (108,571) (51,201)
— 6 —

3. SEGMENT INFOMRATION — continued
Business segments — continued
Six months ended 30 June 2006
Continuing operation
Discontinued
operation
Electricity
supplies Total
Gas fuel
business Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
TURNOVER 727,600 727,600 1,243,931 1,971,531
RESULT

Segment result 77,749 77,749 100,605 178,354
Other income 22,592 46,495 69,087
Corporate expenses (14,486) (26,675) (41,161)
Loss on deemed disposal arising from
dilution of interest in subsidiaries — (5,913) (5,913)
Finance costs (34,025) (126,765) (160,790)
Changes in fair value of derivative
financial instruments — (181,608) (181,608)
Share of results of associates — 4,225 4,225
Profit (loss) before taxation 51,830 (189,636) (137,806)
Taxation (481) (6,910) (7,391)
Profit (loss) for the period 51,349 (196,546) (145,197)
— 7 —

4. FINANCE COSTS
Continuing
operation
Discontinued
operation Consolidated
Six months ended Six months ended Six months ended
30.6.2007 30.6.2006 30.6.2007 30.6.2006 30.6.2007 30.6.2006

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Interest on bank and other
borrowings wholly repayable
within five years 31,225 34,025 1,459 1,345 32,684 35,370
Interest on bank and other
borrowings not wholly repayable
within five years ———1,384 — 1,384
Interest on convertible bonds ——2,453 11,875 2,453 11,875
Interest on guaranteed senior notes 20,515 65,903 20,515 65,903
31,225 34,025 24,427 80,507 55,652 114,532

Net interest expense on interest rate
swaps ———46,118 — 46,118
31,225 34,025 24,427 126,625 55,652 160,650

Bank charges ——182 140 182 140
31,225 34,025 24,609 126,765 55,834 160,790
5. TAXATION

Continuing
operation
Discontinued
operation Consolidated
Six months ended Six months ended Six months ended
30.6.2007 30.6.2006 30.6.2007 30.6.2006 30.6.2007 30.6.2006

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Current Tax:
PRC Enterprise Income Tax 90 481 462 6,910 552 7,391
No provision for Hong Kong Profits Tax has been made in the condensed consolidated financial statements
as the relevant entities incurred tax losses in both periods. The tax rate applicable for all People’s Republic
of China (“PRC”) subsidiaries ranges from 15% to 33%.
Pursuant to relevant laws and regulations in the PRC, certain of the Company’s subsidiaries are entitled to
exemption from Enterprise Income Tax under tax holidays and concessions. Enterprise Income Tax was
calculated at rates given under the concessions.
— 8 —

On 16 March 2007, the PRC promulgated the Law of the PRC on Enterprise Income Tax (the “New Tax
Law”) by Order No. 63 of the President of the PRC, which will change the tax rate from 33% to 25% for
certain subsidiaries from 1 January 2008. However, for the Company’s subsidiaries which are entitled to the
preferential tax treatment, the detailed implementation rules regarding the New Tax Law have not been
issued and therefore the Group is not in a position to determine whether the Company’s subsidiaries will
still be entitled to the preferential tax treatment mentioned above.
6. DISCONTINUED OPERATION

On 4 December 2006, Towngas China Company Limited (“Towngas China”) (formerly known as “Panva
Gas Holdings Limited”), a subsidiary of the Company then, entered into a sale and purchase agreement (the
“Agreement”) with Hong Kong and China Gas (China) Company Limited (“HK&CG (China)”), a
wholly-owned subsidiary of The Hong Kong and China Gas Company Limited (“HKCG”), and HKCG.
Pursuant to the Agreement, Towngas China had conditionally agreed to purchase from HK&CG (China) the
entire issued share capital of certain companies which hold, collectively, equity interests varying from 27%
to 100% in certain PRC companies engaging in the operation of piped gas assets and related business in the
PRC and to purchase and take assignment of the outstanding loans due from these to be acquired companies
to HK&CG (China) or its associates as at the completion subject to the terms and conditions of the
Agreement (the “Transaction”). In consideration for the Transaction, Towngas China has agreed to allot and
issue 772,911,729 ordinary shares of HK$0.10 each in the capital of Towngas China, each credited as fully
paid, to HK&CG (China). Upon the completion of the above transactions, the shareholding of the Company
in Towngas China was diluted and Towngas China ceased to be a subsidiary and became an associate of the
Company with effect from 1 March 2007. Pursuant to an undertaking by the Company to the Stock
Exchange that it would place down the shares held by it in Towngas China, to independent third parties,
on or before the completion of the above transactions solely for the purpose of maintaining the public float
of Towngas China (if necessary). In this connection, the Company disposed of 33,918,400 shares of
Towngas China to independent third parties for an aggregate consideration of approximately
HK$126,064,000. Immediately after the above transactions, the Company holds 30.54% interests in
Towngas China. Certain comparative figures were re-presented so as to reflect the results for the
discontinued operation.
The loss for the period from the discontinued operation is analysed as follows:
1.1.2007 to
28.2.2007

1.1.2006 to
30.6.2006

HK$’000 HK$’000
Loss of gas fuel business operations for the period (25,158) (190,633)
Loss on disposal and deemed disposal of subsidiaries (77,201) —
Loss on deemed disposal arising from dilution of interest in subsidiaries (6,212) (5,913)
(108,571) (196,546)
— 9 —

The results of the gas fuel business were as follows:
1.1.2007 to
28.2.2007

1.1.2006 to
30.6.2006

HK$’000 HK$’000
Turnover 421,459 1,243,931
Cost of sales (370,458) (1,028,686)
Gross profit 51,001 215,245
Other income 1,804 46,495
Distribution and selling expenses (16,682) (40,269)
Administrative expenses (39,334) (99,345)
Other expenses (31) (1,701)
Finance costs (24,609) (126,765)
Changes in fair value of derivative financial instruments — (181,608)
Share of results of associates 3,155 4,225
Loss before taxation (24,696) (183,723)
Taxation (462) (6,910)
Loss for the period (25,158) (190,633)
Loss on disposal and deemed disposal of subsidiaries (77,201) —
Loss on deemed disposal arising from dilution of interest in subsidiaries (6,212) (5,913)
Loss for the period from discontinued operation (108,571) (196,546)
Attributable to:
Equity holders of the Company (99,200) (139,719)
Minority interests (9,371) (56,827)
(108,571) (196,546)
7. DIVIDENDS

Six months ended
30.6.2007 30.6.2006

HK$’000 HK$’000
Dividend recognised as distribution during the period:
2005 final of HK1.0 cent per share — 48,376
The directors have resolved not to declare an interim dividend in respect of six months ended 30 June 2007.
— 10 —

8. (LOSS) EARNINGS PER SHARE
From continuing and discontinued operations
The calculation of the basic and diluted loss per share attributable to the ordinary equity holders of the
Company is based on the following data:
Six months ended
30.6.2007 30.6.2006

HK$’000 HK$’000
Loss for the purpose of basic loss for the period attributable to equity
holders of the Company (42,481) (88,256)
Six months ended
30.6.2007 30.6.2006

Number of shares
Weighted average number of ordinary shares for the
purposes of basic loss per share 4,792,934,807 4,837,583,112
Effect of dilutive share options 16,103,800 25,542,778
Weighted average number of ordinary shares for the
purposes of dilutive earnings per share 4,809,038,607 4,863,125,890
From continuing operation
The calculation of basic and diluted earnings per share from continuing operation attributable to the
ordinary equity holders of the Company is based on the following data:
Six months ended
30.6.2007 30.6.2006

HK$’000 HK$’000
Loss for the period attributable to equity holders of the Company (42,481) (88,256)
Less: Loss for the period from discontinued operation 99,200 139,719
Earnings for the purposes of basic and diluted earnings per share from
continuing operation 56,719 51,463
The denominators used are the same as those detailed above for basic and dilutive loss per share.
— 11 —

From discontinued operation
Basic loss per share from discontinued operation is HK2.07 cents per share (2006: HK2.89 cents loss per
share) and diluted loss per share for the discontinued operation is HK2.06 cents per share (2006: HK2.87
cents loss per share), based on the loss for the period from discontinued operation of HK$99 million (2006:
HK$140 million) and the denominators detailed above for basic and diluted loss per share.
9. TRADE AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

The Group allows an average credit period ranging from 0-90 days to its customers.
Included in trade and other receivables, deposits and prepayments are trade receivables totalling
HK$258,059,000 (31.12.2006: HK$218,769,000), the aged analysis of which is as follows:
30.6.2007 31.12.2006

HK$’000 HK$’000
Aged:
0 — 90 days 235,887 152,029
91 — 180 days 22,084 62,970
181 — 360 days — 3,682
Over 360 days 88 88
258,059 218,769
10. TRADE, NOTES AND OTHER PAYABLES

Included in trade, notes and other payables are trade and notes payables of HK$350,523,000 (31.12.2006:
HK$258,019,000), the aged analysis of which is as follows:
30.6.2007 31.12.2006

HK$’000 HK$’000
Aged:
0 — 90 days 347,713 184,242
91 — 180 days 2,762 33,199
181 — 360 days — 13,954
Over 360 days 48 26,624
350,523 258,019

— 12 —

MANAGEMENT DISCUSSION AND ANALYSIS
The Group is principally engaged in electricity generation and the sale of electricity, and
through Towngas China Company Limited (stock code: 1083, “Towngas China”) (previously
known as Panva Gas Holdings Limited), the sale and distribution of Liquefied Petroleum Gas
(“LP Gas”) and piped gas, and gas pipelines construction. The gas fuel business operation
was discontinued on 28 February 2007 upon the completion of the agreement entered into
between the Company, Towngas China and Hong Kong & China Gas (China) Limited
(“HKCG”) announced on 4 December 2006. Details of the transaction is set out in the section
headed “Major Associate”.
For the six months ended 30 June 2007, the Group recorded a turnover from continuing
operation of HK$617.2 million, representing a decrease of 15.2% as compared to the same
period last year. Gross profit from continuing operation decreased to HK$58.1 million for the
six months ended 30 June 2007, a decrease of 34.5% as compared to the same period last
year. The decrease in gross profit was mainly caused by the decrease in the Group’s
electricity generation and the reduced fuel subsidy amount received from the Shenzhen
Government for the period.
Net loss attributable to the equity holders of the Company amounted to HK$42.5 million. The
loss is due to (i) the decrease in the Group’s electricity generation; (ii) the reduced fuel
subsidy amount received from the Shenzhen Government as compared to the same period last
year; and (iii) the HK$77.2 million loss on disposal and deemed disposal of Towngas China
during the period which is partly offset by the improved operations of the gas fuel business.
Overview on electricity generation business
During the period, the Group’s on-grid electricity generation amounted to 991.9 million kwh,
representing a decrease of 20.3% as compared to 1,244.7 million kwh over the same period
last year. As a result, the turnover of on-grid electricity decreased by 15.2% to HK$617.2
million. This decrease was mainly caused by the repaired power generating unit, which was
shut down from July to December 2006, having to undergo test runs in the first quarter of
2007 before operating at capacity. We have commenced the claims procedures with both our
insurance provider and the manufacturer to recover the losses incurred for the shut down in
2006. As the final claims are still in discussions and are not finalized yet, we have not
included the claims amount in the results for the six month ended 30 June 2007.
Direct operating expenses attributable to electricity supplies decreased by 12.5% to
HK$559.1 million due to the decrease in electricity generation and also the decrease in fuel
cost per tonne of 7.7%. During the period, the Group incurred a total fuel cost of HK$487.0
million.
The high world crude oil price had significantly affected the price of heavy oil which put the
Group’s power generation business under enormous pressure. Despite management’s efforts
in improving productivity, strengthening fuel procurement and inventory control, the gross
profit margin of the power generation business for the period decreased by 2.8% as compared
to the same period last year.
— 13 —

During the period, the Group was granted and received an amount of HK$81.7 million, in
compensation for the high fuel cost, by the Shenzhen Government for the period from
November 2006 to May 2007, compared to HK$164 million granted and received over the
same period last year for the period from September 2005 to June 2006.
Currently, the Group’s power plants are undergoing conversion from using heavy oil to
natural gas, a more economical and environmentally friendly fuel source. Management plans
to modify the two 180 MW power generator units so that these can use natural gas as an
additional energy source, making them unique with dual-fuel firing capabilities by the
second half of 2007. When completed, this will provide greater flexibility for the Group to
select the most economical source of fuel. The proximity of the Group’s power plant to the
Guangdong Liquefied Natural Gas Terminal, which was completed in June 2006, ensures that
the Group is well positioned for the change from heavy oil to natural gas.
Major Associate
On 4 December 2006, the Company, Towngas China and HKCG announced that the Towngas
China has agreed to acquire the entire issued share capital of each of the eight companies
held by HKCG (collectively the “Target Companies”), which hold equity interests in ten PRC
companies that are engaged in piped gas fuel businesses. Towngas China also agreed that it
will take assignment of the outstanding loans due from the Target Companies to HKCG or
its associates, being approximately HK$568.1 million, together with all interest accrued
thereon, if any. In consideration of the acquisition (which includes taking assignment of the
shareholder loans), Towngas China agreed to issue approximately 773 million new shares to
HKCG, which represented 43.97% of the enlarged issued share capital of Towngas China.
The resolutions related to the agreement were approved at the extraordinary general meeting
of both Towngas China and Enerchina and the completion of the agreement took place on 1
March 2007, upon which HKCG became the single largest shareholder of Towngas China and
Enerchina’s shareholding in Towngas China was reduced from 57.94% to 32.47%.
In order to maintain the public float of Towngas China at the minimum level of 25%, on the
same date, Enerchina placed down 33,918,400 shares in Towngas China at the placing price
of HK$3.77, raising HK$126.1 million for the Group. The placement further reduced our
shareholding in Towngas China to 30.54%.
Upon the integration of Towngas China with HKCG on 1 March 2007, Towngas China
become the major associate of the Company.
For the six months ended 30 June 2007, Towngas China recorded a turnover of HK$1,400.3
million, an increase of 12.6% over 2006. The gas fuel business was further divided into the
sale of piped gas, gas pipeline construction and sale of LP gas. Turnover contribution from
each of these activities amounted to HK$281.1 million, HK$113.4 million, and HK$577.1
million, accounting for 20.1%, 8.1%, and 41.2%, respectively, of Towngas China’s turnover.
The rapid growth of the piped gas business underlines Towngas China’s shift towards a
utility business model with the sale of piped gas becoming a significant source of income.
— 14 —

Its gross profit increased by 16.8% to HK$251.5 million and the profit attributable to
shareholders amounted to HK$50.5 million. The increase in gross profit was due to increases
in the gross profit margins in all segments of the Company’s businesses.
Profit attributable to equity holders of Towngas China of approximately HK$50.5 million,
represents a significant increase from the loss of HK$221.1 million recorded for the same
period last year. The turn around from a loss making position to a profitable one is mainly
due to the loss in fair value of derivatives of HK$181.6 million and the net interest expense
incurred on the interest rate swaps of HK$46.1 million recorded during the same period last
year versus none recorded this year. A significant increase in contribution from associated
companies from HK$4.2 million in 2006 to HK$49.9 million in 2007, and the additional
contribution of HK$30.3 million in 2007 from the 6 jointly controlled entities acquired from
HKCG are all contributing factors for recording a profit in the first half of 2007.
SHARE BUY BACK

From 2 January 2007 to 16 March 2007, the Company repurchased a total of 40,983,000 of
its own shares worth approximately HK$26,850,000 in the market, in an effort to further
enhance the value in the Company to its shareholders.
If market conditions allow, the Company will consider restarting the share buy back
programme.
FINANCIAL POSITION

The Group’s total borrowings decreased from HK$3,103.1 million as at 31 December 2006
to HK$897.6 million as at 30 June 2007. The net decrease is mainly due to the
de-consolidation of the gas fuel business since 1 March 2007.
The total borrowings were mainly comprised of bank and other loans amounting to HK$897.6
million. The bank borrowings were mainly used to finance the expansion of the power plant
in Shenzhen. The Group’s net debt to equity as at 30 June 2007 was 14.45%.
Total assets pledged in securing these loans have a net book value of HK$753.6 million as
at 30 June 2007. All the bank borrowings of the Group are at floating rates and denominated
in both Renminbi and United States dollars. The Group’s operation is mainly carried out in
the PRC and substantial receipts and payments in relation to the operations are denominated
in Renminbi. No financial instruments were used for hedging purpose. The Board will
continue to evaluate and monitor the potential impact of the appreciation of Renminbi to the
Group’s business and manage the risks of using different financial instruments.
The Group’s cash and cash equivalents amounted to HK$373.5 million as at 30 June 2007 and
are mostly denominated in Renminbi, Hong Kong dollars and United States dollars.
— 15 —

Capital Commitments
As at 30 June 2007, the Group had capital commitments in respect of the acquisition of
property, plant and equipment not provided in the financial statements amounting to
HK$12.2million.
OUTLOOK

The Group expects the growth in power consumption in the Guangdong province to continue
in the second half of 2007. Looking ahead, the second half of 2007 still pose a challenging
period for the Group’s power generation business as the price of heavy oil is still a major
determinant in the Group’s power sector profitability. The Group considers that heavy oil
price may not come down significantly in the near future and under the current electricity
supply regime of the PRC, the Group cannot transfer the additional fuel costs to its customers
and can only rely on partial compensation from the government for such rising fuel costs.
In view of this, in the second half of 2007, we will continue our efforts in improving
productivity and closely monitor the conversion of our power plants from using oil fuel to
natural gas. The Group will also continue our discussions in securing the supply of natural
gas to coincide with the completion of the conversion of the power plants, which is expected
to be completed and will undergo a trial run in using natural gas in the last quarter of 2007.
The expansion plans to increase the power generation capacity, from the Group’s existing
total installed capacity of 665,000 kilowatts to 1,450,000 kilowatts would also be expedited
once discussions on the long term supply of natural gas have reached the final stage.
Looking ahead, Towngas China’s integration with HKCG has shown results with improved
interim results reported as compared to the same period last year. The main focus will still
be on improving the management and cost efficiency of its existing projects by capitalising
on operational synergies with HKCG, focusing on the development of piped gas projects with
an emphasis in operational and safety management for long-term results and consolidating
its existing LP Gas operation while allocating resources to the development of new LP Gas
projects on a selective basis.
With the integration of Towngas China into HKCG from 1 March 2007 onwards, the Group
will remain as a major strategic investor in Towngas China. We are confident and optimistic
about its prospects and if the opportunity arises, will capitalize on its value and enhance
returns to our shareholders.
In view of the continued growth in China’s economy and the unrelenting demand for energy
and natural resources, the Group will continue to pursue opportunities in these businesses.
We are currently holding various preliminary discussions on such possible investment
opportunities in the energy and related sector.
INTERIM DIVIDEND

In order to retain resources for the Group’s business development, the Board does not declare
an interim dividend for the six months ended 30 June 2007 (2006: Nil).
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EMPLOYEES AND REMUNERATION POLICIES
As at 30 June 2007, the Group employed approximately 193 full time employees. The Group
recognizes the importance of high caliber and competent staff and continues to provide
remuneration packages to employees with reference to prevailing market practices and
individual performance. In addition, share options may be granted to certain eligible
directors and employees of the Group in accordance with the terms of the approved share
option scheme adopted by the Group.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SHARES
During the six months ended 30 June 2007, the Company repurchased 40,983,000 shares on
the Stock Exchange at an aggregate consideration of HK$26,850,223. All of the shares were
subsequently cancelled. The nominal value of the cancelled shares of HK$409,830 during the
period was credited to capital redemption reserve and the relevant aggregate consideration
of HK$26,850,223 was paid out from the Company’s retained earnings. Details of the shares
repurchased are as follows:
Month of repurchases
Number of
shares
repurchased Price per share
Aggregate
consideration
Highest Lowest Paid
HK$ HK$ HK$
January 2007 40,935,000 0.67 0.63 26,823,823
March 2007 48,000 0.55 0.55 26,400
40,983,000 26,850,223

The reason for the repurchases of shares was for the enhancement of shareholder value in the
long term.
Save as disclosed above, neither the Company nor any of its subsidiaries purchased, sold or
redeemed any of the Company’s listed securities during the six months ended 30 June 2007.
CORPORATE GOVERNANCE

During the period, the Company has complied with the code provisions as set out in the Code
on Corporate Governance Practices in Appendix 14 to the Rule Governing the Listing of
Securities on the Stock Exchange (the “Listing Rules”).
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MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted the Model Code set out in Appendix 10 to the Listing Rules as the
code of conduct regarding securities transactions by the Directors. Having made specific
enquiry of all Directors, the Company confirmed that in respect of the six months ended 30
June 2007, all Directors have complied with the required standard set out in the Model Code.
AUDIT COMMITTEE

The Company has an audit committee (“Audit Committee”) which was established in
accordance with the requirements of the Listing Rules for the purposes of reviewing and
providing supervision over the Group’s financial reporting process and internal controls. The
Audit Committee comprises three independent non-executive directors. The members of the
Audit Committee are Messrs. Lu Yungang, Davin A. Mackenzie and Xin Luo Lin. The Audit
Committee meets regularly with the Company’s senior management and the Company’s
auditors to consider the Company’s financial reporting process, the effectiveness of internal
controls, the audit process and risk management.
The interim results of the Group for the six months ended 30 June 2007 had not been audited,
but had been reviewed by the Company’s auditors, Deloitte Touche Tohmatsu and the Audit
Committee.
APPRECIATION

On behalf of the Board, I would like to take this opportunity to express our gratitude to all
staff for their devoted efforts and hard work.
By Order of the Board
Tang Yui Man Francis
Executive Director
Hong Kong, 13 September 2007
As at the date of this announcement, the Board comprises:
Executive Directors:
Ou Yaping (Chairman)
Chen Wei (Chief Executive Officer)
Tang Yui Man Francis
Xiang Ya Bo
Non-executive Director:
Sun Qiang Chang (Non-executive Vice Chairman)
Independent non-executive Directors:
Lu Yungang
Davin A. Mackenzie
Xin Luo Lin

— 18 —