Major Shareholder:

• China Resources Holdings ¡V 74.90% interest

The Group is a fast growing independent power generation company incorporated in HK in August 2001 to invest, develop, own and operate large coal-fired power plants in the more affluent regions in China. As of 30 September 2003, the Group owns five power plants in commercial operation which give an attributable installed generation capacity of 1,545,MW and seven power plants under construction with an attributable installed generation capacity of 2,893 MW. The Group owned a significant influence over ao a majority interest in the power plants under construction. Most of the power plants are located in the more affluence provinces or provinces with a relatively higher GDP growth rate in China, including Guangdong, Jiangsu, Zhejiang, Hebei and Henan.

The Group exercise tight cost control in all stages and aspects of the development, construction, management and operation of the Power plants. The Group strives to shorten the construction period of the power plants, which helps to lower the capitalized interest costs during construction. The Group seeks to keep the organization lean and exercise tight control over the fuel costs. Based on the efficient construction and operations, the Group believe can earn a competitive return in the investments by selling power at competitive on grid tariffs in the emerging merchant power market in China.

The Group is the flagship Power Company and subsidiary of CRH, which is the holding company of the China Resources Group, a major PRC state-owned conglomerate based in the HK. The Group believes that it can leverage on China Resources Group's strong brand recognition throughout Hong Kong and mainland China, its extensive investments in various regions and provinces throughout China, and its long standing working relationships with China's central and various regional and local governments. The Group owns a strong entrepreneurial and return driven corporate culture. The Group grant the management and key employees shares options in the Company to align management's incentive with shareholder value.

The Directors believe that the Group has the following competitive advantages:

• The Group is well positioned to benefit from the robust growth in demand for electricity in China, especially in the more affluent provinces or provinces with higher economic growth rates where most of the power plants are located;
• The Group is in a high level of flexibility;
• The Group benefits from the affiliation with the China Resources Group;
• The management team is motivated towards the creation of shareholder value by a share option scheme;
• The Group exercises tight control over costs;
• The Group focus on investment in and development of large-scale coal-fired power plants with similar equipment configuration;
• The Group owns significant influence over or a majority interest in the power plants under commercial operation and own a majority interest in most of the power plants under construction;

The Group believes the factors driving the growth of China's power market in the next 5 to 10 years include;

• Strong GDP growth in China, which drives a robust growth in the demand for electricity, especially in the more affluent provinces or provinces with a higher GDP growth rate in China where most of the Power Plants are located;
• Tight power supply in many of the economically affluent provinces such as Guangzhou, Jiangsu and Zhejiang, which results in high average utilization rates of power plants serving those provinces;
• Power market reform to gradually allow market forces to determine power prices, which the Group believe will enable us to effectively compete in such market; and
• The PRC Government' general policy of continuing to maintain rational power prices to encourage much needed power sector investments in the PRC

• The revenue and profit may be advesely affected by reductions in tariffs, or by reductions in dispatched planned output;
• Regulatory reform of the PRC power industry may adversely affect the business;
• Uncertainty of power sully in the markets in which the Group compete may adversely affect the results of operations;
• Delays in power plant development or acquisition may advesely affect the expansion plans;
• The construction of power plants is subject to certain risks which could give rise to delays or cost overruns;
• The limited operating history as a stand-alone independent power producer may make it difficult for you to evaluate the business and prospects;

The goal of the Group is to become a leading independent power producer in the PRC by selling affordable electricity to the customers while providing attractive financial returns and earnings growth for the shareholder. To achieve this goal the Group is pursuing the following strategies;

• Expanding the market share in the PRC power industry primarily through development of new power plants in which the Group own 100% or majority interests or expansion of some of the existing power plants, at the same time looking for appropriate acquisition opportunities;
• Focusing the growth strategy in the more affluent regions, in particular eastern China, southern China and Beijing-Tianjian-Tangshan areas, which have experienced relatively higher GDP growth rates where electricity demand is increasing and some of which support relatively higher electricity tariffs; and
• Focusing on the development and construction of high-efficiency, high capacity (300MW or greater) coal-fired power plants with similar equipment configuration and also exploring the development of alternative sources of fuel such as hydro and gas fueled power plants;

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$1,944 million (based on the offer price HK$2.20 per shares). The Group at present intends to apply the net proceeds as follows: