Shandong International Power Development Company Ltd.

1
Shandong International Power Development Company
Ltd.

• May 9th, 2003

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Contents

• Proposed Application to Issue A Share
• Reasons for and benefits of the proposed A Share
  Issue
• Scheme of the proposed A share issue
• Proposed Acquisition of Sichuan Guangan
• Brief introduction of the proposed acquisition
• Introduction of Guangan Company
• Assessment pricing
• Reasons for and benefits of the proposed
  acquisition

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The Proposed Application of A Share Issue
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Reasons for and benefits of the Proposed A Share
Issue

• Raising the new capital for the companys future
  development
• Improving the capital structure and lowering the
  capital cost
• Expanding the financial approach

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Scheme of the Proposed A Share Issue
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Share capital changing after the Proposed A
Share Issue
Before the Proposed A Share Issue
After the Proposed A Share Issue
suppose that 765 million new A shares shall be
issued, thereof 196 million shares are proposed
to be allocated and issued to China Huadian.
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Brief Introduction of the Proposed Acquisition
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Acquisition introduction
Before acquisition
After acquisition
China Huadian
Sichuan Bashu electricity development company
China Huadian
Sichuan Bashu electricity development company
53.56
20
80
SIPD
53.56
SIPD
20
80
Sichuan Guangan Power Generation Company Ltd.
Sichuan Guangan Power Generation Company Ltd
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Introduction of Guangan Company
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Information of Guangan Company
Sichuan Guangan Power Generation Company Ltd.
Phase I
Phase II
Guangan
Started construction in Oct. 1997
under construction
Sichuan
First unit 300MW
Third unit 300MW
Forth unit 300MW
Second unit 300MW
Started commercial operation in Oct. 1999
Started commercial operation in Feb. 2000
Expected to be put into operation in 2004
Expected to be put into operation in 2004

• The four units of Phase I II are all the state
  produced coal-fired power generating units
  high-quality, large-scale and high efficiency at
  present, it was one of the lowest cost power
  plants.
• Total investment to the Guangan Phase II project
  is RMB 2,285 million, the cost per kilowatt is
  RMB 3809yuan,the capital account the total
  investment to 20
• A mine- mouth plant, the coal supplying of
  Guangan is primarily from Sichuan Huayinshan
  Mineral Bureau and other local coal mines in
  favor of assuring the fire supply and the cost
  controlling
• Total staff in Guangan Plant at 2002 end are 379
  , the higher productive efficiency belongs to the
  first level in China
• All electricity generated by Guangan is sold onto
  Sichuan Power Grid through 220kv electricity
  transmission line

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Electricity generation growth of Guangan phase I
electricity generation growth by year
Electricity generation growth by quarter
Million kwh
Million kwh
2000-2002 CAGR 39.2
Growth over the previous period 30.5
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Increasing revenue and profit of Guangan
Sales revenue
Net profit
RMB Million Yuan
RMB Million Yuan
130
32.2
The data of the first quarter of 2003 were not
audited
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Financial information of Guangan
As at 31st Dec.,2002
unitRMB Million Yuan
the datum was assessed by the State-approved
independent PRC valuer according to the domestic
valuation system
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Assessment and pricing
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Process of acquisition assessment and pricing
Cash flow discount
Valuation result
Negotiation between buyer and seller
pricing
assets assessment
Financial Advisor of the Compny
CICC Acquisition Independent
Financial Advisor CLSA
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Principal terms of the Guangan Acquisition
Agreement
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Acquisition cost analysis
P/E ratio relative to the net profit of the
first quarter of 2003
9.93x
1.0x
P/B ratio
3,953
EV(RMB Yuan/kw)
The acquisition price is RMB475.5 Million,
which not included the possible adjustment
fund RMB195 Million borrowing in Guangan Phase
II has been deducted from the net borrowing
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Reasons for and benefits of the proposed
acquisition
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Realizing the development across the nation

• Carrying out the companys expansion strategy of
  strengthening the businesses in Shandong and
  expanding to other markets in China
• Expanding the development space for the Company
• Mitigating operational risks due to concentrating
  within a single market
• A key step of reaching the national IPP

Territorial listed IPP
national listed IPP
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Fast developing economy in Sichuan Province
GDP growth ratio

• Sichuan Province located in southwest region of
  China,which adjoins with Northwest,Southwest and
  Mid-China?The land area is about 0.485 million
  square kilometers. The population in Sichuan was
  about 8329 at 2002 end.
• Sichuan possesses the abundance resources,which
  is one of the most important metallurgy industry
  bases and occupied the significant strategic
  position in China
• The GDP growth ratios of the recent three years
  were all over 9
• The GDP growth ratios were higher than those of
  nation

Shandong
Sichuan and Ningxia
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Rapid growth of power consumption in Sichuan
Province
Installed capacity growth ratio
Whole society power consumption
Million kwh

2000-2002 CAGR 12.6
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Main support from China Huadian

• The concrete representation of China Huadian
  permitting the company to have a preferential
  right to acquire and develop China Huadians
  interests in all of its power plants and
  projects
• Boosting the investors confidence of the
  companys future business development nationally
• Establishing the bases of the continuous
  acquisitions and good interaction between the
  company and China Huadian

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Reaching the rapid growth of the companys
installation scale
Growth of Interested installed capacity
before the proposed acquisition of Guangan
Growth of Interested installed capacity after the
proposed acquisition of Guangan
MW
MW
2002-2004 CAGR 7.8
2002-2004 CAGR 15.6
Note suppose that the proposed acquisition will
be accomplished by the end of 2003
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• Thanks