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Operating Results

(i) Overview

According to the audited consolidated financial statements for 2015, the Group’s net profit for the year was RMB189 million, representing a decrease of 62.1% as compared with 2014, of which, the profit attributable to the equity holders of the Group was RMB168 million, representing a decrease of 49.8% as compared with 2014, mainly due to (1) a significant drop in sales of natural gas affected by a decline in the national macroeconomic situation and a decrease in coal and oil prices; (2) the provision for impairment resulting from the significant overdue trade receivable of Hebei Natural Gas due to the outstanding amount due from certain users of Hebei Natural Gas, (3) a decrease in annual utilization hours of the Group caused by the poor wind resources in the areas where the wind farms operated by the Group were located during the year as compared with 2014.

(ii) Revenue

In 2015, the Group recorded revenue of RMB4,224 million, representing a decrease of 18.0% as compared with 2014, of which:

1. Natural gas business recorded revenue of RMB2,796 million, representing a decrease of 28.4% as compared with 2014. This was mainly attributable to a decrease in gas sales and gas sales unit price during the reporting period.

2. Wind power business achieved revenue of RMB1,428 million, representing an increase of 14.6% as compared with 2014. This was mainly due to an increase in sales of electricity as compared to last year resulting from two wind farms and one photovoltaic project being gradually put into operation during the year, despite of the wind resources in 2015 were less than 2014.

(iii) Other income and net gains

During the reporting period, the Group recorded other income and net gains of RMB77 million, representing an increase of 38.0% as compared with 2014. This was mainly due to an increase in foreign exchange gains arising from the unused portion of the proceeds from the 2014 placing of H shares during the reporting period.

(iv) Operating costs

During the reporting period, the Group’s operating costs (including cost of sales, selling and distribution expenses, administrative expenses and other expenses) aggregated to RMB3,592 million, representing a decrease of 12.7% as compared with 2014, of which:

1. Cost of sales was RMB3,103 million, representing a decrease of 19.5% as compared with 2014. This was mainly because the purchase of natural gas represented the major sales costs of the Group, and the gas purchase volume and unit price decreased.

2. Administrative expenses was RMB272 million, representing an increase of 6.7% as compared with 2014. This was mainly due to the corresponding increase in staff costs and administrative costs as a result of the expansion of the Group’s production scale.

3. Other expenses were RMB216 million, representing an increase of 5,859.6% as compared with 2014.

This was mainly due to a provision of RMB214 million for bad debts made by Hebei Natural Gas as compared with 2014.

(v) Finance cost

During the reporting period, the Group’s finance costs were RMB572 million, representing an increase of 17.5% as compared with RMB487 million in 2014. This was mainly due to the fact that following the expansion of production capacity of the Company, the increase of borrowings contributed to the rise of interest expenses, and interests from the projects being put into operation were expensed.

(vi) Share of profit of associates

During the reporting period, the Group’s share of profit of associates was RMB63 million, representing a decrease of RMB6 million as compared with RMB69 million last year. This was mainly due to a decrease in profitability of the enterprises in which the Group has non-controlling interest.

(vii) Income tax expenses

During the reporting period, the Group’s net income tax expense was RMB11 million, representing a decrease of RMB165 million as compared with RMB176 million last year. The main reasons for this decrease were as follows: (1) a decrease in profit before tax of Hebei Natural Gas as compared with last year, which resulted in a decrease in income tax expenses of approximately RMB122 million; (2) the Group

has paid RMB32 million as the one-off income tax of CDM for previous years at the request of the State Administration of Taxation, Hebei Branch in 2014 and there was no such matter in 2015.

(viii) Net profit

During the reporting period, the Group recorded a net profit of RMB189 million, representing a decrease of 62.1% as compared with 2014. Among others, the natural gas segment realized a net profit of RMB38 million, representing a decrease of 89.8% as compared with 2014, which was mainly due to a decrease in natural gas sales and the provisions for impairment; the wind power segment recorded a net profit of RMB161 million, representing an increase of 8.7% as compared with 2014, which was mainly due to an increase in sales revenue of wind power sector.

(ix) Profit attributable to owners of the Company

During the reporting period, the profit attributable to owners of the Company was RMB168 million, representing a decrease of RMB167 million as compared with RMB335 million last year. This was primarily attributable to a decrease in net profit of the Group as compared with the same period last year.

The basic earnings per share attributable to shareholders of the Company was RMB0.0453.

(x) Profit attributable to non-controlling interests

During the reporting period, the profit attributable to non-controlling interests of the Company was RMB21 million, representing a decrease of RMB142 million as compared with RMB163 million last year.

This was primarily attributable to a decrease in net profit of the Group as compared with last year.