---

Save as disclosed above, there is no other matter that needs to be brought to the attention of the shareholders of the Company in connection with the above appointment.

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Board has resolved at the 14th meeting of the ninth session of the Board held on 31 July 2018, to (among other things) amend the articles of association of the Company (the “Articles of Association”) for purpose of introducing the accumulative voting with respect to the election of director(s) and supervisor(s) of the Company and making other minor house keeping amendments. Of the proposal to amend the Articles of Association, the Board shall seek approval from shareholders of the Company at shareholders’ meeting.

A circular containing, among other things, details of the proposed amendments to the Articles of Association will be dispatched by the Company to the shareholders as soon as practicable.

 

Document 2

 

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(a Sino-foreign joint stock limited company incorporated in the Peoples Republic of China)

(Stock Code: 902)

CONNECTED TRANSACTION

On 31 July 2018, Shandong Company (a subsidiary of the Company) and Taishan Power (a subsidiary of Huaneng Group) entered into the Transfer Agreement, pursuant to which Shandong Company shall acquire from Taishan Power (i) 75% interests in the registered capital of Liaocheng Thermal Power, (ii) 80% interests in the registered capital of Laizhou Wind Power, (iii) 80% interests in the registered capital of Laiwu Thermal Power, and (iv) 15% interests in the registered capital of Laiwu Power Generation at the consideration of RMB1,800,020,000. Upon completion of the Transfer, Liaocheng Thermal Power, Laizhou Wind Power, and Laiwu Thermal Power will become subsidiaries of Shandong Company (Laiwu Power Generation is already a subsidiary of the Company).   As of the date of this announcement, the Company holds an 80% equity interest in Shandong Company and Huaneng Group holds a 56.53% indirect interest in Taishan Power through HETHC. Huaneng Group holds a 75% direct interest and a 25% indirect interest in HIPDC, while HIPDC, being the direct controlling shareholder of the Company, holds a 33.33% interest in the Company. Huaneng Group also holds a 10.23% direct interest in the Company and holds a 3.11% indirect interest in the Company through Huaneng HK and a 0.49% indirect interest in the Company through Huaneng Finance. HETHC is an associate of Huaneng Group. According to the Hong Kong Listing Rules, the Transfer constitutes a connected transaction of the Company.   According to relevant percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, the Transfer does not constitute a notifiable transaction under Chapter 14 of the Hong Kong Listing Rules. However, the Transfer constitutes a connected transaction under Chapter 14A of the Hong Kong Listing Rules. As the scale of the Transfer exceeds 0.1% but does not exceed 5% of the applicable percentage ratios (other than the profit ratio) as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, the Company is only required to comply with the reporting and announcement requirements under Rules 14A.71 and 14A.35 of the Hong Kong Listing Rules but is exempt from independent shareholders’ approval requirements.

THE TRANSFER

On 31 July 2018, Shandong Company (a subsidiary of the Company) and Taishan Power (a subsidiary of Huaneng Group) entered into the Transfer Agreement, pursuant to which Shandong Company shall acquire from Taishan Power (i) 75% interests in the registered capital of Liaocheng Thermal Power, (ii) 80% interests in registered capital of Laizhou Wind Power, (iii) 80% interests in registered capital of Laiwu Thermal Power, and (iv) 15% interests in registered capital of Laiwu Power Generation at the consideration of RMB1,800,020,000. The Company will pay the consideration in cash with its own funds. Upon completion of the Transfer, Liaocheng Thermal Power, Laizhou Wind Power, and Laiwu Thermal Power will become subsidiaries of Shandong Company (Laiwu Power Generation is already a subsidiary of the Company).

RELATIONSHIP AMONG THE COMPANY, SHANDONG COMPANY, HUANENG GROUP, HIPDC AND TAISHAN POWER

The Company and its subsidiaries mainly develop, construct, operate and manage large-scale power plants in China. It is one of the largest listed power suppliers in China. As at the date of this announcement, the Company’s controlled generation capacity is 104,425 MW and the equity based generation capacity is 91,894 MW.

Shandong Company is a subsidiary of the Company, and is mainly engaged in the development, investment, construction, management of the electric (heat) power projects, investment in coal, transportations and relevant industries; purchase and sale of power; consultant service on thermal power technology and so on.

Huaneng Group is principally engaged in the operation and management of enterprises investments, development, investment, construction, operation and management of power plants; organising the generation and sale of power (and heat); and the development, investment, construction, production and sale of products in relation to energy, transportation, new energy and environmental protection industries.

HIPDC is a sino-foreign joint venture whose incorporation was approved by the State Council, and its principal business is development, construction and operation of power plants in China.

Taishan Power is a subsidiary of HETHC (a wholly-owned subsidiary of Huaneng Group), and is currently mainly engaged in the development, investment, and management of electric and heat power projects; investment, development, construction and management of photovoltaic power generation project, and R&D, manufacture and sale of optical fibre preform and optical fibre; and maintenance of housing and living infrastructure, green cleaning and road freight through its subsidiaries.

As of the date of this announcement, the Company holds an 80% equity interest in Shandong Company and Huaneng Group holds a 56.53% indirect interest in Taishan Power through HETHC. Huaneng Group holds a 75% direct interest and a 25% indirect interest in HIPDC, while HIPDC, being the direct controlling shareholder of the Company, holds a 33.33% interest in the Company.

Huaneng Group also holds a 10.23% direct interest in the Company and holds a 3.11% indirect interest in the Company through its wholly-owned subsidiary i.e. Huaneng HK and a 0.49% indirect interest in the Company through its controlling subsidiary i.e. Huaneng Finance. HETHC is an associate of Huaneng Group. According to the Hong Kong Listing Rules, the Transfer constitutes a connected transaction of the Company.

As of the date of this announcement, the relationship between the Company and Taishan Power is illustrated as follows:

*	Huaneng Group, through its wholly owned subsidiary i.e. Huaneng HK, indirectly holds 100% of Pro- Power Investment Limited while Pro-Power Investment Limited holds a 25% interest in HIPDC. Therefore, Huaneng Group holds a 25% indirect interest in HIPDC.

**	Huaneng Group holds a 10.23% direct interest in the Company. It also holds a 3.11% interest in the Company through Huaneng HK (a wholly-owned subsidiary of Huaneng) and a 0.49% indirect interest in the Company through Huaneng Finance (a subsidiary of Huaneng).

Therefore, under the Hong Kong Listing Rules, Huaneng Group and its associates (including HETHC) are connected persons of the Company.

TRANSFER AGREEMENT

The major terms of the Transfer Agreement are as follows:

1.

Date:

31 July 2018

2.

Parties:

(1) Shandong Company (as purchaser); and

(2) Taishan Power (as seller)

3.

Consideration:

Taishan Power agrees to transfer (i) the Liaocheng Thermal Power Interest, (ii) Laizhou Wind Power Interest, (iii) Laiwu Thermal Power Interest, and (iv) Laiwu Power Generation Interest to Shandong Company, while Shandong Company agrees to pay the consideration of RMB1,800,020,000 to Taishan Power. The consideration is agreed by both parties after arm’s length negotiation and is determined primarily by taking into account the following

factors and having regard to the results of the asset valuation report: (i) the undistributed profits of the Target Companies as of the base date (i.e. 31 March 2018) and the corresponding portion of the Target Interests to which Shandong Company shall be entitled, whether or not the same was declared before or after the completion; (ii) the profit and loss and other comprehensive income of Target Company arising from 1 April 2018 to the completion date proportional to the Target Interests which Shandong Company shall be entitled to and assumed.

4.	Method of Payment: Shandong Company will pay the consideration by way of cash.

5.	Payment Schedule: Unless otherwise agreed between the parties, Shandong Company shall pay 50% of the consideration on completion date, and pay the remaining 50% within 5 working days following the completion of registration of change of business in relation to the Target Interests.

6.	Completion and Timing for Registration: Subject to satisfaction or waiver of all the conditions precedent in a reasonable manner, and unless otherwise specified by the parties, Shandong Company and Taishan Power shall complete the Transfer on 1 August 2018.

7.	Condition Precedent:

(1)

Conditions to the Transfer for fulfilment by both parties

Both parties bear their respective obligations to procure the Transfer and shall make their best efforts to satisfy the following conditions (where any or all of which may be wholly or partly waived by Shandong Company and Taishan Power, as the case may be, to the extent which are permissible under applicable laws and regulations). Neither party shall have any obligation to complete the Transfer unless and until all the following conditions are satisfied or waived:

(a)

Transfer Agreement and the Transfer have been approved by the internal decision- making bodies of both parties in accordance with necessary procedures pursuant to their respective articles of association and applicable laws and regulations;

(b)

no government agency of competent jurisdiction has published or promulgated any law, rule or regulation that prohibits the completion of the Transfer; and no court of competent jurisdiction has released any order or injunction that prevents the completion of the Transfer;

(c)

all necessary approvals, consents, filings and certificates required from governments or their designated authorities as well as all material third-party consents required for the Transfer Agreement and the Transfer have been obtained, except for legal

proceedings that can only be attended to after the completion of the Transfer in accordance with applicable laws and regulations and the documents derived therefrom.

(2)

Conditions to the Transfer for fulfilment by Taishan Power

The obligations of Taishan Power to complete the Transfer are conditional upon the satisfaction of each of the following conditions on or before the completion date, which may be wholly or partly waived by Taishan Power to the extent that is permissible under applicable laws and regulations:

(a)

the representations and warranties made by Shandong Company in the Transfer Agreement are true and accurate in all material respects and there are no material omissions as at the completion date; and

(b)

Shandong Company has performed and observed the terms under the Transfer Agreement to be performed and observed on its part in all material respects.

(3)

Conditions to the Transfer for fulfilment by Shandong Company

The obligations of Shandong Company to complete the Transfer are conditional upon the satisfaction of each of the following conditions on or before the completion date, which may be wholly or partly waived by Shandong Company to the extent permitted by applicable laws and regulations:

(a)

the representations and warranties made by Taishan Power in the Transfer Agreement are true and accurate in all material respects and there are no material omissions as at the Completion Date; and

(b)

Taishan Power has performed and observed the terms under the Transfer Agreement to be performed and observed on its part in all material respects.

8.	Effectiveness: The Transfer Agreement shall become effective upon being duly signed by Shandong Company and Taishan Power.

9.

Transition Arrangements: Both parties agreed that Shandong Company shall be entitled to assume the profit and loss and other comprehensive income of Target Companies arising from 1 April 2018 to the completion date proportional to the Target Interests. Taishan Power undertook to perform its duty of diligence in relation to the Target Interests, and to maintain Target Companies and relevant businesses under reasonable and normal management and operation.

10.	Indemnity/compensation:

Each party shall promptly indemnify and hold the other party harmless from and against any and all losses and expenses arising out of or in connection with its breach of any provisions (including any of its representations, warranties, commitments and undertakings) of the Transfer Agreement. For avoidance of doubt, the parties agree that the amount of indemnity to be made under the Transfer Agreement shall be calculated by either Taishan Power or Shandong Company (as appropriate) based on the percentage of equity interests in the Target Company to be transferred to Shandong Company under the Transfer.

BASIC INFORMATION OF THE TARGET COMPANIES

1.	Liaocheng Thermal Power

Establishment date:

8 August 1995

Company type:

Limited liability company

Registered capital:

RMB427.74 million

Business Scope:

Electricity and thermal power generation and distribution. House repairs; construction of garden landscaping project; ordinary freight; catering services and accommodation. Cleaning services; sales of daily necessities, local sundry goods, office supplies, and labor protection appliances.

Liaocheng Thermal Power is a subsidiary of Taishan Power and completed registration for incorporation with the authority of industrial and commercial administration on 8 August 1995. Currently, Liaocheng Thermal Power’s shares are 75% held by Taishan Power and 25% held by the Asset Management Center of Liaocheng Credit Agency (a third party independent from the Company and its connected persons and associates). The Asset Management Center of Liaocheng Credit Agency has given its written consent to the Transfer and waived its pre- emptive right with respect to the Transfer.

Certain key financial information of Liaocheng Thermal Power (under PRC GAAP)

The audited profit before income tax expenses and net profit of Liaocheng Thermal Power for the year of 2016 are RMB62,781,582.56 and RMB44,957,305.11, respectively. According to the audited financial statements of Liaocheng Thermal Power as at and for the year ended 31 December 2017, as at 31 December 2017, the total asset of Liaocheng Thermal Power was RMB 933,801,813.25, the total liability was RMB394,480,282.12, the total owner’s equity was RMB539,321,531.13. For the year of 2017, Liaocheng Thermal Power’s operating revenue was RMB555,121,540.54, profit before income tax expenses was RMB59,325,425.19, and net profit was RMB45,927,334.35.

According to the unaudited financial statements of Liaocheng Thermal Power as at and for the 3-month period ended 31 March 2018, as at 31 March 2018, the total asset of Liaocheng Thermal Power was RMB903,151,292.79, the total liability was RMB425,859,626.96, the total owner’s equity was RMB477,291,665.83; during the period from January to March 2018, Liaocheng Thermal Power’s operating revenue was RMB179,682,815.41, profit before income tax expenses was RMB39,229,122.29, and net profit was RMB29,421,841.71.

The target of the Transfer includes the Liaocheng Thermal Power Interest owned by Taishan Power. Taishan Power guaranteed that the ownership of Liaocheng Thermal Power Interest is clearly defined and free from any mortgage, pledge, lien, third-party interest or other impediments of the transfer of ownership, and that the Liaocheng Thermal Power Interest is not subject to any dispute, litigation, arbitration or other legal proceedings.

Upon completion of the Transfer, Liaocheng Thermal Power will become a subsidiary of Shandong Company, and its financial data will be consolidated into the Company’s consolidated financial statements. The Company has not provided Liaocheng Thermal Power with guarantees or appointed Liaocheng Thermal Power for entrusted financial management, nor is Liaocheng Thermal Power in possession of any funds of the Company.

2.	Laizhou Wind Power

Establishment date:

13 October 2006

Company type:

Other limited liability company

Registered capital:

RMB90 million

Business scope:

Wind power

Laizhou Wind Power is a subsidiary of Taishan Power and completed registration for incorporation with the authority of industrial and commercial administration on 13 October 2006. Currently, Laizhou Wind Power’s shares are 80% held by Taishan Power and 20% held by Yantai Dongyuan Investment Co., Ltd. (a third party independent from the Company, and its connected persons and associates). Yantai Dongyuan Investment Co., Ltd. has given its written consent to the Transfer and waived its pre-emptive right with respect to the Transfer.

Certain key financial information of Laizhou Wind Power (under PRC GAAP)

The audited loss before income tax expenses and net loss of Laizhou Wind Power for the year of 2016 are RMB16,052,662.90 and RMB16,052,662.90, respectively. According to the audited financial statements of Laizhou Wind Power as at and for the year ended 31 December 2017, as at 31 December 2017, the total asset of Laizhou Wind Power was RMB680,390,482.51, the total

liability was RMB686,001,415.12, the total owner’s equity was RMB-5,610,932.61; for the year of 2017, Laizhou Wind Power’s operating revenue was RMB65,979,968.30, loss before income tax expenses was RMB48,652,642.89, and net loss was RMB48,652,642.89.

According to the audited financial statements of Laizhou Wind Power as at and for the 3-month period ended 31 March 2018, as at 31 March 2018, the total asset of Laizhou Wind Power was RMB685,849,320.10, the total liability was RMB685,446,717.68, the total owner’s equity was RMB402,602.42; during the period from January to March 2018, Laizhou Wind Power’s operating revenue was RMB24,256,833.03, profit before income tax expenses was RMB6,013,535.03, and net profit was RMB6,013,535.03.

The target of the Transfer includes the Laizhou Wind Power Interest owned by Taishan Power. Taishan Power guaranteed that the ownership of Laizhou Wind Power Interest is clearly defined and free from any mortgage, pledge, lien, third-party interest or other impediments of the transfer of ownership, and that the Laizhou Wind Power Interest are not subject to any dispute, litigation, arbitration or other legal proceedings.

Upon completion of the Transfer, Laizhou Wind Power will become a subsidiary of Shandong Company. The Company has not provided Laizhou Wind Power with guarantees or appointed Laizhou Wind Power for entrusted financial management, nor is Laizhou Wind Power in possession of any funds of the Company.

3.	Laiwu Thermal Power

Establishment date:

29 June 2003

Company type:

Other limited liability company

Registered capital:

RMB540 million

Business scope:

Generation and sales of electricity; generation and supply of heat power; R&D of electricity energy.

Laiwu Thermal Power is a subsidiary of Taishan Power and completed registration for incorporation with the authority of industrial and commercial administration on 29 June 2003. Currently, Laiwu Thermal Power’s shares are 80% held by Taishan Power and 20% held by Laiwu Economic Development and Investment Co., Ltd. (a third party independent from the Company and its connected persons and associates). Laiwu Economic Development and Investment Co., Ltd. has given its written consent to the Transfer and waived its pre-emptive right with respect to the Transfer.

Certain key financial information of Laiwu Thermal Power (under PRC GAAP)

The audited profit before income tax expense and net profit of Laiwu Thermal Power for the year of 2016 are RMB48,751,078.34 and RMB26,614,117.58, respectively. According to the audited financial statements of Laiwu Thermal Power as at and for the year ended 31 December 2017, as at 31 December 2017, the total asset of Laiwu Thermal Power was RMB2,124,965,364.62, the total liability was RMB1,635,512,790.52, the total owner’s equity was RMB489,452,574.10; for the year of 2017, Laiwu Thermal Power’s operating revenue was RMB1,079,349,145.43, loss before income tax expense was RMB77,921,284.11, and net loss was RMB81,620,128.62.

According to the audited financial statements of Laiwu Thermal Power as at and for the 3- month period ended 31 March 2018, as at 31 March 2018, the total asset of Laiwu Thermal Power was RMB2,056,413,316.14, the total liability was RMB1,578,665,040.83, the total owner’s equity was RMB477,748,275.31; during the period from January to March 2018, Laiwu Thermal Power’s operating revenue was RMB304,300,905.92, loss before income tax expenses was RMB11,704,298.79, and net loss was RMB11,704,298.79.

The target of the Transfer includes the Laiwu Thermal Power Interest owned by Taishan Power. Taishan Power guaranteed that the ownership of Laiwu Thermal Power Interest is clearly defined and free from any mortgage, pledge, lien, third-party interest or other impediments of the transfer of ownership, and that the Laiwu Thermal Power Interest is not subject to any dispute, litigation, arbitration or other legal proceedings.

Upon completion of the Transfer, Laiwu Thermal Power will become a subsidiary of Shandong Company, and its financial data will be consolidated into the Company’s consolidated financial statements. The Company has not provided Laiwu Thermal Power with guarantees or appointed Laiwu Thermal Power for entrusted financial management, nor is Laiwu Thermal Power in possession of funds of the Company.

4.	Laiwu Power Generation

Establishment date:

10 November 2009

Company type:

Other limited liability company

Registered capital:

RMB1.80 billion

Business scope:

Electricity generation and distribution; thermal production and supply; coal sales.

Laiwu Power Generation is a subsidiary of Shandong Company and completed registration for incorporation with the authority of industrial and commercial administration on 10 November 2009. Currently, Laiwu Power Generation’s shares are 80% held by Shandong Company, 15% held by Taishan Power and 5% held by Laiwu Economic Development and Investment Co., Ltd. (a third party independent from the Company and its connected persons and associates). Laiwu Economic Development and Investment Co., Ltd. has given its written consent to the Transfer and waived its pre-emptive right with respect to the Transfer.

Certain key financial information of Laiwu Power Generation (under PRC GAAP)

The audited profit before income tax expenses and net profit of Laiwu Power Generation for the year of 2016 are RMB349,854,794.66 and RMB276,106,277.75, respectively. According to the audited financial statements of Laiwu Power Generation as at and for the year ended 31 December 2017, as at 31 December 2017, the total asset of Laiwu Power Generation was RMB8,431,688,639.84, the total liability was RMB6,442,531,307.34, the total owner’s equity was RMB1,989,157,332.50; for the year of 2017, Laiwu Power Generation’s operating revenue was RMB4,364,265,473.59, profit before income tax expenses was RMB219,357,316.14, and net profit was RMB163,133,640.44.

According to the audited financial statements of Laiwu Power Generation as at and for the 3- month period ended 31 March 2018, as at 31 March 2018, the total asset of Laiwu Power Generation was RMB 8,413,344,629.31, the total liability was RMB6,402,031,387.95, the total owner’s equity was RMB2,011,313,241.36; during the period from January to March 2018, Laiwu Power Generation’s operating revenue was RMB983,760,386.41, profit before income tax expenses was RMB29,541,211.82, and net profit was RMB22,155,908.86.

The target of the Transfer includes the Laiwu Power Generation Interest owned by Taishan Power. Taishan Power guaranteed that the ownership interests in Laiwu Power Generation is clearly defined and free from any mortgage, pledge, lien, third-party interest or other impediments of the transfer of ownership, and that the Laiwu Thermal Power Interest is not subject to any dispute, litigation, arbitration or other legal proceedings.

VALUATION OF TARGET INTERESTS

1.	Liaocheng Thermal Power

(1)

Valuation approach and results

In accordance with the Asset Valuation Report Zhong Lian Ping Bao Zi (2018) No. 985 issued by China United Assets Appraisal Group Co., Ltd. which is qualified to practice securities and futures related businesses, with 31 March 2018 as the base date, the detailed valuation approach and results for Liaocheng Thermal Power are as follows:

Unit: RMB10,000

Company name	Percentage of equity interest	Book value of shareholders’ equity	Approach adopted	Appraised value of shareholders’ equity	Increase/ decrease	Increase/Decrease (%)
Liaocheng Thermal Power	75%	47,489.36	Asset-based approach	86,926.50	39,437.14	83.04

According to applicable laws, the said asset valuation report has been duly filed in compliance with state-owned asset appraisal procedure.

(2)

Valuation assumptions as set out in the valuation report

(i)

General assumptions

1.

Transaction assumption

The transaction assumption assumes all assets to be valued are in the course of transaction and the valuation by the valuer is based on simulated market including terms of transaction of the target assets. Transaction assumption is the most basic pre-condition for the conduct of asset valuation.

2.

Open market assumption

The open market assumption assumes that both parties to the assets transaction or the proposed assets transaction in the market are in equal position and have opportunities and time to obtain sufficient market information in order to make rational judgments on the assets including their functions, purposes and transaction prices. The basis of open market assumption is that the assets can be traded openly in the market.

3.

Continuing operations of assets assumption

It is assumed that the assets to be valued can be used continuously based on the current purpose, method of operation, scale, frequency and environmental conditions, etc., or can be used on a changed basis, where in such case, the corresponding valuation method, parameters and basis are determined accordingly.

(ii)

Specific assumptions

1.

No material changes have occurred in existing national policies such as macroeconomic, financial and industrial policies.

2.

No material changes occur in the social economic environment of the valuation target and effective policies such as taxation and tax rates during the forecast period.

3.

During the forecast period, the management of the valuation target have duly performed their duties and continue to maintain the existing operational management model on the base date for continuous operation.

4.

The acquisition and utilization methods of the sites for production and business operation of the valuation target continue in the mode as of the base date of valuation.

5.

The valuation target will maintain and will not have any substantial changes as to its asset size, composition, principal business activities, product structure, the composition of its income and costs, marketing strategies and costs control as continuously adopted in recent years while disregarding the profit and loss out of changes in the asset size and composition, principal business activities, product structure, etc. that may result from any changes in management, operational strategy, business environment, etc.

6.

During the forecast period, all expenses incurred by the valuation target, will be in line with the basis as of the current level, follow the trends over recent years without significant changes and move in tandem with changes in operation scale. Considering that the monetary capitals or bank deposits of the company will change frequently during the production and operating periods and that idle capital has been considered as surplus asset, the appraisal does not take into account any interest incomes of deposits or any uncertain profit and loss other than interest-bearing debts.

7.

It is assumed that the entities being appraised will not construct new power generation units upon expiration of the economic life of existing power generation units, and relevant assets will be disposed of by dismantling.

8.

Assumption in relation to the recovered value of the assets upon expiration of the economic life of power generation units: the recovered value of land use right shall be calculated based on the appraised value on the base date of valuation and the remaining years at the end of the forecast period; except the main plant which shall have a value of 0, the recovered value of housing and buildings are calculated based on the appraised value by the cost approach and

the remaining years at the end of the forecast period. Price movements of the assets that may occur during the period from the base date to the disposal at the end of the period are not considered for the valuation.

9.

The impact of inflation is not taken into account in the valuation.

10.

Pursuant to the Policies on Technologies Used for Prevention and Treatment of Pollution in Thermal Power Plants issued by the Ministry of Environmental Protection on 10 January 2017, the elimination standard for small thermal power generating units is further raised, with priority of elimination given to sub-300,000-kw generating units that fail to meet energy efficiency and environmental protection standards after renovation. The average coal consumption for power supply of the two 140MV generating units of Liaocheng Thermal Power was lower than 300g standard coal/kWh in 2017 after the High Back Pressure renovation. The said generating units were therefore not included in the closure and suspension scope regulated by the local government. In the valuation, it is assumed that the economic lives of the generating units are the same as that on the Electric Power Business Licenses, and the possibility of the generating units being closed or suspended is disregarded.

11.

It is assumed that all assets under valuation are based on the actual inventories as of the base date of valuation, and the domestic effective prices on the base date of valuation are used as the basis for the present market prices of assets.

12.

It is assumed that all basic information and financial information provided by the instructing party and the entities being appraised are true, correct and complete.

13.

It is assumed that the scope of valuation shall be subject to the valuation declaration forms provided by the instructing party and the entities being appraised without considering any possible contingent assets or contingent liabilities out of the lists provided by the instructing party and the entities being appraised; If there is any change in the aforesaid conditions, the valuation results normally will become invalid.

2.	Laizhou Wind Power

(1)

Valuation approach and results

In accordance with the Asset Valuation Report Zhong Lian Ping Bao Zi (2018) No. 984 issued by China United Assets Appraisal Group Co., Ltd., which is qualified to practice securities and futures related businesses, with 31 March 2018 as the base date, the detailed valuation approach and results for Laizhou Wind Power are as follows:

Unit: RMB10,000

Company name	Percentage of equity interest	Book value of shareholders’ equity	Approach adopted	Appraised value of shareholders’ equity	Increase/ decrease	Increase/ Decrease (%)
Laizhou Wind Power	80%	40.26	Income approach	130.75	90.49	224.76

According to applicable laws, the said asset valuation report has been duly filed in compliance with state-owned asset appraisal procedure.

(2)

Valuation assumptions as set out in the valuation report

(i)

General assumptions

1.

Transaction assumption

The transaction assumption assumes all assets to be valued are in the course of transaction and the valuation by the valuer is based on simulated market including terms of transaction of the target assets. Transaction assumption is the most basic pre-condition for the conduct of asset valuation.

2.

Open market assumption

Open market assumption assumes that both parties to the assets transaction or the proposed assets transaction in the market are in equal position and have opportunities and time to obtain sufficient market information in order to make rational judgments on the assets including their functions, purposes and transaction prices. The basis of open market assumption is that the assets can be traded openly in the market.

3.

Continuing operations of assets assumption

It is assumed that the assets to be valued can be used continuously based on the current purpose, method of operation, scale, frequency and environmental conditions, etc., or can be used on a changed basis, where in such case, the corresponding valuation method, parameters and basis are determined accordingly.

(ii)

Specific assumptions

1.

No material changes have occurred in existing national policies such as macroeconomic, financial and industrial policies.

2.

No material changes occur in the social economic environment of the valuation target and effective policies such as taxation and tax rates during the forecast period.

3.

During the forecast period, the management of the valuation target have duly performed their duties and continue to maintain the existing operational management model on the base date for continuous operation.

4.

The acquisition and utilization methods of the sites for production and business operation of the valuation target continue in the mode as of on the base date of valuation.

5.

The valuation target will maintain and will not have any substantial changes as to its asset size, composition, principal business activities, product structure, the composition of its income and costs, marketing strategies and costs control as continuously adopted in recent years, while disregarding the profit and loss out of changes in the asset size and composition, principal business activities, product structure, etc. that may result from any changes in management, operational strategy, business environment, etc.

6.

During the forecast period, all expenses incurred by the valuation target, will be in line with the basis as of the current level, follow the trends over recent years without significant changes and move in tandem with changes in operation scale. Considering that the monetary capitals or bank deposits of the company will change frequently during the production and operating periods and that idle capital has been considered as surplus asset, the appraisal does not take into account any interest incomes of deposits or any uncertain profit and loss other than interest-bearing debts.

7.

It is assumed that the entities being appraised will not construct new power generation units following the expiration of the economic life of existing power generation units, and relevant assets will be disposed of by dismantling.

8.

Assumption in relation to the recovered value of the assets upon expiration of the economic life of power generation units: the recovered value of land use right shall be calculated based on the appraised value on the base date of valuation and the remaining years at the end of the forecast period; except the main plant which shall have a value of 0, the recovered value of housing and buildings are calculated based on the appraised value by the cost approach and

the remaining years at the end of the forecast period. Price movements of the assets that may occur during the period from the base date to the disposal at the end of the period are not considered for the valuation.

9.

The impact of inflation is not taken into account in the valuation.

10.

It is assumed that all assets under valuation are based on the actual inventories as of the base date of valuation, and the domestic effective prices on the base date of valuation are used as the basis for the present market prices of assets.

11.

It is assumed that all basic information and financial information provided by the instructing party and the entities being appraised are true, correct and complete.

12.

It is assumed that the scope of valuation shall be subject to the valuation declaration forms provided by the instructing party and the entities being appraised without considering any possible contingent assets and contingent liabilities out of the lists provided by the instructing party and the entities being appraised. If there is any change in the aforesaid conditions, the valuation results normally will become invalid.

3.	Laiwu Thermal Power

(1)

Valuation approach and results

In accordance with the Asset Valuation Report Zhong Lian Ping Bao Zi (2018) No. 983 issued by China United Assets Appraisal Group Co., Ltd., which is qualified to practice securities and futures related businesses, with 31 March 2018 as the base date, the detailed valuation approach and results for Laiwu Thermal Power are as follows:

Unit: RMB10,000

Company name	Percentage of equity interest	Book value of shareholders’ equity	Approach adopted	Appraised value of shareholders’ equity	Increase/ decrease	Increase/ Decrease (%)
Laiwu Thermal Power	80%	47,774.84	Asset-based approach	65,044.57	17,269.73	36.15

According to applicable laws, the said asset valuation report has been duly filed in compliance with state-owned asset appraisal procedure.

(2)

Valuation assumptions as set out in the valuation report

(i)

General assumptions

1.

Transaction assumption

The transaction assumption assumes all assets to be valued are in the course of transaction and the valuation by the valuer is based on simulated market including terms of transaction of the target assets. Transaction assumption is the most basic pre-condition for the conduct of asset valuation.

2.

Open market assumption

Open market assumption assumes that both parties to the assets transaction or the proposed assets transaction in the market are in equal position and have opportunities and time to obtain sufficient market information in order to make rational judgments on the assets including their functions, purposes and transaction prices. The basis of open market assumption is that the assets can be traded openly in the market.

3.

Continuing operations of assets assumption

It is assumed that the assets to be valued can be used continuously based on the current purpose, method of operation, scale, frequency and environmental conditions, etc., or can be used on a changed basis, where in such case, the corresponding valuation method, parameters and basis are determined accordingly.

(ii)

Specific assumptions

1.

No material changes have occurred in existing national policies such as macroeconomic, financial and industrial policies.

2.

No material changes occur in the social economic environment of the valuation target and effective policies such as taxation and tax rates during the forecast period.

3.

During the forecast period, the management of the valuation target have duly performed their duties and continue to maintain the existing operational management model on the base date for continuous operation.

4.

The acquisition and utilization methods of the sites for production and business operation of the valuation target continue in the mode as of the base date of valuation.

5.

The valuation target will maintain and will not have any substantial changes as to its asset size, composition, principal business activities, product structure, the composition of its income and costs, marketing strategies and costs control as continuously adopted in recent years, while disregarding the profit and loss out of changes in the asset size and composition, principal business activities, product structure, etc. that may result from any changes in management, operational strategy, business environment, etc.

6.

During the forecast period, all expenses incurred by the valuation target, will be in line with the basis as of the current level, will follow the trends over recent years without significant changes and move in tandem with changes in operation scale. Considering that the monetary capitals or bank deposits of the company will change frequently during the production and operating periods and that idle capital has been considered as surplus asset, the appraisal does not take into account any interest incomes of deposits or any uncertain profit and loss other than interest-bearing debts.

7.

It is assumed that the entities being appraised will not construct new power generation units following the expiration of the economic life of existing power generation units, and relevant assets will be disposed of by dismantling.

8.

Assumption in relation to the recovered value of the assets upon expiration of the economic life of power generation units: the recovered value of land use right shall be calculated based on the appraised value on the base date of valuation and the remaining years at the end of the forecast period; except the main plant which shall have a value of 0, the recovered value of housing and buildings are calculated based on the appraised value by the cost approach and the remaining years at the end of the forecast period. Price movements of the assets that may occur during the period from the base date to the disposal at the end of the period are not considered for the valuation.

9.

The impact of the value of alternative power index upon disposal at the end of the period on its appraised value is not considered for the valuation.

10.

The impact of inflation is not taken into account in the valuation.

11.

It is assumed that all assets under valuation are based on the actual inventories as of the base date of valuation, and the domestic effective prices on the base date of valuation are used as the basis for the present market prices of assets.

12.

It is assumed that all basic information and financial information provided by the instructing party and the entities being appraised are true, correct and complete.

13.

It is assumed that the scope of valuation shall be subject to the valuation declaration forms provided by the instructing party and the entities being appraised without considering any possible contingent assets and contingent liabilities out of the lists provided by the instructing party and the entities being appraised. If there is any change in the aforesaid conditions, the valuation results normally will become invalid.

4.	Laiwu Power Generation

(1)

Valuation approach and results

In accordance with the Asset Valuation Report Zhong Lian Ping Bao Zi (2018) No. 982 issued by China United Assets Appraisal Group Co., Ltd., which is qualified to practice securities and futures related businesses, with 31 March 2018 as the base date, the detailed valuation approach and results for Laiwu Power Generation are as follows:

Unit: RMB10,000

Company name	Percentage of equity interest	Book value of shareholders’ equity	Approach adopted	Appraised value of shareholders’ equity	Increase/ decrease	Increase/ Decrease (%)
Laiwu Power Generation	15%	201,131.33	Income approach	417,770.78	216,639.45	107.71

According to applicable laws, the said asset valuation report has been duly filed in compliance with state-owned asset appraisal procedure.

(2)

Valuation assumptions as set out in the valuation report

(i)

General assumptions

1.

Transaction assumption

The transaction assumption assumes all assets to be valued are in the course of transaction and the valuation by the valuer is based on simulated market including terms of transaction of the target assets. Transaction assumption is the most basic pre-condition for the conduct of asset valuation.

2.

Open market assumption

Open market assumption assumes that both parties to the assets transaction or the proposed assets transaction in the market are in equal position and have opportunities and time to obtain sufficient market information in order to make rational judgments on the assets including their functions, purposes and transaction prices. The basis of open market assumption is that the assets can be traded openly in the market.

3.

Continuing operations of assets assumption

It is assumed that the assets to be valued can be used continuously based on the current purpose, method of operation, scale, frequency and environmental conditions, etc., or can be used on a changed basis, where in such case, the corresponding valuation method, parameters and basis are determined accordingly.

(ii)

Specific assumptions

1.

No material changes have occurred in existing national policies such as macroeconomic, financial and industrial policies.

2.

No material changes occur in the social economic environment of the valuation target and effective policies such as taxation and tax rates during the forecast period.

3.

During the forecast period, the management of the valuation target have duly performed their duties and continue to maintain the existing operational management model on the base date for continuous operation.

4.

The acquisition and utilization methods of the sites for production and business operation of the valuation target continue in the mode as of the base date of valuation.

5.

The valuation target will maintain and will not have any substantial changes as to its asset size, composition, principal business activities, product structure, and the composition of its income and costs, marketing strategies and costs control as continuously adopted in recent years, while disregarding the profit and loss out of changes in the asset size and composition, principal business activities, product structure, etc. that may result from any changes in management, operational strategy, business environment, etc.

6.

During the forecast period, all expenses incurred by the valuation target, will be in line with the basis as of the current level, follow the trends over recent years without significant changes and move in tandem with changes in operation scale. Considering that the monetary capitals or bank deposits of the company will change frequently during the production and operating periods and that idle capital has been considered as surplus asset, the appraisal does not take into account any interest incomes of deposits or any uncertain profit and loss other than interest-bearing debts.

7.

It is assumed that the entities being appraised will not construct new power generation units following the expiration of the economic life of existing power generation units, and relevant assets will be disposed of by dismantling.

8.

Assumption in relation to the recovered value of the assets upon expiration of the economic life of power generation units: the recovered value of land use right shall be calculated based on the appraised value on the base date and the remaining years at the end of the forecast period; except the main plant which shall have a value of 0, the recovered value of housing and buildings are calculated based on the appraised value by the cost approach and the remaining years at the end of the forecast period. Price movements of the assets that may occur during the period from the base date to the disposal at the end of the period are not considered for the valuation.

9.

The impact of the value of alternative power index upon disposal at the end of the period on its appraised value is not considered for the valuation.

10.

The impact of inflation is not taken into account in the valuation.

11.

It is assumed that all assets under valuation are based on the actual inventories as of the base date of valuation, and the domestic effective prices on the base date of valuation are used as the basis for the present market prices of assets.

12.

It is assumed that all basic information and financial information provided by the instructing party and the entities being appraised are true, correct and complete.

13.

It is assumed that the scope of valuation shall be subject to the valuation declaration forms provided by the instructing party and the entities being appraised without considering any possible contingent assets and contingent liabilities out of the lists provided by the instructing party and the entities being appraised. If there is any change in the aforesaid conditions, the valuation results normally will become invalid.

PRICING OF THE TRANSFER

Shandong Xinneng Taishan Power Generation Co., Ltd. is a company with its shares listed on Shenzhen Stock Exchange. HETHC, which is wholly owned by Huaneng Group, is the controlling shareholder thereof.

On 1 February 2018, Shandong Xinneng Taishan Power Generation Co., Ltd. sold (among others) the Liaocheng Thermal Power Interest, Laizhou Wind Power Interest, Laiwu Thermal Power Interest, and Laiwu Power Generation Interest to Taishan Power. Such transactions were completed on 1 February 2018. The considerations paid by Taishan Power for such transfer of the Liaocheng Thermal Power Interest, Laizhou Wind Power Interest, Laiwu Thermal Power Interest and Laiwu Power Generation Interest were RMB499,510,900, RMB2,604,300, RMB502,127,000.00 and RMB592,639,700.00,

respectively.

Based on the asset valuation results of the Target Companies, upon agreement by the parties, Shandong Company shall pay Taishan Power a total consideration of RMB1,800,020,000 for the Transfer.

The consideration of the Transfer is determined based on the asset valuation results of Liaocheng Thermal Power, Laizhou Wind Power, Laiwu Thermal Power, Laiwu Power Generation as at 31 March 2018, of which, the valuations of Laizhou Wind Power and Laiwu Power Generation adopted the income approach. The Board of the Company (and Independent Non-Executive Directors) considered that the selection of important valuation parameters such as the analysis principle of valuation value, the calculation model and expected earnings adopted, earnings period, discount rate which the valuation institution relied on were correct and the valuation methods and conclusions were reasonable pursuant to the valuation reports and illustrations of valuation methods offered by the valuation institution.

As the valuation reports of Laizhou Wind Power and Laiwu Power Generation adopted the income approach, such valuations constitute profit forecast under Rule 14.61 of the Hong Kong Listing Rules. In accordance with Rule 14.62(2) of the Hong Kong Listing Rules, the Company has engaged KPMG (“KPMG”), to report on the calculation of the discounted future cash flows of the profit forecast of Laizhou Wind Power (“Laizhou Wind Power Profit Forecast”) and the profit forecast of Laiwu Power Generation (“Laiwu Power Generation Profit Forecast”). KPMG is of the view that so far as the calculations are concerned, the discounted future cash flows have been properly compiled in all material respects in accordance with the bases and assumptions adopted by the Directors as set out in the valuation.

To the knowledge of Directors, have made all reasonable inquiries, China United Assets Appraisal Group Co., Ltd. is a third party independent of the Company and Connected Persons.

The key assumptions of Laizhou Wind Power Profit Forecast and Laiwu Power Generation Profit Forecast have been set forth herein. The Board has reviewed relevant profit forecasts and considered that Laizhou Wind Power Profit Forecast and Laiwu Power Generation Profit Forecast have been

made after careful consideration and inquiry. The report on Laizhou Wind Power Profit Forecast and Laiwu Power Generation Profit Forecast issued by KPMG in accordance with Rule 14.62 (2) of Hong Kong Listing Rules and the letter from the Board have been set forth in Appendix I and Appendix II hereto, respectively.

The following are the qualifications of the experts who have given opinions or advice which are contained in this announcement:

Name	Qualification

KPMG	Certified Public Accountants, Hong Kong

China United Assets Appraisal Group Co., Ltd.

Asset Valuer, PRC

To the best of the knowledge and belief of the directors of the Company, as at the date of this announcement, the above experts were not beneficially interested in the share capital of the Company and its subsidiaries nor did it have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in the Company and its subsidiaries.

As at the date of this announcement, the above experts did not have any direct or indirect interest in any assets which have acquired or disposed of by or leased to the Company and its subsidiaries, or were proposed to be acquired or disposed of by or leased to the Company and its subsidiaries since 31 December 2017 (being the date to which the latest published audited consolidated accounts of the Company were made up).

Each of the experts mentioned above has given and has not withdrawn its consent to the publication of this announcement with inclusion of its letter, report or statement(s) and all references to its name and logo in the form and context in which it appears.

PURPOSE OF THE TRANSFER AND THE EFFECT ON THE COMPANY

The Transfer is the specific implementation of Huaneng Group’s undertaking to avoid horizontal competition with the Company, which is conducive for the Company to further expand its scale, increase market share and enhance the Company’s competitiveness. The total assets of the Target Companies of the Transfer accounted for approximately 1% of the Company’s total assets, and the Transfer has no material impact on the Company’s operating conditions and financial position.

 

 

IMPLICATIONS UNDER THE HONG KONG LISTING RULES

According to relevant percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, the Transfer does not constitute a notifiable transaction under Chapter 14 of the Hong Kong Listing Rules. However, the Transfer constitutes a connected transaction under Chapter 14A of the Hong Kong Listing Rules. As the scale of the Transfer exceeds 0.1% but does not exceed 5% of the applicable percentage ratios (other than the profit ratio) as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, the Company is only required to comply with the reporting and announcement requirements under Rules 14A.71 and 14A.35 of the Hong Kong Listing Rules but is exempt from independent shareholders’ approval requirements.

The Board of Directors of the Company has considered and approved the resolution regarding the Transfer. Messrs. Cao Peixi, Huang Jian and Wang Yongxiang, all being Directors of the Company having related relationship, abstained from voting on the board resolution relating to the Transfer. The resolution was voted by Directors who are not unrelated to the Transfer. The Directors (including independent non-executive Directors) are of the view that, Transfer Agreement (and the transaction as contemplated thereby) was entered into: (i) on normal commercial terms (on arm’s length basis or on terms no less favourable to the Company than terms available from independent third parties); (ii) on terms that are fair and reasonable and are in the interests of the Company and its shareholders as a whole and (iii) in the ordinary and usual course of business of the Company.

DEFINITIONS

“Acquisition”/“Transfer”

the acquisition of the Liaocheng Thermal Power Interest, Laizhou Wind Power Interest, Laiwu Thermal Power Interest and Laiwu Power Generation Interest by Shandong Company from Taishan Power as contemplated by the Transfer Agreement.

“associate”

has the meaning ascribed to it in the Hong Kong Listing Rules;

“Company”

Huaneng Power International, Inc.;

“Director(s)”

the director(s) of the Company (including independent non- executive directors);

“HETHC”

Huaneng Energy and Transportation (Holding) Company Limited;

“HIPDC”

Huaneng International Power Development Corporation;

“Hong Kong Listing Rules”

the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange;

“Huaneng Finance”

China Huaneng Finance Corporation Limited;

“Huaneng Group”

China Huaneng Group Co., Ltd.;

“Huaneng HK”

China Hua Neng Group Hong Kong Limited;

“Laiwu Power Generation”

Huaneng Laiwu Power Generation Limited;

“Laiwu Power Generation Interest”

the 15% equity interests held by Taishan Power in the registered capital of Laiwu Power Generation;

 

“Laiwu Thermal Power”

Shandong Huaneng Laiwu Thermal Power Company Limited;

“Laiwu Thermal Power Interest”

the 80% equity interests held by Taishan Power in the registered capital of Laiwu Thermal Power;

“Laizhou Wind Power”

Shandong Huaneng Laizhou Wind Power Generation Company Limited;

 

“Laizhou Wind Power Interest”

the 80% equity interests held by Taishan Power in the registered capital of Laizhou Wind Power;

 

“Liaocheng Thermal Power”

Shandong Huaneng Liaocheng Thermal Power Company Limited;

“Liaocheng Thermal Power Interest”

the 75% equity interests held by Taishan Power in the registered capital of Liaocheng Thermal Power;

 

“PRC” or “China”

the People’s Republic of China;

“RMB”

Renminbi, the lawful currency of the PRC;

“Shandong Company”

Huaneng Shandong Power Generation Limited;

“Stock Exchange”

The Stock Exchange of Hong Kong Limited;

“subsidiary(ies)”

has the meaning ascribed to it in the Hong Kong Listing Rules; “Taishan Power”Huaneng Taishan Power Generation Limited;

“Target Companies”

collectively, Liaocheng Thermal Power, Laizhou Wind Power, Laiwu Thermal Power and Laiwu Power Generation;

“Target Interests”

collectively the Liaocheng Thermal Power Interest, Laizhou Wind Power Interest, Laiwu Thermal Power Interest, and Laiwu Power Generation Interest held by Taishan Power; and

“Transfer Agreement”

the agreement regarding the transfer of the Target Interests entered into between Shandong Company and Taishan Power on 31 July 2018.

	By order of the Board
	Huaneng Power International, Inc.
	Huang Chaoquan
	Company Secretary

As of the date of the announcement, the directors of the Company are:

Cao Peixi (Executive Director)		Yue Heng (Independent Non-executive Director)
Huang Jian (Non-executive Director)		Xu Mengzhou (Independent Non-executive Director)
Wang Yongxiang (Non-executive Director)		Liu Jizhen (Independent Non-executive Director)
Mi Dabin (Non-executive Director)		Xu Haifeng (Independent Non-executive Director)
Guo Hongbo (Non-executive Director)		Zhang Xianzhi (Independent Non-executive Director)
Cheng Heng (Non-executive Director)
Lin Chong (Non-executive Director)

Appendix I

The following is the text of a report received from the Company’s auditor, KPMG, Certified Public Accountants, Hong Kong, for inclusion in this announcement.

REPORT ON THE DISCOUNTED FUTURE CASH FLOWS IN CONNECTION WITH THE ASSETS VALUATIONS OF HUANENG LAIWU POWER GENERATION CO., LTD. AND SHANDONG HUANENG LAIZHOU WIND POWER CO., LTD.

TO THE BOARD OF DIRECTORS OF HUANENG POWER INTERNATIONAL, INC.

We refer to the discounted future cash flows on which the assets valuations (the “Valuations”) dated 6 July 2018 prepared by China United Assets Appraisal Group Co., Ltd. in respect of the appraisal of the fair value of Huaneng Laiwu Power Generation Co., Ltd., and Shandong Huaneng Laizhou Wind Power Co., Ltd. (the “Target Companies”) as at 31 March 2018 are based. The Valuations are prepared based on their respective discounted future cash flows and are regarded as profit forecasts under paragraph 14.61 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

Directors’ Responsibilities

The directors of Huaneng Power International, Inc. (the “Directors”) are responsible for the preparation of the discounted future cash flows in accordance with the bases and assumptions determined by the Directors and as set out in the Valuations. This responsibility includes carrying out appropriate procedures relevant to the preparation of the discounted future cash flows for the Valuations and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

The firm applies Hong Kong Standard on Quality Control 1 “Quality Control for Firms That Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements” issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibilities

Our responsibility is to report, as required by paragraph 14.62(2) of the Listing Rules, on the calculations of the discounted future cash flows used in the Valuations. The discounted future cash flows do not involve the adoption of accounting policies.

Basis of opinion

We conducted our engagement in accordance with the Hong Kong Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” issued by the HKICPA. This standard requires that we plan and perform our work to obtain reasonable assurance as to whether, so far as the calculations are concerned, the Directors have properly compiled the discounted future cash flows in accordance with the bases and assumptions adopted by the Directors as set out in the Valuations. We performed procedures on the arithmetical calculations and the compilations of the discounted future cash flows in accordance with the bases and assumptions adopted by the Directors. Our work is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing issued by the HKICPA. Accordingly, we do not express an audit opinion.

Opinion

In our opinion, so far as the calculations are concerned, the discounted future cash flows have been properly compiled in all material respects in accordance with the bases and assumptions adopted by the Directors as set out in the Valuations.

Other matters

Without qualifying our opinion, we draw to your attention that we are not reporting on the appropriateness and validity of the bases and assumptions on which the discounted future cash flows are based and our work does not constitute any valuation of the Target Companies or an expression of audit or review opinion on the Valuations.

The discounted future cash flows depend on future events and on a number of assumptions which cannot be confirmed and verified in the same way as past results and not all of which may remain valid throughout the period. Further, since the discounted future cash flows relates to the future, actual results are likely to be different from the discounted future cash flows because events and circumstances frequently do not occur as expected, and the differences may be material. Our work has been undertaken for the purpose of reporting solely to you under paragraph 14.62(2) of the Listing Rules and for no other purpose. We accept no responsibility to any other person in respect of, arising out of or in connection with our work.

KPMG

Certified Public Accountants

Hong Kong

31 July 2018

Appendix II

The following is the text of the letter form the Board for the inclusion into this Announcement.

Listing Division

The Stock Exchange of Hong Kong Limited

11/F, One International Finance Centre

1 Harbour View Street, Central

Hong Kong

31 July 2018

 

Dear Sirs,

 

Company:

Huaneng Power International, Inc. (Stock code: 902) (the “Company”)

Subject:

Profit forecast – confirmation letter under the requirements of Rule 14.62(3) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”)

Reference is made to the announcement of the Company dated 1 August 2018 in relation to the discounted future cash flows on which the assets valuations (the “Valuations”) dated 6 July 2018 prepared by China United Assets Appraisal Group Co., Ltd. in respect of the appraisal of the fair value of Huaneng Laiwu Power Generation Co., Ltd., and Shandong Huaneng Laizhou Wind Power Co., Ltd. as at 31 March 2018 are based. Unless the context otherwise requires, terms defined in the Announcement shall have the same meanings when used herein.

The Valuations are prepared based on their respective discounted future cash flows and are regarded as profit forecasts under paragraph 14.61 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

The Board of the Company has reviewed the basis and assumptions of the Valuations set out in the assets valuation reports. The Board of the Company has also considered the report dated 31 July 2018 from KPMG regarding whether the discounted future cash flows, so far as the calculations are concerned, have been properly compiled in all material respects in accordance with the bases and assumptions as set out in the Valuations.

Pursuant to the requirements of Rule 14.62(3) of the Listing Rules, the Board of the Company confirmed that the profit forecast used in the aforesaid assets valuation reports has been made after due and careful enquiry.

	By order of the Board
	Huaneng Power International, Inc.
	Cao Peixi
	Executive Director

 

 

 

 

 

Document 3

 

Consolidated operating revenue:		RMB82.405 billion
Net profit attributable to equity holders of the Company:		RMB1.731 billion
Earnings per share:		RMB0.11

Region		Power Generation								Electricity sold
		April to June 2018		Change		January to June 2018		Change		April to June 2018		Change		January to June 2018		Change
Heilongjiang Province		3.630		14.06%		6.930		8.01%		3.417		14.55%		6.503		8.12%
Coal-fired		3.343		16.61%		6.387		6.79%		3.130		17.06%		5.969		6.81%
Wind-power		0.275		-13.07%		0.528		21.05%		0.274		-11.22%		0.518		21.52%
PV		0.0127		–		0.0160		–		0.0080		–		0.0112		–
Jilin Province		2.778		40.13%		5.089		27.77%		2.643		40.81%		4.822		28.52%
Coal-fired		2.389		47.49%		4.403		28.89%		2.268		48.37%		4.161		29.57%
Wind-power		0.285		0.68%		0.519		21.92%		0.278		1.48%		0.506		23.28%
Hydro-power		0.039		3.06%		0.043		-4.59%		0.039		2.71%		0.042		-4.83%
PV		0.0064		2,259.26%		0.0122		4,391.16%		0.0063		2,284.19%		0.0121		4,465.92%
Biomass power		0.058		41.91%		0.112		16.68%		0.052		42.85%		0.101		17.97%
Liaoning Province		4.728		40.66%		9.320		8.74%		4.429		41.30%		8.654		8.00%
Coal-fired		4.550		40.54%		9.005		7.57%		4.253		41.19%		8.341		6.74%
Wind-power		0.119		16.83%		0.210		23.84%		0.118		16.91%		0.209		23.99%
Hydro-power		0.015		19.93%		0.023		64.36%		0.015		19.86%		0.022		63.74%
PV		0.0439		367.82%		0.0826		382.25%		0.0434		379.26%		0.0817		394.30%
Inner Mongolia		0.065		2.11%		0.128		14.20%		0.064		2.39%		0.126		14.12%
Wind-power		0.065		2.11%		0.128		14.20%		0.064		2.39%		0.126		14.12%
Hebei Province		3.611		-7.42%		6.439		-4.85%		3.388		-7.76%		6.050		-4.92%
Coal-fired		3.534		-7.69%		6.264		-5.66%		3.314		-8.06%		5.881		-6.01%
Wind-power		0.061		0.35%		0.144		35.66%		0.059		1.04%		0.140		61.16%
PV		0.0157		44.09%		0.0305		46.31%		0.0151		46.81%		0.0293		49.62%
Gansu Province		2.654		37.69%		6.503		27.26%		2.518		38.56%		6.178		27.56%
Coal-fired		2.163		42.28%		5.523		25.61%		2.044		43.15%		5.231		25.82%
Wind-power		0.491		20.57%		0.980		37.44%		0.475		21.72%		0.947		38.09%
Ningxia		0.0069		1,495.35%		0.0108		2,419.15%		0.0066		1,512.89%		0.0104		2,439.24%
PV		0.0069		1,495.35%		0.0108		2,419.15%		0.0066		1,512.89%		0.0104		2,439.24%
Beijing		1.755		83.22%		3.958		18.26%		1.702		82.07%		3.775		19.86%
Coal-fired		0.00		–		0.436		-59.88%		0.00		–		0.381		-59.63%
Combined Cycle		1.755		83.22%		3.522		55.79%		1.702		82.07%		3.393		53.93%

Region		Power Generation								Electricity sold
		April to June 2018		Change		January to June 2018		Change		April to June 2018		Change		January to June 2018		Change
Tianjin		1.568		6.16%		3.595		10.81%		1.474		5.40%		3.368		10.44%
Coal-fired		1.311		23.69%		2.878		6.97%		1.224		23.41%		2.672		6.51%
Combined Cycle		0.256		-38.59%		0.716		29.14%		0.249		-38.71%		0.694		28.34%
PV		0.0009		800%		0.0016		11,187.59%		0.0009		–		0.0016		–
Shanxi Province		2.247		-20.96%		4.793		-11.37%		2.081		-22.00%		4.483		-12.03%
Coal-fired		2.227		5.30%		3.596		4.41%		2.061		5.20%		3.318		4.19%
Combined Cycle		0.001		-99.90%		1.161		-40.89%		0.001		-99.91%		1.128		-41.00%
PV		0.0189		5,300%		0.0368		10,315.31%		0.0191		–		0.0370		–
Shandong Province		21.724		2.42%		42.866		2.42%		20.380		2.27%		40.113		2.28%
Coal-fired		21.399		1.70%		42.258		1.73%		20.062		1.52%		39.539		1.60%
Wind-power		0.207		55.24%		0.416		61.62%		0.201		52.20%		0.383		53.15%
PV		0.1184		222.78%		0.1923		251.39%		0.1174		249.04%		0.1909		277.56%
Henan Province		6.763		38.31%		12.693		16.74%		6.380		38.21%		11.963		16.63%
Coal-fired		6.321		44.46%		12.138		23.06%		5.947		44.60%		11.418		23.19%
Combined Cycle		0.413		-16.28%		0.495		-48.91%		0.405		-16.18%		0.485		-48.85%
Wind-power		0.021		12.28%		0.046		21.35%		0.021		12.28%		0.046		21.49%
PV		0.0072		402.1%		0.0132		823.41%		0.0071		400.54%		0.0130		820.58%
Jiangsu Province		9.823		-14.58%		20.526		-4.02%		9.317		-14.69%		19.474		-4.03%
Coal-fired		7.703		-24.43%		16.678		-11.95%		7.241		-24.89%		15.705		-12.35%
Combined Cycle		1.712		55.94%		2.957		46.93%		1.679		55.97%		2.902		46.97%
Wind-power		0.388		96.83%		0.855		104.19%		0.378		96.62%		0.834		115.06%
PV		0.0207		72.5%		0.0347		189.32%		0.0191		62.67%		0.0329		180.86%
Shanghai		4.488		24.53%		10.001		14.09%		4.246		24.50%		9.472		13.95%
Coal-fired		4.024		26.42%		9.204		17.44%		3.791		26.42%		8.693		17.39%
Combined Cycle		0.465		10.29%		0.797		-14.16%		0.455		10.52%		0.780		-14.12%
Chongqing		1.683		8.27%		4.517		7.28%		1.540		7.57%		4.173		6.67%
Coal-fired		1.547		14.34%		4.127		18.54%		1.408		13.88%		3.793		18.45%
Combined Cycle		0.136		-32.55%		0.390		-46.53%		0.132		-32.41%		0.380		-46.51%
Zhejiang Province		8.257		14.93%		14.798		10.08%		7.945		15.08%		14.231		10.19%
Coal-fired		8.020		14.02%		14.439		9.35%		7.712		14.14%		13.878		9.43%
Combined Cycle		0.219		58.90%		0.330		52.51%		0.215		59.47%		0.324		53.10%
PV		0.0187		40.49%		0.0293		29.05%		0.0186		47.32%		0.0292		33.50%

Region		Power Generation								Electricity sold
		April to June 2018		Change		January to June 2018		Change		April to June 2018		Change		January to June 2018		Change
Hubei Province		3.545		42.29%		8.064		23.46%		3.305		42.47%		7.534		23.29%
Coal-fired		3.329		44.91%		7.715		23.80%		3.111		46.07%		7.221		24.10%
Wind-power		0.103		29.89%		0.192		31.57%		0.083		6.25%		0.159		11.24%
Hydro-power		0.107		-7.24%		0.146		-4.96%		0.104		-6.83%		0.142		-4.31%
PV		0.0066		65,900%		0.0111		110,400%		0.0065		–		0.0110		–
Hunan Province		2.328		71.45%		5.526		41.41%		2.185		72.92%		5.191		42.05%
Coal-fired		2.061		86.75%		5.038		47.37%		1.922		89.75%		4.709		48.49%
Wind-power		0.160		17.62%		0.326		12.64%		0.159		17.49%		0.322		12.60%
Hydro-power		0.096		-17.26%		0.146		-26.38%		0.094		-17.32%		0.143		-26.44%
PV		0.0102		608.33%		0.0161		1,014.96%		0.0100		594.30%		0.0157		994.51%
Jiangxi Province		4.830		8.36%		10.043		11.74%		4.615		8.55%		9.609		11.86%
Coal-fired		4.737		7.31%		9.856		10.83%		4.524		7.29%		9.424		10.83%
Wind-power		0.093		115.45%		0.187		95.93%		0.091		163.61%		0.185		113.86%
Anhui Province		1.358		1.12%		2.806		-1.39%		1.296		1.13%		2.677		-1.76%
Coal-fired		1.249		-2.80%		2.620		-4.27%		1.188		-2.96%		2.497		-4.56%
Wind-power		0.073		188.72%		0.138		134.22%		0.073		189.11%		0.131		125.15%
Hydro-power		0.035		9.77%		0.048		-3.43%		0.035		9.90%		0.048		-3.42%
Fujian Province		3.049		39.70%		5.963		48.16%		2.880		40.11%		5.634		48.52%
Coal-fired		3.045		39.55%		5.957		48.01%		2.876		39.93%		5.628		48.36%
PV		0.0037		1,581.82%		0.0062		2,790.47%		0.0037		–		0.0062		–
Guangdong Province		7.683		46.87%		14.083		52.50%		7.361		47.36%		13.498		52.75%
Coal-fired		7.677		46.91%		14.072		52.55%		7.355		47.39%		13.487		52.80%
PV		0.0058		11.42%		0.0109		8.87%		0.0058		11.50%		0.0109		8.97%
Guangxi		0.132		–		0.169		–		0.127		–		0.162		–
Combined Cycle		0.132		–		0.169		–		0.127		–		0.162		–
Yunnan Province		1.601		77.77%		2.573		36.80%		1.478		77.48%		2.376		36.32%
Coal-fired		1.461		82.53%		2.264		38.84%		1.343		82.41%		2.075		38.31%
Wind-power		0.139		39.55%		0.309		23.50%		0.135		39.94%		0.301		24.01%
Guizhou Province		0.052		268.42%		0.111		226.39%		0.051		270.26%		0.109		227.83%
Wind-power		0.052		268.42%		0.111		226.39%		0.051		270.26%		0.109		227.83%

Region		Power Generation								Electricity sold
		April to June 2018		Change		January to June 2018		Change		April to June 2018		Change		January to June 2018		Change
Hainan Province		3.496		13.74%		6.661		16.02%		3.246		13.84%		6.202		16.24%
Coal-fired		3.423		14.73%		6.507		16.39%		3.175		14.90%		6.050		16.64%
Combined Cycle		0.008		317.96%		0.023		195.57%		0.007		316.26%		0.022		195.43%
Wind-power		0.017		-15.62%		0.046		-11.79%		0.016		-15.68%		0.045		-11.69%
Hydro-power		0.037		-41.55%		0.062		-22.42%		0.036		-41.69%		0.062		-22.48%
PV		0.0118		116.07%		0.0226		124.20%		0.0117		117.19%		0.0224		125.27%
Total		103.856		14.52%		208.167		11.51%		98.075		14.54%		196.387		11.51%

		The Company and its subsidiaries
Item		As of 30 June 2018		As of 31 December 2017
Ratio of liabilities to equity holders’ equity		3.30		3.30
Current ratio		0.40		0.31
Quick ratio		0.33		0.26
Item		For the six months ended 30 June 2018		For the six months ended 30 June 2017
Multiples of interest earned		1.52		1.11

		For the six months ended 30 June 2018				For the six months ended 30 June 2017				Change
		(RMB in billion)				(RMB in billion)				(%)
Net cash provided by operating activities			15.116				14.302				5.69	%
Net cash used in investing activities			(6.104	)			(20.269	)			(69.89	%)
Net cash (used in)/provided by financing activities			(2.095	)			10.269				(120.40	%)
Effect of exchange rate fluctuations on cash held			(0.010	)			0.022				(145.45	%)
Net increase in cash and cash equivalents			6.907				4.324				59.74	%
Cash and cash equivalents at beginning of the reporting period			9.282				7.811				18.83	%
Cash and cash equivalents at the end of the reporting period			16.189				12.135				33.41	%

Name of Shareholders		Total Shareholdings as at end of the reporting period		Percentage of shareholding in total issued shares (%)
Huaneng International Power Development Corporation		5,066,662,118		33.33%
HKSCC Nominees Limited*		4,019,698,699		26.44%
China Huaneng Group Co., Ltd.		1,555,124,549		10.23%
Hebei Construction & Investment Group Co., Ltd.		527,548,946		3.47%
China Hua Neng Group Hong Kong Limited		472,000,000		3.11%
Jiangsu Provincial Investment & Management Limited Liability		416,500,000		2.74%
China Securities Finance Corporation Limited		413,567,472		2.72%
Fujian Investment Development (Group) Co., Ltd.		372,818,249		2.45%
Liaoning Energy Investment (Group) Limited Liability Company		362,200,722		2.38%
Dalian Municipal Construction Investment Company Limited		301,500,000		1.98%

Name		Number of meetings to be attended		Number of meetings attended in person		Number of meetings attended by proxy		Rate of Attendance (%)
Executive Director
Cao Peixi		6		5		1		83.33% (Attendance by proxy rate of 16.67%)
Non-executive Directors
Huang Jian		6		6		0		100%
Wang Yongxiang		6		6		0		100%
Mi Dabin		6		5		1		83.33% (Attendance by proxy rate of 16.67%)
Guo Hongbo		6		5		1		83.33% (Attendance by proxy rate of 16.67%)
Cheng Heng		6		6		0		100%
Lin Chong		6		6		0		100%

Name		Number of meetings to be attended		Number of meetings attended in person		Number of meetings attended by proxy		Rate of Attendance (%)
Independent non-executive Directors
Yue Heng		6		5		1		83.33% (Attendance by proxy rate of 16.67%)
Xu Mengzhou		6		6		0		100%
Liu Jizhen		6		4		2		66.66% (Attendance by proxy rate of 33.4%)
Xu Haifeng		6		6		0		100%
Zhang Xianzhi		6		5		1		83.33% (Attendance by proxy rate of 16.67%)
Directors who had resigned
Liu Guoyue		4		4		0		100%
Fan Xiaxia		1		1		0		100%

Name of Non-executive Directors		Term of office
Huang Jian		13 June 2017-2020
Wang Yongxiang		13 June 2017-2020
Mi Dabin		13 June 2017-2020
Guo Hongbo		13 June 2017-2020
Cheng Heng		13 June 2017-2020
Lin Chong		13 June 2017-2020

Name of meeting		Date of meeting		Members who attended the meeting in person		Members who attended the meeting by proxy
First meeting of the Remuneration and Appraisal Committee of the Ninth Session of the Board in 2018		12 March 2018		Zhang Xianzhi, Liu Guoyue, Guo Hongbo, Cheng Heng, Yue Heng, Liu Jizhen and Xu Haifeng		–
Second meeting of the Remuneration and Appraisal Committee of the Ninth Session of the Board in 2018		28 June 2018		Zhang Xianzhi, Guo Hongbo, Cheng Heng, Yue Heng, Liu Jizhen and Xu Haifeng		–

Name of meeting		Date of meeting		Members who attended the meeting in person		Members who attended the meeting by proxy
First meeting of the Nomination Committee of the Ninth Session of the Board in 2018		29 March 2018		Liu Jizhen, Mi Dabin, Lin Chong, Yue Heng, Xu Mengzhou, Zhang Xianzhi		–

Name of meeting		Date of meeting		Members who attended the meeting in person		Members who attended the meeting by proxy
First meeting of the Audit Committee of the Ninth Session of the Board in 2018		24 February 2018		Yue Heng, Xu Mengzhou, Liu Jizhen, Xu Haifeng, Zhang Xianzhi		–
Second meeting of the Audit Committee of the Ninth Session of the Board in 2018		12 March 2018		Yue Heng, Xu Mengzhou, Xu Haifeng, Zhang Xianzhi		Liu Jizhen
Third meeting of the Nomination Committee of the Ninth Session of the Board in 2018		23 April 2018		Yue Heng, Xu Mengzhou, Liu Jizhen, Xu Haifeng, Zhang Xianzhi		–

	By Order of the Board
	Huaneng Power International, Inc.
	Cao Peixi
	Chairman

Cao Peixi (Executive Director)	Yue Heng (Independent Non-executive Director)
Huang Jian (Non-executive Director)	Xu Mengzhou (Independent Non-executive Director)
Wang Yongxiang (Non-executive Director)	Liu Jizhen (Independent Non-executive Director)
Mi Dabin (Non-executive Director)	Xu Haifeng (Independent Non-executive Director)
Guo Hongbo (Non-executive Director)	Zhang Xianzhi (Independent Non-executive Director)
Cheng Heng (Non-executive Director)
Lin Chong (Non-executive Director)

		Note				As at 30 June 2018				As at 31 December 2017
										(Note)
ASSETS
Non-current assets
Property, plant and equipment							278,822,750				284,328,093
Investments in associates and joint ventures							19,694,225				19,517,623
Investment property							219,368				217,406
Available-for-sale financial assets			2(b	)			–				1,604,993
Other equity instrument investments			2(b	)			2,080,871				–
Land use rights							11,212,378				11,264,785
Power generation licenses							3,880,557				3,916,246
Mining rights							1,646,271				1,646,271
Deferred income tax assets							2,008,369				2,300,091
Derivative financial assets							92,933				75,328
Goodwill							15,387,868				15,484,120
Other non-current assets							7,554,585				7,696,845
Total non-current assets							342,600,175				348,051,801
Current assets
Inventories							8,950,286				7,385,411
Other receivables and assets							5,717,279				6,081,517
Accounts receivable			4				24,878,005				25,447,595
Derivative financial assets							375,631				258,364
Bank balances and cash							16,264,513				9,364,823
Total current assets							56,185,714				48,537,710
Total assets							398,785,889				396,589,511

		Note				As at 30 June 2018				As at 31 December 2017
										(Note)
EQUITY AND LIABILITIES
Capital and reserves attributable to equity holders of the Company
Share capital							15,200,383				15,200,383
Perpetual corporate bonds							4,999,950				5,068,550
Capital surplus							24,435,402				24,114,400
Surplus reserves							8,140,030				8,140,030
Currency translation differences							(868,868	)			(675,054	)
Retained earnings							35,877,891				35,793,257
							87,784,788				87,641,566
Non-controlling interests							20,969,294				19,973,038
Total equity							108,754,082				107,614,604
Non-current liabilities
Long-term loans							118,558,847				107,030,958
Long-term bonds			6				20,486,433				15,993,833
Deferred income tax liabilities							4,288,212				4,566,680
Derivative financial liabilities							58,773				148,486
Other non-current liabilities							5,363,068				5,284,462
Total non-current liabilities							148,755,333				133,024,419

		Note				As at 30 June 2018				As at 31 December 2017
										(Note)
EQUITY AND LIABILITIES (CONTINUED)
Current liabilities
Accounts payable and other liabilities			7				35,526,103				38,900,132
Contract liabilities			2(c	)			593,675				–
Taxes payable							1,070,653				1,302,210
Dividends payable							1,948,404				1,735,426
Derivative financial liabilities							15,194				62,178
Short-term bonds			8				20,631,759				11,068,357
Short-term loans							59,525,772				80,251,348
Current portion of long-term loans							21,660,142				18,098,458
Current portion of long-term bonds			6				–				3,997,033
Current portion of other non-current liabilities							304,772				535,346
Total current liabilities							141,276,474				155,950,488
Total liabilities							290,031,807				288,974,907
Total equity and liabilities							398,785,889				396,589,511

						For the six months ended 30 June
		Note				2018				2017
										(Note i)
Operating revenue			3				82,404,919				71,433,689
Tax and levies on operations							(876,085	)			(648,556	)
Operating expenses
Fuel							(51,599,895	)			(44,001,200	)
Maintenance							(1,721,161	)			(1,715,061	)
Depreciation							(10,123,301	)			(10,146,899	)
Labor							(4,499,789	)			(4,314,259	)
Service fees on transmission and transformer facilities of HIPDC							(48,360	)			(48,360	)
Purchase of electricity							(2,197,348	)			(1,807,341	)
Others							(3,627,746	)			(3,684,999	)
Total operating expenses							(73,817,600	)			(65,718,119	)
Profit from operations							7,711,234				5,067,014
Interest income							107,974				95,234
Financial expenses, net
Interest expense							(5,138,907	)			(4,662,641	)
Exchange (loss)/gain and bank charges, net							(68,294	)			50,667
Total financial expenses, net							(5,207,201	)			(4,611,974	)
Share of profits less losses of associates and joint ventures							385,030				156,070
Loss on fair value changes of financial assets/liabilities							(1,488	)			(6,374	)
Other investment income							11,010				120,066
Profit before income tax expense			10				3,006,559				820,036
Income tax expense			11				(744,586	)			(478,875	)
Net profit							2,261,973				341,161

			For the six months ended 30 June
Note			2018				2017
							(Note i)
Other comprehensive (loss)/income, net of tax
Items that will not be reclassified to profit or loss:
Fair value changes of other equity instrument investments				(538	)			–
Share of other comprehensive loss of investees accounted for under the equity method				(46,047	)			–
Items that may be reclassified subsequently to profit or loss:
Fair value changes of available-for-sale financial asset (Note ii)				–				293,611
Share of other comprehensive loss of investees accounted for under the equity method				(147,194	)			(3,574	)
Effective portion of cash flow hedges				225,362				(248,452	)
Translation differences of the financial statements of foreign operations				(213,473	)			282,485
Other comprehensive (loss)/income, net of tax				(181,890	)			324,070
Total comprehensive income				2,080,083				665,231
Net profit attributable to:
– Equity holders of the Company				1,731,372				243,944
– Non-controlling interests				530,601				97,217
				2,261,973				341,161
Total comprehensive income attributable to:
– Equity holders of the Company				1,569,157				572,696
– Non-controlling interests				510,926				92,535
				2,080,083				665,231
Earnings per share attributable to the ordinary shareholders of the Company (expressed in RMB per share)
– Basic and diluted	12			0.11				0.02

		As at 31 December 2017				Impact on Initial application of IFRS9 Reclassification				Impact on Initial application of IFRS9 Remeasurement				Impact on Initial application of IFRS15				As at 1 January 2018
						(Note 2(b))				(Note 2(b))				Note 2(c))
Available-for-sale financial assets			1,604,993				(1,604,993	)			–				–				–
Other equity instrument investments			–				1,604,993				476,595				–				2,081,588
Total non-current assets			348,051,801				–				476,595				–				348,528,396
Total assets			396,589,511				–				476,595				–				397,066,106
Capital surplus			24,114,400				–				369,946				–				24,484,346
Total equity			107,614,604				–				369,946				–				107,984,550
Deferred income tax liabilities			4,566,680				–				106,649				–				4,673,329
Total non-current liabilities			133,024,419				–				106,649				–				133,131,068
Accounts payable and other liabilities			38,900,132				–				–				(1,504,926	)			37,395,206
Contract liabilities			–				–				–				1,504,926				1,504,926
Total current liabilities			155,950,488				–				–				–				155,950,488
Total liabilities			288,974,907				–				106,649				–				289,081,556
Total equity and liabilities			396,589,511				–				476,595				–				397,066,106

Other reserve in other comprehensive income
Transferred to fair value reserve (non-recycling) relating to equity instrument investments now measured at fair value through other comprehensive income		(574,657)
Fair value reserve (non-recycling)
Transferred from other reserve in other comprehensive income relating to equity instrument investments now measured at fair value through other comprehensive income and increase in fair value reserve (non-recycling) at 1 January 2018		944,603

For the six months ended 30 June 2018		PRC power segment				Singapore segment				All other segments				Inter-segment revenue				Total
– Sales of power and heat			75,481,830				5,302,547				–				–				80,784,377
– Sales of coal and raw material			523,659				–				–				–				523,659
– Port service			–				–				227,303				(162,768	)			64,535
– Transportation service			–				–				106,316				(82,318	)			23,998
– Others			902,819				100,774				24,975				(20,218	)			1,008,350
Total			76,908,308				5,403,321				358,594				(265,304	)			82,404,919

For the six months ended 30 June 2017		PRC power segment				Singapore segment				All other segments				Inter-segment revenue				Total
– Sales of power and heat			65,237,710				4,842,072				–				–				70,079,782
– Sales of coal and raw material			545,091				–				–				–				545,091
– Port service			–				–				219,437				(108,948	)			110,489
– Transportation service			–				–				94,823				(52,373	)			42,450
– Others			601,977				51,086				19,022				(16,208	)			655,877
Total			66,384,778				4,893,158				333,282				(177,529	)			71,433,689

		PRC power segment				Singapore segment				All other segments				Total
For the six months ended 30 June 2018
Total revenue			76,908,308				5,403,321				358,594				82,670,223
Inter-segment revenue			–				–				(265,304	)			(265,304	)
Revenue from external customers			76,908,308				5,403,321				93,290				82,404,919
Segment results			3,785,293				(194,692	)			170,866				3,761,467
Interest income			72,253				34,393				1,328				107,974
Interest expense			(4,815,582	)			(221,712	)			(52,259	)			(5,089,553	)
Impairment loss			(16	)			257				–				241
Credit loss			2,378				(4,155	)			–				(1,777	)
Depreciation and amortization			(9,279,472	)			(380,701	)			(71,090	)			(9,731,263	)
Net gain/(loss) on disposal of non-current assets			3,806				(481	)			(7	)			3,318
Share of profits less losses of associates and joint ventures			189,222				–				104,434				293,656
Income tax expense			(906,463	)			29,854				(11,245	)			(887,854	)
For the six months ended 30 June 2017
Total revenue			66,384,778				4,893,158				333,282				71,611,218
Inter-segment revenue			–				–				(177,529	)			(177,529	)
Revenue from external customers			66,384,778				4,893,158				155,753				71,433,689
Segment results			2,057,236				(295,187	)			(54,403	)			1,707,646
Interest income			59,217				35,281				736				95,234
Interest expense			(4,296,671	)			(226,908	)			(77,495	)			(4,601,074	)
Impairment loss			5				(900	)			–				(895	)
Depreciation and amortization			(8,990,464	)			(458,019	)			(103,217	)			(9,551,700	)
Net (loss)/gain on disposal of non-current assets			(117	)			148				–				31
Share of profits less losses of associates and joint ventures			132,941				–				(22,588	)			110,353
Income tax expense			(742,136	)			50,576				(3,241	)			(694,801	)

		PRC power segment				Singapore segment				All other segments				Total
30 June 2018
Segment assets			337,170,808				27,288,007				10,296,474				374,755,289
Including:
Additions to non-current assets (excluding financial assets and deferred income tax assets)			5,334,552				40,012				369,189				5,743,753
Investments in associates			12,442,987				–				3,254,482				15,697,469
Investments in joint ventures			1,429,210				–				1,070,824				2,500,034
Segment liabilities			(266,916,633	)			(13,535,252	)			(2,774,615	)			(283,226,500	)
31 December 2017
Segment assets			334,379,104				27,817,680				9,978,885				372,175,669
Including:
Additions to non-current assets (excluding financial assets and deferred income tax assets)			24,447,658				260,240				328,061				25,035,959
Investments in associates			12,577,836				–				2,919,860				15,497,696
Investments in joint ventures			1,457,247				–				1,025,534				2,482,781
Segment liabilities			(264,115,887	)			(14,000,442	)			(3,026,229	)			(281,142,558	)

		For the six months ended 30 June
		2018				2017
Segment results (PRC GAAP)			3,761,467				1,707,646
Reconciling items:
Loss related to the headquarters			(181,508	)			(152,363	)
Investment income from China Huaneng
Finance Co., Ltd. (“Huaneng Finance”)			92,653				62,436
Dividend income of available-
for-sale financial assets			–				114,241
Dividend income of other equity instrument investments			612				–
Impact of IFRS adjustments*			(666,665	)			(911,924	)
Profit before income tax expense per unaudited consolidated interim statement of comprehensive income			3,006,559				820,036

		As at 30 June 2018				As at 31 December 2017
Total segment assets (PRC GAAP)			374,755,289				372,175,669
Reconciling items:
Investment in Huaneng Finance			1,304,704				1,336,777
Deferred income tax assets			2,810,112				2,980,303
Prepaid income tax			280,409				150,838
Available-for-sale financial assets			–				1,654,993
Other equity instrument investments			2,080,871				–
Corporate assets			351,562				395,148
Impact of IFRS adjustments*			17,202,942				17,895,783
Total assets per unaudited consolidated interim statement of financial position			398,785,889				396,589,511

		As at 30 June 2018				As at 31 December 2017
Total segment liabilities (PRC GAAP)			(283,226,500	)			(281,142,558	)
Reconciling items:
Current income tax liabilities			(279,181	)			(430,703	)
Deferred income tax liabilities			(1,270,283	)			(1,283,950	)
Corporate liabilities			(2,981,608	)			(3,632,847	)
Impact of IFRS adjustments*			(2,274,235	)			(2,484,849	)
Total liabilities per unaudited consolidated interim statement of financial position			(290,031,807	)			(288,974,907	)

		Reportable Segment total				Headquarters				Investment income from Huaneng Finance				Impact of IFRS adjustments*				Total
For the six months ended 30 June 2018
Total revenue			82,404,919				–				–				–				82,404,919
Interest expense			(5,089,553	)			(49,354	)			–				–				(5,138,907	)
Depreciation and amortization			(9,731,263	)			(14,604	)			–				(604,215	)			(10,350,082	)
Impairment loss			241				–				–				–				241
Credit loss			(1,777	)			–				–				–				(1,777	)
Share of profits less losses of associates and joint ventures			293,656				–				92,653				(1,279	)			385,030
Net gain on disposal of non-current assets			3,318				11				–				(139	)			3,190
Income tax expense			(887,854	)			–				–				143,268				(744,586	)
For the six months ended 30 June 2017
Total revenue			71,433,689				–				–				–				71,433,689
Interest expense			(4,601,074	)			(61,567	)			–				–				(4,662,641	)
Depreciation and amortization			(9,551,700	)			(21,183	)			–				(806,660	)			(10,379,543	)
Impairment loss			(895	)			–				–				–				(895	)
Share of profits less losses of associates and joint ventures			110,353				–				62,436				(16,719	)			156,070
Net gain/(loss) on disposal of non-current assets			31				(4	)			–				(18	)			9
Income tax expense			(694,801	)			–				–				215,926				(478,875	)

		For the six months ended 30 June
		2018				2017
PRC			77,001,598				66,540,531
Singapore			5,403,321				4,893,158
Total			82,404,919				71,433,689

		As at 30 June 2018				As at 31 December 2017
PRC			314,630,558				319,534,533
Singapore			22,483,600				23,035,758
Total			337,114,158				342,570,291

		For the six months ended 30 June
		2018								2017
		Amount				Proportion				Amount				Proportion
State Grid Shandong Electric Power Company			14,133,998				17	%			13,157,354				18	%

		As at 30 June 2018				As at 31 December 2017
Accounts receivable			21,031,276				21,948,753
Notes receivable			3,962,251				3,610,928
			24,993,527				25,559,681
Less: provision for doubtful accounts			115,522				112,086
Total			24,878,005				25,447,595

		As at 30 June 2018				As at 31 December 2017
Within 1 year			23,593,585				24,787,284
Between 1 to 2 years			1,027,792				576,564
Between 2 to 3 years			230,320				155,360
Over 3 years			141,830				40,473
Total			24,993,527				25,559,681

		As at 30 June 2018				As at 31 December 2017
Accounts and notes payable			16,013,091				15,496,475
Payables to contractors for construction			12,737,732				14,491,632
Retention payables to contractors			1,938,175				2,008,106
Amounts received in advance (Note)			–				1,504,926
Accrued interests			1,006,955				947,302
Others			3,830,150				4,451,691
Total			35,526,103				38,900,132

		As at 30 June 2018				As at 31 December 2017
Within 1 year			15,678,503				15,201,380
Between 1 to 2 years			246,811				196,082
Over 2 years			87,777				99,013
Total			16,013,091				15,496,475

		For the six months ended 30 June
		2018				2017
Total interest expense on borrowings			5,363,550				4,925,548
Less: amounts capitalized in property, plant and equipment			224,643				262,907
Interest expense charged in unaudited consolidated interim statement of comprehensive income			5,138,907				4,662,641
Operating lease charge			188,227				208,633
Depreciation of property, plant and equipment			10,123,301				10,146,899
Net gain on disposal of non-current assets			(3,190	)			(9	)
Amortization of land use rights			172,638				168,850
Amortization of other non-current assets			54,143				63,794
Recognition of provision for doubtful accounts			1,777				347
(Reversal)/recognition for inventory obsolescence			(241	)			548
Government grants			(210,271	)			(98,662	)

		For the six months ended 30 June
		2018				2017
Current income tax expense			876,800				806,971
Deferred income tax			(132,214	)			(328,096	)
Total			744,586				478,875

		For the six months ended 30 June
		2018				2017
Notional tax on profit before income tax expense, calculated at the applicable income tax rates in the countries concerned			24.98	%			27.88	%
Effect of tax losses not recognized			8.14	%			27.27	%
Effect of deductible temporary differences not recognized			(0.51	%)			(1.05	%)
Effect of non-taxable income			(3.10	%)			(8.31	%)
Effect of non-deductible expenses			0.96	%			12.71	%
Others			(5.70	%)			(0.10	%)
Effective tax rate			24.77	%			58.40	%

		For the six months ended 30 June
		2018				2017
Consolidated net profit attributable to equity holders of the Company			1,731,372				243,944
Less: net profit attributable to holders of perpetual corporate bonds			126,700				–
Consolidated net profit attributable to ordinary
Shareholders of the Company			1,604,672				243,944
Weighted average number of the Company’s outstanding ordinary shares (’000)			15,200,383				15,200,383
Basic and diluted earnings per share (RMB)			0.11				0.02

			Unit	As at 30 June 2018	As at 31 December 2017	Variance (%)
Total assets			Yuan	381,582,945,767	378,693,729,128	0.76
Total equity attributable to equity holders of the Company			Yuan	76,032,449,811	75,533,342,281	0.66

			For the six months ended 30 June
			Unit	2018	2017	Variance (%)
Operating revenue			Yuan	82,404,918,640	71,433,688,713	15.36
Profit before taxation			Yuan	3,673,223,489	1,731,960,200	112.08
Net profit attributable to equity holders of the Company			Yuan	2,128,710,393	787,572,539	170.29
Net profit attributable to equity holders of the Company (excluding non-recurring items)			Yuan	1,935,648,390	644,758,071	200.21
Basic earnings per share			Yuan/per share	0.13	0.05	160.00
Basic earnings per share (excluding non-recurring items)			Yuan/per share	0.12	0.04	200.00
Diluted earnings per share			Yuan/per share	0.13	0.05	160.00
Return on net assets (weighted average)			%	2.80	1.08	Increased by 1.72 percentage points
Net cash flow from operating activities			Yuan	15,115,530,397	14,302,015,063	5.69
Net cash flow from operating activities per share			Yuan/per share	0.99	0.94	5.32

	Basic earnings per share		=	Net profit attributable to ordinary shareholders of the company for the period/Weighted average number of ordinary shares
	Return on net assets (weighted average)		=	Net profit attributable to equity holders of the Company for the period/Weighted average equity attributable to equity holders of the Company (excluding non-controlling interests) x 100%

Non-recurring Items		For the six months ended 30 June 2018
Net gain from disposal of non-current assets			3,329,066
Government grants recognized though profit or loss, excluding those having close relationships with the company and its subsidiaries’ operation and enjoyed in fixed amount or quantity according to uniform national standard			266,645,190
The investment income of derivative financial instruments and other equity instrument investments (excluding effective hedging instruments related to operating activities of the company)			7,260,066
Reversal of doubtful accounts receivable individually tested for impairments			2,556,892
Non-operating income and expenses besides items above			13,645,172
Other items recorded in the profit and loss in accordance with the definition of non-recurring items			3,065,723
Sub total			296,502,109
Impact of income tax			(66,148,369	)
Impact of non-controlling interests (net of tax)			(37,291,737	)
Total			193,062,003

						For the six months ended 30 June
						2018				2017				2018				2017
						Consolidated				Consolidated				The Company				The Company
	1.		Operating revenue				82,404,918,640				71,433,688,713				25,389,640,493				21,753,401,857
			Less:	Operating cost			71,567,295,784				63,226,662,437				22,092,873,401				19,027,064,352
				Taxes and surcharges			876,084,659				648,556,150				293,108,962				235,821,453
				Selling expenses			13,642,668				6,347,940				12,223,249				2,250,196
				General and administrative expenses			1,848,917,961				1,791,347,448				829,709,661				804,736,838
				Research and development expenses			4,441,053				17,377,548				3,749,119				14,938,480
				Financial expenses, net			5,099,227,348				4,516,740,179				2,103,994,559				1,742,667,620
				Including: Interest expenses			5,138,907,007				4,662,640,541				2,106,224,700				1,823,293,084
				Interest income			(107,973,939	)			(95,233,743	)			(20,738,088	)			(18,677,045	)
				Impairment loss			(241,419	)			895,403				169,221				–
				Credit loss			1,777,950				——				–				——
			Add:	Other income			264,457,953				151,124,979				90,273,799				89,170,770
				Investment income			397,318,987				292,854,433				1,047,484,426				2,008,139,928
				Including: investment income from associates and joint ventures			386,308,749				172,788,938				300,463,032				102,704,930
				Loss from changes in fair value			(1,487,562	)			(6,373,663	)			–				–
				Gain on disposal of assets			1,920,905				144,045				–				–
	2.		Operating profit				3,655,982,919				1,663,511,402				1,191,570,546				2,023,233,616
			Add:	Non-operating income			55,639,380				88,295,776				12,954,837				30,555,441
			Less:	Non-operating expenses			38,398,810				19,846,978				6,006,310				6,186,687
	3.		Profit before taxation				3,673,223,489				1,731,960,200				1,198,519,073				2,047,602,370
				Less: Income tax expense			887,854,236				694,800,300				144,537,937				177,472,282
	4.		Net profit				2,785,369,253				1,037,159,900				1,053,981,136				1,870,130,088

					For the six months ended 30 June
					2018				2017				2018				2017
					Consolidated				Consolidated				The Company				The Company
			(1) Classification according to the continuity of operation
			– Continuous operating net profit			2,785,369,253				1,037,159,900				1,053,981,136				1,870,130,088
			(2) Classification according to ownership
			Attributable to:
			– Equity holders of the Company			2,128,710,393				787,572,539				1,053,981,136				1,870,130,088
			– Non-controlling interests			656,658,860				249,587,361				——				——
	5.		Earnings per share
			Basic earnings per share			0.13				0.05				——				——
			Diluted earnings per share			0.13				0.05				——				——
	6.		Other comprehensive (loss)/income, net of tax			(181,889,445	)			324,069,454				(182,319,244	)			311,572,057
			Other comprehensive (loss)/income, net of tax, attributable to shareholders of the company			(162,214,253	)			328,751,879				(182,319,244	)			311,572,057
			(a) Items that will not be reclassified to profit or loss:
			Including:
			Fair value changes of other equity instrument investments			(521,643	)			——				–				——
			Share of other comprehensive loss of investees accounted for under the equity method (non-recycling)			(46,047,205	)			——				(46,047,205	)			——

					For the six months ended 30 June
					2018				2017				2018				2017
					Consolidated				Consolidated				The Company				The Company
			(b) Items that may be reclassified subsequently to profit or loss:
			Including:
			Share of other comprehensive loss of investees accounted for under the equity method (recycling)			(147,194,401	)			(3,574,007	)			(147,194,401	)			(3,574,007	)
			Fair value changes of available-for-sale financial assets			——				293,665,930				——				293,311,200
			Effective portion of cash flow hedges			225,362,450				(248,452,389	)			10,922,362				21,834,864
			Translation differences of the financial statements of foreign operations			(193,813,454	)			287,112,345				–				–
			Other comprehensive loss net of tax, attributable to non–controlling interests			(19,675,192	)			(4,682,425	)			——				——
	7.		Total comprehensive income			2,603,479,808				1,361,229,354				871,661,892				2,181,702,145
			Attributable to
			– Equity holders of the Company			1,966,496,140				1,116,324,418				871,661,892				2,181,702,145
			– Non-controlling interests			636,983,668				244,904,936				——				——

		Consolidated net profit attributable to equity holders of the Company
		For the six months ended 30 June
		2018				2017
		RMB’000				RMB’000
Consolidated net profit attributable to equity holders of the Company under PRC GAAP			2,128,710				787,573
Impact of IFRS adjustments:
Differences in accounting treatment on business combinations under common control and depreciation and amortization of assets acquired in business combinations under common control (a)			(658,466	)			(886,628	)
Difference on depreciation related to borrowing costs capitalized in previous years (b)			(13,508	)			(13,503	)
Amortization of the difference in the recognition of housing benefits of previous years (c)			(326	)			(326	)
Others			5,635				(11,467	)
Applicable deferred income tax impact of the GAAP differences above (d)			143,268				215,925
Profit attributable to non-controlling interests on the adjustments above			126,059				152,370
Consolidated net profit attributable to equity holders of the Company under IFRS			1,731,372				243,944