THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Whitewash Circular or as to the action to be taken, you should consult a licensed securities dealer, or registered institution in securities bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in DATANG INTERNATIONAL POWER GENERATION CO., LTD. , you should at once hand this Whitewash Circular to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

This Whitewash Circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities mentioned herein.

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(a sino-foreign joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 00991)

(I) CONNECTED TRANSACTIONS IN RESPECT OF THE PROPOSED A-SHARE ISSUANCE AND H-SHARE ISSUANCE (II) SPECIFIC MANDATES (III) APPLICATION FOR WHITEWASH WAIVER

Financial Advisers to the Company in relation to the H-Share Issuance

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Sponsor to the Company in relation to the A-Share Issuance

Joint Lead Underwriters to the Company in relation to the A-Share Issuance

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Independent Financial Adviser to the Connected Transactions IBC, Whitewash Waiver IBC and the Independent Shareholders

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed “Definitions” in this Whitewash Circular. A “Letter from the Board” is set out on pages 1 to 27 of this Whitewash Circular. A “Letter from the Connected Transactions IBC” is set out on page 28 to 29 of this Whitewash Circular. A “Letter from the Whitewash Waiver IBC” is set out on page 30 to 31 of this Whitewash Circular. A “Letter from Gram Capital” containing its advice to the Connected Transactions IBC, Whitewash Waiver IBC and the Independent Shareholders is set out on pages 32 to 61 of this Whitewash Circular.

The Company will convene the EGM at 1608 Conference Room of Datang International Power Generation Co., Ltd., No. 9 Guangningbo Street, Xicheng District, Beijing, the People’s Republic of China on 24 February 2017 at 9:30 a.m.. The notice convening the EGM has been despatched to the Shareholders on 9 February 2017.

The Company will convene the class meeting of holders of A-Shares of the Company at 1608 Conference Room of Datang International Power Generation Co., Ltd., No. 9 Guangningbo Street, Xicheng District, Beijing, the People’s Republic of China on 24 February 2017 at 10:30 a.m.. The notice convening the class meeting of holders of A-Shares of the Company has been despatched to the Shareholders on 9 February 2017.

The Company will convene the class meeting of holders of H-Shares of the Company at 1608 Conference Room of Datang International Power Generation Co., Ltd., No. 9 Guangningbo Street, Xicheng District, Beijing, the People’s Republic of China on 24 February 2017 at 11:00 a.m.. The notice convening the class meeting of holders of H-Shares of the Company has been despatched to the Shareholders on 9 February 2017.

The Company has despatched the revised notices of attendance for the EGM and the Class Meetings on 25 January 2017 and required Shareholders who intend to attend the EGM and the Class Meetings to complete and return the revised notices of attendance in accordance with the instructions printed thereon as soon as possible and in any event by not later than 3 February 2017.

Whether or not you are able to attend the meeting, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 24 hours before the time appointed for holding of the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish.

9 February 2017

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE CONNECTED TRANSACTIONS IBC. . . . . . . . . . . . . . . . . . . . . . . . . .	28
LETTER FROM THE WHITEWASH WAIVER IBC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
LETTER FROM GRAM CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
APPENDIX IA – PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES
(SECOND REVISION). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
APPENDIX IB – REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016. . . . . 145
APPENDIX IIA – FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . . . 154
APPENDIX IIB – REPORTS ON THE LOSS ESTIMATE ANNOUNCEMENT. . . . . . . . . 312
APPENDIX III – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	321

– i –

DEFINITIONS

In this Whitewash Circular, unless the context otherwise requires, the following expressions have the following meanings:

“A-Share Class Meeting”
the class meeting of A-Shareholders to be convened and held to approve, among other things, the A-Share Issuance, the A-Share Subscription Agreement and the transactions contemplated thereunder
“A-Share Issuance”
the allotment and issue of not more than 2,794,943,820 A-Share Subscription Shares (subject to adjustments) to CDC pursuant to the A-Share Subscription Agreement
“A-Share Issuance Date”
such date as may be notified by the Company to CDC within six months after the CSRC Approval has been obtained
“A-Share Issue Price”
the issue price of each A-Share Subscription Shares
“A-Share Last Trading Date”
14 November 2016, being the last trading day immediately preceding the suspension of trading in the A-Shares on 15 November 2016
“A-Share Price Referencing 29 November 2016, being the date on which the announcement in respect Date” of the resolutions of the Board Meeting is published on the Shanghai Stock Exchange
“A-Share Subscription Agreement”
the subscription agreement dated 28 November 2016 entered into between the Company and CDC in respect of the allotment and issue of 2,794,943,820 A-Share Subscription Shares (subject to adjustments) by the Company to CDC, as amended by the A-Share Subscription Supplemental Agreement
“A-Share Subscription Shares” new A-Shares to be allotted and issued by the Company to CDC pursuant to the A-Share Subscription Agreement
“A-Share Subscription Supplemental Agreement”

the supplemental agreement dated 6 January 2017 to the A-Share Subscription Agreement entered into between the Company and CDC pursuant to which the A-Share Subscription Agreement is amended to reflect the amendments to the H-Share Subscription Agreement pursuant to the H-Share Subscription Amendment Agreement

“A-Shareholders”
holders of the A-Shares
“A-Shares”
ordinary shares of RMB1.00 each in the share capital of the Company, which are listed on the Shanghai Stock Exchange (Stock Code: 601991)
“acting in concert”

has the same meaning as defined in the Takeovers Code

– ii –

DEFINITIONS

“Announcement Date” 28 November 2016, being the date of the Whitewash Announcement “Articles” the articles of association of the Company “associate(s)” has the meaning ascribed to it under the Listing Rules “Board” the board of Directors “Board Meeting” the sixth meeting of the ninth session of the Board held on 28 November 2016 for approving, among other things, the A-Share Issuance, the H-Share Issuance, the Subscription Agreements and the transactions contemplated thereunder
“Business Day” a day on which the Hong Kong Stock Exchange is open for the transaction of business
“CDC” China Datang Corporation* (中國大唐集團公司), a state-owned enterprise established under the laws of the PRC and the controlling shareholder of the Company
“CDC Group” CDC and its subsidiaries “CDFC” China Datang Finance Company Limited* (中國大唐集團財務有限公司), a company established in the PRC which is a subsidiary of CDC held as to approximately 71.7898% by CDC directly, approximately 15.8931% by the Company directly, approximately 6.7544% by five other nonwholly owned subsidiaries of CDC and approximately 5.5624% by six other wholly owned subsidiaries of CDC
“CDOHKC” China Datang Overseas (Hong Kong) Co., Limited (中國大唐海外（香港）有限公司), a company incorporated in Hong Kong which is an indirect wholly owned subsidiary of CDC held through China Datang Corporation Overseas Investment Co., Limited (中國大唐集團海外投資有限公司)
“CITIC CLSA” CITIC CLSA Capital Markets Limited, a licensed corporation to carry out type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO, being the financial adviser to the Company in relation to the H-share Issuance which was appointed on 25 January 2017
“Class Meetings” A-Share Class Meeting and H-Share Class Meeting

– iii –

DEFINITIONS

“CMS”

China Merchants Securities Co., Ltd., the principal business lines of which comprise Brokerage and Wealth Management, Investment Banking, Investment Management and Investment and Trading, being the joint lead underwriter to the Company in relation to the A-Share Issuance
“CMS HK” China Merchants Securities (HK) Co., Limited, a company licensed to conduct type 1 (dealing in securities), type 2 (dealing in futures contracts), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, being the financial adviser to the Company in relation to the H-Share Issuance
“Company” Datang International Power Generation Co., Ltd.* (大唐國際發電股份有限公司) (Stock Code: 991), a sino-foreign joint stock limited company incorporated in the PRC on 13 December 1994, whose H-Shares are listed on the Hong Kong Stock Exchange and the London Stock Exchange and whose A-Shares are listed on the Shanghai Stock Exchange
“connected person(s)” has the meaning ascribed to it under the Listing Rules
“Connected Transactions IBC” an independent committee of the Board, comprising all the independent non-executive Directors, namely Feng Genfu, Luo Zhongwei, Liu Huangsong, Jiang Fuxiu and Liu Jizhen, established pursuant to the requirements of the Listing Rules to advise the Independent Shareholders on the Subscription Agreements and the transactions contemplated thereunder and the Specific Mandates
“controlling shareholder” has the meaning ascribed to it under the Listing Rules
“CSC” CSC Financial Co., Limited, the principal business segments of which include investment banking, wealth management, trading and institutional client services as well as investment management, being the sponsor and joint lead underwriter to the Company in relation to the A-Share Issuance
“CSCI” China Securities (International) Corporate Finance Company Limited, a company licensed to conduct type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO, being the financial adviser to the Company in relation to the H-Share Issuance
“CSRC” China Securities Regulatory Commission
“CSRC Approval” the approval of the CSRC in respect of the A-Share Issuance and the H-Share Issuance
“Directors” director(s) of the Company

– iv –

DEFINITIONS

“Executive” the Executive Director of the Corporate Finance Division of the SFC from time to time and any delegate of such Executive Director
“EGM” an extraordinary general meeting of the Company to be convened to consider, if thought fit, to approve, among others, the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver
“Group” the Company and its subsidiaries “H-Share Class Meeting” the class meeting of H-Shareholders to be convened and held to approve, among other things, the H-Share Issuance, the H-Share Subscription Agreement and the transactions contemplated thereunder
“H-Share Issuance” the allotment and issue of not more than 2,794,943,820 H-Share Subscription Shares (subject to adjustments) to the H-Share Subscription Shares Subscriber pursuant to the H-Share Subscription Agreement
“H-Share Issuance Date” such date as may be notified by the Company to the H-Share Subscription Shares Subscriber within 12 months after the CSRC Approval has been obtained
“H-Share Issue Price” the issue price of each H-Share Subscription Share
“H-Share Price Referencing 28 November 2016, being the date of the Board Meeting Date”
“H-Share Subscription the subscription agreement dated 28 November 2016 entered into Agreement” between the Company and CDOHKC in respect of the allotment and issue of 2,794,943,820 H-Share Subscription Shares (subject to adjustments) by the Company to CDOHKC, as amended by the H-Share Subscription Amendment Agreement
“H-Share Subscription the amendment agreement dated 6 January 2017 to the H-Share Amendment Agreement” Subscription Agreement entered into among the Company, CDC and CDOHKC pursuant to which CDC or its nominated wholly owned subsidiary shall substitute CDOHKC as the subscriber of the H-Share Subscription Shares and CDOHKC shall relinquish all its rights and obligations as a party to the H-Share Subscription Agreement and cease to be a party thereof
“H-Share Subscription Shares” new H-Shares to be conditionally allotted and issued by the Company to the H-Share Subscription Shares Subscriber pursuant to the H-Share Subscription Agreement

– v –

DEFINITIONS

“H-Share Subscription Shares the subscriber of the H-Share Subscription Shares, being CDC or its Subscriber” nominated wholly owned subsidiary
“H-Shareholders” holders of the H-Shares
“H-Shares” overseas-listed foreign shares of RMB1.00 each in the share capital of the Company, which are listed on (i) the Hong Kong Stock Exchange and traded in Hong Kong dollars and (ii) the London Stock Exchange and traded in pounds sterling
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited
“Independent Board the Connected Transactions IBC and the Whitewash Waiver IBC Committees”
“Independent Financial Gram Capital Limited, a licensed corporation to carry out type 6 (advising Adviser” or on corporate finance) regulated activity as defined under the Securities “Gram Capital” and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), the independent financial adviser appointed to advise the Independent Board Committees and the Independent Shareholders in respect of the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver
“Independent Shareholders” Shareholders other than CDC and parties acting in concert with it and those who are involved in, or interested in the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver
“Latest Practicable Date” 6 February 2017, being the latest practicable date prior to the printing of this Whitewash Circular for ascertaining certain information in this Whitewash Circular
“Listing Committee”
the listing sub-committee of the board of directors of the Hong Kong Stock Exchange
“Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange

“Loss Estimate Announcement” the announcement dated 13 January 2017 of the Company in respect of the estimated loss for the annual result for the year 2016

– vi –

DEFINITIONS

“PRC”	the People’s Republic of China excluding, for the purpose of this
	Whitewash Circular, Hong Kong, the Macau Special Administrative
	Region and Taiwan
“PRC GAAP”	Accounting Principles Generally Accepted in the PRC, and for the
	purpose of this Whitewash Circular, refers to China Accounting
	Standards for Business Enterprises
“Relevant H-Share Price”	103% of the 20-day average trading price of the H-Shares immediately
	preceding the H-Share Price Referencing Date
“Relevant Period”	the period from 28 May 2016, being the date six months before the
	Announcement Date, up to and including the Latest Practicable Date
“RMB”	Renminbi, the lawful currency of the PRC
“Ruihua”	Ruihua Certified Public Accountants (Special General Partnership)
“SASAC”	State-owned Assets Supervision and Administration Commission of State
	Council of the PRC
“SFC”	the Securities and Futures Commission of Hong Kong
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
	Kong)
“Shareholder(s)”	holder(s) of the Shares
“Share(s)”	ordinary share(s) of RMB1.00 each in the share capital of the Company,
	including A-Shares and H-Shares
“Six-Month Period”	the period from 28 May 2016, being the date six months before the date
	of the Announcement, up to and including the date of the Announcement
“Specific Mandates”	the specific mandates proposed to be granted by the Independent
	Shareholders to the Directors at the EGM and the Class Meetings to allot
	and issue the A-Share Subscription Shares and H-Share Subscription
	Shares
“Subscription Agreements”	collectively, the A-Share Subscription Agreement and the H-Share
	Subscription Agreement
“Subscription Shares”	collectively, the A-Share Subscription Shares and the H-Share
	Subscription Shares

– vii –

DEFINITIONS

“substantial shareholder” has the meaning ascribed to it under the Listing Rules
“Supervisors” supervisors of the Company
“Takeovers Code” the Hong Kong Code on Takeovers and Mergers
“Whitewash Announcement” the announcement of the Company dated 28 November 2016 in respect of, among other things, (i) connected transaction in respect of the proposed A-Share Issuance and H-Share Issuance; (ii) Specific Mandates; (iii) application for Whitewash Waiver; and (iv) resumption of trading of A-Shares
“Whitewash Circular” this whitewash circular dated 9 February 2017 containing, among other things, details of the Whitewash Transactions, the Whitewash Waiver, the letters of advice of the Independent Board Committees and the letter of advice from Gram Capital
“Whitewash Supplemental Announcement”
the supplemental announcement dated 6 January 2017 to the Whitewash Announcement in respect of, among other things, the A-Share Subscription Supplemental Agreement and the H-Share Subscription Amendment Agreement, as clarified by the clarification announcement of the Company dated 11 January 2017
“Whitewash Transactions” the A-Share Issuance and the H-Share Issuance
“Whitewash Waiver”

a waiver from the Executive pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code of the obligation on the part of CDC and parties acting in concert with it to make a general offer for all securities of the Company (other than those already owned or agreed to be acquired by CDC and its concert parties) as a result of the allotment and issue of the Subscription Shares under the Subscription Agreements

“Whitewash Waiver IBC”

an independent committee of the Board, comprising the non-executive Directors and independent non-executive Directors who have no direct or indirect interest in the Whitewash Transactions and the Whitewash Waiver, namely Zhu Shaowen, Cao Xin, Zhao Xianguo, Liu Haixia, Guan Tiangang, Feng Genfu, Luo Zhongwei, Liu Huangsong, Jiang Fuxiu and Liu Jizhen, established pursuant to the requirements of the Takeovers Code to provide recommendations to the Independent Shareholders on the Whitewash Transactions and the Whitewash Waiver

“%”

per cent.

For identification purposes

– viii –

LETTER FROM THE BOARD

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(a sino-foreign joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 00991)

Executive Directors:

Mr. Wang Xin Mr. Ying Xuejun

Non-executive Directors:

Mr. Chen Jinhang (Chairman) Mr. Liu Chuandong Mr. Liang Yongpan Mr. Zhu Shaowen Mr. Cao Xin Mr. Zhao Xianguo Mr. Liu Haixia Ms. Guan Tiangang

Office address: No. 9 Guangningbo Street Xicheng District Beijing, 100033 the PRC

Principal place of business in Hong Kong:

c/o Eversheds 21/F, Gloucester Tower The Landmark 15 Queen’s Road Central Hong Kong

Independent non-executive Directors:

Mr. Feng Genfu

Mr. Luo Zhongwei Mr. Liu Huangsong Mr. Jiang Fuxiu

Mr. Liu Jizhen

9 February 2017

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION IN RESPECT OF THE PROPOSED SHARE ISSUANCE SPECIFIC MANDATES APPLICATION FOR WHITEWASH WAIVER

INTRODUCTION

Reference is made to the Whitewash Announcement and the Whitewash Supplemental Announcement.

– 1 –

LETTER FROM THE BOARD

On 28 November 2016 (after trading hours), the Company entered into the A-Share Subscription Agreement with CDC pursuant to which the Company has conditionally agreed to allot and issue and CDC has conditionally agreed to subscribe in cash for 2,794,943,820 A-Share Subscription Shares (subject to adjustments) at the A-Share Issue Price of RMB3.56 per A-Share Subscription Share (subject to adjustments), raising gross proceeds of approximately RMB9,950 million.

Immediately after the entering into of the A-Share Subscription Agreement, the Company entered into the H-Share Subscription Agreement with CDOHKC pursuant to which the Company has conditionally agreed to allot and issue and CDOHKC has conditionally agreed to subscribe in cash for 2,794,943,820 H-Share Subscription Shares (subject to adjustments) at the H-Share Issue Price of HK$2.12 per H-Share Subscription Share (subject to adjustments), raising gross proceeds of approximately HK$5,925 million.

The A-Share Issuance and the H-Share Issuance are inter-conditional upon each other.

In order to provide more flexibility on the entity that may be used by CDC to subscribe for the H-Share Subscription Shares, improve the efficiency and thereby facilitate the completion of the H-Share Issuance, on 6 January 2017 (after trading hours), the Company, CDC and CDOHKC entered into the H-Share Subscription Amendment Agreement pursuant to which CDC or its nominated wholly owned subsidiary shall substitute CDOHKC as the H-Share Subscription Shares Subscriber and CDOHKC shall relinquish all its rights and obligations as a party to the H-Share Subscription Agreement and cease to be a party thereof. The final entity that may be used by CDC to be the H-Share Subscription Shares Subscriber shall comply with all applicable laws, rules and regulations. In connection with the amendments to the H-Share Subscription Agreement, immediately after the entering into of the H-Share Subscription Amendment Agreement, on 6 January 2017, the Company and CDC entered into the A-Share Subscription Supplemental Agreement pursuant to which all references to CDOHKC in the A-Share Subscription Agreement are either amended to “CDC or its nominated wholly owned subsidiary” or deleted as appropriate in the relevant context. Save as amended as aforesaid, all other terms and conditions of the Subscription Agreements described in the Whitewash Announcement remain unchanged.

The purpose of this Whitewash Circular is to provide you with, among other things, (i) details of the connected transactions in respect of the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the application for Whitewash Waiver; (ii) a letter of recommendation from the Connected Transactions IBC on the Subscription Agreements and the transactions contemplated thereunder and the Specific Mandates; (iii) a letter of recommendation from the Whitewash Waiver IBC on the Whitewash Transactions and the Whitewash Waiver; (iv) a letter of advice from Gram Capital to the Independent Board Committees and Independent Shareholders on the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver; (v) financial information of the Group; and (vi) other information as required under the Takeovers Code and the Listing Rules.

– 2 –

LETTER FROM THE BOARD

CONNECTED TRANSACTIONS IN RESPECT OF THE PROPOSED SHARE ISSUANCE

The A-Share Issuance and the H-Share Issuance are inter-conditional upon each other.

On 6 January 2017 (after trading hours), the Company, CDC and CDOHKC entered into the H-Share Subscription Amendment Agreement and the Company and CDC entered into the A-Share Subscription Supplemental Agreement in connection with the amendments to the H-Share Subscription Agreement to provide that CDC or its nominated wholly owned subsidiary shall substitute CDOHKC as the H-Share Subscription Shares Subscriber.

The major terms and conditions of the A-Share Subscription Agreement (as supplemented) and H-Share Subscription Agreement (as amended) are set out below.

A-SHARE SUBSCRIPTION AGREEMENT (AS SUPPLEMENTED)

Date

28 November 2016, supplemented on 6 January 2017

Parties

(1) The Company as the issuer; and
(2) CDC as the subscriber.

– 3 –

LETTER FROM THE BOARD

Number of A-Share Subscription Shares

2,794,943,820 A-Share Subscription Shares, representing approximately 27.97% of the total number of issued A-Shares and approximately 21.00% of the total number of issued Shares as at the Latest Practicable Date; and approximately 21.85% of the total number of issued A-Shares as enlarged by the A-Share Issuance and approximately 14.79% of the total number of issued Shares as enlarged by the A-Share Issuance and the H-Share Issuance.

The total number of A-Share Subscription Shares to be subscribed by CDC shall be adjusted according to any ex-rights or ex-dividends activities (such as equity distribution, capitalisation of capital reserve or share placing) undertaken by the Company between the A-Share Price Referencing Date and the A-Share Issuance Date based on the following formula:

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where

QA1 = Number of A-Share Subscription Shares to be issued after adjustment
QA0 = Number of A-Share Subscription Shares to be issued before adjustment, i.e. 2,794,943,820 subject to CSRC Approval
PA0 = A-Share Issue Price before adjustment
PA1 = A-Share Issue Price after adjustment

The formulae for determining PA1 are as that set out under the paragraph headed “Adjustments to the A-Share Issue Price” in this Whitewash Circular.

The final number of A-Share Subscription Shares to be issued shall not exceed the maximum number approved by the CSRC, subject to adjustments in accordance with the terms of the A-Share Subscription Agreement. The Company has been advised by its PRC legal adviser that any adjustments to the number of A-Share Subscription Shares in accordance with the terms of the A-Share Subscription Agreement resulting in the number of A-Share Subscription Shares to be issued exceeding the maximum number approved by the CSRC for the A-Share Issuance will not require approval from the CSRC again. Accordingly, provided that the adjustment mechanisms in the A-Share Subscription Agreement are complied with, there is no cap on the maximum number of A-Share Subscription Shares that may be issued under the A-Share Subscription Agreement.

Nonetheless, the Company will ensure that the allotment and issue of the final number of A-Share Subscription Shares, taking into account any adjustments required to be made, will comply with the requirements under applicable laws, rules and regulations, including but not limited to the Listing Rules (including the public float requirement set out in Rule 8.08(1)(a) of the Listing Rules which requires at least 25% of the Company’s total number of issued Shares to be held by the public at all times).

– 4 –

LETTER FROM THE BOARD

If the number of A-Share Subscription Shares approved for allotment and issue by the CSRC is different from 2,794,943,820 and if any adjustment is made to the number of A-Share Subscription Shares proposed to be allotted and issued, further announcements will be made in compliance with the Listing Rules and other applicable requirements in the PRC as and when appropriate.

Method of Issue

Non-public issuance

A-Share Issue Price

RMB3.56 per A-Share Subscription Share.

The A-Share Issue Price represents:

(a) a discount of approximately 10.55% to the closing price of RMB3.98 per A-Share as quoted on the Shanghai Stock Exchange on the A-Share Last Trading Date;
(b) a discount of approximately 9.51% to the average closing price of RMB3.93 per A-Share as quoted on the Shanghai Stock Exchange in the last five consecutive trading days up to and including the A-Share Last Trading Date;
(c) a discount of approximately 9.27% to the average closing price of RMB3.92 per A-Share as quoted on the Shanghai Stock Exchange in the last 30 consecutive trading days up to and including the A-Share Last Trading Date;
(d) a discount of approximately 11.76% to the average closing price of RMB4.03 per A-Share as quoted on the Shanghai Stock Exchange in the last 180 consecutive trading days up to and including the A-Share Last Trading Date; and
(e) a premium of approximately 5.33% over the audited consolidated net asset value per Share of approximately RMB3.38 (from the Company’s consolidated financial statements prepared in accordance with PRC GAAP) as at 31 December 2015, based on the total number of issued Shares as at 31 December 2015.

Basis for determining the A-Share Issue Price

The A-Share Issue Price represents 90% of the 20-day average trading price of the A-Shares immediately preceding the A-Share Price Referencing Date.

– 5 –

LETTER FROM THE BOARD

The 20-day average trading price of the A-Shares (“ XA ”) is calculated based on the following formula:

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where

YA = the total trading amount of the A-Shares in the 20 trading days immediately preceding the A-Share Price Referencing Date
ZA = the total trading volume of the A-Shares in the 20 trading days immediately preceding the A-Share Price Referencing Date

Adjustments to the A-Share Issue Price

The A-Share Issue Price shall be adjusted according to the following formulae if there are any ex-rights or ex-dividends activities (such as equity distribution, capitalisation of capital reserve or share placing) undertaken by the Company between the A-Share Price Referencing Date and the A-Share Issuance Date:

(a) when distributing cash dividends only:

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(b) when issuing bonus shares or capitalising capital reserve:

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where

PA1 = A-Share Issue Price after adjustment
PA0 = A-Share Issue Price before adjustment
DA = Cash dividend per Share distributed between the A-Share Price Referencing Date and the A-Share Issuance Date
EA = Number of bonus shares per Share or number of Shares resulting from capitalisation of capital reserve being issued for each Share between the A-Share Price Referencing Date and the A-Share Issuance Date

– 6 –

LETTER FROM THE BOARD

The price adjustment will be made at the effective date of the adjustment event. Further announcement(s) in relation to the aforesaid adjustment will be made in compliance with the Listing Rules and other applicable requirements in the PRC as and when appropriate.

Proceeds from the A-Share Issuance

The gross proceeds from the A-Share Issuance, being the aggregate of the A-Share Issue Price (as adjusted) multiplied by the number of A-Share Subscription Shares (as adjusted), shall be payable by CDC in one lump sum on the A-Share Issuance Date.

The gross proceeds from the A-Share Issuance amount to approximately RMB9,950 million. The net proceeds from the A-Share Issuance is estimated to be not more than approximately RMB9,950 million and the net A-Share Issue Price is estimated to be not more than RMB3.56 per A-Share Subscription Share.

The aggregate nominal value of the new A-Share Subscription Shares is RMB2,794,943,820 before any adjustment events.

A-Share Lock-up Period

CDC shall not trade or transfer any of the A-Share Subscription Shares within 36 months from the completion of the A-Share Issuance. In the event the CSRC and the stock exchanges on which the Company is listed have different requirements for lock-up period, CDC shall comply with such requirements.

Effective Date of the A-Share Subscription Agreement

The A-Share Subscription Agreement will become effective upon the fulfilment of the following conditions:

the A-Share Subscription Agreement having been signed and sealed by the respective authorised representative of CDC and the Company;
CDC having obtained its internal approvals in respect of the A-Share Issuance and the H-Share Issuance;
the Board having approved the A-Share Issuance and the H-Share Issuance;
the Independent Shareholders at the EGM and the Class Meetings having approved the A-Share Issuance, the H-Share Issuance, the Subscription Agreements and the transactions contemplated thereunder;

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LETTER FROM THE BOARD

the Independent Shareholders at the EGM having approved (i) the Whitewash Waiver in accordance with the Takeovers Code; and (ii) CDC increasing its shareholding in the Company without making a general offer in accordance with PRC laws;
the Executive having granted the Whitewash Waiver to CDC;
all necessary approvals and consents in respect of the A-Share Issuance and the H-Share Issuance (including but not limited to the approvals from the SASAC and CSRC) having been obtained from the relevant governmental and regulatory authorities; and
conditions precedent 1 to 7 set out under the H-Share Subscription Agreement having been fulfilled.

None of the conditions above may be waived by any party to the A-Share Subscription Agreement. If any conditions above cannot be fulfilled (including but not limited to, if the Whitewash Waiver is not granted or approved as per conditions 5 and 6 above), the A-Share Issuance will not proceed.

All the conditions above have to be fulfilled within 18 months from the date of the A-Share Subscription Agreement, failing which the A-Share Subscription Agreement will not become effective and the A-Share Issuance will not proceed. The 18-month long stop period for the fulfilment of the conditions set out in the A-Share Subscription Agreement is independent of the validity period of the CSRC Approval. The Company may only proceed with the A-Share Issuance if all the conditions are fulfilled within the 18-month long stop period and the relevant CSRC Approval remains valid. In addition, the Specific Mandate in respect of the A-Share Issuance shall be valid for 12 months from the date of the passing of the relevant resolution at the EGM and the Class Meetings.

As at the Latest Practicable Date, all conditions precedent above had been fulfilled save and except for conditions precedent 4, 5, 6, 7 and 8, which by their nature cannot be fulfilled on or before the Latest Practicable Date.

A-Share Issuance Date

The A-Share Subscription Shares shall be allotted and issued to CDC on the A-Share Issuance Date. The Company has been advised by its PRC legal adviser that the allotment and issue of the A-Share Subscription Shares on the A-Share Issuance Date complies with applicable PRC laws, rules and regulations. In determining the actual A-Share Issuance Date, the Company will consider factors such as the progress of the projects and the repayment schedule of infrastructure project loans for which the proceeds from the A-Share Issuance will be used.

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LETTER FROM THE BOARD

H-SHARE SUBSCRIPTION AGREEMENT (AS AMENDED)

Date

28 November 2016, amended on 6 January 2017

Parties

(1) The Company as the issuer;
(2) CDOHKC as the original subscriber; and
(3) CDC (for itself or its nominated wholly owned subsidiary) as the substitute subscriber.

Number of H-Share Subscription Shares

2,794,943,820 H-Share Subscription Shares, representing approximately 84.29% of the total number of issued H-Shares and approximately 21.00% of the total number of issued Shares as at the Latest Practicable Date; and approximately 45.74% of the total number of issued H-Shares as enlarged by the H-Share Issuance and approximately 14.79% of the total number of issued Shares as enlarged by the A-Share Issuance and the H-Share Issuance.

The total number of H-Share Subscription Shares to be subscribed by the H-Share Subscription Shares Subscriber shall be adjusted according to any ex-rights or ex-dividends activities (such as equity distributions, capitalisation of capital reserve or share placing) undertaken by the Company between the H-Share Price Referencing Date and the H-Share Issuance Date based on the following formula:

QH1 = QH0 x PH0/PH

QH1 = Number of H-Share Subscription Shares to be issued after adjustment

QH0 = Number of H-Share Subscription Shares to be issued before adjustment, i.e. 2,794,943,820 subject to CSRC Approval
PH0 = H-Share Issue Price before adjustment
PH = H-Share Issue Price after adjustment

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LETTER FROM THE BOARD

The final number of H-Share Subscription Shares to be issued shall not exceed the maximum number approved by the CSRC, subject to adjustments in accordance with the terms of the H-Share Subscription Agreement. The Company has been advised by its PRC legal adviser that any adjustments to the number of H-Share Subscription Shares in accordance with the terms of the H-Share Subscription Agreement resulting in the number of H-Share Subscription Shares to be issued exceeding the maximum number approved by the CSRC for H-Share Issuance will not require approval from the CSRC again. Accordingly, provided that the adjustment mechanisms in the H-Share Subscription Agreement are complied with, there is no cap on the maximum number of H-Share Subscription Shares that may be issued under the H-Share Subscription Agreement.

Nonetheless, the Company will ensure that the allotment and issue of the final number of H-Share Subscription Shares, taking into account any adjustments required to be made, will comply with the requirements under applicable laws, rules and regulations, including but not limited to the Listing Rules (including the public float requirement set out in Rule 8.08(1)(a) of the Listing Rules which requires at least 25% of the Company’s total number of issued Shares to be held by the public at all times).

If the number of H-Share Subscription Shares approved for allotment and issue by the CSRC is different from 2,794,943,820 and if any adjustment is made to the number of H-Share Subscription Shares proposed to be allotted and issued, further announcements will be made in compliance with the Listing Rules and other applicable requirements in the PRC as and when appropriate.

Method of Issue

Non-public issuance

H-Share Issue Price

HK$2.12 per H-Share Subscription Share.

The H-Share Issue Price represents:

(a) a premium of approximately 1.92% to the closing price of HK$2.08 per H-Share as quoted on the Hong Kong Stock Exchange on the H-Share Price Referencing Date;
(b) a premium of approximately 2.51% to the average closing price of HK$2.07 per H-Share as quoted on the Hong Kong Stock Exchange in the last five consecutive trading days up to and including the H-Share Price Referencing Date;
(c) a premium of approximately 1.86% to the average closing price of HK$2.08 per H-Share as quoted on the Hong Kong Stock Exchange in the last 30 consecutive trading days up to and including the H-Share Price Referencing Date;

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LETTER FROM THE BOARD

(d) a premium of approximately 0.58% to the average closing price of HK$2.11 per H-Share as quoted on the Hong Kong Stock Exchange in the last 180 consecutive trading days up to and including the H-Share Price Referencing Date; and
(e) a discount of approximately 44.50% over the audited consolidated net asset value per Share of approximately RMB3.40 (from the Company’s consolidated financial statements prepared in accordance with International Financial Reporting Standards, equivalent to approximately HK$3.82 based on the reference rate of the People’s Bank of China of HK$1:RMB0.89015 as at 28 November 2016) as at 31 December 2015, based on the total number of issued Shares as at 31 December 2015.

Basis for determining the H-Share Issue Price

The H-Share Issue Price represents 103% of the 20-day average trading price of the H-Shares immediately preceding the H-Share Price Referencing Date i.e. HK$2.12 (the Relevant H-Share Price).

The 20-day average trading price of the H-Shares (“ XH ”) is calculated based on the following formula:

XH = YH/ZH

where

YH = the total trading amount of the H-Shares in the 20 trading days immediately preceding the H-Share Price Referencing Date
ZH = the total trading volume of the H-Shares in the 20 trading days immediately preceding the H-Share Price Referencing Date

Adjustments to the H-Share Issue Price

If the closing price of the H-Shares on the last trading day immediately preceding the date of the EGM and the Class Meetings is higher than the closing price of the H-Shares on the last trading day immediately preceding the H-Share Price Referencing Date (i.e. HK$2.07 per H-Share) or the Relevant H-Share Price (i.e. HK$2.12), whichever is higher, the H-Share Issue Price shall be subject to an upward adjustment of not more than 5%. The exact upward adjustment ratio shall be determined by the Company after consultation with its financial advisers to the H-Share Issuance and be notified to the H-Share Subscription Shares Subscriber in writing.

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LETTER FROM THE BOARD

The upward adjustment ratio and the H-Share Issue Price after adjustment shall be calculated with reference to the following formula:

==> picture [79 x 43] intentionally omitted <==

where

R = upward adjustment ratio
N2 = closing price of the H-Shares on the last trading day immediately preceding the date of the EGM and the Class Meetings
N1 = closing price of the H-Shares on the last trading day immediately preceding the H-Share Price Referencing Date (i.e. HK$2.07 per H-Share) or Relevant H-Share Price (i.e. HK$2.12), whichever is higher
P1 = H-Share Issue Price before adjustment
P2 = H-Share Issue Price after adjustment

If the closing price of the H-Shares on the last trading day immediately preceding the date of the EGM and the Class Meetings is the same or is lower than Relevant H-Share Price (i.e. HK$2.12), the H-Share Issue Price will not be subject to adjustments.

The H-Share Issue Price shall be adjusted according to the following formulae if there are any ex-rights or ex-dividends activities (such as equity distribution, capitalisation of capital reserve or share placing) undertaken by the Company between the H-Share Price Referencing Date and the H-Share Issuance Date:

(a) when distributing cash dividends only:

==> picture [71 x 11] intentionally omitted <==

(b) when issuing bonus shares or capitalising capital reserve:

==> picture [86 x 11] intentionally omitted <==

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LETTER FROM THE BOARD

PH = (PH0 – DH)/(1 + EH)

where

PH = H-Share Issue Price after adjustment
PH0 = H-Share Issue Price before adjustment
DH = Cash dividend per Share distributed between the H-Share Price Referencing Date and the H-Share Issuance Date
EH = Number of bonus shares per Share or number of Shares resulting from capitalisation of capital reserve being issued for each Share between the H-Share Price Referencing Date and the H-Share Issuance Date

PH0 equals to P1 if the upward adjustment aforesaid does not take place and P2 if otherwise.

Proceeds from the H-Share Issuance

The gross proceeds from the H-Share Issuance, being the aggregate of the H-Share Issue Price (as adjusted) multiplied by the number of H-Share Subscription Shares (as adjusted), shall be payable by the H-Share Subscription Shares Subscriber in one lump sum on the H-Share Issuance Date.

The gross proceeds from the H-Share Issuance amount to approximately HK$5,925 million (assuming there is no adjustment to the H-Share Issue Price) and HK$6,233 million (assuming there is a 5% upward adjustment to the H-Share Issue Price). The net proceeds from the H-Share Issuance is estimated to be not more than approximately HK$5,925 million (assuming there is no adjustment to the H-Share Issue Price) and not more than approximately HK$6,233 million (assuming there is a 5% upward adjustment to the H-Share Issue Price). The net H-Share Issue Price is estimated to be not more than HK$2.12 per H-Share Subscription Share (assuming there is no adjustment to the H-Share Issue Price) and not more than HK$2.23 per H-Share Subscription Share (assuming there is a 5% upward adjustment to the H-Share Issue Price).

The aggregate nominal value of the new H-Share Subscription Shares is RMB2,794,943,820 before any adjustment events.

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LETTER FROM THE BOARD

H-Share Lock-up Period

The H-Share Subscription Shares Subscriber shall not trade or transfer any of the H-Share Subscription Shares within 36 months from the completion of the H-Share Issuance, save for transfer to subsidiaries of CDC (regardless of whether such subsidiaries are directly or indirectly held or wholly owned or controlled) in accordance with PRC laws, other laws applicable to the Company and the listing rules of the jurisdictions in which the Shares of the Company are listed provided that the transferee shall also comply with such lock-up undertaking. In the event the CSRC and the stock exchanges on which the Shares of the Company are listed have different requirements for lock-up period, the H-Share Subscription Shares Subscriber shall comply with such requirements.

The H-Share Subscription Shares Subscriber may pledge or create encumbrances over all or part of the H-Share Subscription Shares during the above lock-up period provided that any transfer resulting for the enforcement of such pledge or encumbrances shall comply with such lock-up undertaking.

Effective Date of the H-Share Subscription Agreement

The H-Share Subscription Agreement will become effective upon the fulfilment of the following conditions:

the H-Share Subscription Agreement having been signed and sealed by the respective authorised representative of CDOHKC and the Company;
CDC having obtained its internal approvals in respect of the A-Share Issuance and the H-Share Issuance;
the Board having approved the A-Share Issuance and the H-Share Issuance;
the Independent Shareholders at the EGM and the Class Meetings having approved the A-Share Issuance, the H-Share Issuance, the Subscription Agreements and the transactions contemplated thereunder;
the Independent Shareholders having approved the Whitewash Waiver at the EGM;
the Executive having granted the Whitewash Waiver to CDC;
all necessary approvals and consents in respect of the A-Share Issuance and the H-Share Issuance (including but not limited to the approval from the SASAC, the approval for the listing of, and permission to deal in the H-Share Subscription Shares from the Listing Committee of the Hong Kong Stock Exchange and the approval from the CSRC) having been obtained from the relevant governmental and regulatory authorities; and

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LETTER FROM THE BOARD

conditions precedent 1 to 7 set out under A-Share Subscription Agreement having been fulfilled.

None of the conditions above may be waived by any party to the H-Share Subscription Agreement. If any conditions above cannot be obtained (including but not limited to, if the Whitewash Waiver is not granted or approved as per conditions 5 and 6 above), the H-Share Issuance will not proceed.

All the conditions above have to be fulfilled within 18 months from the date of the H-Share Subscription Agreement, failing which the H-Share Subscription Agreement will not become effective and the H-Share Issuance will not proceed. The 18-month long stop period for the fulfilment of the conditions set out in the H-Share Subscription Agreement is independent of the validity period of the CSRC Approval. The Company may only proceed with the H-Share Issuance if all the conditions are fulfilled within the 18-month long stop period and the relevant CSRC Approval remains valid. In addition, the Specific Mandate in respect of the H-Share Issuance shall be valid for 12 months from the date of the passing of the relevant resolution at the EGM and the Class Meetings.

H-Share Issuance Date

The H-Share Subscription Shares shall be allotted and issued to the H-Share Subscription Shares Subscriber on the H-Share Issuance Date. The Company has been advised by its PRC legal adviser that the allotment and issue of the H-Share Subscription Shares on the H-Share Issuance Date complies with applicable PRC laws, rules and regulations. In determining the actual H-Share Issuance Date, the Company will consider factors such as the repayment schedule of loans and bonds for which the proceeds from the H-Share Issuance will be used.

RANKING OF THE A-SHARE SUBSCRIPTION SHARES AND H-SHARE SUBSCRIPTION SHARES

The A-Share Subscription Shares and the H-Share Subscription Shares will rank, upon issue, pari passu in all respects with the A-Shares and H-Shares in issue, respectively, at the time of allotment and issue of such new A-Share Subscription Shares and H-Share Subscription Shares, respectively.

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LETTER FROM THE BOARD

SPECIFIC MANDATES

The Specific Mandates to be sought from the Independent Shareholders at the EGM and the Class Meetings will relate to 2,794,943,820 A-Share Subscription Shares (subject to adjustments and the Listing Rules) and 2,794,943,820 H-Share Subscription Shares (subject to adjustments and the Listing Rules).

APPLICATION FOR LISTING

The Company will apply to the Shanghai Stock Exchange for the listing of, and permission to deal in, the A-Share Subscription Shares.

Application will also be made by the Company to the Hong Kong Stock Exchange and the London Stock Exchange for the grant of the listing of, and permission to deal in, the H-Share Subscription Shares. The Company is expected to apply to the Hong Kong Stock Exchange for the listing of, and permission to deal in, 2,794,943,820 H-Share Subscription Shares.

EFFECT ON SHAREHOLDING STRUCTURE OF THE COMPANY

As at the Latest Practicable Date, the number of issued Shares is 13,310,037,578 Shares, comprising, 9,994,360,000 A-Shares and 3,315,677,578 H-Shares.

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LETTER FROM THE BOARD

Set out below is the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately after completion of the A-Share Issuance and the H-Share Issuance (assuming there are no other changes in the issued share capital of the Company save for the allotment and issue of the Subscription Shares pursuant to the A-Share Issuance and the H-Share Issuance):

Name of Shareholder Notes Class of Shares CDC 1, 7 A CDFC 2, 7 A Tianjin Jinneng Investment Company 3 A Hebei Construction & Investment Group Co., Ltd. 4 A Beijing Energy Investment Holding Co., Ltd. 5 A Public holders of A-Shares A Total A-Shares CDOHKC 6, 7 H H-Share Subscription Shares Subscriber 8 H Public holders of H-Shares H Total H-Shares Total (A-Shares and H-Shares)	As at the Latest Practicable Date Number of Shares Approximate % of the total issued Shares Approximate % of the relevant class of Shares 4,138,977,414 31.10% 41.41% 8,738,600 0.07% 0.09% 1,296,012,600 9.74% 12.97% 1,281,872,927 9.63% 12.83% 1,260,988,672 9.47% 12.62% 2,007,769,787 15.08% 20.09% 9,994,360,000 75.09% 100% 480,680,000 3.61% 14.50% – – – 2,834,997,578 21.30% 85.50% 3,315,677,578 24.91% 100% 13,310,037,578 100%	Immediately after completion of the A-Share Issuance and the H-Share Issuance Number of Shares Approximate % of the total Issued Shares Approximate % of the relevant class of Shares 6,933,921,234 36.69% 54.22% 8,738,600 0.05% 0.07% 1,296,012,600 6.86% 10.13% 1,281,872,927 6.78% 10.02% 1,260,988,672 6.67% 9.86% 2,007,769,787 10.62% 15.70% 12,789,303,820 67.67% 100% 480,680,000 2.54% 7.87% 2,794,943,820 14.79% 45.74% 2,834,997,578 15.00% 46.39% 6,110,621,398 32.33% 100% 18,899,925,218 100%	Immediately after completion of the A-Share Issuance and the H-Share Issuance Number of Shares Approximate % of the total Issued Shares Approximate % of the relevant class of Shares 6,933,921,234 36.69% 54.22% 8,738,600 0.05% 0.07% 1,296,012,600 6.86% 10.13% 1,281,872,927 6.78% 10.02% 1,260,988,672 6.67% 9.86% 2,007,769,787 10.62% 15.70% 12,789,303,820 67.67% 100% 480,680,000 2.54% 7.87% 2,794,943,820 14.79% 45.74% 2,834,997,578 15.00% 46.39% 6,110,621,398 32.33% 100% 18,899,925,218 100%
			100%
			7.87% 45.74% 46.39%
			100%

Notes:

(1) Mr. Chen Jinhang, Mr. Liu Chuandong and Mr. Liang Yongpan, all non-executive Directors, are employees of CDC.
(2) CDFC is a subsidiary of CDC. CDFC is held as to approximately 71.7898% by CDC directly, approximately 15.8931% by the Company directly, approximately 6.7544% by five other non-wholly owned subsidiaries of CDC and approximately 5.5624% by six other wholly owned subsidiaries of CDC.

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LETTER FROM THE BOARD

(3) Mr. Zhu Shaowen, a non-executive Director, is currently an employee of Tianjin Energy Investment Group Limited, the de facto controller of Tianjin Jinneng Investment Company. Tianjin Jinneng Investment Company is independent of CDC.
(4) Mr. Cao Xin and Mr. Zhao Xiangguo, both non-executive Directors, are employees of Hebei Construction & Investment Group Co., Ltd.. Hebei Construction & Investment Group Co., Ltd. is independent of CDC.
(5) Mr. Liu Haixia and Ms. Guan Tiangang, both non-executive Directors, are employees of Beijing Energy Investment Holding Co., Ltd.. Beijing Energy Investment Holding Co., Ltd. is independent of CDC.
(6) CDOHKC is an indirect wholly owned subsidiary of CDC.
(7) CDFC and CDOHKC are subsidiaries of CDC and parties acting in concert with CDC.
(8) The final entity that may be used by CDC to be the H-Share Subscription Shares Subscriber may or may not be CDOHKC.
(9) Figures shown above are calculated assuming that no other Shares will be issued or transferred after the Latest Practicable Date until the completion of the A-Share Issuance and the H-Share Issuance.
(10) The upward adjustment of up to 5% to the H-Share Issue Price in accordance with the terms of the H-Share Subscription Agreement will not affect the number of H-Share Subscription Shares to be issued.
(11) The shareholding structure table above set out Shareholders which hold 5% or more interest in each class of Shares. The shareholding structure table on page 77 in Appendix IA to this Whitewash Circular set out the top 10 A-Shareholders.

USE OF PROCEEDS

A-Share Issuance

The Company expects to raise total proceeds of not more than approximately RMB9,950 million from the A-Share Issuance. It is the intention of the Company to apply the total proceeds from the A-Share Issuance as follows:

(a) approximately RMB1,082 million (equivalent to approximately 10.87% of the total proceeds from the A-Share Issuance) for “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Huludao Thermal Power Plant (遼寧大唐國際葫蘆島熱電廠“上大壓小”新建工程項目);

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LETTER FROM THE BOARD

(b) approximately RMB922 million (equivalent to approximately 9.27% of the total proceeds from the A-Share Issuance) for Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project (2 sets of 400 MW class (F class)) (江蘇大唐國際金壇燃機熱電聯產工程項目（2套400 MW級（F級））);
(c) approximately RMB822 million (equivalent to approximately 8.26% of the total proceeds from the A-Share Issuance) for Tangshan Beijiao 2x350 MW Thermal Power Co-generation Project (唐山北郊熱電聯產工程項目(2×350 MW));
(d) approximately RMB794 million (equivalent to approximately 7.98% of the total proceeds from the A-Share Issuance) for “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant (2×350 MW supercritical coal-fired wet and cold heat supply unit) (遼寧大唐國際沈撫連接帶熱電廠“上大壓小” 新建工程（2×350 MW超臨界燃煤濕冷供熱機組）);
(e) approximately RMB780 million (equivalent to approximately 7.84% of the total proceeds from the A-Share Issuance) for Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply (2×400 MW) Co-generation Project (廣東大唐國際高要金淘熱電冷(2×400 MW)聯產項目); and
(f) approximately RMB5,550 million (equivalent to approximately 55.78% of the total proceeds from the A-Share Issuance) for repaying infrastructure project loans, the lenders of which are commercial banks independent of the Company and not shareholders of the Company.

If the amount of the actual net proceeds from the A-Share Issuance is less than the total amount of proceeds proposed to be invested into the above projects after deducting expenses payable in connection with the A-Share Issuance and the H-Share Issuance, the Company will adjust and finalise the specific investment projects for which the proceeds shall be used, where the priorities and the specific investment amount of each project will be based on the amount of the actual net proceeds and the importance and urgency of the projects. Any insufficient amount shall be covered by the self-owned funds of the Company or by any other financing means.

H-Share Issuance

The Company expects to raise total proceeds of not more than approximately HK$5,925 million (assuming the H-Share Issue Price is not subject to adjustment) and not more than approximately HK$6,233 million (assuming the H-Share Issue Price is subject to a 5% upward adjustment), from the H-Share Issuance. It is currently the intention of the Company to apply the total proceeds from the H-Share Issuance for general corporate purposes including but not limited to loan and bond repayment within two years after the H-Share Issuance is completed.

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LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE A-SHARE ISSUANCE AND THE H-SHARE ISSUANCE

(I) Enhancing the core competitiveness of the principal business of the Company

The proposed use of part of the proceeds from the A-Share Issuance for the construction of power plant projects is beneficial for the further solidification of the advantages of the principal business of the Company and enhances the core competitiveness of the power generation business while facilitating the sustainable development of the Company.

(II) Optimizing the capital structure and reducing financial risks

Part of the proceeds from the A-Share Issuance is proposed to be used for repaying infrastructure project loans. As of 30 September 2016, the liability to asset ratio of the Company was 74.78%, which was at a relatively high level; and for 2015, the interest expense of the Company amounted to RMB11.281 billion, resulting in a relatively high level of financial cost. Through the A-Share Issuance and the H-Share Issuance, the Company is expected to reduce its liability to asset ratio to approximately 68.70% (based on the reference rate of the People’s Bank of China of HK$1:RMB0.89015 as at 28 November 2016) if the total proceeds from the H-Share Issuance are to be applied to loan and bond repayment, thus optimizing its capital structure, reducing its financial cost and lowering its financial risk.

(III) Enjoying further support from CDC

The increase in shareholding demonstrates CDC’s confidence in the Company. With the increase in shareholding, the interests of CDC would be further integrated with the performance of the Company, thus CDC would be willing to provide further support to the Company, including but not limited to (a) providing insights on industry policy interpretation, (b) providing credit enhancement such as letter of support with which the Company may raise funds more easily if needed, and (c) potentially more contribution from CDC in the circumstance of equity issuance pro rata to existing shareholders, which will be beneficial to the long-term development of the Company. The support would comply with the compliance requirement of the Company as a listed entity.

FUTURE INTENTION OF CDC REGARDING THE COMPANY AND ITS EMPLOYEES

CDC intends that the existing business of the Company will continue, and it does not intend to introduce any major changes to the existing operations and business of the Company (including any redeployment of the fixed assets of the Company). Save as disclosed in this Whitewash Circular, as at the Latest Practicable Date, CDC has no intention to make any major changes to the continued employment of the existing employees of the Company and of its subsidiaries.

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LETTER FROM THE BOARD

Please see the section headed “Reasons for and Benefits of the A-Share Issuance and the H-Share Issuance” for further details of the commercial justification for the A-Share Issuance and the H-Share Issuance, and the sections headed “Implications under the Takeovers Code” and “Application for Whitewash Waiver” for further details of the Whitewash Waiver.

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company has not carried out any fund raising exercises involving the issue of equity securities during the 12 months immediately preceding the Latest Practicable Date.

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, CDC is holding 4,138,977,414 A-Shares, CDC’s subsidiaries, namely CDFC and CDOHKC, are holding 8,738,600 A-Shares and 480,680,000 H-Shares, respectively. In aggregate, the CDC Group is holding 4,147,716,014 A-Shares and 480,680,000 H-Shares, representing approximately 31.16% and approximately 3.61%, respectively, of the total number of issued Shares of the Company. In total, the CDC Group is holding approximately 34.77% of the total number of issued Shares of the Company as at the Latest Practicable Date.

CDC is a controlling shareholder and therefore a connected person of the Company. The H-Share Subscription Shares Subscriber, being CDC or its nominated wholly owned subsidiary, is also a connected person of the Company. Accordingly, the A-Share Issuance and the H-Share Issuance constitute connected transactions of the Company and are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

BOARD’S APPROVAL

The Directors are of the view that the terms of the A-Share Issuance and the H-Share Issuance are fair and reasonable and in the interests of the Shareholders as a whole.

The connected Directors, namely Chen Jinhang, Liu Chuandong and Liang Yongpan who are employees of CDC, have abstained from voting at the Board Meeting for approval of the relevant resolutions in respect of the A-Share Issuance and the H-Share Issuance. Save as disclosed above, none of the Directors has a material interest in the A-Share Issuance and the H-Share Issuance or is required to abstain from voting on the Board resolutions for considering and approving the A-Share Issuance and the H-Share Issuance pursuant to the Listing Rules, the Listing Rules of the Shanghai Stock Exchange and/or the Articles.

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LETTER FROM THE BOARD

IMPLICATIONS UNDER THE TAKEOVERS CODE

As at the Latest Practicable Date, the CDC Group in aggregate holds 4,628,396,014 Shares, representing approximately 34.77% of the total number of issued Shares of the Company.

Upon completion of the A-Share Issuance and the H-Share Issuance, on the assumption that there are no adjustment events, it is expected that 2,794,943,820 A-Share Subscription Shares will be issued to CDC and 2,794,943,820 H-Share Subscription Shares will be issued to the H-Share Subscription Shares Subscriber, and the interests of the CDC Group in the voting rights of the Company will be increased from approximately 34.77% to approximately 54.07% (assuming there are no other changes in the issued share capital of the Company save for the allotment and issue of the Subscription Shares pursuant to the A-Share Issuance and the H-Share Issuance).

APPLICATION FOR WHITEWASH WAIVER

On 5 December 2016, an application was made on behalf of CDC to the Executive for the Whitewash Waiver pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, will be subject to, among other things, the approval of Independent Shareholders by way of poll at the EGM.

CDC and parties acting in concert with it will abstain from voting on the resolutions to be proposed at the EGM and/or the Class Meetings to approve the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver.

Completion of the Whitewash Transactions is conditional upon, among other things, the Whitewash Waiver being granted by the Executive and approved by the Independent Shareholders. The Executive may or may not grant the Whitewash Waiver and the Independent Shareholders may or may not approve the Whitewash Waiver. The Whitewash Transactions will not proceed if the Whitewash Waiver is not granted or approved.

If the Whitewash Waiver is granted by the Executive and approved by the Independent Shareholders, upon the issue of the Subscription Shares to CDC and the H-Share Subscription Shares Subscriber (and assuming there is no other change to the issued share capital of the Company), the aggregate shareholding of CDC and parties acting in concert with it will exceed 50%. Subject to the Takeovers Code, CDC may further increase their shareholdings in the Company without incurring any further obligations under Rule 26 of the Takeovers Code to make a general offer.

– 22 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company does not believe that the Whitewash Transactions give rise to any concerns in relation to compliance with other applicable rules or regulations (including the Listing Rules). If a concern should arise after the Latest Practicable Date, the Company will endeavour to resolve the matter to the satisfaction of the relevant authority as soon as possible. The Company notes that the Executive may not grant the Whitewash Waiver if the Whitewash Transactions do not comply with other applicable rules and regulations.

ADDITIONAL DISCLOSURE OF INTEREST

Interest of CDC and parties acting in concert with it in the securities of the Company

Pursuant to paragraph 3 of Schedule VI to the Takeovers Code, the Executive will not normally waive an obligation to make a mandatory general offer with respect to a company under Rule 26 of the Takeovers Code if there occurs any disqualifying transaction prior to the grant of such waiver. Disqualifying transactions include transactions where the person seeking a waiver or any person acting in concert with it has acquired voting rights in such company in the six months prior to the announcement of the proposals but subsequent to negotiations, discussions or the reaching of understandings or agreements with the directors of such company in relation to the relevant proposal. Further, a waiver will not be granted or if granted will be invalidated if, without the prior consent of the Executive, any non-exempt acquisitions or disposals of voting rights are made by such persons between the time of announcement of the proposals and the completion of the subscription.

As at the Latest Practicable Date, CDC is holding 4,138,977,414 A-Shares, representing approximately 31.10% of the total number of issued Shares and parties acting in concert with it, namely CDFC and CDOHKC (both of which are subsidiaries of CDC), are holding 8,738,600 A-Shares and 480,680,000 H-Shares, respectively, representing approximately 0.066% and 3.61%, respectively, of the total number of issued Shares.

As at the Latest Practicable Date, save for entering into of the Subscription Agreements and as disclosed in this Whitewash Circular, neither CDC nor any party acting in concert with it:

(1) has acquired any voting rights in the Company in the Six-Month Period but subsequent to negotiations, discussions or the reaching of understandings or agreement with the Directors in relation to the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder;
(2) save as disclosed above, owns or has control or direction over any voting rights or rights over the Shares or convertible securities, warrants, options or derivatives of the Company or holds any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company;
(3) has received any irrevocable commitment or arrangements to vote in favour of or against the resolutions in respect of the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and/or the Whitewash Waiver;

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LETTER FROM THE BOARD

(4) has any arrangement referred to in Note 8 to Rule 22 of the Takeovers Code (whether by way of option, indemnity or otherwise) in relation to shares of CDC or of the Company which may be material to the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and/or the Whitewash Waiver, with any other persons;
(5) has any agreement or arrangement to which it is a party which relates to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and/or the Whitewash Waiver, other than the conditions relating to the coming into effect of the Subscription Agreements; and
(6) has borrowed or lent any relevant securities (as defined in note 4 to Rule 22 of the Takeovers Code) in the Company.

The Company has no outstanding warrants, options or securities convertible into shares of the Company as at the Latest Practicable Date.

INDEPENDENT BOARD COMMITTEES

Pursuant to the Listing Rules, the Connected Transactions IBC (comprising all the independent non-executive Directors) has been formed to advise the Independent Shareholders on the Subscription Agreements and the transactions contemplated thereunder and the Specific Mandates.

Pursuant to Rule 2.8 of the Takeovers Code, the Whitewash Waiver IBC (comprising all the non-executive Directors and independent non-executive Directors who have no direct or indirect interest in the Whitewash Transactions and the Whitewash Waiver) has also been formed to advise the Independent Shareholders on the Whitewash Transactions and the Whitewash Waiver. Three non-executive Directors, namely Chen Jinhang, Liu Chuandong and Liang Yongpan, are also employees of CDC and considered to have interests in the Whitewash Transactions and the Whitewash Waiver. Therefore, they do not form part of the Whitewash Waiver IBC.

APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

Gram Capital has been appointed as the Independent Financial Adviser with the approval of the Independent Board Committees to advise the Independent Board Committees and the Independent Shareholders on the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver (as the case may be) and to make recommendations on voting.

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LETTER FROM THE BOARD

INFORMATION ON THE PARTIES

The Company

The Company was established on 13 December 1994 with registered capital of RMB13.310 billion and is principally engaged in the construction and operation of power plants, the sale of electricity and thermal power, the repair, maintenance and commissioning of power equipment and power related technical services. The Company mainly provides services in the PRC.

CDC

CDC was established on 9 March 2003 with registered capital of RMB18.009 billion. Its operation scope includes the development, investment, construction, operation and management of power energy, organisation of power (thermal) production and sales; manufacturing, repair and commissioning of power equipment; power technology development and consultation; power engineering, contracting and consultation of environmental power engineering; development of new energy as well as development and production of power-related coal resources.

CDOHKC

CDOHKC is an indirect wholly owned subsidiary of CDC. It primarily engages in investment, development, construction and management of domestic and overseas power energy; manufacturing, repair and maintenance of power equipment and so forth.

EGM AND CLASS MEETINGS

The EGM will be convened on 24 February 2017 at 9:30 a.m. to consider and, if thought fit, pass resolutions to approve, among other things, (i) the Whitewash Transactions; (ii) the Subscription Agreements and the transactions contemplated thereunder; (iii) the grant of Specific Mandates for the allotment and issue of the A-Share Subscription Shares and the H-Share Subscription Shares; and (iv) the Whitewash Waiver.

The A-Share Class Meeting will be convened on 24 February 2017 at 10:30 a.m. and the H-Share Class Meeting will be convened on 24 February 2017 at 11:00 a.m. to consider and, if thought fit, pass resolutions to approve, among other things, (i) the Whitewash Transactions; (ii) the Subscription Agreements and the transactions contemplated thereunder; and (iii) the grant of Specific Mandates for allotment and the issue of the A-Share Subscription Shares and the H-Share Subscription Shares.

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LETTER FROM THE BOARD

The voting in relation to the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver at the EGM and the Class Meetings will be conducted by way of poll.

The Subscription Agreements and the transactions contemplated thereunder and the Specific Mandates will be proposed by way of special resolutions at the EGM and Class Meetings for approval by the Independent Shareholders and the Whitewash Waiver will be proposed by way of an ordinary resolution at the EGM for approval by the Independent Shareholders. CDC and parties acting in concert with it will, and any other Shareholder who are involved in, or interested in the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver will be required to, abstain from voting on the resolutions to be proposed at the EGM and/or the Class Meetings to approve the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver.

WARNING: THE COMPLETION OF THE WHITEWASH TRANSACTIONS IS SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS, INCLUDING THE WHITEWASH WAIVER BEING OBTAINED FROM THE EXECUTIVE AND APPROVED BY THE INDEPENDENT SHAREHOLDERS. ACCORDINGLY, THE WHITEWASH TRANSACTIONS MAY OR MAY NOT PROCEED. SHAREHOLDERS AND POTENTIAL INVESTORS ARE ADVISED TO EXERCISE CAUTION WHEN DEALING IN THE SHARES, AND ARE RECOMMENDED TO CONSULT THEIR STOCKBROKER, BANK MANAGER, SOLICITOR OR OTHER PROFESSIONAL ADVISER IF THEY ARE IN ANY DOUBT ABOUT THEIR POSITION AND AS TO ACTIONS THEY SHOULD TAKE.

FURTHER INFORMATION

Your attention is drawn to the further information set out in the appendices to this Whitewash Circular.

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LETTER FROM THE BOARD

RECOMMENDATION

Your attention is drawn to (i) the “Letter from the Connected Transactions IBC” set out on page 28 to 29 which contains its recommendation to the Independent Shareholders on the terms of the Subscription Agreements and the transactions contemplated thereunder and the Specific Mandates; (ii) the “Letter from the Whitewash Waiver IBC” set out on page 30 to 31 which contains its recommendation to the Independent Shareholders on the terms of the Whitewash Transactions and the Whitewash Waiver; and (iii) the “Letter from Gram Capital” set out on pages 32 to 61 of this Whitewash Circular containing its advice to the Connected Transactions IBC, the Whitewash Waiver IBC and the Independent Shareholders. The Independent Shareholders are advised to read the aforesaid letters before deciding as to how to vote on the resolutions approving, inter alia , the Whitewash Transactions, the Subscription Agreements and transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver.

The Directors (excluding members of the Connected Transactions IBC and Whitewash Waiver IBC whose views are set out in the “Letter from the Connected Transactions IBC” and the “Letter from the Whitewash Waiver IBC” in this Whitewash Circular, respectively) consider that the terms of the A-Share Issuance and the H-Share Issuance are fair and reasonable and that the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver are in the interests of the Shareholders as a whole. Accordingly, the Board recommends all Shareholders to vote in favour of the resolutions to be proposed at the EGM and/or the Class Meetings to approve the matters put forward at the EGM and/or the Class Meetings.

Yours faithfully,

By Order of the Board of

Datang International Power Generation Co., Ltd. Ying Xuejun

Secretary to the Board

– 27 –

LETTER FROM THE CONNECTED TRANSACTIONS IBC

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(a sino-foreign joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 00991)

Office address No. 9 Guangningbo Street Xicheng District Beijing, 100033 The PRC

9 February 2017

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION IN RESPECT OF THE PROPOSED SHARE ISSUANCE SPECIFIC MANDATES

We refer to the circular issued by the Company to the shareholders dated 9 February 2017 (the “ Whitewash Circular ”) of which this letter forms part. Terms defined in the Whitewash Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed as members of the Connected Transactions IBC to advise the Independent Shareholders in respect of the Subscription Agreement and the transactions contemplated thereunder and the Specific Mandates, details of which are set out in the “Letter from the Board” in the Whitewash Circular. Gram Capital has been appointed as the Independent Financial Adviser with our approval to advise the Connected Transactions IBC and the Independent Shareholders in this regard.

We wish to draw your attention to the “Letter from the Board”, the “Letter from Gram Capital” and the additional information set out in the appendices of the Whitewash Circular. Having taken into the terms of the Subscription, and the principal factors and reasons considered by Gram Capital as set out in the “Letter from Gram Capital” in the Whitewash Circular, we concur with the view of Gram Capital and consider that the terms of the Subscription Agreements and the Specific Mandates are on normal commercial terms though not conducted in the ordinary and usual course of business of the Group and the terms of

– 28 –

LETTER FROM THE CONNECTED TRANSACTIONS IBC

the Subscription Agreements and the Specific Mandates are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Independent Shareholders as a whole.

Accordingly, we recommend you to vote in favour of the resolutions to be proposed at the EGM and the Class Meetings for approving the Subscription Agreements and the transactions contemplated thereunder and the Specific Mandates.

Yours faithfully,

For and on behalf of the Connected Transactions IBC

Feng Gengfu, Luo Zhongwei, Liu Huangsong,

Jiang Fuxiu, Liu Jizhen

Independent non-executive Directors

Datang International Power Generation Co., Ltd.

– 29 –

LETTER FROM THE WHITEWASH WAIVER IBC

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==> picture [336 x 37] intentionally omitted <==

(a sino-foreign joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 00991)

Office address No. 9 Guangningbo Street Xicheng District Beijing, 100033 The PRC

9 February 2017

To the Independent Shareholders

Dear Sir or Madam,

THE PROPOSED SHARE ISSUANCE APPLICATION FOR WHITEWASH WAIVER

We have been appointed as members of the Whitewash Waiver IBC under the Takeovers Code to advise the Independent Shareholders as to whether, in our opinion, the respective terms in respect of the Whitewash Transactions and the Whitewash Waiver, details of which are set out in the “Letter from the Board” in the Whitewash Circular, are fair and reasonable so far as the Independent Shareholders are concerned and if they are in the interests of the Company and the Independent Shareholders. Gram Capital has been appointed as the Independent Financial Adviser with our approval to advise the Whitewash Waiver IBC and the Independent Shareholders in this regard.

We wish to draw your attention to the “Letter from the Board”, the “Letter from Gram Capital” and the additional information set out in the appendices of the Whitewash Circular. Having taken into the terms of the Subscription, and the principal factors and reasons considered by Gram Capital as set out in the “Letter from Gram Capital” in the Whitewash Circular, we concur with the view of Gram Capital and consider that the terms of the Whitewash Transactions and the Whitewash Waiver are on normal commercial terms and the terms of the Whitewash Transactions and the Whitewash Waiver are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Independent Shareholders as a whole.

– 30 –

LETTER FROM THE WHITEWASH WAIVER IBC

Accordingly, we recommend you to vote in favour of the resolutions to be proposed at the EGM and the Class Meetings for approving the Whitewash Transactions and the Whitewash Waiver.

Yours faithfully,

For and on behalf of the Whitewash Waiver IBC

Zhu Shaowen, Cao Xin, Zhao Xianguo, Liu Haixia, Guan Tiangang Non-executive Directors

Feng Gengfu, Luo Zhongwei, Liu Huangsong, Jiang Fuxiu, Liu Jizhen Independent non-executive Directors Datang International Power Generation Co., Ltd.

– 31 –

LETTER FROM GRAM CAPITAL

Set out below is the text of a letter received from Gram Capital, the Independent Financial Adviser to the Independent Board Committees and Independent Shareholders in respect of the Subscription Agreements, the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver for the purpose of inclusion in this circular.

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Room 1209, 12/F. Nan Fung Tower 88 Connaught Road Central/ 173 Des Voeux Road Central Hong Kong

9 February 2017

To: Th e Independent Board Committees and the Independent Shareholders of Datang International Power Generation Company Limited

Dear Sir/Madam,

(I) CONNECTED TRANSACTION IN RESPECT OF

THE PROPOSED SHARE ISSUANCE;

(II) SPECIFIC MANDATES; AND

(III) APPLICATION FOR WHITEWASH WAIVER

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committees and the Independent Shareholders in respect of the Subscription Agreements, the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 9 February 2017 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 28 November 2016 (after trading hours), the Company entered into the A-Share Subscription Agreement with CDC pursuant to which the Company has conditionally agreed to allot and issue and CDC has conditionally agreed to subscribe in cash for 2,794,943,820 A-Share Subscription Shares at the A-Share Issue Price of RMB3.56 per A-Share Subscription Share (subject to adjustments), raising gross proceeds of approximately RMB9,950 million.

– 32 –

LETTER FROM GRAM CAPITAL

On 6 January 2017 (after trading hours), the Company, CDC and CDOHKC entered into the H-Share Subscription Amendment Agreement pursuant to which CDC or its nominated wholly owned subsidiary shall substitute CDOHKC as the H-Share Subscription Shares Subscriber and CDOHKC shall relinquish all its rights and obligations as a party to the H-Share Subscription Agreement and cease to be a party thereof. The final entity that may be used by CDC to be the H-Share Subscription Shares Subscriber shall comply with all applicable laws, rules and regulations.

In connection with the amendments to the H-Share Subscription Agreement, immediately after the entering into of the H-Share Subscription Amendment Agreement, on the even date, the Company and CDC entered into the A-Share Subscription Supplemental Agreement pursuant to which all references to CDOHKC in the A-Share Subscription Agreement are either amended to “CDC or its nominated wholly owned subsidiary” or deleted as appropriate in the relevant context. Save as amended as aforesaid, all other terms and conditions of the Subscription Agreements described in the Whitewash Announcement remain unchanged.

With reference to the Board Letter, CDC is a controlling shareholder and therefore a connected person of the Company. The H-Share Subscription Shares Subscriber, being CDC or its nominated wholly owned subsidiary, is also a connected person of the Company. Accordingly, the A-Share Issuance and the H-Share Issuance constitute connected transactions of the Company and are subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Under Rule 26.1 of the Takeovers Code, CDC and parties acting in concert with it will be obliged to make a mandatory general offer to the Shareholders for all the issued Shares and other securities of the Company not already owned or agreed to be acquired by CDC or parties acting in concert with it, unless the Whitewash Waiver is granted by the Executive and approved by the Independent Shareholders pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code.

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LETTER FROM GRAM CAPITAL

The Connected Transactions IBC comprising all the independent non-executive Directors, namely Mr. Feng Genfu, Mr. Luo Zhongwei, Mr. Liu Huangsong, Mr. Jiang Fuxiu and Mr. Liu Jizhen has been established to advise the Independent Shareholders on (i) whether the terms of the Subscription Agreements are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Subscription Agreements and the Specific Mandates are in the interests of the Company and the Shareholders as a whole and are conducted in the ordinary and usual course of business of the Group; and (iii) how the Independent Shareholders should vote in respect of the resolution(s) to approve the Subscription Agreements and the Specific Mandates at the EGM and the Class Meetings.

The Whitewash Waiver IBC comprising the non-executive Directors and independent non-executive Directors who have no direct or indirect interest in the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver, namely Mr. Zhu Shaowen, Mr. Cao Xin, Mr. Zhao Xianguo, Mr. Liu Haixia, Ms. Guan Tiangang, Mr. Feng Genfu, Mr. Luo Zhongwei, Mr. Liu Huangsong, Mr. Jiang Fuxiu and Mr. Liu Jizhen has been established to advise the Independent Shareholders on (i) whether the terms of the Subscription Agreements are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver are in the interests of the Company and the Shareholders as a whole and are conducted in the ordinary and usual course of business of the Group; and (iii) how the Independent Shareholders should vote in respect of the resolution(s) to approve the Subscription Agreements, the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver at the EGM and the Class Meetings.

We, Gram Capital Limited, have been appointed as the Independent Financial Adviser to advise the Connected Transactions IBC, Whitewash Waiver IBC and the Independent Shareholders in these respects.

INDEPENDENCE

During the past two years immediately preceding the Latest Practicable Date, (i) Mr. Graham Lam was the person signing off the opinion letter from the independent financial adviser contained in the circular dated 9 December 2016 in respect of the major transaction and continuing connected transactions for the Company; and (ii) Gram Capital is engaged as the independent financial adviser regarding continuing connected transactions (details of which are set out under the announcements of the Company dated 28 December 2016 and 13 January 2017). Notwithstanding the aforesaid engagements (the “ Other IFA Engagements ”), as at the Latest Practicable Date, we were not aware of any relationships or interests between Gram Capital and the Company, the CDC Group or any other parties that could be reasonably regarded as a hindrance to Gram Capital’s independence to act as the IFA to the Independent Board Committees and the Independent Shareholders.

Besides that, apart from the advisory fee payable to us in connection with the Other IFA Engagements and our appointment as the Independent Financial Adviser to the Independent Board Committees and the Independent Shareholders, no arrangement exists whereby we shall receive any other fees or benefits from the Company.

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LETTER FROM GRAM CAPITAL

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committees and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date, and should there be any material changes to our opinion after the Latest Practicable Date, Shareholders would be notified as soon as possible. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. Our opinion is based on the Directors’ representation and confirmation that there are no undisclosed private agreements/arrangements or implied understanding with anyone concerning the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules and Rule 2 of the Takeovers Code.

The Circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, the information (other than information relating to CDC and its concert parties) contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or the Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice.

The Circular includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Group. The Directors jointly and severally accept full responsibility for the accuracy of the information (other than information relating to CDC and its concert parties) contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed (other than those expressed by directors of CDC and its concert parties) in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading.

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LETTER FROM GRAM CAPITAL

The information in relation to CDC contained in the Circular has been supplied by the directors of CDC. The directors of CDC jointly and severally accept full responsibility for the accuracy of the information contained in the Circular (other than information relating to the Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed (other than those expressed by directors of the Group) in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statements in the Circular misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, the CDC Group, or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the A-Share Issuance and the H-Share Issuance. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company. The Shareholders will be notified of any material changes as soon as possible in accordance with Rule 9.1 of the Takeovers Code.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, it is the responsibility of Gram Capital to ensure that such information has been correctly and fairly extracted, reproduced or presented from the relevant sources while we are not obligated to conduct any independent in-depth investigation into the accuracy and completeness of those information.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver, we have taken into consideration the following principal factors and reasons:

A. The A-Share Issuance and the H-Share Issuance

Business overview of the Group

With reference to the Board Letter, the Company was established on 13 December 1994 with registered capital of RMB13.310 billion and is principally engaged in the construction and operation of power plants, the sale of electricity and thermal power, the repair, maintenance and commissioning of power equipment and power related technical services. The Company mainly provides services in the PRC.

– 36 –

LETTER FROM GRAM CAPITAL

Set out below is a summary of the consolidated financial information on the Group for the six months ended 30 June 2016 and the two years ended 31 December 2015 as extracted from the interim report of the Company for the six months ended 30 June 2016 (the “ 2016 Interim Report ”) and the annual report of the Company for the year ended 31 December 2015 (the “ 2015 Annual Report ”):

	For the	For the	For the
	six months ended	year ended	year ended	Change from
	30 June 2016	31 December 2015	31 December 2014	2014 to 2015
	RMB’000	RMB’000	RMB’000	%
	(unaudited)	(audited)	(audited)
Operating revenue	29,198,539	61,890,285	70,194,327	(11.83)
Profit for the period/year	2,051,679	3,260,372	1,888,494	72.64

As illustrated in the above table, the operating revenue of the Group decreased to approximately RMB61,890.29 million for the year ended 31 December 2015 (“ FY2015 ”), representing a decrease of approximately 11.83% as compared to that for the year ended 31 December 2014 (“ FY2014 ”). With reference to the 2015 Annual Report, the aforesaid decrease in operating revenue was mainly due to the decrease in operating revenue derived from electricity sales. Despite the decrease in operating revenue, the net profit for the year of the Group substantially increased to approximately RMB3,260.37 million for FY2015, representing an increase of approximately 72.64% as compared to FY2014. With reference to the 2015 Annual Report, the aforesaid increase in net profit was due to the decrease in fuel costs and financial costs.

With reference to the 2016 Interim Report, the Company will continue to adhere to the value focused and result-oriented principles; consolidating the basis for safety production; strengthening the increase in power generation; enhancing strict cost control; sticking to the optimisation of development; carrying out quality projects and strengthening the energy conservation and emission reduction.

With reference to the announcement of the Company dated 13 January 2017 (the “ Profit Warning Announcement ”), based on a preliminary assessment by the management of the Company based on the unaudited management accounts of the Group for the year ended 31 December 2016, the Group expects to record a loss in operating results for the year ended 31 December 2016 and a net loss attributable to the equity holders of the Company. The change in the results of the Group was mainly attributable to (i) the loss incurred from the disposal of the coal-to-chemical and related projects, which was completed on 31 August 2016; (ii) average on-grid tariffs decreased during 2016 as compared to that during 2015; (iii) the increase in coal price in 2016 as compared to that in 2015, resulting in a decrease in the results of the coal-fired generator enterprise of the Company in 2016. Details of the aforesaid information were set out in the Profit Warning Announcement.

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LETTER FROM GRAM CAPITAL

Information on CDC

With reference to the Board Letter, CDC was established on 9 March 2003 with registered capital of RMB18.009 billion. Its operation scope includes the development, investment, construction, operation and management of power energy, organisation of power (thermal) production and sales; manufacturing, repair and commissioning of power equipment; power technology development and consultation; power engineering, contracting and consultation of environmental power engineering; development of new energy as well as development and production of power-related coal resources.

Financing alternatives available to the Group

With reference to the Board Letter, the Company has not carried out any fund raising exercises involving the issue of equity security during the 12 months immediately preceding the Latest Practicable Date.

Upon our enquiry with the Directors, we understood that the Directors have considered both debt and equity financing as fund raising methods for the Group from Hong Kong capital market and/ or the PRC capital market. In relation to debt financing, the Directors advised us that in light of that (i) the debt financing may incur interest expenses as compared to equity financing; and (ii) the Company does not prefer to increase the Group’s gearing level and create additional debt liabilities to the Group, debt financing is considered to be less preferable for the Group at present.

As for equity financing, the Directors have also considered the rights issue and open offer. Having considered that (i) the amount of funds raised for rights issue is uncertain unless the rights issue is fully underwritten; (ii) it is difficult for the Company to identify independent institutional underwriter(s) for rights issue/open offer at more favourable terms than those under the A-Share Issuance and the H-Share Issuance; and (iii) the costs for underwriting, if an underwriter can be identified, are comparatively higher than that of the A-Share Issuance and the H-Share Issuance as a result of (a) the higher costs involved with rights issue/open offer attributable to a higher rate of underwriting commission for rights issue/open offer payable to underwriter(s) as compared with nil commission fee payable for the A-Share Issuance and the H-Share Issuance; and (b) an additional documentation preparation cost for rights issue/open offer prospectus and thus higher professional fees. Accordingly, the Directors considered the A-Share Issuance and the H-Share Issuance to be more preferable methods of fund raising for the Group.

Furthermore, according to the 《上市公司證券發行管理辦法》 (Measures for Administration of the Issue of Securities by Listed Companies) and《上市公司非公開發行股票實施細則》(the Implementation Rules for the Non-Public Issuance of Shares by Listed Companies) issued by CSRC (the “ Measures ”), the non-public issuance of new A shares is generally subject to a lockup period of not less than (i) 36 months period for (a) the controlling shareholders, their beneficial owners, or their associates; (b) investors who obtain the controlling power upon the completion

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LETTER FROM GRAM CAPITAL

of the issuance; and (c) strategic investors as introduced by the board of the company; or (ii) 12 months period for the other investors from the date of the completion of the issuance. With reference to the Board Letter, (i) CDC has undertaken not to trade or transfer any of the A-Share Subscription Shares; and (ii) H-Share Subscription Shares Subscriber shall not trade or transfer any of the H-Share Subscription Shares, within 36 months from the completion of the H-Share Issuance, save for transfer to subsidiaries of CDC in accordance with applicable rules and regulations. In light of the aforementioned, the Directors are of the view that the Share lock-up would limit the negative impact of the A-Share Issuance and the H-Share Issuance on the market price of the Shares.

In light of the above, we concur with the Directors that the A-Share Issuance and the H-Share Issuance are more preferable methods of fund raising for the Group.

Reasons for and benefits of the A-Share Issuance and the H-Share Issuance and use of proceeds

With reference to the Board Letter, the proposed use of part of the proceeds from the A-Share Issuance for the construction of power plant projects is beneficial for the further solidification of the advantages of the principal business of the Company and enhances the core competitiveness of the power generation business while facilitating the sustainable development of the Company.

Part of the proceeds from the A-Share Issuance is proposed to be used for repaying infrastructure project loans. As of 30 September 2016, the debt-to-asset ratio (calculated by total liabilities over total assets) of the Company was 74.78%, which was at a relatively high level as compared to the average debt-to-asset ratio of approximately 62.83% for the companies which are principally engaged in electricity related business and listed on Shanghai Stock Exchange/Shenzhen Stock Exchange as extracted from Wind Info (Wind諮詢) [Note] ; and for 2015, the interest expense of the Company amounted to RMB11.281 billion, resulting in a relative high level of finance cost which represented approximately 12.89% to the operating revenue for FY2015 (the finance cost to operating revenue of the Group for each of the five years ended 31 December 2014 were approximately 8.86%, 9.81%, 11.04%, 11.11% and 12.40% respectively). According to the proposed use of proceeds from the A-Share Issuance and the H-Share Issuance, approximately 55.78% of the total proceeds from the A-Share Issuance will be applied for the repayment borrowings of the Group and the whole proceeds from the H-Share Issuance will be applied for general corporate purposes including but not limited to loan and bond repayment. Accordingly, the Company may reduce its debt-to-asset ratio, thus optimizing its capital structure, reducing its financial cost and lowering its financial risk.

Note: Based on the website of Wind Info, Wind Info was founded in 1994. As the market leader in China’s financial information services industry, Wind Info is dedicated to provide accurate and real-time information, as well as sophisticated communication platforms for financial professionals.

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LETTER FROM GRAM CAPITAL

With reference to the Board Letter, the Company expects to raise total proceeds of approximately RMB9,950 million from the A-Share Issuance. It is the intention of the Company to apply the net proceeds from the A-Share Issuance (the “ A-Share Net Proceeds ”) as follows:

(a) approximately RMB1,082 million (equivalent to approximately 10.87% of the total proceeds from the A-Share Issuance) for “Replacing Small Units with Larger Units” Newlyconstructed Project of Liaoning Datang International Huludao Thermal Power Plant (遼寧大唐國際葫蘆島熱電廠“上大壓小”新建工程項目) (the “ Huludao Project ”);
(b) approximately RMB922 million (equivalent to approximately 9.27% of the total proceeds from the A-Share Issuance) for Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project (2 sets of 400MW class (F class)) (江蘇大唐國際金壇燃機熱電聯產工程項目(2套400MW級（F級）)) (the “ Jintan Project ”);
(c) approximately RMB822 million (equivalent to approximately 8.26% of the total proceeds from the A-Share Issuance) for Tangshan Beijiao 2x350MW Thermal Power Co-generation Project (唐山北郊熱電聯產工程項目(2×350MW)) (the “ Tangshan Project ”);
(d) approximately RMB794 (equivalent to approximately 7.98% of the total proceeds from the A-Share Issuance) for “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant (2×350MW supercritical coal-fired wet and cold heat supply unit) (遼寧大唐國際沈撫連接帶熱電廠“上大壓小”新建工程（2×350MW超臨界燃煤濕冷供熱機組）) (the “ Shenfu Project ”);
(e) approximately RMB780 million (equivalent to approximately 7.84% of the total proceeds from the A-Share Issuance) for Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply (2×400MW) Co-generation Project (廣東大唐國際高要金淘熱電冷 (2×400MW) 聯產項目) (the “ Gaoyao Project ”); and
(f) approximately RMB5,550 million (equivalent to approximately 55.78% of the total proceeds from the A-Share Issuance) for repaying infrastructure project loans, the lenders of which are commercial banks independent of the Company and not shareholders of the Company (the “ Repayment ”).

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LETTER FROM GRAM CAPITAL

We noted that there is a 《非公開發行A股股票募集資金使用的可行性分析報告》 (Proposal in respect of the Feasibility Report on Use of Proceeds from the Non-public Issuance of A Shares) of the Company dated 28 November 2016 (the “ Feasibility Report ”). The Feasibility Report set out the details of the above projects (the “ Project(s) ”) and the Repayment (collectively, the “ Uses* ”), including the necessity of the development of each of the Projects, the time schedule for the development of the Projects, estimated of investments on the Projects and feasibility of the Uses. Summarised below are the details of the Uses:

The Huludao Project

The Huludao Project is situated at Huludao Beigang Industrial Zone, Huludao City, Liaoling Province, the PRC* (葫蘆島市北港工業園區). The purpose of the Huludao Project is to satisfy the demand on heat supply by Huludao City. According to the development plan, the Huludao Project is expected to supply heat in 2018. The total investment for the project is approximately RMB3,209,780,000 and approximately RMB1,082,000,000 is intended to be funded by the net proceeds from the A-Share Net Proceeds and the remaining amount is intended to be funded by the Company’s self-owned funds or through other financing methods.

The Jintan Project

The Jintan Project is situated at Jiangsu Jintan Economic Development Zone, Jintan City, Jiangsu Province, the PRC* (江蘇省金壇市金壇經濟開發區). The purpose of the Jintan Project is to satisfy the demand on heat supply by and provide source of electricity to Jintan City. According to the development plan, the construction for the Jintan Project is approximately 24 months. The total investment for the project is approximately RMB2,457,310,000 and approximately RMB922,000,000 is intended to be funded by the net proceeds from the A-Share Net Proceeds and the remaining amount is intended to be funded by the Company’s self-owned funds or through other financing methods.

The Tangshan Project

The Tangshan Project is situated at Kaiping Zone, Tangshan City, Hebei Province, the PRC* (河北省唐山市開平區). The purpose of the Tangshan Project is to satisfy the demand on heat supply by Tangshan City. According to the development plan, the construction for the Jintan Project is approximately 19 months. The total investment for the project is approximately RMB3,079,540,000 and approximately RMB822,000,000 is intended to be funded by the net proceeds from the A-Share Net Proceeds and the remaining amount is intended to be funded by the Company’s self-owned funds or through other financing methods.

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LETTER FROM GRAM CAPITAL

The Shenfu Project

The Shenfu Project is situated at east of Shenyang City and West of Fushun City, Liaoning Province, the PRC* (遼寧省瀋陽市東部、撫順市西部). The purpose of the Shenfu Project is to satisfy the demand on heat supply by east of Shenyang City. According to the development plan, the construction for the Shenfu Project is approximately 31 months. The total investment for the project is approximately RMB3,417,180,000 and approximately RMB794,000,000 is intended to be funded by the net proceeds from the A-Share Net Proceeds and the remaining amount is intended to be funded by the Company’s self-owned funds or through other financing methods.

The Gaoyao Project

The Gaoyao Project is situated at Jinli Town, Gaoyao City, Guangdong Province, the PRC* (廣東省高要市金利鎮). The purpose of the Gaoyao Project is to satisfy the demand on heat supply (for industrial use purpose) by Gaoyao City. According to the development plan, the construction for the Gaoyang Project is approximately 18 months. The total investment for the project is approximately RMB2,734,120,000 and approximately RMB780,000,000 is intended to be funded by the net proceeds from the A-Share Net Proceeds and the remaining amount is intended to be funded by the Company’s self-owned funds or through other financing methods.

The Repayment

As at 30 June 2016, short-term borrowings of the Group amounted to approximately RMB16,525 million, bearing annual interest rates ranging from 3.83% to 6.15%. Long-term borrowings (excluding those due within one year) amounted to approximately RMB130,102 million and longterm borrowings due within one year amounted to approximately RMB10,941 million. Long-term borrowings (including those repayable within one year) were at annual interest rates ranging from 1.13% to 6.80%. According to the Feasibility Report, as at 30 September 2016, the average debt-toasset ratio of the companies which are principally engaged in electricity related business and listed on Shanghai Stock Exchange/Shenzhen Stock Exchange is approximately 62.83%, while the debtto-asset of the Group is approximately 74.78%. The Directors considered that the Repayment will optimise the capital structure of the Company, lower finance expense as well as the debt-to-asset ratio of the Company.

In light of the above-mentioned summaries of the Projects and the debt position of the Group, we consider that the Uses to be acceptable.

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LETTER FROM GRAM CAPITAL

the H-Share Issuance for general corporate purposes including but not limited to loan and bond repayment within two years after the H-Share Issuance is completed. Having considered the amount of short-term borrowings, long-term borrowings (excluding those due within one year) and longterm borrowings due within one year of the Group as at 30 June 2016 and their respective range of interest rates as mentioned above, we concur with the Directors that the proposed use of proceeds from H-Share Issuance will also optimise the capital structure of the Company, lower finance expense as well as the debt-to-asset ratio of the Company. Accordingly, we consider that the use of proceeds from H-Share Issuance to be acceptable.

Having considered (i) the aforementioned reasons for and possible benefits of the A-Share Issuance and the H-Share Issuance; (ii) that the A-Share Issuance and the H-Share Issuance are more preferable method of fund raising for the Group as discussed above; and (iii) the proposed use of proceeds from the A-Share Issuance and the H-Share Issuance, we concur with the Directors that the A-Share Issuance and the H-Share Issuance, although are not conducted in the ordinary and usual course of business of the Group, are in the interests of the Company and the Shareholders as a whole.

Principal terms of the A-Share Subscription Agreement (as supplemented by the A-Share Subscription Supplemental Agreement)

The table below summarises the major terms of the A-Share Subscription Agreement (as supplemented by the A-Share Subscription Supplemental Agreement):

Date

28 November 2016

Parties

The Company as the issuer; and

CDC as the subscriber.

Number of A-Share Subscription Shares

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LETTER FROM GRAM CAPITAL

The total number of A-Share Subscription Shares to be subscribed by CDC shall be adjusted based on the following formula as disclosed in the section headed “A-Share Subscription Agreement (as supplemented)” of the Board Letter.

A-Share Issue Price

RMB3.56 per A-Share Subscription Share.

The A-Share Issue Price represents 90% of the 20-day average trading price of the A-Shares immediately preceding the A-Share price referencing date (i.e. 29 November 2016) (“ A-Share Issue Price Basis/20-day A-Share Discount ”).

The A-Share Issue Price of RMB3.56 represents:

(a) a discount of approximately 8.01% to the closing price of RMB3.87 per A-Share as quoted on the Shanghai Stock Exchange on the Latest Practicable Date;
(b) a discount of approximately 10.55% to the closing price of RMB3.98 per A-Share as quoted on the Shanghai Stock Exchange on the A-Share Last Trading Date (the “ LTD A-Share Discount ”);
(c) a discount of approximately 9.51% to the average closing price of RMB3.93 per A-Share as quoted on the Shanghai Stock Exchange in the last five consecutive trading days up to and including the A-Share Last Trading Date;
(d) a discount of approximately 9.27% to the average closing price of RMB3.92 per A-Share as quoted on the Shanghai Stock Exchange in the last 30 consecutive trading days up to and including the A-Share Last Trading Date;
(e) a discount of approximately 11.76% to the average closing price of RMB4.03 per A-Share as quoted on the Shanghai Stock Exchange in the last 180 consecutive trading days up to and including the A-Share Last Trading Date; and
(f) a premium of approximately 5.33% over the audited consolidated net asset value per Share of approximately RMB3.38 (from the Company’s consolidated financial statements prepared in accordance with PRC GAAP) as at 31 December 2015, based on the total number of issued Shares as at 31 December 2015.

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LETTER FROM GRAM CAPITAL

To assess the fairness and reasonableness of the A-Share Issue Price, we have taken into account the following factors:

Review of A-Shares price

The diagram demonstrating the daily closing price of the A-Shares as quoted from Bloomberg during the period commencing from 1 December 2015 up to and including the Latest Practicable Date (the “ Review Period ”), being approximate one year period prior to and including the date of the A-Share Subscription Agreement and up to the Latest Practicable Date, which is commonly used for analysis purpose, is shown as follows:

Historical daily closing price per A-Share

==> picture [400 x 206] intentionally omitted <==

----- Start of picture text -----

RMB
6
5
4
3
2
1
0
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
2015 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2017 2017
A-Share historical daily closing price A-Share Issue Price
----- End of picture text -----

Note: Trading in A-Shares were suspended from 15 November 2016 to 28 November 2016 (both dates inclusive)

Source: Bloomberg

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LETTER FROM GRAM CAPITAL

During the Review Period, the A-Shares were traded with closing prices in the range of RMB3.77 to RMB5.47 per A-Share with an average closing price of approximately RMB4.14 per A-Share. The closing prices of the A-Shares showed a sliding trend from 1 December 2015 to 28 January 2016 and became relatively stable during the rest of the Review Period.

Comparison of the subscription price of new A shares

To assess the fairness and reasonableness of the A-Share Issue Price, we have identified transactions (the “ A Shares Issuance Transactions ”) regarding issuance of new A shares by companies listed on both (i) Shanghai Stock Exchange/Shenzhen Stock Exchange; and (ii) Hong Kong Stock Exchange as announced since 28 September 2016, being approximately two months immediately before the date of the A-Share Subscription Agreement, and up to and including the Latest Practicable Date, for comparison purpose. We noted from the A Shares Issuance Transactions that the issue price may or may not be fixed as at the date of the relevant announcement regarding the A Shares Issuance Transactions. Having considered that (i) the A-Share Issue Price was fixed as at the Announcement Date; and (ii) the premium/discount of the subscription price over/to their respective closing price of A Shares Issuance Transactions may vary if the subscription price was not fixed, we selected the A Shares Issuance Transactions with fixed issue price for comparison purpose. However, we only found two transactions which met the aforesaid criteria. For this reason, we have extended our selection period commencing from 1 December 2015, being approximately one year period immediately before the date of the A-Share Subscription Agreement. We identified four transactions which met our aforesaid criteria (the “ A-Share Comparables ”) and they are exhaustive. Despite that the businesses, operations and prospects of the Company are not exactly the same as the A-Share Comparables, the A-Share Comparables is adequate and appropriate to demonstrate the market practices regarding issuance of A shares by companies listed on both

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LETTER FROM GRAM CAPITAL

(i) Shanghai Stock Exchange/Shenzhen Stock Exchange; and (ii) Hong Kong Stock Exchange. Summarised below is our relevant findings:

				Premium/(discount)
				of the subscription
				price over/(to)
			Premium/(discount)	the 20-day average
			of the subscription	trading price
			price over/(to)	immediately
			closing price as	preceding the
			at the A-Share Price	A-Share Price
		Date of	Reference Date	Reference Date
Company (Stock code)	Principal business	announcement	(as defined below)	(as defined below)
			(Note)	(Note)
Shanghai Electric Group	Design, manufacture and	6 December 2015	(7.30)	(10.00)
Company Limited (2727 &	sale of power equipment,
SH601727)	electromechanical equipment,
	heavy machinery & nuclear
	electricity & nuclear island
	equipment, transportation
	equipment & environmental
	protection industrial products and
	related services.
CRRC Corporation Limited	Research and development,	27 May 2016	(4.84)	(9.98)
(1766 & SH601766)	manufacturing, sale and
	refurbishment of locomotives,
	passenger carriages, freight
	wagons, multiple units and metro
	cars; and other businesses that
	utilise proprietary rolling stock
	technologies.
Guangzhou Automobile Group	Manufacturing and sales of passenger	31 October 2016	(12.08)	(10.00)
Company Limited (2238 &	vehicles, commercial vehicles,
SH601238)	engines and automotive parts.
Shanghai Electric Group	Design, manufacture and	14 November 2016	(10.44)	(10.00)
Company Limited (2727 &	sale of power equipment,
SH601727)	electromechanical equipment,
	heavy machinery & nuclear
	electricity & nuclear island
	equipment, transportation
	equipment & environmental
	protection industrial products and
	related services.
Maximum			(4.84)	(9.98)
Minimum			(12.08)	(10.00)
Average			(8.66)	(9.99)
The Company		28 November 2016	(10.55)	(10.00)

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LETTER FROM GRAM CAPITAL

Note: According to the Measures, price reference date (the “ A-Share Price Reference Date ”) is defined as (i) the date of announcement of the board resolutions relating to the non-public issuance; (ii) the date of announcement of the shareholders’ resolutions relating to the non-public share issuance; or (iii) the first day of the issuance period (發行期). Companies may choose any of the three ways to define their A-Share Price Reference Date. The A-Share Price Reference Date of each of the A-Share Comparables was the date of announcement of the board resolutions relating to the non-public issuance.

As shown by the above table, the subscription prices of the A-Share Comparables ranged from (i) a discount of approximately 4.84% to a discount of approximately 12.08% to the respective closing prices of their shares on the A-Share Price Reference Date, with an average discount of approximately 8.66%; and (ii) a discount of approximately 9.98% to a discount of approximately 10.00% with an average discount of approximately 9.99% to the respective 20-day average trading price of their shares immediately preceding the A-Share Price Reference Date (the “ A-Share Market Ranges ”). The LTD A-Share Discount and the 20-day A-Share Discount are thus within the aforesaid A-Share Market Ranges.

In addition, we noted that the A-Share Issue Price Basis complies with Measures, which require the A share issue price to be not less than 90% of the average trading price of A-Shares of the Company during the 20 trading days immediately preceding the A-Share Price Reference Date.

Despite that the A-Share Issue Price of RMB3.56 per A Share is lower than the closing price of the A-Shares during the Review Period, having considered that (i) the A-Share Issue Price Basis complies with relevant PRC regulations; and (ii) the LTD A-Share Discount and the 20-day A-Share Discount are within the A-Share Market Ranges, we consider that the A-Share Issue Price is fair and reasonable so far as the Independent Shareholders are concerned.

Adjustments to the A-Share Issue Price

The A-Share Issue Price shall be adjusted according to the formulae as set out in the sub-section headed “Adjustments to the A-Share Issue Price” of the Board Letter if there are any ex-rights or ex-dividends activities (such as dividends distribution, share placement or capitalisation of capital reserve) undertaken by the Company between the A-Share price referencing date (i.e. 29 November 2016) and the A-Share Issuance Date.

Lock-up period

With reference to the Board Letter, CDC has undertaken not to trade or transfer any of the A-Share Subscription Shares within 36 months from the completion of the A-Share Issuance. The Directors are of the view that the lock-up period would limit the negative impact of the issuance of new A-Shares on the market price of the Shares.

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LETTER FROM GRAM CAPITAL

Further details of the A-Share Subscription Agreement are included in the section headed “A-Share Subscription Agreement (as supplemented)” of the Board Letter.

Having considered the above, we are of the view that the terms of the A-Share Subscription Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

Principal terms of the H-Share Subscription Agreement (as amended by the H-Share Subscription Amendment Agreement)

The table below summarises the major terms of the H-Share Subscription Agreement (as amended by the H-Share Subscription Amendment Agreement):

Date

28 November 2016

Parties

The Company as the issuer;

CDOHKC as the original subscriber; and

CDC (for itself or its nominated wholly owned subsidiary) as the substitute subscriber.

Number of H-Share Subscription Shares

The total number of H-Share Subscription Shares to be subscribed by the H-Share Subscription Shares Subscriber shall be adjusted based on the formula as disclosed in the section headed “H-Share Subscription Agreement (as amended)” of the Board Letter.

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LETTER FROM GRAM CAPITAL

H-Share Issue Price

HK$2.12 per H-Share Subscription Share.

The H-Share Issue Price represents 103% of the 20-day average trading price of the H-Shares immediately preceding the H-Share Price Referencing Date i.e. HK$2.12.

The H-Share Issue Price represents:

(a) a premium of approximately 4.95% over the closing price of HK$2.02 per H-Share as quoted on the Hong Kong Stock Exchange on the Latest Practicable Date;
(b) a premium of approximately 1.92% over the closing price of HK$2.08 per H-Share as quoted on the Hong Kong Stock Exchange on the H-Share Price Referencing Date (the “ H-Share PRD Premium ”);
(c) a premium of approximately 2.51% over the average closing price of HK$2.07 per H-Share as quoted on the Hong Kong Stock Exchange in the last five consecutive trading days up to and including the H-Share Price Referencing Date (the “ H-Share Five-day Premium ”);
(d) a premium of approximately 1.86% over the average closing price of HK$2.08 per H-Share as quoted on the Hong Kong Stock Exchange in the last 30 consecutive trading days up to and including the H-Share Price Referencing Date;
(e) a premium of approximately 0.58% over the average closing price of HK$2.11 per H-Share as quoted on the Hong Kong Stock Exchange in the last 180 consecutive trading days up to and including the H-Share Price Referencing Date; and
(f) a discount (the “ NAV Discount ”) of approximately 44.50% to the audited consolidated net asset value per Share of approximately RMB3.40 (from the Company’s consolidated financial statements prepared in accordance with International Financial Reporting Standards, equivalent to approximately HK$3.82 based on the reference rate of the People’s Bank of China of HK$1:RMB0.89015 as at 28 November 2016) as at 31 December 2015, based on the total number of issued Shares as at 31 December 2015.

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LETTER FROM GRAM CAPITAL

To assess the fairness and reasonableness of the H-Share Issue Price, we have taken into account the following factors:

Review of H-Shares prices

The diagram demonstrating the daily closing price of the H-Shares as quoted on the Hong Kong Stock Exchange during the Review Period, is shown as follows:

Historical daily closing price per H-Share

==> picture [396 x 259] intentionally omitted <==

----- Start of picture text -----

HK$
3
2.5
2
1.5
1
0.5
0
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
2015 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2017 2017
H-Shares historical daily closing price H-Share Issue Price
----- End of picture text -----

Source: the Hong Kong Stock Exchange

During the Review Period, the H-Shares were traded with closing prices in the range of HK$1.90 to HK$2.58 per H-Share with an average closing price of approximately HK$2.12 per H-Share. The closing prices of the H-Shares fluctuated with range of HK$1.9 to HK$2.58 from 1 December 2015 to 29 July 2016 and became relatively stable during the rest of the Review Period.

As aforementioned, the H-Share Issue Price represents a discount of approximately 44.50% to the audited consolidated net asset value per Share as at 31 December 2015. We consider that the NAV Discount is acceptable as the closing prices per H-Share for the trading days during the Review Period were below the audited net asset value per Share of RMB3.40 (equivalent to approximately HK$3.82 based on the reference rate of the People’s Bank of China of HK$1:RMB0.89015 as at 28 November 2016) as at 31 December 2015.

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LETTER FROM GRAM CAPITAL

Comparison of the subscription price of new H shares

To assess the fairness and reasonableness of the H-Share Issue Price, we have identified transactions (the “ H-Share Issuance Transactions ”) regarding issuance of new H Shares by companies listed on both (i) Shanghai Stock Exchange/Shenzhen Stock Exchange; and (ii) Hong Kong Stock Exchange as announced since 28 September 2016, being approximately two months period immediately before the date of the H-Share Subscription Agreement, for comparison purpose. We noted from the H-Share Issuance Transactions that the issue price may or may not be fixed as at the date of the relevant announcement regarding the H-Share Issuance Transactions. Having considered that (i) the H-Share Issue Price was fixed as at the Announcement Date; and (ii) the premium/discount of the subscription price over/to their respective closing price of H Shares Issuance Transactions may vary if the subscription price was not fixed, we selected the H-Share Issuance Transactions with fixed issue price for comparison purpose. However, we could not find any transaction which met the aforesaid criteria. Despite that we extended our selection period commencing from 1 December 2015, being approximately one year period immediately before the date of the H-Share Subscription Agreement, we only found one transaction which could meet the aforesaid criteria.

For this reason, we have alternatively identified transactions regarding the issuance of new shares under specific mandate as announced by companies listed on Hong Kong Stock Exchange with fixed issue price since 28 September 2016, being approximately two months immediately before the date of the H-Share Subscription Agreement, and up to and including the Latest Practicable Date for comparison purpose. We identified 21 transactions which met our aforesaid criteria (the “ H-Share Comparables ”) and they are exhaustive. Despite that the businesses, operations and prospects of the Company are not exactly the same as the H-Share Comparables, we consider that the H-Share Comparables is adequate and appropriate to demonstrate the market practices regarding issuance of shares by companies listed on Hong Kong Stock Exchange. Summarised below is our relevant findings:

			Premium/(discount)
			of the subscription	Premium/(discount)
			price over/(to)	of the subscription
			closing price per	price over/(to)
			share on the date	average closing price
			of agreement (the	per share for the
			“Reference Date”)	last five consecutive
			in relation to the	trading days up
		Date of	respective	to and including
Company (Stock code)	Principal business	announcement	subscription of share	the Reference Date
Ngai Shun Holdings Limited	Foundation business, property	2 October 2016	6.95	5.93
(1246)	development business, investment
	securities and provision of catering
	services.

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LETTER FROM GRAM CAPITAL

			Premium/(discount)
			of the subscription	Premium/(discount)
			price over/(to)	of the subscription
			closing price per	price over/(to)
			share on the date	average closing price
			of agreement (the	per share for the
			“Reference Date”)	last five consecutive
			in relation to the	trading days up
		Date of	respective	to and including
Company (Stock code)	Principal business	announcement	subscription of share	the Reference Date
Global Mastermind Holdings	Provision and operation of travel	12 October 2016	(8.50)	(6.79)
Limited (8063)	business, treasury management and
	money lending.
Global Mastermind Capital	Investment in listed and unlisted	17 October 2016	(4.26)	0.22
Limited (905)	companies in Hong Kong and in
	the PRC.
Share Economy Group Limited	Manufacturing and trading of	28 October 2016	(17.43)	(16.74)
(formerly known as Vitop Group	BIOenergy products, healthcare		(Note 1)	(Note 2)
Limited) (1178)	food products, multi-functional
	water generators, other healthcare
	products and properties investments in
	the PRC, excluding Hong Kong
	and Macau.
Alltronics Holdings Limited (833)	Manufacturing and trading of	31 October 2016	(47.16)	(46.79)
	electronic products, components
	for electronic products, biodiesel
	products; and provision of energy
	saving business solutions.
Yue Da Mining Holdings	Exploration, mining and processing	11 November 2016	31.03	29.69
Limited (629)	of zinc, lead, iron and gold.
Ozner Water International Holding	Provide water purification services	16 November 2016	2.40	7.41
Limited (2014)	and air sanitisation services.		(Note 1)	(Note 2)
Beijing Capital Juda Limited (1329)	Property investment and development.	25 November 2016	(29.29)	(25.05)
IRC Limited (1029)	Production and development of	1 December 2016	(44.74)	(44.00)
	industrial commodities products
	including iron ore that are used in
	industry across the world.
China Agri-Products Exchange	Management and sales of agricultural	4 December 2016	5.47	2.12
Limited (149)	produce exchange markets in the PRC.
Winshine Science Company Limited	Manufacturing and trading of hard	14 December 2016	(10.89)	(22.28)
(209)	and stuffed toys and securities
	investments.

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LETTER FROM GRAM CAPITAL

			Premium/(discount)
			of the subscription	Premium/(discount)
			price over/(to)	of the subscription
			closing price per	price over/(to)
			share on the date	average closing price
			of agreement (the	per share for the
			“Reference Date”)	last five consecutive
			in relation to the	trading days up
		Date of	respective	to and including
Company (Stock code)	Principal business	announcement	subscription of share	the Reference Date
Honghua Group Limited (196)	Research, design, manufacture, setting	19 December 2016	(20.62)	(10.88)
	and sale of land rigs and related
	parts and components, design and
	manufacture of the offshore drilling
	module, provides technical support
	services and drilling engineering
	service for clients.
A8 New Media Group Limited (800)	Provision of digital entertainment	21 December 2016	(12.77)	(12.95)
	services, including music-based
	entertainment services and game
	related services in the PRC.
See Corporation Limited (491)	Film and TV programme production	22 December 2016	(10.38)	(11.46)
	and investment; cinema operation;
	event production and investment,
	music production and others; and
	investment in securities.
China Oil Gangran Energy	Development of liquefied natural gas,	4 January 2017	(12.17)	(10.14)
Group Holdings Limited (8132)	compressed natural gas; provision of
	programming services, web services,
	mobile marketing solutions and
	development of mobile phone games;
	and sales and manufacture of power
	and data cords.
Addchance Holdings Limited (3344)	Production and sale of dyed yarns,	6 January 2017	(92.00)	(92.11)
	knitted sweaters, cotton yarns,
	provision of dyeing and knitting
	services, and trading of cotton and
	yarns.
Ground International Development	Provision of telecommunications	9 January 2017	(20.00)	(19.79)
Limited (989)	retail sales and management services,
	property investment and property
	development and management,
	including planning, design, budgeting,
	licensing, contract tendering and
	contract administration.

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LETTER FROM GRAM CAPITAL

			Premium/(discount)
			of the subscription	Premium/(discount)
			price over/(to)	of the subscription
			closing price per	price over/(to)
			share on the date	average closing price
			of agreement (the	per share for the
			“Reference Date”)	last five consecutive
			in relation to the	trading days up
		Date of	respective	to and including
Company (Stock code)	Principal business	announcement	subscription of share	the Reference Date
Huarong Investment Stock	Foundation and substructure	12 January 2017	(73.15)	(73.37)
Corporation Limited (2277)	construction business in Hong Kong
	mainly include ELS works, pile
	caps construction and substructure
	construction for residential,
	commercial and infrastructure
	projects.
C Cheng Holdings Limited (1486)	Provision of comprehensive	13 January 2017	(37.62)	(37.07)
	architectural service.
National Arts Entertainment and	Film production and distribution, the	20 January 2017	(4.29)	(1.15)
Culture Group Limited (8228)	provision of management services
	to artistes, and operations of film
	studio and hotels.
SMI Culture & Travel Group	Provision of cross-media services	24 January 2017	(12.50)	(13.15)
Holdings Limited (2366)	including investment in the
	production and distribution of films
	and television programmes and
	related services.
Maximum			31.03	29.69
Minimum			(92.00)	(92.11)
Average			(19.62)	(18.97)
The Company		28 November 2016	1.92	2.51
Notes:

Trading in shares of the company was suspended/halted as at the date of agreement or the date of agreement was not a trading day. The discount/premium was calculated based on its subscription price over the closing price as at the last trading day immediately before the Reference Date.
Trading in shares of the company was suspended/halted as at the date of agreement or the date of agreement was not a trading day. The discount/premium was calculated based on its subscription price over the average closing price per share for the last five consecutive trading days immediately before the Reference Date.

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LETTER FROM GRAM CAPITAL

As shown by the above table, the subscription prices of the H-Share Comparables ranged from a discount of approximately 92.00% to a premium of approximately 31.03% to/over the respective closing prices on the Reference Date (the “ H-Share Market Range ”), with an average of a discount of approximately 19.62%. The H-Share PRD Premium is thus within the H-Share Market Range.

In addition, the subscription prices of the H-Share Comparables ranged from a discount of approximately 92.11% to a premium of approximately 29.69% to/over the respective average closing price per share for the last five consecutive trading days immediately preceding/up to and including the Reference Date (the “ H-Share Five-day Market Range ”), with an average of a discount of approximately 18.97%. The H-Share Five-day Premium is thus within the H-Share Fiveday Market Range.

Given that (i) the businesses, operations and prospects of the Company are not exactly the same as the H-Share Comparables; and (ii) the H-Share Market Range and the H-Share Five-day Market Range are wide, the above H-Share Comparables analysis can only serve for reference purpose.

Having considered that (i) the H-Share Issue Price of HK$2.12 per H-Share represents a premium over the closing prices of H-Share as at the Latest Practicable Date, the H-Share Price Referencing Date (i.e. 28 November 2016), the last 5, 30, 180 consecutive trading days up to and including the H-Share Price Referencing Date; and (ii) the H-Share Issue Price is within the range of closing prices of H-Shares during the Review Period (i.e. HK$1.90 to HK$2.58), we consider that the H-Share Issue Price is fair and reasonable so far as the Independent Shareholders are concerned.

Adjustments to the H-Share Issue Price

If the closing price of the H-Shares on the last trading day immediately preceding the date of the EGM and the Class Meetings is higher than the higher of the closing price of the H-Shares on the last trading day immediately preceding the H-Share Price Referencing Date (i.e. HK$2.07 per H-Share) or the Relevant H-Share Price (i.e. HK$2.12), the H-Share Issue Price shall be subject to an upward adjustment of not more than 5%. The exact upward adjustment ratio shall be determined by the Company after consultation with its financial advisers to the H-Share Issuance and be notified to the H-Share Subscription Shares Subscriber in writing.

The H-Share Issue Price shall also be adjusted according to the formulae as set out in the subsection headed “Adjustments to the H-Share Issue Price” of the Board Letter if there are any exrights or ex-dividends activities (such as dividends distribution, share placement or capitalisation of capital reserve) undertaken by the Company between the H-Share Price Referencing Date and the H-Share Issuance Date.

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LETTER FROM GRAM CAPITAL

Lock-up period

With reference to the Board Letter, the H-Share Subscription Shares Subscriber shall not trade or transfer any of the H-Share Subscription Shares within 36 months from the completion of the H-Share Issuance, save for transfer to subsidiaries of CDC (regardless of whether such subsidiaries are directly or indirectly held or wholly owned or controlled) in accordance with PRC laws, other laws applicable to the Company and the listing rules of the jurisdictions in which the Shares of the Company are listed provided that the transferee shall also comply with such lock-up undertaking. The Directors are of the view that the lock-up period would limit the negative impact of the issuance of new H-Shares on the market price of the Shares.

Further details of the H-Share Subscription Agreement are included in the section headed “H-Share Subscription Agreement (as amended)” of the Board Letter.

Having considered the above, we are of the view that the terms of the H-Share Subscription Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

Dilution effect on the shareholding interests of the existing public Shareholders

With reference to shareholding table as set out in the section headed “Effect on shareholding structure of the Company” of the Board Letter, the shareholding interests of the existing public Shareholders would be diluted by approximately 10.76 percent point immediately upon completion of the A-Share Issuance and the H-Share Issuance assuming there are no other changes in the issued share capital of the Company save for the allotment and issue of the Subscription Shares pursuant to the A-Share Issuance and the H-Share Issuance (the “ Dilution Effect ”). Nonetheless, in view of (i) the reasons for and the possible benefits of the A-Share Issuance and the H-Share Issuance to the Company; (ii) the terms of the Subscription Agreements being fair and reasonable; and (iii) our assessment and independent work done on point (i) and (ii) as mentioned above, we are of the view that the aforementioned level of dilution to the shareholding interests of the existing public Shareholders is acceptable.

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LETTER FROM GRAM CAPITAL

Financial effects of the A-Share Issuance and the H-Share Issuance

As confirmed by the Directors, it is expected that the A-Share Issuance and the H-Share Issuance would (i) increase the net asset value of the Group by amount of not more than the sum of the A-Share Net Proceeds and the H-Share Net Proceeds; and (ii) decrease the net asset value per Share of the Group, immediately upon the completion of the A-Share Issuance and the H-Share Issuance but before utilization of the aforesaid proceeds.

It should be noted that the aforementioned analyses are for illustrative purpose only and do not purport to represent how the financial position of the Group will be upon completion of the A-Share Issuance and the H-Share Issuance.

Recommendation on the A-Share Issuance and the H-Share Issuance

Having taken into consideration the factors and reasons as stated below:

(i) the A-Share Issuance and the H-Share Issuance are more preferable methods of fund raising for the Group;
(ii) the proposed use of proceeds from the A-Share Issuance and the H-Share Issuance;
(iii) reasons for and benefits of the A-Share Issuance and the H-Share Issuance as set out under the section headed “Reasons for and benefits of the A-Share Issuance and the H-Share Issuance and use of proceeds”;
(iv) despite that the A-Share Issue Price of RMB3.56 per A Share is lower than the closing price of the A-Shares during the Review Period, having considered that (a) the A-Share Issue Price Basis complies with relevant PRC regulations; and (b) the LTD A-Share Discount and the 20-day A-Share Discount are within the A-Share Market Ranges, the A-Share Issue Price is fair and reasonable so far as the Independent Shareholders are concerned;
(v) despite that the H-Share Issue Price represents a discount of approximately 44.50% to the audited consolidated net asset value per Share as at 31 December 2015, we consider that the NAV Discount is acceptable as the closing prices per H-Share for the trading days during the Review Period were below the audited net asset value per Share as at 31 December 2015. Having also considered that (a) the H-Share Issue Price of HK$2.12 per H Share represents a premium over the closing prices of H Share as at the Latest Practicable Date, the H-Share

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LETTER FROM GRAM CAPITAL

Price Referencing Date (i.e. 28 November 2016), the last 5, 30, 180 consecutive trading days up to and including the H-Share Price Referencing Date; and (b) the H-Share Issue Price is within the range of closing prices of H Shares during the Review Period (i.e. HK$1.90 to HK$2.58), we consider that the H-Share Issue Price is fair and reasonable so far as the Independent Shareholders are concerned;

(vi) the lock-up period would limit the negative impact of the issuance of new A-Shares and H-Shares on the market price of the Shares; and
(vii) the aforementioned level of dilution to the shareholding interests of the existing public Shareholders is acceptable,

we are of the opinion that (i) the terms of the Subscription Agreements are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the A-Share Issuance and the H-Share Issuance, although are not conducted in the ordinary and usual course of business of the Group, are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committees to advise the Independent Shareholders to vote in favour of the resolution(s) to be proposed at the EGM, A-Share Class Meeting and the H-Share Class Meeting to approve the A-Share Issuance and the H-Share Issuance and we recommend the Independent Shareholders to vote in favour of the resolution(s) in this regard.

B. THE WHITEWASH WAIVER

Upon completion of the A-Share Issuance and the H-Share Issuance, 2,794,943,820 A-Share Subscription Shares will be issued to CDC and 2,794,943,820 H-Share Subscription Shares will be issued to the H-Share Subscription Shares Subscriber, and the interests of the CDC Group in the voting rights of the Company will be increased from approximately 34.77% to approximately 54.07% (assuming there are no other changes in the issued share capital of the Company save for the allotment and issue of the Subscription Shares pursuant to the A-Share Issuance and the H-Share Issuance).

Under Rule 26.1 of the Takeovers Code, CDC and parties acting in concert with it would be obliged to make a mandatory general offer to the Shareholders for all the issued Shares and other securities of the Company not already owned or agreed to be acquired by CDC or parties acting in concert with it unless the Whitewash Waiver is granted by the Executive and approved by the Independent Shareholders pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code. CDC has made an application to the Executive for the Whitewash Waiver pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, will be subject to, among other things, the approval of Independent Shareholders by way of poll at the EGM.

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LETTER FROM GRAM CAPITAL

Completion of the A-Share Issuance and the H-Share Issuance are conditional upon, among other things, the Executive having granted the Whitewash Waiver to CDC. The A-Share Issuance and the H-Share Issuance will not proceed if the Whitewash Waiver is not granted or approved.

In view of (i) the reasons for and possible benefits of the A-Share Issuance and the H-Share Issuance as set out under the sub-section headed “Reasons for and benefits of the A-Share Issuance and the H-Share Issuance and use of proceeds” of this letter; (ii) that the A-Share Issuance and the H-Share Issuance are more preferable method of fund raising for the Group; (iii) the proposed use of proceeds from the A-Share Issuance and the H-Share Issuance; (iv) the terms of the Subscription Agreements being fair and reasonable so far as the Independent Shareholders are concerned, we are of the opinion that the approval of the Whitewash Waiver, which is a prerequisite for the completion of the A-Share Issuance and the H-Share Issuance, is in the interests of the Company and the Shareholders as a whole and is fair and reasonable for the purpose of proceeding with the A-Share Issuance and the H-Share Issuance.

– 60 –

LETTER FROM GRAM CAPITAL

Recommendation on the Whitewash Waiver

Having taken into consideration the reasons for and possible benefits of the A-Share Issuance and the H-Share Issuance and that the A-Share Issuance and the H-Share Issuance are conditional upon, among other things, the Executive having granted the Whitewash Waiver to CDC, we consider that the Whitewash Waiver is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Whitewash Waiver IBC to advise the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM to approve the Whitewash Waiver and we recommend the Independent Shareholders to vote in favour of the resolution in this regard.

Yours faithfully, For and on behalf of Gram Capital Limited Graham Lam Managing Director

For identification purposes only

– 61 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

This English version is for reference only. If there is any discrepancy between the English and Chinese version, the Chinese version shall prevail. Pursuant to the Implementation Rules for the Non-public Issue of Shares by Listed Companies (2011 Revision) ( 上市公司非公開發行股票實施細則（ 2011 年修訂） ) promulgated by the CSRC, the Board shall prepare the Proposal for Non-public Issuance of A-Shares in accordance with the requirements set out in No. 25 Guideline on the Contents and Formats of Information Disclosure by the Companies – Advanced Proposal and Issuance Reports on the Non-public Issue of Shares by Listed Companies ( 公司信息披露內容與格式準則第 25 號 – 上市公司非公開股票預案和發行情況報告書 ) (“ No. 25 Guideline ”). The said Proposal is required to be approved by the Board and the Shareholders in accordance with the Administrative Measures for the Issuance of Securities by Listed Companies ( 上市公司證券發行管理辦法 ) promulgated by the CSRC. The said Proposal is set out in this Appendix in order for Shareholders to have a better understanding of the Whitewash Transactions.

In this Proposal, the term “General Meeting” refers to the EGM as defined in the Whitewash Circular, and the following terms, i.e. “Non-public Issuance of A-Shares”, “Non-public Share Issuance”, “Non-public Issuance” and “Issuance” are interchangeable and refer to the A-Share Issuance as defined in the Whitewash Circular, unless the context otherwise requires.

All the numbers in this Appendix I are prepared using PRC GAAP. Net profit attributable to the equity holders of the Company excluding non-recurring profit/loss for the year of 2016 and 2017 in Section VII of this Appendix IA constitutes profit forecast under Rule 10 of the Takeovers Code and is required to be reported in accordance with Rule 10 of the Takeovers Code. With respect to the information relating to 2016, please refer to Appendix IB for the reports under Rule 10 of the Takeovers Code prepared by the PRC domestic auditor and the financial advisers to the H-Share Issuance of the Company. With respect to the information relating to 2017, as such information is prepared for illustrative purposes only and does not represent the Company’s judgments on its operation results or trend in 2017, and it will be inappropriate for the Company to prepare an actual profit forecast for 2017 at the beginning of the year to provide the relevant illustration given that it will prematurely disclose the business plans of the Company, leak its business secrets, severely jeopardise the competitiveness of the Company and harm the interests of the Company and the Shareholders as a whole and at the same time not providing meaningful information to the Shareholders as a profit forecast at the beginning of the year may not present sufficient accuracy and may even be misleading to Shareholders, an application has been made to the Executive for a waiver from the reporting on requirements set out in Rule 10 of the Takeovers Code, and the Executive has indicated that it is minded to grant such consent. As such information relating to 2017 has not been reported on in accordance with Rule 10 of the Takeovers Code, it does not meet the standard required by Rule 10 of the Takeovers Code. Shareholders and potential investors of the Company should exercise caution in placing reliance on such profit forecast in assessing the merits and demerits of the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver.

==> picture [52 x 53] intentionally omitted <==

==> picture [336 x 37] intentionally omitted <==

大唐國際發電股份有限公司 DATANG INTERNATIONAL POWER GENERATION CO., LTD. (Place of business: No. 9 Guangningbo Street, Xicheng District, Beijing, People’s Republic of China)

Proposal for Non-public Issuance of A-Shares (Second Revision)

February 2017

STATEMENT OF THE COMPANY

– 62 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

The Company and all members of its board of directors (the “ Board ”) warrant that the Proposal is true, accurate and complete and does not contain any false information, misleading statement or material omission, and assume partial and joint liability for it.
The Company assumes the liabilities for any changes in operation and revenue of the Company after the Non-Public Issuance of A-Shares. Any investment risks arising from the Non-Public Issuance of A-Shares shall be borne by the investors.
The Proposal is the statement of the Board of the Company on the Non-Public Issuance of A-Shares, and any contradictory statement constitutes misinterpretation.
Investors shall consult their stock brokers, solicitors, professional accountants or other professional advisers for any questions and doubts.
Matters mentioned in the Proposal do not represent any substantive judgment, confirmation, authorisation or approval from the approving authorities regarding the Non-Public Issuance of A-Shares. Effect and completion of the matters relating to the Non-Public Issuance of A-Shares mentioned in the Proposal shall be subject to approval or authorisation by competent authorities.

SPECIAL NOTES

The matters relevant to the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares were considered and approved at the sixth meeting of the ninth session of the Board of the Company and the eighth meeting of the ninth session of the Board of the Company held on 28 November 2016 and 6 January 2017 after discussion.
The matters relevant to the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares are to be approved by the SASAC of the State Council, to be approved in the General Meeting, the A-Share Class Meeting and the H-Share Class Meeting of the Company and to be approved by the CSRC.
The target subscriber of the Non-public Issuance of A-Shares is CDC Group, the controlling shareholder of the Company, which is to subscribe for the A-Shares under the Non-public Issuance in cash. The target subscriber of the Non-public Issuance of H-Shares is CDC Group, the controlling shareholder of the Company, or its nominated wholly owned subsidiary, which is to subscribe for the H-Shares under the Non-public Issuance of H-Shares in cash.

– 63 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

The Company intends to issue no more than 2,794,943,820 Shares under the Non-public Issuance of A-Shares to specific target, all of which are intended to be subscribed by CDC Group or its nominated subsidiary. Subject to the above issuance scope, the Board and relevant directors shall determine the final number of Shares to be issued under the Non-public Issuance of A-Shares after consultation with the sponsor (lead underwriter) with reference to market conditions. In case of the Company’s ex-dividend and ex-right arrangements such as equity distribution, capitalisation of capital reserve or share placing from the price referencing date to the issuance date, the maximum number to be issued under the Non-public Issuance of A-Shares will be adjusted accordingly.

Moreover, the Company intends to issue no more than 2,794,943,820 Shares under the Nonpublic Issuance of H-Shares at the same time, all of which shall be subscribed by CDC Group or its nominated wholly owned subsidiary. In case of the Company’s ex-dividend and ex-right arrangements such as equity distribution, capitalisation of capital reserve or share placing from the Convening Date of the Board Meeting to the issuance date, the number of H-Shares to be issued under the Issuance will be adjusted accordingly.

The price referencing date of the Non-public Issuance of A-Shares is the date of the announcement on the resolutions of the sixth meeting of the ninth session of the Board of the Company (29 November 2016). The issue price under the Non-public Issuance of A-Shares shall be RMB3.56 per Share, which is not lower than 90% of the average trading price of the Company’s A-Shares in the 20 trading days preceding the price referencing date (the average trading price of the A-Shares in the 20 trading days preceding the price referencing date = the total trading amount of A-Shares in the 20 trading days/the total trading volume of A-Shares traded in the 20 trading days preceding the price referencing date).

In case of the Company’s ex-dividend and ex-right arrangements such as equity distribution, capitalisation of capital reserve or share placing from the price referencing date to the issuance date, the issue under Non-public Issuance of A-Shares will be adjusted accordingly.

The Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares are interconditional, which means nothing under the Issuance will proceed in case that any approval or authorisation required under applicable laws and regulations has not been obtained for any matters under the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares, including but not limited to those from the internal approving bodies of CDC Group, the General Meeting of Datang Power, the A-Share Class Meeting, the H-Share Class Meeting of the Company, the SASAC of the State Council, the CSRC and other regulatory institutions.

– 64 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

Upon the completion of the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares, the A-Shares of the Company to be subscribed for by CDC Group shall not be traded or transferred within 36 months after the date of the completion of the issuance.

In addition, CDC Group or its nominated wholly owned subsidiary shall not trade or transfer H-Shares subscribed for under the Non-public Issuance of H-Shares within 36 months after the date of the completion of the Non-public Issuance of H-Shares. However, unless otherwise permitted by the laws of China and other applicable laws of the Company and the listing rules of the stock exchanges on which the Company is listed, except for transfer made to any subsidiary directly or indirectly wholly owned or controlled by CDC Group, the transferee shall continue to perform the above commitments until the expiry of the lockup period.

Total proceeds from the Non-public Issuance of A-Shares shall not exceed RMB9,950 million, which, after deduction of expenses relating to issuance, are proposed to be invested in “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Huludao Thermal Power Plant, Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project, the Datang International Tangshan Beijiao Thermal Power Co-generation Project, “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant, Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply Co-generation Project, and any remaining amount will be used to repay borrowings for project infrastructures.

Total proceeds from the Non-public Issuance of H-Shares shall not exceed HK$5,925.2809 million or equivalent RMB (in the event that an upward adjustment is made to the issue price of H-Shares according to the upward adjustment mechanism under the H-Share Subscription Agreement, the issuance number of H-Shares shall remain unchanged, and the total proceeds from the Non-public Issuance of H-Shares shall be adjusted upwards accordingly), all of which, after deduction of expenses relating to issuance, shall be fully used for general corporate purposes.

The Non-public Issuance will not cause any shareholding distribution of the Company to fail to meet the listing requirements.
The subscription of all the Shares under the Non-public Issuance of A-Shares by CDC Group constitutes a related party transaction with the Company, and the Company will implement the approval procedure for related party transactions in strict accordance with applicable laws and regulations as well as internal provisions of the Company. When voting on the proposal relevant to Non-public Issuance of A-Shares at the Board Meeting, related directors shall abstain from voting and independent directors shall make comments on the related party transaction. When the matters related to the issuance are considered at the General Meeting, related Shareholders shall abstain from voting on the relevant resolution. As it is uncertain whether the issuance will be approved at the General Meeting, the investors shall consider risks involved.

– 65 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

The controlling shareholder of the Company is CDC Group, and the de facto controller is the SASAC of the State Council. The controlling shareholder and the de facto controller of the Company will remain unchanged after the Non-public Issuance.
Please see “Section VIII Particulars of Profit Distribution Policies Presented by the Board” herein for profit distribution policies of the Company and details on its cash dividend of the latest three years.
The matters relevant to the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares were considered and approved by the Board of the Company on 28 November 2016. From the date of the announcement in relation to this Proposal, the Company will carry out the following work in sequence:
(1) To submit the application for the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares and relevant documents to the SASAC of the State Council;
(2) To issue the notice of the General Meeting, the A-Share Class Meeting and the H-Share Class Meeting of the Company and to issue the circular of H Shareholders, for considerating the matters relevant to the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares;
(3) To convene the General Meeting, the A-Share Class Meeting and the H-Share Class Meeting of the Company for considerating the matters relevant to the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares upon obtaining approval by the SASAC of the State Council;
(4) To submit the scheme for the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares to the Issuing Department and the International Department of the CSRC respectively after the approval at General Meeting, the A-Share Class Meeting and the H-Share Class Meeting of the Company.

– 66 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

STATEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	STATEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	STATEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	STATEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	62
SPECIAL NOTES. .			. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	63
CONTENTS. . . .		. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	67
DEFINITIONS.		. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	70
SECTION I	OVERVIEW OF PROPOSAL FOR NON-PUBLIC
		ISSUANCE OF A-SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		73
	I.		BASIC INFORMATION OF THE ISSUER. . . . . . . . . . . . . . . . . . . . . . . . .	73
	II.		BACKGROUND AND PURPOSES OF
			THE NON-PUBLIC ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	74
	III.		OVERVIEW OF THE NON-PUBLIC ISSUANCE SCHEME . . . . . . . . . . .	80
	IV.		WHETHER THE NON-PUBLIC ISSUANCE CONSTITUTES RELATED
			PARTY TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	83
	V.		WHETHER CONTROL RIGHT CHANGES SHALL BE
			CAUSED BY THE ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	84
	VI.		APPROVALS OBTAINED FROM THE RELEVANT DEPARTMENTS
			AND APPROVAL PROCEDURE TO BE COMPLETED FOR THE
			ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	84
	VII.		RELATION BETWEEN THE NON-PUBLIC ISSUANCE OF A-SHARES
			AND THE NON-PUBLIC ISSUANCE OF H-SHARES. . . . . . . . . . . . . .	85
	VIII.		BRIEF OF THE SCHEME FOR NON-PUBLIC
			ISSUANCE OF H-SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	85
SECTION II	PROFILE OF TARGET SUBSCRIBER DETERMINED BEFORE
		THE BOARD MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		89
	I.		BASIC INFORMATION OF THE TARGET SUBSCRIBER. . . . . . . . . . . .	89
	II.		PENALTIES IMPOSED ON AND LITIGATION OR ARBITRATION
			AGAINST CDC GROUP AND ITS DIRECTORS AND SENIOR
			MANAGEMENT IN THE LATEST FIVE YEARS . . . . . . . . . . . . . . . . .	91
	III.		HORIZONTAL COMPETITION OR POTENTIAL HORIZONTAL
			COMPETITION AND RELATED PARTY TRANSACTION BETWEEN
			THE BUSINESS OF THE COMPANY AND THAT OF THE ISSUANCE
			TARGET AND ITS CONTROLLING SHAREHOLDER AND DE FACTO
			CONTROLLER AFTER THE COMPLETION OF THE ISSUANCE. . . .	91
	IV.		MAJOR TRANSACTIONS AMONG THE TARGET SUBSCRIBER, ITS
			CONTROLLING SHAREHOLDER, DE FACTO CONTROLLER AND
			THE COMPANY WITHIN 24 MONTHS BEFORE THE DISCLOSURE
			OF THIS ISSUANCE PROPOSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	92

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SECTION III	SUMMARISATION OF SHARE SUBSCRIPTION AGREEMENT WITH	SUMMARISATION OF SHARE SUBSCRIPTION AGREEMENT WITH
	CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		93
	I.	A-SHARE SUBSCRIPTION AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . .	93
	(I)	CONTRACT PARTIES AND SIGNING DATE . . . . . . . . . . . . . . . . . . . . .	93
	(II)	SUBSCRIPTION METHOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	93
	(III)	SUBSCRIPTION PRICE AND PRINCIPLE FOR PRICING. . . . . . . . . . . .	93
	(IV)	PROPOSED AMOUNT AND ISSUE SIZE OF
		SUBSCRIPTION SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	94
	(V)	LOCK-UP PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	94
	(VI)	PAYMENT METHOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	94
	(VII)	CONDITIONS PRECEDENT OF SUBSCRIPTION AGREEMENT . . . . . .	95
	(VIII)	BREACH OF CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	95
SECTION IV	FEASIBILITY ANALYSIS BY THE BOARD ON THE USE OF PROCEEDS
	FROM THE ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		97
	I.	INVESTMENT PLAN FOR PROCEEDS FROM THE ISSUANCE . . . . . .	97
	II.	BASIC INFORMATION ON THE INVESTMENT PLAN FOR THE
		PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	98
	III.	EFFECT OF THE ISSUANCE ON OPERATION MANAGEMENT AND
		FINANCIAL POSITION OF THE COMPANY . . . . . . . . . . . . . . . . . . . .	116
SECTION V	ANALYSIS OF THE INFLUENCES OF THE ISSUANCE ON THE BOARD.		118
	I.	CHANGES IN BUSINESS, INCOME STRUCTURE, ARTICLES OF
		ASSOCIATION, SHAREHOLDER STRUCTURE AND SENIOR
		MANAGEMENT STRUCTURE OF THE COMPANY . . . . . . . . . . . . . .	118
	II.	CHANGES IN FINANCIAL POSITION, PROFITABILITY AND CASH
		FLOWS OF THE LISTED COMPANY UPON COMPLETION OF THE
		ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	119
	III.	CHANGES IN BUSINESS RELATIONSHIP, ADMINISTRATIVE
		RELATIONSHIP, RELATED PARTY TRANSACTION AND
		COMPETING BUSINESS BETWEEN THE LISTED COMPANY AND
		ITS CONTROLLING SHAREHOLDER AND ITS RELATED PARTIES	120
	IV.	WITH THE COMPLETION OF THE ISSUANCE, THE POSSIBLE
		SITUATIONS OF EMBEZZLEMENT OF FUNDS AND ASSETS BY
		CONTROLLING SHAREHOLDER AND ITS RELATED PARTIES,
		OR GUARANTEE PROVIDED BY THE LISTED COMPANY TO ITS
		CONTROLLING SHAREHOLDER AND ITS RELATED PARTIES . . .	120
	V.	EFFECT OF THE ISSUANCE ON LIABILITY STRUCTURE OF THE
		COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	120

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SECTION VI RISKS RELATED TO THIS ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SECTION VI RISKS RELATED TO THIS ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	121
I.	MACROECONOMIC RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	121
II.	BUSINESS AND OPERATIONAL RISK . . . . . . . . . . . . . . . . . . . . . . . . . .	122
III.	RISK IN PROJECTS FUNDED BY PROCEEDS . . . . . . . . . . . . . . . . . . . .	122
IV.	RISK RELATED TO ENVIRONMENTAL PROTECTION . . . . . . . . . . . .	122
V.	APPROVAL RISK FOR ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	122
VI.	RISK IN STOCK MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	123
VII.	RISK OF DILUTING CURRENT RETURNS AFTER THE NON-PUBLIC
	SHARE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	123
SECTION VII ANALYSIS OF DILUTED CURRENT RETURNS REGARDING THE NON-
PUBLIC SHARE ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		124
I.	IMPACT OF THE NON-PUBLIC SHARE ISSUANCE WITH DILUTING
	CURRENT RETURNS ON MAJOR FINANCIAL INDICATORS OF
	THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	124
II.	SPECIAL RISK WARNING FOR DILUTED CURRENT RETURNS OF
	THE NON-PUBLIC SHARE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . .	127
III.	NECESSITY AND REASONS OF CHOOSING THIS FINANCING BY
	THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	128
IV.	RELATION BETWEEN THE PROJECTS FUNDED BY THE PROCEEDS
	AND EXISTING BUSINESSES OF THE COMPANY, AND THE
	RESERVE OF HUMAN RESOURCES, TECHNOLOGIES AND
	MARKETS FOR THE PROJECTS OF THE COMPANY . . . . . . . . . . . .	128
V.	MEASURES SHALL BE TAKEN BY THE COMPANY FOR DILUTED
	CURRENT RETURNS OF THE NON-PUBLIC SHARE ISSUANCE . . .	130
VI.	UNDERTAKINGS BY THE CONTROLLING SHAREHOLDER,
	DIRECTORS AND SENIOR MANAGEMENT OF THE COMPANY
	FOR GUARANTEEING THE DUE PERFORMANCE OF REMEDIAL
	MEASURES FOR DILUTION OF CURRENT RETURNS OF THE NON-
	PUBLIC SHARE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	135
SECTION VIII PARTICULARS OF PROFIT DISTRIBUTION POLICIES PRESENTED BY
THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		137
I.	PROFIT DISTRIBUTION POLICY OF THE COMPANY . . . . . . . . . . . . .	137
II.	SITUATION OF CASH DIVIDEND AND USE OF UNDISTRIBUTED
	PROFITS IN PAST THREE YEARS. . . . . . . . . . . . . . . . . . . . . . . . . . . .	139
III.	DIVIDEND DISTRIBUTION POLICY AND PLAN FOR THREE-YEAR
	RETURNS TO SHAREHOLDERS (2016–2018) . . . . . . . . . . . . . . . . . . .	140

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DEFINITIONS

Unless otherwise noted, the following abbreviations herein shall have the following meaning:

A-Share Subscription Agreement

the subscription agreement in relation to the Non-public Issuance of A-Shares between Datang International Power Generation Co., Ltd. and China Datang Corporation

A-Share Subscription Supplemental Agreement
the supplemental agreement to the subscription agreement in relation to the Non-public Issuance of A-Shares between Datang International Power Generation Co., Ltd. and China Datang Corporation

A-Shares

ordinary shares issued to domestic investors, listed on a domestic securities exchange, and denominated, subscribed and traded in RMB subject to CSRC’s approval

Articles of Association

the articles of association of the Company as considered and approved at a general meeting upon approval at the sixth meeting of the ninth session of the Board
attributable installed capacity
the sum of installed capacities of wholly owned power plants, and those of power plants under control or invested in multiplied by shareholdings
BEIH
Beijing Energy Investment Holding Co., Ltd.
Beijing International Power
formerly Beijing International Power Development and Investment Company, which became Beijing Power Development and Investment Holding Company after merging with Beijing Integrated Investment Company in 2004, with Beijing Energy Investment Holding Co., Ltd. as its current name

CSRC

the China Securities Regulatory Commission
CDC Group, the Group, the controlling shareholder
China Datang Corporation
Datang Power, the Company, the Listed Company, the Issuer
Datang International Power Generation Co., Ltd.

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H-Share Subscription Agreement	the subscription agreement in relation to the Non-public Issuance
	of H-Shares between Datang International Power Generation
	Co., Ltd. and China Datang Overseas (Hong Kong) Co., Limited
H-Shares	ordinary shares with par value of RMB1.00 approved to issue by
	the CSRC, listed on the Stock Exchange of Hong Kong Limited
	and subscribed and traded in HK$
Hebei Construction Investment	formerly Hebei Construction Investment Company, with Hebei
	Construction & Investment Group Co., Ltd. as its current name
Hong Kong Stock Exchange	The Stock Exchange of Hong Kong Limited
installed capacity	the aggregated designated power of electric generators
MW	1,000,000 watts (equivalent to 1,000 kW)
on-grid power generation	power generated by power plants and connected to a power grid,
	also known as power sales
on-grid tariffs	unit prices at which electricity is sold by power plants to grids
CDOHKC	China Datang Overseas (Hong Kong) Co., Limited
RMB, RMB’000, RMB’0,000 and	RMB, RMB’000, RMB’0,000 and RMB’00 million
RMB’00 million
SASAC of the State Council	the State-owned Assets Supervision and Administration
	Commission of the State Council
SCRES	the former State Commission for Restructuring the Economic
	System
SSE	Shanghai Stock Exchange
the Convening Date of	the date on which the sixth meeting of the ninth session of the
the Board Meeting	Board of Datang Power was convened, being 28 November 2016
the Company Law	the Company Law of the People’s Republic of China

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the date of the announcement on the the date of announcement on the resolutions of the sixth meeting resolutions of the Board of the ninth session of the Board of Datang Power, being 29 November 2016

the Convening Date of the General the date on which the General Meeting and class meetings held to Meeting consider the resolution on the Non-public Issuance

the Non-public Issuance of A-Shares, the proposed issuance of no more than 2,794,943,820 A-Shares to the Non-public Share Issuance, the CDC Group by Datang Power under a non-public issuance Non-public Issuance and the Issuance

the Non-public Issuance of the proposed issuance of no more than 2,794,943,820 H-Shares to H-Shares CDC Group or its nominated wholly owned subsidiary by Datang Power under a non-public issuance The Proposal the proposal for Non-public Issuance of A-Shares of Datang International Power Generation Co., Ltd. Tianjin Jinneng Tianjin Jinneng Investment Company utilisation hour(s) hour(s) during which the aggregated power generation of generators reaching the designated value for a certain period of time. It is an indicator of utilisation of generators based on their nameplate capacities

Note: Any differences between a total and its components in aggregate as shown herein are due to rounding.

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SECTION I OVERVIEW OF PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES

I. BASIC INFORMATION OF THE ISSUER

Company name (Chinese): 大唐國際發電股份有限公司 Company name (English): Datang International Power Generation Co., Ltd. Chinese abbreviation: 大唐發電 Legal representative: Chen Jinhang Incorporation (Registration) date: 13 December 1994 Registered capital: RMB13,310,037,578 A-Shares listed on: SSE Abbreviation for A-Shares: Datang Power A-Share Code: 601991.SH H-Shares listed on: Hong Kong Stock Exchange Abbreviation for H-Shares: Datang Power H-Share code: 0991.HK Abbreviation at London Stock Exchange: DAT Stock Code at London Stock Exchange: 991 Registered address: No. 9 Guangningbo Street, Xicheng District, Beijing Business address: No. 9 Guangningbo Street, Xicheng District, Beijing Post code: 100033 Tel: (010) 8800 8678 and (010) 8800 8669 Fax: (010) 8800 8672 and (010) 8800 8672 E-mail: [email protected]

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II. BACKGROUND AND PURPOSES OF THE NON-PUBLIC ISSUANCE

(I) Background of the Non-Public Issuance

1. Company profile

As approved in 《關於設立北京大唐發電股份有限公司的批覆》 (the Reply on Establishment of Beijing Datang Power Generation Company Limited) (Ti Gai Sheng [1994] No. 106) issued by the former SCRES, the Company was co-founded by North China Power Group, Beijing International Power and Hebei Construction Investment and incorporated as a limited liability company in Beijing on 13 December 1994. The total net assets contributed by the sponsor were valued at RMB5,112,581,600, which constituted 3,732,180,000 Shares at par value of RMB1 at a discount of 73% and RMB1,380,401,600 in the capital reserve of the Company. The 3,732,180,000 Shares were held by the co-founders, i.e. former North China Power Group, former Beijing International Power and Hebei Construction Investment as to 96.57%, 2.57% and 0.86%.

As approved in the Reply on Transformation into an Overseas-listed Company by Beijing Datang Power Generation Company Limited (Ti Gai Sheng [1996] No. 125) issued by the former SCRES and the Reply on Issue of Overseas-listed Foreign Shares by Beijing Datang Power Generation Company Limited (Zheng Wei Fa [1996] No. 35) issued by the former State Council Securities Committee, the Company, on 21 March 1997, issued 1,430,669,000 overseas-listed foreign Shares which were simultaneously listed on Hong Kong Stock Exchange and London Stock Exchange. Upon the completion of the overseas issuance and listing, the total Share capital of the Issuer was 5,162,849,000 Shares.

As approved in the Reply on Approving Transfer of Certain Equity Interest in Beijing Datang Power Generation Company Limited (《關於同意轉讓北京大唐發電股份有限公司部分股權的批覆》) (Guo Dian Cai [1999] No. 115) issued by the former State Power Corporation of China and the Reply on Change in Equity Interest in Beijing Datang Power Generation Company Limited (《關於北京大唐發電股份有限公司股權變更的批覆》) (Wai Jing Mao Zi Er Han Zi [1999] No. 266) issued by the former Ministry of Foreign Trade and Economic Cooperation, former North China Power Group, a Shareholder of the Company, transferred 575,732,000 Shares, 639,772,000 Shares and 559,827,000 Shares of the Company to Beijing International Power, Hebei Construction Investment and Tianjin Jinneng respectively at RMB1.595 per Share on 2 July 1999, representing 1,775,332,000 Shares in total. There had been no change to the total Share capital of the Issuer after such a transfer, which remained at 5,162,849,000 Shares.

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According to the Approval Reply of the State Council on Issues in Relation to the Establishment of China Datang Group Corporation (Guo Han [2003] No. 16) of the State Council dated 2 February 2003, all the Shares in the Company held by former North China Power Group were transferred to CDC Group, which held a shareholding of 35.43% in the Company upon the transfer. The industrial and commercial registration of the transfer was completed on 15 March 2004. Upon the completion of the transfer, CDC Group became the controlling shareholder of the Company. On 1 November 2004, confirmation was made by the SASAC of the State Council in the Reply on Issues of Management of State-owned Shareholding in Datang International Power Generation Co., Ltd. (《關於大唐國際發電股份有限公司國有股權管理有關問題的批覆》) (Guo Zi Chan Quan [2004] No. 993) that the Shares in the Company held by CDC Group were state-owned shares while those held by Beijing International Power, Hebei Construction Investment and Tianjin Jinneng were state-owned legal person shares. There had been no change to the total Share capital of the Issuer since such a transfer, which remained at 5,162,849,000 Shares.

Upon approval of the former State Development and Planning Commission in the Reply on Overseas Convertible Bond Issuance by Beijing Datang Power Generation Company Limited (《關於北京大唐發電股份有限公司發行境外可轉換債券的批覆》) (Ji Wai Zi [2003] No. 243) and the CSRC (Zheng Jian Guo He Zi [2003] No. 28), the Company issued American convertible bonds of US$153,800,000 on 9 September 2003 at 0.75% per annum expiring at 2008 with an initial converting price at HK$5.558 per H-Share. As of the end of 2008, all such American convertible bonds had been converted into H-Shares.

Pursuant to the document of State-owned Assets Supervision and Administration Commission of the People’s Government of Beijing Municipality (Jing Guo Zi Gai Fa Zi [2004] No. 45), Beijing International Power merged with Beijing Integrated Investment Company and became BEIH, which received 671,792,000 Shares of the state-owned legal person Shares then held by Beijing International Power.

Upon approval of the CSRC (Zheng Jian Fa Zi [2006] No. 135), the Company issued 500,000,000 A-Shares in December 2006 at RMB1.00 per Share, which listed on SSE in the same month represented by the stock code 601991. Upon the completion of the domestic issuance, the total share capital of the Issuer amounted to 5,662,849,000 Shares.

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Upon approval at the annual general meeting of the Company for 2006 held on 29 June 2007, the Company completed a transfer from the capital reserve to share capital on 30 July 2007, which increased its total number of Shares from 5,844,881,000 Shares to 11,689,761,000 Shares. Upon the completion of the transfer, the total share capital of the Issuer amounted to 11,689,761,000 Shares.

In 2008, the five-year American convertible bonds issued by the Company in September 2003 were converted into 45,954,105 H-Shares, which increased its total number of Shares from 11,734,083,473 Shares to 11,780,037,578 Shares.

Upon approval by the CSRC (Zheng Jian Xu Ke [2009] No. 1492), the Company issued 530,000,000 A-Shares to specific investors in March 2010, which increased its total number of Shares from 11,780,037,578 Shares to 12,310,037,578 Shares.

Upon approval by the CSRC (Zheng Jian Xu Ke [2010] No. 1842), the Company issued 1,000,000,000 A-Shares to specific investors in May 2011, which increased its total number of Shares from 12,310,037,578 Shares to 13,310,037,578 Shares.

As of 30 September 2016, the Company had 9,994,360,000 A-Shares and 3,315,677,578 overseas-listed foreign Shares (H-Shares), representing approximately 75.09% and approximately 24.91% of the total share capital, respectively.

The Company is one of the largest independent power generation companies in the People’s Republic of China (the PRC). The businesses of the Company and its subsidiaries cover 18 provinces, municipalities and autonomous regions across the country. Its installed thermal power capacity concentrates in the Beijing-TianjinHebei region and southeast coastal areas, its hydropower projects are mainly located in the southwest region and its wind farms and photovoltaic systems are widespread in regions with abundant resources.

As of the end of 2015, the Company managed an installed capacity of approximately 42,337.225 MW, for which coal-fired generating units, thermal combustion engines, hydropower, wind power and photovoltaic power accounted approximately 31,280 MW, 2,890.8 MW, 6,100.825 MW, 1,875.6 MW, 190 MW respectively, or approximately 73.88%, 6.83%, 14.41%, 4.43% and 0.45% respectively. The proportion of clean energy increased by 2.27 percentage points as compared to the end of the previous year, suggesting a further improvement in the power generation structure.

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2. Shareholding structure

CDC Group, the controlling shareholder of Datang Power, is a state-owned enterprise funded by the SASAC of the State Council. The SASAC of the State Council is the de facto controller of the Company.

As of 30 September 2016, the top ten Shareholders of the Company were as follows:

			Proportion in
		Number of	the total share	Nature of
No.	Name of shareholders	shares held	capital	share capital
		(share)
1	China Datang Corporation	4,138,977,414	31.10%	Tradable A-Shares
2	HKSCC Nominees Limited	3,291,424,921	24.73%	Tradable H-Shares
3	Tianjin Jinneng Investment Company	1,296,012,600	9.74%	Tradable A-Shares
4	Hebei Construction & Investment	1,281,872,927	9.63%	Tradable A-Shares
	Group Co., Ltd.
5	Beijing Energy Investment Holding	1,260,988,672	9.47%	Tradable A-Shares
	Co., Ltd.
6	China Securities Finance Corporation	387,353,765	2.91%	Tradable A-Shares
	Limited
7	Central Huijin Asset Management	76,904,200	0.58%	Tradable A-Shares
	Ltd.
8	CITIC Trust Co., Ltd. – Phase II of	70,000,000	0.53%	Tradable A-Shares
	CITIC Wealth Specified Structural
	Securities Investment Trust Plan of
	Assembled Fund (中信信託有限責任
	公司－中信民生財富2期指定型結
	構化證券投資集合資金信託計劃)
9	CITIC Trust Co., Ltd. – Phase IV of	67,000,000	0.50%	Tradable A-Shares
	CITIC Wealth Specified Structural
	Securities Investment Trust Plan of
	Assembled Fund (中信信託有限責
	任公司－中信民生財富4期指定型
	結構化證券投資集合資金信託計
	劃)
10	Aerospace Science & Technology	54,901,264	0.41%	Tradable A-Shares
	Finance Co., Ltd.

11,925,435,763 89.60% –

Total

– 77 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

As of 30 September 2016, the share capital structure of Datang Power was as follows:

Nature of shares Total A-Share capital Total H-Share capital Total share capital	Number of shares Percentage in the total share capital in issue (share) 9,994,360,000 75.09% 3,315,677,578 24.91% 13,310,037,578 100.00%

3. Information on major subsidiaries

As of 30 September 2016, a total of 136 subsidiaries were consolidated. The Company and its subsidiaries are principally engaged in the development and operation of power plants, the sale of electricity and thermal power, the repair and testing of power equipment, and power related technical services, sales of ores (other than those under public monopoly) and relevant technological consultancy and services, technological development of chemical products, energy and chemical and transfer of relevant technologies, examination, installation and tuning of chemical equipment.

4. Businesses of the Company

The Company is principally engaged in thermal power generation, hydropower, wind power and other forms of power generation, and is also engaged in business related to coal, transportation and circular economy.

In 2015 and from January to September 2016, the production of main products of the Company is as follows:

			Unit:	’00 million kWh
	January to
	September	Year-on-year		Year-on-year
Item	2016	increase	2015	increase
Power generation	1,299.73	1.20%	1,697.25	-10.12%
On-grid power
generation	1,232.99	1.34%	1,608.30	-9.97%

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

In 2015 and from January to September 2016, the revenue from main businesses of the Company is as follows:

Unit: RMB’0,000

Datang Power Electricity Chemicals Sales of heat Coal Other products Total	January to September 2016 3,907,465.07 183,276.22 102,679.20 8,748.32 217,424.34 4,419,593.15	Proportion 88.41% 4.15% 2.32% 0.20% 4.92% 100.00%	2015 5,555,632.10 183,998.30 143,457.00 26,764.90 211,841.30 6,121,693.60	Proportion 90.75% 3.01% 2.34% 0.44% 3.46%
				100.00%

(II) Purposes and Significance of the Non-public Issuance

1. Enhancing core competitiveness of principal businesses

In recent years, economic development of the PRC has entered a new normal state where as the power generation and consumption entered a phase of adjustment. Against this background, while pro-actively striking a balance between stable growth and structural adjustment, enhancing the structural reformation of the supply side, accelerating the cultivation of new development momentums and enhancing its advantages in traditional capacities, the Company will accelerate the progress of structural adjustments and realise the clean, efficient, sustainable development of power generation principal business by centering the quality and effectiveness enhancement, aiming to upgrade the power generation industry and taking technological innovation as a driving force.

In light of the above, the Company has proposed the Non-public Issuance to fund the construction of power plant projects and repay borrowings for project infrastructures which is the implementation of its established development strategies. This will further reinforce advantages of the Company in its principal businesses and enhance its core competitiveness in power business, which are essential for its long-term sustainable development and resistance of market risks.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

2. Enhancing capital structure and reducing financial risks

The proceeds from the Non-public Issuance of A-Shares are intended to be used for construction of power plants and repayment of borrowings for project infrastructures. In recent years, the Company have been financing mainly through bank borrowings. Its gearing ratio stood at a high level at 74.78% as of 30 September 2016, and its interest expenses amounted to RMB11.281 billion for 2015. There is a certain level of insolvency risk, which is a restraint on the continuous growth of the Company. Through the Non-public Issuance, the gearing ratio of the Company will be reduced, which will help optimise the capital structure, and reduce finance costs and financial risks.

III. OVERVIEW OF THE NON-PUBLIC ISSUANCE SCHEME

(I) Type of Shares to be Issued and Par Value

The type of shares to be issued are domestic listed RMB-denominated ordinary shares (A-Shares), with par value of RMB1 per Share.

(II) Method of Issue

All the Shares under the Non-public Issuance of A-Shares will be issued to the specific target in a non-public way in due course within 6 months upon approval by the CSRC.

(III) Target Subscribers

The shares under the Non-public Issuance of A-Shares are to be entirely subscribed by CDC Group, the controlling shareholder of the Company.

(IV) Subscription Method

Subscribers of the shares under the Non-public Issuance of A-Shares shall subscribe for the A-Shares under the Non-public Issuance by way of cash in one-time subscription.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

(V) Issue Price and Principle of Pricing

The price referencing date of the Non-public Issuance of A-Shares shall be the date of the announcement on the resolution of the sixth meeting of the ninth session of the Board (29 November 2016). The issue price under the Non-public Issuance of A-Shares shall be RMB3.56 per Share, which is no less than 90% of the average trading price of the Company’s A-Shares for the 20 trading days before the price referencing date (the average trading prices of A-Shares for the 20 trading days preceding the Price Referencing Date = the aggregate trading amount of A-Shares for the 20 trading days preceding the A-Share Price Referencing Date/the aggregate trading volume of A-Shares for the 20 trading days preceding the A-Share Price Referencing Date). In the event this the Company’s ex-rights and ex-dividends activities such as equity distribution, capitalisation of capital reserve or share placing from the price referencing date and the date of the issuance, the issue price of the Non-public Issuance of A-Shares shall be adjusted accordingly as follows:

When distributing cash dividends only: PA1 = PA0 – DA
When issuing bonus shares or capitalising capital reserve: PA1 = PA0/(1+EA)
When distributing cash dividends and issuing bonus shares or capitalising capital reserve: PA1 = (PA0 – DA)/(1 + EA)

whereas PA1 represents the adjusted issue price, PA0 the issue price before adjustment, DA cash dividends per Share and EA number of bonus shares per Share or number of Shares resulting from capitalisation of capital reserve to be issued for each Share.

(VI) Number of Shares to be Issued

The number of shares to be issued under the Non-public Issuance of A-Shares will not exceed 2,794,943,820 shares, which shall be subscribed by CDC Group to the entirety. In case of the Company’s ex-dividend and ex-right arrangements such as equity distribution, capitalisation of capital reserve or share placing between benchmark pricing date and issue date, the number of the shares under the Non-public Issuance of A-Shares shall be adjusted accordingly as follows:

QA1 = QA0 × PA0/PA1

whereas QA1 represents the number of Shares to be issued after adjustment, QA0 the number of Shares to be issued after adjustment before adjustment, PA 0 the issue price before adjustment and PA1 the adjusted issue price.

The number of Shares under the Non-public Issuance shall be subject to the final approval of the CSRC.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

(VII) Lock-up Period and Listing Arrangements

The A-Shares to be subscribed by CDC Group under the Non-public Issuance shall not be listed for trading or transferred within 36 months commencing from the date of the completion of the Issuance.

The Company will apply to the SSE for the listing of the A-Shares under the Non-public Issuance. The A-Shares under the Non-public Issuance can be listed for trading on the SSE upon expiry of the lock-up period.

(VIII) Use of Proceeds

The total proceeds from the Non-public Issuance of A-Shares shall not exceed RMB9,950 million, after the deduction of relevant issuance expenses, and is proposed to be used for the following projects:

Unit: RMB’0,000

Category Project Name Shareholding Power plant project “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Huludao Thermal Power Plant (遼寧大唐國際葫蘆島熱電廠“上大壓小”新建工程項目) 100% Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project (江蘇大唐國際金壇燃機熱電聯產項目) 100% Datang International Tangshan Beijiao Thermal Power Co-generation Project (大唐國際唐山北郊熱電聯產項目) 100% “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant (遼寧大唐國際瀋撫連接帶熱電廠“上大壓小”新建工程項目) 100% Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply Co-generation Project (廣東大唐國際高要金淘熱電冷聯產項目) 100% Subtotal – Repayment of borrowings for project infrastructures – Total –	Estimated Total Investment 320,978 245,731 307,954 341,718 273,412 1,489,793 – –	Proposed Amount of the Use of Proceeds 108,200 92,200 82,200 79,400 78,000
		440,000

		555,000
		995,000

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

If the actual net amount of the proceeds from the Non-public Issuance of A-Shares is less than the proposed total investment for the aforesaid projects, then the Company will adjust and finally determine a detailed investment plan for the proceeds, the precedence and the specific amount to be invested for each project according to the actual net amount of the proceeds and the importance of the projects, and the shortfall shall be funded by the self-owned funds of the Company or other financing means.

Before the proceeds from the Non-public Issuance are put into place, the Company will otherwise raise the funds for the investment based on the actual circumstances, and the proceeds, once put into place, will replace the otherwise raised funds that have been invested pursuant to the procedures stipulated by relevant regulations.

(IX) Accumulated Profits Arrangement before the Issuance

The undistributed accumulated profits of the Company before the Non-public Issuance shall be shared by new and existing shareholders upon the completion of the Non-public Issuance.

(X) Valid Term of the Resolution Regarding the Issuance of Share

The resolution in relation to the Non-public Issuance will be valid within 12 months from the date on which the resolution in relation to the Non-public Issuance was considered and approved at the General Meeting.

IV. WHETHER THE NON-PUBLIC ISSUANCE CONSTITUTES RELATED PARTY TRANSACTION

CDC Group, the target subscriber under the Non-public Issuance, is the controlling shareholder of the Company, and therefore, the Non-public Issuance of Shares to CDC Group by the Company shall constitute a related party transaction.

An approval on the related party transaction involving the Non-public Issuance has been obtained from the independent directors of the Company, and an independent opinion in favour of the agreement has been published. According to the Administrative Measures for the Issuance of Securities by Listed Companies and the Implementation Rules for the Non-public Issuance of Shares by Listed Companies promulgated by the CSRC and the relevant provisions of the Articles of Association of the Company, related directors shall abstain from voting on the relevant resolution approved by non-related directors when considering the relevant resolution of the Nonpublic Issuance at the sixth extraordinary meeting of the ninth session of the Board, and related shareholders shall also abstain from voting on the relevant resolution when the the relevant reduction is submitted at the General Meeting for consideration.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

V. WHETHER CONTROL RIGHT CHANGES SHALL BE CAUSED BY THE ISSUANCE

Before the Issuance, the total share capital of the Company amounted to 13,310,037,578 Shares, of which 4,628,396,014 Shares are held by CDC Group and its subsidiaries, representing a shareholding ratio of approximately 34.77%. CDC Group is the controlling shareholder and the SASAC of the State Council is the de facto controller of the Company.

The number of Shares to be issued under the Non-public Issuance of A-Shares will not exceed 2,794,943,820 Shares, which are intended to be subscribed by CDC Group in their entirety. The number of Shares to be issued under the Non-public Issuance of H-Shares will not exceed 2,794,943,820 Shares, which are intended to be subscribed by CDC Group or its nominated wholly owned subsidiary. After the completion of the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares, CDC Group, together with its subsidiaries, will hold approximately 54.07% of the share capital of the Company in aggregate, and it remains to be the controlling shareholder of the Company, while the SASAC of the State Council remains to be the de facto controller of the Company.

VI. APPROVALS OBTAINED FROM THE RELEVANT DEPARTMENTS AND APPROVAL PROCEDURE TO BE OBTAINED FOR THE ISSUANCE

The matters relevant to the Non-public Issuance of A-Shares were considered and approved at the sixth meeting of the ninth session of the Board and the eighth meeting of the ninth session of the Board held on 28 November 2016 and 6 January 2017.

The Non-public Issuance is subject to the approval of the SASAC of the State Council.

The Non-public Issuance is subject to the consideration and approval at the General Meeting, the A-Share Class Meeting and the H-Share Class Meeting of the Company.

The Non-public Issuance is subject to the authorisation from the CSRC.

After obtaining the approval from the CSRC, the Company will apply to the SSE and Shanghai Branch of China Securities Depository and Clearing Corporation Limited for dealing with Shares issuance and listing formalities in order to complete all submission and approval procedures for the Non-public Issuance.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

VII. RELATION BETWEEN THE NON-PUBLIC ISSUANCE OF A-SHARES AND THE NON-PUBLIC ISSUANCE OF H-SHARES

The Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares are inter-conditional, which means nothing under the Issuance will proceed in the event that any approval or authorisation required under applicable laws and regulations has not been obtained for any matters under the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares, including but not limited to any approval or authorisation obtained from the internal approving authorities of CDC Group, the General Meeting, A-Share Class Meeting, H-Share Class Meeting of the Company, the SASAC of the State Council and the CSRC and other regulatory authorities.

VIII. BRIEF OF THE SCHEME FOR NON-PUBLIC ISSUANCE OF H-SHARES

(I) Progress of Non-public Issuance of H-Shares

The Company intends to conduct the Non-public Issuance of H-Shares during the Non-public Issuance of A-Shares. The scheme for the Issuance of H-Shares was considered and approved at the sixth meeting of the ninth session of the Board and the eighth meeting of the ninth session of the Board held on 28 November 2016 and 6 January 2017, and is subject to the approval from the SASAC of the State Council, at the General Meeting, the A-Share Class Meeting and the H-Share Class Meeting of the Company as well as the authorisation from the CSRC.

(II) Target Subscribers, Subscription Method, Number of Shares and Price under the Issuance
Target subscriber: All the Shares under the Non-public Issuance of H-Shares are proposed to be subscribed by CDC Group or its nominated wholly owned subsidiary.
Subscription method: To be subscribed by target subscriber in cash on a one-off basis
Number of Shares under the Issuance: No more than 2,794,943,820 Shares under the Non-public Issuance of H-Shares, all of which are intended to be subscribed by target subscriber. The number of Shares to be issued under the Non-public Issuance of H-Shares shall be adjusted accordingly as follows, if there are any ex-rights or exdividends activities (such as equity distribution, capitalisation of capital reserve or share placing) undertaken by the Company from the Convening Date of the Board Meeting to the date of the Issuance: QH1 = QH0 × PH0/PH

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

Whereas:

QH1 represents the number of shares under the issuance after adjustment

QH0 represents the number of shares under the issuance before adjustment

PH0 represents the issue price before adjustment

PH represents the issue price after adjustment

In the event that an upward adjustment is made to H-Share Issue Price according to the upward adjustment mechanism under the H-Share Subscription Agreement, the issuance number of H-Shares shall remain unchanged, and the total proceeds from the Non-public Issuance of H-Shares shall be adjusted upwards accordingly.

The number of H-Shares under the issuance shall be subject to the final approval of the CSRC.

Issue price: The issue price under the Non-public Issuance of H-Shares is to be 103% of the average trading price of the Company’s H-Shares for the 20 trading days preceding the date of the sixth meeting of the ninth session of the Board of the Company (the average trading price of H-Shares for the 20 trading days preceding the Convening Date of the Board Meeting: the total trading amount of H-Shares for the 20 trading days preceding the Convening Date of the Board Meeting/the total trading volume of H-Shares for the 20 trading days preceding the Convening Date of the Board Meeting), i.e. HK$2.12 per share.

In case the closing price of H-Shares on the trading day preceding the date on which the General Meeting and class meetings for matters relevant to the Non-public Issuance are held is higher than that on the trading day preceding the Convening Date of the Board Meeting or 103% of the average trading price of H-Shares for the 20 trading days preceding the Convening Date of the Board Meeting, whichever is the higher, the issue price under the Non-public Issuance of H-Shares shall be subject to an upward adjustment based on the basis of the aforementioned issue price which shall not exceed 5%. The specific upward adjustment ratio shall be determined by the Company after negotiating with the sponsor/underwriter for the H-Share issuance, and be notified to the target subscriber in writing. The equation for calculating the upward adjustment ratio and the issue price after adjustment is as follows:

==> picture [56 x 11] intentionally omitted <==

P2=P1× (1+R)

– 86 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

R: Ratio of upward adjustment
P1: H-Share Issue Price before adjustment
P2: H-Share Issue Price after adjustment
N1: 103% of the average trading price of H-Shares in the 20 trading days preceding the Convening Date of the Board Meeting or the closing price on the trading day preceding the Convening Date of the Board Meeting, whichever is the higher
N2: Closing price of H-Shares on the trading day preceding the Convening Date of the General Meeting

In case the closing price of H-Shares on the trading day preceding the Convening Date of the General Meeting for matters relevant to the Issuance are held is not higher than 103% of the average transaction price of H-Shares in the 20 trading days preceding the Convening Date of the Board Meeting, the issue price of H-Shares under the Non-public Issuance of H-Shares shall not be adjusted.

In case of the Company’s ex-dividend and ex-right arrangements such as equity distribution, capitalisation of capital reserve or allotment of Shares between the Convening Date of the Board Meeting and issue date, the issue price under the Non-public Issuance of H-Shares shall be adjusted accordingly as follows:

(1) When distributing cash dividends only: PH = PH0 – DH
(2) When issuing bonus shares or capitalising capital reserve: PH = PH0/(1 + EH)
(3) When distributing cash dividends and issuing bonus shares or capitalising capital reserve: PH = (PH0 – DH)/(1 + EH)

whereas PH0 represents the issue price before adjustment, PH is the adjusted issue price, DH is cash dividends per Share and EH is number of bonus shares per Share or number of Shares resulting from capitalisation of capital reserve to be issued for each Share.

– 87 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

(III) Lock-up Period

The target subscriber undertakes not to trade or transfer any H-Shares it acquired from this transaction within 36 months after the date of completion of the Issuance of H-Shares, except transferring to any subsidiaries directly or indirectly wholly owned or controlled by CDC Group under the permission of the PRC laws and other laws applicable to Datang Power and the listing rules of the place where its shares are listed, while the transferee shall continue to perform the aforesaid undertaking until the expiration of the lock-up period. In the event that the requirements of the CSRC differ from the requirements of the stock exchange of the place where the shares of Datang Power are listed, the target subscriber agrees to comply with the requirements of the CSRC. The target subscriber shall make relevant lock-up undertakings for the shares subscribed under the Issuance of H-Shares and handle the shares lock-up matters pursuant to the relevant requirements of the PRC laws and the stock exchange of the place where its shares are listed and the request from Datang Power.

The target subscriber is allowed to pledge or create other secured interests for all or part of H-Shares acquired from this transaction during the lock-up period, while it is still subject to the aforesaid lock-up period requirements in the event that registration of share transfer is required as a result of such pledge or other forms of guarantee.

(IV) Use of Proceeds from the Non-Public Issuance of H-Shares

Total proceeds from the Non-public Issuance of H-Shares shall not exceed HK$5,925.2809 million or equivalent RMB (In the event that an upward adjustment is made to H-Share Issue Price according to the upward adjustment mechanism under the H-Share Subscription Agreement, the issuance number of H-Shares shall remain unchanged, and the total proceeds from the Non-public Issuance of H-Shares shall be adjusted upwards accordingly), all of which, after deduction of expenses relevant to issuance, will be fully used for general corporate purposes.

(V) Listing Arrangements

The Company shall apply for the listing of H-Shares under the non-public issuance to Hong Kong Stock Exchange and London Stock Exchange. Upon the expiration of the lock-up period, the H-Shares under the non-public issuance may be traded in the Hong Kong Stock Exchange and London Stock Exchange.

– 88 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

SECTION II PROFILE OF TARGET SUBSCRIBER DETERMINED BEFORE THE BOARD MEETING

The basic information of CDC Group, the target subscriber under the Non-public Issuance of A-Shares and the controlling shareholder of the Company, is as follows:

I. BASIC INFORMATION OF THE TARGET SUBSCRIBER

(I) Overview of CDC Group

Name of company: China Datang Corporation Date of establishment: 9 April 2003 Registered capital: RMB18,009,316,900 ONLY Registered address: No. 1 Guangningbo Street, Xicheng District, Beijing Legal representative: Chen Jinhang Type of company: Ownership by the whole people Scope of business:

Operation of all state-owned assets formed by the investment of the State and owned by group companies in the said companies and related enterprises; development, investment, construction, operation and management of power energy; organisation of power (thermal) production and sales; manufacturing, repair and commissioning of power equipment; power technology development and consultation; contracting and consultation of power engineering and environmental protection projects; development of new energy as well as self-operated and commissioned import and export business for various commodities and technologies (other than commodities and technologies whose dealing, import or export is restricted or prohibited to operate by the State). Enterprises shall select operating items and operate autonomously according to law; items that shall be approved according to law can be operated upon approval of relevant departments; enterprises shall not engage in operations prohibited by industrial policies and restricted items in this city.)

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

(II) Shareholding and Controlling Relationship

The sole Shareholder of CDC Group is the SASAC of the State Council, and its shareholding and controlling correlation structure is set out in the following diagram:

==> picture [262 x 240] intentionally omitted <==

----- Start of picture text -----

State-owned Assets Supervision and
Administration Commission of the State Council
100%
China Datang Corporation
34.77%
Datang International Power Generation Co., Ltd.
----- End of picture text -----

As of 30 September 2016, CDC Group, together with its subsidiaries, held 4,628,396,014 issued Shares of the Company in aggregate, representing approximately 34.77% of total issued of Shares of the Company in aggregate.

(III) Principal Businesses

CDC Group is principally engaged in power generation and sales and, leverging its advantages in the power industry, expands and strengthens other businesses such as coal, finance and environmental protection, so as to form a structural-rationalised industry chain.

CDC Group recorded a realised revenue of approximately RMB165.920 billion and realised net profit of approximately RMB10.032 billion for 2015. Its total assets and net assets amounted to approximately RMB729.547 billion and approximately RMB132.558 billion, respectively, as of 31 December 2015.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

(IV) Latest Condensed Annual and Quarterly Accounting Statements

Unit: RMB’0,000

	As at	As at
	30 September	31 December
Item	2016	2015
Total assets	65,955,993.19	72,954,670.13
Total liabilities	53,804,450.71	59,698,870.07
Total owner’s equity	12,151,542.49	13,255,800.06
	January to
Item	September 2016	2015
Revenue	11,198,008.34	16,592,036.29
Total profit	876,943.45	1,731,603.69
Net profit	691,955.22	1,003,200.38

Note: The data for 2015 is extracted from audited and consolidated statement while the data for January to September 2016 is extracted from unaudited consolidated statement.

II. PENALTIES IMPOSED ON AND LITIGATION OR ARBITRATION AGAINST CDC GROUP AND ITS DIRECTORS AND SENIOR MANAGEMENT IN THE LAST FIVE YEARS

CDC Group and its directors and senior management have neither been subject to administrative penalties (except for those obviously unrelated to the securities market) and criminal penalties nor involved in any major civil litigation or arbitration related to economic disputes in the last five years.

III. HORIZONTAL COMPETITION OR POTENTIAL HORIZONTAL COMPETITION AND RELATED PARTY TRANSACTION BETWEEN THE BUSINESS OF THE COMPANY AND THAT OF THE ISSUANCE TARGET AND ITS CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER AFTER THE COMPLETION OF THE ISSUANCE

Upon the completion of the Non-public Issuance, there will be no new or potential horizontal competition between the business of the Company and that of CDC Group and its controlling subsidiaries arising therefrom.

Upon the completion of the Issuance, there will be no new related party transaction between the Company and CDC Group and its controlling shareholder and de facto controller arising therefrom. Where any related party transaction between the Company and CDC Group and its controlling shareholder and de facto controller conducted in the future owing to normal business needs, the Company will determine the transaction price in compliance with the market principles and perform necessary approval procedures and information disclosure obligation in accordance with the provisions of prevailing laws and regulations.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

IV. MAJOR TRANSACTIONS AMONG THE TARGET SUBSCRIBER, ITS CONTROLLING SHAREHOLDER, DE FACTO CONTROLLER AND THE COMPANY WITHIN 24 MONTHS BEFORE THE DISCLOSURE OF THIS ISSUANCE PROPOSAL

Related party transactions regarding substantial purchase and sale of commodities, loans, provision and acceptance of labor services conducted by the Company with CDC Group, the controlling shareholder, and its subsidiaries, and agreements of substantial related party transaction involving the related parties have all been disclosed and announced within 24 months prior to the disclosure of this proposal. Please see regular reports and temporary announcements of the Company for specific details.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

SECTION III SUMMARISATION OF SHARE SUBSCRIPTION AGREEMENT WITH CONDITIONS PRECEDENT

I. A-SHARE SUBSCRIPTION AGREEMENT

(I) Contract Parties and Signing Date

Issuer (Party A): Datang International Power Generation Co., Ltd. Subscriber (Party B): China Datang Corporation Time of Execution: November 2016

(II) Subscription Method

The subscription of A-Shares of the Issuer under the Non-public Issuance shall be made by way of cash in one-time subscription.

(III) Subscription Price and Principle for Pricing

The price referencing date of the Non-public Issuance of A-share is the date, being 29 November 2016, of the announcement on the resolutions of the sixth meeting of the ninth session of the Board of the Company. The issue price of A-share under the Non-public Issuance is RMB3.56 per share, which shall be no less than 90% of the average trading prices (the average trading prices of the Company’s A-share for the 20 trading days prior to the Price Referencing Date = the aggregate trading amount of the A-share for the 20 trading days prior to the A-share Price Referencing Date/the aggregate trading volume of the A-share for the 20 trading days prior to the A-share Price Referencing Date) of the Company’s A-shares for the 20 trading days prior to the Price Referencing Date. The price of each share under the Non-public Issuance of A-share subscribed by CDC Group shall be adjusted accordingly if there are any ex-rights or ex-dividends events (such as equity distribution, capitalisation of capital reserve or share placing) occurred under the Issuance of A-shares of the Company from the Price Referencing Date to the date of the Issuance.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

(IV) Proposed Amount and Issue Size of Subscription Shares

As agreed by both parties, the number of shares to be issued under the Issuance of A-Shares by the Company to CDC Group is 2,794,943,820, and CDC Group agreed to subscribe such shares pursuant to A-Share Subscription Agreement. The number of A-Shares to be issued under the Issuance of A-Shares subscribed by CDC Group shall be adjusted accordingly if there are any ex-rights or ex-dividends activities (such as equity distribution, capitalisation of capital reserve or share placing) undertaken by the Company from the Price Referencing Date of the Issuance to the date of the Issuance. The subscription amount to be paid by CDC Group shall be equal to the issue price per share multiplied by the number of shares it subscribed for.

(V) Lock-Up Period

CDC Group has undertaken that any A-Shares it acquired under the transaction will not be listed for trading or transferred within 36 months following the completion of the Issuance of A-Shares. CDC Group agreed to implement under the provisions of the requirements of the stock exchange of the listing place where the Shares of the company are listed if is the requirements are different from the CSRC. CDC Group shall issue relevant lock-up commitment and deal with lock-up matters for Shares in accordance with relevant provisions of laws of the PRC and stock exchanges of the listing place where the Shares of the Company are listed as well as the requirements of the Company.

(VI) Payment Method

Following effective of the A-Share Subscription Agreement and on the Issuance date, CDC Group shall pay for the subscription in a lump sum in cash via bank transfer to the account designated by the underwriter for the Issuance of A-Shares. Upon receiving the subscription payments for the Issuance in full, the underwriter shall make a single transfer of the subscription payments in full to the bank account designated by the issuer for the Issuance of A-Shares pursuant to the underwriting agreement with the Issuer.
Within five business days following the receipt of the above subscription payments, the Company shall designate a qualified PRC certified public accountant to conduct an inspection and issue a capital verification report of the same paid by CDC Group.
Upon the issuance of the capital verification report, the Company should submit a written application to Shanghai Branch of China Securities Depository and Clearing Corporation Limited as soon as possible for registering CDC Group as a holder of the A-Shares subscribed under the transaction, to which CDC Group agrees to provide necessary assistance.
Upon the completion of the above registration, CDC Group shall enjoy share rights attached to such A-Shares as a shareholder. Any undistributed accumulated profits of the Company prior to the Issuance shall be entitled to both new and existing shareholders on a pro rata basis.

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(VII) Conditions Precedent of Subscription Agreement

The A-Share Subscription Agreement shall be signed by the authorised representatives from both parties with their respective corporate seals affixed;
CDC Group shall obtain an approval on the Issuance from its internal approving authorities;
The Board of the Company has approved the Issuance;
The Independent Shareholders of the Company has approved the Issuance and its Subscription Agreement at the general meeting, and the Issuance of A-Shares and the related Subscription Agreement and the Issuance of H-Shares and the related Subscription Agreement approved at the A-Share Class Meeting and the H-Share Class Meeting respectively;
The Independent Shareholders of the Company has approved the whitewash waiver at the general meeting pursuant to the Code on Takeovers and Mergers, and approved CDC Group to be exempted from increasing shareholdings of the Company by way of offering pursuant to the PRC laws;
The SFC has granted the whitewash waiver to CDC Group;
All necessary approvals and consents have been obtained from relevant governments and regulatory authorities for the Issuance, including but not limited to those from the SASAC of the State Council and the CSRC; and
The conditions precedent set out in clauses 1 to 7 of section 4 contained in the H-Share Subscription Agreement have been satisfied.

(VIII) Breach of Contract

Any violation of any terms set out in the A-Share Subscription Agreement by either party shall be deemed a breach of the A-Share Subscription Agreement by that party. If any loss incurred to another party by a breach of contract from a party, the nondefaulting party is entitled to request for compensation from the defaulting party for such loss.
Any losses referred to in the A-Share Subscription Agreement shall include all direct loss suffered by the non-defaulting party due to any breach of contract from the defaulting party and any reasonable litigation costs, investigation fees, notary fees, legal fees, fees of other intermediary services and others incurred borne by the nondefaulting party in handling any disputes in this connection.

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II. A-SHARE SUBSCRIPTION SUPPLEMENTAL AGREEMENT

On 6 January 2017, the Company signed the A-Share Subscription Supplemental Agreement with CDC Group in relation to corresponding adjustments or amendments to the description of the target subscriber for the A-Share Subscription Agreement under the Non-public Issuance of H-Shares.

The A-Share Subscription Supplemental Agreement is an effective component of the A-Share Subscription Agreement and shall have the same legal effect with the A-Share Subscription Agreement. In case of any discrepancy between the A-Share Subscription Supplemental Agreement and the A-Share Subscription Agreement, the A-Share Subscription Supplemental Agreement shall prevail. Where there is no provision in the A-Share Subscription Supplemental Agreement, it remain to be implemented as stipulated in the A-Share Subscription Agreement.

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SECTION IV FEASIBILITY ANALYSIS BY THE BOARD ON THE USE OF PROCEEDS FROM THE ISSUANCE

I. INVESTMENT PLAN FOR PROCEEDS FROM THE ISSUANCE

The total proceeds from the Non-public Issuance of A-Shares of the Company shall not be more than RMB9,950 million. After the deduction of by relevant offering expenses, such proceeds are proposed to be used for the investment in “Replacing Small Units with Larger Units” Newlyconstructed Project of Liaoning Datang International Huludao Thermal Power Plant (遼寧大唐國際葫蘆島熱電廠“上大壓小”新建工程項目), Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project (江蘇大唐國際金壇燃機熱電聯產項目), Datang International Tangshan Beijiao Thermal Power Co-generation Project (大唐國際唐山北郊熱電聯產項目), “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant (遼寧大唐國際瀋撫連接帶熱電廠“上大壓小”新建工程項目), Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply Co-generation Project (廣東大唐國際高要金淘熱電冷聯產項目), and the remaining proceeds will be used to repay the borrowings for project infrastructures, and the details are as follows:

Unit: RMB’0,000

Category Project Name Power Plant Project “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Huludao Thermal Power Plant (遼寧大唐國際葫蘆島熱電廠“上大壓小”新建工程項目) Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project (江蘇大唐國際金壇燃機熱電聯產項目) Datang International Tangshan Beijiao Thermal Power Co-generation Project (大唐國際唐山北郊熱電聯產項目) “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant (遼寧大唐國際瀋撫連接帶熱電廠 “上大壓小”新建工程項目) Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply Co- generation Project (廣東大唐國際高要金淘熱電冷聯產項目) Subtotal Repayment of borrowings for project infrastructures Total	Shareholding 100% 100% 100% 100% 100% – – –	Estimated Total Investment 320,978 245,731 307,954 341,718 273,412 1,489,793 – –	Proposed Amount of the Use of Proceeds 108,200 92,200 82,200 79,400 78,000
			440,000
			555,000
			995,000

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If the actual net amount of the proceeds from the Non-public Issuance of A-Shares is less than the proposed total investment for the said projects, the Company will adjust and finally determine a detailed investment plan for the proceeds, the precedence and the specific amount to be invested for each project according to the actual net amount of the proceeds and the importance of the projects, and the shortfall shall be funded by the self-owned funds of the Company or other financing means.

Before the proceeds from the Non-public Issuance of A-Shares are put into place, the Company will otherwise raise the funds for the investment based on the actual progress of the projects, and the proceeds, once put into place, will replace the otherwise raised funds that have been invested pursuant to the procedures stipulated by relevant regulations.

II. BASIC INFORMATION ON THE INVESTMENT PLAN FOR THE PROCEEDS

(I) “Replacing Small Units with Larger Units” Newly-constructed Project of Liaoning Datang International Huludao Thermal Power Plant ( 遼寧大唐國際葫蘆島熱電廠“上大壓小”新建工程項目 )

1. Basic information on this project

Project Name: “Replacing Small Units with Larger Units” Newlyconstructed Project of Liaoning Datang International Huludao Thermal Power Plant (遼寧大唐國際葫蘆島熱電廠“上大壓小”新建工程項目)

Implementation Entity: Liaoning Datang International Huludao Thermal Power Generation Company Limited (100% wholly owned)

Construction Location: Beigang Industrial Park, Huludao City Construction Scope: Total installed capacity 2×350 MW Project Construction Period: 20 months

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2. Necessity analysis of the project

(1) Guaranteeing the need of centralised heat supply in the city

As the main heating source of centralised heat supply for the eastern part of Huludao City, the project mainly undertakes the heating heat load and 100t/h industrial heat load, planning to commence operation in 2018. The total area of eastern heating district where the project located in is 2,730×104 m[2] with 350t/h steam heat load, among which the heat supply area of small thermal power co-generation is 474×104 m[2] , representing 17% of the aggregate eastern heating area. The heating area is expected to reach 3,530×104 m[2] in 2020 with 400t/h steam heat load. With the rapid development of the regional industry and urban construction, the demand for heating will grow fast and hence there is an urgent need for developing thermal power co-generating units for centralised heat supply.

(2) Need for improving energy utilisation and environmental protection

The project locates in the eastern area of Huludao City. It is proposed to establish 2×350 MW supercritical coal-fired thermal power generation units through shutting down 175,000 kWh small coal-fired generating units. The construction of the project conforms to the national energy industry policies, and would meet the need for development of heat load in the eastern area of Huludao City. Dismantling small boilers can reduce 5,775 tonne emission of sulfur dioxide, 3,204 tonne emission of nitrogen oxides and 3,571 tonne emission of smoke ash each year in the area where they locate in, and can efficiently improve the quality of atmospheric environment. The project may improve the heat and power supply capability in the city and energy utilisation, and may facilitate the local economic and social sustainable development.

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3. Feasibility study for the project

The project is a thermal power co-generation project conforming to the national energy policies. The thermal power co-generation index accords with the relevant regulations and requirements. The project also conforms to the electricity development plan of Liaoning Province and the overall development plan and thermal power plan of Huludao City. The construction of the project could raise the proportion of centralised heat supply in Huludao City. As the disposal of pollutants (such as sewage, dust and slag) accords with the national standard, the project can improve the urban environment, realise energy conservation and emission reduction and improve the atmospheric environment. Huludao City’s economy has grown rapidly in the recent years which complies with sustainable development, providing the project with favourable conditions to establish the power plant.

The construction of the project at the current stage contributes to urban centralised heat supply, energy conservation and environment improvement, facilitates the economic development for local citizens, and relieves the intense power supply in Huludao City. The thermal power plant contains relatively good development value.

4. Matters to be declared for approval under the project

As of the issue date of the Proposal, “Replacing Small Units with Larger Units” Newly-Constructed Project of Liaoning Datang International Huludao Thermal Power Plant has been approved by relevant competent departments:

(1) Ministry of Land and Resources issued the Reply to the Preliminary Opinions on Construction Land of “Replacing Small Units with Larger Units” NewlyConstructed Project of Liaoning Datang International Huludao Thermal Power Plant (Guo Tu Zi Yu Shen Zi [2014] No. 25) on 4 April 2014.
(2) Ministry of Environmental Protection issued The Approval on Environmental Impact Report of “Replacing Small Units with Larger Units” NewlyConstructed Project of Liaoning Datang International Huludao Thermal Power Plant (Huan Shen [2015] No. 68) on 23 March 2015.
(3) Liaoning Provincial Development and Reform Commission issued The Approval of “Replacing Small Units with Larger Units” Newly-Constructed Project of Liaoning Datang International Huludao Thermal Power Plant (Liao Fa Gai Neng Yuan [2015] No. 570) on 8 July 2015.

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5. Project investment estimate and economic assessment

The estimated total investment of “Replacing Small Units with Larger Units” NewlyConstructed Project of Liaoning Datang International Huludao Thermal Power Plant is RMB3,209.78 million, of which RMB1,082.00 million will be funded by the proceeds of the Non-public Issuance of A-Shares and the shortfall will be funded by the self-owned funds of the Company or other financing means.

As estimated, after this Project achieves the desired productivity, the internal rate of after-tax return on the total investment of the project is expected to be 8.08% with the payback period of 10.79 years.

(II) Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project ( 江蘇大唐國際金壇燃機熱電聯產項目 )

1. Basic information on this project

Project Name: Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project (江蘇大唐國際金壇燃機熱電聯產項目) Implementation Entity: Jiangsu Datang International Jintan Thermal Power Generation Company Limited (100% wholly owned) Construction Location: Economic Development Zone, Jintan City, Jiangsu Province

Construction Scope: At the current stage, establishing 2 sets of 400 MW (F class) gas-steam combined cycle thermal power co-generating units and corresponding ancillary facilities, and reserving lands for expansion

Project Construction Period: 24 months

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2. Necessity analysis of the project

(1) Meeting the local demand for heat

The existing thermal power plant in Jintan City is a self-owned coal-fired thermal power plant with limited heat supply capability which fails to satisfy current needs. Most of the enterprises radiate and supply heat with small boilers, which not only produces environmental pollution and waste of energy, but also seriously limits the economic development of Jintan City. The construction of the project can facilitate centralised heat supply for the heat load of the district and meet the local demand for heating.

(2) Meeting the demand for developing Jiangsu power grid load

With the growth of Jiangsu Province electrical load, less electricity supply is arranged during the period of “12th Five-Year Plan” and “13th Five-Year Plan”, resulting in a huge shortage of installed capacity for the period. The construction of the project is beneficial to satisfying the power demand of Jiangsu power grid.

(3) Meeting the demand for developing local electrical load

According to the electricity distribution of 220 kV power grid load in Changzhou and Jintan, there will be huge electricity shortage of the 220 kV power grid in Changzhou and Jintan during 2015–2020. The construction of the project will enhance capability and reliability of the electricity supply of grounding power grid, and properly postpone the local construction of 500 kV substation capacity.

(4) Facilitating energy conservation and emission reduction, improve the ecological environment and optimise the energy structure

The project implements gas-steam thermal power co-generation engineering which can realise clean centralised heat supply and power generation by fully utilising the natural gas resources of Jintan reservoir. It will efficiently improve regional ecological environment, relieve local energy shortage and optimise local energy structure.

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3. Feasibility analysis for the project

The construction of the project can meet the demand for heat load from the industrial development within Jintan heat supply area, and replace part of heat load of the existing scattered small boilers and small coal-fired thermal power generation units. The project is beneficial to energy conservation and emission reduction, enhance the energy utilisation and improve regional environmental air quality. It could also relieve the electricity shortage of local 220 kV power grid and enhance the reliability of electricity supply of regional power grid.

4. Matters to be declared for approval under the project

As of the issue date of the Proposal, Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project has been approved by some competent departments:

(1) Department of Land and Resources of Jiangsu Province issued Preliminary Opinions on Construction Land of Datang International Jintan Gas Turbine Thermal Power Co-generation Project (Su Guo Tu Zi Yu [2013] No. 213) on 17 October 2013.
(2) Department of Environmental Protection issued Reply on Approval for Environmental Impact Statement of Datang International Jintan Gas Turbine Thermal Power Co-generation Project (Su Huan Shen [2014] No. 31) on 20 February 2014.
(3) Jiangsu Provincial Development and Reform Commission issued Reply on Approval of Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project (Su Fa Gai Neng Yuan [2015] No. 1206) on 29 October 2015.
(4) Entered into Contracts for the Transfer of the Land Use Rights of the Land with Land and Resources Authority of Jintan District of Changzhou City on 20 September 2016.

5. Project investment estimate and economic assessment

The estimated total investment of the Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project is about RMB2,457.31 million, of which RMB922.00 million will be funded by the proceeds of the Non-public Issuance of A-Shares and the shortfall will be funded from self-owned capital of the Company or other financing means.

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As estimated, after this Project achieves the desired productivity, the internal rate of after-tax return on the total investment of the project will be 11.87% with the payback period of 9.00 years.

(III) Datang International Tangshan Beijiao Thermal Power Co-generation Project ( 大唐國際唐山北郊熱電聯產項目 )

1. Basic information on this project

Project Name: Datang International Tangshan Beijiao Thermal Power Co-generation Project (大唐國際唐山北郊熱電聯產項目)

Implementation Entity: Hebei Datang International Tangshan Beijiao Thermal Power Generation Company Limited (100% wholly owned) Construction Location: Kaiping District, Tangshan City, Hebei Province Construction Scope: Proposed installation of 2×350 MW supercritical coal-fired and water-cooled heat supplying units

Project Construction Period: 19 months

2. Necessity analysis of the project

(1) Adapting for the need for unban centralised heat supply development

The urban construction and economy of Tangshan City have developed rapidly. With the continuous development of urban construction, the shortage of heat supply has become more severe with increasing insufficiency of centralised heat supply for urban development. According to the heat supply plan and thermal power co-generation plan, Tangshan Beijiao thermal power plant, as the important infrastructure of Tangshan’s urban centre, is the most important source of centralised heat supply for the development zone and Lubei District. Therefore, the construction must commence as soon as possible in order to meet the heating needs within heat supply area and improve the citizens’ living standards.

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Upon the operation of Tangshan Beijiao thermal power plant, the original numerous small boilers could be replaced, which can conserve energy, reduce environmental pollution and further enhance social and economic benefits. And thus the project is totally necessary.

(2) Satisfying the need for improving environmental quality

Tangshan City has restricted new projects of or rectification and expansion projects of small boilers, and has strictly formulated governance measures for atmospheric pollutants from burning facilities. The city adopts the rule of only using low sulfur-containing coal and clean energy. The city has also set stricter requirements for desulfurization and the control of oxynitride, with dust removing efficiency being higher than 98% and others. In addition, the city formulated a plan to replace coal-fired centralised heat supply boilers with thermal power in the city centre, vigorously developing thermal power co-generation heat supply.

This thermal power co-generation project could provide development zone and Lubei District of Tangshan City with stable and quality heating sources, and replace the numerous small and medium boilers which create serious pollution and disturbing impacts. Also, large-scaled thermal power projects have high quality energy utilisation, and have perfect and efficient measures to control pollutant emission. These advantages are in accordance to Tangshan City’s basic requirements of preventing and controlling atmospheric pollutants.

(3) Compliance with the national industry policy

The project involves thermal power co-generation infrastructure which is promoted by the PRC government. It contains comprehensive benefits including energy conservation, environment improvement, the enhancement of heat supply quality, and the increment of power supply. In addition, the project is of “Replacing Small Units with Large Ones” type, which will replace the No. 4, 5, 6 and 7 units (50 MW+55 MW+10 MW+10 MW=125 MW) of Tangshan New Area Power Plant, where no desulfurization facilities are installed with the annual emission amount of sulfur dioxide of approximately 7,100 tonne. Upon the close and replacement of the plants, there will be significant energy conservation and emission reduction effect, which is in compliance with national industrial policies.

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As for the project, at the current stage, the heat to power ratio during the heating period, annual average heat to power ratio, plantwide annual thermal efficiency ratio, and the rate of annual standard coal consumption for power generating, are 83.4%, 50.6%, 55.4% and 278.8g/kWh, respectively, conforming to the requirements of relevant regulations of thermal power co-generation.

3. Feasibility analysis for the project

The project involves thermal power co-generation infrastructure which is promoted by the PRC government. It contains comprehensive benefits including energy conservation, environment improvement, the enhancement of heat supply quality, and the increment of power supply. Also, the project is of “Replacing Small Units with Large Ones” type, which will replace No. 4, 5, 6 and 7 units (125 MW) of Tangshan New Area Power Plant, heat supplying units of Tangshan Fuxing Thermal Power Generation Company Limited and certain scattered small and medium heating boilers. Therefore, the project could reduce waste of energy and pollutant discharge caused by small thermal power units and small heating coal-fired boilers with low efficiency, and could help conserve energy and improve environmental quality.

4. Matters to be declared for approval under the project

As of the issue date of the Proposal, Datang International Tangshan Beijiao Thermal Power Co-generation Project has been approved by some competent departments:

(1) Department of Land and Resources of Hebei Province issued Preliminary Opinions on Construction Land of Hebei Datang International Tangshan Beijiao Thermal Power Plant Project (Ji Guo Tu Zi Han [2015] No. 424) on 19 May 2015.
(2) Hebei Provincial Development and Reform Commission issued Reply on Approval of Jiangsu Datang International Jintan Gas Turbine Thermal Power Co-generation Project (Ji Fa Gai Neng Yuan [2015] No. 562) on 3 June 2015.
(3) Department of Environmental Protection of Hebei Province issued Reply on Approval for Environmental Impact Statement of Datang International Tangshan Beijiao 2×350 MW Thermal Power Co-generation Project (Ji Huan Ping [2015] No. 344) on 19 October 2015.

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5. Project investment estimate and economic assessment

The estimated total investment of the Datang International Tangshan Beijiao Thermal Power Co-generation Project is about RMB3,079.54 million, of which RMB822.00 million will be funded by the proceeds of the Non-public Issuance of A-Shares and the shortfall will be funded by the self-owned capital of the Company or other financing means.

As estimated, after this Project achieves the desired productivity, the internal rate of after-tax return on the total investment of the project will be 6.25% with the payback period of 13.04 years.

(IV) “Replacing Small Units with Large Units” Newly constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant ( 遼寧大唐國際瀋撫連接帶熱電廠「上大壓小」新建工程項目 )

1. Basic information on this project

Project Name:

“Replacing Small Units with Large Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant (遼寧大唐國際瀋撫連接帶熱電廠「上大壓小」新建工程項目)

Implementation Equity:

Liaoning Datang International Shendong Thermal Power Company Limited (100% wholly owned)

Construction Location:

Eastern area of Shenyang City and western area of Fushun City, Liaoning Province
Construction Scope:
Proposed installation of 2×350 MW supercritical coal-fired heat supply and power generation units

Project Construction Period: 31 months

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2. Necessity analysis of the project

(1) Conforming to the urban heat plan and satisfy the heating needs of eastern area of Shenyang City

Development Planning Commission of Shenyang City organised relevant governmental departments and design institutions to reformulate the Overall Plan of Shenyang City’s Urban Thermal Power Development (2005–2020) in 2005. The plan specifies conducting the off-shore expansion project of Phase III of Shenhai Thermal Power Plant in the eastern area of Shenyang City and installing two sets of 300 MW coal-fired heat supply and power generation units. The plan also indicates that, during the planning period, the government can formulate thermal power development plan for emerging large-scaled industrial districts according to the area’s overall plan and separately apply to Liaoning Provincial Development and Reform Commission for approval. However, with the rapid development of urban construction, the demand for heating from the eastern area of Shenyang City has grown fast and has greatly exceeded the heat load development speed proposed in the thermal power development plan, implying the urgent need for developing thermal power co-generation centralised heat supply and clean heat supply. The project aims to establish large-scaled centralised heat supply construction for satisfying the rapidly growing demand of heat load in the eastern area of Shenyang City.

(2) Improvement of environmental conditions

With the development of construction and economy in the recent years, urban environmental construction has become more important. Atmospheric pollution in the city has particularly affected the sustainable development of local economy. Therefore, building large-scaled heat supply power plants serves the need to improve the urban air quality, accelerate the urban construction, and improve the investment environment.

Upon the operation of the thermal power plant, it can replace numerous small boiler rooms and exert significantly important influence on improving Shenyang City’s environment:

① Adopting boilers with high capacity and high efficiency could distinctly reduce coal consumption, and thus definitely reduce the emission of pollutants and transportation volume of coal and ashes;

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② Using highly efficient precipitators could decrease emission of smoke ash and relieve atmospheric pollution;
③ Adopting high stack for one fume exhaust cooling tower and one standard cooling tower in the two units of the project which can facilitate the pollutant diffusion and lower the landing concentration of pollutants;
④ More concentrated ashes storage which is beneficial for comprehensive utilisation of ashes and reduction of secondary pollution;
⑤ Utilising advanced equipment and materials, and using high-quality shock reduction and anti-noised measures to reduce the noise pollution to the environment;
⑥ Up-to-standard discharge of sewage after centralised processing.

3. Feasibility analysis for the project

The project is of thermal power co-generation type which accords with the Overall Plan of Thermal Power Development in Shenfu Connection Areas and eastern area of Shenyang City and the national energy policies. The construction of the project can raise the centralised heat supply proportion of the eastern area of Shenyang and the core zone of integration of Shenyang with Fushun, and improve the quality of atmospheric environment. The economy of the eastern area of Shenyang and the core zone of integration of Shenyang with Fushun has developed relatively fast with sustainable and rapid growth, implying favourable conditions of establishing power plant for the project. The construction of the project can relieve the regional problems of insufficient power grid installation capacity and intense power supply. It can also improve the regional power grid structure and guarantee reliable power utilisation, and stable, safe and sufficient power supply.

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4. Matters to be declared for approval under the project

As of the issue date of the Proposal, “Replacing Small Units with Large Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant has been approved by relevant authorities in charge:

(1) Ministry of Land and Resources issued Reply Letter of Preliminary Opinions on Construction Land of “Replacing Small Units with Large Units” Newlyconstructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant (Guo Tu Zi Yu Shen Zi [2012] No. 190) on 30 July 2012.
(2) Ministry of Environmental Protection of the People’s Republic of China issued Reply on Approval for Environmental Impact Statement of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant Newly-constructed Project (Huan Shen [2012] No. 373) on 28 December 2012.
(3) National Development and Reform Commission issued Reply on Approval for “Replacing Small Units with Large Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant (Fa Gai Neng Yuan [2013] No. 2620) on 25 December 2013.
(4) Ministry of Land and Resources issued Reply on Approval for Construction Land of “Replacing Small Units with Large Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant (Guo Tu Zi Han [2016] No. 598) on 29 September 2016.

5. Project investment estimate and economic assessment

The estimated total investment of the “Replacing Small Units with Large Units” Newly-constructed Project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant is about RMB3,417.18 million, of which RMB794.00 million will be funded by the proceeds of the Non-public Issuance of A-Shares and the shortfall will be funded by the self-owned funds of the Company or other financing means.

As estimated, after this Project achieves the desired productivity, the internal rate of after-tax return on the total investment of the project will be 10.53% with the payback period of 9.79 years.

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(V) Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply Co-generation Project ( 廣東大唐國際高要金淘熱電冷聯產項目 )

1. Basic information on this project

Project Name:

Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply Co-generation Project (廣東大唐國際高要金淘熱電冷聯產項目)

Implementation Equity:

Guangdong Datang International Zhaoqing Thermal Power Generation Company Limited (100% wholly owned)

Construction Location:

Jinli County, Gaoyao City, Guangdong Province

Construction Scope:

2×400 MW (Grade F) cogenerated heating electricity and cooling supply units with steam-gas cycle

Project Construction Period:

18 months

2. Necessity analysis of the project

(1) Satisfying the demand for heat sources of surrounding areas

According to survey and forecasts of the heat load of enterprises in Gaoyao Jintao industrial cluster and its surrounding areas, the heat load of the Gaoyao Jintao industrial cluster and its surrounding areas is mainly for industrial uses. It is a typical industrial area and an ideal place for co-generation and centralised heat supply.

(2) Energy conservation and emission reduction, and improvement of energy utilisation

The project will satisfy the recent heat load demand of the Gaoyao Jintao industrial cluster and is necessary for energy conservation, emission reduction and improving the environment.

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At present, enterprises in the Gaoyao Jintao industrial cluster are mainly using their own low efficiency small boilers to generate heat, most of which are not equipped with fume processing facilities, and caused serious pollution. The project is intended to replace such low efficiency and highly polluting small boilers with centralised heat supply to satisfy the enterprises’ growing needs for heat load. And the project will enable a better environment and better energy utilisation, and is in line with national policies for energy industries.

The project uses natural gas, a clean kind of energy, which can reduce emission of pollutants such as sulfur dioxide, nitrogen dioxide and carbon dioxide, reduce pollution and improve air quality. The construction of Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply Co-generation Project can protect the ecosystem and boost the sustainable development of social economy of the Pearl River Delta, which suffers relatively great pressure in terms of environmental protection, by effectively controlling the emission volume of harmful gas such as sulfur dioxide. The project is in line with the national industrial development guide and national policies relating to energy conservation and emission reduction and development of low-carbon economy.

3. Feasibility analysis for the project

The primary energy utilisation rates of the project are higher than the corresponding indicators as specified in Technological Specifications for Feasibility Study of Thermal Power Co-generation Projects, plantwide thermal efficiency of 75.77% and a heat to power ratio of 50.35%. And the project will also exert a huge impact on improving energy utilisation, emission reduction and energy conservation, bringing about significant social benefits.

4. Matters to be declared for approval

As of the issue date of the Proposal, the following approval has been obtained for the project from the relevant authorities in charge:

(1) The Department of Land and Resources of Guangdong Province issued Preliminary Opinion on Construction Land for Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply Co-generation Project (2 × 400 MW) (Yue Guo Tu Zu (Yu) Han [2011] No. 164) on 20 December 2011.

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(2) The Department of Environmental Protection of Guangdong Province issued Reply on Approval for Environmental Impact Report for Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply Co-generation Project (Yue Huan Shen [2012] No. 253) on 6 June 2012.
(3) The Guangdong Development and Reform Commission issued Reply on Approval by Guangdong Development and Reform Commission for Guangdong Datang International Gaoyao Jintao Heating, Power and Cooling Supply Cogeneration Project (Yue Huan Shen [2012] No. 3128) on 26 November 2012.
(4) The land use right certificate (Gao Yao Guo Yong [2015] No. 02467) was obtained on 17 August 2015.

5. Project investment estimate and economic assessment

The estimated total investment of the project is RMB2,734.12 million, of which RMB780.00 million will be funded by the proceeds from the Non-public Issuance of A-Shares and the shortfall will be funded by self-owned capital of the Company or other financing means.

As estimated, after this Project achieves the desired productivity, the internal rate of after-tax return on the total investment of the project will be 10.11%, with a payback period of 9.78 years.

(VI) Repayment of borrowings for project infrastructures

1. Improving capital structure, lowering gearing ratio, and reducing risk of debt repayment

Power generation is a capital intensive industry. In order to fulfil the needs for its development, the Company has been accelerating investment in fixed assets in recent years. The Company had strong financial needs during the reporting period with a high level gearing ratio. During the reporting period, the gearing ratio of the Company stayed high, being 78.08%, 79.13%, 79.12% and 74.78% respectively.

Assuming that the gross proceeds from the Issuance (including issuance expenses) amount to RMB15.0 billion, in which RMB5.55 billion will be used in the repayment of borrowings for project infrastructures, and that the simulated calculation is based on the dates of 31 December 2015 and 30 September 2016, the following table sets out the comparison between the Issuer’s gearing ratio before and after the Issuance (assuming there is no additional bank borrowings in the future) and the average

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gearing ratio of all listed companies under the industry category of “Utilities – Electricity – Coal-fired power” of Shenyin Wanguo (on consolidation basis):

			Gearing ratio	Gearing ratio	Gearing ratio
		Stock	31 December		30 September
No.	Stock code	abbreviation		2015	2016
1	000027.SZ	SEIC		57.17%	59.39%
2	000539.SZ	GED		57.98%	57.93%
3	000543.SZ	WENERGY CO., LTD.		42.49%	45.66%
4	000600.SZ	JEI		51.36%	51.59%
5	000720.SZ	LN&TS		76.55%	76.85%
6	000767.SZ	ZHANGZE POWER		77.57%	81.57%
7	000875.SZ	JPSC		79.23%	82.51%
8	000899.SZ	JXGNCL		56.08%	36.49%
9	000966.SZ	CHANGYUAN		64.10%	59.19%
10	001896.SZ	YNHC		66.34%	62.58%
11	600011.SH	HPI		67.99%	67.07%
12	600021.SH	SEP		69.70%	69.87%
13	600023.SH	Zhejiang Energy		38.39%	37.05%
		Electric Power
14	600027.SH	HDPI		72.95%	71.69%
15	600098.SH	GDG		47.26%	47.57%
16	600396.SH	SHYJSHEN		78.12%	77.25%
17	600452.SH	FULING POWER		43.56%	70.04%
18	600483.SH	FUNENG CO., LTD		52.72%	42.91%
19	600642.SH	Shenergy		40.12%	38.50%
20	600726.SH	HDECL		84.36%	83.27%
21	600744.SH	DHEP		80.34%	79.35%
22	600780.SH	TEC		47.12%	53.05%
23	600795.SH	GDPD		72.21%	70.96%
24	600863.SH	NMHD		64.13%	63.86%
25	600886.SH	SDIC Power		72.00%	72.64%
26	601991.SH	Datang Power		79.12%	74.78%
Average of listed companies in the same industry				63.04%	62.83%
Datang	Power (before the Issuance)			79.12%	74.78%
Datang	Power (after the simulated Issuance)			74.95%	69.46%

Source: Wind Info

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As of 31 December 2015 and 30 September 2016, the Issuer’s gearing ratios were 79.12% and 74.78% respectively, which were far higher than its industry peers. Based on the dates of 31 December 2015 and 30 September 2016 for simulated calculation, the simulated gearing ratio of the Company upon the completion of the Issuance would decrease to 74.95% and 69.46% respectively. The gearing ratios from simulated calculation based on the dates of 31 December 2015 and 30 September 2016 were both higher than the listed companies in the same industry.

2. Reducing debt size and financial expenses

Since the Company has been accelerating investment in fixed assets and has strong financial needs in recent years, the gearing ratio and financial expenses of the Company have been at a relatively high level, which in turn affected the business performance of the Company. The financial expenses of the Company during the reporting period are set out below:

Unit: RMB’0,000

	January to
Item	September 2016	2015	2014	2013
Financial expenses	535,785.40	789,827.30	861,560.40	815,786.20
Operating profit	-17,330.70	515,950.80	443,395.30	798,839.90
Proportion of financial
expenses to operating profit	–	153.08%	194.31%	102.12%

During the reporting period, the proportion of financial expenses to operating profit stayed high, where figures from 2013 to 2015 exceeded 100%, showing that the financial expenses had a significant impact on the Company’s operating profits. Using proceeds for repayment of part of the borrowings of the Company can reduce debt scale and save financial expenses.

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III. EFFECT OF THE ISSUANCE ON OPERATION MANAGEMENT AND FINANCIAL POSITION OF THE COMPANY

(I) Effect of the Non-public Issuance on Operation Management of the Company

The proceeds from the Non-public Share Issuance will be used in the construction of power plants and the repayment of borrowings for project infrastructures. The commencement of production of the projects will enable the Company to strengthen its principal business. The repayment of borrowings for project infrastructures will contribute to optimising the Company’s capital structure and enhance its core competitiveness. The scope of principal business engaged by the Company will remain unchanged after the Issuance.

(II) Effect of the Non-public Issuance on Financial Position of the Company

1. Effect on sustainable development capability of the Company

The Non-public Issuance will enable the Company to expand its asset scale and business scale. The overall financial position of the Company will be further improved with a more stable and sound financial structure. At the same time, with the gradual implementation and construction of projects funded by proceeds, the sustainable development capability of the Company will be further enhanced. The overall strength and risk resistance of the Company will also be significantly improved.

At the same time, since the projects funded by proceeds, namely the new “Replacing Small Units with Large Ones” construction project of Liaoning Datang International Huludao Thermal Power Plant, the Gas Turbine Co-generation Project of Jiangsu Datang International in Jintan, the Datang International Tangshan Beijiao Co-generation Project, the new “Replacing Small Units with Large Ones” construction project of Liaoning Datang International Shenfu Connection Areas Thermal Power Plant, Guangdong Datang International Gaoyao Jintao Cogenerated Heating Electricity and Refrigeration System Project, are mainly for investment in fixed assets, depreciation and amortisation expenses will increase upon the completion of projects.

2. Effect on asset size of the Company

Upon the completion of the Issuance, both total assets and net assets of the Company will increase, thereby strengthening the financial strength of the Company and providing beneficial financial protection for the subsequent development of the Company.

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3. Effect on cash flows of the Company

Upon the completion of the Issuance, the cash inflow of the Company will significantly increase and the cash inflow generated from financing activities will also drastically rise in a short term. Since the proceeds will be used in the repayment of borrowings for project infrastructures, cash outflow arising from financing activities will increase during the repayment period. Since the proceeds from the Non-public Issuance of A-Shares will partially be used in construction of power plants, cash outflow from investing activities will increase during the construction period. Upon the commencement of production and operation of the power plant projects, cash inflow generated from operating activities will gradually increase.

In conclusion, the use of proceeds from the Non-public Issuance of A-Shares complies with the national industrial policy and the development needs of the Company. The implementation of the issuance plan will further expand the Company’s asset size, optimise its capital structure, improve its asset quality and enhance its core competitiveness so as to facilitate its consistent and healthy development, which is in the interests of the Company all and its shareholders.

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SECTION V ANALYSIS OF THE INFLUENCES OF THE ISSUANCE ON THE BOARD

I. CHANGES IN BUSINESS, INCOME STRUCTURE, ARTICLES OF ASSOCIATION, SHAREHOLDER STRUCTURE AND SENIOR MANAGEMENT STRUCTURE OF THE COMPANY

(I) Effect on Business and Income Structure of the Company

The Company primarily engages in power generation businesses, mainly in coal-fired power generation, as well as hydropower, wind power and other power generation businesses. Proceeds from the Non-public Share Issuance will be used for the construction of power plants and repayment of borrowings for project infrastructures. This can help to facilitate the Company’s core business, improve its balance sheet, and enhance its core competitiveness. Upon the completion of the Non-public Issuance, there will be no significant change in the business and income structure of the Company. The Board is of the opinion that, in the basis of original business and income structure, the Non-public Issuance will facilitate the long-term development of the Company.

(II) Amendments to the Articles of Association

Upon the completion of the Non-public Share Issuance, the share capital of the Company will be enlarged correspondingly. Hence, based on the changes in share capital, the Company will make corresponding amendments to its articles in relation to share capital under the Articles of Association as considered and approved by the Board and approved at the General Meeting. The Company will process industrial and commercial registration for such changes.

(III) Changes in Shareholder Structure

Before the Issuance, the total share capital of the Company was 13,310,037,578 Shares, of which 4,628,396,014 Shares in issue were held by CDC Group and its parties acting in concert, representing approximately 34.77% of the total shares of the Company in issue. CDC Group is the controlling shareholder of the Company. Based on the number of A-Shares and H-Shares to be issued under the Non-public Issuance of not more than 2,794,943,820 shares and 2,794,943,820 shares respectively, as the shareholding of CDC Group and its parties acting in concert are expected to be not less than 54.07% upon the completion of the Issuance, CDC Group will remain to be the controlling shareholder of the Company and the Issuance will not cause any changes to the control over the Company.

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(IV) Adjustments to Senior Management Structure

As of the issue date of the Proposal for the Issuance, the Company does not have any plan on adjusting its senior management structure. So the Issuance will not cause any significant change on the Company’s senior management structure. If the Company intends to adjust its senior management structure, it will perform necessary legal procedures and information disclosure obligation in accordance to relevant provisions.

II. CHANGES IN FINANCIAL POSITION, PROFITABILITY AND CASH FLOWS OF THE LISTED COMPANY UPON COMPLETION OF THE ISSUANCE

(I) Effect on Profitability of the Company

Upon the completion of the Non-public Issuance, the Company can enhance its capital strength, control its financial cost and improve its subsequent financing capacity. Proceeds from the Non-public Issuance are intended to be used for the construction of power plants and repayment of borrowings for project infrastructures. Operation efficiency of project to be funded by proceeds can only be fully achieved in a certain period of time upon project completion. The projects, after completed and reaching their designed capacity, will enable the Company to increase its future competitiveness in the industry.

(II) Effect on Financial Position of the Company

The Non-public Issuance will bring positive impacts on financial position of the Company. If funds can be fully raised as planned, total assets and net assets of the Company shall increase upon the completion of the Issuance. Hence, the capital strength of the Company will be strengthened, which will provide a secure funding for subsequent development of the Company. Meanwhile, some of the proceeds from the Non-public Issuance will be used for repayment of borrowings for project infrastructures, which is beneficial to lowering financial costs and gearing ratio of the Company.

(III) Effect on Cash Flows of the Company

Upon the completion of the Issuance, the cash inflow of the Company will increase significantly. Cash inflow generated from fund raising activities will increase significantly in a short term. Certain proceeds will be used for the construction of power plants. Hence, cash outflow used in investing activities will increase during the construction period. Cash inflow generated from operating activities will gradually increase after the projects funded by the proceeds have been put into operation.

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III. CHANGES IN BUSINESS RELATIONSHIP, ADMINISTRATIVE RELATIONSHIP, RELATED PARTY TRANSACTION AND COMPETING BUSINESS BETWEEN THE LISTED COMPANY AND ITS CONTROLLING SHAREHOLDER AND ITS RELATED PARTIES

Upon the completion of the Issuance, there will be no change in business relationship and administrative relationship between the Company and its controlling shareholder, de facto controller and their related parties. The Company’s business and administration are still independent of each other, with independent operating obligations and risks to undertake. There will be no competing business or other new related party transaction between the Company and its controlling shareholder, de facto controller and their related parties as a result of the Issuance.

IV. WITH THE COMPLETION OF THE ISSUANCE, THE POSSIBLE SITUATIONS OF EMBEZZLEMENT OF FUNDS AND ASSETS BY CONTROLLING SHAREHOLDER AND ITS RELATED PARTIES, OR GUARANTEE PROVIDED BY THE LISTED COMPANY TO ITS CONTROLLING SHAREHOLDER AND ITS RELATED PARTIES

Upon the completion of the Non-public Issuance, the Company’s capital and assets will not be misappropriated by its controlling shareholder and related parties due to the Issuance.

Upon the completion of the Non-public Issuance, there will be no guarantee provided by the Company to its controlling shareholder and related parties which is in violation of regulations.

V. EFFECT OF THE ISSUANCE ON LIABILITY STRUCTURE OF THE COMPANY

Under the Non-public Issuance, the subscription of Shares by the target subscriber shall be paid in cash. Upon the completion of the Issuance, total assets and net assets of the Company will increase. The Company’s gearing ratio will decrease within reasonable scope, while its debt repayment ability will enhance, and its risk-tolerant ability will further strengthen, thus making the capital structure more stable. No significant increase of debt or excessive low gearing ratio of the Company will arise from the Issuance, Neither had the Company any improper financial costs.

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SECTION VI RISKS RELATED TO THIS ISSUANCE

I. MACROECONOMIC RISK

Power generation is a foundational industry which provides energy and power for the operation of the national economy and its market demand is closely related to the national macroeconomic development. Changes in the economic cycle affect the demand for electricity. If the macroeconomic growth continues to slow down, the overall demand for electricity from the national economy will decrease, thereby affecting the sales of electricity. The cycle of macroeconomic development and the cyclical changes in the economic development of the regions covered by the power generation business of Datang Power and its subsidiaries will affect the production and operation of the Company to a certain extent in the future.

II. BUSINESS AND OPERATIONAL RISK

The downward trend of consumption of electricity remains significant due to the weakness of global macroeconomic fundamentals, slower growth of Chinese economy and further implementation of supply-side structural reforms. Since the additional generating units have sustained growth in capacity and the pace of operation commencement of such generating units is much faster than the growth of electricity demand, it is anticipated that there will be a further decrease in the utilisation hours of certain coal-fired generating units.

Along with the gradual implementation of a series of new supporting documents of power sector reforms and the delegation of approval authority for the trial programmes on direct purchase of electricity, there has been a significant growth in the number of provinces that implement direct purchase of electricity and the transaction scale with respect thereto. In addition, with the larger unilateral reduction in prices by the power suppliers, the competition among power generation enterprises is becoming increasingly fierce. Meanwhile, there has been a sharp rebound in coal prices since the beginning of 2016 due to the supply-side reforms in the coal industry and the increase in transportation costs.

Therefore, if the selling price of electricity decreases and the cost of power generation materials increases while there is a further decline in demand for electricity, the production and operation of the Company may be affected.

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III. RISK IN PROJECTS FUNDED BY PROCEEDS

The proceeds are intended to be invested in the construction projects of power plants and repayment of borrowings for infrastructure projects. The progress of development and the profitability of the projects will have a significant impact on the Company’s future business performance. Although the projects funded by proceeds have been carefully considered and discussed, the projects may fail to achieve the expected results due to changes in political environment, construction progress, the supply of equipment and other aspects.

IV. RISK RELATED TO ENVIRONMENTAL PROTECTION

The Company principally engages in the power generation business focusing on coal-fired power and power generation business of hydropower, wind power and other type of energy. It also sets foot in coal mining, transportation, recycling and other sectors. During the process of power generation, discharge of waste gases, waste water and solid waste as well as noise pollution cannot be avoided. The Company attaches great importance to environmental protection and had marshalled massive resources in the construction and maintenance of environmental facilities as well as the establishment and optimisation of environmental management and supervision system. In recent years, with the improvement in people’s living standards and environmental awareness, the governments over the world, including the PRC government, have started to devote more effort to environmental protection. With the implementation of the Environmental Protection Law in 2015 and the Law of the People’s Republic of China on the Prevention and Control of Atmospheric Pollution in 2016, the requirements for pollutant emissions by companies have become increasingly stringent. As far as the enterprises are concerned, there has been significant growth in their production costs and a considerable increase in their exposure to the risks of exceeding the waste discharge limits. The follow-up transformation of environmental protection equipment may affect the normal production and operation of certain subsidiaries of the Company. Moreover, if the countries around the world, including the PRC, raise the standards of environmental protection or promulgate more stringent policies for environmental protection, the production and operation of the Company may be affected and its operation costs may further increase.

V. APPROVAL RISK FOR ISSUANCE

The Non-public Issuance of A-Shares is subject to the approval from SASAC of the State Council, the General Meeting, the A-Share Class Meeting, the H-Share Class Meeting and the CSRC. However, there is still uncertainty regarding whether these internal and external approvals can be obtained successfully and the final time when they are obtained.

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Moreover, the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares are mutually dependent, which means if either of them is not fully approved or authorised as required under the applicable laws and regulations, including but not limited to the approvals from the internal approval department of CDC Group, the General Meeting, the A-Share Class Meeting, the H-Share Class Meeting of Datang Power, SASAC of the State Council, CSRC or other regulators, the Issuance will not proceed in any extent.

VI. RISK IN STOCK MARKET

Secondary market price of shares of the Company will not only be affected by fundamental factors, including business environment, financial position and industry development prospect, but also can be affected by various macroeconomic factors political factors, investor sentiment, stock market conditions and other factors. Given that several approval procedures are need for the Non-public Issuance, it will take some time to proceed to complete. Before completion, market price of the Company’s shares may fluctuate and exert direct and indirect influences on investors’ earnings. As a result, investors shall pay attention to these risks.

VII. RISK OF DILUTING CURRENT RETURNS AFTER THE NON-PUBLIC SHARE ISSUANCE

The Non-public Issuance will increase the share capital and scale of net assets of the Company. Since the realisation of benefits from the projects funded by proceeds (construction projects of power plants) will involve processes including construction, acceptance upon completion, installation and debugging of equipment and putting into operation, it will take a certain amount of time to complete the projects and realise benefits. Therefore, the earnings per share and return on net assets of the Company are subject to dilution in the short term.

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SECTION VII ANALYSIS OF DILUTED CURRENT RETURNS REGARDING THE NON-PUBLIC SHARE ISSUANCE

I. IMPACT OF THE NON-PUBLIC SHARE ISSUANCE WITH DILUTING CURRENT RETURNS ON MAJOR FINANCIAL INDICATORS OF THE COMPANY

Under the Non-public Issuance of A-Shares, no more than 2,794,943,820 shares will be issued with proceeds not exceeding RMB9,950,000,000. Under the Non-public Issuance of H-Shares, no more than 2,794,943,820 shares will be issued with proceeds not exceeding HK$5,925,280,900 or equivalent RMB (in the event that an upward adjustment is made to the H-Share Issue Price according to the upward adjustment mechanism under the H-Share Subscription Agreement, the issuance number of H-Shares shall remain unchanged, and the total proceeds from the Non-public Issuance of H-Shares shall be adjusted upwards accordingly). The total share capital of the Company will increase from 13,310,037,578 shares to 18,899,925,218 shares at most.

(I) Major Assumptions and Explanation of the Calculation of Financial Indicators

The following assumptions are only made for the purpose of estimating the impact on the Company’s major financial indicators as a result of diluted current returns of the Non-public Issuance. They do not represent a guarantee for the Company’s future profits. Investors shall not make investment decisions based on such assumptions, but if they do so and cause losses, the Company shall not assume any liability for damages;
Assume that there is no material adverse change in the macroeconomic environment and the industry in which the Company operates;
The A-Share Issue Price shall be RMB3.56 per share. Without taking into consideration of issuance costs, the amount of proceeds from the issuance of A-Shares is assumed to be RMB9,950,000,000. The H-Share Issue Price shall be HK$2.12 per share. Without taking into consideration of issuance costs, the amount of proceeds from the issuance of H-Shares is assumed to be HK$5,925,280,900 or equivalent RMB;
Assuming 2,794,943,820 A-Shares and 2,794,943,820 H-Shares shall be issued (subject to the approval from CSRC), and the total share capital of the Company, upon the completion of the Issuance, shall be 18,899,925,218 shares;
Assume that the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares will be completed by the end of June 2017. This assumption is only for the estimate of the impact of the Issuance on the Company’s earnings per share, not the representation of the Company’s opinion about the actual completion date of the Issuance, and should be subject to the actual completion date;

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According to “Special Review Report on the Profit Estimate of the year 2016 of Datang International Power Generation Co., Ltd.” issued by Ruihua Certified Public Accountants (Special General Partnership), estimated net profit attributable to the equity holders of the Company excluding non-recurring profit/loss of Datang Power for 2016 ranged from approximately RMB2,584,145,200 to approximately RMB2,884,145,200[1] ;
Assume that the net profit attributable to the equity holders of the Company excluding non-recurring profit/loss for 2017 is same as that for 2016, ranging from approximately RMB2,584,145,200 to approximately RMB2,884,145,200[2] . (The assumption does not represent the Company’s judgement on its operation results and trend in 2017, neither does it constitute the profit forecast of the Company);
Assume that there is no conversion of capital reserve into share capital, dividend distribution, cash dividend and other matters which affect the number of shares of Datang Power in 2017;
The impacts on the production and operation, the financial position (e.g. financial expense and investment returns) and other aspects of the Company from the implementation of the projects funded by the proceeds from the Issuance is not taken into account.
1 Such information constitutes profit forecast under Rule 10 of the Takeovers Code and is required to be reported on in accordance with Rule 10 of the Takeovers Code. Please refer to Appendix IB of this Whitewash Circular for the reports under Rule 10 of the Takeovers Code prepared by the PRC domestic auditor and the financial advisers to the H-Share Issuance of the Company.

2 Such information constitutes profit forecast under Rule 10 of the Takeovers Code and is required to be reported on in accordance with Rule 10 of the Takeovers Code. However, as such information is prepared for illustrative purposes only and does not represent the Company’s judgments on its operation results or trend in 2017, and it will be inappropriate for the Company to prepare an actual profit forecast for 2017 at the beginning of the year to provide the relevant illustration given that it will prematurely disclose the business plans of the Company, leak its business secrets, severely jeopardise the competitiveness of the Company and harm the interests of the Company and the Shareholders as a whole and at the same time not providing meaningful information to the Shareholders as a profit forecast at the beginning of the year may not present sufficient accuracy and may even be misleading to Shareholders, an application has been made to the Executive for a waiver from the reporting on requirements set out in Rule 10 of the Takeovers Code, and the Executive has indicated that it is minded to grant such consent. As such information relating to 2017 has not been reported on in accordance with Rule 10 of the Takeovers Code, it does not meet the standard required by Rule 10 of the Takeovers Code. Shareholders and potential investors of the Company should exercise caution in placing reliance on such profit forecast in assessing the merits and demerits of the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver.

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(II) Impact on the Company’s Major Indicators

On the basis of the assumptions and explanations mentioned above, the Company estimates the impact of the Non-public Share Issuance on the earnings per share of the Company as indicated below:

	2017/
	2016/ 31 December 2017
	31 December Before After
Items	2016 Issuance Issuance
Total share capital_(’0,000 shares)_	1,331,003.76 1,331,003.76 1,889,992.52
Assumption:	Net profit attributable to the equity holders of the
	Company excluding non-recurring profit/loss for 2017
	remains the same as compared to 2016

Net profit attributable to the equity holders
of the Company excluding non-recurring
profit/loss (lower limit)_(RMB’0,000)_3	258,414.52	258,414.52	258,414.52
Net profit attributable to the equity holders
of the Company excluding non-recurring
profit/loss (upper limit)_(RMB’0,000)_4	288,414.52	288,414.52	288,414.52
Weighted average number of outstanding
ordinary shares_(’0,000 shares)_	1,331,003.76	1,331,003.76	1,610,498.14
Basic earnings per share after excluding
non-recurring profit/loss (lower limit)
(RMB/share)	0.19	0.19	0.16
Diluted earnings per share after excluding
non-recurring profit/loss (lower limit)
(RMB/share)	0.19	0.19	0.16
Basic earnings per share after excluding
non-recurring profit/loss (upper limit)
(RMB/share)	0.22	0.22	0.18
Diluted earnings per share after excluding
non-recurring profit/loss (upper limit)
(RMB/share)	0.22	0.22	0.18

3, 4

Such information constitutes profit forecast under Rule 10 of the Takeovers Code and is required to be reported on in accordance with Rule 10 of the Takeovers Code. With respect to the information relating to 2016, please refer to Appendix IB of this Whitewash Circular for the reports under Rule 10 of the Takeovers Code prepared by the PRC domestic auditor and the financial advisers to the H-Share Issuance of the Company. With respect to the information relating to 2017, as such information is prepared for illustrative purposes only and does not represent the Company’s judgments on its operation results or trend in 2017, and it will be inappropriate for the Company to prepare an actual profit forecast for 2017 at the beginning of the year to provide the relevant illustration given that it will prematurely disclose the business plans of the Company, leak its business secrets, severely jeopardise the competitiveness of the Company and harm the interests of the Company and the Shareholders as a whole and at the same time not providing meaningful information to the Shareholders as a profit forecast at the beginning of the year may not present sufficient accuracy and may even be misleading to Shareholders, an application has been made to the Executive for a waiver from the reporting on requirements set out in Rule 10 of the Takeovers Code, and the Executive has indicated that it is minded to grant such consent. As such information relating to 2017 has not been reported on in accordance with Rule 10 of the Takeovers Code, it does not meet the standard required by Rule 10 of the Takeovers Code. Shareholders and potential investors of the Company should exercise caution in placing reliance on such profit forecast in assessing the merits and demerits of the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver.

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II. SPECIAL RISK WARNING FOR DILUTED CURRENT RETURNS OF THE NON-PUBLIC SHARE ISSUANCE

Proceeds from the Non-public Issuance of A-Shares shall not exceed RMB9,950,000,000, which after deduction of relevant issuance costs, are intended to be invested in the construction projects of power plants, and the remaining amount is intended to repay the borrowings for infrastructure projects. Proceeds from the Non-public Issuance of H-Shares shall not exceed HK$5,925,280,900 or equivalent RMB (in the event that an upward adjustment is made to H-Shares Issue Price according to the upward adjustment mechanism under the H-Share Subscription Agreement, the issuance number of H-Shares shall remain unchanged, and the total proceeds from the Non-public Issuance of H-Shares shall be adjusted upwards accordingly), which after deduction of relevant issuance costs, are fully used for general corporate purposes.

As proceeds are raised from the Non-public Issuance of A-shares and the Non-public Issuance of H-shares, total share capital of the Company will increase and the positive effect of profits gained from proposed construction of projects on the Company’s business development requires certain time to realize, the Non-public Issuance may result in slight decrease in earnings per share for the year when proceeds are raised from the Non-public Issuance by the Company as compared with that of the previous year. Investors are advised to make rational investment and beware of investment risks.

Meanwhile, under the regulation of A-share market in the PRC, the Company’s assumption and analysis on net profit attributable to the equity holders of the Company excluding non-recurring profit/loss for 2017 for the estimate of impact of the Non-public Issuance on dilution of current returns and the remedial measures for coping with risks of dilution of current returns do not constitute profit forecast of the Company from A-share market perspective[5] , and the remedial measures for coping with risks of dilution of current returns do not represent a guarantee for the Company’s future profits in any form.[6] Investors should not make investment decisions according thereto and investors should pay attention.

5, 6 Such information, however, constitutes profit forecast under Rule 10 of the Takeovers Code and is required to be reported on in accordance with Rule 10 of the Takeovers Code. As such information is prepared for illustrative purposes only and does not represent the Company’s judgments on its operation results or trend in 2017, and it will be inappropriate for the Company to prepare an actual profit forecast for 2017 at the beginning of the year to provide the relevant illustration given that it will prematurely disclose the business plans of the Company, leak its business secrets, severely jeopardise the competitiveness of the Company and harm the interests of the Company and the Shareholders as a whole and at the same time not providing meaningful information to the Shareholders as a profit forecast at the beginning of the year may not present sufficient accuracy and may even be misleading to Shareholders, an application has been made to the Executive for a waiver from the reporting on requirements set out in Rule 10 of the Takeovers Code, and the Executive has indicated that it is minded to grant such consent. As such information relating to 2017 has not been reported on in accordance with Rule 10 of the Takeovers Code, it does not meet the standard required by Rule 10 of the Takeovers Code. Shareholders and potential investors of the Company should exercise caution in placing reliance on such profit forecast in assessing the merits and demerits of the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver.

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III. NECESSITY AND REASONS OF CHOOSING THIS FINANCING BY THE BOARD

Proceeds from the Non-public Issuance of A-Shares are intended to be invested in the construction projects of power plants and the repayment of borrowings for infrastructure projects.

The “Thirteenth Five-Year” is an important period for the scale-up development of energy in the PRC. Coal-fired power, wind power and solar power, which are the strategic industries of the country, are of great significance to the promotion of economic transformation and industrial upgrade in the PRC. In recent years, the Company has actively pushed forward the development of power projects in an orderly manner. Upon the receipt of proceeds, power generation, which is the principal business of the Company, will be further strengthened and expanded, assuring sustainable development of the Company.

The controlling shareholder of the Company plans to subscribe the shares of the Company issued under the Non-public Issuance in cash. This shows the controlling shareholder’s attitude of supporting the Company and its confidence in the future development of the Company, which is beneficial to safeguard the interests of small and medium shareholders and maximise the interests of the Company’s Shareholders.

IV. RELATION BETWEEN THE PROJECTS FUNDED BY THE PROCEEDS AND EXISTING BUSINESSES OF THE COMPANY, AND THE RESERVE OF HUMAN RESOURCES, TECHNOLOGIES AND MARKETS FOR THE PROJECTS OF THE COMPANY

The Company is one of the largest independent power generation companies in the PRC and primarily engages in the power generation business. The power generation business of the Company and its subsidiaries is mainly located in 18 provinces, municipalities and autonomous regions across the country. Its coal-fired power generating units concentrate in Beijing-Tianjin-Hebei region and southeast coastal region; hydropower projects are mainly located in southwest region; wind power and photovoltaic power projects are widespread in regions with abundant resources across the country.

As of 30 June 2016, the installed capacity of generating units managed by the Company amounted to approximately 43,472.225 MW, among which coal-fired power generator accounted for 32,280 MW or approximately 74.25%, coal-fired power combustion engine accounted for 2,890.8 MW or approximately 6.65%, hydropower accounted for 6,125.825 MW or approximately 14.09%, wind power accounted for 1,875.6 MW or approximately 4.32%, and photovoltaic power accounted for 300 MW or approximately 0.69%.

The projects funded by proceeds from the Issuance are extension of the existing principal business of the Company and are in line with the production and operation, technological level and management capacity of the Company.

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The reserve of human resources, technologies and markets prepared by the Company for the projects funded by proceeds are set out below:

(I) Reserve for Human Resources

As at 31 December 2015, there were 24,704 employees working at the Company in total, among which 13,395 were production personnel; 4,040 were technicians; 713 were financial personnel; 5,327 were administrative personnel; 1,229 were other personnel. In terms of educational background, the Company employed 809 employees holding a master degree or higher, accounting for 3.27% of the total number of employees; 12,443 employees holding a bachelor degree, accounting for 50.37%; 6,947 employees holding a college degree, accounting for 28.12%; 20,199 employees holding a college degree or higher in total, accounting for 81.76%. In the future, the Company will also continue to employ outstanding staff from campus or the society with reference to the market conditions so as to enhance the quality of human resources.

In conclusion, the Company has sufficient and well-structured reserve for human resources to ensure the effective implementation of the projects funded by proceeds.

(II) Technology Reserve

The Company is one of the largest independent power generation companies in the PRC and primarily engages in the power generation business focusing on coal-fired power and power generation business of hydropower, wind power and other energies. The in-service and under-construction assets of the Company locate at companies in 18 provinces, municipalities and autonomous regions across the country. The Company adheres to enhancement of the capacity for independent innovation and to enhance the corporate development strategy. The Company has strengthened scientific and technological management, gradually established a long-term mechanism for steady investment in science and technology, and set up a market-oriented technological innovation system combining production, learning and research for the Company so as to provide strong technological support for the development of the Company. In 2015, the Company obtained two second prizes of Industry Scientific and Technological Progress Award and also obtained 276 authorised patents (including 50 patents for invention). During the first half of 2016, the Company obtained one second prize and one third prize of China Power Science and Technology Award, filed for five China Power Science and Technology Achievement Awards and completed 141 authorised patents. Technological output continued to increase.

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As of the first half of 2016, the proportion of coal-fired generating units with more than 600 MW among the coal-fired generating units managed by the Company reached 61.83%. The operational costs of generating units were able to be effectively controlled. According to the requirements from the environmental protection authorities of the PRC, the Company carried out the reformation of the ultralow emission with desulfurisation, denitrification and dust removal during the reporting period, ensuring that the efficiency and emission standards of the generating units were industry-leading with exceptional edge in equipment and technology.

In conclusion, the projects funded by proceeds are extension of the existing principal business of the Company and the Company has sufficient technology reserve to ensure the effective implementation of the projects funded by proceeds.

(III) Market Reserve

The power industry is an important prospective basic industry of the national economy of the PRC. It is closely related to the development of national economy and presents cyclical characteristics positively correlated to economic development. Power consumption of the entire society in 2015 was 5,550.0 billion kWh with year-on-year growth of 0.5%. Being oriented to the market and using the capital market as a link, the Company continues to perform structural adjustment, integrate various advantageous resources and commence project development, investment and M&A so as to quickly enhance the Company’s comprehensive strength and maximise the interests of shareholders.

In conclusion, the projects funded by proceeds have sufficient market reserve.

V. MEASURES SHALL BE TAKEN BY THE COMPANY FOR DILUTED CURRENT RETURNS OF THE NON-PUBLIC SHARE ISSUANCE
(I) Operation Conditions and Development Trend of the Company’s Existing Business Domains, Major Risks Faced and Improvement Measures

1. Operation Conditions and Development Trend of the Company’s Existing Business Domains

The Company is one of the largest independent power generation companies in the PRC. The power generation business of the Company and its subsidiaries is mainly located in 18 provinces, municipalities and autonomous regions across the country. Coal-fired power generating units concentrates in Beijing-Tianjin-Hebei region and Southeast coastal region; hydropower projects are mainly located in Southwest region; wind power and photovoltaic power are widespread in regions with abundant resources across the country.

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In 2015, the Company completed power generation of approximately 169.725 billion kWh and on-grid power generation of approximately 160.830 billion kWh, achieving operating revenue of approximately RMB61.89 billion.

As of 30 June 2016, the installed capacity of generating units managed by the Company amounted to 43,472.225 MW, among which coal-fired generator of coal-fired power accounted for 32,280 MW or approximately 74.25%, combustion engine of coal-fired power accounted for 2,890.8 MW or approximately 6.65%, hydropower accounted for 6,125.825 MW or approximately 14.09%, wind power accounted for 1,875.6 MW or approximately 4.32%, and photovoltaic power accounted for 300 MW or approximately 0.69%.

For the first half of 2016, the profitability of the power generation companies of the Company improved after multiple measures were implemented, despite the drop of both power generation volume and utilisation hours. For the first half of 2016, the power generation segment realised a total profit of approximately RMB6.13 billion, representing a year-on-year increase of approximately 1.74%.

2. Major Risks Faced by the Company and Improvement Measures

(1) Market risk. Due to further implementation of supply-side structural reforms, the downward trend of power consumption remains significant in 2016. Since the additional generating units have sustained growth in capacity and the pace of operation commencement of such generating units is much faster than the growth of power demand, the utilisation hours of coal-fired generating units face downward pressure to a certain extent.

Along with the gradual implementation of a series of new supporting documents of power sector reforms and the delegation of power of approval for the trial programmes on direct purchase of electricity, the growth in the number of provinces that implement direct purchase of electricity and in the transaction scale with respect thereto has been significant. Apart from this, with the larger unilateral reduction in prices by the electricity suppliers, the competition among power generation enterprises has been increasingly fierce.

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Measures: Upholding its value and result-oriented philosophy, the Company will strengthen the tracking analysis on the electricity market to capture the opportunity of power generation and strive to increase the capacity of power generation. The Company will expand the scope of policy analysis and judgment so as to capture the capacity of power generation from various markets with benefits. At the Company and its subsidiaries level, the Company will also take the lead to optimise the electricity structure and motivate the people in charge at different levels to strive for capacity for power generation.

(2) Environmental risk. With the implementation of the Environmental Protection Law in 2015 and the Law of the People’s Republic of China on the Prevention and Control of Atmospheric Pollution in 2016, the requirements for pollutant emissions by companies have become increasingly stringent. As far as the enterprises are concerned, there has been significant growth in their production costs and a considerable increase in their exposure to the risks of exceeding the waste discharge limits. The follow-up transformation of environmental protection equipment may affect the normal production and operation of certain enterprises of the Company.

Measures: The Company will continue to strengthen the awareness of red line and baseline of environmental protection. The Company will be responsible for integrated planning to make reasonable arrangements on the environmental facilities improvement projects and their progress and be aware of the requirements for environmental improvement projects from local governments in a timely manner.

(3) Price risk. Revenue from coal-fired power is still the main source of revenue of the Company and fuel cost is one of the major operating costs of coal-fired power enterprises. Thus coal price is a major factor affecting the business performance of coal-fired power enterprises. If coal price highly fluctuates, the business performance of the Company will be affected to a certain extent.

Measures: The Company will step up its efforts in research on fuel markets. Focusing on the optimisation and adjustment on the procurement structure of coal, the Company will devote more efforts in the negotiation with coal suppliers and pay attention to refined despatch and transportation so as to establish a reasonable pricing mechanism. The Company will also perform coal blending and mixed burning according to local conditions so as to manage and control fuel costs effectively.

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OF A-SHARES (SECOND REVISION)

(II) Detailed Measures for Improvement of Daily Operation Efficiency, Reduction of Operational Cost and Improvement of Business Performance

With respect to the possible dilution in current returns of the Non-public Issuance, the Company intends to adopt the following measures to ensure the effective use of proceeds aiming at improving business performance of the Company, safeguarding the interests of the Company’s shareholders (especially the small and medium shareholders) and improving the future profitability of the Company.

1. Strengthening management of proceeds and ensuring the reasonable and rightful use of proceeds

In order to regulate the management and use of proceeds and safeguard the interests of investors, the Company has formulated the Management Rules on Proceeds pursuant to the requirements of laws, regulations and regulatory documents, including the Company Law , the Securities Law , the Administrative Measures for the Issuance of Securities by Listed Companies , Guideline for the Supervision of Listed Companies No. 2 – Regulatory Requirements for the Management and Use of Proceeds by Listed Companies and the Listing Rules of Shanghai Stock Exchange , which sets out detailed provisions with respect to the rules of use and management of proceeds, deposit of proceeds, use and management of proceeds, changes in the use of proceeds and report and supervision of use of proceeds.

According to the Management Rules on Proceeds , the Company shall use the proceeds according to the plan on the use of proceeds committed in the offering application documents. The proceeds from the Non-public Issuance will be deposited in a specific account for proceeds as decided by the Board for centralised management. The Company will also enter into a tripartite supervision agreement with the depositary bank and the sponsor for the proceeds account, pursuant to which the proceeds will be supervised by the sponsor, depositary bank and the Company so as to ensure the proceeds will be utilised on the specified purposes. The Company will go through the examination and approval procedures for the capital expenditures strictly in compliance with the capital management system of the Company and the Management Rules on Proceeds when using the proceeds for investment purposes. Meanwhile, the Company will conduct internal audit of the proceeds periodically, and coordinate the depositary banks and the sponsor to inspect and supervise the use of proceeds.

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2. Accelerating the implementation of projects funded by proceeds and striving for realising expected profit as soon as possible

To be in line with the development strategies of the Company, the projects funded by proceeds have gone through rigorous scientific examinations and were approved by the Board of the Company. The implementation of the projects funded by proceeds will enable the Company to strengthen its principal business, enhance competiveness and reduce financial costs. Upon the receipt of proceeds from the Non-public Issuance, the Company will accelerate the implementation of projects funded by proceeds and strive for realising expected profit as soon as possible so as to mitigate the risk in dilution of current returns of shareholders resulted from the Issuance as much as possible.

3. Further facilitating the development strategies of the Company and enhancing comprehensive competitiveness

The “Thirteenth Five-Year” is an important period for the scale-up development of new energy in the PRC. Electricity industry is a strategic industry of the country and is of great significance to the promotion of economic transformation and industrial upgrading in the PRC. While maintaining balance between stable growth and structural adjustment, strengthening the supply-side structural reform, accelerating the development of new energy and improving the advantages of traditional production capacity, the Company will focus on the enhancement of development quality and efficiency, the establishment of advanced power generation industry and technology innovation to facilitate structural adjustment and achieve sustainable development of efficient and clean power generation with an aim of establishing the Company into a well-known comprehensive energy service provider with excellent core competitiveness and strong sustainability.

4. Continuing to improve corporate governance structure and improving operational and management efficiency

The Company will strictly follow the Company Law, the Securities Law, the Corporate Governance Guidelines for Listed Companies, the Listing Rules and other laws, regulations and regulatory documents, and constantly improve the corporate governance structure to ensure that shareholders can fully exercise their rights and to ensure that the Board exercise their powers in accordance with laws, regulations and the Articles of Association to make a scientific, timely and prudent decisions. At the same time, the Company will further enhance operational and management standard, strengthen internal control and give full play to corporate management and control efficiency. The Company will also push forward comprehensive budget management, improve cost management and strengthen supervision on budget execution. On the basis of placing strict control on various expenses, the Company will improve operational and management efficiency and control operational and management risk.

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VI. UNDERTAKINGS BY THE CONTROLLING SHAREHOLDER, DIRECTORS AND SENIOR MANAGEMENT OF THE COMPANY FOR GUARANTEEING THE DUE PERFORMANCE OF REMEDIAL MEASURES FOR DILUTION ON CURRENT RETURNS OF THE NONPUBLIC SHARE ISSUANCE

(I) Undertakings by the Controlling Shareholder

China Datang Corporation, the controlling shareholder of the Company, has made the following undertakings in respect of the due performance by the Company of remedial measures for current returns pursuant to the relevant requirements of the CSRC:

CDC Group undertakes not to act beyond its authority to intervene in operating management activities of the Company, nor to misappropriate interests of the Company;
Since the date of this undertaking up to completion of the Issuance, if the CSRC imposes other new regulatory requirements in relation to the remedial measures relating to dilution on current returns and such undertaking cannot meet such rules of the CSRC, CDC Group undertakes to issue supplemental undertakings as required and in accordance with the latest rules of the CSRC;
CDC Group undertakes to practically implement the Company’s remedial measures for current returns and fulfil any undertakings it makes thereto in connection with remedial measures for current returns. In case of breach of the undertakings and cause losses of the Company or investors, CDC Group agrees to assume liability of indemnity to the Company or investors.

As one of the parties responsible for the remedial measures for current returns, in the event that the above undertakings are breached or not to be implemented by CDC Group, CDC Group agrees that the penalties or relevant regulatory measures shall be taken in accordance with the relevant provisions and rules as formulated or published by securities regulatory authorities such as the CSRC and Shanghai Stock Exchange.

(II) Undertakings by Directors and Senior Management

The directors and senior management of the Company have made the following undertakings in respect of the due performance by the Company of remedial measures for current returns pursuant to the relevant requirements of the CSRC:

(1) I undertake not to transfer benefits to other units or individuals at nil consideration or on unfair conditions, nor to damage the interests of the Company by other means;

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(2) I undertake to impose restrictions on duty consumption acts;
(3) I undertake not to apply any assets of the Company for investment and consumption activities that are irrelevant to the duties performed;
(4) I undertake to proactively promote the refining of the Company’s remuneration system so that it is more in line with the requirements for diluted current returns, to propose (if I have the right to do so) and support the Board or the remuneration committee to formulate or revise the remuneration system which is linked with the execution of remedial measures for current returns, and to vote in favour of the resolutions in relation to the remuneration system which is linked with the execution of remedial measures for current returns at the Board meetings or general meetings (if I have voting rights);
(5) I undertake to propose (if I have the right to do so) and support the Board or the remuneration committee to revise the vesting conditions to be linked with the execution of remedial measures for current returns when they are formulating share incentive scheme if the Company implement any share incentive scheme in future, and to vote in favour of the resolutions in relation to the share incentive scheme which is linked with the execution of remedial measures for current returns at the Board meetings or general meetings (if I have voting rights);
(6) Since the date of this undertaking up to completion of the Non-public Share Issuance, if the CSRC imposes other new regulatory requirements in relation to the remedial measures relating to dilution on current returns and such undertaking cannot meet such rules of the CSRC, I undertake to issue supplemental undertakings in accordance with the latest rules of the CSRC;
(7) As one of the parties responsible for the remedial measures for current returns, in the event that the above undertakings are breached or not to be implemented by me, I agree that the penalties or relevant administrative measures shall be taken in accordance with the relevant provisions and rules as formulated or published by securities regulatory authorities such as the CSRC and Shanghai Stock Exchange.

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SECTION VIII PARTICULARS OF PROFIT DISTRIBUTION POLICIES PRESENTED BY THE BOARD

I. PROFIT DISTRIBUTION POLICY OF THE COMPANY

(I) Profit Distribution Principles

The profits of the Company after making allowances for taxes and levies shall be applied in the following order: (1) making up the losses; (2) allocation to reserve; (3) allocation to statutory public welfare fund; (4) allocation to discretionary reserve; (5) payment of dividends in respect of ordinary shares.

No dividend shall be paid before the Company has made up its losses and has made allocation to the statutory reserve and public welfare fund. No dividend, unless the same is not paid by the Company when due and payable, shall bear interest as against the Company. The Company shall allocate 10% of its profits after tax to the statutory reserve, provided that no allocation is required if the statutory reserve have reached 50% of the registered capital of the Company. The Company shall allocate 10% of its profits after tax to the statutory public welfare fund. The discretionary reserve shall be allocated separately out of the profits of the Company in accordance with the resolutions of general meetings.

Subject to the restrictions imposed by the above, annual dividends shall be paid in proportion to the shareholding of each shareholder, within 6 months after the end of each accounting year. The annual dividends shall be approved by the general meeting but the amount of dividends payable shall not exceed the amount recommended by the Board. When the general meeting violates the preceding paragraph to distribute the profit to the shareholders prior to making up the losses and allocation to statuary reserves, the shareholders shall refund the distributed profit against the related requirements to the Company. In addition, the Company’s shares held by itself are not entitled to profit distribution.

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(II) Detailed Profit Distribution Policy

The Company’s profit distribution policy shall maintain continuity and stability.

On the basis that such profit distribution policy shall pay great attention to the reasonable investment return of the shareholders and also take into account of the long-term interests of the Company, the overall interests of all shareholders, the Company’s reasonable financial needs and the sustainable development of the Company, the Company shall implement an active method to distribute its profit (i.e. distribution by way of cash shall be the priority way for profit distribution). The Company may distribute dividends by way of cash or shares (or by both ways).

(1) Dividends and other distributions in respect of the ordinary shares shall be declared and denominated in Renminbi.
(2) Dividends and other cash distributions in respect of the domestic shares shall be paid in Renminbi.
(3) Dividends and other cash distributions in respect of the overseas-listed foreign shares listed in Hong Kong and London shall be paid in Hong Kong dollars in accordance with relevant PRC foreign exchange regulations. The exchange rate shall be calculated on the basis of the average closing exchange price of Hong Kong dollars against Renminbi issued by the People’s Bank of China in each business day of the week immediately preceding the date when such dividends are declared.
The Board may distribute interim dividends or bonus as authorised at the general meeting unless the general meeting decides otherwise.
Where the Company distributes dividends to its shareholders, it shall withhold taxes levied upon such dividends in accordance the PRC tax laws.
Where the Company distributes dividends by way of shares, it shall obtain approvals from the approval authorities of the State.
The Company shall disclose information relating to profit distribution in accordance with the laws, rules and regulations of the PRC.

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II. SITUATION OF CASH DIVIDEND AND USE OF UNDISTRIBUTED PROFITS IN PAST THREE YEARS

(I) Cash Dividend in Past Three Years

The Company’s cash dividend in past three years is as follows:

Unit: RMB’000

Year Profit distribution plan 2015 Dividend of RMB0.17 per share 2014 Dividend of RMB0.13 per share 2013 Dividend of RMB0.12 per share Total	Amount of cash dividend (including tax) 2,262,706 1,730,305 1,597,205 5,590,216	Net profit attributable to the equity holders of the Company in consolidated statements during the years for which dividends are distributed 2,809,033 1,798,358 3,400,789 8,008,180	Proportion in net profit attributable to the equity holders of the Company in consolidated statements 80.55% 96.22% 46.97%
			69.81%

For the accounting year ended 31 December 2015, as calculated pursuant to PRC GAAP and IFRS, the net profit attributable to the equity holders of the Company amounted to approximately RMB2,809,030,000 and RMB2,787,740,000 respectively. The Company’s profit distribution plan for 2015 was to distribute dividend of RMB0.17 per share (including tax) to all shareholders based on the total share capital (13,310,037,578 shares) of the Company as at 31 December 2015. Total dividend distributed amounted to approximately RMB2,262,710,000.

For the accounting year ended 31 December 2014, as calculated pursuant to PRC GAAP and IFRS, the net profit attributable to the equity holders of the Company amounted to approximately RMB1,798,360,000 and RMB1,767,420,000 respectively. The Company’s profit distribution plan for 2014 was to distribute dividend of RMB0.13 per share (including tax) to all shareholders based on the total share capital (13,310,037,578 shares) of the Company as at 31 December 2014. Total dividend distributed amounted to approximately RMB1,730,300,000.

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For the accounting year ended 31 December 2013, as calculated pursuant to PRC GAAP and IFRS, the net profit attributable to the equity holders of the Company amounted to approximately RMB3,526,890,000 and RMB3,528,780,000 respectively. The Company’s profit distribution plan for 2013 was to distribute dividend of RMB0.12 per share (including tax) to all shareholders based on the total share capital (13,310,037,578 shares) of the Company as at 31 December 2013. Total dividend distributed amounted to approximately RMB1,597,200,000.

(II) Use of Undistributed Profit in Past Three Years

The undistributed profit in past three years on consolidation basis is as follows:

	Undistributed profit
Time	at the end of period
	(RMB’000)
31 December 2015	2,085,379
31 December 2014	2,322,148
31 December 2013	4,454,912

III. DIVIDEND DISTRIBUTION POLICY AND PLAN FOR THREE-YEAR RETURNS TO SHAREHOLDERS (2016–2018)

In order to optimise the scientific, sustainable and stable shareholder return mechanism, enhance the transparency and operability of decision-making on dividend distribution policy and strengthen the protection of legitimate rights and interests of public shareholders, Datang Power formulated the following dividend distribution policy and plan for three-year returns to shareholders (the “ Policy and Plan ”) in accordance with the Company Law and relevant requirements under The Notice on the Further Implementation of Matters pertaining to Cash Bonus of Listed Companies (Zheng Jian Fa [2012] No. 37) and Guideline for the Supervision of Listed Companies No. 3 – Cash Dividend of Listed Companies of the CSRC, and the Articles of Association of Datang International Power Generation Co., Ltd. (the “ Articles of Association ”).

Article I Main Consideration for the Company to Formulate the Policy and Plan

With a view to long-term and sustainable development requirements, taking comprehensive consideration of its actual operating conditions, development objective, reasonable requirements from shareholders, financing cost and environment, the Company sets up the plan and mechanism for scientific, sustainable and stable returns to investors to make definite institutional arrangements for profit distribution.

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Article II Principles in Formulating the Policy and Plan

(I) The Company’s plan of shareholders’ return gives full consideration and listens to the opinions of the Company’s shareholders (in particular to medium and small investors), the independent directors and the supervisors;
(II) The Company’s plan of shareholders’ return is strictly in accordance with the profit distribution policy specified in the Articles of Association ;
(III) The formulation of the Company’s plan of shareholders’ return gives full consideration to the investors’ return, reasonably balances and deals with the relationship between the Company’s own stable development and return to the shareholders, and implements scientific, sustainable and stable profit distribution policy.

Article III Specific Dividend Distribution Policy and Three-Year Plan of Shareholders’ Return

(I) Specific conditions for and proportions of cash dividend distribution

In the event that the Company has generated profits, the accumulative undistributed profit is a positive figure and the cash flow of the Company is sufficient for the normal operation and sustainable development of the Company, the Company shall distribute its dividends by way of cash. The amount of profit to be distributed by way of cash in a year in principle shall be 50% of the net profit of the parent company realised in such year in accordance with PRC GAAP.

(II) Differentiated cash dividend policy

The Board shall distinguish the following circumstances taking into account the Company’s industry features, development stages, operation model and profitability as well as whether it has any substantial capital expenditure arrangement, and shall propose the differentiated cash dividend policy in accordance with the procedures set out in the Articles of Association:

Where the Company is in a developed stage with no substantial capital expenditure arrangement, cash dividend shall represent at least 80% of the total profit distribution when distributing profits;

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

Where the Company is in a developed stage with substantial capital expenditure arrangement, cash dividend shall represent at least 40% of the total profit distribution when distributing profits;
Where the Company is in a developing stage with substantial capital expenditure arrangement, cash dividend shall represent at least 20% of the total profit distribution when distributing profits;

when the Company is distributing profits, the Company’s stage of development should be determined by the Board according to specific circumstances. If it is difficult to determine the Company’s stage of development but there is a substantial capital expenditure arrangement, profit distribution may be dealt with pursuant to aforesaid requirements.

(III) Policy of distributing dividend by way of shares

In the event that the Company is well operated and the Board considers that the price of Company’s Shares does not match the size of the share capital of the Company and that distributing dividends by way of Shares is in the interests of all shareholders of the Company as a whole, the Company may propose a plan for the distribution of dividends by way of Shares, provided that the above requirements for the distribution of cash dividends have been fulfilled.

Article IV Formulation of Profit Distribution Plan and Decision-making Procedures

The profit distribution plan of the Company shall be drafted by the management and submitted to the Board and supervisory committee of the Company for consideration and approval. The Board shall fully discuss the rationality of the profit distribution plan, produce specific resolutions in this regard, and submit to the general meeting for consideration and approval.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

In the event that the Company makes changes or adjustments to the cash dividend policy and/or profit distribution policy in the Articles of Association pursuant to macroeconomic changes, internal production and operation of the Company, investment plans and long-term development needs or relevant laws, administrative regulations and relevant requirements of the listing of shares, the Board shall fully consider the opinion of medium and small shareholders, pay attention to the protection of the interests of investors, and shall have specific discussions in this regard and shall fully discuss the reasons for such adjustment and produce a written discussion report. The discussion report, after being considered by the independent directors, shall be submitted to the general meeting for approval by way of special resolutions.

Article V Cycle and Decision-making Mechanism of the Three-Year Plan of Shareholders’ Return

The Company formulates or reviews the plan of shareholders’ return once every three years. The latest plan period is from 2016 to 2018.

Prior to the end of the last plan period, the Board shall give full consideration to the Company’s operation condition, development targets, capital needs and financing environment, and fully listen to the opinions of the Company’s shareholders, independent directors and supervisors, to recommend extending the original plan of shareholders’ return or formulating a new three-year plan of shareholders’ return, and submit the same to the Board for approval after the same is approved by the independent directors. The independent directors and the supervisory committee express independent opinions on the plan of shareholders’ return. The relevant proposals will be presented at the general meeting for approval in the form of special resolutions upon being approved by the Board.

During the plan period, if the Company has to adjust the three-year plan of return due to significant changes in the external operating environment or its own operations, upon detailed demonstration, the Company shall perform the corresponding decision-making procedures and obtain consent of more than two-thirds of voting rights of shareholders present at the general meeting under the conditions set out in the Articles of Association.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (SECOND REVISION)

APPENDIX IA

Article VI Disclosure of Execution of Profit Distribution Plan and Cash Dividend Policy

The Company shall fully disclose the formulation and execution of cash distribution policy in its annual reports. In the event that the Company makes profit but the Board does not propose any cash dividend distribution plan, the Company shall disclose the reason thereof and the use of funds not used in dividends distribution and retained by the Company in the annual report, and the independent directors shall express independent opinions on this case. The Board shall disclose the profit distribution plan and the arrangements or principles of the use of undistributed profit retained. The undistributed profit retained by the Company after profit distribution shall be used for the business development of the Company.

Article VII The Policy and Plan shall become effective from the date when the Policy and Plan are considered and approved at the general meeting.

Datang International Power Generation Co., Ltd.

9 February 2017

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REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016

APPENDIX IB

The information relating to net profit attributable to the equity holders of the Company excluding nonrecurring profit/loss for the year ended 31 December 2016 set out in Appendix IA of this Whitewash Circular constitutes profit forecast under Rule 10 of the Takeovers Code and is required to be reported on in accordance with Rule 10 of the Takeovers Code.

A. THE PROFIT ESTIMATE OF THE YEAR 2016

I. Estimate on Consolidated Net Profit Attributable to the Equity Holders of the Company Excluding Non-Recurring Profit/Loss for the Year Ended 31 December 2016 and the Bases
Period to which the estimated result apply: From 1 January 2016 to 31 December 2016.
Estimated results and bases: Based on a preliminary assessment by the management of the Company based on the unaudited management accounts of the Group for the year ended 31 December 2016, with going-concern assumption, the Group expects to disclose a consolidated net profit attributable to the equity holders of the Company excluding non-recurring profit/loss of approximately RMB2,584.1452 million to approximately RMB2,884.1452 million in the consolidated financial statements of the Group for the year ended 31 December 2016.

B. REPORTS UNDER RULE 10 OF THE TAKEOVERS CODE

Set out below are the full text of the reports received from Ruihua Certified Public Accountants (Special General Partnership), the PRC domestic auditor of the Company and each of China Merchants Securities (HK) Co., Limited, China Securities (International) Corporate Finance Company Limited and CITIC CLSA Capital Markets Limited, the financial advisers to the H-Share Issuance of Company, in respect of the Profit Estimate of the year 2016, prepared for the purpose of inclusion in this Whitewash Circular.

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REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016

APPENDIX IB

I. REPORT FROM RUIHUA CERTIFIED PUBLIC ACCOUNTANTS (SPECIAL GENERAL PARTNERSHIP)

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通訊地址：北京市東城區永定門西濱河路8號院7號樓中海地產廣場西塔5–11層

Postal Address: 5–11/F, West Tower of China Overseas Property Plaza, Building 7, NO. 8, Yongdingmen Xibinhe Road, Dongcheng District, Beijing 郵政編碼(Post Code)：100077 電話(Tel)：+86 (10) 8809 5588 傳真(Fax)：+86 (10) 8809 1199

SPECIAL REVIEW REPORT ON

THE PROFIT ESTIMATE OF THE YEAR 2016 OF DATANG INTERNATIONAL POWER GENERATION CO., LTD.

Rui Hua He Zi [2017] No. 0149

To Directors of Datang International Power Generation Co., Ltd.

We accept the engagement to perform a special review on the “Profit Estimate of the year 2016” of Datang International Power Generation Co., Ltd. (hereinafter referred to as “ Datang Power ”).

The abovementioned “the Profit Estimate of the year 2016” refers to the “consolidated net loss attributable to the equity holders of the Company” of approximately RMB2,500 million to approximately RMB2,800 million and the “consolidated net profit attributable to the equity holders of the Company excluding non-recurring profit/loss” of approximately RMB2,584.1452 million to approximately RMB2,884.1452 million that Datang Power expects to disclose in the PRC onshore consolidated statement of profit or loss of the Group for the year of 2016.

The directors of Datang Power shall be responsible for the preparation of the “Profit Estimate of the year 2016” in accordance with relevant requirements under the China Accounting Standards for Business Enterprises with going-concern assumption and for ensuring the truthfulness, completeness and accuracy thereof. Our responsibility is to opine on the result of the “Profit Estimate of the year 2016” based on the work we conducted.

We conducted our review work pursuant to the “Standards on Other Assurance Engagements for Certified Public Accountants of China No. 3101 – Assurance Engagements other than Audit or Review of Historical Financial Information”. Such standards require that we shall comply with the code of ethics for PRC Certified Accountants, and plan and perform review work to obtain reasonable assurance as to whether the “Profit Estimate of the year 2016” of Datang Power is

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REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016

APPENDIX IB

free from material misstatement. In the process of review, we performed procedures which in our opinion are necessary, including inspection of accounting policies and accounting records which the “Profit Estimate of the year 2016” is based on and recalculation of the amount of Profit Estimate of the year 2016. We believe that our review provides a reasonable basis for our opinion.

Our responsibility is to express an opinion on the accounting policies and calculations of the Profit Estimate of the year 2016.

We are of the opinion that the “Profit Estimate of the year 2016” based on the unaudited management accounts of the Group, with going-concern assumption, so far as the accounting policies and calculations are concerned has been prepared with proper calculation process and has been properly compiled in accordance with the bases adopted by the directors as set out in Section A.I.2 of Appendix IB to the Whitewash Circular, and is in all material respects consistent with the China Accounting Standards for Business Enterprises adopted by the Group for preparing the PRC annual report of the Company in 2015.

This review report shall only be used for the proposed non-public issuance of A shares and non-public issuance of H shares by Datang Power for information disclosure purpose and shall not be used for any other purposes.

Ruihua Certified Public Accountants LLP PRC Certified Public Accountant: Bin Cao Beijing, the PRC PRC Certified Public Accountant: Li Deng

9 February 2017

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REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016

APPENDIX IB

II. REPORT FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

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The Board of Directors

Datang International Power Generation Company Limited

No. 9 Guangningbo Street Xicheng District Beijing People’s Republic of China

9 February 2017

Dear Sirs,

Reference is made to the estimate of the consolidated net profit attributable to the equity holders of the Company excluding non-recurring profit/loss for the year ended 31 December 2016 (the “ Profit Estimate of the year 2016 ”) as set out in section A headed “THE PROFIT ESTIMATE OF THE YEAR 2016” in Appendix IB to this Whitewash Circular, which has been prepared to enable the Directors of the Company to make the following statement in the Whitewash Circular.

“Based on a preliminary assessment by the management of the Company based on the unaudited management accounts of the Group for the year ended 31 December 2016, with going-concern assumption, the Group expects to disclose a consolidated net profit attributable to the equity holders of the Company excluding non-recurring profit/loss of approximately RMB2,584.1452 million to approximately RMB2,884.1452 million in the consolidated financial statements of the Group for the year ended 31 December 2016.”

We note that the Profit Estimate of the year 2016 is regarded as a profit forecast under Rule 10 of the Takeovers Code and must be reported on by the financial adviser and the auditors. This report is issued in compliance with the requirements under Rule 10.4 and Note 1(c) to Rules 10.1 and 10.2 of the Takeovers Code.

We have reviewed the Profit Estimate of the year 2016 and the unaudited consolidated management account of the Company and its subsidiaries for the year ended 31 December 2016 which you as the Directors are solely responsible for. We have also discussed with you the bases upon which the Profit Estimate of the year 2016 was prepared. In addition, we have considered, and relied upon, the report on Profit Estimate of the year 2016 dated 9 February 2017 issued by Ruihua Certified Public Accountants, the PRC auditor of the Company, to you, which stated that, the “Profit Estimate of the year 2016” based on the unaudited management accounts of the Group, with going-concern

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REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016

APPENDIX IB

assumption, so far as the accounting policies and calculations are concerned has been prepared with proper calculation process and has been properly compiled in accordance with the bases adopted by the directors as set out in Section A.I.2 of Appendix IB to the Whitewash Circular, and is in all material respects consistent with the China Accounting Standards for Business Enterprises adopted by the Group for preparing the PRC annual report of the Company in 2015.

On the basis of the foregoing, we are of the opinion that the Profit Estimate of the year 2016, for which the Directors are solely responsible, has been made after due and careful enquiry and with due care and consideration.

We hereby give our consent to and confirm that we have not withdrawn our written consent to the issue of the Profit Estimate of the year 2016 with the inclusion of this letter and/or our name and logo in the form and context in which they respectively appear in Appendix IB to the Whitewash Circular.

Yours faithfully,

For and on behalf of

China Merchants Securities (HK) Co., Limited

Pharos Chan

Executive Director

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REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016

APPENDIX IB

III. REPORT FROM CHINA SECURITIES (INTERNATIONAL) CORPORATE FINANCE COMPANY LIMITED

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The Board of Directors

Datang International Power Generation Company Limited

No. 9 Guangningbo Street

Xicheng District Beijing People’s Republic of China

9 February 2017

Dear Sirs,

We have reviewed the Profit Estimate of the year 2016 and the unaudited consolidated management account of the Company and its subsidiaries for the year ended 31 December 2016 which you as the Directors are solely responsible for. We have also discussed with you the bases upon which the Profit Estimate of the year 2016 was prepared. In addition, we have considered, and relied upon, the report on the Profit Estimate of the year 2016 dated 9 February 2017 issued by Ruihua Certified

– 150 –

REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016

APPENDIX IB

Public Accountants, the PRC auditor of the Company, to you, which stated that, the “Profit Estimate of the year 2016” based on the unaudited management accounts of the Group, with going-concern assumption, so far as the accounting policies and calculations are concerned has been prepared with proper calculation process and has been properly compiled in accordance with the bases adopted by the directors as set out in Section A.I.2 of Appendix IB to the Whitewash Circular, and is in all material respects consistent with the China Accounting Standards for Business Enterprises adopted by the Group for preparing the PRC annual report of the Company in 2015.

Yours faithfully,

For and on behalf of China Securities (International) Corporate Finance Company Limited Wang Wei Managing Director

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REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016

APPENDIX IB

IV. REPORT FROM CITIC CLSA CAPITAL MARKETS LIMITED

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The Board of Directors

Datang International Power Generation Company Limited

No. 9 Guangningbo Street Xicheng District Beijing People’s Republic of China

9 February 2017

Dear Sirs,

We have reviewed the Profit Estimate of the year 2016 and the unaudited consolidated management account of the Company and its subsidiaries for the year ended 31 December 2016 which you as the Directors are solely responsible for. We have also discussed with you the bases upon which the Profit Estimate of the year 2016 was prepared. In addition, we have considered, and relied upon, the report on the Profit Estimate of the year 2016 dated 9 February 2017 issued by Ruihua Certified Public Accountants, the PRC auditor of the Company, to you, which stated that, the “Profit Estimate

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REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016

APPENDIX IB

of the year 2016” based on the unaudited management accounts of the Group, with going-concern assumption, so far as the accounting policies and calculations are concerned has been prepared with proper calculation process and has been properly compiled in accordance with the bases adopted by the directors as set out in Section A.I.2 of Appendix IB to the Whitewash Circular, and is in all material respects consistent with the China Accounting Standards for Business Enterprises adopted by the Group for preparing the PRC annual report of the Company in 2015.

Yours faithfully,

For and on behalf of CITIC CLSA Capital Markets Limited Edmund Chan

Managing Director, Head of M&A

– 153 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for each of the three years ended 31 December 2013, 2014 and 2015 are disclosed in the following documents which have been published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.dtpower.com/en/):

(a) annual report of the Company for the year ended 31 December 2015 published on 29 April 2016 (pages 108 to 114);
(b) annual report of the Company for the year ended 31 December 2014 published on 24 April 2015 (pages 89 to 95); and
(c) annual report of the Company for the year ended 31 December 2013 published on 24 April 2014 (pages 86 to 92).

The unaudited condensed consolidated financial statements of the Group for the six months ended 30 June 2016 have been published in the interim report of the Company on 26 September 2016 (pages 20 to 44) which have been published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.dtpower.com/en/).

The following summary financial information of the Group for each of the three years ended 31 December 2013, 2014 and 2015 and the six months ended 30 June 2016 is extracted from the respective published audited consolidated financial statements of the Group as set forth in the annual reports for the years ended 31 December 2013, 2014 and 2015, respectively, and the unaudited interim results announcement dated 29 August 2016 of the Company.

The international auditor of the Company, RSM Hong Kong, did not issue any qualified or modified opinion on the financial statements of the Group for any of the three years ended 31 December 2015. There are no exceptional items because of the size, nature or incidence of the Group for each of the three years ended 31 December 2015.

I. Summary of financial information of the Group for each of the three years ended 31 December 2015 and the six months ended 30 June 2016

				As at
	As	at 31 December		30 June
	2013	2014	2015	2016
	RMB’000	RMB’000	RMB’000	RMB’000
Operating revenue	75,227,458	70,194,327	61,890,285	29,198,539
Total operating costs	(59,905,559)	(57,145,125)	(48,574,989)	(22,376,650)
Operating profit	15,321,899	13,049,202	13,315,296	6,821,889
Shares of profits of associates	686,196	606,547	515,041	99,974
Shares of profits of joint ventures	134,780	112,703	389,595	180,072
Investment income	350,200	220,069	160,865	86,299
Other gains	(16,926)	8,391	100,619	–

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

				As at
	As	at 31 December		30 June
	2013	2014	2015	2016
	RMB’000	RMB’000	RMB’000	RMB’000
Impairment losses on
available-for-sale financial assets	(241,476)	(208,992)	(38,672)	–
Interest income	79,504	88,881	76,585	25,589
Finance costs	(8,355,500)	(8,704,485)	(7,974,858)	(3,725,733)
Profit before tax	7,958,677	5,172,316	6,544,471	3,488,090
Income tax expense	(2,367,422)	(3,283,822)	(3,284,099)	(1,436,411)
Profit for the period	5,591,255	1,888,494	3,260,372	2,051,679
Other comprehensive income
for the period, net of tax	(48,670)	120,957	(9,473)	(62,363)
Total comprehensive income
for the period	5,542,585	2,009,451	3,250,899	1,989,316
Total comprehensive income for
the period attributable to:
Owners of the Company	3,354,016	1,888,374	2,778,266	1,646,977
Non-controlling interests	2,188,569	121,077	472,633	342,339
	RMB	RMB	RMB	RMB
Earnings per share	0.26	0.13	0.21	0.13
Dividends per share	0.12	0.13	0.17	0.17
Total Assets	299,939,829	307,528,433	308,495,439	306,345,313
Current assets	32,037,536	28,578,169	25,885,846	24,417,640
Non-current assets	267,902,293	278,950,264	282,609,593	281,927,673
Total Equity	63,829,856	63,458,193	63,584,339	61,672,954
Non-controlling interests	20,065,272	19,293,312	18,286,856	16,990,982
Equity attributable to owners of
the Company	43,764,584	44,164,881	45,297,483	44,681,972
Total Liabilities	236,109,973	244,070,240	244,911,100	244,672,359
Current liabilities	70,373,725	76,481,106	75,781,339	76,134,793
Non-current liabilities	165,736,248	167,589,134	169,129,761	168,537,566
Total Equity and Liabilities	299,939,829	307,528,433	308,495,439	306,345,313
Net Current Liabilities	(38,336,189)	(47,902,937)	(49,895,493)	(51,717,153)

– 155 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

II. Audited Consolidated Financial Statements

Set out below is financial information of the Group as extracted from the published audited financial statements of the Group for the year ended 31 December 2015.

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the Year Ended 31 December 2015

Note Operating revenue 8 Operating costs Fuel for power and heat generation Fuel for coal sales Depreciation Repairs and maintenance Salaries and staff welfare Local government surcharges Others Total operating costs Operating profit Shares of profits of associates Shares of profits of joint ventures Investment income Other gains 9 Impairment losses on available-for-sale financial assets Interest income Finance costs 11 Profit before tax Income tax expense 12 Profit for the year 13	2015 RMB’000 61,890,285 (21,901,632) (372,034) (11,354,266) (1,620,914) (3,457,161) (694,732) (9,174,250) (48,574,989) 13,315,296 515,041 389,595 160,865 100,619 (38,672) 76,585 (7,974,858) 6,544,471 (3,284,099) 3,260,372	2014 RMB’000 70,194,327 (27,437,948) (1,734,683) (11,451,071) (2,325,049) (3,256,951) (683,340) (10,256,083) (57,145,125) 13,049,202 606,547 112,703 220,069 8,391 (208,992) 88,881 (8,704,485) 5,172,316 (3,283,822) 1,888,494

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Note Other comprehensive income: Items that may be reclassified to profit or loss: Reclassification adjustments for amounts transferred to profit or loss upon disposals of available-for-sale financial assets Reclassification adjustments for amounts transferred to profit or loss arising from impairment of available-for-sale financial assets Fair value loss on available-for-sale financial assets Shares of other comprehensive income of associates Exchange differences on translating foreign operations Income tax on items that may be reclassified to profit or loss Other comprehensive income for the year, net of tax Total comprehensive income for the year Profit for the year attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the year attributable to: Owners of the Company Non-controlling interests Earnings per share Basic and diluted 17	2015 RMB’000 (52,901) 38,672 (37,653) 19,760 9,679 12,970 (9,473) 3,250,899 2,787,739 472,633 3,260,372 2,778,266 472,633 3,250,899 RMB 0.21	2014 RMB’000 – 184,914 (72,429) 34,004 4,281 (29,813) 120,957 2,009,451 1,767,417 121,077 1,888,494 1,888,374 121,077 2,009,451 RMB 0.13

– 157 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Consolidated Statement of Financial Position

At 31 December 2015

Note ASSETS Non-current assets Property, plant and equipment 18 Investment properties 19 Intangible assets 20 Development costs Investments in associates 21 Investments in joint ventures 22 Available-for-sale financial assets 23 Deferred housing benefits 24 Long-term entrusted loans to associates 25 Deferred tax assets 38 Other non-current assets 26 Total non-current assets Current assets Inventories 27 Accounts and notes receivables 28 Prepayments and other receivables 29 Short-term entrusted loans to related parties 30 Tax recoverable Current portion of long-term entrusted loans to associates 25 Current portion of other non-current assets 26 Cash and cash equivalents and restricted deposits 31 Total current assets TOTAL ASSETS	2015 RMB’000 256,735,094 577,627 4,378,081 11 7,981,871 5,575,810 4,978,596 3,360 121,778 1,182,573 1,074,792 282,609,593 3,857,781 7,859,689 8,517,913 – 13,212 – 63,360 5,573,891 25,885,846 308,495,439	2014 RMB’000 252,791,177 590,580 4,372,138 31 7,596,175 5,653,654 5,022,210 24,289 100,183 1,386,234 1,413,593 278,950,264 3,744,420 10,004,824 8,329,124 813,170 12,149 335,706 50,278 5,288,498 28,578,169 307,528,433

– 158 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Note EQUITY AND LIABILITIES Equity Equity attributable to owners of the Company Share capital 32 Reserves 34 Retained earnings Proposed dividends 16 Others Non-controlling interests Total equity Non-current liabilities Long-term loans 35 Long-term bonds 36 Deferred income 37 Deferred tax liabilities 38 Provisions 39 Other non-current liabilities 40 Total non-current liabilities Current liabilities Accounts payables and accrued liabilities 41 Taxes payables Dividends payables Short-term loans 42 Short-term bonds 43 Current portion of non-current liabilities 35, 36, 40 Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES NET CURRENT LIABILITIES	2015 RMB’000 13,310,038 29,320,653 2,262,706 404,086 45,297,483 18,286,856 63,584,339 130,061,212 15,410,018 3,194,264 606,985 372,138 19,485,144 169,129,761 27,603,263 1,264,011 316,706 14,785,757 15,143,743 16,667,859 75,781,339 244,911,100 308,495,439 (49,895,493)	2014 RMB’000 13,310,038 27,925,977 1,730,305 1,198,561 44,164,881 19,293,312 63,458,193 137,691,639 15,394,158 2,436,534 644,226 42,191 11,380,386 167,589,134 28,627,496 1,709,059 100,595 13,753,134 11,000,000 21,290,822 76,481,106 244,070,240 307,528,433 (47,902,937)

– 159 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Consolidated Statement of Changes in Equity

For the Year Ended 31 December 2015

		Att	ributable to owner	s of the Company				Total equity RMB’000 63,829,856 2,009,451 1,685,967 (1,673) 277 – – (4,065,685)
Share capital RMB’000 13,310,038 – – – – – – – – 13,310,038 13,310,038 – – – – – – – – – 13,310,038	Capital reserve RMB’000 9,910,838 – – – – – – – – 9,910,838 9,910,838 – – – – – – – – – 9,910,838	Statutory surplus reserve Discretionary surplus reserve RMB’000 RMB’000 4,186,401 10,842,720 – – – – – – – – – – 349,350 1,590,132 – – 349,350 1,590,132 4,535,751 12,432,852 4,535,751 12,432,852 – – – – – – – – – – – – 457,146 858,351 – – 457,146 858,351 4,992,897 13,291,203	Restricted reserve RMB’000 88,471 – – – – (2,872) – – (2,872) 85,599 85,599 – – – – – 4,011 – – 4,011 89,610	Foreign currency translation reserve RMB’000 39,334 4,281 – – – – – – 4,281 43,615 43,615 9,679 – – – – – – – 9,679 53,294	Available- for-sale financial assets revaluation reserve RMB’000 (29,070) 116,676 – – – – – – 116,676 87,606 87,606 (19,152) – – – – – – – (19,152) 68,454	Other reserves RMB’000 720,588 – 110,024 (663) (233) – – – 109,128 829,716 829,716 – – 77,396 – 7,245 – – – 84,641 914,357	Retained earnings RMB’000 4,695,264 1,767,417 – – – 2,872 (1,939,482) (1,597,205) (1,766,398) 2,928,866 2,928,866 2,787,739 – – – – (4,011) (1,315,497) (1,730,305) (262,074) 2,666,792
								(371,663)
								63,458,193

								63,458,193 3,250,899 1,151,064 (69,400) (167,679) (13,668) – – (4,025,070)
								126,146
								63,584,339

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Consolidated Statement of Cash Flows

For the Year Ended 31 December 2015

Note CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 44(a) Interest received Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment Additions to intangible assets Acquisition of a subsidiary Investments in joint ventures Investments in associates Investments in available-for-sale financial assets Additional entrusted loans made Proceeds from disposals of property, plant and equipment Disposals of subsidiaries 44(b) Proceeds from disposals of associates Proceeds from disposals of available-for-sale financial assets Repayments of entrusted loans Dividends received Interest received from entrusted loans to related parties Others Net cash used in investing activities	2015 RMB’000 28,178,087 76,585 (3,205,099) 25,049,573 (18,173,743) (12,864) – (78,910) (109,890) (180,045) (19,810) 2,067,875 (26,608) – 228,014 1,196,600 767,956 31,942 106,990 (14,202,493)	2014 RMB’000 28,996,250 88,881 (2,837,918) 26,247,213 (20,242,150) (119,263) (41,221) (278,900) (338,736) (850,000) (1,036,600) 1,432 – 107,876 – 925,200 359,199 75,575 413,215 (21,024,373)

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Note CASH FLOWS FROM FINANCING ACTIVITIES Capital injections from non-controlling interests Capital withdrawal from non-controlling interests 44(c) Drawdown of short-term loans Drawdown of long-term loans Issuance of short-term bonds Issuance of long-term bonds, net of issuance costs Proceeds from sale and finance leaseback transactions Repayment of short-term loans Repayment of long-term loans Repayment of short-term bonds Repayment of long-term bonds Repayment of finance lease payables Interest paid Dividends paid to owners of the Company Dividends paid to non-controlling interests Others Net generated used in financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS AT 1 JANUARY CASH AND CASH EQUIVALENTS AT 31 DECEMBER 31	2015 RMB’000 1,151,064 (69,400) 39,303,824 17,461,050 18,200,000 – 12,165,520 (37,822,435) (23,126,269) (14,300,000) (5,500,000) (3,707,878) (10,612,451) (1,730,305) (2,078,654) 3,348 (10,662,586) 184,494 1,548 5,013,275 5,199,317	2014 RMB’000 1,685,967 – 27,862,380 14,629,182 21,000,000 6,476,000 2,367,947 (32,348,480) (14,125,389) (15,000,000) (3,000,000) (2,128,355) (11,406,653) (1,597,205) (2,515,158) (324) (8,100,088) (2,877,248) 9,679 7,880,844 5,013,275

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Year Ended 31 December 2015

1. General information

Datang International Power Generation Co., Ltd. (the “ Company ”) was incorporated in the People’s Republic of China (the “ PRC ”) as a joint stock limited liability company. The Company’s H shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “ Hong Kong Stock Exchange ”) and the London Stock Exchange Limited while the Company’s A shares are listed on the Shanghai Stock Exchange. The address of its registered office is No. 9 Guangningbo Street, Xicheng District, Beijing 100033, the PRC. The addresses of its principal place of business in the PRC and the Hong Kong Special Administrative Region of the PRC (“ Hong Kong ”) are No. 9 Guangningbo Street, Xicheng District, Beijing 100033, the PRC and 21/F., Gloucester Tower, 15 Queen’s Road Central, Hong Kong respectively.

The principal activities of the Company and its subsidiaries (collectively referred to as the “ Group ”) are power generation and power plant development in the PRC. The Group also engaged in coal trading, chemical products manufacturing and selling, etc.

In the opinion of the directors of the Company, China Datang Corporation (“ China Datang ”), a company incorporated in the PRC, is the ultimate parent of the Company.

2. Basis of preparation

These consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (“ IFRSs ”) issued by the International Accounting Standards Board (the “ IASB ”). IFRSs comprise International Financial Reporting Standards (“ IFRS ”); International Accounting Standards (“ IAS ”); and Interpretations. These consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange and with the disclosure requirements of the Hong Kong Companies Ordinance (Cap. 622).

At 31 December 2015, a significant portion of the funding requirements of the Group for capital expenditures was satisfied by short-term borrowings. Consequently, at 31 December 2015, the Group had net current liabilities of approximately RMB49.90 billion. The Group had significant undrawn borrowing facilities, subject to certain conditions, amounting to approximately RMB262.54 billion and may refinance and/or restructure certain short-term borrowings into long-term borrowings and will also consider alternative sources of financing, where applicable. The directors of the Company are of the opinion that the Group will be able to meet its liabilities as and when they fall due within the next twelve months and have prepared these consolidated financial statements on a going concern basis.

3. Adoption of new and revised international financial reporting standards and requirements

(a) Application of new and revised IFRSs

In the current year, the Group has adopted all the new and revised IFRSs issued by the IASB that are relevant to its operations and effective for its accounting year beginning on 1 January 2015:

Amendment to IAS 40 (Annual Improvements to IFRSs 2011–2013 Cycle)

The amendment clarifies the application of IFRS 3 and IAS 40 in respect of acquisitions of investment property. IAS 40 assists preparers to distinguish between investment property and owner-occupied property, then IFRS 3 helps them to determine whether the acquisition of an investment property is a business combination. The amendment had no effect on the Group’s consolidated financial statements.

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Amendment to IFRS 8 (Annual Improvements to IFRSs 2010–2012 Cycle)

The amendment requires disclosure of the judgements made by management in applying the aggregation criteria to operating segments, and clarifies that reconciliations of the total of the reportable segments’ assets to the entity’s assets are required only if the segment assets are reported regularly. These clarifications had no effect on the Group’s consolidated financial statements.

(b) New and revised IFRSs in issue but not yet effective

The Group has not early applied new and revised IFRSs that have been issued but are not yet effective for the financial year beginning on 1 January 2015. The directors anticipate that the new and revised IFRSs will be adopted in the Group’s consolidated financial statements when they become effective. The Group is in the process of assessing, where applicable, the potential effect of all new and revised IFRSs that will be effective in future periods but is not yet in a position to state whether these new and revised IFRSs would have a material impact on its results of operations and financial position. List of new and revised IFRSs in issue but not yet effective that are relevant to the Group’s operations is as follows:

IFRS 9	Financial Instruments1
IFRS 15	Revenue from Contracts with Customers1
IFRS 16	Leases2
Amendments to IAS 1	Disclosure Initiative3
Amendments to IAS 7	Disclosure Initiative4
Amendments to IAS 16 and	Clarification of Acceptable Methods of
IAS 38	Depreciation and Amortisation3
Amendments to IAS 27	Equity Method in Separate Financial Statements3
Amendments to IFRS 10 and	Sale or Contribution of Assets between an Investor and
IAS 28	its Associate or Joint Venture5
Amendments to IFRSs	Annual Improvements to IFRSs 2012–2014 Cycle3

1 Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted.
2 Effective for annual periods beginning on or after 1 January 2019, with earlier application permitted.
3 Effective for first annual IFRS financial statements beginning on or after 1 January 2016, with earlier application permitted.
4 Effective prospectively for annual periods beginning on or after 1 January 2017, with earlier application permitted.
5 Effective for annual periods beginning on or after a date to be determined. Early adoption is permitted.

(c) New Hong Kong Companies Ordinance (Cap. 622)

The requirements of Part 9 “Accounts and Audit” of the new Hong Kong Companies Ordinance (Cap. 622) came into operation during the financial year. As a result, there are changes to presentation and disclosures of certain information in the consolidated financial statements.

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(d) Amendments to the Rules Governing the Listing of Securities on the Stock Exchange

The Stock Exchange in April 2015 released revised Appendix 16 of the Rules Governing the Listing of Securities in relation to disclosure of financial information in annual reports that are applicable for accounting periods ending on or after 31 December 2015. The amendments results in changes to the presentation and disclosures of certain information in the consolidated financial statements.

4. Significant accounting policies

These consolidated financial statements have been prepared under the historical cost convention, unless mentioned otherwise in the accounting policies below (e.g. certain available-for-sale financial assets that are measured at fair value).

The preparation of consolidated financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 5 to consolidated financial statements.

The significant accounting policies applied in the preparation of these consolidated financial statements are set out below.

(a) Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 December. Subsidiaries are entities over which the Group has control. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group has power over an entity when the Group has existing rights that give it the current ability to direct the relevant activities, i.e. activities that significantly affect the entity’s returns.

When assessing control, the Group considers its potential voting rights as well as potential voting rights held by other parties. A potential voting right is considered only if the holder has the practical ability to exercise that right.

Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date the control ceases.

The gain or loss on the disposal of a subsidiary that results in a loss of control represents the difference between (i) the fair value of the consideration of the sale plus the fair value of any investment retained in that subsidiary and (ii) the Company’s share of the net assets of that subsidiary plus any remaining goodwill and any accumulated foreign currency translation reserve relating to that subsidiary.

Intragroup transactions, balances and unrealised profits are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

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Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to the Company. Non-controlling interests are presented in the consolidated statement of financial position and consolidated statement of changes in equity within equity. Non-controlling interests are presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of profit or loss and total comprehensive income for the year between the non-controlling shareholders and owners of the Company.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling shareholders even if this results in the non-controlling interests having a deficit balance.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (i.e. transactions with owners in their capacity as owners). The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

(b) Business combination under common control

The consolidated financial statements incorporate the financial statements of the combining entities as if they had been combined from the date when they first came under the control of the controlling party.

The consolidated statements of profit or loss and other comprehensive income and consolidated statements of cash flows include the results and cash flows of the combining entities from the earliest date presented or since the date when the combining entities first came under the common control, where this is a shorter period, regardless of the date of the common control combination.

The consolidated statements of financial position have been prepared to present the assets and liabilities of the combining entities as if the Group structure as at 31 December 2015 had been in existence at the end of each reporting period. The net assets of the combining entities are combined using the existing book values from the controlling party’s perspective. No amount is recognised in respect of goodwill or gain on bargain purchase at the time of common control combination, to the extent of the continuation of the controlling party’s interest.

There was no adjustment made to the net assets nor the net profit or loss of any combining entities in order to achieve consistency of the Group’s accounting policies.

(c) Business combination other than under common control and goodwill

The acquisition method is used to account for the acquisition of a subsidiary in a business combination. The consideration transferred in a business combination is measured at the acquisition-date fair value of the assets given, equity instruments issued, liabilities incurred and any contingent consideration. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. Identifiable assets and liabilities of the subsidiary in the acquisition are measured at their acquisition-date fair values.

The excess of the sum of the consideration transferred over the Group’s share of the net fair value of the subsidiary’s identifiable assets and liabilities is recorded as goodwill. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the sum of the consideration transferred is recognised in consolidated profit or loss as a gain on bargain purchase which is attributed to the Group.

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In a business combination achieved in stages, the previously held equity interest in the subsidiary is remeasured at its acquisition-date fair value and the resulting gain or loss is recognised in consolidated profit or loss. The fair value is added to the sum of the consideration transferred in a business combination to calculate the goodwill.

The non-controlling interests in the subsidiary are initially measured at the non-controlling shareholders’ proportionate share of the net fair value of the subsidiary’s identifiable assets and liabilities at the acquisition date.

After initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“ CGUs ”) or groups of CGUs that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes. Goodwill impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to its recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(d) Associates

Associates are entities over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policies of an entity but is not control or joint control over those policies. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has significant influence. In assessing whether a potential voting right contributes to significant influence, the holder’s intention and financial ability to exercise or convert that right is not considered.

Investment in an associate is accounted for in the consolidated financial statements by the equity method and is initially recognised at cost. Identifiable assets and liabilities of the associate in an acquisition are measured at their fair values at the acquisition date. The excess of the cost of investment over the Group’s share of the net fair value of the associate’s identifiable assets and liabilities is recorded as goodwill. The goodwill is included in the carrying amount of the investment and is tested for impairment together with the investment at the end of each reporting period when there is objective evidence that the investment is impaired. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognised in consolidated profit or loss.

The Group’s share of an associate’s post-acquisition profits or losses and other comprehensive income is recognised in consolidated profit or loss and other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

The gain or loss on the disposal of an associate that results in a loss of significant influence represents the difference between (i) the fair value of the consideration of the sale plus the fair value of any investment retained in that associate and (ii) the Group’s entire carrying amount of that associate (including goodwill) and any related accumulated foreign currency translation reserve. If an investment in an associate becomes an investment in a joint venture, the Group continues to apply the equity method and does not remeasure the retained interest.

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Unrealised profits on transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

(e) Joint arrangements

A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Relevant activities are activities that significantly affect the returns of the arrangement. When assessing joint control, the Group considers its potential voting rights as well as potential voting rights held by other parties. A potential voting right is considered only if the holder has the practical ability to exercise that right.

A joint arrangement is either a joint operation or a joint venture. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. The Group has assessed the type of each of its joint arrangement and determined them to all be joint ventures.

Investment in a joint venture is accounted for in the consolidated financial statements by the equity method and is initially recognised at cost. Identifiable assets and liabilities of the joint venture in an acquisition are measured at their fair values at the acquisition date. The excess of the cost of the investment over the Group’s share of the net fair value of the joint venture’s identifiable assets and liabilities is recorded as goodwill. The goodwill is included in the carrying amount of the investment and is tested for impairment together with the investment at the end of each reporting period when there is objective evidence that the investment is impaired. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognised in consolidated profit or loss.

The Group’s share of a joint venture’s post-acquisition profits or losses and other comprehensive income is recognised in consolidated profit or loss and other comprehensive income. When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint venture), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture. If the joint venture subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

The gain or loss on the disposal of a joint venture that results in a loss of joint control represents the difference between (i) the fair value of the consideration of the sale plus the fair value of any investment retained in that joint venture and (ii) the Group’s entire carrying amount of that joint venture (including goodwill) and any related accumulated foreign currency translation reserve. If an investment in a joint venture becomes an investment in an associate, the Group continues to apply the equity method and does not remeasure the retained interest.

Unrealised profits on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interests in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

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(f) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “ functional currency ”). The consolidated financial statements are presented in Renminbi (“ RMB ”), which is the Company’s functional and presentation currency, and all values are rounded to the nearest thousand (“ RMB’000 ”), unless otherwise stated.

(ii) Transactions and balances in each entity’s financial statements

Transactions in foreign currencies are translated into the functional currency on initial recognition using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities in foreign currencies are translated at the exchange rates at the end of each reporting period. Gains and losses resulting from this translation policy are recognised in profit or loss.

Non-monetary items that are measured at fair value in foreign currencies are translated using the exchange rates at the dates when the fair values are determined.

When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss is recognised in other comprehensive income. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.

(iii) Translation on consolidation

The results and financial position of all the Group entities that have a functional currency different from the Company’s presentation currency are translated into the Company’s presentation currency as follows:

Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
Income and expenses are translated at average exchange rates for the period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the exchange rates on the transaction dates); and
All resulting exchange differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve.

On consolidation, exchange differences arising from the translation of monetary items that form part of the net investment in foreign entities and of borrowings are recognised in other comprehensive income and accumulated in the foreign currency translation reserve. When a foreign operation is sold, such exchange differences are reclassified to consolidated profit or loss as part of the gain or loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

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(g) Property, plant and equipment

Property, plant and equipment, other than construction in progress, are stated in the consolidated statement of financial position at cost, less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised in profit or loss during the period in which they are incurred.

Depreciation of property, plant and equipment is calculated at rates sufficient to write off their cost less their residual values over the estimated useful lives on a straight-line basis. The principal useful lives are as follows:

Land use rights	10–70 years
Buildings and structures	8–45 years
Electricity utility plants	4–35 years
Coal chemical specialised assets	23 years
Transportation facilities	6–12 years
Others	5–22 years

The residual values, useful lives and depreciation methods are reviewed and adjusted, if appropriate, at the end of each reporting period.

Construction in progress represents buildings and structures under construction and plant and equipment pending installation, and is stated at cost less impairment losses. Depreciation begins when the relevant assets are available for use.

The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in profit or loss.

(h) Investment properties

Investment properties are land and/or buildings held to earn rentals and/or for capital appreciation. An investment property is measured initially at its cost including all direct costs attributable to the property.

After initial recognition, the investment property is stated at cost less accumulated depreciation and impairment losses. The depreciation is calculated using the straight line method to allocate the cost to the residual value over its estimated useful life of 30 years.

The gain or loss on disposal of an investment property is the difference between the net sales proceeds and the carrying amount of the property, and is recognised in profit or loss.

(i) Leases

The Group as lessee

(i) Operating leases

Leases that do not substantially transfer to the Group all the risks and rewards of ownership of assets are accounted for as operating leases. Lease payments (net of any incentives received from the lessor) are recognised as an expense on a straight-line basis over the lease term.

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(ii) Finance leases

Leases that substantially transfer to the Group all the risks and rewards of ownership of assets are accounted for as finance leases. At the commencement of the lease term, a finance lease is capitalised at the lower of the fair value of the leased asset and the present value of the minimum lease payments, each determined at the inception of the lease.

The corresponding liability to the lessor is included in the consolidated statement of financial position as finance lease payable. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Assets under finance leases are depreciated the same as owned assets.

A sale and leaseback transaction involves the sale of an asset and the leasing back of the same asset. The lease payment and the sale price are usually interdependent because they are negotiated as a package. If a sale and leaseback transaction results in a finance lease, any excess of sales proceeds over the carrying amount shall be deferred and amortised over the lease term.

The Group as lessor

(i) Operating leases

Leases that do not substantially transfer to the lessees all the risks and rewards of ownership of assets are accounted for as operating leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

(ii) Finance leases

Leases that substantially transfer to the lessees all the risks and rewards of ownership of assets are accounted for as finance leases. Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

(j) Intangible assets other than goodwill

Intangible assets, other than goodwill, are stated at cost less accumulated amortisation and impairment losses. Amortisation of intangible assets is calculated either at rates appropriate to write off their cost over the estimated useful lives on a straight-line basis or on a systematic and proper method to reflect the pattern in which the asset’s future economic benefits are expected to be realised by the Group. Mining rights are amortised based on the units of production method while the principal useful lives of other intangible assets are as follows:

Resource use rights	10–40 years
Technology know-how	23 years
Computer software	2–9 years
Others	10 years

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(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using weighted average basis. Costs of inventories include direct material cost and transportation expenses incurred in bringing them to the working locations. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs in power generation and selling expenses.

(l) Recognition and derecognition of financial instruments

Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instruments.

Financial assets are derecognised when the contractual rights to receive cash flows from the assets expire; the Group transfers substantially all the risks and rewards of ownership of the assets; or the Group neither transfers nor retains substantially all the risks and rewards of ownership of the assets but has not retained control on the assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.

(m)

Financial assets

Financial assets are recognised and derecognised on a trade date basis where the purchase or sale of an financial asset is under a contract whose terms require delivery of the financial assets within the timeframe established by the market concerned, and are initially measured at fair value, plus directly attributable transaction costs except in the case of financial assets at fair value through profit or loss.

The Group classifies its financial assets in the following categories: loans and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These assets are carried at amortised cost using the effective interest method (except for short-term receivables where interest is immaterial) minus any reduction for impairment or uncollectibility. Typically accounts and notes receivables, other receivables and cash and cash equivalents are classified in this category.

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(ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are not classified as loans and receivables. Available-for-sale financial assets are subsequently measured at fair value. Gains or losses arising from changes in fair value of these investments are recognised in other comprehensive income and accumulated in the investment revaluation reserve, until the investments are disposed of or there is objective evidence that the investments are impaired, at which time the cumulative gains or losses previously recognised in other comprehensive income are reclassified from equity to profit or loss. Interest calculated using the effective interest method and dividends on available-for-sale equity investments are recognised in profit or loss.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, are measured at cost less impairment losses.

(n) Accounts and notes receivables and other receivables

Accounts and notes receivables and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment.

If collection of accounts and notes receivables and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

(o) Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents represent cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term highly liquid investments which are readily convertible into known amounts of cash and subject to an insignificant risk of change in value. Bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management are also included as a component of cash and cash equivalents.

(p) Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument under IFRSs. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

(q) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

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(r) Financial guarantee contract liabilities

The Group issues financial guarantee contracts that transfer significant insurance risk. Financial guarantee contracts are those contracts that require the issuer to make specified payments to reimburse the holders for losses they incur because specified debtors fail to make payments when due in accordance with the original or modified terms of debt instruments.

At the end of each reporting period, liability adequacy tests are performed to ensure the adequacy of the contract liabilities. In performing these tests, current best estimates of future contractual cash flows and related administrative expenses are used. Any deficiency is immediately charged to the profit or loss by establishing a provision for losses arising from these tests.

(s) Accounts payables and accrued liabilities

Accounts payables and accrued liabilities are recognised initially at their fair values and subsequently measured at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

(t) Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

(u) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Revenue is shown net of value-added tax, returns, rebates and discounts.

Revenue from sales of electricity and heat represents the amount of tariffs billed for electricity and heat generated and transmitted to the respective power companies and heat supply companies.

Revenue associated with sales of coal and other goods is recognised when the title to the goods has been passed to customers, which is the date when the goods are either picked up at site or free on board, or delivered to the designated locations and accepted by the customers.

Interest income is recognised on a time-proportion basis using the effective interest method.

Dividend income is recognised when the shareholders’ rights to receive payment are established.

(v) Employee benefits

(i) Pension and other social obligations

The Group contributes to defined contribution schemes including pension and/or other social benefits in accordance with the local conditions and practices in the municipalities and provinces in which it operates. Contributions to the schemes by the Group and employees are calculated as a percentage of employees’ basic salaries. The scheme cost charged to profit or loss represents contributions payable by the Group to the funds.

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(ii) Staff housing benefits

The Company provides housing to its employees at preferential prices. The difference between the selling price and the cost of housing is considered a housing benefit to the employees and is recorded as deferred housing benefits which are amortised on a straight-line basis over the estimated remaining average service lives of the relevant employees and included in salaries and staff welfare expenses.

During 2005 to 2007, the Company and some of its subsidiaries also started to provide monetary housing subsidies to their employees. These subsidies are considered housing benefits and are recorded as deferred housing benefits which are amortised on a straightline basis over the estimated remaining average service lives of the relevant employees and included in salaries and staff welfare expenses.

In addition, the Group also contributes to the state-prescribed housing fund. Such costs are charged to the profit or loss as incurred.

(iii) Termination benefits

Termination benefits are recognised at the earlier of the dates when the Group can no longer withdraw the offer of those benefits, and when the Group recognises restructuring costs and involves the payment of termination benefits.

(w) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicable to the borrowings of the Group that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(x) Government grants

A government grant is recognised when there is reasonable assurance that the Group will comply with the conditions attaching to it and that the grant will be received.

Government grants relating to income are deferred and recognised in profit or loss over the period to match them with the costs they are intended to compensate.

Government grants that become receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Government grants relating to the purchase of assets are recorded as deferred income and recognised in profit or loss on a straight-line basis over the useful lives of the related assets.

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(y) Taxation

Income tax represents the sum of the current tax and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit recognised in profit or loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, associates, and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity.

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

(z) Value-added tax (“VAT”)

Revenue from sales of electricity and heat and revenue associated with sales of coal and other goods are subjected to VAT in the PRC. VAT payables are determined by applying 17% or 13% or 11% or 6% on the taxable revenue after offsetting deductible input VAT of the period.

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(aa) Impairment of non-financial assets

The carrying amounts of non-financial assets are reviewed at each reporting date for indications of impairment and where an asset is impaired, it is written down as an expense through the consolidated statement of profit or loss to its estimated recoverable amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, recoverable amount is determined for the CGU to which the asset belongs. Recoverable amount is the higher of value in use and the fair value less costs of disposal of the individual asset or the CGU.

Value in use is the present value of the estimated future cash flows of the asset/CGU. Present values are computed using pre-tax discount rates that reflect the time value of money and the risks specific to the asset/CGU whose impairment is being measured.

Impairment losses for the CGUs are allocated first against the goodwill of the unit and then pro rata amongst the other assets of the CGU. Subsequent increases in the recoverable amount caused by changes in estimates are credited to profit or loss to the extent that they reverse the impairment.

(ab) Impairment of financial assets

At the end of each reporting period, the Group assesses whether its financial assets are impaired, based on objective evidence that, as a result of one or more events that occurred after the initial recognition, the estimated future cash flows of the (group of) financial asset(s) have been affected.

For available-for-sale financial assets, a significant or prolonged decline in the fair value of the investment below its cost is considered also to be objective evidence of impairment.

In addition, for accounts and notes receivables that are assessed not to be impaired individually, the Group assesses them collectively for impairment, based on the Group’s past experience of collecting payments, an increase in the delayed payments in the portfolio, observable changes in economic conditions that correlate with default on receivables, etc.

Only for accounts and notes receivables, the carrying amount is reduced through the use of an allowance account and subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

For all other financial assets, the carrying amount is directly reduced by the impairment loss.

For financial assets measured at amortised cost, if the amount of the impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed (either directly or by adjusting the allowance account for accounts and notes and other receivables) through profit or loss. However, the reversal must not result in a carrying amount that exceeds what the amortised cost of the financial asset would have been had the impairment not been recognised at the date the impairment is reversed.

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(ac) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Group has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote.

(ad) Events after the reporting period

Events after the reporting period that provide additional information about the Group’s position at the end of the reporting period or those that indicate the going concern assumption is not appropriate are adjusting events and are reflected in the consolidated financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes to the consolidated financial statements when material.

5. Critical judgements and key estimates

Critical judgements in applying accounting policies

In the process of applying the accounting policies, the directors have made the following judgements that have the most significant effect on the amounts recognised in the consolidated financial statements (apart from those involving estimations, which are dealt with below).

(a) Going concern basis

These consolidated financial statements have been prepared on a going concern basis, the validity of which depends upon the availability of funding from various sources to enable the Group to operate as a going concern and meet its liabilities as they fall due. Details are explained in note 2 to the consolidated financial statements.

(b) Joint control assessment

The Group holds 40% or above of the voting rights of its joint arrangements. The directors have determined that the Group has joint control over these arrangements as under the contractual agreements, it appears that unanimous consent is required from all parties to the agreements for the all relevant activities of Hebei Yuzhou Energy Multiple Development Company Limited (“ Yuzhou Energy Multiple Company ”), Kailuan (Group) Yuzhou Mining Company Limited (“ Yuzhou Mining Company ”), Inner Mongolia Huineng Datang Changtan Coal Mining Company Limited (“ Changtan Mining Company ”) and Fujian Ningde Nuclear Power Company Limited (“ Ningde Nuclear Power Company ”).

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(c) Joint arrangements of limited companies

The Group’s joint arrangements of Yuzhou Energy Multiple Company, Yuzhou Mining Company, Changtan Mining Company and Ningde Nuclear Power Company are structured as limited companies and provide the Group and the parties to the agreements with rights to the net assets of the limited companies under the arrangements. Therefore, the directors have determined that Yuzhou Energy Multiple Company, Yuzhou Mining Company, Changtan Mining Company and Ningde Nuclear Power Company are classified as joint ventures of the Group.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

(a) Property, plant and equipment and depreciation

The Group determines the estimated useful lives, residual values and related depreciation charges for its property, plant and equipment. This estimate is based on the projected wear and tear incurred during power generation. This could change significantly as a result of technical renovations on power generators. The Group will revise the depreciation charge where useful lives and residual values are different to those previously estimated, or it will write-off or writedown technically obsolete or non-strategic assets that have been abandoned.

The carrying amount of property, plant and equipment as at 31 December 2015 was RMB256,735,094 thousand (2014: RMB252,791,177 thousand).

(b) Impairment of property, plant and equipment

The Group tests annually whether property, plant and equipment have suffered any impairment in accordance with the accounting policy stated in note 4 (aa) to the consolidated financial statements. An impairment loss is recognised when the carrying amount of property, plant and equipment exceeds their recoverable amount which has been determined based on value in use calculations. These calculations require the use of estimates such as electricity and heat tariffs and fuel prices. Changes of assumptions in electricity and heat tariffs and fuel prices could affect the result of property, plant and equipment impairment assessment.

During the year, impairment loss of RMB1,332,132 thousand (2014: RMB2,203,912 thousand) was recognised. Details of the impairment loss calculation are provided in note 18 to the consolidated financial statements.

(c) Approval of construction in new power plants

The Group has not received relevant government approvals from the National Development and Reform Commission (the “ NDRC ”) for its certain power plant construction projects. The ultimate approval from the NDRC on these projects is a critical estimate and judgement of the directors. Such an estimate and judgement are based on initial approval documents received as well as their understanding of the projects. Based on historical experience, the directors believe that the Group will receive final approval from the NDRC on the related power plant projects. Deviation from this estimate and judgement could result in material adjustments to the carrying amount of property, plant and equipment.

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(d) Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cashgenerating unit to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value.

The carrying amount of goodwill at the end of the reporting period was RMB899,886 thousand (2014: RMB899,886 thousand) and no impairment loss was recognised during the year. Details of the impairment of goodwill assessment calculation are provided in note 20 to the consolidated financial statements.

(e) Impairment of available-for-sale financial assets

The Group determines whether available-for-sale financial assets have suffered any impairment largely dependent on the management’s judgements and assumptions. In making judgements and assumptions, the Group requires to assess the extent and duration when the fair value of a financial asset is lower than its cost, and the financial position and short-term business outlook of the investee company, including industry conditions, technology changes, credit ratings, default rates and counterparty risks.

During the year, impairment loss of RMB38,672 thousand (2014: RMB208,992 thousand) was recognised.

(f) Impairment of intangible assets other than goodwill

At the end of each reporting period, the Group determines whether there is any indication that its intangible assets other than goodwill may be impaired. For intangible assets other than goodwill that have an indefinite useful life, the Group is required to perform impairment assessment annually and whenever there is any indication that those assets have suffered an impairment loss. The Group reviews the carrying amounts of its intangible assets other than goodwill to determine whether there is any indication that those intangible assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss.

Recoverable amount is the higher of fair value less costs of disposal and value in use. If the recoverable amount of the intangible assets other than goodwill is estimated to be less than its carrying amount, it indicates those assets have been impaired.

In assessing value in use of those intangible assets, the future cash flows are estimated using discounted cash flow method. The key assumptions for the discounted cash flow method include the expected production capacity, selling prices, related operating costs and discount rates. These key assumptions are based on expectations with reasonable and appropriate analysis.

As at 31 December 2015, impairment losses on intangible assets other than goodwill amounted to nil (2014: RMB42,457 thousand).

(g) Deferred tax assets

The estimates of deferred tax assets require estimates over future taxable profit and corresponding applicable income tax rates of respective years. The change in future income tax rates and timing would affect income tax expense or credit, as well as deferred tax balance. The realisation of deferred tax assets also depends on the realisation of sufficient future taxable profits of the Group. Deviation of future profitability from the estimate could result in material adjustments to the carrying amount of deferred tax assets.

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As at 31 December 2015, the carrying amount of deferred tax assets was RMB1,182,573 thousand (2014: RMB1,386,234 thousand).

(h) Allowance for inventories

An allowance is recognised when the net realisable value of inventories is higher than their costs and inventories are obsolete and slow-moving. Determination of allowance for inventories requires the management to obtain conclusive evidence. In making the judgement and estimates, the management also considers the factors such as the purpose of holding the inventories and the effect of the events after the reporting period. Where the actual outcome in future is different from the original estimate, such difference will impact the carrying value of inventories and allowance charge or write-back in the period in which such estimate has been changed.

As at 31 December 2015, allowance for inventories amounted to RMB728,187 thousand (2014: RMB386,376 thousand).

(i) Allowance for accounts and other receivables

The Group makes allowance for accounts and other receivables based on assessments of the recoverability of the accounts and other receivables, including the current creditworthiness and the past collection history of each debtor. Allowance for accounts and other receivables arises where events or changes in circumstances indicate that the balances may not be collectible. The identification of allowance for accounts and other receivables, in particular of a loss event, requires the use of judgement and estimates. Where the actual result is different from the original estimate, such difference will impact the carrying value of the accounts and other receivables and allowance for accounts and other receivables in the year in which such estimate has been changed.

As at 31 December 2015, allowance for accounts and other receivables amounted to RMB2,033,217 thousand (2014: RMB812,852 thousand).

(j) Income taxes

The Group is subject to income taxes in various regions. Significant estimates are required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business, overall assets transfers and corporate restructuring. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

During the year, income tax of RMB3,284,099 thousand (2014: RMB3,283,822 thousand) was charged to profit or loss based on the estimated profit.

6. Financial risk management

The Group’s activities expose it to a variety of financial risks: foreign currency risk, price risk, credit risk, liquidity risk and interest rate risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Foreign currency risk

The Group has minimal exposure to foreign currency risk as most of its business transactions, assets and liabilities are principally denominated in the functional currencies of the Group entities.

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(b) Price risk

The Group’s certain available-for-sale financial assets amounted to RMB169,029 thousand (2014: RMB392,688 thousand) as disclosed in note 23 to the consolidated financial statements are measured at fair value at the end of each reporting period. Therefore, the Group is exposed to equity security price risk. Since the amounts of such investments are insignificant to the Group, the directors of the Company are of opinion that the Group is not exposed to any significant equity security price risk as at 31 December 2015 and 2014. The Group closely monitors the pricing trends in the open market in determining their long-term strategic stakeholding decisions.

(c) Credit risk

The Group’s credit risk is primarily attributable to its bank deposits, accounts receivables, other receivables, short-term entrusted loans and long-term entrusted loans.

The Group maintains most of its bank deposits in several major government-related financial institutions in the PRC and a non-bank financial institution which is a related party of the Group. With strong State support provided to those government-related financial institutions and the holding of directorship in the board of the related party non-bank financial institution, the directors are of the opinion that there is no significant credit risk on such assets being exposed.

With regard to accounts receivables arising from power sales, most of the power plants of the Group sell electricity to their sole customers, the power grid companies of their respective provinces or regions where the power plants operate. These power plants of the Group communicate with their individual grid companies periodically and believe that adequate allowance for doubtful accounts has been made in the consolidated financial statements. For accounts receivables arising from coal and chemical product sales, the Group assesses the credit quality of the customers, taking into account their financial positions, past experience and other factors. It will also collect advanced payments from their customers. The Group performs periodic credit evaluations of its customers and believes that adequate allowance for doubtful debts has been made in the consolidated financial statements. The Group does not hold any collateral as security for all the receivables.

At 31 December 2015, accounts and notes receivables due from the top five debtors amounted to RMB3,310,200 thousand (2014: RMB4,557,537 thousand), representing 42.12% (2014: 45.55%) of the total accounts and notes receivables. Except for accounts and notes receivables, the Group has no significant concentrations of credit risk.

Other receivables, short-term entrusted loans and long-term entrusted loans primarily include amounts due from related parties. The Group assesses the credibility of the related parties by reviewing their operating results and gearing ratios periodically.

(d) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding from an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding by maintaining availability under committed credit facilities.

The Group monitors the cash flow rolling forecasts of the Group’s undrawn borrowing facility and cash and cash equivalents available as at each month end in meeting its liabilities.

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APPENDIX IIA

The maturity analysis based on contractual undiscounted cash flows of the Group’s financial liabilities is as follows:

		Between	Between
	Less than	1 and 2	2 and 5	Over 5
	1 year	years	years	years	Total
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
At 31 December 2015
Long-term loans	19,896,751	21,514,500	69,762,832	102,842,117	214,016,200
Long-term bonds	792,500	792,500	8,545,500	10,216,500	20,347,000
Finance lease payables	3,622,653	3,576,604	14,870,162	3,017,099	25,086,518
Other non-current liabilities,
excluding finance lease
payables	291,557	291,006	859,020	1,420,033	2,861,616
Accounts payables and
accrued liabilities	27,603,263	–	–	–	27,603,263
Short-term loans	15,408,852	–	–	–	15,408,852
Short-term bonds	15,143,743	–	–	–	15,143,743
At 31 December 2014
Long-term loans	22,300,878	24,536,582	82,156,062	103,444,173	232,437,695
Long-term bonds	6,572,500	792,500	8,877,500	10,677,000	26,919,500
Finance lease payables	2,964,436	2,641,468	5,769,914	2,690,235	14,066,053
Other non-current liabilities,
excluding finance lease
payables	61,647	291,006	866,020	1,704,039	2,922,712
Accounts payables and
accrued liabilities	28,627,496	–	–	–	28,627,496
Short-term loans	14,535,299	–	–	–	14,535,299
Short-term bonds	11,000,000	–	–	–	11,000,000

(e)

Interest rate risk

As the Group has no significant interest-bearing assets except for bank deposits, the Group’s operating cash flows are substantially independent of changes in market interest rates.

Most of the bank deposits are maintained in the savings and fixed deposits accounts in the PRC. The interest rates are regulated by the People’s Bank of China while the Group closely monitors the fluctuation on such rates periodically. As the average interest rates applied to the deposits are relatively low, the directors are of the opinion that the Group is not exposed to any significant interest rate risk for these assets held as at 31 December 2015 and 2014.

The Group’s exposure to interest rate risk arises from its loans. Certain loans bear interests at variable rates varied with the then prevailing market condition, thus exposing the Group to cash flow interest rate risk. The Group analyses interest rate exposures on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions and alternative financing.

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At 31 December 2015, if interest rates on RMB and USD denominated loans had been 50 basis points (2014: 50 basis points) lower respectively with all other variables held constant, consolidated profit after tax for the year would have been RMB486,883 thousand (2014: RMB521,513 thousand) and RMB2,785 thousand (2014: RMB2,060 thousand) higher, respectively, arising mainly as a result of lower interest expense on the loans. If interest rates on RMB and USD denominated loans had been 50 basis points (2014: 50 basis points) higher respectively with all other variables held constant, consolidated profit after tax for the year would have been RMB486,883 thousand (2014: RMB521,513 thousand) and RMB2,785 thousand (2014: RMB2,060 thousand) lower, respectively, arising mainly as a result of higher interest expense on the loans.

(f) Categories of financial instruments at 31 December 2015

	2015	2014
	RMB’000	RMB’000
Financial assets:
Loans and receivables
(including cash and cash equivalents)	16,651,356	18,889,336
Available-for-sale financial assets	4,978,596	5,022,210
Financial liabilities:
Financial liabilities at amortised cost	239,473,702	239,238,230

(g) Fair values

The carrying amounts of the Group’s financial assets and financial liabilities as reflected in the consolidated statement of financial position approximate their respective fair values.

7. Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following disclosures of fair value measurements use a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value:

Level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2 inputs: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs: unobservable inputs for the asset or liability.

The Group’s policy is to recognise transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer.

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Disclosures of level in fair value hierarchy at 31 December 2015:

Description	Fair value measurements using Level 1:	Fair value measurements using Level 1:
	2015	2014
	RMB’000	RMB’000
Recurring fair value measurements:
Available-for-sale financial assets
Listed securities in Hong Kong	169,029	194,864
Listed securities outside Hong Kong	–	197,824
Total	169,029	392,688

8. Operating revenue

An analysis of the Group’s operating revenue for the year is as follows:

Sales of electricity Heat supply Sales of coal Sales of chemical products Others	2015 RMB’000 55,556,321 1,434,570 267,649 1,839,983 2,791,762 61,890,285	2014 RMB’000 62,589,174 1,306,685 1,757,130 1,916,735 2,624,603
		70,194,327

9. Other gains

Gain on disposal of a subsidiary Gain on disposals of associates Gain on disposals of available-for-sale financial assets	2015 RMB’000 452 – 100,167 100,619	2014 RMB’000 – 8,391 –
		8,391

10. Segment information

Executive directors and certain senior management (including chief accountant) of the Company (collectively referred to as the “ Senior Management ”) perform the function as chief operating decision makers. The Senior Management reviews the internal reporting of the Group in order to assess performance and allocate resources. Senior Management has determined the operating segments based on these reports.

Senior Management considers the business from a product perspective. Senior Management primarily assesses the performance of power generation, coal and chemical separately. Other operating activities primarily include sales of coal ash and aluminium smelting products, etc., and are included in “other segments”.

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Senior Management assesses the performance of the operating segments based on a measure of profit before tax prepared under China Accounting Standards for Business Enterprises (“ PRC GAAP ”).

The accounting policies of the operating segments are the same as those described in note 4 to the consolidated financial statements. Segment profits or losses do not include dividend income from available-for-sale financial assets, gain or loss on disposals of available-for-sale financial assets and income tax expense. Segment assets do not include available-for-sale financial assets and deferred tax assets. Segment liabilities do not include current and deferred tax liabilities. Sales between operating segments are marked to market or contracted close to market price and have been eliminated at consolidation level. Unless otherwise noted below, all such financial information in the segment tables below is prepared under PRC GAAP.

Information about reportable segment profit or loss, assets and liabilities:

Year ended 31 December 2015 Revenue from external customers Intersegment revenue Segment profit/(loss) Depreciation and amortisation Net (losses)/gains on disposals of property, plant and equipment Gain on disposals of intangible assets Gain on disposals of construction in progress Gain on disposals of long-term investments Impairment losses on assets Interest income Interest expense Shares of profits of associates Shares of profits/(losses) of joint ventures Income tax expense	Power generation segment RMB’000 57,616,609 109,953 13,147,168 9,658,705 (629) 369 20,530 452 165,020 54,366 6,420,383 161,403 593,000 3,022,690	Coal segment RMB’000 276,277 13,480,800 (1,523,440) 306,417 3 – – – 1,283,918 11,383 304,268 42,181 (188,697) 274,331	Chemical segment RMB’000 1,852,071 18,183 (4,305,017) 1,304,715 – – – – 1,294,826 4,121 988,492 – – 3,266	Other segments RMB’000 2,145,328 1,042,373 (826,331) 310,460 – – – – 189,235 6,715 70,292 333,079 – 23,357	Total RMB’000 61,890,285 14,651,309 6,492,380 11,580,297 (626) 369 20,530 452 2,932,999 76,585 7,783,435 536,663 404,303 3,323,644

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Year ended 31 December 2014 Revenue from external customers Intersegment revenue Segment profit/(loss) Depreciation and amortisation Net gains on disposals of property, plant and equipment Gain on disposals of long-term investments Impairment losses/(reversal of impairment losses) on assets Interest income Interest expense Shares of profits of associates Shares of profits/(losses) of joint ventures Income tax expense/(credit) At 31 December 2015 Segment assets Including: Investments in associates Investments in joint ventures Additions to non-current assets (other than financial assets and deferred tax assets) Segment liabilities At 31 December 2014 Segment assets Including: Investments in associates Investments in joint ventures Additions to non-current assets (other than financial assets and deferred tax assets) Segment liabilities	Power generation segment RMB’000 64,406,294 132,517 12,421,849 9,616,816 935 7,633 11,270 69,075 7,044,672 105,825 332,877 3,027,292 Power generation segment RMB’000 211,867,418 1,085,341 4,678,202 24,500,275 163,234,461 212,922,389 828,678 4,631,552 19,675,722 172,011,658	Coal segment RMB’000 1,768,329 20,094,671 (1,515,930) 257,715 – – 1,468,344 7,941 325,830 260,408 (195,199) (6,077) Coal segment RMB’000 25,571,602 2,067,004 762,850 413,971 22,331,414 28,508,324 1,984,833 883,855 1,385,975 23,125,739	Chemical segment RMB’000 1,931,929 20,722 (5,164,994) 1,345,770 111 – 1,765,567 4,598 987,671 – – 265,993 Chemical segment RMB’000 68,655,276 1,404 – 11,071,737 65,314,457 66,532,848 1,405 – 1,619,081 58,552,330	Other segments RMB’000 2,087,775 1,057,463 (515,873) 413,046 3,301 758 (8,436) 7,267 159,126 235,113 – 36,778 Other segments RMB’000 10,951,061 4,632,010 – 34,558 7,954,757 14,896,155 4,492,778 – 321,686 9,254,917	Total RMB’000 70,194,327 21,305,373

					5,225,052

					11,633,347 4,347 8,391 3,236,745 88,881 8,517,299 601,346 137,678 3,323,986

					Total RMB’000 317,045,357 7,785,759 5,441,052 36,020,541

					258,835,089

					322,859,716 7,307,694 5,515,407 23,002,464

					262,944,644

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APPENDIX IIA

Reconciliations of reportable segment revenue, profit or loss, assets, liabilities and other material items:

Revenue Total revenue of reportable segments Elimination of intersegment revenue Consolidated revenue Profit or loss Total profit or loss of reportable segments Dividend income from available-for-sale financial assets Gain on disposals of available-for-sale financial assets Elimination of intersegment profits IFRS adjustment on reversal of general provision on mining funds Other IFRS adjustments Consolidated profit before tax Assets Total assets of reportable segments Available-for-sale financial assets Deferred tax assets Elimination of intersegment assets Reclassification of non-income taxes recoverable IFRS adjustment on reversal of general provision on mining funds Other IFRS adjustments Consolidated total assets Liabilities Total liabilities of reportable segments Current tax liabilities Deferred tax liabilities Elimination of intersegment liabilities Reclassification of non-income taxes recoverable Other IFRS adjustments Consolidated total liabilities	2015 RMB’000 76,541,594 (14,651,309) 61,890,285 6,492,380 129,507 100,167 (153,947) (2,707) (20,929) 6,544,471 317,045,357 4,970,330 1,150,903 (19,798,242) 4,865,531 332,996 (71,436) 308,495,439 (258,835,089) (721,074) (579,632) 20,117,579 (4,865,531) (27,353) (244,911,100)	2014 RMB’000 91,499,700 (21,305,373) 70,194,327 5,225,052 143,363 – (156,742) (14,619) (24,738) 5,172,316 322,859,716 5,013,944 1,355,564 (26,797,857) 4,719,616 428,957 (51,507) 307,528,433 (262,944,644) (804,573) (617,218) 25,042,819 (4,719,616) (27,008) (244,070,240)

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Other material items

Year ended 31 December 2015 Shares of profits of associates Shares of profits of joint ventures Income tax expense Year ended 31 December 2014 Shares of profits of associates Shares of profits of joint ventures Income tax expense At 31 December 2015 Investments in associates Investments in joint ventures At 31 December 2014 Investments in associates Investments in joint ventures	Total of reportable segments Elimination of intersegment IFRS adjustment on reversal of general provision on mining funds RMB’000 RMB’000 RMB’000 536,663 – (21,622) 404,303 – (14,708) 3,323,644 (38,890) 2,961 601,346 – 5,201 137,678 – (24,975) 3,323,986 (38,379) 1,289 7,785,759 – 196,112 5,441,052 – 134,758 7,307,694 – 288,481 5,515,407 – 138,247	Other IFRS adjustments Total per consolidated statement of financial position/ statement of profit or loss and other comprehensive income RMB’000 RMB’000 – 515,041 – 389,595 (3,616) 3,284,099 – 606,547 – 112,703 (3,074) 3,283,822 – 7,981,871 – 5,575,810 – 7,596,175 – 5,653,654

Geographical information (under IFRS):

During the years ended 31 December 2015 and 2014, all revenues from external customers are generated domestically. At 31 December 2015, non-current assets (excluding financial assets and deferred tax assets) amounted to RMB276,148,568 thousand (2014: RMB272,171,434 thousand) and RMB4,221 thousand (2014: RMB46,077 thousand) are located in the PRC and foreign countries, respectively.

In presenting the geographical information, revenue is based on the locations of the customers.

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APPENDIX IIA

Revenue from major customers:

	2015	2014
	RMB’000	RMB’000
Power generation segment
North China Branch of State Grid Corporation of China	15,377,161	19,512,315
State Grid Zhejiang Electric Power Company	5,676,155	6,045,793
State Grid Jibei Electric Power Company	5,411,558	4,757,402
Guangdong Power Grid Corporation	4,941,097	5,990,343
State Grid Beijing Electric Power Corporation	3,874,988	1,869,510

11. Finance costs

Interest expense on: Short-term loans Long-term loans Short-term bonds Long-term bonds Finance leases Discounted notes receivables Others Total borrowing costs Amount capitalised Exchange gain, net Others	2015 RMB’000 631,340 8,601,393 628,451 602,524 770,711 12,763 33,731 11,280,913 (3,497,478) 7,783,435 18,048 173,375 7,974,858	2014 RMB’000 983,679 9,235,105 452,783 883,914 698,129 30,317 4,515
		12,288,442 (3,771,143)
		8,517,299 3,927 183,259
		8,704,485

Borrowing costs on funds borrowed generally are capitalised at a rate of 5.36% (2014: 6.14%) per annum.

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APPENDIX IIA

12. Income tax expense

Current tax – PRC Enterprise Income Tax Provision for the year Under-provision in prior years Deferred tax	2015 RMB’000 3,068,577 7,672 3,076,249 207,850 3,284,099	2014 RMB’000 2,930,818 79,514
		3,010,332 273,490
		3,283,822

The Company and its subsidiaries, other than as stated below, are generally subject to PRC Enterprise Income Tax statutory rate of 25% (2014: 25%).

(i) Pursuant to document Cai Shui Zi [2006]88 issued by the Ministry of Finance of the PRC (the “ MOF ”), a subsidiary of the Company, being a high and new technology industrial development enterprise set up in the high and new technology industrial development zone approved by the State Council, and as approved by Tax Bureau of Beijing Fengtai District, is exempted from PRC Enterprise Income Tax in the first two operating years and then applies 15% being the preferential rate from the third year, counting from the first year when this subsidiary starts to make profit.
(ii) Pursuant to documents Cai Shui [2008]46 “Implementation of Catalogue of Preferential Enterprise Income Tax Treatment for Public Infrastructure Projects” and [2008]116 “Catalogue of Preferential Enterprise Income Tax Treatment for Public Infrastructure Projects” issued by the MOF and the State Administration of Taxation of the PRC, certain subsidiaries are exempted from PRC Enterprise Income Tax during the first three years of operation commencing from the year of assessment in which the first sale transaction is reported and have been granted a tax concession to pay PRC Enterprise Income Tax at 50% of the statutory rate of 25% from the fourth to sixth year of operation in respect of their operating profit derived from investments in new wind power generation and solar power generation projects approved by government investment task forces after 1 January 2008. This preferential tax treatment will expire from 31 December 2013 to 31 December 2020.
(iii) Pursuant to document Cai Shui [2011]58 “Circular on the Issues Concerning Related Tax Policies for the In-depth Implementation of the Western China Development Strategy” issued by the MOF, the General Administration of Customs and the State Administration of Taxation of the PRC, certain subsidiaries set up in the western area of the PRC and engaged in a business encouraged by the State are eligible to pay PRC Enterprise Income Tax at a preferential rate of 15% from 1 January 2011 to 31 December 2020.

– 191 –

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APPENDIX IIA

The reconciliation between the income tax expense and the product of profit before tax multiplied by the PRC Enterprise Income Tax rate is as follows:

Profit before tax Tax at the PRC Enterprise Income Tax rate of 25% (2014: 25%) Tax effect of income that is not taxable Tax effect of expenses that are not deductible Tax effect of utilisation of tax losses not previously recognised Tax effect of temporary differences not recognised Reversal of tax losses previously recognised Under-provision in prior years Tax effect of tax concession Others Income tax expense	2015 RMB’000 6,544,471 1,636,118 (288,827) 171,416 (50,928) 2,092,808 – 7,672 (277,242) (6,918) 3,284,099	2014 RMB’000 5,172,316 1,293,079 (222,642) 823,462 (34,616) 1,376,248 456,942 79,514 (226,358) (261,807) 3,283,822

13. Profit for the year

The Group’s profit for the year is stated after charging/(crediting) the following:

	2015	2014
	RMB’000	RMB’000
Auditors’ remuneration	15,770	15,420
Acquisition-related costs (included in operating costs)	–	28
Allowance for accounts receivables	341,427	338,020
Allowance for inventories (included in operating costs)	347,385	15,153
Allowance for other receivables	907,770	437,366
Amortisation of deferred income	(1,068,443)	(101,727)
Amortisation of intangible assets
(included in operating costs)	51,333	57,302
Cost of major inventories sold and consumed
– Fuel	22,273,666	29,172,631
– Spare parts and consumable supplies	422,923	575,748
Rental income generated from investment properties	(30,435)	(22,078)
Dividend income from equity investments	(129,507)	(143,363)
Net gains on disposals of property, plant and equipment	(20,273)	(4,347)
Impairment losses on available-for-sale financial assets	38,672	208,992
Impairment losses on intangible assets other than goodwill
(included in operating costs)	–	42,457
Impairment losses on property, plant and equipment
(included in operating costs)	1,332,132	2,203,912
Reversal of allowance for inventories	(5,555)	–
Reversal of allowance for other receivables	(28,832)	(9,155)
Staff costs excluding directors’ and supervisors’ emoluments
– Salaries and welfares	2,257,684	2,214,403
– Retirement benefits	485,755	460,634
– Housing benefits	236,775	231,192
– Other costs	476,947	350,722

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

14. Benefits and interest of directors and supervisors

(a) The remuneration of every director and supervisor is set out below:

	Emoluments paid or receivable in respect of a person’s service as a director and supervisor whether of the Company or its subsidiary undertaking	Emoluments paid or receivable in respect of a person’s service as a director and supervisor whether of the Company or its subsidiary undertaking	Emoluments paid or receivable in respect of a person’s service as a director and supervisor whether of the Company or its subsidiary undertaking
Fees RMB’000 – – – – – – – – – – – 97 137 – 97 137 – – – – 468 – – – – – – 468	Salaries,	allowance and bonus Bonus Subtotal Retirement benefits RMB’000 RMB’000 RMB’000 – – – – – – 452 799 60 – – – 132 409 44 – 126 37 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 584 1,334 141 – – – – – – – – – 387 675 47 420 576 20 807 1,251 67 1,391 2,585 208	Other benefits RMB’000 – – 98 – 98 98 – – – – – – – – – – – – – – 294 – – – 98 98 196 490	Total RMB’000 – – 957 – 551 261 – – – – – 97 137 – 97 137 – – – –
	Basic salaries and allowances RMB’000 – – 347 – 277 126 – – – – – – – – – – – – – – 750 – – – 288 156 444 1,194	Bonus RMB’000 – – 452 – 132 – – – – – – – – – – – – – – – 584 – – – 387 420 807 1,391
				2,237
				– – – 820 694
				1,514
				3,751

Notes:

(i) Appointed on 29 October 2015
(ii) Ceased on 23 September 2015
(iii) Ceased on 26 February 2016
(iv) Ceased on 14 August 2015
(v) Appointed on 14 August 2015
(vi) Appointed on 26 February 2016
(vii) Ceased on 25 June 2015
(viii) Appointed on 25 June 2015

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Emoluments paid or receivable in respect of a person’s service as a director and supervisor whether of the Company or its subsidiary undertaking	Emoluments paid or receivable in respect of a person’s service as a director and supervisor whether of the Company or its subsidiary undertaking	Emoluments paid or receivable in respect of a person’s service as a director and supervisor whether of the Company or its subsidiary undertaking
Salaries,	allowance and bonus Bonus Subtotal Retirement benefits RMB’000 RMB’000 RMB’000 – – – – – – – – – – 347 58 – – – 262 456 44 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 262 803 102 – – – – – – – – – 190 484 45 202 335 14 392 819 59 654 1,622 161	Other benefits RMB’000 – – – 105 – 105 – – – – – – – – – – – – – 210 – – – 105 86 191 401	Total RMB’000 – – – 510 – 605 – – – – – – – 137 137 137 137 137 –
	Bonus RMB’000 – – – – – 262 – – – – – – – – – – – – – 262 – – – 190 202 392 654
			1,800
			– – – 634 435
			1,069
			2,869

Neither any of the directors nor the supervisors waived any remunerations during the year (2014: nil).

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APPENDIX IIA

(b) Directors’ and supervisors’ termination and other benefits

During the year, no remunerations were paid by the Group to any of the directors or the supervisors as an inducement to join or upon joining the Group or as compensation for loss of office.

(c) Directors’ material interests in transactions, arrangements or contracts

No significant transactions, arrangements and contracts in relation to the Group’s business to which the Company was a party and in which a director of the Company and the director’s connected party had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

15. Employee benefits

(a) Retirement benefits

The Group is required to make specific contributions to the state-sponsored retirement plan at a rate of 20% (2014: 20%) of the specified salaries of the PRC employees. The PRC government is responsible for the pension liability to the retired employees. The PRC employees of the Group are entitled to a monthly pension upon their retirements.

In addition, the Group has implemented a supplementary defined contribution retirement scheme. Under this scheme, the employees of the Group make a specified contribution based on their service duration. The Group is required to make a contribution equal to 2 to 3 times of the staff’s contributions. The Group may, at their discretion, provide additional contributions to the retirement fund depending on the operating results of the year. The employees will receive the total contributions and any returns thereon, upon their retirements.

The total retirement costs incurred by the Group during the year ended 31 December 2015 pursuant to these arrangements amounted to RMB724,093 thousand (2014: RMB666,479 thousand).

(b) Housing benefits

Apart from the housing benefits and monetary subsidies as stated in note 24 to the consolidated financial statements, in accordance with the PRC housing reform regulations, the Group is required to make contributions to the state-sponsored housing fund at rates 10% to 20% (2014: 10% to 20%) of the specified salaries of the PRC employees. At the same time, the employees are required to make a contribution based on certain percentages. The employees are entitled to claim the entire sum of the fund under certain specified withdrawal circumstances. The Group has no further obligations for housing benefits beyond the contributions made above. During the year ended 31 December 2015, the Group provided RMB318,220 thousand (2014: RMB296,384 thousand) to the fund.

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APPENDIX IIA

(c) Five highest paid individuals

The five highest paid individuals in the Group during the year included one (2014: no) director and two (2014: no) supervisor(s) whose emoluments are reflected in the analysis presented in note 14(a) to the consolidated financial statements. The emoluments of the remaining two (2014: five) individuals are set out below:

Basic salaries and allowances Bonus Retirement benefits Other benefits	2015 RMB’000 643 838 95 196 1,772	2014 RMB’000 1,476 1,654 249 525
		3,904

The emoluments fell within the following bands:

Nil to RMB837,780 (2014: RMB788,870) (equivalent to HKD1,000,000) RMB837,781 to RMB1,256,670 (2014: RMB788,871 to RMB1,183,305) (equivalent to HKD1,000,001 to HKD1,500,000)	Number of individuals 2015 2014 3 2 2 3 5 5	Number of individuals 2015 2014 3 2 2 3 5 5
		5

16. Dividends

		2015	2014
		RMB’000	RMB’000
Proposed final of RMB0.17	(2014: RMB0.13) per share	2,262,706	1,730,305

Pursuant to the PRC Enterprise Income Tax Law, the Company is required to withhold 10% PRC Enterprise Income Tax when it distributes dividends to its non-PRC resident enterprise shareholders.

17. Earnings per share

Basic earnings per share

The calculation of basic earnings per share is based on the profit for the year attributable to owners of the Company of RMB2,787,739 thousand (2014: RMB1,767,417 thousand) and the weighted average number of ordinary shares of 13,310,038 thousand (2014: 13,310,038 thousand) in issue during the year.

Diluted earnings per share

During the years ended 31 December 2015 and 2014, the Company did not have any dilutive potential ordinary shares. Therefore, diluted earnings per share is equal to basic earnings per share.

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APPENDIX IIA

18. Property, plant and equipment

Land use rights Buildings and structures RMB’000 RMB’000 2,997,694 68,861,920 – 7,240,277 608,469 1,007 – 34,683 – (85,463)	Land use rights Buildings and structures RMB’000 RMB’000 2,997,694 68,861,920 – 7,240,277 608,469 1,007 – 34,683 – (85,463)	Electricity utility plants Coal chemical specialised assets Transportation facilities RMB’000 RMB’000 RMB’000 125,569,985 19,047,307 3,461,776 10,630,924 960,731 58,074 2,052,736 – 33,484 15,005 – 62 (2,566,652) – (13,118)	Electricity utility plants Coal chemical specialised assets Transportation facilities RMB’000 RMB’000 RMB’000 125,569,985 19,047,307 3,461,776 10,630,924 960,731 58,074 2,052,736 – 33,484 15,005 – 62 (2,566,652) – (13,118)	Electricity utility plants Coal chemical specialised assets Transportation facilities RMB’000 RMB’000 RMB’000 125,569,985 19,047,307 3,461,776 10,630,924 960,731 58,074 2,052,736 – 33,484 15,005 – 62 (2,566,652) – (13,118)	Others RMB’000 5,569,263 3,839,368 35,820 353 (16,624)	Construction in progress RMB’000 85,756,715 (23,139,897) 22,461,610 – –	Total RMB’000 311,264,660 (410,523) 25,193,126 50,103 (2,681,857)

3,606,163	76,052,424	135,701,998	20,008,038	3,540,278	9,428,180	85,078,428	333,415,509
–	15,552,135	13,570,056	17,046,664	265,101	346,207	(46,794,173)	(14,010)
164,671	44	13,765	21,347	25,082	30,844	35,079,062	35,334,815
(5,292)	(763,089)	(4,179,376)	–	(21,625)	(10,155)	(128,011)	(5,107,548)
–	(1,105,772)	(10,394,804)	(7,665,675)	(524,787)	(71,278)	–	(19,762,316)

3,765,542	89,735,742	134,711,639	29,410,374	3,284,049	9,723,798	73,235,306	343,866,450
Land use rights Buildings and structures RMB’000 RMB’000 344,828 13,739,215 – (17,832) 77,994 2,455,386 – 300,029 – (1,197)		Electricity utility plants Coal chemical specialised assets Transportation facilities RMB’000 RMB’000 RMB’000 50,622,383 605,910 1,265,465 – – – 7,420,812 790,510 265,923 – 1,423,534 6,380 (872,120) – (12,553)			Others RMB’000 1,206,955 – 540,746 54,413 (12,005)	Construction in progress RMB’000 – – – 419,556 –	Total RMB’000 67,784,756 (17,832) 11,551,371 2,203,912 (897,875)

422,822	16,475,601	57,171,075	2,819,954	1,525,215	1,790,109	419,556	80,624,332
–	(2,657)	–	–	–	–	–	(2,657)
88,154	2,775,868	7,529,547	792,186	278,459	576,633	–	12,040,847
–	–	31,752	–	–	–	1,300,380	1,332,132
(309)	(177,212)	(1,374,531)	–	(16,092)	(5,208)	–	(1,573,352)
–	(287,519)	(3,438,803)	(1,169,488)	(326,028)	(68,108)	–	(5,289,946)

510,667	18,784,081	59,919,040	2,442,652	1,461,554	2,293,426	1,719,936	87,131,356


3,254,875 3,183,341	70,951,661 59,576,823	74,792,599 78,530,923	26,967,722 17,188,084	1,822,495 2,015,063	7,430,372 7,638,071	71,515,370 84,658,872	256,735,094 252,791,177

– 197 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

During the year, depreciation expenses charged into operating costs and construction in progress amounted to RMB11,329,960 thousand (2014: RMB11,432,921 thousand) and RMB710,887 thousand (2014: RMB118,450 thousand), respectively.

At 31 December 2015 the carrying amount of property, plant and equipment pledged as security for the Group’s long-term loans amounted to RMB3,814,509 thousand (2014: RMB3,872,135 thousand).

During the year, Gansu Datang International Liancheng Power Generation Company Limited made impairment loss of RMB31,752 thousand on its property, plant and equipment which are used in power generation segment. As these property, plant and equipment were unable to meet the emission standard of electrostatic precipitation outlet dust under the State’s Twelfth Five-Year Plan, replacement for these property, plant and equipment is required. Their recoverable amount which has been determined on the basis of its value in use using discounted cash flow method was estimated at zero.

In addition, due to the extension of project construction period resulting in increase in total construction investment and lower-than-expected future natural gas selling price, Liaoning Datang International Fuxin Coal-based Gas Company Limited expected that the carrying amount of its property, plant and equipment exceeded the future cash flow stream to be generated from the plant being built. This indicated that there may be impairment of property, plant and equipment. It carried out review of the recoverable amount of these property, plant and equipment which are used in the Group’s chemical segment. This led to the recognition of impairment loss of RMB1,300,380 thousand that has been recognised in profit or loss. The recoverable amount of the relevant assets which has been reduced to RMB14,799,635 thousand has been determined on the basis of its value in use using discounted cash flow method. The discount rate used was 10.52%.

During the year ended 31 December 2014, Inner Mongolia Datang International Xilinhaote Mining Company Limited, Datang Inner Mongolia Duolun Coal Chemical Company Limited and Datang Hulunbei’er Fertilizer Company Limited incurred continuing increasing losses as compared to the corresponding period last year and indication of impairment was shown in relation to their property, plant and equipment. The Group carried out reviews of the recoverable amount of these property, plant and equipment which are used in the Group’s coal segment and chemical segment. The reviews led to the recognition of impairment losses of RMB2,203,912 thousand that had been recognised in profit or loss. The recoverable amount of the relevant assets which has been reduced to RMB12,411,061 thousand, RMB23,586,278 thousand and RMB2,515,557 thousand respectively had been determined on the basis of their value in use using discounted cash flow method. The discount rates used were 12.60%, 10.30% and 10.57% respectively.

At 31 December 2015, the carrying amount of buildings and structures, electricity utility plants, coal chemical specialised assets, transportation facilities and others held by the Group under finance leases amounted to RMB3,383,188 thousand (2014: RMB2,224,102 thousand), RMB8,020,901 thousand (2014: RMB4,964,316 thousand), RMB6,923,664 thousand (2014: nil), RMB1,274,320 thousand (2014: RMB1,183,569 thousand) and RMB442,367 thousand (2014: nil) respectively.

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APPENDIX IIA

19. Investment properties

Cost At 1 January 2014 Transfer in Disposals At 31 December 2014 and 1 January 2015 Transfer in Transfer out At 31 December 2015 Accumulated depreciation At 1 January 2014 Charge for the year At 31 December 2014 and 1 January 2015 Charge for the year Transfer out At 31 December 2015 Carrying amount At 31 December 2015 At 31 December 2014	RMB’000 517,766 155,049 (13,586)

	659,229
	11,787
	(492)

	670,524
	50,499 18,150

	68,649
	24,306
	(58)

	92,897


	577,627
	590,580

At 31 December 2015, the Group’s total future minimum lease payments under non-cancellable operating leases of investment properties are receivable as follows:

Within one year In the second to fifth years, inclusive After five years	2015 RMB’000 18,796 59,041 8,323 86,160	2014 RMB’000 18,054 73,777 11,654
		103,485

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

20. Intangible assets

Goodwill RMB’000 899,886 – –	Mining rights RMB’000 2,710,177 100,000 –	Resource use rights RMB’000 37,763 – –	Technology know-how RMB’000 694,249 5,126 –	Computer software RMB’000 145,243 35,193 (85)	Others RMB’000 14,844 347 –	Total RMB’000 4,502,162 140,666 (85)

899,886	2,810,177	37,763	699,375	180,351	15,191	4,642,743
–	–	–	32,145	24,018	1,541	57,704
–	–	–	–	(6,042)	–	(6,042)

899,886	2,810,177	37,763	731,520	198,327	16,732	4,694,405
– – – –	30,678 1,812 – –	30,220 3,695 – –	31,691 31,552 42,457 –	61,402 22,540 – (85)	14,596 47 – –	168,587 59,646 42,457 (85)

–	32,490	33,915	105,700	83,857	14,643	270,605
–	1,476	2,695	28,501	18,895	194	51,761
–	–	–	–	(6,042)	–	(6,042)

–	33,966	36,610	134,201	96,710	14,837	316,324


899,886	2,776,211	1,153	597,319	101,617	1,895	4,378,081
899,886	2,777,687	3,848	593,675	96,494	548	4,372,138

The Group carried out a review of the recoverable amount of its intangible assets other than goodwill in 2014, having regard to the market conditions of the Group’s products. These assets are used in the Group’s chemical segment. The review led to the recognition of impairment losses on technology know-how of RMB42,457 thousand that have been recognised in profit or loss. The recoverable amount of the relevant assets has been determined on the basis of their value in use using discounted cash flow method. The discount rate used was 10.30%.

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Goodwill

Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs that are expected to benefit from that business combination. The carrying amount of goodwill had been allocated as follows:

Power generation segment Qinghai Datang International Zhiganglaka Hydropower Development Company Limited Jiangxi Datang International Xinyu Power Generation Company Limited Zhangjiakou Power Plant No. 2 generator Datang Tongzhou Technology Company Limited Inner Mongolia Datang International Hohhot Thermal Power Generation Company Limited Yunnan Datang International Deqin Hydropower Development Company Limited Sichuan Jinkang Electricity Development Company Limited Shenzhen Datang Baochang Gas Power Generation Company Limited Coal segment Inner Mongolia Datang International Zhunge’er Mining Company Limited Inner Mongolia Baoli Coal Company Limited Erdos Ruidefeng Mining Company Limited Other segments Yuneng (Group) Company Limited	2015 RMB’000 273,795 104,361 33,561 949 902 18 130,830 165,995 710,411 120,177 18,712 32,546 171,435 18,040 899,886	2014 RMB’000 273,795 104,361 33,561 949 902 18 130,830 165,995
		710,411
		120,177 18,712 32,546
		171,435
		18,040
		899,886

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The recoverable amounts of the CGUs have been determined on the basis of their value in use using discounted cash flow method. The key assumptions for the discounted cash flow method for power generation units include the expected tariff rates, demands of electricity in specific regions where these power plants are located and fuel cost. The key assumptions for the discounted cash flow method for coal mining entities include the expected coal price, the estimated remaining coal reserves and the mining plan. These key assumptions are based on past practices and expectations on market development. The Group estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by the directors for the next five years. The Group expects cash flows beyond the respective forecast periods below will be similar to that of last year of respective forecast based on existing production capacity.

The discount rates used in respective value in use calculations are as follows:

	2015	2014
Qinghai Datang International Zhiganglaka Hydropower
Development Company Limited	7.61%	9.12%
Jiangxi Datang International Xinyu Power Generation
Company Limited	9.70%	7.33%
Inner Mongolia Datang International Zhunge’er
Mining Company Limited	10.26%	18.06%
Sichuan Jinkang Electricity Development Company Limited	7.06%	8.11%
Shenzhen Datang Baochang Gas Power Generation
Company Limited	7.65%	6.98%
Others	7.25% to 10.84%	7.73% to 16.50%

Based on the assessments, the Group believes that there is no impairment of goodwill at 31 December 2015 and 2014.

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21. Investments in associates

	2015	2014
	RMB’000	RMB’000
Unlisted investments:
Share of carrying amount of interests	7,981,871	7,596,175

Details of the Group’s associates at 31 December 2015 are as follows:

	Place of
	incorporation/	Registered and	Percentage of
Name	registration	paid-up capital	equity interest		Principal activities
		RMB’000	Direct	Indirect
		unless otherwise
		stated
North China Electric Power Research	PRC	124,980	30%	–	Power related
Institute Company Limited					technology services
Tongfang Investment Company Limited	PRC	550,000	36.36%	–	Project investments and
(“Tongfang Investment Company”)					management
Shanxi Zhang Electric Datang Tashan Power	PRC	410,000	40%	–	Power generation
Generation Company Limited
(“Tashan Power Company”)
Tongmei Datang Tashan Coal Mine	PRC	2,072,540	28%	–	Coal construction and
Company Limited (“Tashan Coal Company”)					mining
Tangshan Huaxia Datang Power Fuel	PRC	20,000	30%	–	Power fuel trading
Company Limited
China Datang Group Finance Company Limited	PRC	4,869,872	15.89%	–	Financial services
(“Datang Finance”)(i)
Inner Mongolia Bazhu Railway Company Limited	PRC	100,000	20%	–	Railway and highway
					construction
					and operational
					management
Liaoning Diaobingshan Coal Gangue Power	PRC	603,400	40%	–	Power generation
Generation Co., Ltd.
Inner Mongolia Xiduo Railway Company Limited	PRC	Registered capital:	34%	–	Railway transportation
(“Xiduo Railway Company”)		3,540,249;			services
		paid-up capital:
		3,240,862
COSCO Datang Shipping Company Limited	PRC	100,000	45%	–	Cargo shipping

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	Place of
	incorporation/	Registered and	Percentage of
Name	registration	paid-up capital	equity interest		Principal activities
		RMB’000	Direct	Indirect
		unless otherwise
		stated
Inner Mongolia Datang Da Ta Energy	PRC	20,000	35%	–	Construction and
Company Limited					operation
					of coal logistics park
					zone
Datang Wealth Management Co., Ltd.	PRC	100,000	15%	–	Investment
(“Datang Wealth Company”)(ii)					management
					and advisory
Fuxin Huanfa Wastage Disposal Company Limited	PRC	Registered capital:	–	20%	Environmental greening
		25,000;
		paid-up capital:
		20,000
Chongqing Fuling Water Resources Development	PRC	120,000	–	42%	Hydropower technology
Company Limited					development
Fujian Baima Harbour Railway Spur Line	PRC	316,500	–	33%	Railway transportation
Company Limited
Jinzhou Thermal Power Company Limited	PRC	150,000	–	26%	Heat supply
Macro Technologies Inc. (Vietnam) Limited	Vietnam	USD150,000	–	35%	Electricity related
					technical services
Chongqing Guanming Investment	PRC	100,000	49%	–	Investment
Company Limited					management
Shanxi Datang International Yuncheng	PRC	264,694	49%	–	Power generation
Power Generation Company Limited
Inner Mongolia Hutietaihe Logistics	PRC	56,700	–	49%	Provision of railway
Company Limited					logistics services
Inner Mongolia Datang Tongfang Silicon and	PRC	10,000	26%	–	Development and
Aluminum Technology Company Limited					production of silicon
					and aluminum alloy
Datang Tibet Bodui Hydropower	PRC	Registered capital:	20%	–	Hydropower
Development Company Limited		478,500;			construction
		paid-up capital:
		506,090
Datang Finance Leasing Company Limited	PRC	Registered capital:	20%	–	Finance leasing
(“Datang Leasing Company”)		1,000,000;			business
		paid-up capital:
		2,000,000

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	Place of
	incorporation/	Registered and	Percentage of
Name	registration	paid-up capital	equity interest		Principal activities
		RMB’000	Direct	Indirect
		unless otherwise
		stated
Baxin Railway Company Limited	PRC	2,600,000	20%	–	Railway construction
(“Baxin Railway Company”)
China Datang Corporation Nuclear Power	PRC	390,221	40%	–	Nuclear power
Company Limited					development,
					construction and
					operations
Beijing Shangshan Hengsheng Property Company	PRC	63,763	60%	–	Property development
Limited (“Shangshan Property Company”)
(iii)
Datang Tibet Wangpai Hydropower	PRC	95,000	20%	–	Hydropower
Development Company Limited					construction
Ningxia Datang International Daba Power	PRC	489,691	50%	–	Power generation
Generation Company Limited
Jiangxi Jiangmei Datang Coal Company Limited	PRC	20,000	35%	–	Sales of coal
Tongmei Datang Tashan II Power Generation	PRC	200,000	40%	–	Power generation
Company Limited
Chongqing Nengtou Electricity Company Limited	PRC	200,000	29%	–	Power supply

Notes:

(i) Although the Company holds less than 20% equity interest in Datang Finance, the Company exercises significant influence over Datang Finance which is a non-bank financial institution because the Company has board representation in Datang Finance and the Group had material transactions with Datang Finance.
(ii) Although the Company holds less than 20% equity interest in Datang Wealth Company, the directors of the Company consider that the Company exercises significant influence over Datang Wealth Company because the Company is entitled to appoint 2 directors out of 5 directors of Datang Wealth Company.
(iii) The Company entered into an agreement with another shareholder of Shangshan Property Company, which holds 40% equity interest in Shangshan Property Company. Pursuant to this agreement, the Company and the another shareholder would nominate 3 directors and 4 directors respectively. Therefore, the Company does not obtain control over Shangshan Property Company.

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APPENDIX IIA

The following table shows information on the associates that are material to the Group. These associates are accounted for in the consolidated financial statements using the equity method. The summarised financial information presented is based on the IFRS financial statements of the associates.

Name Principal place of business/ country of incorporation Principal activities % of ownership interests/ voting rights held by the Group At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Group’s share of net assets Others Group’s share of carrying amount of interests Year ended 31 December: Revenue Profit from operations Other comprehensive income Total comprehensive income Dividends received from associates	Tongfang Investment Company 2015 2014 PRC/PRC Project investments and management 36.36%/36.36% 36.36%/36.36% RMB’000 RMB’000 942,095 809,946 451,428 255,255 (8,203) (10,561) (390,114) (1,337) 995,206 1,053,303 361,856 382,981 20 20 361,876 383,001 4,182 3,439 171,002 37,773 (66,797) – 104,205 37,773 72,720 –	Tashan Power Company 2015 2014 PRC/PRC Power generation 40%/40% 40%/40% RMB’000 RMB’000 3,047,497 3,123,922 464,410 552,361 (1,800,000) (2,480,000) (855,184) (363,533) 856,723 832,750 342,689 333,100 – – 342,689 333,100 1,529,386 1,816,468 323,803 342,091 – – 323,803 342,091 120,000 171,274

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Name Principal place of business/ country of incorporation Principal activities % of ownership interests/ voting rights held by the Group At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Group’s share of net assets Others Group’s share of carrying amount of interests Year ended 31 December: Revenue Profit from operations Other comprehensive income Total comprehensive income Dividends received from associates	Tashan Coal Company 2015 2014 PRC/PRC Coal construction and mining 28%/28% 28%/28% RMB’000 RMB’000 7,007,099 6,601,446 4,615,542 5,225,053 (1,462,012) (1,916,287) (2,143,188) (2,508,946) 8,017,441 7,401,266 2,244,883 2,072,354 (75,719) 186,750 2,169,164 2,259,104 4,244,329 5,759,590 469,433 1,105,460 – – 469,433 1,105,460 110,384 50,000	Datang Finance 2015 2014 PRC/PRC Financial services 15.89%/15.89% 20%/20% RMB’000 RMB’000 23,089,887 16,707,046 10,020,969 10,462,550 – – (26,374,310) (22,022,377) 6,736,546 5,147,219 1,070,437 1,029,444 152 (1,976) 1,070,589 1,027,468 1,396,262 1,209,137 928,945 830,259 – – 928,945 830,259 273,254 –

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Name	Xiduo Railway Company	Xiduo Railway Company	Datang Leasing Company	Datang Leasing Company
	2015	2014	2015		2014
Principal place of business/
country of incorporation	PRC/PRC		PRC/PRC
Principal activities	Railway transportation services		Finance leasing business
% of ownership interests/
voting rights held by the
Group	34%/34%	34%/34%	20%/20%	20%/20%
	RMB’000	RMB’000	RMB’000	RMB’000
At 31 December:
Non-current assets	10,035,330	9,698,734	16,572,466	10,954,827
Current assets	135,212	125,479	1,374,200		601,985
Non-current liabilities	(5,417,656)	(5,206,186)	(2,116,857)	(5,003,329)
Current liabilities	(1,183,471)	(976,768)	(13,446,090)	(4,139,432)
Net assets	3,569,415	3,641,259	2,383,719	2,414,051

Group’s share of net assets	1,213,601	1,238,028	476,744		482,810
Others	227,747	228,156	–		–
Group’s share of carrying
amount of interests	1,441,348	1,466,184	476,744		482,810

Year ended 31 December:
Revenue	1,308,852	853,783	830,648		608,840
(Loss)/profit from operations	(66,940)	(33,702)	69,669		306,136
Other comprehensive income	–	–	–		–
Total comprehensive income	(66,940)	(33,702)	69,669		306,136
Dividends received from
associates	–	–	20,000		–

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APPENDIX IIA

Name
Principal place of business/country of incorporation
Principal activities
% of ownership interests/voting rights held by the Group
At 31 December:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Group’s share of net assets
Others
Group’s share of carrying amount of interests
Year ended 31 December:
Revenue
Loss from operations
Other comprehensive income
Total comprehensive income
Dividends received from associates

Baxin Railway Company
2015
2014
PRC/PRC
Railway construction
20%/20%
20%/20%
RMB’000
RMB’000
6,217,425
5,974,218
1,813,424
1,867,654
(5,152,668)
(5,087,854)
(305,588)
(180,806)
2,572,593
2,573,212
514,519
514,642
119,295
120,420
633,814
635,062
6,738
14,008
(6,240)
(9,148)
–
–
(6,240)
(9,148)
–
–

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

The following table shows, in aggregate, the Group’s share of the amounts of all individually immaterial associates that are accounted for using the equity method.

		2015	2014
		RMB’000	RMB’000
	At 31 December:
	Carrying amounts of interests	1,485,647	1,009,446
	Year ended 31 December:
	Profit from operations	193,888	86,283
	Other comprehensive income	–	–
	Total comprehensive income	193,888	86,283
22.	Investments in joint ventures
		2015	2014
		RMB’000	RMB’000
	Unlisted investments:
	Share of carrying amount of interests	5,575,810	5,653,654

Details of the Group’s joint ventures at 31 December 2015 are as follows:

	Place of
	incorporation/	Registered and	Percentage of
Name	registration	paid-up capital	equity interest		Principal activities
		RMB’000	Direct	Indirect
Yuzhou Energy Multiple
Company	PRC	1,019,014	50%	–	Power generation
Yuzhou Mining Company	PRC	1,079,157	34%	15%	Coal mining and sales
Changtan Mining Company	PRC	50,000	40%	–	Coal mining and sales
Ningde Nuclear Power	PRC	10,116,000	44%	–	Nuclear power plant
Company					construction and
					operations

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APPENDIX IIA

The following table shows information of the joint ventures that are material to the Group. These joint ventures are accounted for in the consolidated financial statements using the equity method. The summarised financial information presented is based on the IFRS financial statements of the joint ventures.

Name Principal place of business/ country of incorporation Principal activities % of ownership interests/ voting rights held by the Group At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Group’s share of net assets Others Group’s share of carrying amount of interests Cash and cash equivalents included in current assests Current financial liabilities (excluding accounts and other payables and provisions) included in current liabilities Non-current financial liabilities (excluding accounts and other payables and provisions) included in non-current liabilities Year ended 31 December: Revenue Depreciation and amortisation Interest income Interest expense Income tax (expense)/credit Loss from operations and total comprehensive income	Yuzhou Energy Multiple Company 2015 2014 PRC/PRC Power generation 50%/50% 50%/50% RMB’000 RMB’000 3,316,939 2,587,054 186,622 130,270 (2,263,476) (360,000) (568,441) (1,679,466) 671,644 677,858 335,822 338,929 – – 335,822 338,929 38,242 24,961 – (1,353,300) (2,263,476) (360,000) 144,991 184,497 (18,127) (18,238) 108 76 (53,583) (54,669) – (513) (157,166) (137,582)	Yuzhou Mining Company 2015 2014 PRC/PRC Coal mining and sales 49%/49% 49%/49% RMB’000 RMB’000 5,836,633 5,600,180 268,631 640,820 (1,580,919) (2,630,173) (3,208,524) (1,923,160) 1,315,821 1,687,667 644,752 826,957 (182,949) (243,784) 461,803 583,173 17,271 201,706 (2,197,113) (953,920) (1,353,453) (1,622,100) 2,392,915 5,142,483 (146,650) (219,898) 1,014 1,121 (26,452) (56,321) 10,005 (34,644) (356,166) (361,073)

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APPENDIX IIA

Name Principal place of business/ country of incorporation Principal activities % of ownership interests/ voting rights held by the Group At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Group’s share of net assets Others Group’s share of carrying amount of interests Cash and cash equivalents included in current assets Current financial liabilities (excluding accounts and other payables and provisions) included in current liabilities Non-current financial liabilities (excluding accounts and other payables and provisions) included in non-current liabilities Year ended 31 December: Revenue Depreciation and amortisation Interest expense Income tax credit (Loss)/profit from operations and total comprehensive income Dividends received from joint ventures	Changtan Mining Company 2015 2014 PRC/PRC Coal mining and sales 40%/40% 40%/40% RMB’000 RMB’000 205 14 49,756 50,000 – – (4) (14) 49,957 50,000 19,983 20,000 80,000 80,000 99,983 100,000 47,447 46,092 – – – – – – – – (38) – – – (43) – – –	Ningde Nuclear Power Company 2015 2014 PRC/PRC Nuclear power plant construction and operations 44%/44% 44%/44% RMB’000 RMB’000 49,860,697 49,306,828 6,039,071 5,146,998 (40,865,132) (36,744,453) (4,253,601) (6,959,981) 10,781,035 10,749,392 4,743,655 4,729,732 (65,453) (98,180) 4,678,202 4,631,552 335,323 377,558 (1,173,543) (6,270,936) (40,501,839) (36,521,084) 6,684,012 3,981,182 (1,151,234) (680,393) (1,731,338) (1,260,401) 1,013 – 1,379,671 596,900 742,893 121,760

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

23. Available-for-sale financial assets

Equity securities, at fair value Listed in Hong Kong Listed outside Hong Kong Market value of listed securities Unlisted equity securities, at cost Less: Impairment losses	2015 RMB’000 169,029 – 169,029 4,833,645 (24,078) 4,809,567 4,978,596	2014 RMB’000 194,864 197,824 392,688 4,653,600 (24,078) 4,629,522 5,022,210

The fair values of listed securities are based on current bid prices. All the unlisted equity securities were carried at cost as they do not have a quoted market price in an active market and their fair values cannot be reliably measured.

24. Deferred housing benefits

Pursuant to the “Proposal on Further Reform of Housing Policy in Urban Areas” of the State and the implementation schemes for staff quarters issued by the relevant provincial and municipal governments, the Company implemented a scheme for selling staff quarters in 1999. Under the scheme, the Company provides housing benefits to its staff to buy staff quarters from the Company at preferential prices. The offer price is determined based on their length of services and positions pursuant to the prevailing local regulations. The deferred housing benefits represent the difference between the net book amount of the staff quarters sold and the proceeds collected from the employees, and are amortised over the remaining average service life of the relevant employees.

During 2005 to 2007, the Company and some of its subsidiaries carried out another housing benefit scheme – “Monetary Housing Benefit Scheme” upon the approval from Housing Reform Office of the local government. Under the Monetary Housing Benefit Scheme, the Company and some of its subsidiaries provided monetary housing subsidies to those employees whose houses did not meet the standard they should have enjoyed based on their length of services and their positions and rankings. There is no such subsidy payment in 2015 (2014: nil). The benefits were amortised over the remaining average service life of the relevant employees.

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APPENDIX IIA

Cost At 1 January 2014, 31 December 2014, 1 January 2015 and 31 December 2015 Accumulated amortisation At 1 January 2014 Charge for the year At 31 December 2014 and 1 January 2015 Charge for the year At 31 December 2015 Carrying amount At 31 December 2015 At 31 December 2014 25. Long-term entrusted loans to associates 2015 RMB’000 Entrusted loans to associates 121,778 Less: Current portion of long-term entrusted loans to associates – 121,778		RMB’000
		653,269
		604,242 24,738

		628,980
		20,929

		649,909


		3,360


		24,289


		2014 RMB’000 435,889 (335,706) 100,183

At 31 December 2015, the long-term entrusted loans to associates carried interest rate ranging from 4.75% to 6.00% (2014: of 6.15%) per annum and there were neither pledges nor guarantees received on these loans.

The long-term entrusted loans are due within 2 and 3 years (2014: 3 years) from the end of the reporting period.

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APPENDIX IIA

26. Other non-current assets

Long-term receivables Long-term prepaid expenses Others Less: Current portion of other non-current assets 27. Inventories Raw materials Finished goods Others	2015 RMB’000 237,217 679,906 221,029 1,138,152 (63,360) 1,074,792 2015 RMB’000 2,610,511 998,556 248,714 3,857,781	2014 RMB’000 274,404 821,437 368,030
		1,463,871 (50,278)
		1,413,593

		2014 RMB’000 2,779,254 696,000 269,166
		3,744,420

28. Accounts and notes receivables

Accounts and notes receivables of the Group primarily represent receivables from regional or provincial grid companies for tariff revenue and coal sales customers and comprise the following:

Accounts receivables from third parties Notes receivables from third parties Accounts receivables from related parties	2015 RMB’000 7,278,013 516,622 65,054 7,859,689	2014 RMB’000 9,468,926 504,789 31,109
		10,004,824

The Group usually grants credit period of approximately 1 month to local power grid customers and coal purchase customers from the month end after sales and sale transactions made, respectively.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

The ageing analysis of accounts and notes receivables is as follows:

Within one year Between one to two years Between two to three years Over three years	2015 RMB’000 7,165,522 408,095 134,081 151,991 7,859,689	2014 RMB’000 9,059,461 682,669 61,826 200,868
		10,004,824

At 31 December 2015, the Group applied tariff collection rights in securing loans, for which details please refer to notes 35 and 42 to the consolidated financial statements.

Reconciliation of allowance for accounts and notes receivables:

At 1 January Allowance for the year At 31 December	2015 RMB’000 342,712 341,427 684,139	2014 RMB’000 4,692 338,020
		342,712

At 31 December 2015, accounts and notes receivables of RMB694,167 thousand (2014: RMB945,363 thousand) were past due but not impaired. The major portion of the past due accounts and notes receivables were due from certain local thermal power companies and customers of coal purchases, and the directors believe that such receivables can be recovered because such local thermal companies and customers of coal purchases had no recent history of default. The ageing analysis of these accounts and notes receivables is as follows:

Between one to two years Between two to three years Over three years	2015 RMB’000 408,095 134,081 151,991 694,167	2014 RMB’000 682,669 61,826 200,868
		945,363

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

29. Prepayments and other receivables

Prepayments Prepayments for fuel and materials Prepayments for construction VAT recoverable Other taxes recoverable Prepayments to related parties Prepayments for transportation cost Others Other receivables Advanced payments for construction Receivables from disposals of property, plant and equipment Staff advances Staff housing maintenance fund deposits Receivables from sales of materials Receivables from related parties Other deposits Dividends receivables Government grant receivables Prepayments for fuel recoverable Receivables from transfer of construction projects Others Allowance for doubtful debts Reconciliation of allowance for other receivables: At 1 January Allowance for the year Reversal of allowance At 31 December	2015 RMB’000 158,998 23,797 4,854,850 10,759 48,138 49,317 137,835 5,283,694 358,769 149,746 4,208 16,669 30,707 84,257 174,353 783,985 298,158 1,657,711 249,933 774,801 4,583,297 (1,349,078) 3,234,219 8,517,913 2015 RMB’000 470,140 907,770 (28,832) 1,349,078	2014 RMB’000 275,905 5,138 4,700,913 24,952 54,905 22,444 182,864 5,267,121 743,813 81,082 7,776 21,513 101,667 6,071 108,936 444,125 257,919 991,003 – 768,238 3,532,143 (470,140) 3,062,003 8,329,124 2014 RMB’000 41,929 437,366 (9,155) 470,140

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30. Short-term entrusted loans to related parties

Entrusted loans to a joint venture_(i) Entrusted loan to a fellow subsidiary(ii)_	2015 RMB’000 – – –	2014 RMB’000 803,170 10,000
		813,170

Notes:

(i) At 31 December 2014, the short-term entrusted loans to a joint venture carried interest rate ranging from 6.336% to 6.653% per annum and there were neither pledges nor guarantees received on these loans.
(ii) At 31 December 2014, the short-term entrusted loan to a fellow subsidiary carried interest rate of 6% per annum and there was neither pledge nor guarantee received on this loan.

31. Cash and cash equivalents and restricted deposits

Bank deposits Deposits with Datang Finance Cash on hand Restricted deposits included in bank deposits Cash and cash equivalents	2015 RMB’000 838,522 4,735,155 214 5,573,891 (374,574) 5,199,317	2014 RMB’000 2,824,054 2,463,508 936
		5,288,498 (275,223)
		5,013,275

The carrying amounts of the Group’s cash and cash equivalents and restricted deposits are denominated in the following currencies:

RMB USD HKD EUR Indonesian Rupiah	2015 RMB’000 5,530,223 32,379 11,121 – 168 5,573,891	2014 RMB’000 5,098,760 159,319 29,606 21 792
		5,288,498

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APPENDIX IIA

32. Share capital

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Number of shares Amount
A shares (i) H shares (i) Total A shares H shares Total
’000 ’000 ’000 RMB’000 RMB’000 RMB’000
Registered, issued and
fully paid:
Shares of RMB1 (2014:
RMB1) each
At 1 January 2014,
31 December 2014,
1 January 2015 and
31 December 2015 9,994,360 3,315,678 13,310,038 9,994,360 3,315,678 13,310,038
Notes:
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(i) Both A shares and H shares rank pari passu to each other.

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maximise the returns to the shareholders through the optimisation of the capital structure.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the payment of dividends, issue new shares, raise new debts or sell assets to reduce debts.

The Group monitors capital on the basis of the assets-to-liabilities ratio. This ratio is calculated as total liabilities divided by total assets. The assets-to-liabilities ratio of the Group as at 31 December 2015 was 79.39% (2014: 79.37%).

Taking into consideration of the expected operating cash flows of the Group and the available banking facilities and their experience in refinancing short-term borrowings, the directors believe the Group can meet their current obligations when they fall due.

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APPENDIX IIA

33. Statement of financial position and reserve movement of the company

(a) Statement of financial position of the Company

ASSETS Non-current assets Property, plant and equipment Investment properties Intangible assets Investments in subsidiaries Investments in associates Investments in joint ventures Available-for-sale financial assets Deferred housing benefits Long-term entrusted loans to subsidiaries Long-term entrusted loan to an associate Deferred tax assets Other non-current assets Total non-current assets Current assets Inventories Accounts and notes receivables Prepayments and other receivables Short-term entrusted loans to subsidiaries Short-term entrusted loans to related parties Current portion of other non-current assets Cash and cash equivalents Total current assets TOTAL ASSETS	2015 RMB’000 16,640,323 216,899 50,545 35,703,018 6,105,564 5,781,718 4,102,472 – 4,954,222 101,662 151,377 183,456 73,991,256 161,847 1,237,836 2,163,766 4,736,378 – 4,900,000 1,393,358 14,593,185 88,584,441	2014 RMB’000 16,153,812 225,125 42,754 35,653,506 5,641,388 5,506,268 3,922,427 2,280 10,736,079 100,183 146,344 183,456
		78,313,622
		268,306 1,497,751 1,610,378 4,718,335 803,170 4,335,706 2,179,471
		15,413,117
		93,726,739

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EQUITY AND LIABILITIES Equity Share capital Reserves Retained earnings Proposed dividends Others Total equity Non-current liabilities Long-term loans Long-term bonds Deferred income Other non-current liabilities Total non-current liabilities Current liabilities Accounts payables and accrued liabilities Taxes payables Short-term loans Short-term bonds Current portion of non-current liabilities Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES NET CURRENT LIABILITIES	2015 RMB’000 13,310,038 28,307,864 2,262,706 2,213,673 46,094,281 8,250,000 15,410,018 533,496 14,000 24,207,514 2,488,830 121,342 800,000 14,215,474 657,000 18,282,646 42,490,160 88,584,441 (3,689,461)	2014 RMB’000 13,310,038 26,994,647 1,730,305 858,350 42,893,340 14,912,600 15,394,158 483,835 21,000 30,811,593 3,054,982 289,455 500,000 11,000,000 5,177,369 20,021,806 50,833,399 93,726,739 (4,608,689)

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APPENDIX IIA

(b) Reserve movement of the Company

At 1 January 2014 Total comprehensive income for the year Transfer from restricted reserve Transfer to surplus reserve Dividends paid At 31 December 2014 At 1 January 2015 Total comprehensive income for the year Transfer from restricted reserve Transfer to surplus reserve Dividends paid At 31 December 2015	Capital reserve RMB’000 9,982,310 – – – – 9,982,310 9,982,310 – – – – 9,982,310	Statutory surplus reserve Discretionary surplus reserve RMB’000 RMB’000 4,223,835 10,842,720 – – – – 349,350 1,590,132 – – 4,573,185 12,432,852 4,573,185 12,432,852 – – – – 457,146 858,351 – – 5,030,331 13,291,203	Restricted reserve RMB’000 8,148 – (5,868) – – 2,280 2,280 – (2,280) – – –	Other reserves RMB’000 4,020 – – – – 4,020 4,020 – – – – 4,020	Retained earnings RMB’000 3,108,322 3,011,152 5,868 (1,939,482) (1,597,205) 2,588,655 2,588,655 4,931,246 2,280 (1,315,497) (1,730,305) 4,476,379	Total RMB’000 28,169,355 3,011,152 – – (1,597,205)
						29,583,302

						29,583,302 4,931,246 – – (1,730,305)
						32,784,243

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APPENDIX IIA

34. Reserves

(a) Group

The amounts of the Group’s reserves and movements therein are presented in the consolidated statement of profit or loss and other comprehensive income and consolidated statement of changes in equity.

(b) Nature and purpose of reserves

(i) Capital reserve

Capital reserve mainly comprised: (i) the difference between the nominal amount of the domestic shares issued and the fair value of the net assets injected into the Company during its formation and also proceeds from the issue of H shares and A shares in excess of their par value, net of issuance expenses in 1997, 2006, 2010 and 2011; and (ii) the premium from convertible bonds converted to shares. The capital reserve is nondistributable.

(ii) Statutory surplus reserve

In accordance with the relevant laws and regulations of the PRC and the articles of association of the Company, it is required to appropriate 10% of its net profit under PRC GAAP, after offsetting any prior years’ losses, to the statutory surplus reserve. When the balance of such reserve reaches 50% of the Company’s share capital, any further appropriation is optional.

The statutory surplus reserve can be used to offset prior years’ losses, if any, and may be converted into share capital by issuing new shares to shareholders in proportion to their existing shareholding or by increasing the par value of the shares currently held by them, provided that the remaining balance of the reserve after such an issue is not less than 25% of share capital. The statutory surplus reserve is non-distributable.

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APPENDIX IIA

(iii) Discretionary surplus reserve

Pursuant to the articles of association of the Company, the appropriation of profit to the discretionary surplus reserve and its utilisation are made in accordance with the recommendation of the Board of Directors and is subject to shareholders’ approval at their general meeting.

The discretionary surplus reserve can be used to offset prior years’ losses, if any, and may be converted into share capital by issuing new shares to shareholders in proportion to their existing shareholding or by increasing the par value of the shares currently held by them. The discretionary surplus reserve is distributable.

(iv) Restricted reserve

Pursuant to relevant regulations and guidance issued by the MOF, certain deferred housing benefits are charged to equity directly when incurred under PRC GAAP. In order to reflect such undistributable retained earnings in these financial statements prepared under IFRS, a restricted reserve is set up to reduce the balance of retained earnings with an amount equals to the residual balance of deferred housing benefits, net of tax.

Pursuant to relevant PRC regulations, coal mining companies are required to set aside an amount to a fund for future development and work safety which they transferred certain amounts from retained earnings to restricted reserve. The fund can then be used for future development and work safety of the coal mining operations, and is not available for distribution to shareholders. When qualifying development expenditure and improvements of safety incurred, an equivalent amount is transferred from restricted reserve to retained earnings.

(c) Basis for profit appropriation

In accordance with the articles of association of the Company, distributable profit of the Company is derived based on the lower of profit determined in accordance with PRC GAAP and IFRS.

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APPENDIX IIA

35. Long-term loans

Long-term bank loans Other long-term loans	2015 RMB’000 124,119,908 18,585,503 142,705,411	2014 RMB’000 136,790,681 14,134,183
		150,924,864

Long-term loans are repayable as follows:

	2015		2014
Long-term bank loans RMB’000 11,199,286 13,558,244 41,662,380 57,699,998 124,119,908 (11,199,286) 112,920,622	Other long- term loans RMB’000 1,444,913 1,317,909 13,342,181 2,480,500 18,585,503 (1,444,913) 17,140,590	Long-term bank loans RMB’000 12,290,426 14,602,765 54,824,846 55,072,644 136,790,681 (12,290,426) 124,500,255	Other long- term loans RMB’000 942,799 1,642,300 8,093,343 3,455,741 14,134,183 (942,799) 13,191,384	Total RMB’000 13,233,225 16,245,065 62,918,189 58,528,385
				150,924,864
				(13,233,225)
				137,691,639

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APPENDIX IIA

Long-term loans are classified as follows:

	2015		2014
Long-term bank loans RMB’000 33,670,942 9,605,743 80,843,223 124,119,908 (2,189,422) (1,424,940) (7,584,924) (11,199,286) 31,481,520 8,180,803 73,258,299 112,920,622	Other long- term loans RMB’000 – 13,619,562 4,965,941 18,585,503 – (199,708) (1,245,205) (1,444,913) – 13,419,854 3,720,736 17,140,590	Long-term bank loans RMB’000 41,774,669 11,356,610 83,659,402 136,790,681 (3,256,986) (1,483,681) (7,549,759) (12,290,426) 38,517,683 9,872,929 76,109,643 124,500,255	Other long- term loans RMB’000 – 8,729,949 5,404,234 14,134,183 – (163,979) (778,820) (942,799) – 8,565,970 4,625,414 13,191,384	Total RMB’000 41,774,669 20,086,559 89,063,636
				150,924,864
				(3,256,986) (1,647,660) (8,328,579)
				(13,233,225)
				38,517,683 18,438,899 80,735,057
				137,691,639

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APPENDIX IIA

The carrying amounts of the Group’s long-term loans are denominated in the following currencies:

RMB USD EUR		2015	Total RMB’000 141,939,633 742,702 23,076 142,705,411		2014
	Long-term bank loans RMB’000 123,653,692 443,140 23,076 124,119,908	Other long- term loans RMB’000 18,285,941 299,562 – 18,585,503		Long-term bank loans RMB’000 136,651,307 139,374 – 136,790,681	Other long- term loans RMB’000 13,695,965 409,949 28,269 14,134,183	Total RMB’000 150,347,272 549,323 28,269
						150,924,864

The interest rates for long-term loans per annum at 31 December were as follows:

	2015	2014
Long-term bank loans	3.00%–6.80%	5.23%–7.14%
Other long-term loans	1.13%–6.61%	1.13%–6.55%

Long-term loans of RMB14,103,656 thousand (2014: RMB14,863,850 thousand) are arranged at fixed interest rates and expose the Group to fair value interest rate risk. The remaining long-term loans are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.

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APPENDIX IIA

At 31 December 2015, long-term bank loans amounted to RMB1,750,000 thousand (2014: RMB1,746,000 thousand) were secured by the following assets:

	2015	2014
	RMB’000	RMB’000
Property, plant and equipment	3,814,509	3,872,135

At 31 December 2015, long-term bank loans amounted to RMB31,920,942 thousand (2014: RMB40,028,669 thousand) were secured by the following assets of the Group:

Tariff collection rights Others	2015 RMB’000 4,151,687 1,082,202 5,233,889	2014 RMB’000 4,086,474 1,136,725
		5,223,199

At 31 December 2015, long-term bank loans amounted to RMB9,605,743 thousand (2014: RMB11,356,610 thousand) were guaranteed by the following parties:

The Company Certain subsidiaries of the Company China Datang Certain non-controlling shareholders of subsidiaries Others	2015 RMB’000 7,665,747 16,000 1,680,000 179,696 64,300 9,605,743	2014 RMB’000 8,942,345 20,000 2,100,000 222,825 71,440
		11,356,610

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APPENDIX IIA

At 31 December 2015, other long-term loans amounted to RMB794,600 thousand (2014: RMB794,600 thousand) which were borrowed from China Datang were unsecured and interest-bearing ranging from 3.60% to 5.40% (2014: 3.60% to 5.40%) per annum.

At 31 December 2015, other long-term loans amounted to RMB2,926,300 thousand (2014: RMB3,813,800 thousand) which were borrowed from Datang Finance were unsecured and interestbearing ranging from 4.35% to 5.97% (2014: 5.54% to 6.15%) per annum.

At 31 December 2015, other long-term loans amounted to RMB30,000 thousand (2014: RMB30,000 thousand) which were borrowed from Datang Leasing Company were unsecured and interest-bearing at 4.75% (2014: 6.40%) per annum.

At 31 December 2015, other long-term loans included a loan amounted to RMB299,562 thousand (2014: RMB409,949 thousand) borrowed by the MOF from International Bank for Reconstruction and Development (“ World Bank ”) and on-lent to a subsidiary of the Company for the construction of electricity utility plant, with the maturities from 1998 to 2017. The effective annual interest rate was LIBOR Base Rate plus LIBOR Total Spread as defined in the loan agreement between MOF and World Bank. China Datang provided guarantees on 60% of the loan balance. In addition, at 31 December 2015, another other long-term loans amounted to RMB3,000,000 thousand (2014: RMB3,000,000 thousand) were also guaranteed by China Datang.

At 31 December 2015, other long-term loans amounted to RMB10,320,000 thousand (2014: RMB5,320,000 thousand) were guaranteed by the Company.

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APPENDIX IIA

36. Long-term bonds

Medium-term notes_(i) Corporate bonds(ii) Non-public debt financing instruments(iii) Offshore RMB bonds(iv)_ Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	2015 RMB’000 3,474,661 11,935,357 – – 15,410,018 – 15,410,018	2014 RMB’000 3,467,532 11,926,626 4,995,369 497,909 20,887,436 (5,493,278) 15,394,158

Notes:

(i) Medium-term notes represented unsecured notes issued by the Company in inter-bank market on 22 August 2014 with par value of RMB100 each totalling RMB3.5 billion (2014: RMB3.5 billion). Such medium-term notes are of 5-year term with fixed annual coupon and effective interest rates of 5.20% (2014: 5.20%) and 5.41% (2014: 5.41%), respectively. At 31 December 2015, accrued interest for these notes amounted to RMB65,639 thousand (2014: RMB65,819 thousand).
(ii) Corporate bonds represented unsecured bonds issued by the Company on 19 August 2009, 22 April 2011, 27 March 2013 and 3 November 2014 with par value of RMB100 each totalling RMB12 billion (2014: RMB12 billion). Such bonds, which are secured by China Datang and of which 65.29% of RMB3 billion were counter-guaranteed by the Company, are of 10-year term with fixed annual coupon and effective interest rates of 5.00%/5.25%/5.10%/5.00% and 5.10%/5.36%/5.20%/5.10%, respectively. At 31 December 2015, accrued interest for these bonds amounted to RMB307,541 thousand (2014: RMB308,384 thousand).
(iii) Non-public debt financing instruments represented debt financing instruments issued by the Company on 18 April 2012 with par value of RMB100 each totalling RMB5 billion. Such debt financing instruments are of 3 years with fixed annual coupon and effective interest rates of 5.08% and 5.41%, respectively. At 31 December 2015, accrued interest for these instruments amounted to nil (2014: RMB179,540 thousand).
(iv) Offshore RMB bonds represented unsecured offshore RMB-denominated bonds issued by a subsidiary of the Company on 30 November 2012 in denominations of RMB1,000,000 each and integral multiples of RMB10,000 in excess thereof totalling RMB0.5 billion. Such bonds are of 3-year term with fixed annual coupon and effective interest rates of 5.20% and 5.27%, respectively. At 31 December 2015, accrued interest for these bonds amounted to nil (2014: RMB2,166 thousand).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

37. Deferred income

Deferred income primarily represented government grants received by the Group from local environmental protection authorities for undertaking approved environmental protection projects and excess of sales proceeds over the carrying amounts of certain sale and finance leaseback assets.

38. Deferred tax

The following are the deferred tax assets (before offset) recognised by the Group:

Assets revaluation RMB’000 4,778 (287)	Deductible tax losses RMB’000 824,134 (632,316)	Intragroup unrealised profits Depreciation Government grants Impairment of assets RMB’000 RMB’000 RMB’000 RMB’000 593,951 40,629 39,842 43,724 48,075 (981) 152,636 188,730	Intragroup unrealised profits Depreciation Government grants Impairment of assets RMB’000 RMB’000 RMB’000 RMB’000 593,951 40,629 39,842 43,724 48,075 (981) 152,636 188,730	Intragroup unrealised profits Depreciation Government grants Impairment of assets RMB’000 RMB’000 RMB’000 RMB’000 593,951 40,629 39,842 43,724 48,075 (981) 152,636 188,730	Intragroup unrealised profits Depreciation Government grants Impairment of assets RMB’000 RMB’000 RMB’000 RMB’000 593,951 40,629 39,842 43,724 48,075 (981) 152,636 188,730	Others RMB’000 175,664 (63,053)	Total RMB’000 1,722,722 (307,196)

4,491	191,818	642,026	39,648	192,478	232,454	112,611	1,415,526
(209)	(140,398)	69,570	2,955	(6,059)	(144,569)	(14,243)	(232,953)

4,282	51,420	711,596	42,603	186,419	87,885	98,368	1,182,573

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

The following are the deferred tax liabilities (before offset) recognised by the Group:

Assets revaluation Depreciation RMB’000 RMB’000 625,264 6,924 (29,952) (2,372) – –	Assets revaluation Depreciation RMB’000 RMB’000 625,264 6,924 (29,952) (2,372) – –	Mining safety and development funds RMB’000 23,061 1,289 –	Deferred housing benefits RMB’000 5,155 (2,497) –	Fair value gain on available- for-sale financial assets RMB’000 11,443 – 29,813	Others RMB’000 5,564 (174) –	Total RMB’000 677,411 (33,706) 29,813

595,312	4,552	24,350	2,658	41,256	5,390	673,518
(22,583)	(2,373)	2,961	(2,616)	–	(492)	(25,103)
–	–	–	–	(40,304)	(1,126)	(41,430)

572,729	2,179	27,311	42	952	3,772	606,985

The following is the analysis of the deferred tax balances (after offset) for consolidated statement of financial position purposes:

Deferred tax assets Deferred tax liabilities	2015 RMB’000 1,182,573 (606,985) 575,588	2014 RMB’000 1,386,234 (644,226) 742,008

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APPENDIX IIA

No deferred tax asset has been recognised in respect of certain unused tax losses of RMB10,722,227 thousand (2014: RMB9,045,546 thousand) due to the unpredictability of future profit streams. The related unrecognised tax losses will expire in the following years ending 31 December:

2015 2016 2017 2018 2019 2020	2015 RMB’000 – 302,065 377,763 2,302,650 3,209,194 4,530,555 10,722,227	2014 RMB’000 273,786 531,031 430,902 2,304,836 5,504,991 –
		9,045,546

39. Provisions

At 1 January 2015 Provisions Changes in present value At 31 December 2015	Litigation RMB’000 – 328,588 – 328,588	Mine disposal and environmental restoration RMB’000 42,191 – 1,359 43,550	Total RMB’000 42,191 328,588 1,359
			372,138

The litigation provision represents legal claims brought against the Group by banks relating to the accounts receivables factoring loans to a supplier of a subsidiary of the Group. The provision is made based on legal advice received.

The mine disposal and environmental restoration provision represents the Group’s best estimate of the Group’s liability for remediation costs based on industry standards and historical experience.

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APPENDIX IIA

40. Other non-current liabilities

Finance lease payables Others Less: Amount due for settlement within 12 months (shown under current liabilities)	2015 RMB’000 21,429,012 2,079,792 23,508,804 (4,023,660) 19,485,144	2014 RMB’000 11,771,745 2,172,960 13,944,705 (2,564,319) 11,380,386

Finance lease payables

Within one year In the second to fifth years, inclusive After five years Less: Future finance charges Present value of lease obligations Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	Minimum lease payments 2015 2014 RMB’000 RMB’000 3,622,653 2,964,436 18,446,766 8,411,382 3,017,099 2,690,235 25,086,518 14,066,053 (3,657,506) (2,294,308) 21,429,012 11,771,745	Present value of minimum lease payments 2015 2014 RMB’000 RMB’000 2,684,119 2,361,152 15,987,558 6,816,302 2,757,335 2,594,291 21,429,012 11,771,745 N/A N/A 21,429,012 11,771,745 (2,684,119) (2,361,152) 18,744,893 9,410,593

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APPENDIX IIA

It is the Group’s policy to lease certain of its property, plant and equipment under finance leases. The average lease term is 8 years (2014: 9 years). At 31 December 2015, the average effective borrowing rate was 4.95% (2014: 5.98%) per annum. Interest rates are fixed at the contract dates and thus expose the Group to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. At the end of each lease term, the Group has the option to purchase the plant and machinery at nominal prices.

The Group’s finance lease payables amounted to RMB2,521,800 thousand (2014: RMB2,473,085 thousand) were secured by the following assets of the Group:

Restricted deposits, all of which will be refunded after settlements of last instalments of respective finance lease arrangements Tariff collection rights	2015 RMB’000 127,836 101,685 229,521	2014 RMB’000 127,836 86,618
		214,454

At 31 December 2015, finance lease payables amounted to RMB6,253,177 thousand (2014: RMB5,042,227 thousand) which were due to associates were unsecured and interest-bearing ranging from 4.41% to 5.87% (2014: 5.40% to 7.47%) per annum.

At 31 December 2015, finance lease payables amounted to RMB351,615 thousand (2014: nil) which were due to a subsidiary of China Datang were unsecured and interest-bearing ranging from 4.56% to 4.96% (2014: nil) per annum.

At 31 December 2015, finance lease payables guaranteed by China Datang and the Company amounted to RMB7,936,935 thousand (2014: nil) and RMB9,387,180 thousand (2014: nil) respectively.

At 31 December 2015, the total future minimum sublease payments expected to be received under noncancellable subleases amounted to RMB22,325 thousand (2014: RMB40,167 thousand).

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APPENDIX IIA

41. Accounts payables and accrued liabilities

Accounts and notes payables Fuel and materials payables to third parties Fuel and materials payables to related parties Notes payables to third parties Notes payables to related parties Construction payables to third parties Construction payables to related parties Acquisition considerations payables Receipts in advance from third parties Receipts in advance from related parties Salaries and welfares payables Interests payables Other payables to related parties Others	2015 RMB’000 7,087,569 554,146 1,495,939 600,000 9,737,654 11,281,741 507,312 101,779 289,308 13,477 117,919 609,980 1,070,021 3,874,072 27,603,263	2014 RMB’000 10,006,589 170,332 2,109,388 200,000
		12,486,309
		8,419,241 676,683 101,779 298,985 15,027 166,798 1,049,234 586,262 4,827,178
		28,627,496

The ageing analysis of the accounts and notes payables is as follows:

Within one year Between one to two years Between two to three years Over three years	2015 RMB’000 8,270,774 575,759 524,844 366,277 9,737,654	2014 RMB’000 10,375,066 1,318,491 349,168 443,584
		12,486,309

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APPENDIX IIA

42. Short-term loans

Short-term bank loans Other short-term loans	2015 RMB’000 11,807,757 2,978,000 14,785,757	2014 RMB’000 11,895,634 1,857,500
		13,753,134

Short-term loans are classified as follows:

Secured loans Guaranteed loans Unsecured loans	2015	Total RMB’000 – 4,180,000 10,605,757 14,785,757	2014
	Short-term bank loans Other short- term loans RMB’000 RMB’000 – – 4,180,000 – 7,627,757 2,978,000 11,807,757 2,978,000		Short-term bank loans Other short- term loans RMB’000 RMB’000 470,497 – 320,000 – 11,105,137 1,857,500 11,895,634 1,857,500	Total RMB’000 470,497 320,000 12,962,637
				13,753,134

The carrying amounts of the Group’s short-term loans are denominated in the following currencies:

RMB USD	2015	Total RMB’000 14,773,082 12,675 14,785,757	2014
	Short-term bank loans Other short- term loans RMB’000 RMB’000 11,795,082 2,978,000 12,675 – 11,807,757 2,978,000		Short-term bank loans Other short- term loans RMB’000 RMB’000 11,525,831 1,857,500 369,803 – 11,895,634 1,857,500	Total RMB’000 13,383,331 369,803
				13,753,134

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APPENDIX IIA

The interest rates for short-term loans per annum at 31 December were as follows:

	2015	2014
Short-term bank loans	2.00%–6.15%	1.32%–6.60%
Other short-term loans	3.92%–5.35%	5.04%–6.10%

Short-term loans of RMB12,809,257 thousand (2014: RMB12,764,134 thousand) are arranged at fixed interest rates and expose the Group to fair value interest rate risk. The remaining short-term loans are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.

At 31 December 2015, short-term bank loans amounted to nil (2014: RMB470,497 thousand) were secured by certain tariff collection rights of the Group.

At 31 December 2015, short-term bank loans amounted to RMB4,180,000 thousand (2014: RMB320,000 thousand) were guaranteed by the Company.

At 31 December 2015, other short-term loans amounted to RMB2,976,000 thousand (2014: RMB1,855,000 thousand) which were borrowed from Datang Finance were unsecured and interestbearing ranging from 3.92% to 5.35% (2014: 5.04% to 6.10%) per annum.

43. Short-term bonds

At 31 December 2015, short-term bonds represented unsecured bonds issued by the Group in March 2015, May 2015, June 2015, July 2015 and August 2015 (2014: July 2014, August 2014, October 2014 and December 2014) at par value of RMB100 each with annual coupon and effective interest rate of ranging from 3.00% to 4.98% (2014: 4.30% to 5.50%) and matured within 12 months.

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APPENDIX IIA

44. Notes to the consolidated statement of cash flows

(a) Reconciliation from profit before tax to cash generated from operations

Profit before tax Adjustments for: Depreciation of property, plant and equipment Depreciation of investment properties Amortisation of intangible assets Amortisation of long-term prepaid expenses Amortisation of deferred income Amortisation of deferred housing benefits Net gains on disposals of property, plant and equipment Write-off of property, plant and equipment Interest income Finance costs Investment income Impairment losses on available-for-sale financial assets Impairment losses on property, plant and equipment Impairment losses on intangible assets Allowance for inventories Reversal of allowance for inventories Allowance for accounts receivables Allowance for other receivables Reversal of allowance for other receivables Shares of profits of associates Shares of profits of joint ventures Other gains Operating profit before working capital changes Increase in inventories Decrease/(increase) in accounts and notes receivables (Increase)/decrease in prepayments and other receivables Increase in accounts payables and accrued liabilities (Decrease)/increase in taxes payables Cash generated from operations	2015 RMB’000 6,544,471 11,329,960 24,306 51,333 174,308 (1,068,443) 20,929 (20,273) 28,848 (76,585) 7,783,435 (160,865) 38,672 1,332,132 – 347,385 (5,555) 341,427 907,770 (28,832) (515,041) (389,595) (100,619) 26,559,168 (536,930) 1,516,618 (1,043,029) 2,035,350 (353,090) 28,178,087	2014 RMB’000 5,172,316 11,432,921 18,150 57,302 124,848 (101,727) 24,738 (4,347) 36,179 (88,881) 8,517,299 (220,069) 208,992 2,203,912 42,457 15,153 – 338,020 437,366 (9,155) (606,547) (112,703) (8,391) 27,477,833 (77,474) (235,483) 521,659 1,019,994 289,721 28,996,250

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APPENDIX IIA

(b) Disposals of subsidiaries

On 27 November 2011, the Group entered into an agreement with another shareholder of Ningxia Datang International Daba Power Generation Company Limited (“ Daba Power Company ”), which holds 50% equity interest in Daba Power Company. Pursuant to this agreement, prior to 1 January 2015, the Group and the another shareholder would nominate 4 directors and 3 directors respectively. Therefore, the Group obtained control over Daba Power Company and consolidated the financial statements of Daba Power Company. Starting from 1 January 2015, the another shareholder and the Group would nominate 4 directors and 3 directors respectively. Accordingly, the Group lost control but maintains significant influence over Daba Power Company.

On 31 March 2015, the Group disposed of 69.78% interest in Chongqing Luozitang Hydropower Company Limited (“ Luozitang Hydropower Company ”).

Net assets at the date of disposals were as follows:

Daba Power Company RMB’000	Luozitang Hydropower Company RMB’000	Total RMB’000

3,534,114	82	3,534,196
81,739	–	81,739
287,090	–	287,090
4,661	–	4,661
26,985	90	27,075
(2,565,500)	–	(2,565,500)
(99,138)	–	(99,138)
(386,498)	(148)	(386,646)
(5,901)	(2)	(5,903)
(145,000)	–	(145,000)
(397,208)	–	(397,208)

335,344	22	335,366
(167,672)	(7)	(167,679)
(167,672)	–	(167,672)
–	452	452

–	467	467

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Daba Power Company RMB’000	Luozitang Hydropower Company RMB’000	Total RMB’000


–	467	467
(26,985)	(90)	(27,075)

(26,985)	377	(26,608)

(c) Capital withdrawal from non-controlling interests

During the year, the non-controlling shareholders of the Group’s interests in a 60.61% subsidiary withdrew all their capital resulting in an increase in the Group’s interest in that subsidiary to 100%. The effect of the capital withdrawal on the equity attributable to the owners of the Company is as follows:

Carrying amount of non-controlling interests decreased Capital withdrawal from non-controlling interests Gain on capital withdrawal recognised directly in equity	RMB’000

	146,796
	(69,400)

	77,396

(d) Material non-cash transactions

Additions to property, plant and equipment during the year of RMB650,000 thousand (2014: RMB2,402,773 thousand) were financed by finance leases.

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APPENDIX IIA

45. Financial guarantees

The Group issues financial guarantee contracts to its associates, joint ventures and other equity investee for their borrowings from financial institutions for business developments that transfer significant insurance risk. The risk under any one financial guarantee contract is the possibility that the insured event (default of a specified debtor) occurs and the uncertainty of the amount of the resulting claims. By the nature of such financial guarantee contracts, this risk is predictable.

Experience shows credit risks from specified debtors are relatively remote. The Group maintains a close watch on the financial position and liquidity of the associates, joint ventures and other equity investee for which financial guarantees have been granted in order to mitigate such risks. The Group takes all reasonable steps to ensure that it has appropriate information regarding any claim exposure. Details of financial guarantee contracts issued by the Group to the above-mentioned parties at the end of the reporting period are as follows:

Associates Joint ventures Other equity investee	2015 RMB’000 881,181 241,032 – 1,122,213	2014 RMB’000 716,040 379,597 12,000
		1,107,637

Based on historical experience, no claims have been made against the Group since the date of granting of the above financial guarantees.

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APPENDIX IIA

46. Capital commitments

Capital commitments contracted for at the end of the reporting period but not yet incurred are as follows:

Property, plant and equipment Equity investment Share of capital commitments of joint ventures	2015 RMB’000 19,036,316 – 908,483 19,944,799	2014 RMB’000 8,352,953 45,223 1,958,664
		10,356,840

47. Lease commitments

At 31 December 2015 the total future minimum lease payments under non-cancellable operating leases are payable as follows:

Within one year In the second to fifth years inclusive After five years	2015 RMB’000 41,893 46,757 13,868 102,518	2014 RMB’000 49,113 39,940 18,363
		107,416

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APPENDIX IIA

48. Related party transactions

In addition to those related party transactions and balances disclosed elsewhere in the consolidated financial statements, the Group had the following significant transactions and balances with its related parties during the year:

(a) Significant transactions with related parties

(i) Significant transactions with China Datang and its subsidiaries other than the Group (collectively referred to as “ China Datang Group ”) and associates and joint ventures of the Group and their respective subsidiaries

	2015	2014
	RMB’000	RMB’000
China Datang Group
Clean development mechanism income	10,575	–
Sales of coal	–	32,967
Sales of desulfurisation materials	182	4,083
Sales of desulfurisation and denitrification
assets_(i)_	2,019,992	–
Alternative power generation income_(ii)_	115,242	128,259
Provision of repairs and maintenance services	9,339	24,050
Provision of desulfurisation and
denitrification services	19,813	–
Provision of technical support services	2,221	–
Purchase of indicators of small-capacity
generating units_(iii)_	332,223	–
Provision of project management services	24,184	–
Provision of property management services	79	–
Purchases of materials and equipment_(iv)_	744,944	635,768
Purchases of fuel	29,157	46,365
Receipt of construction services	–	61,070
Receipt of construction tendering agency
services	–	1,510
Receipt of construction consulting services	41,052	26,624
Operating lease expenses for buildings and
facilities	22,228	22,228
Receipt of repairs and maintenance services	12,240	8,950
Receipt of desulfurisation and denitrification
and technological transformation services
(v)	1,474,030	1,221,129
Receipt of construction supervision services	–	8,782
Receipt of technical supervision services_(ii)_	44,878	–
Receipt of technical support services	20,052	4,508

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

	2015	2014
	RMB’000	RMB’000
China Datang Group
Receipt of management services	23,524	3,488
Receipt of finance lease services_(ii)_	350,000	–
Drawdown of loans	–	43,600
Interest expense on loans	29,799	27,451
Increase in entrusted loans	–	10,000
Interest income on entrusted loans	413	647
Provision of agency and custody services	15,807	15,563
Clean development mechanism expenses	2,263	13,865
Provision of heat supply services	–	113
Provision of training services	–	6
Rental income	–	597
Associates of the Group
Receipt of technical support services	43,503	39,185
Receipt of finance lease services_(ii)_	3,760,000	1,397,286
Rental income	615	825
Drawdown of loans	11,649,500	7,910,000
Interest expense on loans_(vi)_	328,625	302,675
Interest income on deposits_(ii)_	61,257	44,183
Increase in entrusted loans	19,810	150,000
Interest income on entrusted loans	11,847	34,427
A subsidiary of an associate of the Group
Purchases of fuel	137,489	245,267
Joint ventures of the Group
Purchases of fuel	191,730	360,304
Increase in entrusted loans	–	876,600
Interest income on entrusted loans	19,098	41,451

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

During the year, China Datang injected capital to two subsidiaries (2014: one subsidiary) of the Company totalled RMB747,880 thousand (2014: RMB474,680 thousand).

During the year, China Datang injected capital to an associate of the Company totalled RMB1,561,069 thousand (iii) (2014: nil).

During the year, the Company injected capital to two (2014: four) of its associates which are the subsidiaries of China Datang totalled RMB184,341 thousand (2014: RMB377,948 thousand (vii), of which RMB132,088 thousand represented capital injected to an associate by transferring all its 24% equity interest in an associate, CNNC Liaoning Nuclear Power Co., Ltd. to that associate with a gain of RMB7,633 thousand).

During the year, the Company set up a subsidiary with China Datang for a capital injection of RMB20,500 thousand and RMB18,090 thousand respectively.

(ii) Financial guarantees and financing facilities with China Datang Group and associates and joint ventures of the Group

	2015	2014
	RMB’000	RMB’000
China Datang Group
Long-term loans of the Group guaranteed
by China Datang	4,859,737	5,345,970
Long-term bonds of the Group guaranteed
by China Datang	12,000,000	12,000,000
Associates of the Group
Long-term loans of the associates guaranteed
by the Company	881,181	716,040
Integrated credit facilities provided by an
associate	24,000,000	24,000,000
Joint ventures of the Group
Long-term loans of joint ventures guaranteed
by the Company	241,032	379,597

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APPENDIX IIA

(iii) Significant transactions with government-related entities

Government-related entities, other than entities under China Datang which is a stateowned enterprise and its subsidiaries, directly or indirectly controlled by the Central People’s Government of the PRC (“ Government-Related Entities ”) are also regarded as related parties of the Group.

For the purpose of the related party transactions disclosure, the Group has established procedures for determination, to the extent possible, of the identification of the ownership structure of its customers and suppliers as to whether they are GovernmentRelated Entities to ensure the adequacy of disclosure for all material related party transactions given that many Government-Related Entities have multi-layered corporate structures and the ownership structures change over time as a result of transfers and privatisation programs.

During the years ended 31 December 2015 and 2014, the Group sold substantially all of its electricity to local government-related power grid companies. Please refer the details of information of power generation revenue to major power grid companies to note 10 to the consolidated financial statements. The Group maintained most of its bank deposits in government-related financial institutions while lenders of most of the Group’s loans are also government-related financial institutions, associated with the respective interest income or interest expense incurred.

During the years ended 31 December 2015 and 2014, other collectively significant transactions with Government-Related Entities also included purchases of fuel and property, plant and equipment.

(iv) Compensation to key management personnel of the Group

Basic salaries and allowances Bonus Retirement benefits Other benefits	2015 RMB’000 3,679 2,841 543 1,190 8,253	2014 RMB’000 4,186 2,610 575 1,273
		8,644

Further details of directors’ and supervisors’ remunerations are included in note 14 to the consolidated financial statements.

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APPENDIX IIA

(b) Significant balances with related parties

(i) Significant balances with China Datang Group and associates and joint ventures of the Group and their respective subsidiaries

	2015	2014
	RMB’000	RMB’000
China Datang Group
Deposits paid for property, plant and
equipment (included in property, plant and
equipment)	303,888	245,473
Accounts receivables	65,054	31,109
Prepayments and other receivables	132,372	60,953
Accounts payables and accrued liabilities	2,108,441	1,392,799
Long-term loans (including current portion)	794,600	794,600
Short-term entrusted loans	–	10,000
Other non-current liabilities
(including current portion)	351,615	–
Associates of the Group
Long-term entrusted loans
(including current portion)	121,778	435,889
Prepayments and other receivables	23	23
Short-term loans	2,976,000	1,855,000
Accounts payables and accrued liabilities	625,553	222,896
Long-term loans (including current portion)	2,956,300	3,843,800
Other non-current liabilities
(including current portion)	6,253,177	5,042,227
A subsidiary of an associate of the Group
Accounts payables and accrued liabilities	10,962	32,609
Joint ventures of the Group
Short-term entrusted loans	–	803,170

Except for long-term loans, short-term loans, other non-current liabilities, long-term entrusted loans and short-term entrusted loans stated above, all the above balances are unsecured, interest-free and due on demand.

Terms of long-term loans, short-term loans, other non-current liabilities, long-term entrusted loans and short-term entrusted loans are described in notes 35, 42, 40, 25 and 30 respectively to the consolidated financial statements.

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APPENDIX IIA

(ii) Significant balances with Government-Related Entities

At 31 December 2015, the long-term loans (including current portion) and short-term loans payable to Government-Related Entities included in long-term loans (including current portion) and short-term loans amounted to RMB123,723,266 thousand (2014: RMB89,381,997 thousand) and RMB11,807,757 thousand (2014: RMB11,631,268 thousand) respectively.

The balances with Government-Related Entities also included substantially all the accounts receivables of local government-related power grid companies, most of the bank deposits which placed in government-related financial institutions as well as accounts payables and accrued liabilities arising from the purchases of coal and property, plant and equipment. These balances are unsecured, interest-free and due within 12 months.

Notes:

(i) Certain transactions totalled RMB2,013,733 thousand (2014: nil) constitute connected transactions under the Listing Rules, details of which are included in the section headed “Connected transactions” of the Report of the Directors.
(ii) These transactions constitute continuing connected transactions under the Listing Rules, details of which are included in the section headed “Connected transactions” of the Report of the Directors.
(iii) These transactions constitute connected transactions under the Listing Rules, details of which are included in the section headed “Connected transactions” of the Report of the Directors.
(iv) Certain transactions totalled RMB628,243 thousand (2014: RMB615,212 thousand) and nil (2014: RMB2,470 thousand) constitute continuing connected transactions and connected transactions respectively under the Listing Rules, details of which are included in the section headed “Connected transactions” of the Report of the Directors.
(v) Certain transactions totalled RMB852,222 thousand (2014: RMB367,311 thousand) and RMB549,123 thousand (2014: RMB652,217 thousand) constitute continuing connected transactions and connected transactions respectively under the Listing Rules, details of which are included in the section headed “Connected transactions” of the Report of the Directors.
(vi) Certain transactions totalled RMB326,815 thousand (2014: RMB300,728 thousand) constitute continuing connected transactions under the Listing Rules, details of which are included in the section headed “Connected transactions” of the Report of the Directors.
(vii) These transactions constitute connected transactions under the Listing Rules.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

49. Principal subsidiaries

Particulars of the principal subsidiaries as at 31 December 2015 are as follows:

(a) Subsidiaries acquired from business combination under common control

	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
Liaoning Datang International	PRC	1,716,420	53.85%	–	Wind power
Renewable Power Company					generation
Limited (“Liaoning Renewable
Power Company”)
Liaoning Datang International	PRC	899,680	–	100%	Wind power
Changtu Wind Power					generation
Company Limited
Datang Hulunbei’er Fertilizer	PRC	548,200	–	100%	Production and
Company Limited					sales of chemical
					materials
Datang Zhangzhou Wind Power	PRC	217,590	–	100%	Wind power
Company Limited					generation
Tangshan Jibei Electricity Overhaul	PRC	15,524	–	100%	Electrical equipment
Company Limited					overhaul

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

(b) Subsidiaries acquired from business combination other than under common control and obtained through other methods

	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
		unless otherwise stated
Tianjin Datang International	PRC	831,250	75%	–	Power generation
Panshan Power Generation
Company Limited (“Panshan
Power Company”)
Inner Mongolia Datang	PRC	1,714,020	60%	–	Power generation
International Tuoketuo Power
Generation Company Limited
(“Tuoketuo Power Company”)
Shanxi Datang International	PRC	749,000	60%	–	Power generation
Shentou Power Generation
Company Limited (“Shentou
Power Company”)
Shanxi Datang International	PRC	690,000	100%	–	Power generation
Yungang Thermal Power					and heat supply
Company Limited
Gansu Datang International	PRC	275,500	55%	–	Power generation
Liancheng Power Generation
Company Limited
Hebei Datang International	PRC	380,264	80%	–	Power generation
Tangshan Thermal Power					and heat supply
Company Limited
Jiangsu Datang International	PRC	1,050,182	55%	–	Power generation
Lvsigang Power Generation
Company Limited (“Lvsigang
Power Company”)
Guangdong Datang International	PRC	559,981	52.5%	–	Power generation
Chaozhou Power Generation
Company Limited (“Chaozhou
Power Company”)
Fujian Datang International Ningde	PRC	825,090	51%	–	Power generation
Power Generation Company
Limited (“Ningde Power
Company”)

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
		unless otherwise stated
Chongqing Datang International	PRC	1,098,170	40%	24%	Hydropower
Pengshui Hydropower					generation
Development Company Limited
(“Pengshui Hydropower
Company”)
Chongqing Datang International	PRC	1,399,560	51%	24.5%	Hydropower
Wulong Hydropower					generation
Development Company Limited
(“Wulong Hydropower
Company”)
Datang International	Hong Kong	USD102,900,000	100%	–	Import of power
(Hong Kong) Limited					related fuel
Qinghai Datang International	PRC	380,000	–	90%	Hydropower
Zhiganglaka Hydropower					generation
Development Company Limited
(“Zhiganglaka Company”)
Hebei Datang International	PRC	450,000	70%	–	Power generation
Wangtan Power Generation
Company Limited (“Wangtan
Power Company”)
Chongqing Datang International	PRC	585,910	70%	–	Power generation
Shizhu Power Generation
Company Limited
Sichuan Datang International	PRC	1,625,063	52.5%	–	Hydropower
Ganzi Hydropower Development					generation
Company Limited (“Ganzi
Hydropower Company”)
Beijing Datang Fuel Company	PRC	1,009,650	51%	–	Coal trading
Limited (“Beijing Datang Fuel”)
Zhejiang Datang Wushashan	PRC	1,700,000	51%	–	Power generation
Power Generation Company
Limited (“Wushashan Power
Company”)
Inner Mongolia Datang	PRC	1,666,050	60%	–	Coal mining
International Xilinhaote Mining
Company Limited (“Xilinhaote
Mining Company”)

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
		unless otherwise stated
Inner Mongolia Datang	PRC	749,900	40%	–	Power generation
International Tuoketuo II Power
Generation Company Limited
(“Tuoketuo II
Power Company”)(i)
Hebei Datang International	PRC	458,000	100%	–	Power generation
Zhangjiakou Thermal Power					and heat supply
Generation Company Limited
Jiangxi Datang International	PRC	1,811,616	51%	–	Power generation
Fuzhou Power Generation
Company Limited (“Fuzhou
Power Company”)
Liaoning Datang International	PRC	368,000	100%	–	Power generation
Jinzhou Thermal Power					and heat supply
Generation Limited
Chongqing Datang International	PRC	93,880	100%	–	Wind power
Wulongxingshun Wind Power					generation
Company Limited
Hebei Datang International Fengrun	PRC	393,070	84%	–	Power generation
Thermal Power Company Limited					and heat supply
Datang Energy and Chemical	PRC	9,733,250	100%	–	Energy and
Company Limited					chemical
					development
Datang Fuxin Energy and Chemical	PRC	30,000	–	100%	Maintenance of
Engineering Company Limited					chemical power
					equipment,
					construction
					and mechanical
					subcontracting

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
		unless otherwise stated
Datang Energy and Chemical	PRC	50,000	–	100%	Wholesale
Marketing Company Limited					and retail
					of chemical
					products
Datang International Chemical	PRC	50,000	–	100%	Coal chemistry
Technology Research Institute					related
Company Limited					consultation
					services
Datang Inner Mongolia Erdos	PRC	188,000	100%	–	Silicon and
Silicon and Aluminium					aluminium
Technology Company Limited					smelting
Datang Inner Mongolia Duolun	PRC	4,050,000	–	60%	Coal chemical
Coal Chemical Company Limited					production
(“Duolun Coal Chemical
Company”)
Inner Mongolia Datang	PRC	258,321	40.35%	–	Production
International Renewable Energy					and sale of
Resource Development Company					alumina
Limited (“Renewable Energy
Resource Company”)(ii)
Inner Mongolia Datang	PRC	28,520	–	51%	Hydropower
International Duolun Hydropower					generation
Multiple Development Company					and
Limited					water supply
Liaoning Datang International	PRC	2,946,200	–	90%	Coal-based
Fuxin Coal-based Gas Company					natural gas
Limited (“Fuxin Coal-based Gas					generation
Company”)
Inner Mongolia Datang	PRC	5,090,974	–	51%	Coal-based
International Keshiketeng Qi					natural gas
Coal-based Gas Company					generation
Limited (“Keshiketeng Qi Coal-
based Gas Company”)

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
		unless otherwise stated
Inner Mongolia Datang	PRC	212,700	100%	–	Brown coal
International Xilinhaote Brown					processing
Coal Integrated Development
Company Limited
Inner Mongolia Datang	PRC	10,000	–	90%	Hydropower
International Keshiketeng					generation
Dashimen Hydropower					and water
Development Company Limited					supply
Fuxin Qingyuan Sewage Disposal	PRC	1,300	–	80%	Sewage
Company Limited					disposal
Duolun County Huachuan Zhuoyue	PRC	7,000	–	100%	Production
Plastic Products Company					of plastic
Limited					products
Jiangsu Datang Shipping Company	PRC	264,900	98.11%	–	Cargo shipping
Limited
Inner Mongolia Datang	PRC	1,190,020	51%	–	Wind power
International Renewable Power					generation
Company Limited (“Inner
Mongolia Renewable Power
Company”)
Fujian Datang International	PRC	840,530	53.64%	–	Wind power
Renewable Power Company					generation
Limited (“Fujian Renewable
Power Company”)
Shanxi Datang International Linfen	PRC	282,550	80%	–	Power
Thermal Power Company Limited					generation
					and heat
					supply
Liaoning Datang International	PRC	452,400	–	100%	Wind power
Fuxin Wind Power Company					generation
Limited
Tibet Datang International	PRC	310,000	100%	–	Hydropower
Nujiang Upstream Hydropower					generation
Development Company Limited
Datang International Nuclear Power	PRC	237,746	100%	–	Nuclear power
Company Limited					generation

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
		unless otherwise stated
Datang Tongzhou Technology	PRC	100,000	100%	–	Sales of coal ash
Company Limited					and integrated
					application of
					solid wastes
Beijing Tongzhou High Voltage	PRC	1,600	–	100%	Sales of ash
Environmental Protection
Technology Company Limited
Ningbo Datang Tongzhou	PRC	4,000	–	100%	Sales of ash
Environmental Protection
Technology Company
Limited (formerly known as
“Zhejiang Datang Tongzhou
Environmental Protection
Technology Company
Limited”)
Tianjin Datang Tongzhou Tongxin	PRC	4,000	–	100%	Sales of ash
Technology Company Limited
Fujian Datang Tongzhou Yicai	PRC	5,000	–	75%	Sales of ash and
Environmental Protection					comprehensive
Technology Company Limited					utilisation of
					solid emissions
Beijing Tongzhou Xinyuan	PRC	2,000	–	70%	Sales of ash and
Building Materials Technological					comprehensive
Development Company Limited					utilisation of
					solid emissions
Nantong Tongzhou Datong	PRC	1,000	–	60%	Cargo agent and
Logistics Company Limited					sales of ash
Tangshan Haigang Datang	PRC	15,000	–	52%	Trading of
Tongzhou Construction					construction
Materials Company Limited					materials

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
		unless otherwise stated
Yunnan Datang International	PRC	2,899,888	60.91%	–	Power plant
Electric Power Company Limited					construction
(“Yunnan Electric Power					and
Company”)					operations
Yunnan Datang International	PRC	414,550	–	70%	Power
Honghe Power Generation					generation
Company Limited
Yunnan Datang International	PRC	173,370	–	51%	Hydropower
Nalan Hydropower Development					generation
Company Limited
Yunnan Datang International	PRC	598,000	–	70%	Hydropower
Lixianjiang Hydropower					generation
Development Company Limited
Yunnan Datang International	PRC	513,090	–	60%	Hydropower
Wenshan Hydropower					generation
Development
Company Limited
Yunnan Datang International	PRC	2,000	–	70%	Hydropower
Hengjiang Hydropower					generation
Development
Company Limited
Yunnan Datang International	PRC	89,044	–	70%	Hydropower
Biyuhe Hydropower					development
Development Company Limited
Yunnan Datang International	PRC	126,890	–	100%	Hydropower
Mengyejiang Hydropower					development
Development Company Limited
Yunnan Datang International Deqin	PRC	66,591	–	70%	Hydropower
Hydropower Development					plant
Company Limited					construction
					and
					operations
Yunnan Datang International	PRC	83,000	–	100%	Solar power
Renewable Power Company					generation
Limited
Yunnan Datang International	PRC	43,000	–	100%	Solar power
Binchuan Renewable Power					generation
Company Limited

– 257 –

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APPENDIX IIA

	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
		unless otherwise stated
Hebei Datang International	PRC	1,394,166	51.94%	–	Wind power
Renewable Power Company					generation
Limited (“Hebei Renewable
Power Company”)
Liaoning Datang International	PRC	40,000	100%	–	Power
Wafangdian Thermal Power					generation
Company Limited					and heat
					supply
Inner Mongolia Datang	PRC	133,910	100%	–	Water
International Haibowan Water					conservancy
Conservancy Hub Development					hub
Company Limited					construction
					and
					management
Inner Mongolia Datang	PRC	60,000	51%	–	Power
International Hohhot Thermal					generation
Power Generation Company					and heat
Limited					supply
Jiangxi Datang International Xinyu	PRC	633,910	100%	–	Power
Power Generation Company					generation
Limited
Inner Mongolia Datang	PRC	60,000	52%	–	Coal mining
International Zhunge’er Mining
Company Limited (“Zhunge’er
Mining Company”)
Hebei Datang International Qian’an	PRC	214,914	93.33%	–	Power
Thermal Power Company Limited					generation
Yuneng (Group) Company Limited	PRC	1,800,238	100%	–	Hydropower
					generation
Qinghai Datang International	PRC	79,970	100%	–	Solar power
Golmud Photovoltaic Power					generation
Generation Company Limited
Inner Mongolia Baoli Coal	PRC	50,000	70%	–	Coal mining
Company Limited

– 258 –

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	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
		unless otherwise stated
Sichuan Jinkang Electricity	PRC	195,000	54.44%	–	Hydropower
Development Company Limited					generation
(“Sichuan Jinkang Company”)
Shanxi Datang International	PRC	328,110	100%	–	Wind power
Renewable Power Company					generation
Limited
Zhejiang Datang International	PRC	261,740	100%	–	Power
Jiangshan Xincheng Thermal					generation
Power Company Limited					and heat
					supply
Zhejiang Datang International	PRC	600,000	90%	–	Power
Shaoxing Jiangbin Thermal					generation
Power Company Limited					and heat
					supply
Erdos Ruidefeng Mining	PRC	237,220	100%	–	Wholesale of
Company Limited					coal
Jiangxi Datang International	PRC	Registered capital:	51%	–	Power plant
Yichun Coal and Electricity		10,000;			construction
Company Limited		paid-up capital:			and
		2,000			operations
Jiangxi Datang International	PRC	302,330	100%	–	Wind power
Renewable Power Company					generation
Limited
Shenzhen Datang Baochang Gas	PRC	USD25,000,000	51%	–	Natural gas
Power Generation Company					power
Limited (“Baochang Gas					generation
Company”)
Guangdong Datang International	PRC	20,000	100%	–	Power
Zhaoqing Thermal Power					generation
Company Limited					and heat
					supply

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APPENDIX IIA

	Place of
	incorporation/
	registration	Registered and	Percentage of		Principal
Name	and operation	paid-up capital	equity interest		activities
		RMB’000	Direct	Indirect
		unless otherwise stated
Guangdong Datang International	PRC	35,000	100%	–	Wind power
Renewable Power Company					generation
Limited
Qinghai Datang International	PRC	95,680	100%	–	Solar power
Renewable Power Company					generation
Limited
Ningxia Datang International	PRC	227,000	100%	–	Wind power
Renewable Power Company					generation
Limited
Sichuan Datang International	PRC	20,000	100%	–	Solar power
Renewable Power Company					generation
Limited
Liaoning Datang International	PRC	10,000	100%	–	Power generation
Shendong Thermal Power					and heat supply
Company Limited
Guangdong Datang	PRC	Registered capital:	34%	–	Power plant
International Leizhou Power		100,000;			construction
Generation Company Limited		paid-up capital:			and operation
(“Leizhou Power Company”)(iii)		74,590
Inner Mongolia Datang	PRC	Registered capital:	100%	–	Power generation
International Xilinhaote Power		10,000;
Generation Company Limited		paid-up capital:
		29,760
Hebei Datang International	PRC	Registered capital:	100%	–	Power generation
Tangshan Beijiao Thermal Power		20,000;			and heat supply
Generation Company Limited		paid-up capital:
		37,910

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APPENDIX IIA

All the above subsidiaries are limited liability companies except that Zhiganglaka Company is also a foreign investment enterprise while Baochang Gas Company and Fuzhou Power Company are also sino foreign equity joint ventures.

The above list contains the particulars of subsidiaries which principally affected the results, assets or liabilities of the Group.

Notes:

(i) On 6 September 2006, the Company entered into an agreement with China Datang, one of the shareholders of Tuoketuo II Power Company, which holds 20% equity interest in Tuoketuo II Power Company. Pursuant to this agreement, the shareholder representative and directors appointed from China Datang will act in concert with that of the Company’s when exercising voting rights in shareholders’ and directors’ meetings of Tuoketuo II Power Company. Therefore, the Company obtained control over Tuoketuo II Power Company and accounted for it as a subsidiary onwards.
(ii) The Company entered into an agreement with one of the shareholders of Renewable Energy Resource Company, which holds 10.65% equity interest of this subsidiary in 2007. Pursuant to this agreement, the shareholder representative and directors appointed from this shareholder will act in concert with that of the Company’s when exercising voting rights in shareholders’ and directors’ meetings of Renewable Energy Resource Company. Therefore, the Company obtained control over Renewable Energy Resource Company and accounted for it as a subsidiary onwards.
(iii) The Company entered into an agreement with China Datang, one of the shareholders of Leizhou Power Company, which holds 30% equity interest in Leizhou Power Company in 2015. Pursuant to this agreement, the shareholder representative and directors appointed from China Datang will act in concert with that of the Company’s when exercising voting rights in shareholders’ and directors’ meetings of Leizhou Power Company. Therefore, the Company obtained control over Leizhou Power Company and accounted for it as a subsidiary onwards.

– 261 –

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APPENDIX IIA

The following table shows information on the subsidiaries that have non-controlling interests (“ NCI ”) material to the Group. The summarised financial information represents amounts before inter-company eliminations.

Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Accumulated NCI Year ended 31 December: Revenue Profit Total comprehensive income Profit allocated to NCI Dividends paid to NCI Net cash generated from operating activities Net cash used in investing activities Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents	Liaoning Renewable Power Company 2015 2014 PRC/PRC 46.15%/46.15% 46.15%/46.15% RMB’000 RMB’000 3,564,742 3,597,464 438,518 594,132 (1,219,081) (1,385,375) (464,552) (604,764) 2,319,627 2,201,457 1,070,508 1,015,972 465,209 416,312 118,170 68,282 118,170 68,282 54,536 31,512 – – 546,908 434,412 (269,299) (162,611) (286,117) (262,222) (8,508) 9,579	Panshan Power Company 2015 2014 PRC/PRC 25%/25% 25%/25% RMB’000 RMB’000 1,426,131 1,794,367 535,948 360,291 – (176,000) (365,676) (370,215) 1,596,403 1,608,443 399,101 402,110 1,784,627 2,218,367 454,135 517,972 454,135 517,972 113,535 129,493 (116,544) (77,020) 715,690 850,781 (70,995) (105,509) (646,410) (746,478) (1,715) (1,206)

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Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Accumulated NCI Year ended 31 December: Revenue Profit Total comprehensive income Profit allocated to NCI Dividends paid to NCI Net cash generated from operating activities Net cash generated from/ (used in) investing activities Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents	Tuoketuo Power Company 2015 2014 PRC/PRC 40%/40% 40%/40% RMB’000 RMB’000 6,656,003 10,019,468 2,370,292 1,148,944 (3,156,621) (4,783,452) (1,856,356) (2,358,720) 4,013,318 4,026,240 1,604,480 1,609,998 5,316,543 5,953,630 1,465,394 1,489,265 1,465,394 1,489,265 585,809 595,671 (591,327) (601,813) 2,547,383 2,511,234 1,197,091 (316,816) (3,617,479) (2,052,466) 126,995 141,952	Shentou Power Company 2015 2014 PRC/PRC 40%/40% 40%/40% RMB’000 RMB’000 1,928,777 2,351,552 176,196 264,842 (154,515) (650,818) (739,256) (717,728) 1,211,202 1,247,848 484,480 499,139 1,422,382 1,811,416 319,325 395,524 319,325 395,524 127,730 158,210 (142,389) (110,296) 584,416 730,230 164,023 (149,118) (748,482) (581,097) (43) 15

– 263 –

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APPENDIX IIA

Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Accumulated NCI Year ended 31 December: Revenue Profit Total comprehensive income Profit allocated to NCI Dividends paid to NCI Net cash generated from operating activities Net cash generated from/ (used in) investing activities Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents	Lvsigang Power Company 2015 2014 PRC/PRC 45%/45% 45%/45% RMB’000 RMB’000 7,411,738 8,006,658 906,677 1,202,718 (4,401,314) (5,001,438) (2,159,365) (2,567,144) 1,757,736 1,640,794 797,599 744,810 4,320,112 4,764,137 592,188 527,240 592,188 527,240 266,484 237,259 (213,861) (251,858) 1,370,691 1,873,276 60,513 (192,421) (1,502,114) (1,605,166) (70,910) 75,689	Chaozhou Power Company 2015 2014 PRC/PRC 47.5%/47.5% 47.5%/47.5% RMB’000 RMB’000 7,779,468 8,596,704 871,204 1,631,719 (2,171,062) (3,243,898) (1,730,688) (3,467,405) 4,748,922 3,517,120 2,203,915 1,618,809 5,016,486 6,059,366 1,231,802 1,412,307 1,231,802 1,412,307 585,106 670,846 – (626,750) 1,765,668 2,348,673 677,442 (280,355) (2,442,987) (2,068,369) 123 (51)

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Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Accumulated NCI Year ended 31 December: Revenue Profit Total comprehensive income Profit allocated to NCI Dividends paid to NCI Net cash generated from operating activities Net cash (used in)/generated from investing activities Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents	Ningde Power Company 2015 2014 PRC/PRC 49%/49% 49%/49% RMB’000 RMB’000 6,309,176 6,924,296 746,279 969,382 (3,269,928) (4,215,755) (2,476,035) (2,221,167) 1,309,492 1,456,756 684,678 714,103 3,381,943 4,649,260 415,210 642,374 415,210 642,374 203,453 314,763 (232,878) – 1,719,264 1,567,838 (101,732) (210,470) (1,467,357) (1,344,979) 150,175 12,389	Pengshui Hydropower Company 2015 2014 PRC/PRC 36%/36% 36%/36% RMB’000 RMB’000 11,114,376 11,740,507 264,539 230,241 (8,754,656) (9,479,748) (787,389) (729,507) 1,836,870 1,761,493 662,126 634,990 1,614,969 1,615,278 545,920 522,276 545,920 522,276 196,532 188,019 (169,396) (25,457) 1,381,708 1,594,717 46,129 (274,923) (1,495,680) (1,247,842) (67,843) 71,952

– 265 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Accumulated NCI Year ended 31 December: Revenue Profit Total comprehensive income Profit allocated to NCI Dividends paid to NCI Net cash generated from operating activities Net cash (used in)/generated from investing activities Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents	Wulong Hydropower Company 2015 2014 PRC/PRC 24.5%/24.5% 24.5%/24.5% RMB’000 RMB’000 6,582,088 6,532,912 89,149 93,728 (4,349,270) (4,349,200) (528,856) (506,707) 1,793,111 1,770,733 439,598 437,158 796,853 795,797 223,623 237,268 223,623 237,268 54,787 58,130 (52,348) (20,224) 604,774 583,906 (100,571) (266,205) (516,593) (304,885) (12,390) 12,816	Wangtan Power Company 2015 2014 PRC/PRC 30%/30% 30%/30% RMB’000 RMB’000 2,673,167 2,883,628 222,946 263,762 (898,334) (1,037,692) (1,098,984) (1,265,632) 898,795 844,066 268,811 252,391 1,805,817 2,185,877 387,098 366,927 387,098 366,927 116,130 110,078 (99,710) (49,396) 836,195 928,001 61,671 (134,521) (871,352) (793,060) 26,514 420

– 266 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Accumulated NCI Year ended 31 December: Revenue Profit/(loss) Total comprehensive income Profit/(loss) allocated to NCI Net cash generated from operating activities Net cash (used in)/generated from investing activities Net cash generated from/ (used in) financing activities Net increase/(decrease) in cash and cash equivalents	Ganzi Hydropower Company 2015 2014 PRC/PRC 47.5%/47.5% 47.5%/47.5% RMB’000 RMB’000 28,195,104 22,467,778 332,140 35,921 (20,929,568) (16,712,261) (2,669,956) (2,337,228) 4,927,720 3,454,210 2,339,380 1,633,866 153,663 5,661 16,030 (2,660) 16,030 (2,660) 7,614 (1,264) 83,449 1,426 (3,656,949) (4,917,575) 3,764,359 4,577,307 190,859 (338,842)	Beijing Datang Fuel 2015 2014 PRC/PRC 49%/49% 49%/49% RMB’000 RMB’000 65,352 264,615 4,441,131 6,932,904 (328,589) – (3,902,691) (5,715,752) 275,203 1,481,767 97,889 691,047 11,884,341 18,210,265 (1,206,564) (413,738) (1,206,564) (413,738) (593,158) (206,778) 279,535 85,950 754,076 (2,652) (1,228,457) 193,030 (194,846) 276,328

– 267 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets/(liabilities) Accumulated NCI Year ended 31 December: Revenue Profit/(loss) Total comprehensive income Profit/(loss) allocated to NCI Dividends paid to NCI Net cash generated from/ (used in) operating activities Net cash generated from/ (used in) investing activities Net cash (used in)/generated from financing activities Net (decrease)/increase in cash and cash equivalents	Wushashan Power Company 2015 2014 PRC/PRC 49%/49% 49%/49% RMB’000 RMB’000 5,237,675 5,638,447 688,793 767,654 (198,780) (509,164) (2,862,333) (3,278,504) 2,865,355 2,618,433 1,404,024 1,283,032 4,202,037 5,091,413 945,464 776,158 945,464 776,158 463,278 380,318 (342,286) (381,235) 1,637,510 1,725,039 19,289 (139,544) (1,659,906) (1,645,649) (3,107) (60,154)	Xilinhaote Mining Company 2015 2014 PRC/PRC 40%/40% 40%/40% RMB’000 RMB’000 12,983,400 12,994,738 1,862,556 1,306,263 (9,081,790) (9,702,962) (7,091,963) (5,192,124) (1,327,797) (594,085) (671,433) (373,844) 326,367 513,220 (721,468) (1,358,855) (721,468) (1,358,855) (285,346) (552,503) – (1,590) (1,015,837) (395,518) (450,723) (489,593) 1,614,607 939,323 148,047 54,212

– 268 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Accumulated NCI Year ended 31 December: Revenue Profit Total comprehensive income Profit allocated to NCI Dividends paid to NCI Net cash generated from operating activities Net cash used in investing activities Net cash (used in)/generated from financing activities Net (decrease)/increase in cash and cash equivalents	Tuoketuo II Power Company 2015 2014 PRC/PRC 60%/60% 60%/60% RMB’000 RMB’000 3,931,309 3,290,168 169,486 274,702 (1,891,000) (1,737,625) (683,705) (628,866) 1,526,090 1,198,379 915,654 722,621 1,786,096 2,045,985 532,466 510,672 532,466 510,672 319,480 306,403 (267,402) (262,483) 1,005,393 1,051,614 (936,647) (52,112) (69,583) (998,235) (837) 1,267	Fuzhou Power Company 2015 2014 PRC/PRC 49%/49% 49%/49% RMB’000 RMB’000 5,530,481 2,657,741 522,201 25,523 (2,146,000) (1,053,000) (1,965,065) (159,087) 1,941,617 1,471,177 951,392 720,876 – – – – – – – – – – – – (1,954,642) (1,531,597) 1,937,973 1,537,224 (16,669) 5,627

– 269 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net (liabilities)/assets Accumulated NCI Year ended 31 December: Revenue Profit/(loss) Total comprehensive income Profit/(loss) allocated to NCI Net cash (used in)/generated from operating activities Net cash used in investing activities Net cash generated from financing activities Net (decrease)/increase in cash and cash equivalents	Duolun Coal Chemical Company 2015 2014 PRC/PRC 40%/40% 40%/40% RMB’000 RMB’000 22,944,279 23,754,855 1,373,717 912,222 (13,556,316) (13,385,548) (15,874,140) (13,577,208) (5,112,460) (2,295,679) (2,043,209) (920,356) 981,909 1,117,587 (2,818,867) (4,866,973) (2,818,867) (4,866,973) (1,126,713) (1,944,894) (923,986) (1,458) (163,278) (168,614) 1,082,949 166,340 (4,315) (3,732)	Fuxin Coal-based Gas Company 2015 2014 PRC/PRC 10%/10% 10%/10% RMB’000 RMB’000 14,809,675 14,674,412 688,953 691,765 (7,214,506) (7,638,877) (6,544,182) (4,687,656) 1,739,940 3,039,644 173,994 303,964 152 139 (1,299,705) 106 (1,299,705) 106 (129,970) 10 913 141 (836,084) (1,040,282) 877,969 660,657 42,798 (379,484)

– 270 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Accumulated NCI Year ended 31 December: Revenue Profit/(loss) Total comprehensive income Profit/(loss) allocated to NCI Net cash generated from operating activities Net cash used in investing activities Net cash generated from/ (used in) financing activities Net increase/(decrease) in cash and cash equivalents	Keshiketeng Qi Coal-based Gas Company 2015 2014 PRC/PRC 49%/49% 49%/49% RMB’000 RMB’000 23,881,163 22,495,989 1,976,338 1,654,243 (579,018) (740,540) (20,097,135) (18,278,241) 5,181,348 5,131,451 2,537,081 2,514,411 338,921 – 49,897 (296) 49,897 (296) 24,446 (145) 150,329 – (832,587) (1,569,761) 717,886 1,619,660 35,628 49,899	Inner Mongolia Renewable Power Company 2015 2014 PRC/PRC 49%/49% 49%/49% RMB’000 RMB’000 2,440,997 2,461,588 172,998 225,886 (1,095,924) (1,097,544) (192,873) (321,196) 1,325,198 1,268,734 649,347 621,680 270,215 311,304 56,464 50,727 56,464 50,727 27,667 24,856 281,703 264,432 (163,927) (101,231) (121,265) (159,246) (3,489) 3,955

– 271 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Accumulated NCI Year ended 31 December: Revenue Profit/(loss) Total comprehensive income Profit/(loss) allocated to NCI Dividends paid to NCI Net cash generated from operating activities Net cash used in investing activities Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents	Fujian Renewable Power Company 2015 2014 PRC/PRC 46.36%/46.36% 46.36%/46.36% RMB’000 RMB’000 1,244,850 1,303,851 120,240 115,458 (397,200) (444,700) (103,911) (140,600) 863,979 834,009 400,541 386,646 172,824 162,184 29,971 12,479 29,971 12,479 13,895 5,785 – – 177,312 145,271 (30,370) (38,991) (102,997) (121,288) 43,945 (15,008)	Yunnan Electric Power Company 2015 2014 PRC/PRC 39.09%/39.09% 39.09%/39.09% RMB’000 RMB’000 15,146,977 15,143,717 700,087 442,868 (11,206,156) (10,163,464) (2,263,083) (2,736,438) 2,377,825 2,686,683 1,018,227 1,180,941 1,614,008 1,578,427 (308,369) (539,499) (308,369) (539,499) (162,225) (294,070) (489) (9,090) 662,014 900,139 (561,724) (527,508) (110,733) (381,267) (10,443) (8,636)

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Name Principal place of business/ country of incorporation % of ownership interests/ voting rights held by NCI At 31 December: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Accumulated NCI Year ended 31 December: Revenue Profit Total comprehensive income Profit allocated to NCI Net cash generated from/ (used in) operating activities Net cash (used in)/generated from investing activities Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents	Hebei Renewable Power Company 2015 2014 PRC/PRC 48.06%/48.06% 48.06%/48.06% RMB’000 RMB’000 3,442,880 3,576,134 392,773 433,995 (1,453,800) (1,536,890) (339,693) (510,267) 2,042,160 1,962,972 981,462 943,404 428,666 453,366 79,187 137,217 79,187 137,217 38,058 65,946 404,026 379,326 (87,658) (139,133) (306,477) (288,283) 9,891 (48,090)	Zhunge’er Mining Company 2015 2014 PRC/PRC 48%/48% 48%/48% RMB’000 RMB’000 964,687 955,084 216,810 219,760 (497,374) (497,374) (969) (1,074) 683,154 676,396 324,826 322,355 6 5 6,758 8,068 6,758 8,068 2,471 1,558 (2,544) (8,540) (339) 1,609 – – (2,883) (6,931)

– 273 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Name
Principal place of business/country of incorporation
% of ownership interests/voting rights held by NCI
At 31 December:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Accumulated NCI
Year ended 31 December:
Revenue
Profit
Total comprehensive income
Profit allocated to NCI
Dividends paid to NCI
Net cash generated from operating activities
Net cash used in investing activities
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents

Sichuan Jinkang Company
2015
2014
PRC/PRC
45.56%/45.56%
45.56%/45.56%
RMB’000
RMB’000
4,561,405
4,424,264
101,297
84,462
(2,382,404)
(2,433,234)
(599,350)
(414,992)
1,680,948
1,660,500
766,163
756,847
173,560
132,499
24,235
12,920
24,235
12,920
12,768
5,886
(19,785)
(24,562)
134,653
100,151
(168,970)
(453,872)
39,082
320,986
4,765
(32,735)

– 274 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

50. Events after the reporting period

The Company completed the issuance of “The First Tranche of Datang International Power Generation Co., Ltd.’s Super Short-term Debentures in 2016” (the “ First Tranche Super Short-term Debentures ”) on 25 February 2016. The issuance amount for the First Tranche Super Short-term Debentures was RMB3 billion with a maturity of 180 days. The unit nominal value is RMB100 and the issuance interest rate is at 2.63%. Bank of China Limited acts as the underwriter and bookkeeper for the First Tranche Super Short-term Debentures and Shanghai Pudong Development Bank Co., Ltd. acts as the joint lead underwriter for the First Tranche Super Short-term Debentures. The proceeds from the First Tranche Super Short-term Debentures will be used to replace part of the loans of the Company, adjust its debt structure and lower its financing costs.

The Company completed the issuance of “The Second Tranche of Datang International Power Generation Co., Ltd.’s Super Short-term Debentures in 2016” (the “ Second Tranche Super Short-term Debentures ”) on 15 March 2016. The issuance amount for the Second Tranche Super Short-term Debentures was RMB3 billion with a maturity of 178 days. The unit nominal value is RMB100 and the issuance interest rate is at 2.42%. China CITIC Bank Corporation Limited acts as the underwriter and bookkeeper for the Second Tranche Super Short-term Debentures and China Everbright Bank Company Limited acts as the joint lead underwriter for the Second Tranche Super Short-term Debentures. The proceeds from the Second Tranche Super Short-term Debentures will be used to replace part of the loans of the Company, adjust its debt structure and lower its financing costs.

On 7 July 2014, the Company entered into a reorganisation framework agreement with China Reform Holdings Corporation Limited for the proposed reorganisation of the Company’s coal-to-chemical business segment and related projects. On 29 March 2016, the Company and China Reform Holdings Corporation Limited entered into termination agreement of the reorganisation framework agreement. After the negotiation between both parties, stipulations under the reorganisation framework agreement shall no longer be carried out. After negotiation with China Datang, China Datang will take the lead in facilitating the reorganisation in relation to the Company’s coal-to-chemical business segment and related projects.

– 275 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

III. UNAUDITED INTERIM FINANCIAL STATEMENTS

Set out below is financial information of the Group as extracted from the published unaudited interim results announcement dated 29 August 2016.

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the six months ended 30 June 2016

Note
Operating revenue
4
Operating costs
Fuel for power and heat generation
Fuel for coal sales
Depreciation
Repairs and maintenance
Salaries and staff welfare
Local government surcharges
Others
Total operating costs
Operating profit
Shares of profits of associates
Shares of profits of joint ventures
Investment income
Other gains
Interest income
Finance costs
6
Profit before tax
Income tax expense
7
Profit for the period
8

Six months ended 30 June
2016
2015
RMB’000
RMB’000
(unaudited)
(unaudited)
29,198,539
31,014,420
(8,836,603)
(11,576,893)
(154,227)
(197,920)
(6,372,036)
(5,207,208)
(686,116)
(1,098,588)
(1,633,328)
(1,784,537)
(297,748)
(359,914)
(4,396,592)
(3,206,403)
(22,376,650)
(23,431,463)
6,821,889
7,582,957
99,974
416,105
180,072
102,693
86,299
29,609
–
112,004
25,589
38,432
(3,725,733)
(4,111,872)
3,488,090
4,169,928
(1,436,411)
(1,459,278)
2,051,679
2,710,650

– 276 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Note
Other comprehensive income:
Items that may be reclassified to profit or loss:
Fair value loss on available-for-sale financial assets
Share of other comprehensive income of associates
Exchange differences on translating foreign
operations
Income tax on items that may be reclassified
to profit or loss
Other comprehensive income for
the period, net of tax
Total comprehensive income for the period
Profit for the period attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income for
the period attributable to:
Owners of the Company
Non-controlling interests
Earnings per share
Basic and diluted
10

Six months ended 30 June
2016
2015
RMB’000
RMB’000
(unaudited)
(unaudited)
(43,997)
(26,456)
(19,479)
36,175
922
(812)
191
12,969
(62,363)
21,876
1,989,316
2,732,526
1,709,340
2,112,485
342,339
598,165
2,051,679
2,710,650
1,646,977
2,134,361
342,339
598,165
1,989,316
2,732,526
RMB
RMB
(unaudited)
(unaudited)
0.1284
0.1587

– 277 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Condensed Consolidated Statement of Financial Position

At 30 June 2016

Note ASSETS Non-current assets Property, plant and equipment 11 Investment properties Intangible assets Development costs Investments in associates Investments in joint ventures Available-for-sale financial assets Deferred housing benefits Long-term entrusted loans to an associate Deferred tax assets Other non-current assets Total non-current assets Current assets Inventories Accounts and notes receivables 12 Prepayments and other receivables Tax recoverable Current portion of other non-current assets Cash and cash equivalents and restricted deposits Total current assets TOTAL ASSETS	At 30 June 2016 RMB’000 (unaudited) 255,819,654 566,328 4,353,659 5 8,070,844 5,755,881 4,937,057 1,652 124,707 1,216,991 1,080,895 281,927,673 3,322,742 9,778,160 7,592,691 10,394 24,570 3,689,083 24,417,640 306,345,313	At 31 December 2015 RMB’000 (audited) 256,735,094 577,627 4,378,081 11 7,981,871 5,575,810 4,978,596 3,360 121,778 1,182,573 1,074,792 282,609,593 3,857,781 7,859,689 8,517,913 13,212 63,360 5,573,891 25,885,846 308,495,439

– 278 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Note EQUITY AND LIABILITIES Equity Equity attributable to owners of the Company Share capital 13 Reserves (Accumulated losses)/retained earnings Proposed dividends Others Non-controlling interests Total equity Non-current liabilities Long-term loans Long-term bonds Deferred income Deferred tax liabilities Provisions Other non-current liabilities Total non-current liabilities	At 30 June 2016 RMB’000 (unaudited) 13,310,038 31,479,443 – (107,509) 44,681,972 16,990,982 61,672,954 130,101,558 15,418,197 3,056,421 596,400 195,734 19,169,256 168,537,566	At 31 December 2015 RMB’000 (audited) 13,310,038 29,320,653 2,262,706 404,086 45,297,483 18,286,856 63,584,339 130,061,212 15,410,018 3,194,264 606,985 372,138 19,485,144 169,129,761

– 279 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Note Current liabilities Accounts payables and accrued liabilities 14 Taxes payables Dividends payables Short-term loans Short-term bonds Current portion of non-current liabilities Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES Net current liabilities	At 30 June 2016 RMB’000 (unaudited) 26,050,835 1,306,793 4,185,889 16,525,140 13,076,441 14,989,695 76,134,793 244,672,359 306,345,313 (51,717,153)	At 31 December 2015 RMB’000 (audited) 27,603,263 1,264,011 316,706 14,785,757 15,143,743 16,667,859 75,781,339 244,911,100 308,495,439 (49,895,493)

– 280 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2016

			Attributable to own	Attributable to own	ers of the Company	ers of the Company			Total equity RMB’000 (unaudited) 63,458,193
Share capital RMB’000 (unaudited) 13,310,038 – – – – – – – – – 13,310,038 13,310,038 – – – – – – – 13,310,038	Capital reserve RMB’000 (unaudited) 9,910,838 – – – – – – – – – 9,910,838 9,910,838 – – – – – – – 9,910,838	Statutory surplus reserve RMB’000 (unaudited) 4,535,751 – – – – – – – – – 4,535,751 4,992,897 – – – – – – – 4,992,897	Discretionary surplus reserve RMB’000 (unaudited) 12,432,852 – – – – – – 858,351 – 858,351 13,291,203 13,291,203 – – – – 2,213,673 – 2,213,673 15,504,876	Restricted reserve RMB’000 (unaudited) 85,599 – – – – – 28,963 – – 28,963 114,562 89,610 – – – 7,262 – – 7,262 96,872	Foreign currency translation reserve RMB’000 (unaudited) 43,615 (812) – – – – – – – (812) 42,803 53,294 922 – – – – – 922 54,216	Available- for-sale financial assets revaluation reserve RMB’000 (unaudited) 87,606 22,688 – – – – – – – 22,688 110,294 68,454 (63,285) – – – – – (63,285) 5,169	Other reserves RMB’000 (unaudited) 829,716 – – 74,202 – 17,668 – – – 91,870 921,586 914,357 – – 218 – – – 218 914,575	Retained earnings RMB’000 (unaudited) 2,928,866 2,112,485 – – – – (28,963) (858,351) (1,730,305) (505,134) 2,423,732 2,666,792 1,709,340 – – (7,262) (2,213,673) (2,262,706) (2,774,301) (107,509)
									2,732,526 (41,445) – (167,679) 17,668 – – (2,360,077)
									180,993
									63,639,186

									63,584,339
									1,989,316 230,580 540 – – (4,131,821)
									(1,911,385)
									61,672,954

– 281 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2016

CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations
Interest received
Income tax paid
Net cash generated from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment
Additions to intangible assets
Investment in an associate
Proceeds from disposals of property, plant and equipment
Disposal of a subsidiary
Proceeds from disposals of available-for-sale financial assets
Repayments of entrusted loans
Dividends received
Interest received from entrusted loans to related parties
Others
Net cash used in investing activities

Six months ended 30 June
2016
2015
RMB’000
RMB’000
(unaudited)
(unaudited)
12,243,246
15,746,135
25,589
38,432
(1,543,534)
(1,740,480)
10,725,301
14,044,087
(5,568,339)
(6,277,931)
–
(1,525)
(8,400)
–
285,739
303,493
–
377
–
228,014
–
693,700
410,310
284,098
–
28,991
(102,285)
718,672
(4,982,975)
(4,022,111)

– 282 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

CASH FLOWS FROM FINANCING ACTIVITIES
Capital withdrawals from non-controlling interests
Capital injections from non-controlling interests
Drawdown of short-term loans
Drawdown of long-term loans
Issuance of short-term bonds
Proceeds from sale and finance leaseback transactions
Repayment of short-term loans
Repayment of long-term loans
Repayment of short-term bonds
Repayment of long-term bond
Repayment of finance lease payables
Interest paid
Dividends paid to non-controlling interests
Others
Net cash used in financing activities
NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS
Effect of foreign exchange rate changes
CASH AND CASH EQUIVALENTS AT 1 JANUARY
CASH AND CASH EQUIVALENTS AT 30 JUNE

Six months ended 30 June
2016
2015
RMB’000
RMB’000
(unaudited)
(unaudited)
–
(29,545)
230,580
–
25,886,031
18,995,939
10,521,312
5,925,474
13,000,000
10,900,000
1,560,024
3,445,575
(24,146,648)
(17,005,145)
(12,227,269)
(8,002,777)
(14,900,000)
(8,000,000)
–
(5,000,000)
(2,138,856)
(1,788,301)
(4,969,513)
(5,497,989)
(262,639)
(207,099)
(22,525)
(81,889)
(7,469,503)
(6,345,757)
(1,727,177)
3,676,219
(7,037)
(1,072)
5,199,317
5,013,275
3,465,103
8,688,422

– 283 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Notes to the Condensed Consolidated Financial Statements

For the six months ended 30 June 2016

1. Basis of preparation

These condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” issued by the International Accounting Standards Board and the applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

At 30 June 2016, a significant portion of the funding requirements of the Company and its subsidiaries (collectively referred to as the “ Group ”) for capital expenditures was satisfied by short-term borrowings. Consequently, at 30 June 2016, the Group had net current liabilities of approximately RMB51.72 billion. The Group had significant undrawn borrowing facilities, subject to certain conditions, amounting to approximately RMB262.82 billion and may refinance and/or restructure certain short-term borrowings into long-term borrowings and will also consider alternative sources of financing, where applicable. The Directors of the Company are of the opinion that the Group will be able to meet its liabilities as and when they fall due within the next twelve months and have prepared these condensed consolidated financial statements on a going concern basis.

These condensed consolidated financial statements should be read in conjunction with the 2015 annual financial statements. The accounting policies and methods of computation used in the preparation of these condensed consolidated financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2015.

These condensed consolidated financial statements are presented in Renminbi (“ RMB ”), which is the Company’s functional and presentation currency, and all values are rounded to the nearest thousand (“ RMB’000 ”), unless otherwise stated.

2. Adoption of new and revised international financial reporting standards

In the current period, the Group has adopted all the new and revised International Financial Reporting Standards (“ IFRSs ”) issued by the International Accounting Standards Board that are relevant to its operations and effective for its accounting year beginning on 1 January 2016. IFRSs comprise International Financial Reporting Standards (“ IFRS ”); International Accounting Standards; and Interpretations. The adoption of these new and revised IFRSs did not have any significant effect on the condensed consolidated financial statements.

3. Fair value measurements

The carrying amounts of the Group’s financial assets and financial liabilities as reflected in the condensed consolidated statement of financial position approximate their respective fair values.

Level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2 inputs: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs:

unobservable inputs for the asset or liability.

– 284 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

The Group’s policy is to recognise transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer.

Disclosures of level in fair value hierarchy at 30 June 2016:

	Fair value measurements	Fair value measurements	Fair value measurements
Description	using	Level 1:
	At 30 June	At 31	December
	2016		2015
	RMB’000		RMB’000
	(unaudited)		(audited)
Recurring fair value measurements:
Available-for-sale financial assets
Listed securities in Hong Kong	127,490		169,029

4. Operating revenue

An analysis of the Group’s operating revenue for the period is as follows:

Sales of electricity Heat supply Sales of coal Sales of chemical products Others	Six months ended 30 June 2016 2015 RMB’000 RMB’000 (unaudited) (unaudited) 25,062,406 28,238,621 988,158 736,176 77,583 190,444 1,498,604 348,804 1,571,788 1,500,375 29,198,539 31,014,420	Six months ended 30 June 2016 2015 RMB’000 RMB’000 (unaudited) (unaudited) 25,062,406 28,238,621 988,158 736,176 77,583 190,444 1,498,604 348,804 1,571,788 1,500,375 29,198,539 31,014,420
		31,014,420

5. Segment information

Executive Directors and certain senior management (including chief accountant) of the Company (collectively referred to as the “ Senior Management ”) perform the function as chief operating decision makers. The Senior Management reviews the internal reporting of the Group in order to assess performance and allocate resources. Senior Management has determined the operating segments based on these reports.

Senior Management assesses the performance of the operating segments based on a measure of profit before tax prepared under China Accounting Standards for Business Enterprises (“ PRC GAAP ”).

– 285 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Segment profits or losses do not include dividend income from available-for-sale financial assets, gain or loss on disposals of available-for-sale financial assets and income tax expense. Segment assets do not include available-for-sale financial assets and deferred tax assets. Segment liabilities do not include current and deferred tax liabilities. Sales between operating segments are marked to market or contracted close to market price and have been eliminated at consolidation level. Unless otherwise noted below, all such financial information in the segment tables below is prepared under PRC GAAP.

Six months ended 30 June 2016 Revenue from external customers Intersegment revenue Segment profit/(loss) At 30 June 2016 Segment assets Segment liabilities Six months ended 30 June 2015 Revenue from external customers Intersegment revenue Segment profit/(loss) At 31 December 2015 Segment assets Segment liabilities	Power generation segment RMB’000 (unaudited) 26,222,942 351,968 6,129,682 214,857,223 164,226,560 29,178,498 519,020 6,024,580 (audited) 211,867,418 163,234,461	Coal segment RMB’000 (unaudited) 80,215 5,132,952 (335,957) 24,179,558 21,284,213 192,912 7,386,267 (135,164) (audited) 25,571,602 22,331,414	Chemical segment RMB’000 (unaudited) 1,501,591 2,343 (2,238,069) 69,067,473 67,960,374 353,321 7,456 (1,805,489) (audited) 68,655,276 65,314,457	Other segments RMB’000 (unaudited) 1,393,791 24,962 (92,899) 11,552,369 7,937,174 1,289,689 – (29,942) (audited) 10,951,061 7,954,757	Total RMB’000 (unaudited) 29,198,539 5,512,225 3,462,757 319,656,623 261,408,321 31,014,420 7,912,743 4,053,985 (audited) 317,045,357 258,835,089

– 286 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Reconciliation of segment profit or loss:
Total profit or loss of reportable segments
Dividend income from available-for-sale financial assets
Gain on disposals of available-for-sale financial assets
Elimination of intersegment profits
IFRS adjustment on amortisation of
monetary housing benefits
IFRS adjustment on reversal of general provision
on mining funds
Consolidated profit before tax
Revenue from major customers:
Power generation segment
North China Branch of State Grid Corporation of China
State Grid Zhejiang Electric Power Company
State Grid Jibei Electric power Company
Guangdong Power Grid Corporation
State Grid Jiangsu Electric Power Company

Six months ended 30 June
2016
2015
RMB’000
RMB’000
(unaudited)
(unaudited)
3,462,757
4,053,985
83,379
1,598
–
111,552
(77,132)
(66,542)
(1,708)
(11,211)
20,794
80,546
3,488,090
4,169,928
Six months ended 30 June
2016
2015
RMB’000
RMB’000
(unaudited)
(unaudited)
6,757,005
9,119,828
2,655,455
2,942,829
2,382,716
2,543,281
2,099,499
2,428,119
1,936,133
2,159,970

6. Finance costs

Interest expense Less: amount capitalised in property, plant and equipment Exchange loss/(gain), net Others	Six months ended 30 June 2016 2015 RMB’000 RMB’000 (unaudited) (unaudited) 4,834,304 5,865,321 (1,199,398) (1,775,775) 3,634,906 4,089,546 10,275 (1,301) 80,552 23,627 3,725,733 4,111,872

– 287 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

7. Income tax expense

Current tax Deferred tax	Six months ended 30 June 2016 2015 RMB’000 RMB’000 (unaudited) (unaudited) 1,481,223 1,370,060 (44,812) 89,218 1,436,411 1,459,278	Six months ended 30 June 2016 2015 RMB’000 RMB’000 (unaudited) (unaudited) 1,481,223 1,370,060 (44,812) 89,218 1,436,411 1,459,278
		1,459,278

Income tax is provided on the basis of the statutory profit for financial reporting purposes, adjusted for income and expense items, which are not assessable or deductible for income tax purposes.

The applicable People’s Republic of China (“ PRC ”) Enterprise Income Tax rate of the Company and its subsidiaries is 25% (six months ended 30 June 2015: 25%). Certain subsidiaries located in western region in the PRC enjoyed PRC Enterprise Income Tax rate of 15% before 2021 (six months ended 30 June 2015: 2021) when such income tax rate has changed to 25% thereafter.

In addition, certain subsidiaries are exempted from the PRC Enterprise Income Tax for two years starting from the first year of commercial operation followed by a 50% exemption of the applicable tax rate for the next three years.

8. Profit for the period

The Group’s profit for the period is stated at after (crediting)/charging the following:

	Six months ended 30 June	Six months ended 30 June
	2016	2015
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Interest income	(25,589)	(38,432)
Dividend income	(83,379)	(1,598)
Amortisation of intangible assets	24,746	24,105
Amortisation of deferred housing benefits	1,708	11,211
Depreciation	6,372,036	5,207,208
Directors’ emoluments	1,927	1,331
Gain on disposal of a subsidiary	–	(452)
Gain on disposals of available-for-sale financial assets	–	(111,552)

– 288 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

9. Dividends

	Six months ended 30 June	Six months ended 30 June
	2016	2015
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Final dividend for the year ended 31 December 2015
(six months ended 30 June 2015: 31 December 2014)
approved and paid – RMB0.17 (six months ended
30 June 2015: RMB0.13) per share	2,262,706	1,730,305

10. Earnings per share

Basic earnings per share

The calculation of basic earnings per share is based on the profit for the period attributable to owners of the Company of RMB1,709,340 thousand (unaudited) (six months ended 30 June 2015: RMB2,112,485 thousand (unaudited)) and the weighted average number of ordinary shares of 13,310,038 thousand (unaudited) (six months ended 30 June 2015: 13,310,038 thousand (unaudited)) in issue during the period.

Diluted earnings per share

During the six months ended 30 June 2016 and 2015, the Company did not have any dilutive potential ordinary shares. Therefore, diluted earnings per share is equal to basic earnings per share.

11. Property, plant and equipment

During the six months ended 30 June 2016, the Group acquired property, plant and equipment of RMB5,589,931 thousand (unaudited) (six months ended 30 June 2015: RMB7,393,613 thousand (unaudited)).

12. Accounts and notes receivables

The Group usually grants credit period of approximately one month to local power grid customers and coal purchase customers from the month end after sales and sale transactions made, respectively. The ageing analysis of the accounts and notes receivables is as follows:

Within one year Between one to two years Between two to three years Over three years	At 30 June 2016 RMB’000 (unaudited) 8,978,479 269,087 379,871 150,723 9,778,160	At 31 December 2015 RMB’000 (audited) 7,165,522 408,095 134,081 151,991 7,859,689

– 289 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

13. Share capital

Registered, issued and fully paid: 9,994,360,000 (At 31 December 2015: 9,994,360,000) A shares of RMB1 each 3,315,677,578 (At 31 December 2015: 3,315,677,578) H shares of RMB1 each Accounts payables and accrued liabilities Accounts and notes payables Other payables and accrued liabilities	At 30 June 2016 RMB’000 (unaudited) 9,994,360 3,315,678 13,310,038 At 30 June 2016 RMB’000 (unaudited) 10,139,368 15,911,467 26,050,835	At 31 December 2015 RMB’000 (audited) 9,994,360 3,315,678
		13,310,038

		At 31 December 2015 RMB’000 (audited) 9,737,654 17,865,609
		27,603,263

14. Accounts payables and accrued liabilities

The ageing analysis of the accounts and notes payables is as follows:

Within one year Between one to two years Between two to three years Over three years	At 30 June 2016 RMB’000 (unaudited) 8,526,005 535,553 679,690 398,120 10,139,368	At 31 December 2015 RMB’000 (audited) 8,270,774 575,759 524,844 366,277
		9,737,654

– 290 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

15. Related party transactions

(a) Significant transactions with China Datang Corporation which is the ultimate parent of the Company and its subsidiaries other than the Group (collectively referred to as “China Datang Group”) and associates and joint ventures of the Group and their respective subsidiaries

	Six months ended 30 June	Six months ended 30 June
	2016	2015
	RMB’000	RMB’000
	(unaudited)	(unaudited)
China Datang Group
Purchases of fuel	10,284	8,999
Purchases of materials and equipment	408,196	127,800
Operating lease expenses for buildings and facilities	10,629	11,114
Receipt of repairs and maintenance services	9,892	–
Receipt of capital injection to subsidiaries	203,740	11,980
Payment of capital injection to an associate	8,400	–
Receipt of desulfurisation and denitrification services	440,816	213,776
Receipt of management services	3,451	644
Provision of project management and repairs and
maintenance services	25,729	13,926
Receipt of technical support services	9,972	1,316
Receipt of agency and custody services	–	6,208
Interest income on entrusted loans	–	303
Sales of desulfurisation materials	73,919	55,171
Sales of desulfurisation and denitrification assets	13,670	696,768
Receipt of construction consulting services	1,744	4,056
Alternative power generation income	43,297	74,726
Interest expense on loans	14,858	14,786
Rental income	1,045	149
Provision of property management services	336	–
Sales of fuel	506	–
Receipt of finance lease services	425,000	–

– 291 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

		Six months ended 30 June	Six months ended 30 June
		2016	2015
		RMB’000	RMB’000
		(unaudited)	(unaudited)
	Associates of the Group
	Interest expense on loans	138,139	165,566
	Interest income on deposits	18,592	17,197
	Receipt of technical support services	5,491	12,282
	Receipt of finance lease services	200,000	1,312,584
	Drawdown of loans	6,248,000	3,749,000
	Interest income on entrusted loans	2,920	8,123
	Increase in entrusted loans	–	18,000
	Purchases of properties	30,482	–
	Subsidiary of an associate of the Group
	Purchases of fuel	–	123,828
	Joint ventures of the Group
	Purchases of fuel	137,501	124,843
	Interest income on entrusted loans	–	19,098

*(b)*	*Financial guarantees and financing facilities with China Datang Group and associates and*
	*joint ventures of the Group*
		At 30 June	At 31 December
		2016	2015
		RMB’000	RMB’000
		(unaudited)	(audited)
	China Datang Group
	Long-term loans of the Group guaranteed by
	China Datang Corporation	4,680,201	4,859,737
	Long-term bonds of the Group guaranteed by
	China Datang Corporation_(Note)_	12,000,000	12,000,000
	Finance lease payables of the Group guaranteed by
	China Datang Corporation	3,120,000	3,174,774
	Associates of the Group
	Long-term loans of the associates guaranteed by
	the Company	868,381	881,181
	Integrated credit facilities provided by an associate	24,000,000	24,000,000
	Joint ventures of the Group
	Long-term loans of joint ventures guaranteed by
	the Company	225,023	241,032

Note:

Of which 65.29% of RMB3 billion long-term bonds were counter-guaranteed by the Company.

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(c) Significant transactions with government-related entities

Government-related entities, other than entities under China Datang Corporation which is a state-owned enterprise and its subsidiaries, directly or indirectly controlled by the Central People’s Government of the PRC (“ Government-Related Entities ”) are also regarded as related parties of the Group.

For the purpose of the related party transactions disclosure, the Group has established procedures for determination, to the extent possible, of the identification of the ownership structure of its customers and suppliers as to whether they are Government-Related Entities to ensure the adequacy of disclosure for all material related party transactions given that many Government-Related Entities have multi-layered corporate structures and the ownership structures change over time as a result of transfers and privatisation programs.

During the six months ended 30 June 2016 and 2015, the Group sold substantially all of its electricity to local government-related power grid companies. Please refer the details of information of power generation revenue to major power grid companies to note 5 to the condensed consolidated financial statements. The Group maintained most of its bank deposits in government-related financial institutions while lenders of most of the Group’s loans are also government-related financial institutions, associated with the respective interest income or interest expense incurred.

During the six months ended 30 June 2016 and 2015, other collectively significant transactions with Government-Related Entities also included purchases of fuel and property, plant and equipment.

(d) Compensation to key management personnel of the Group

Basic salaries and allowances Bonus Other benefits	Six months ended 30 June 2016 2015 RMB’000 RMB’000 (unaudited) (unaudited) 2,159 1,967 3,795 2,567 630 500 6,584 5,034	Six months ended 30 June 2016 2015 RMB’000 RMB’000 (unaudited) (unaudited) 2,159 1,967 3,795 2,567 630 500 6,584 5,034
		5,034

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

16. Financial guarantees

At the end of the reporting period, the Group has provided financial guarantees for loan facilities granted to the following parties:

Associates Joint ventures	At 30 June 2016 RMB’000 (unaudited) 868,381 225,023 1,093,404	At 31 December 2015 RMB’000 (audited) 881,181 241,032
		1,122,213

Based on historical experience, no claims have been made against the Group since the date of granting of the above financial guarantees.

17. Capital commitments

Capital commitments contracted for at the end of the reporting period but not yet incurred are as follows:

Property, plant and equipment Share of capital commitments of joint ventures	At 30 June 2016 RMB’000 (unaudited) 13,343,303 601,408 13,944,711	At 31 December 2015 RMB’000 (audited) 19,036,316 908,483
		19,944,799

18. Lease commitments

At 30 June 2016 the total future minimum lease payments under non-cancellable operating leases are payable as follows:

Within one year In the second to fifth years, inclusive After five years	At 30 June 2016 RMB’000 (unaudited) 30,937 42,098 13,868 86,903	At 31 December 2015 RMB’000 (audited) 41,893 46,757 13,868
		102,518

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APPENDIX IIA

19. Events after the reporting period

(a) The Company completed the issuance of “The Fifth Tranche of Datang International Power Generation Co., Ltd’s Super Short-term Debentures in 2016” ( the “ Fifth Tranche Super Shortterm Debentures ”) on 22 August 2016. The issuance amount for the Fifth Tranche Super Short-term Debentures was RMB4 billion with a maturity of 270 days. The unit nominal value is RMB100 and the coupon rate is at 2.53%. Bank of China Limited acts as the underwriter and bookkeeper for the Fifth Tranche Super Short-term Debentures and GF Securities Co., Ltd. acts as the joint lead underwriter for the Fifth Tranche Super Short-term Debentures. The proceeds from the Fifth Tranche Super Short-term Debentures will be used to replenish the working capital of the Company.
(b) The resolution for the transfer agreement in relation to coal-to-chemical business segment and the related project entered into with Zhongxin Energy and Chemical Technology Company Limited (the “ Transfer Agreement ”), a wholly owned subsidiary of China Datang Corporation, was considered and approved during the 2016 second extraordinary general meeting of the Company held on 29 August 2016. It approved the Company and Zhongxin Energy and Chemical Technology Company Limited (“ Zhongxin Energy and Chemical ”) to enter into the Transfer Agreement, to transfer the coal-to-chemical business segment and the related project (the “ Transaction Targets ”) to Zhongxin Energy and Chemical in form of transfer agreement, and to implement the transfer proposal. The Company shall transfer the Transaction Targets to Zhongxin Energy and Chemical at a consideration of RMB1. The consideration for the transfer is based on the Transaction Targets as a whole, the appraised value of the Transaction Targets confirmed in the asset valuation report and the waiver of part of the entrusted loans of the Company to the Transaction Targets.

The specific amount of the waiver of certain principal amount of the entrusted loans provided to the Transaction Targets is the sum of (A) the appraised absolute value of the Transaction Targets, i.e. RMB8,335.9597 million; and (B) the absolute value of the operating loss incurred by the Transaction Targets during the transitional period to be borne by the Company (special audit report shall prevail). The principal amount of the waived entrusted loans for this transaction is expected to be not more than RMB10 billion.

It is expected that after the transfer of the Transaction Targets, the consolidated assets will decrease by approximately RMB78.2 billion, the consolidated liabilities will decrease by approximately RMB69.7 billion, the assets-to-liabilities ratio will decrease by approximately 3% and the consolidated profit before tax will decrease by approximately RMB6 billion.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

IV. UNAUDITED THIRD QUARTERLY FINANCIAL STATEMENT

Set out below is the financial statement of the Group as extracted from the published unaudited third quarterly report dated 27 October 2016.

Consolidated Balance Sheet

30 September 2016

Prepared by: Datang International Power Generation Co., Ltd.

Unit: RMB’000 Currency: RMB Audit Type: unaudited

Item	Closing balance	Opening balance
Current assets:
Cash balance	4,659,167	5,573,891
Settlement provisions
Loans to banks and other financial institutions
Financial assets at fair value through profit or loss
Derivative financial assets
Notes receivables	623,305	516,622
Accounts receivables	6,735,360	7,343,067
Prepayments	1,031,498	418,085
Premium receivables
Reinsurance receivables
Reinsurance contract reserves receivable
Interest receivable
Dividend receivable	179,920	783,985
Other receivables	2,207,869	2,450,087
Financial assets purchased with agreement to resale
Inventories	1,884,178	3,857,781
Assets classified as held for sale
Non-current assets due within one year	11,655	63,360
Other current assets	1,031,857	13,437
Total current assets	18,364,809	21,020,315

– 296 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Item

Closing balance Opening balance

Non-current assets:

Loans and advances to customers Available-for-sale financial assets Held-to-maturity investments Long-term receivables Long-term equity investments Investment properties Fixed assets Construction-in-progress Construction materials Disposal of fixed assets Productive biological assets Oil and gas assets Intangible assets Development expenses Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	4,991,135 143,486 14,019,781 560,840 136,728,745 39,454,464 3,905,688 3,205,839 5 899,886 193,790 3,554,043 1,932,487 209,590,189 227,954,998	4,970,330 173,857 13,235,077 577,627 182,032,311 66,581,692 4,933,678 6,733,070 11 899,886 716,784 1,150,903 342,807 282,348,033
		303,368,348

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Item	Closing balance	Opening balance
Current liabilities:
Short-term borrowings	10,887,186	14,785,757
Borrowings from the central bank
Receipts of deposits and deposits from other banks
Loans from other banks
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable	2,484,744	2,095,939
Accounts payable	14,456,283	22,261,859
Receipts in advance	223,016	302,785
Funds from selling out and repurchasing financial assets
Fee and commission payable
Salaries payable	227,013	117,919
Taxes payable	-668,123	-3,601,520
Interests payable	628,072	609,980
Dividends payable	1,218,112	316,706
Other payables	2,340,612	2,214,781
Reinsurance accounts payables
Reserves for insurance contracts
Customer deposits for trading in securities
Amounts due to issuer for securities underwriting
Liabilities classified as held for sale
Non-current liabilities due within one year	7,299,013	16,667,859
Other current liabilities	14,195,317	15,143,743
Total current liabilities	53,291,245	70,915,808

– 298 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Item Non-current liabilities: Long-term borrowings Debentures payables Including: Preference shares Perpetual liabilities Long-term payables Long-term salaries payable Specific payables Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	Closing balance 90,065,404 15,422,429 9,345,658 550 151,505 1,623,779 559,536 117,168,861 170,460,106	Opening balance 130,061,212 15,410,018 19,484,594 550 372,138 3,194,264 579,632 169,102,408
		240,018,216

– 299 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Item Shareholders’ equity: Share capital Other equity instruments Including: Preference shares Perpetual liabilities Capital surplus Less: Inventory shares Other comprehensive income Specific reserve Surplus reserve General risk reserve Undistributed profits Total shareholders’ equity interest attributable to the parent company Minority interests Total shareholders’ equity Total liabilities and shareholders’ equity	Closing balance 13,310,038 10,768,148 114,392 254,021 20,497,773 -5,536,374 39,407,998 18,086,894 57,494,892 227,954,998	Opening balance 13,310,038 10,854,672 93,418 395,556 18,284,100 2,085,379 45,023,163
		18,326,969 63,350,132
		303,368,348

– 300 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Consolidated Income Statement

January to September 2016

Prepared by: Datang International Power Generation Co., Ltd.

Unit: RMB’000 Currency: RMB Audit Type: unaudited

					Amount for the
					period from the
				Amount for the	beginning of the
				period from the	previous year to
			Amount for the	beginning of the	the end of the
			corresponding	year to the end	corresponding
		Amount for	period of the	of the reporting	period of the
		the period	previous year	period	previous year
Item		(Jul–Sep)	(Jul–Sep)	(Jan–Sep)	(Jan–Sep)
1.	Total operating revenue	15,303,996	15,068,572	44,502,535	46,082,992
	Including: Operating revenue	15,303,996	15,068,572	44,502,535	46,082,992
	Interest income
	Premiums earned
	Fees and commission income
2.	Total operating costs	14,659,564	13,655,869	41,118,854	41,663,704
	Including: Operating costs	12,235,383	10,794,524	33,088,109	32,660,829
	Interest expenses
	Fees and commission expense
	Surrender payment
	Net expenditure for
	compensation payment
	Net provisions for insurance
	contracts
	Expenditure for insurance
	policy dividend
	Reinsurance cost
	Business tax and surcharges	219,016	174,704	516,764	534,618
	Selling expenses	40,994	27,137	144,764	116,853
	Administrative expenses	562,811	755,147	2,067,713	2,373,607
	Financial expenses	1,657,710	1,926,897	5,357,854	6,000,337
	Loss on impairment of assets	-56,350	-22,540	-56,350	-22,540

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

						Amount for the
						period from the
					Amount for the	beginning of the
					period from the	previous year to
				Amount for the	beginning of the	the end of the
				corresponding	year to the end	corresponding
			Amount for	period of the	of the reporting	period of the
			the period	previous year	period	previous year
Item			(Jul–Sep)	(Jul–Sep)	(Jan–Sep)	(Jan–Sep)
	Add:	Gains arising from changes in fair value
		(losses stated with “-”)
		Investment income (losses stated with “-”)	-3,914,436	655,169	-3,556,988	1,286,002
		Including: Investment income from associates
		and joint ventures	425,539	588,849	696,688	1,078,069
		Gains from foreign exchange (losses are stated by “-”)
3.	Operating profit (losses stated with “-”)		-3,270,004	2,067,872	-173,307	5,705,290
	Add:	Non-operating income	257,565	646,677	642,159	1,112,428
		Including: Gains from the disposal of
		non-current assets
	Less:	Non-operating expenses	16,849	13,322	29,136	15,898
		Including: Loss from the disposal of
		non-current assets			11,203	10
4.	Total	profit (total loss stated with “-”)	-3,029,288	2,701,227	439,716	6,801,820
	Less:	Income tax expense	-2,236,811	749,006	-803,243	2,197,398
5.	Net profit (net loss stated with “-”)		-792,477	1,952,221	1,242,959	4,604,422
	Net profit attributable to owners of the parent company		-4,839,061	1,542,662	-3,145,374	3,586,968
	Minority shareholders’ profit and loss		4,046,584	409,559	4,388,333	1,017,454

– 302 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

						Amount for the
						period from the
					Amount for the	beginning of the
					period from the	previous year to
				Amount for the	beginning of the	the end of the
				corresponding	year to the end	corresponding
			Amount for	period of the	of the reporting	period of the
			the period	previous year	period	previous year
Item			(Jul–Sep)	(Jul–Sep)	(Jan–Sep)	(Jan–Sep)
6.	Other comprehensive income after tax (net)		83,337	-94,720	20,974	-72,844
	Other comprehensive income after tax attributable to owners
	of the parent company (net)		83,337	-94,720	20,974	-72,844
	(1) Other comprehensive income that cannot
	be	reclassified to profit and loss in
	subsequent periods
	1.	Changes in net liabilities or net assets
		arising from the re-measurement of
		defined benefit plans
	2.	Share of other comprehensive income of
		investee that cannot be reclassified to profit
		and loss under equity method
	(2) Other comprehensive income that will be
	reclassified to profit and loss in
	subsequent periods		83,337	-94,720	20,974	-72,844
	1.	Share of other comprehensive income
		of investee that will be reclassified
		to profit and loss under equity
		method in subsequent periods	-2,409	-22,835	-21,888	13,340
	2.	Gains and losses from changes in fair value of
		available-for-sale financial assets	85,472	-75,089	41,666	-88,576
	3.	Gains and losses from held-to-
		maturity investment reclassified as
		available- for-sale financial assets

Effective portion of hedging gains and losses from cash flows

– 303 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

					Amount for the
					period from the
				Amount for the	beginning of the
				period from the	previous year to
			Amount for the	beginning of the	the end of the
			corresponding	year to the end	corresponding
		Amount for	period of the	of the reporting	period of the
		the period	previous year	period	previous year
Item		(Jul–Sep)	(Jul–Sep)	(Jan–Sep)	(Jan–Sep)
	5. Exchange differences from retranslation of
	financial statements	274	3,204	1,196	2,392
	6. Others
	Other comprehensive income after tax
	attributable to minority shareholders (net)
7.	Total comprehensive income	-709,140	1,857,501	1,263,933	4,531,578
	Total comprehensive income attributable to owners of
	the parent company	-4,755,724	1,447,942	-3,124,400	3,514,124
	Total comprehensive income attributable to minority
	shareholders	4,046,584	409,559	4,388,333	1,017,454
8.	Earnings per share:
	(1) Basic earnings per share_(RMB/share)_	-0.3636	0.1159	-0.2363	0.2695
	(2) Diluted earnings per share_(RMB/share)_	-0.3636	0.1159	-0.2363	0.2695

For the merger of enterprise under common control during the period, the net profit recorded by the merged party before the merger is RMB0, and the net profit recorded by the merged party in the corresponding period of the previous year is RMB0.

– 304 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Consolidated Cash Flow Statement

January to September 2016

Prepared by: Datang International Power Generation Co., Ltd.

Unit: RMB’000 Currency: RMB Audit Type: unaudited

		Amount for the
		period from
	Amount for the	the beginning
	period from	of the previous
	the beginning	year to the
	of the year	end of the
	to the end of	corresponding
	the reporting	period of the
	period	previous year
Item	(Jan–Sep)	(Jan–Sep)
1. Cash flows generated from operating activities:
Cash received from sales of goods and
services rendered	51,675,248	61,363,965
Net increase in customer and interbank deposits
Net increase in borrowings from the central bank
Net cash increase in placements
from other financial institutions
Cash received from premiums under
original insurance contracts
Net cash received from reinsurance business
Net increase in deposits of policy holders
and investment funds
Net increase in disposal of financial assets
at fair value through profit or loss
Cash received from interest, fees and commissions
Net increase in placements
Net increase in cash received from
repurchase business
Refund of taxes and levies	104,793	120,814
Other cash received relating to operating activities	831,786	1,322,474
Sub-total of cash inflows from operating activities	52,611,827	62,807,253

– 305 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Item Cash paid for goods and services received Net increase in customer loans and advances to customers Net increase in deposits in the central bank and interbank deposits Cash paid for compensation payments under original insurance contracts Cash paid for interest, fees and commissions Cash paid for insurance policy dividend Cash paid to and on behalf of employees Payments of all types of taxes Other cash paid relating to operating activities Sub-total of cash outflows from operating activities Net cash flows generated from operating activities	Amount for the period from the beginning of the year to the end of the reporting period (Jan–Sep) 22,197,516 3,143,083 6,702,546 1,445,264 33,488,409 19,123,418	Amount for the period from the beginning of the previous year to the end of the corresponding period of the previous year (Jan–Sep) 30,078,748 2,847,266 7,563,584 1,178,250 41,667,848
		21,139,405

– 306 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Item 2. Cash flows generated from investing activities: Cash received on disposals of investments Cash received on investment income Net cash received from disposals of fixed assets, intangible assets and other long-term assets Net cash received from disposals of subsidiaries and other operating units Other cash received relating to investing activities Sub-total of cash inflows from investing activities Cash paid for acquisition and construction of fixed assets, intangible assets and other long-term assets Cash paid to acquire investments Net increase in secured loans Net cash paid for acquisition of subsidiaries and other operating units Other cash paid relating to investing activities Sub-total of cash outflows from investing activities Net cash flows generated from investing activities	Amount for the period from the beginning of the year to the end of the reporting period (Jan–Sep) 112,000 811,752 287,125 48,661 1,259,538 9,681,099 8,400 663,358 10,352,857 -9,093,319	Amount for the period from the beginning of the previous year to the end of the corresponding period of the previous year (Jan–Sep) 1,361,614 519,549 682,614 377 1,169,537 3,733,691
		11,710,257 69,220 369,542 12,149,019
		-8,415,328

– 307 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

Item 3. Cash flows generated from financing activities: Cash received from investments Including: Cash received from minority shareholders’ equity investment in subsidiaries Cash received from borrowings Cash received from issuing bonds Other cash received relating to financing activities Sub-total of cash inflows from financing activities Cash paid on repayments of borrowings Cash paid for distribution of dividends and profit or interest expenses Including: Dividends and profit paid to minority shareholders by subsidiaries Other cash paid relating to financing activities Sub-total of cash outflows from financing activities Net cash flows generated from financing activities	Amount for the period from the beginning of the year to the end of the reporting period (Jan–Sep) 419,170 419,170 63,939,369 1,739,005 66,097,544 66,314,353 8,272,598 1,689,071 2,446,220 77,033,171 -10,935,627	Amount for the period from the beginning of the previous year to the end of the corresponding period of the previous year (Jan–Sep) 590,700 590,700 54,779,073 10,526,266 65,896,039 64,239,412 11,302,822 1,195,199 2,657,830 78,200,064
		-12,304,025

– 308 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

			Amount for the
			period from
		Amount for the	the beginning
		period from	of the previous
		the beginning	year to the
		of the year	end of the
		to the end of	corresponding
		the reporting	period of the
		period	previous year
Item		(Jan–Sep)	(Jan–Sep)
4. Effect of foreign exchange rate changes
on	cash and cash equivalents	-9,196	-26,414
5. Net increase in cash and cash equivalents		-914,724	393,638
Add:	Balance of cash and cash equivalents at
	the beginning of the period	5,573,891	5,013,275
6. Balance of cash and cash equivalents at the
end of the period		4,659,167	5,406,913

– 309 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

INDEBTEDNESS

As at the close of business on 31 October 2016, the Group had unaudited outstanding interest bearing debts of approximately RMB150 billion, comprising borrowings from financial institutions of RMB108.9 billion, and bonds outstanding of RMB29.5 billion, and financial leasing outstanding of RMB11.6 billion.

Save as aforesaid and apart from intra-group liabilities, the Group did not have any mortgages, charges, debentures, loan capital, bank loans and overdrafts, debt securities or other similar indebtedness, finance leases or hire purchase commitments, liabilities under acceptances or acceptances credits, or any guarantees, or any other contingent liabilities outstanding at the close of business on 31 October 2016.

As at the Latest Practicable Date, the Directors are not aware of any material adverse changes in the Group’s indebtedness position and contingent liabilities since the close of business on 31 October 2016.

WORKING CAPITAL

The Directors are of the opinion that, after taking into account the present available banking facilities and the internally generated resources of the Group, the Group has sufficient working capital for its requirements with the next 12 months from the date of this Whitewash Circular.

MATERIAL CHANGE

The Company entered into the transfer agreement with Zhongxin Energy and Chemical Technology Company Limited, pursuant to which the Company had disposed its coal-to-chemical business segment. For further details, please refer to the announcement of the Company dated 30 June 2016 and the circular of the Company dated 12 August 2016. As disclosed in the profit warning announcement dated 11 October 2016 and the related clarification announcement dated 13 October 2016 as well as the unaudited third quarterly report dated 27 October 2016 of the Company, due to the loss incurred from the disposal of the coal-to-chemical segment and related projects which was completed on 31 August 2016, net profit attributable to the equity holders of the Company as reported in the consolidated statements of the Company for the nine months ended on 30 September 2016 decreased by approximately RMB5.518 billion.

As disclosed in the Loss Estimate Announcement, based on a preliminary assessment by the management of the Company based on the unaudited management accounts of the Group for the year ended 31 December 2016, the Group expects to record a loss in operating results for the year ended 31 December 2016 and a net loss attributable to the equity holders of the Company of approximately RMB2.5 billion to approximately RMB2.8 billion is expected to be reported in the consolidated financial statements of the Group for the year ended 31 December 2016, attributable to the following reasons: (i) due to the loss incurred from the disposal of the coal-to-chemical and related projects (completed on 31 August 2016), net

– 310 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IIA

profit attributable to the equity holders of the Company as reported in the consolidated statements of the Group decreased by approximately RMB5.518 billion; (ii) under the influence of downward adjustment to on-grid tariff for coal-fired power generation by the state government at the beginning of the year 2016 and the power generation structure of the Company, the average on-grid tariffs decreased as compared to the corresponding period of the previous year, resulting in a decrease in the results of the electricity segment of the Company as compared to the corresponding period of the previous year; and (iii) under the impact of significant increase in coal price during the second half of the year 2016, the coal price for the full year increased as compared to the corresponding period of the previous year, resulting in a decrease in the results of the coal-fired generator enterprise of the Company as compared to the corresponding period of the previous year.

Save as disclosed above, the Directors confirm that there has been no material change in the financial or trading position or outlook of the Group since 31 December 2015, being the date to which the latest published audited consolidated financial statements of the Group were made up to, and including the Latest Practicable Date.

– 311 –

REPORTS ON THE LOSS ESTIMATE ANNOUNCEMENT

APPENDIX IIB

Set out below are the relevant extracts from the Loss Estimate Announcement, the full text of the report dated 13 January 2017 received from RSM Hong Kong, the international auditor of the Company, and the full text of the reports dated 13 January 2017 received from each of China Merchants Securities (HK) Co., Limited and China Securities (International) Corporate Finance Company Limited, the financial advisers to the H-Share Issuance of the Company as at the date of the Loss Estimate Announcement, in respect of the Loss Estimate Announcement, for the purpose of inclusion in the Loss Estimate Announcement.

A. EXTRACTS FROM THE LOSS ESTIMATE ANNOUNCEMENT

I. Estimated Results for the Period

Period to which the estimated results apply: From 1 January 2016 to 31 December 2016.
Estimated results: Based on a preliminary assessment by the management of the Company based on the unaudited management accounts of the Group for the year ended 31 December 2016, the Group expects to record a loss in operating results for the year ended 31 December 2016 and a net loss attributable to the equity holders of the Company of approximately RMB2.5 billion to approximately RMB2.8 billion is expected to be reported in the consolidated financial statements of the Group for the year ended 31 December 2016.
The figures of the estimated results have not been audited by certified public accountants and are prepared in accordance with IFRS.

II. Results of the Corresponding Period of the Previous Year

Net profit attributable to the equity holders of the Company as reported in the consolidated statements amounted to approximately RMB2.788 billion.
Basic earnings per share: RMB0.21 per share.

The 2015 information set out above was prepared in accordance with IFRS.

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REPORTS ON THE LOSS ESTIMATE ANNOUNCEMENT

APPENDIX IIB

III. Reasons for the Change in the Results

The change in the results of the Group was mainly attributable to the following factors:

Due to the loss incurred from the disposal of the coal-to-chemical and related projects (completed on 31 August 2016), net profit attributable to the equity holders of the Company as reported in the consolidated statements of the Group decreased by approximately RMB5.518 billion.
Under the influence of downward adjustment to on-grid tariff for coal-fired power generation by the state government at the beginning of the year and the power generation structure of the Company, the average on-grid tariffs decreased as compared to the corresponding period of the previous year, resulting in a decrease in the results of the electricity segment of the Company as compared to the corresponding period of the previous year.
Under the impact of significant increase in coal price during the second half of the year, the coal price for the full year increased as compared to the corresponding period of the previous year, resulting in a decrease in the results of the coal-fired generator enterprise of the Company as compared to the corresponding period of the previous year.

– 313 –

REPORTS ON THE LOSS ESTIMATE ANNOUNCEMENT

APPENDIX IIB

B. REPORT FROM RSM HONG KONG

==> picture [111 x 47] intentionally omitted <==

RSM HongKong 29th Floor, Lee Garden Two, 28 Yun Ping Road, Causeway Bay, Hong Kong T +852 2598 5123 F +852 2598 7230 www.rsmhk.com

中瑞岳華（香港）會計師事務所 香港銅鑼灣恩平道二十八號利園二期二十九字樓電話 +852 2598 5123 傳真 +852 2598 7230 www.rsmhk.com

13 January 2017

The Board of Directors

Datang International Power Generation Co., Ltd.

No. 9 Guangningbo Street Xicheng District Beijing People’s Republic of China

Dear Sirs,

Datang International Power Generation Co., Ltd. (the “Company”)

and its subsidiaries (the “Group”)

Loss Estimate for Year Ended 31 December 2016

We refer to the estimate of the consolidated loss attributable to the equity holders of the Company for the year ended 31 December 2016 (the “ Loss Estimate ”) which has been prepared to enable the directors of the Company to make the following statement in the Company’s loss estimate announcement dated 13 January 2017 (the “ Loss Estimate Announcement ”).

“Based on a preliminary assessment by the management of the Company based on the unaudited management accounts of the Group for the year ended 31 December 2016, the Group expects to record a loss in operating results for the year ended 31 December 2016 and a net loss attributable to the equity holders of the Company of approximately RMB2.5 billion to approximately RMB2.8 billion is expected to be reported in the consolidated financial statements of the Group for the year ended 31 December 2016.”

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REPORTS ON THE LOSS ESTIMATE ANNOUNCEMENT

APPENDIX IIB

Directors’ Responsibilities

The Loss Estimate has been prepared by the directors of the Company based on the unaudited consolidated results based on the management accounts of the Group for the year ended 31 December 2016.

The Company’s directors are solely responsible for the Loss Estimate.

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 (the “ HKICPA ”), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

The firm applies Hong Kong Standard on Quality Control 1 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 Accountant’s Responsibilities

Our responsibility is to express an opinion on the accounting policies and calculations of the Loss Estimate based on our procedures.

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 500 “Reporting on Profit Forecasts, Statements of Sufficiency of Working Capital and Statements of Indebtedness” and with reference to Hong Kong Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” issued by the HKICPA. Those standards require that we plan and perform our work to obtain reasonable assurance as to whether, so far as the accounting policies and calculations are concerned, the Company’s directors have properly compiled the Loss Estimate in accordance with the bases made by the directors and as to whether the Loss Estimate is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Group. 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.

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REPORTS ON THE LOSS ESTIMATE ANNOUNCEMENT

APPENDIX IIB

Opinion

In our opinion, so far as the accounting policies and calculations are concerned, the Loss Estimate has been properly compiled in accordance with the bases adopted by the directors as set out in the Loss Estimate Announcement and is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Group as set out in the annual report of the Company for the year ended 31 December 2015.

We hereby give our consent to and confirm that we have not withdrawn our written consent to the issue of the Loss Estimate Announcement with the inclusion of this letter and/or our name and logo in the form and context in which they respectively appear in the Loss Estimate Announcement.

Yours faithfully,

RSM Hong Kong

Certified Public Accountants

Hong Kong

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REPORTS ON THE LOSS ESTIMATE ANNOUNCEMENT

APPENDIX IIB

C. REPORT FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

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The Board of Directors

Datang International Power Generation Company Limited

No. 9 Guangningbo Street Xicheng District Beijing People’s Republic of China

13 January 2017

Dear Sirs,

Reference is made to the estimate of the consolidated loss attributable to the equity holders of the Company for the year ended 31 December 2016 (the “ Loss Estimate ”) which has been prepared to enable the Directors of the Company to make the following statement in the Company’s loss estimate announcement dated 13 January 2017 (the “ Loss Estimate Announcement ”).

We note that the Loss Estimate is regarded as a profit forecast under Rule 10 of the Takeovers Code and must be reported on by the financial adviser and the auditors. This report is issued in compliance with the requirements under Rule 10.4 and Note 1(c) to Rules 10.1 and 10.2 of the Takeovers Code.

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REPORTS ON THE LOSS ESTIMATE ANNOUNCEMENT

APPENDIX IIB

We have reviewed the Loss Estimate and the unaudited consolidated management account of the Company and its subsidiaries for the year ended 31 December 2016 which you as the Directors are solely responsible for. We have also discussed with you the bases upon which the Loss Estimate was prepared. In addition, we have considered, and relied upon, the report on Loss Estimate dated 13 January 2017 issued by RSM Hong Kong, the auditor of the Company, to you, which stated that, so far as the accounting policies and calculations are concerned, the Loss Estimate has been properly compiled in accordance with the bases adopted by the Directors as set out in the Loss Estimate Announcement and is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Company as set out in the annual report of the Company for the year ended 31 December 2015.

On the basis of the foregoing, we are of the opinion that the Loss Estimate, for which the Directors are solely responsible, has been made after due and careful enquiry and with due care and consideration.

Yours faithfully, For and on behalf of

China Merchants Securities (HK) Co., Limited Pharos Chan

Executive Director

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REPORTS ON THE LOSS ESTIMATE ANNOUNCEMENT

APPENDIX IIB

D. REPORT FROM CHINA SECURITIES (INTERNATIONAL) CORPORATE FINANCE COMPANY LIMITED

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The Board of Directors

Datang International Power Generation Company Limited

No. 9 Guangningbo Street Xicheng District Beijing People’s Republic of China

13 January 2017

Dear Sirs,

– 319 –

REPORTS ON THE LOSS ESTIMATE ANNOUNCEMENT

APPENDIX IIB

Yours faithfully,

For and on behalf of

China Securities (International) Corporate Finance Company Limited Wang Wei Managing Director

– 320 –

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This Whitewash Circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, the information (other than information relating to CDC and its concert parties) contained in this Whitewash Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this Whitewash Circular misleading.

This Whitewash Circular includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Group. The Directors jointly and severally accept full responsibility for the accuracy of the information (other than information relating to CDC and its concert parties) contained in this Whitewash Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed (other than those expressed by directors of CDC and its concert parties) in this Whitewash Circular have been arrived at after due and careful consideration and there are no other facts not contained in this Whitewash Circular, the omission of which would make any statement in this Whitewash Circular misleading.

The information in relation to CDC contained in this Whitewash Circular has been supplied by the directors of CDC. The directors of CDC jointly and severally accept full responsibility for the accuracy of the information contained in this Whitewash Circular (other than information relating to the Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed (other than those expressed by directors of the Group) in this Whitewash Circular have been arrived at after due and careful consideration and there are no other facts not contained in this Whitewash Circular, the omission of which would make any statements in this Whitewash Circular misleading.

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GENERAL INFORMATION

APPENDIX III

2. MARKET PRICE

The table below shows the closing price of the H-Shares as recorded on the Hong Kong Stock Exchange (i) on the last Business Day of each of the calendar months during the Relevant Period; (ii) on the last Business Day immediately preceding the Announcement Date; and (iii) on the Latest Practicable Date.

	Closing price
Date	per H-Share
	HK$
31 May 2016	2.0800
30 June 2016	2.1600
29 July 2016	2.0100
31 August 2016	2.0300
30 September 2016	2.0700
31 October 2016	2.0900
25 November 2016 (last Business Day immediately preceding the
Announcement Date)	2.0700
30 November 2016	2.0900
30 December 2016	2.0300
27 January 2017	2.0200
6 February 2017 (Latest Practicable Date)	2.0200

The highest and lowest closing prices of the H-Shares as quoted on the Hong Kong Stock Exchange during the Relevant Period were HK$2.2300 per H-Share on 4 July 2016 and HK$1.9000 per H-Share on 8 July 2016.

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GENERAL INFORMATION

APPENDIX III

3. SHARE CAPITAL

The registered and issued share capital of the Company (i) as at the Latest Practicable Date; and (ii) immediately after completion of the Whitewash Transactions are set out below:

As at the Latest Practicable Date:

Registered capital/Issued and fully paid or credited as fully paid 9,994,360,000 A-Shares 3,315,677,578 H-Shares Total	RMB 9,994,360,000 3,315,677,578
	13,310,037,578

Enlarged share capital of the Company immediately after completion of the Whitewash Transactions

Registered capital/Issued and fully paid or credited as fully paid 12,789,303,820 A-Shares 6,110,621,398 H-Shares Total	RMB 12,789,303,820 6,110,621,398
	18,899,925,218

The net tangible asset backing for the A-Shares and H-Shares, after making allowance for the Subscription Shares to be issued, is RMB3.84 per A-Share and RMB3.84 per H-Share respectively as if the proposed A-Share Issuance and H-Share Issuance had taken place on 30 June 2016 (based on the reference rate of the People’s Bank of China of HK$1:RMB0.896 as at 30 June 2016).

All the issued Shares ranked pari passu in all respects as regards rights to capital, dividends and voting. The A-Share Subscription Shares and the H-Share Subscription Shares will rank, upon issue, pari passu in all respects with the A-Shares and H-Shares in issue, respectively, at the time of allotment and issue of such new A-Share Subscription Shares and new H-Share Subscription Shares, respectively.

Since 31 December 2015 (being the end of the last financial year of the Company) and up to the Latest Practicable Date, no new Shares have been issued by the Company.

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GENERAL INFORMATION

APPENDIX III

The Company has no outstanding warrants, options or securities convertible into shares of the Company as at the Latest Practicable Date.

4. DISCLOSURE OF INTERESTS

Directors, supervisors and chief executive of the Company

As at the Latest Practicable Date:

(i) none of the Directors, chief executive of the Company and Supervisors had any interests and short positions in the shares, underlying shares and/or debentures (as the case may be) of the Company or any of its associated corporations (within the meaning of the SFO) which was required to be (a) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such Director, chief executive or supervisor is taken or deemed to have under such provisions of the SFO); or (b) entered into the register required to be kept by the Company under section 352 of the SFO; or (c) otherwise notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules;
(ii) save as disclosed under the paragraph headed “Disclosure of Interests – Substantial Shareholders” in this Appendix, and save and except for the following Supervisors, i.e. Mr. Zhang Xiaoxu (employee of Tianjin Energy Investment Group Limited) and Mr. Liu Quancheng (employee of COC), none of the Directors or Supervisors is a director or employee of the substantial shareholder of the Company;
(iii) none of the Directors or Supervisors had any existing or proposed service contracts with any member of the Group, excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation);
(iv) none of the Directors or Supervisors have any interest, direct or indirect, in any assets which have been, since 31 December 2015 (being the date to which the latest published audited financial statements of the Company were made up) acquired or disposed of by or leased to any members of the Group, or which are proposed to be acquired or disposed of by or leased to any members of the Group;
(v) save for Chen Jinhang, Liu Chuandong and Liang Yongpan who are deemed by the Shanghai Listing Rules to be connected directors of the Company by virtue of their employment with CDC, none of the Directors or Supervisors was materially interested in any contract or arrangement entered into by any member of the Group subsisting at the date of this Whitewash Circular which is significant in relation to the business of the Group.

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GENERAL INFORMATION

APPENDIX III

Substantial Shareholders

As at the Latest Practicable Date, the following persons (not being a Director or chief executive of the Company or Supervisor), so far as was known to the Directors, chief executive of the Company and Supervisors, had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

				Approximate	Approximate
				% of the	% of the
		Class of	Number	total number	relevant class
Name of Shareholder	Notes	Shares	of Shares	of Shares	of Shares
CDC	1, 7	A	4,138,977,414	31.10%	41.41%
CDFC	2, 7	A	8,738,600	0.07%	0.09%
Tianjin Jinneng Investment Company	3	A	1,296,012,600	9.74%	12.97%
Hebei Construction & Investment Group Co., Ltd.	4	A	1,281,872,927	9.63%	12.83%
Beijing Energy Investment Holding Co., Ltd.	5	A	1,260,988,672	9.47%	12.62%
CDOHKC	6, 7	H	480,680,000	3.61%	14.50%

Notes:

(1) Mr. Chen Jinhang, Mr. Liu Chuandong and Mr. Liang Yongpan, all non-executive Directors, are employees of CDC.
(2) CDFC is a subsidiary of CDC. CDFC is held as to approximately 71.7898% by CDC directly, approximately 15.8931% by the Company directly, approximately 6.7544% by five other non-wholly owned subsidiaries of CDC and approximately 5.5624% by six other wholly owned subsidiaries of CDC.
(3) Mr. Zhu Shaowen, a non-executive Director, is currently an employee of Tianjin Energy Investment Group Limited, the de facto controller of Tianjin Jinneng Investment Company. Tianjin Jinneng Investment Company is independent of CDC.
(4) Mr. Cao Xin and Mr. Zhao Xiangguo, both non-executive Directors, are employees of Hebei Construction & Investment Group Co., Ltd. Hebei Construction & Investment Group Co., Ltd. is independent of CDC.
(5) Mr. Liu Haixia and Ms. Guan Tiangang, both non-executive Directors, are employees of Beijing Energy Investment Holding Co., Ltd.. Beijing Energy Investment Holding Co., Ltd. is independent of CDC.
(6) CDOHKC is an indirect wholly owned subsidiary of CDC.
(7) CDFC and CDOHKC are subsidiaries of CDC and parties acting in concert with CDC. CDC is deemed to be interested in the Shares held by CDFC and CDOHKC.

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GENERAL INFORMATION

APPENDIX III

5. ARRANGEMENT IN CONNECTION WITH THE WHITEWASH TRANSACTIONS AND THE WHITEWASH WAIVER

As at the Latest Practicable Date:

(i) there was no agreement, arrangement or understanding (including any compensation arrangement) between CDC or any person acting in concert with it and any of the Directors, recent Directors, Shareholders or recent Shareholders of the Company having any connection with or dependence upon the Whitewash Transactions and/or the Whitewash Waiver;
(ii) there was no benefit to be given to any Directors as compensation for loss of office or otherwise in connection with the Whitewash Transactions and/or the Whitewash Waiver;
(iii) there was no agreement or arrangement between any Director and any other person which is conditional on or dependent upon the outcome of the Whitewash Transactions and/or the Whitewash Waiver;
(iv) there was no material contract entered into by CDC in which any Director has a material personal interest.

6. SHAREHOLDINGS AND DEALINGS

As at the Latest Practicable Date:

(i) CDC is holding 4,138,977,414 A-Shares, representing approximately 31.10% of the total number of issued Shares and parties acting in concert with it, namely CDFC and CDOHKC (both of which are subsidiaries of CDC), are holding 8,738,600 A-Shares and 480,680,000 H-Shares, respectively, representing approximately 0.066% and 3.61%, respectively, of the total number of issued Shares;
(ii) none of the directors of CDC held any Shares or any convertible securities, warrants, options or derivatives in respect of the Shares;
(iii) no person had irrevocably committed themselves to vote for or against the resolutions to be proposed at the EGM and/or the Class Meetings to approve the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver;
(iv) save for the Subscription Agreements and the transactions contemplated thereunder, none of CDC or parties acting in concert with it had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with any person;

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GENERAL INFORMATION

APPENDIX III

(v) none of CDC or parties acting in concert with it had borrowed or lent any Shares or any convertible securities, warrants, options or derivatives in respect of the Shares;
(vi) the Company did not hold any shares of CDC or any convertible securities, warrants, options or derivatives in respect of the shares of CDC;
(vii) save as disclosed in the paragraph headed “Disclosure of Interests” in this Appendix, none of the Directors was interested in any Shares or any convertible securities, warrants, options or derivatives in respect of the Shares, or any shares of CDC or any convertible securities, warrants, options or derivatives in respect of the shares of CDC;
(viii) none of the subsidiaries of the Company owned or controlled any Shares or any convertible securities, warrants, options or derivatives in respect of the Shares;
(ix) none of the pension fund of the Company or of any of its subsidiaries owned or controlled any Shares or any convertible securities, warrants, options or derivatives in respect of the Shares;
(x) save as disclosed in the paragraph headed “Shareholdings of the Financial Advisers to the Company” in this Appendix, none of the advisers to the Company as specified in class (2) of the definition of associate under the Takeovers Code but excluding exempt principal traders owned or controlled any Shares or any convertible securities, warrants, options or derivatives in respect of the Shares;
(xi) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of associate under the Takeovers Code;
(xii) none of the Company or the Directors had borrowed or lent any Shares or any convertible securities, warrants, options or derivatives in respect of the Shares.

During the Relevant Period:

(i) neither CDC nor any party acting in concert with it had dealt for value in any Shares, convertible securities, warrants, options or derivatives in respect of the Shares;
(ii) none of the directors of CDC had dealt for value in any Shares, convertible securities, warrants, options or derivatives in respect of the Shares;

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GENERAL INFORMATION

APPENDIX III

(iii) the Company did not deal for value in any shares of CDC or any convertible securities, warrants, options or derivatives in respect of the shares of CDC;
(iv) none of the Directors had dealt for value in any Shares or any convertible securities, warrants, options or derivatives in respect of the Shares, or any shares of CDC or any convertible securities, warrants, options or derivatives in respect of the shares of CDC;
(v) none of the subsidiaries of the Company had dealt for value in any Shares or any convertible securities, warrants, options or derivatives in respect of the Shares;
(vi) none of the pension fund of the Company or of any of its subsidiaries had dealt for value in any Shares or any convertible securities, warrants, options or derivatives in respect of the Shares; and
(vii) no fund managers who managed funds on a discretionary basis connected with the Company had dealt for value in any Shares, convertible securities, warrants, options and derivatives of the Company.

Shareholdings of the Financial Advisers to the Company

CMS and CMS HK

As at the Latest Practicable Date, CMS and CMS HK (together with any entity that is controlling, controlled by, or under the same control as CMS or CMS HK) had interests in the Shares, the particulars of which are as follows:

			Percentage of	Percentage of the
			the relevant issued	relevant issued
			share capital as at	A-Share capital
			the Latest	as at the Latest
Name	Number of Shares	Class of Shares	Practicable Date	Practicable Date
CMS	21,400	A-Share	0.00016%	0.00021%

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GENERAL INFORMATION

APPENDIX III

7. COMPETING INTEREST

Since 31 December 2015 and up to the Latest Practicable Date, none of the Directors of the Company and its subsidiaries, or their respective associates has interests in the businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Company and its subsidiaries.

8. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into any service contracts with any member of the Group or associated companies which are in force and (i) are fixed term contracts and which have more than 12 months to run irrespective of the notice period; or (ii) are continuous contracts with a notice period of 12 months or more; or (iii) have been entered into or amended within the six months before the Announcement Date.

9. EXPERTS

The following set out the qualifications of the experts which has given their opinions or advice as contained in this Whitewash Circular:

Name

Qualifications

Gram Capital Limited a licensed corporation to carry out type 6 (advising on corporate finance) regulated activity as defined under the SFO

RSM Hong Kong certified public accountants

Ruihua Certified Public Accountants certified public accountants, one of the PRC mainland (Special General Partnership) accounting firms that have been approved by the Ministry of Finance of the PRC and the CSRC that is eligible to act as reporting accountants and/or auditors for PRC incorporated companies listed in Hong Kong.

Hylands Law Firm PRC legal adviser

China Merchants Securities (HK) a company licensed to conduct type 1 (dealing in securities), Co., Limited type 2 (dealing in futures contracts), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO

– 329 –

GENERAL INFORMATION

APPENDIX III

Name

Qualifications

China Securities (International) a company licensed to conduct type 1 (dealing in securities) Corporate Finance and type 6 (advising on corporate finance) regulated Company Limited activities under the SFO

CITIC CLSA Capital a company licensed to conduct type 4 (advising on Markets Limited securities) and type 6 (advising on corporate finance) regulated activities under the SFO

As at the Latest Practicable Date, each of the experts above:

(i) did not have any shareholding, direct or indirect, in any members of the Group or any rights (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any members of the Group, save as disclosed in the paragraph headed “Shareholdings of the Financial Advisers to the Company” in this Appendix; and
(ii) did not have any interest, direct or indirect, in any assets which have been, since 31 December 2015 (being the date to which the latest published audited financial statements of the Company were made up) acquired or disposed of by or leased to any members of the Group, or which are proposed to be acquired or disposed of by or leased to any members of the Group.

10. CONSENT

Each of experts named in the section headed “Experts” above has given and has not withdrawn its written consent to the issue of this Whitewash Circular with the inclusion of its letter(s) and/or references to its name and/or logo in the form and context in which they are included.

11. LITIGATION

No member of the Company and its subsidiaries is at present engaged in any litigation or arbitration of material importance to the Company and its subsidiaries and no litigation or claim of material importance to the Company and its subsidiaries is known to the Directors or the Company to be pending or threatened by or against any member of the Company and its subsidiaries.

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GENERAL INFORMATION

APPENDIX III

12. MISCELLANEOUS

(i) The registered office and office address of the Company is No. 9 Guangningbo Street, Xicheng District, Beijing, the PRC.
(ii) The principal place of business of the Company in Hong Kong is at c/o Eversheds, 21/F, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong.
(iii) The Hong Kong share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at 46/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(iv) The secretary to the Board of the Company is Mr. Ying Xuejun.
(v) The registered address of CDC is situated at No. 1 Guangningbo Street, Xicheng District, Beijing, The PRC.
(vi) The directors of CDC comprise Chen Jinhang, Chen Feihu, Sun Hanhong, Sun Xinguo, Chen Qiliang, Xia Donglin and Wang Wanchun.
(vii) The Company’s legal advisers as to Hong Kong law is Eversheds located at 21/F, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong. The Company’s legal advisers as to the PRC law is Hylands Law Firm located at 12F Fortune Financial Center, No. 5 Dongsanhuan Zhong Road, Chaoyang District, Beijing 100020, China.
(viii) No founders, management or deferred shares of the Company have been issued or agreed to be issued.
(ix) Save as disclosed above, there were no commissions, discounts, brokerages or other special terms granted since the date to which the latest published audited accounts of the Company were made up in connection with the issue or sale of any capital of any member of the Group, and there were no directors or proposed directors, promoters or experts (as named in this Whitewash Circular) who received any such payment or benefit as at the Latest Practicable Date.
(x) Save as disclosed in the connected transaction announcements of the Company dated 12 December 2016 and 5 September 2016, there was no alteration in the capital of any member of the Group since 31 December 2015, which is the latest date of the published audited accounts of the Group were made up.

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GENERAL INFORMATION

APPENDIX III

(xi) Save as disclosed in this Whitewash Circular, no share or loan capital of any member of the Group is under option or is agreed conditionally or unconditionally to be put under option.
(xii) Dealings in the H Shares may be settled through the CCASS operated by Hong Kong Securities and Clearing Limited, and investors should seek the advice of their stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser for details of those settlement arrangements and how such arrangements will affect their rights and interests.
(xiii) The expenses in connection with the A-Share Issuance, the H-Share Issuance and the application for listing of the Subscription Shares is estimated to be not more than the total proceeds from the A-Share Issuance and the H-Share Issuance and will be payable by the Company.

13. MAJOR CUSTOMERS AND SUPPLIERS

For the year ended 31 December 2015, purchases from the Company’s five largest suppliers accounted for approximately 27.89% of the Company’s total purchases.

For the year ended 31 December 2015, sales to the Company’s largest customer and the five largest customers accounted for approximately 24.85% and approximately 57.01% respectively of the Company’s total turnover.

To the knowledge of the Directors, none of the Directors, Supervisors, their respective associates or shareholders (owning 5% or more of the Company’s issued share capital of the same class) owned any direct or indirect interest in the Company’s suppliers and customers.

14. RESTRICTION AFFECTING REMITTANCE OF PROFITS OR REPATRIATION OF CAPITAL INTO HONG KONG FROM THE PRC

Currently, the PRC government imposes control over foreign currencies. RMB, the official currency in the PRC, is not freely convertible. Enterprises operating in the PRC can enter into foreign exchange transactions through financial institutions authorised by the People’s Bank of China. Payments for imported materials or services, making offshore investments and remittance of earnings outside of the PRC are subject to the availability of foreign currencies which depends on the foreign currency denominated earnings of the enterprises, or must be arranged through financial institutions authorised by the People’s Bank of China, which will approve the purchase of foreign currencies by PRC enterprises for valid reasons such as purchases of imported materials, making offshore investments and remittance of earnings. While conversion of RMB to Hong Kong dollars or other foreign currencies can generally be effected by financial institutions authorised by the People’s Bank of China, there is no guarantee that it can be effected at all times.

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GENERAL INFORMATION

APPENDIX III

15. BIOGRAPHY OF THE DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE COMPANY

Set out below are the brief biographical details of the Directors, supervisors and senior management of the Company:

Directors

Chen Jinhang, aged 61, is a professor-grade senior engineer with postgraduate qualifications. He started to work at First Power Plant in Heze, Shandong, in December 1972, and has successively served as a director and the general manager of Shandong Electric Power Group Corporation, the Party Committee Secretary and general manager of Shanxi Electric Power Corporation, the party committee member and the deputy general manager of State Grid Corporation of China as well as a director, general manager and party committee member of CDC. Mr. Chen has taken up the current position as the chairman and party committee secretary of CDC since April 2013. Mr. Chen has long been engaged in electricity production and business management, and has extensive knowledge and practical experience in electricity production and business management.

Liu Chuandong, aged 54, post-graduate, is a senior accountant. Mr. Liu started to work in July 1981 and has successively served as the deputy Director of the Fund Settlement Management Center of CPI Group, the deputy general manager of CPI Financial Co., Ltd., the deputy head of Finance and Asset Management Department of CPI Group, the general manager and Deputy Party Committee Secretary of CPI Financial Co., Ltd., a director of Fund Settlement Management Center of CPI Group, the general manager and party committee secretary of China Datang Finance Company Limited, the party committee secretary of CDC Capital Holding Company, as well as a director of the Financial Management Department of CDC. He was a supervisor of the Company during the period from 25 June 2015 to 30 June 2016. He served as the chief accountant and a member of the party committee of CDC since October 2015. Mr. Liu has long been engaged in corporate finance as well as operation and management of power generation enterprises and has extensive experience in finance and management of power generation enterprises.

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Wang Xin, aged 56, is a holder of a master’s degree and a senior engineer. Mr. Wang was the head of the Steam Engine Team, head of the Maintenance and Repair Management Division, head of the Biotechnology Division, assistant to the plant manager, deputy plant manager and chief engineer, plant manager and secretary of the party committee of Tianjin First Power Plant. He also served as the head of the Power Generation Department and the Heat Supply Division and deputy chief engineer of Tianjin Electric Power Company and was concurrently the general manager and secretary of the party committee of Sanyuan Power Group Co., Limited. Mr. Wang was the deputy head of the Production Safety Department of CDC, secretary of the party committee and general manager of Datang Heilongjiang Power Generation Co., Ltd., head of the General Manager Office (International Cooperation) and assistant to general manager and head of the Office (Policy and Legal Department and International Cooperation Department) of CDC. Mr. Wang was appointed as the President and deputy Party Committee Secretary of the Company with effect from March 2016. Mr. Wang has long been engaged in the production and operation management of power generation enterprises and possesses extensive experiences in power generation and operation management.

Liang Yongpan, aged 50, university graduate, is a senior engineer. Mr. Liang served as the deputy division head and deputy Plant Head of the Production Division of Lanzhou No. 2 Thermal Power Factory, general manager of Lanzhou Xigu Thermal Power Co. Ltd., a member of Party Committee, the vice general manager and the chairman of the labour union of Gansu branch of CDC and Datang Gansu Power Generation Co., Ltd., the deputy head of Planning, Investment and Financing Department of CDC, as well as the Secretary of Party Committee and general manager of Datang Gansu Power Generation Co., Ltd. He served as the head of Planning and Marketing Department of CDC in May 2014. He has served as the head of Safety and Production Department of CDC since March 2016. Mr. Liang has long been engaged in the production, operation and management of power generation enterprises. Mr. Liang has extensive experience in production, operation and management of power generation companies.

Ying Xuejun, aged 50, a senior engineer with a bachelor’s degree. Mr. Ying was the deputy director of the Production Department of Tangshan General Power Plant; the deputy director of the Production Technology Department, the deputy manager of the Facilities Department, the manager of the Facilities Department, the deputy chief Engineer and Manager of the Facilities Department and the deputy general manager of Dou He Power Plant; the deputy general manager and the general manager of Inner Mongolia Datang International Tuoketuo Power Generation Company Limited; and the deputy general manager of Inner Mongolia Branch Company of CDC. In December 2008, he was re-designated as the chief of the Integrated Planning Department, the deputy chief Economist and the chief of the Integrated Planning Department of the headquarter of the Company. Since January 2015, he has served as the chief economist of the Company. Since December 2015, he has served as the secretary to the Board and joint company secretary of the Company. Since January 2017, he has served as a committee member of the Communist Party of China in the Company and deputy general manager of the Company. Mr. Ying has long been engaged in management of production and operation of power generation companies, and has extensive experience in production, operation and management.

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Zhu Shaowen, aged 51, a master’s degree holder and a senior engineer. Mr. Zhu previously worked as an engineer and the deputy head of Specialty Department at Tianjin Electric Power Science Research Institute, head of Planning and Design Department of State Grid Tianjin Electric Power Company, the deputy head of Project Department, vice manager (person-in-charge) and the manager of Power Development Department and manager of Project Development Department of Tianjin Jinneng Investment Company, the general manager (concurrent) of Tianjin Jinneng Wind Power Co., Ltd. Since November 2013, Mr. Zhu has been the manager of Electric Power Department of Tianjin Energy Investment Group Limited. Mr. Zhu has long been engaged in management of production operation and administrative roles in power generation enterprises, and has extensive experience in the operation and management of power generation enterprises.

Cao Xin, aged 45, is a doctoral candidate, and a principal senior economist. Mr. Cao started to work at Hebei Construction Investment Company in July 1992, and has successively served as a project manager and an assistant to manager of the industrial branch office of Hebei Construction Investment Company, an assistant to manager and the deputy manager of the asset management branch company of Hebei Construction Investment Company, the manager of public utilities second department of Hebei Construction Investment Company and the general manager of Hebei Construction Investment New Energy Co., Ltd., an assistant to general manager of Hebei Construction Investment Company and the Secretary of Party Committee and the general manager of Hebei Construction Investment New Energy Co., Ltd., a standing member of the Party Committee of Hebei Construction Investment Company and Secretary of Party Committee and President of China Suntien Green Energy Corporation Ltd., the Secretary of Party Committee and the general manager of Hebei Construction Investment New Energy Co., Ltd., a standing member of the standing committee of Party Committee and the vice general manager of Hebei Construction & Investment Group Co., Ltd., the chairman of China Suntien Green Energy Corporation Limited and the chairman and the deputy Party Secretary of Hebei Financing and Investment Holding Group Limited. He has been serving as member of the standing committee of Party Committee and the vice general manager of Hebei Construction & Investment Group Co., Ltd. and the chairman of China Suntien Green Energy Corporation since May 2015. Mr. Cao has long been engaged in the management of energy projects and has extensive knowledge and practical experience in energy production and business management.

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Zhao Xianguo, aged 47, is a senior engineer with a postgraduate degree. Mr. Zhao started his career in the electric branch of Xingtai Power Generation Plant in 1990. He has been the engineer head of the office of the electric repair branch of Xingtai Power Generation Plant, an assistant to the head of the electric repair branch and assistant to the head, deputy head and head of the operation and planning department of Hebei Xingtai Power Generation Company Limited; the deputy chief economist and the head of the operation and planning department of Hebei Xingtai Power Generation Company Limited; the deputy general manager of Hebei Construction & Investment Xuanhua Thermal Power Company Limited. He has been acting as the deputy general manager of the appraisal and evaluation department of Hebei Construction & Investment Group Co., Ltd. since December 2013. Mr. Zhao has long been engaged in the production and management of power generation enterprises and has extensive knowledge and practical experience in production, operation and business management.

Liu Haixia, aged 55, is a senior engineer with a postgraduate degree. Mr. Liu joined Beijing Electric Power Company in 1983. He has been an assistant to president of Beijing International Power Development and Investment Company in 1998. He has been an assistant to president and the vice president of Beijing Energy Investment (Group) Company Limited in 2004 and May 2009, respectively. He served as the vice president of Beijing Energy Investment Holding Company Limited since December 2014. With his long-standing involvement in production management and investment management of power generation companies, Mr. Liu has acquired extensive knowledge and practical experience in production and business management of power generation companies, investment and financing.

Guan Tiangang, aged 49, is a senior engineer with a master degree. Ms. Guan started her career in Beijing Shijingshan Thermal Power Plant in 1990. She then became the project manager of the Power Investment Department, the deputy manager of the Power Investment and Management Department and the manager of the Power Generation and Operation Department of Beijing International Power Development and Investment Company. She became the manager of the Power Generation and Operation Department of Beijing Energy Investment (Group) Company in December 2004. In January 2007, she served as the vice president and the secretary to the board of directors of Beijing Jingneng International Energy Company Limited. She was the chief engineer of Beijing Energy Investment (Group) Company Limited in May 2009. She has served as the Chief Engineer of Beijing Energy Investment Holding Company Limited since December 2014. Ms. Guan has long been engaged in the work of power investment and operation management, and has extensive knowledge and practical experience in management of power investment and finance and management and management of power safety production.

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*Feng Genfu, aged 59, a professor and a doctoral supervisor who holds a doctorate degree in Economics. Mr. Feng currently serves as a professor of the School of Finance and Economics of Xi’an Jiaotong University. Mr. Feng served as the Head of China’s Financial Market and Enterprise Development Research Center of Xi’an Jiaotong University. Mr. Feng is currently an Independent Director of Bode Energy Equipment Co., Ltd. (a company listed on the Shenzhen Stock Exchange, Stock Code: 300023) and Hubei Biocause Pharmaceutical Co., Ltd. (a company listed on the Shenzhen Stock Exchange, Stock Code: 000627), the Executive Vice President of China Industry Economic Research Institute and the Vice President of the Chinese Institute of Business Administration. Mr. Feng has long been involved in education and administration management of Economics and Finance. He has extensive experience in Economics and Finance.

*Luo Zhongwei, aged 61, a Doctor of Economics. Mr. Luo is currently a researcher of the Institute of Industrial Economics of Chinese Academy of Social Sciences, a professor and doctoral supervisor of the Graduate School of Chinese Academy of Social Sciences and the chief analyst of the Innovation Engineering Project of Chinese Academy of Social Sciences. He is also the director of Small and Medium-sized Enterprises Research Centre under Chinese Academy of Social Sciences, a legislative consultant to the Law on Promotion of Small and Medium-sized Enterprises for the National People’s Congress, a member of the Investment Advisory Committee of the Investment Association of China, a member of the Management Modernisation Working Committee of China Enterprise Confederation, a scholar and tutor of the “Light of the West” Scheme under the Organisation Department of the Communist Party of China, as well as the Head of MBA Case Research Center of Graduate School of the Chinese Academy of Social Sciences. Mr. Luo served as an independent director of Zhejiang China Commodities City Group Co., Ltd. (a company listed on the Shanghai Stock Exchange, stock code: 600415) and Sichuan Langsha Holding Ltd. (a company listed on the Shanghai Stock Exchange, stock code: 600137). Mr. Luo has long term engagement in research on industry and corporate strategies, corporate management, promotion and policy of small and medium-sized enterprises, development and reform of state-owned enterprises. He has extensive experience in strategic planning for corporate development and corporate management.

Liu Huangsong,* aged 48, a Master of Science and a Doctor of Economics from Fudan University. Mr. Liu served as deputy section chief and officer of Shanghai Municipal Bureau of Statistics and director of the Bureau’s Statistics and Industry Development Center, the general manager of the investment planning department, the general manager of the development and research department and a supervisor of China Worldbest Group, the vice general manager of a listed company under the group and the assistant to the group president, the director, researching professor and doctoral supervisor of Research Centre for Economic Prosperity of Shanghai Academy of Social Sciences, as well as the independent director of Hengdeli Holdings Limited, Shanghai Prime Machinery Company Limited (a company listed on the Stock Exchange of Hong Kong Limited (the “ Stock Exchange** ”), stock code: 02345), Jingwei Textile Machinery Co., Ltd. (a company listed on the Stock Exchange, stock code: 00350) and Changan Fund Management Co., Ltd. Mr. Liu is currently the chief economist of Hengdeli Holdings Limited, the deputy director of the Center for Securities

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Studies of Fudan University, as well as the independent director of Shanghai Xinhua Media Co., Ltd. (a company listed on the Shanghai Stock Exchange, stock code: 600825), Shanghai Zijiang Enterprise Group Co., Ltd. (a company listed on the Shanghai Stock Exchange, stock code: 600210) and Changan International Trust Co., Ltd. Mr. Liu has long term engagement in research in economics and has extensive experience in economic operation and corporate management.

*Jiang Fuxiu, aged 47, a Doctor of Economics and a Postdoctoral Scholar in Management (Accounting). Mr. Jiang is currently the director, professor and doctoral supervisor of the Finance Department of the School of Business of Renmin University of China. Mr. Jiang is currently the independent director of four listed companies on the Shenzhen Stock Exchange, namely Yantai Longyuan Power Technology Co., Ltd. (a company listed on the Shenzhen Stock Exchange, stock code: 300105), Beijing UTour International Travel Service Co., Ltd. (a company listed on the Shenzhen Stock Exchange, stock code: 002707), Lancy Co., Ltd. (a company listed on the Shenzhen Stock Exchange, stock code: 002612) and Shandong Qixing Iron Tower Co., Ltd. (a company listed on the Shenzhen Stock Exchange, stock code: 002359). Mr. Jiang has long term engagement in research in economics and has extensive experience in corporate governance and financial management.

*Liu Jizhen, aged 65, is a professor, a tutor of doctoral students and an academician of the Chinese Academy of Engineering. Mr. Liu has served as the head of the Faculty of Power of North China Power College since July 1990; has served as the vice dean of the North China Power College, the vice principal of the North China Electric Power University and the principal of Baoding Campus since August 1993; has served as the principal of the School of Water Resources and Hydropower Engineering, Wuhan University since June 1998; and served as the principal of the North China Electric Power University from January 2001 to November 2016. He currently serves as the head of the State Key Laboratory of Alternate Electrical Power System with Renewable Energy Sources, the chief scientist of the “973 Programme”. He concurrently serves as the vice president of the China Electricity Council, the vice president of Chinese Society for Electrical Engineering, the vice president of Chinese Society of Power Engineering and a Fellow of the Institution of Engineering and Technology (FIET). Mr. Liu has been engaging in researches in various fields for many years, including thermal power generation control and development and utilisation of new energy sources, as well as technology development, engineering application and talent cultivation, and has obtained innovative and systemic research results. He has extensive experience in power technology innovation and application and other aspects.

Note: * refers to the independent non-executive Directors

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Supervisors

Yu Meiping, aged 54, is a senior economist as well as a senior political officer with a bachelor’s degree. Ms. Yu has served as a cadre in the economic research centre of Xi’an Municipal Government, the principal Staff member of the first supervision bureau of the State’s Ministry of Supervision, the deputy director of the fourth unit of the first discipline and inspection office and the director of the corporate guidance division of the first discipline, inspection and supervision office of the Central Commission for Discipline Inspection, the deputy chief of the corporate supervision bureau of the CDC and deputy director (person-in-charge) of the department of corporate supervision (office of discipline and inspection division of the Party Committee) of CDC. She is currently a Party Committee member and leader of the discipline inspection team of the Company. Ms. Yu has long been engaged in roles in relation to discipline, inspection and supervision, and has extensive experience in discipline, inspection, supervision and corporate supervision and management.

Zhang Xiaoxu, aged 53, is a senior accountant with a bachelor’s degree. Mr. Zhang commenced career in Liaoning Fushun First Construction Company in 1982. He served as accountant in Liaoning Fushun First Construction Company, Accountant and chief accountant of Liaoning Power Plant; and deputy head and head of Finance Department, deputy chief accountant, chief accountant of Liaoning Nenggang Power Generation Co., Ltd., and vice manager and manager of Financial Department of Tianjin Jinneng Investment Company. He became the Manager of the settlement center of Tianjin Energy Investment Group Co., Ltd. since December 2013. Mr. Zhang has long been engaged in financial management and has extensive practical working experience.

Liu Quancheng, aged 53, is a senior accountant with university education. Mr. Liu has served as the chief accountant of Xinxiang Coal-fired Plant; the chief accountant of Luoyang Shouyangshan Electricity Plant; the head of the supervisory audit department, the deputy chief accountant and the head of financial and asset management department and the chief accountant of Henan Branch of CDC; the deputy head of financial management department of CDC; the chief accountant of the Company; the head of financial management department of CDC since January 2016. He is currently serving as a director of Guangxi Guiguan Electric Power Co., Ltd. (stock code: 600236). Mr. Liu has long been engaged in financial management in power generation enterprises and he possesses ample experience in financial management.

Guo Hong, aged 47, is a senior economist with a post-graduate master’s degree. Ms. Guo has served as the deputy manager of the development department, the deputy officer and then officer of the human resources department, deputy chief economist of China National Water Resources & Electric Power Materials & Equipment Co., Ltd. and concurrently as the manager of the Import and Export Company of China National Water Resources & Electric Power Materials & Equipment Co., Ltd. She acted as the department head of the senior management personnel management office of the human resources department of CDC, and has been an officer of the human resources

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department of the Company since March 2014. Ms. Guo is familiar with the development and management of human resources in power generation companies and has extensive experience in human resources management in power generation companies.

Senior management

Wang Xin, aged 56, is a holder of a master’s degree and a senior engineer. Please refer to the paragraph headed “Directors” in this section above for his biography.

Hong Shaobin, aged 50, a postgraduate, and a senior engineer. He worked as deputy director and director of Marketing Division at Generation and Transmission Operation Department of State Electric Power Corporation, deputy director of Marketing Bureau of the CDC, deputy general manager, deputy Party Secretary (person-in-charge) and general manager of China National Water Resources & Electric Power Materials & Equipment Co., Ltd. He has been a Party Committee member and vice president of the Company since October 2015. Mr. Hong has long been engaged in roles in relation to electricity production, and business management of power enterprises, and has extensive experience in electricity production, and business management of power enterprises.

Meng Fankui, aged 53, a senior engineer who holds a post-graduate degree. He served as the deputy chief of Zhangjiakou Power Plant, chief of Xia Hua Yuan Power Plant, chief of Zhangjiakou Power Plant, general manager and Deputy Party Secretary of Inner Mongolia Branch Company of Datang and general manager of Tuoketuo Power Generation Company. He served as the deputy Party Secretary (responsible for leading the work of party group) and deputy general manager of Datang Hebei Power Generation Co., Ltd. He has been a member of the Party Committee and deputy general manager of the Company since June 2014. Mr. Meng has long been involved in production, operation, management and administrative work of power generation enterprises. He has extensive experience in production, operation and management of power generation companies.

Duan Zhangmin , aged 56, is a senior engineer with university education. Mr. Duan served as the deputy manager of Hydropower Maintenance and Overhaul Company under Electric Power Industry Bureau in Gansu Province, the deputy general manager and the general manager of Gansu Electric Power Construction and Installation Engineering Company, the deputy general manager of Liujiaxia Hydropower Plant, general manager of Bikou Hydropower Plant, the chief engineer of Gansu Branch Company of CDC (Datang Gansu Power Generation Co., Ltd.), the general manager of Datang Yantan Hydropower Plant, the vice secretary of the party committee and the deputy general manager (in charge) of Sichuan Branch Company of China Datang Corporation, the secretary of the party committee and the general manager of Sichuan Branch Company of China Datang Corporation. He has served as the general manager and the vice secretary of the party committee of China Datang Overseas Investment Co., Ltd. since August 2011. Mr. Duan has long been engaged in the production and operation management of power enterprises with extensive experience in the production and operation management of power enterprises.

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Ying Xuejun , aged 50, a senior engineer with university education. Please refer to the paragraph headed “Directors” in this section above for his biography.

The business address of the above Directors, supervisors and senior management at the Company is No. 9 Guangningbo Street, Xicheng District, Beijing, 100033, the PRC.

16. CORPORATE INFORMATION

Auditors

Auditors PRC Domestic Auditor Ruihua Certified Public Accountants (Special General Partnership) 5–11F, West Tower, China Overseas Property Plaza, 7F, 8 Xibinhe Road, Yongding Men, Dongcheng District, Beijing, PRC International Auditor RSM Hong Kong Certified Public Accountants 29th Floor, Caroline Centre, Lee Garden Two, 28 Yun Ping Road, Causeway Bay, Hong Kong Principal bankers In the PRC: Industrial and Commercial Bank of China, Xuanwu Branch No. 1 Caishikou Street, Xicheng District, Beijing, PRC Outside the PRC: Bank of China (Hong Kong) Limited One Garden Road, Central, Hong Kong

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Joint company secretary Ying Xuejun Mok Chung Kwan Stephen (Solicitor) Hong Kong branch share registrar Computershare Hong Kong Investor Services Limited and transfer office 46/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong

Authorised representatives

Wang Xin No. 9 Guangningbo Street, Xicheng District, Beijing, 100033, the PRC

Ying Xuejun

No. 9 Guangningbo Street, Xicheng District, Beijing, 100033, the PRC

17. MATERIAL CONTRACTS

In the two years immediately preceding the Announcement Date and up to the Latest Practicable Date, the following contracts, not being contracts entered into the ordinary course of business, were entered into by the Company or any of its subsidiaries which are or may be material:

(1) On 12 February 2015, the Company, Duolun Coal Chemical Company and Datang Finance Company entered into the Entrusted Loan Contract. The Company shall entrust Datang Finance Company as the lending agent to provide the entrusted loan of an aggregate amount of RMB1 billion to Duolun Coal Chemical Company during the term of the contract.
(2) On 21 May 2015, the Company, Duolun Coal Chemical Company and Beijing Railway Sub-branch of China Construction Bank Corporation (“ Construction Bank Railway Subbranch ”) entered into the Entrusted Loan Contract, pursuant to which, the Company shall entrust Construction Bank Railway Sub-branch to act as the lending agent to provide the entrusted loan of an aggregate amount of RMB1 billion to Duolun Coal Chemical Company during the term of the contract.
(3) On 19 June 2015, the Company and Xilinhaote Mining Company entered into the Entrusted Loan Agreement with Construction Bank Railway Sub-branch, pursuant to which, the Company agreed to entrust Construction Bank Railway Sub-branch to act as the lending agent to provide entrusted loan of an aggregate amount of RMB1.5 billion to Xilinhaote Mining Company during the term of the agreement.

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(4) On 29 June 2015, the Company and Xuanwu Sub-branch of the Industrial and Commercial Bank of China (“ ICBC Xuanwu Branch ”) entered into the Entrusted Loan Framework Agreement, pursuant to which, the Company entrusted ICBC Xuanwu Branch to act as the lending agent to provide entrusted loan of an aggregate amount of RMB4.0 billion to Duolun Coal Chemical Company during the term of the agreement.
(5) On 29 June 2015, the Company and Xilinhaote Mining Company entered into the Entrusted Loan Agreement with Construction Bank Railway Sub-branch, pursuant to which, the Company agreed to entrust Construction Bank Railway Sub-branch to act as the lending agent to provide entrusted loan of an aggregate amount of RMB2.0 billion to Xilinhaote Mining Company during the term of the agreement.
(6) On 11 September 2015, the Company and Shanghai Datang Financial Lease Co., Ltd. entered into the Leasing and Factoring Business Cooperation Agreement, pursuant to which Shanghai Datang Financial Lease Co., Ltd. shall provide support on financial leasing and factoring business to the Company and its subsidiaries with a principal of not exceeding RMB10.0 billion for every 12 months for a term of 36 months from the date of entering into the agreement.
(7) On 23 December 2015, the Company, Datang Energy and Chemical Company Limited (“ Energy and Chemical Company ”), China Construction Bank Railway Sub-branch and Duolun Coal Chemical Company entered into the Entrusted Loan Framework Agreement (Duolun), pursuant to which the Company shall entrust China Construction Bank Railway Sub-branch to act as the lending agent to provide entrusted loan of an aggregate amount of RMB6 billion to Duolun Coal Chemical Company during the term of the agreement.
(8) On 25 December 2015, the Company, Renewable Energy Resource Company and China Construction Bank Railway Sub-branch entered into the Entrusted Loan Framework Agreement (Renewable Energy Resource), pursuant to which the Company shall entrust China Construction Bank Railway Sub-branch to act as the lending agent to provide an entrusted loan of an aggregate amount of RMB4 billion to Renewable Energy Resource Company during the term of the agreement.
(9) On 25 December 2015, the Company, Energy and Chemical Company, China Construction Bank Railway Sub-branch and Xilinhaote Mining Company entered into the Entrusted Loan Framework Agreement (Xilinhaote), pursuant to which the Company shall entrust China Construction Bank Railway Sub-branch to act as the lending agent to provide an entrusted loan of an aggregate amount of RMB1 billion to Xilinhaote Mining Company during the term of the agreement.

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(10) On 30 June 2016, the Company entered into a transfer agreement with Zhongxin Energy and Chemical Technology Company Limited in relation to the disposal of the Company’s coalto-chemical business segment at a consideration of RMB1.
(11) On 1 September 2016, the Company entered into the Financial Cooperation Agreement with Datang Financial Lease Co., Ltd., pursuant to which the Company shall conduct financial leasing and other businesses with an aggregate amount of not more than RMB5 billion for every 12 months from 1 September 2016 with Datang Financial Lease Co., Ltd., for a term of 36 months commencing from 1 September 2016 to 31 August 2019.
(12) the A-Share Subscription Agreement.
(13) the H-Share Subscription Agreement.
(14) the A-Share Subscription Supplemental Agreement.
(15) the H-Share Subscription Amendment Agreement.

18. STATEMENT TO BE MADE ON ACQUISITION OF SHARES

The Company shall ensure that all its listing documents and share certificates include the statements stipulated below and shall instruct and cause its share registrars not to register the subscription, purchase or transfer of any of its H-Shares in the name of any particular holder unless and until such holder delivers to such share registrar a signed form in respect of such H-Shares bearing statement to the following effect:

(1) the acquirer of shares agrees with the PRC issuer and each shareholder of the PRC issuer, and the PRC issuer agrees with each shareholder, to observe and comply with the Company Law, the Regulations and the articles of association of the PRC issuer;
(2) the acquirer of shares agrees with the PRC issuer, each shareholder, director, supervisor, manager and officer of the PRC issuer and the PRC issuer acting for itself and for each director, supervisor, manager and officer agrees with each shareholder to refer all differences and claims arising from the articles of association or any rights or obligations conferred or imposed by the Chinese Company Law or other relevant laws and administrative regulations concerning the affairs of the PRC issuer to arbitration in accordance with the articles of association, and any reference to arbitration shall be deemed to authorise the arbitration tribunal to conduct hearing in open session and to publish its award. Such arbitration shall be final and conclusive;

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(3) the acquirer of shares agrees with the PRC issuer and each shareholder of the PRC issuer that shares in the PRC issuer are freely transferable by the holder thereof; and
(4) the acquirer authorises the PRC issuer to enter into a contract on his behalf with each director and officer whereby such directors and officers undertake to observe and comply with their obligations to shareholders stipulated in the articles of association.

19. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at (i) the principal place of business in Hong Kong of the Company at 21/F, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong during normal business hours; (ii) the website of the SFC at www.sfc.hk; and (iii) the website of the Company at http://www.dtpower.com, from the date of this Whitewash Circular up to and including the date of the EGM in accordance with Notes 1 and 2 to rule 8 of the Takeovers Code:

(1) the articles of association of the Company;
(2) the annual reports of the Company for the years ended 31 December 2013, 31 December 2014 and 31 December 2015;
(3) the unaudited interim results announcement of the Company for the six months ended 30 June 2016;
(4) the third quarterly report of the Company for the nine months ended 30 September 2016;
(5) the “Letter from the Board”, the text of which is set out on pages 1 to 27 of this Whitewash Circular;
(6) the “Letter from the Connected Transactions IBC”, the text of which is set out on pages 28 to 29 of this Whitewash Circular;
(7) the “Letter from the Whitewash Waiver IBC”, the text of which is set out on pages 30 to 31 of this Whitewash Circular;
(8) the “Letter from Gram Capital”, the text of which is set out on pages 32 to 61 of this Whitewash Circular;
(9) the report under Rule 10 of the Takeovers Code from Ruihua, the text of which is set out in Appendix IB to this Whitewash Circular;

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(10) the report under Rule 10 of the Takeovers Code from CMS HK, the text of which is set out in Appendix IB to this Whitewash Circular;
(11) the report under Rule 10 of the Takeovers Code from CSCI, the text of which is set out in Appendix IB to this Whitewash Circular;
(12) the report under Rule 10 of the Takeovers Code from CITIC CLSA, the text of which is set out in Appendix IB to this Whitewash Circular;
(13) the report under Rule 10 of the Takeovers Code from RSM Hong Kong, the text of which is set out in Appendix IIB to this Whitewash Circular;
(14) the report under Rule 10 of the Takeovers Code from CMS HK, the text of which is set out in Appendix IIB to this Whitewash Circular;
(15) the report under Rule 10 of the Takeovers Code from CSCI, the text of which is set out in Appendix IIB to this Whitewash Circular;
(16) the consent letters from the experts referred to in the paragraph headed “Experts” in this Appendix;
(17) the circulars of the Company dated 1 February 2016, 12 August 2016, 30 September 2016 and 9 December 2016, respectively;
(18) the material contracts referred to in the paragraph headed “Material Contracts” in this Appendix; and
(19) this Whitewash Circular.

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AI assistant

Datang Intnl Pwr Gen — Proxy Solicitation & Information Statement 2017

10467_rns_2017-02-09_28c0ea37-e466-49af-940e-93242b5efc92.pdf

(Stock Code: 00991)

DEFINITIONS

CONNECTED TRANSACTION IN RESPECT OF THE PROPOSED SHARE ISSUANCE SPECIFIC MANDATES APPLICATION FOR WHITEWASH WAIVER

INTRODUCTION

The A-Share Issuance and the H-Share Issuance are inter-conditional upon each other.

CONNECTED TRANSACTIONS IN RESPECT OF THE PROPOSED SHARE ISSUANCE

A-SHARE SUBSCRIPTION AGREEMENT (AS SUPPLEMENTED)

Date

Parties

Number of A-Share Subscription Shares

Method of Issue

A-Share Issue Price

Basis for determining the A-Share Issue Price

Adjustments to the A-Share Issue Price

Proceeds from the A-Share Issuance

A-Share Lock-up Period

Effective Date of the A-Share Subscription Agreement

A-Share Issuance Date

H-SHARE SUBSCRIPTION AGREEMENT (AS AMENDED)

Date

Parties

Number of H-Share Subscription Shares

QH1 = QH0 x PH0/PH

Method of Issue

H-Share Issue Price

Basis for determining the H-Share Issue Price

Adjustments to the H-Share Issue Price

Proceeds from the H-Share Issuance

H-Share Lock-up Period

Effective Date of the H-Share Subscription Agreement

H-Share Issuance Date

RANKING OF THE A-SHARE SUBSCRIPTION SHARES AND H-SHARE SUBSCRIPTION SHARES

SPECIFIC MANDATES

APPLICATION FOR LISTING

EFFECT ON SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

USE OF PROCEEDS

A-Share Issuance

H-Share Issuance

REASONS FOR AND BENEFITS OF THE A-SHARE ISSUANCE AND THE H-SHARE ISSUANCE

(I) Enhancing the core competitiveness of the principal business of the Company

(II) Optimizing the capital structure and reducing financial risks

(III) Enjoying further support from CDC

FUTURE INTENTION OF CDC REGARDING THE COMPANY AND ITS EMPLOYEES

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

LISTING RULES IMPLICATIONS

BOARD’S APPROVAL

IMPLICATIONS UNDER THE TAKEOVERS CODE

APPLICATION FOR WHITEWASH WAIVER

ADDITIONAL DISCLOSURE OF INTEREST

Interest of CDC and parties acting in concert with it in the securities of the Company

INDEPENDENT BOARD COMMITTEES

APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

INFORMATION ON THE PARTIES

The Company

CDC

CDOHKC

EGM AND CLASS MEETINGS

FURTHER INFORMATION

RECOMMENDATION

Yours faithfully,

CONNECTED TRANSACTION IN RESPECT OF THE PROPOSED SHARE ISSUANCE SPECIFIC MANDATES

Yours faithfully,

Feng Gengfu, Luo Zhongwei, Liu Huangsong,

(Stock Code: 00991)

THE PROPOSED SHARE ISSUANCE APPLICATION FOR WHITEWASH WAIVER

Yours faithfully,

(I) CONNECTED TRANSACTION IN RESPECT OF

THE PROPOSED SHARE ISSUANCE;

(II) SPECIFIC MANDATES; AND

(III) APPLICATION FOR WHITEWASH WAIVER

INTRODUCTION

LETTER FROM GRAM CAPITAL

INDEPENDENCE

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

A. The A-Share Issuance and the H-Share Issuance

Datang Intnl Pwr Gen Proxy Solicitation & Information Statement 2017