THIS SUPPLEMENTAL CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Whitewash Supplemental 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 Supplemental 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 Supplemental Circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Whitewash Supplemental Circular.

This Whitewash Supplemental 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)

WHITEWASH SUPPLEMENTAL CIRCULAR TO THE WHITEWASH CIRCULAR RELATING TO (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

Unless otherwise modified or defined in the section headed “Definitions” in this Whitewash Supplemental Circular, capitalised terms used herein shall have the same meanings as those defined in the 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 28 March 2017 at 9:30 a.m.. The supplemental notice convening the EGM has been despatched to the Shareholders on 13 March 2017.

The Company will convene the A-Share Class Meeting 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 28 March 2017 at 10:30 a.m.. The supplemental notice convening the A-Share Class Meeting has been despatched to the Shareholders on 13 March 2017.

The Company will convene the H-Share Class Meeting 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 28 March 2017 at 11:00 a.m.. The supplemental notice convening the H-Share Class Meeting has been despatched to the Shareholders on 13 March 2017.

As specified in the Whitewash Third Supplemental Announcement, the notices of attendance for the EGM, A-Share Class Meeting and H-Share Class Meeting published by the Company on 25 January 2017 are still valid for the postponed EGM, A-Share Class Meeting and H-Share Class Meeting, unless the Shareholders inform the Company that they no longer intend to attend the EGM, A-Share Class Meeting and/or H-Share Class Meeting through mail, facsimile or by phone (the details of which are set out in such notices of attendance) on or before 8 March 2017. Completion of and return of the notices of attendance shall not preclude Shareholders from attending the EGM, A-Share Class Meeting and/or H-Share Class Meeting and voting at these meetings.

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.

13 March 2017

CONTENTS

			Page
DEFINITIONS.	. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
SUPPLEMENTAL LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			1
SUPPLEMENTAL LETTER FROM GRAM CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			22
APPENDIX IA	–	PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES
		(THIRD REVISION). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
APPENDIX IB	–	REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016. . . . . 132
APPENDIX II	–	SUPPLEMENTAL FINANCIAL INFORMATION OF
		THE GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
APPENDIX III	–	SUPPLEMENTAL GENERAL INFORMATION. . . . . . . . . . . . . . . . . .	143

– i –

DEFINITIONS

Terms defined in the Whitewash Circular shall have the same meanings herein unless the context otherwise requires or unless otherwise modified below in this Whitewash Supplemental Circular. The following expressions have the meanings set out below in this Whitewash Supplemental Circular:

“A-Share Issuance”
the allotment and issue of not more than 2,662,007,515 A-Share Subscription Shares (subject to adjustments) to CDC pursuant to the A-Share Subscription Agreement
“A-Share Issuance amendments to the terms of the A-Share Issuance set out in the paragraph Amendments” headed “Second Supplemental Agreement to the A-Share Subscription Agreement” in this Whitewash Supplemental Circular
“A-Share Issue Floor Price” the minimum price at which CDC shall subscribe for each A-Share Subscription Share
“A-Share Price Referencing the date the Company notifies CDC in writing to pay for the subscription Date” amount in respect of the A-Share Subscription Shares, i.e. the first day of the non-pubic issuance period
“A-Share Proposal” the Proposal for Non-Public Issuance of A-Shares, as revised from time to time
“A-Share Subscription the subscription agreement dated 28 November 2016 and as supplemented Agreement” on 6 January 2017 and 13 March 2017 by the A-Share Subscription Agreement and the A-Share Subscription Second Supplemental Agreement, respectively, in respect of the allotment and issue of the A-Share Subscription Shares
“A-Share Subscription Second the supplemental agreement dated 13 March 2017 to the A-Share Supplemental Agreement” Subscription Agreement entered into between the Company and CDC to reflect the A-Share Issuance Amendments
“Board Resolutions Date”
29 November 2016, being the date on which the announcement in respect of the resolutions of the Board Meeting was published on the Shanghai Stock Exchange
“CDC Undertaking Letter” the letter of undertaking dated 13 March 2017 issued by CDC to the Company in respect of the A-Share Issue Floor Price
“H-Share Subscription the subscription agreement dated 28 November 2016 and as amended Agreement” on 6 January 2017 by the H-Share Subscription Amendment Agreement and supplemented on 13 March 2017 by the H-Share Subscription Supplemental Agreement in respect of the allotment and issue of the H-Share Subscription Shares

– ii –

DEFINITIONS

“H-Share Subscription Supplemental Agreement”
the supplemental agreement dated 13 March 2017 to the H-Share Subscription Agreement entered into between the Company and CDC
“New PRC Regulations”
Decision to Amend the Detailed Rules for Non-Public Stock Offerings by Listed Companies (《關於修改〈上市公司非公開發行股票實施細則〉的決定》) and the Issuance Regulatory Questions and Answers – Regulatory Requirements regarding Guiding and Regulating Listed Companies’ Financing Activities (《發行監管問答 – 關於引導規範上市公司融資行為的監管要求》) published by the CSRC on 17 February 2017
“Six-Month Period” the period from 28 May 2016, being the date six months before the Announcement Date, up to and including the Announcement Date
“Supplemental Latest 10 March 2017, being the latest practicable date prior to the printing Practicable Date” of this Whitewash Supplemental Circular for ascertaining certain information in this Whitewash Supplemental Circular
“Supplemental Relevant the period from 28 May 2016, being the date six months before the Period” Announcement Date, up to and including the Supplemental Latest Practicable Date
“Whitewash Second the supplemental announcement dated 21 February 2017 in respect of, Supplemental among others, the New PRC Regulations Announcement”
“Whitewash Supplemental the Whitewash Supplemental Announcement, Whitewash Second Announcements” Supplemental Announcement and Whitewash Third Supplemental Announcement
“Whitewash Supplemental this supplemental circular dated 13 March 2017 containing additional Circular” information in respect of the Whitewash Transactions
“Whitewash Third the supplemental announcement dated 3 March 2017 in respect of, among Supplemental others, the implications of the New PRC Regulations on the A-Share Announcement” Issuance

“Whitewash Waiver” a waiver from the Executive pursuant to Note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code of the obligation on the part of CDC and/or its nominated wholly owned subsidiary to make a general offer for all securities of the Company (other than those already owned or agreed to be acquired by CDC and/or its nominated wholly owned subsidiary) as a result of the allotment and issue of the Subscription Shares under the Subscription Agreements

– iii –

SUPPLEMENTAL LETTER FROM THE BOARD

13 March 2017

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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

To the Shareholders

Dear Sir or Madam,

WHITEWASH SUPPLEMENTAL CIRCULAR TO THE WHITEWASH CIRCULAR RELATING TO CONNECTED TRANSACTION IN RESPECT OF THE PROPOSED A-SHARE ISSUANCE AND H-SHARE ISSUANCE SPECIFIC MANDATES APPLICATION FOR WHITEWASH WAIVER

INTRODUCTION

Reference is made to the Whitewash Announcement, Whitewash Circular and the Whitewash Supplemental Announcements.

– 1 –

SUPPLEMENTAL LETTER FROM THE BOARD

As disclosed in the Whitewash Second Supplemental Announcement, subsequent to the despatch of the Whitewash Circular on 9 February 2017, the CSRC published the New PRC Regulations which provided, among other things, that the price referencing date to determine the issue price of shares proposed to be issued by way of non-public issuance shall be the first day of the non-public issuance period, and that the number of shares proposed to be issued by a listed company by way of non-public issuance shall not exceed 20% of the total number of issued shares immediately before the non-public issuance.

As disclosed in the Whitewash Third Supplemental Announcement, the Company has been advised by its PRC legal adviser, Hylands Law Firm, its financial advisers to the H-Share Issuance, namely CMS HK, CSCI and CITIC CLSA, and its sponsor to the A-Share Issuance, CSC, that the New PRC Regulations, though do not affect the terms of the H-Share Issuance, would affect the terms of the A-Share Issuance in that the maximum number of A-Share Subscription Shares that may be issued pursuant to the A-Share Issuance would be reduced and the A-Share Issue Price may no longer be pre-determined.

The purpose of this Whitewash Supplemental Circular is to provide you with, among other things, (i) details of the changes to the terms of the A-Share Issuance brought about by the New PRC Regulations; and (ii) any other additional information as required under Rule 8.5 of the Takeovers Code.

This Whitewash Supplemental Circular is supplemental to, and should be read in conjunction with, the Whitewash Circular.

SUPPLEMENTAL AGREEMENTS

Second Supplemental Agreement to the A-Share Subscription Agreement

(a) the number of A-Share Subscription Shares to be allotted and issued pursuant to the A-Share Issuance shall not exceed 2,662,007,515;
(b) the A-Share Price Referencing Date shall be the date the Company notifies CDC in writing to pay for the subscription amount in respect of the A-Share Subscription Shares, i.e. the first day of the non-public issuance period;

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SUPPLEMENTAL LETTER FROM THE BOARD

(c) the Company and CDC agree that the number of A-Share Subscription Shares shall not exceed 2,662,007,515 and the final number of A-Share Subscription Shares to be issued shall be notified by the Company to CDC in writing after consultation with the sponsor to the A-Share Issuance of the Company having regard to the maximum number of A-Share Subscription Shares approved for issuance by the CSRC;
(d) the maximum number of A-Share Subscription Shares to be subscribed by CDC shall be adjusted according to any ex-rights activities (such as equity distribution, capitalisation of capital reserve or share placing) undertaken by the Company between the Board Resolutions Date and the A-Share Issuance Date based on the following formula:

QA1 = QA0 × (1 + EA)

where

QA1 = maximum number of A-Share Subscription Shares to be issued after adjustment
QA0 = maximum number of A-Share Subscription Shares to be issued before adjustment

= Number of bonus shares per Share or number of Shares resulting from capitalisation of capital reserve being issued for each Share
(e) the A-Share Issue Price of RMB3.56 shall be deleted;
(f) the A-Share Issue Price shall represent not less than 90% of the 20-day average trading price of the A-Shares immediately preceding the A-Share Price Referencing Date; and
(g) the final A-Share Issue Price shall be determined by the Company after consultation with the sponsor to the A-Share Issuance of the Company, having regard to the CSRC Approval and relevant PRC laws, rules and regulations, and notified by the Company to CDC in writing.

Save as supplemented by the A-Share Subscription Second Supplemental Agreement, all the terms and conditions of the A-Share Subscription Agreement as described in the Whitewash Circular remain unchanged.

Supplemental Agreement to the H-Share Subscription Agreement

– 3 –

SUPPLEMENTAL LETTER FROM THE BOARD

Save as supplemented by the H-Share Subscription Supplemental Agreement, all other terms and conditions of the H-Share Subscription Agreement as described in the Whitewash Circular remain unchanged.

UNDERTAKING OF CDC

Given that the A-Share Issue Price may not be pre-determined and the number of A-Share Subscription Shares to be issued is subject to a cap, there is a chance that the gross proceeds to be raised from the A-Share Issuance may be less than the RMB9,950 million proposed to be raised from the A-Share Issuance. Taking into account factors such as volatility in the capital markets and fluctuations in the trading price of the A-Shares, in order to provide certainty to the source of funding for the proposed usage of the proceeds from the A-Share Issuance and minimise the risks of the Company raising substantially less than the amount required with the intention that overall not less than 90% of the RMB9,950 million proposed to be raised from the A-Share Issuance, i.e. RMB8,955 million, may be raised from the A-Share Issuance, pursuant to the CDC Undertaking Letter, CDC has undertaken to subscribe for the A-Share Subscription Shares at not less than the A-Share Issue Floor Price of RMB3.37 per A-Share Subscription Share.

Accordingly, if the A-Share Issue Price as determined in accordance with the New PRC Regulations falls below RMB3.37, the Company will issue the A-Share Subscription Shares to CDC at RMB3.37 per A-Share Subscription Share. The Company has been advised by its PRC legal adviser, Hylands Law Firm, that this approach does not contravene applicable PRC laws, rules and regulations.

REVISED TERMS OF THE A-SHARE ISSUANCE

The major terms and conditions of the A-Share Issuance (as revised) are set out below.

Number of A-Share Subscription Shares

2,662,007,515 A-Share Subscription Shares, representing approximately 26.64% of the total number of issued A-Shares and approximately 20% of the total number of issued Shares as at the Supplemental Latest Practicable Date; and approximately 21.03% of the total number of issued A-Shares as enlarged by the A-Share Issuance and approximately 14.18% of the total number of issued Shares as enlarged by the A-Share Issuance and the H-Share Issuance.

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

QA1 = QA0 × (1 + EA)

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SUPPLEMENTAL LETTER FROM THE BOARD

where

QA1 = maximum number of A-Share Subscription Shares to be issued after adjustment
QA0 = maximum number of A-Share Subscription Shares to be issued before adjustment, i.e. 2,662,007,515 subject to CSRC Approval
EA = number of bonus shares per Share or number of Shares resulting from capitalisation of capital reserve being issued for each Share

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. However, the ratio of the final number of A-Share Subscription Shares to be issued over the total number of issued Shares prior to the A-Share Issuance shall not exceed 20% according to the applicable New PRC Regulations.

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).

If the number of A-Share Subscription Shares approved for allotment and issue by the CSRC is different from 2,662,007,515 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.

A-Share Issue Price

The A-Share Issue Price may not be pre-determined since the A-Share Price Referencing Date, against which the A-Share Issue Price shall be determined, shall be the first day of the non-public issuance period, which is a future date and the date the Company notifies CDC in writing to pay for the subscription amount in respect of the A-Share Subscription Shares, and such day shall be any day within the six-month period after the CSRC Approval in respect of the A-Share Issuance has been obtained by the Company.

– 5 –

SUPPLEMENTAL LETTER FROM THE BOARD

Basis for determining the A-Share Issue Price

The A-Share Issue Price shall represent not less than 90% of the 20-day average trading price of the A-Shares immediately preceding the A-Share Price Referencing Date. The 20-day average trading price of the A-Shares (“ XA ”) is calculated based on the following formula:

XA = YA/ZA

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

The final A-Share Issue Price shall be determined by the Company after consultation with its sponsor to the A-Share Issuance, having regard to the CSRC Approval and relevant PRC laws, rules and regulations, and notified by the Company to CDC in writing.

Adjustments to the A-Share Issue Price

There have been no changes to the adjustment mechanism in relation to the A-Share Issue Price. Please refer to the paragraph headed “Adjustments to the A-Share Issue Price” in the Whitewash Circular for details.

A-Share Issue Floor Price

The A-Share Issue Floor Price of RMB3.37 per A-Share Subscription Share undertaken to be paid by CDC for the subscription of the A-Share Subscription Shares represents:

(a) a discount of approximately 5.34% to the original A-Share Issue Price of RMB3.56 per A-Share Subscription Share;
(b) a discount of approximately 15.33% to the closing price of RMB3.98 per A-Share as quoted on the Shanghai Stock Exchange on the A-Share Last Trading Date;
(c) a discount of approximately 29.79% to the closing price of RMB4.80 per A-Share as quoted on the Shanghai Stock Exchange as at the Supplemental Latest Practicable Date;

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SUPPLEMENTAL LETTER FROM THE BOARD

(d) a discount of approximately 28.96% to the average closing price of RMB4.74 per A-Share as quoted on the Shanghai Stock Exchange in the last five consecutive trading days up to and including the Supplemental Latest Practicable Date;
(e) a discount of approximately 21.24% to the average closing price of RMB4.28 per A-Share as quoted on the Shanghai Stock Exchange in the last 30 consecutive trading days up to and including the Supplemental Latest Practicable Date;
(f) a discount of approximately 14.61% to the average closing price of RMB3.95 per A-Share as quoted on the Shanghai Stock Exchange in the last 180 consecutive trading days up to and including the Supplemental Latest Practicable Date;
(g) a discount of approximately 0.30% of 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; and
(h) a discount of approximately 0.88% of the audited consolidated net asset value per Share of approximately RMB3.40 (from the Company’s consolidated financial statements prepared in accordance with IFRS) 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 Floor Price

The A-Share Issue Floor Price of RMB3.37 per A-Share Subscription Share is determined with reference to (i) 90% of the gross proceeds of RMB9.950 million proposed to be raised from the A-Share Issuance, and (ii) the maximum number of A-Share Subscription Shares that may be issued by the Company pursuant to the New PRC Regulations before any adjustments, i.e. 2,662,007,515, and is calculated based on the following formula:

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where

A = A-Share Issue Floor Price (rounded up to the nearest hundredth)
B = 90% of the RMB9,950 million proposed to be raised from the A-Share Issuance, i.e. RMB8,955 million
C = the maximum number of A-Share Subscription Shares that may be issued by the Company pursuant to the New PRC Regulations before any adjustments, i.e. 2,662,007,515

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SUPPLEMENTAL LETTER FROM THE BOARD

Adjustments to the A-Share Issue Floor Price

The A-Share Issue Floor Price is subject to the same adjustment mechanism as that for the A-Share Issue Price set out under the paragraph “Adjustments to the A-Share Issue Price” in the Whitewash Circular, between the date of the CDC Undertaking Letter and the A-Share Issuance Date.

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 is expected to amount to not more than RMB9,950 million and the net proceeds from the A-Share Issuance is estimated to be not more than approximately RMB9,950 million. The net A-Share Issue Price may not be pre-determined and while the gross A-Share Issue Price will be not less than the A-Share Issue Floor Price of RMB3.37 per A-Share Subscription Share pursuant to the CDC Undertaking Letter, the net A-Share Issue Price may be less than RMB3.37 per A-Share Subscription Share. As both the final A-Share Issue Price and the final number of A-Share Subscription Shares shall be determined by the Company after consultation with the sponsor to the A-Share Issuance of the Company, CSC having regard to the CSRC Approval and relevant PRC laws, rules and regulations, the Company, in making such determination, will ensure that the final A-Share Issue Price and the final number of A-Share Subscription Shares to be issued shall be such that the gross proceeds to be raised from the A-Share Issuance shall not exceed RMB9,950 million but in any event not less than RMB8,955 million assuming 2,662,007,515 A-Share Subscription Shares issued. Pursuant to the terms of the A-Share Subscription Second Supplemental Agreement, CDC shall have no rights to participate or be involved in the decision making process of the Company in respect of the determination of the A-Share Issue Price and the number of A-Share Subscription Shares to be issued. The Company, in making such determination, shall consult its sponsor to the A-Share Issuance in accordance with the terms of the A-Share Subscription Second Supplemental Agreement without consulting CDC or its associates.

Subject to CSRC Approval, the maximum aggregate nominal value of the A-Share Subscription Shares is RMB2,662,007,515 before any adjustment events.

Dilutive Impact of the A-Share Issuance

According to the applicable New PRC Regulations, the A-Share Issue Price may not be pre-determined until the first day of the non-public issuance period. At the same time, the applicable New PRC Regulations also impose a cap on the maximum number of A-Share Subscription Shares that may be issued in the A-Share Issuance, i.e. 2,662,007,515 (subject to CSRC Approval and adjustments). Thus the dilutive impact to the public Shareholders is capped.

– 8 –

SUPPLEMENTAL LETTER FROM THE BOARD

Given that the Company proposed to raise not more than RMB9,950 million from the A-Share Issuance, the maximum number of A-Share Subscription Shares that may be issued by the Company to CDC pursuant to the A-Share Issuance will be adjusted according to the final A-Share Issue Price determined in accordance with the New PRC Regulations.

As an illustration, in order to raise RMB9,950 million for the A-Share Issuance and on the assumption that 2,662,007,515 A-Share Subscription Shares will be issued, the final A-Share Issue Price may not fall to or below RMB3.737 (for illustration purposes, rounded to three deciminal places). If the final A-Share Issue Price falls to or below RMB3.737, given the cap on the maximum number of A-Share Subscription Shares that may be issued in accordance with the applicable New PRC Regulations, the gross proceeds that may be raised from the A-Share Issuance would fall below RMB9,950 million but not fall below RMB8,955 million given the A-Share Issue Floor Price that CDC has undertaken to pay for the A-Share Subscription Shares. If the final A-Share Issue Price is higher than RMB3.737, the final number of A-Share Subscription Shares that may be issued will decrease and will be less than 2,662,007,515. Accordingly, the dilutive impact on the public Shareholders will be reduced.

The table below illustrates further the relationship between (i) the final A-Share Issue Price as determined in accordance with the applicable New PRC Regulations, (ii) the maximum number of A-Share Subscription Shares that may be issued (subject to CSRC Approval and before any adjustments), (iii) the maximum gross proceeds that may be raised from the A-Share Issuance; and (iv) the interest of CDC and parties acting in concert with it in the total issued share capital of the Company after the completion of the A-Share Issuance and the H-Share Issuance (on the assumptions that there are no other changes in the issued share capital of the Company save for the allotment and issue of the Subscription Shares, and 2,794,943,820 H-Share Subscription Shares will be issued):

A-Share Issue Price Below RMB3.37 (exclusive)2 Between RMB3.37 (inclusive) and RMB3.737 (inclusive) Above RMB3.738 (inclusive)	Maximum number of A-Share Subscription Shares (subject to CSRC Approval and before any adjustments) 2,662,007,515 2,662,007,515 Less than 2,662,007,515	Maximum Gross Proceeds from the A-Share Issuance1 RMB8,955 million Between RMB8,955 million and approximately RMB9,948 million RMB9,950 million	Interest of CDC and parties acting in concert with it in the total issued share capital
			53.74% 53.74% Less than 53.74%

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SUPPLEMENTAL LETTER FROM THE BOARD

A-Share Issue Price RMB7.907 Above RMB7.908 (inclusive)	Maximum number of A-Share Subscription Shares (subject to CSRC Approval and before any adjustments) 1,258,378,652 (just above 1,258,301,730 which will make the interest of CDC and parties acting in concert with it equal to 50% of the total issued share capital after the completion of the A-Share Issuance and the H-Share Issuance) Not more than 1,258,219,525 (just below 1,258,301,730 which will make the interest of CDC and parties acting in concert with it equal to 50% of the total issued share capital after the completion of the A-Share Issuance and the H-Share Issuance)	Maximum Gross Proceeds from the A-Share Issuance1 RMB9,950 million RMB9,950 million	Interest of CDC and parties acting in concert with it in the total issued share capital
			>50% <50%3

Notes:

(1) The maximum gross proceeds is calculated by multiplying the final A-Share Issue Price with the final number of A-Share Subscription Shares to be issued.
(2) When the final A-Share Issue Price is less than RMB3.37, the A-Share Subscription Shares will be issued at the A-Share Issue Floor Price of RMB3.37.
(3) In the event the interest of CDC and parties acting in concert with it in the total issued share capital of the Company after the completion of the A-Share Issuance and the H-Share Issuance is less than 50%, if CDC and/ or any party acting in concert with it acquires 2% or more of the voting rights of the Company within a 12-month period, CDC will incur an obligation under Rule 26 of the Takeovers Code to make a general offer.

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SUPPLEMENTAL LETTER FROM THE BOARD

H-SHARE ISSUANCE

The terms of the H-Share Issuance are not affected by the New PRC Regulations. However, in view of the reduction in the maximum number of A-Share Subscription Shares that may be issued pursuant to the A-Share Issuance, the 2,794,943,820 H-Share Subscription Shares (subject to CSRC Approval and before any adjustments) proposed to be issued pursuant to the H-Share Issuance would account for a higher percentage of the total number of Subscription Shares and the total issued share capital of the Company after the completion of the A-Share Issuance and the H-Share Issuance. The 2,794,943,820 H-Share Subscription Shares would represent approximately 51.22% of the total number of Subscription Shares and approximately 14.89% of the total number of issued Shares as enlarged by the A-Share Issuance and the H-Share Issuance.

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).

SUMMARY OF THE A-SHARE ISSUANCE (AS REVISED) AND H-SHARE ISSUANCE

The following table set out the summary of the major terms of the A-Share Issuance (as revised) and the H-Share Issuance for the ease of reference of the Shareholders:

A-Share Issuance H-Share Issuance Type of Shares to be Issued New A-Shares New H-Shares Par Value RMB1.00 RMB1.00 Method of Issue Non-Public Issuance Non-Public Issuance Target Subscribers CDC CDC or its nominated wholly owned subsidiary Subscription Method By way of cash settlement on an By way of cash settlement on an one-off basis one-off basis Issue Price To be determined on the first day HK$2.12 per H-Share Subscription of the non-public issuance period Share (subject to adjustments) (subject to adjustments)

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SUPPLEMENTAL LETTER FROM THE BOARD

A-Share Issuance

H-Share Issuance

CDC has undertaken to subscribe for the A-Share Subscription Shares at not less than RMB3.37 per A-Share Subscription Share (subject to adjustments)

Principle of Pricing

Not less than 90% of the 20day average trading price of the A-Shares immediately preceding the A-Share Price Referencing Date

Adjustment mechanism to the Please refer to pages 6 to 7 of the Issue Price Whitewash Circular under the paragraph headed “Adjustments to A-Share Issue Price”

Maximum number of Shares 2,662,007,515, subject to CSRC to be issued Approval and adjustments, but in any event shall not exceed 20% of the total number of issued Shares immediately before the non-public issuance and shall comply with the public float requirements under the Listing Rules

Adjustment mechanism to the Please refer to the paragraph number of Shares issued headed “Number of A-Share Subscription Shares” on pages 4 t o 5 o f t h i s W h i t e w a s h Supplemental Circular

103% of the 20-day average trading price of the H-Shares immediately p r e c e d i n g t h e H - S h a r e P r i c e Referencing Date

Please refer to pages 11 to 13 of the Whitewash Circular under the paragraph headed “Adjustments to H-Share Issue Price”

2,794,943,820, subject to CSRC Approval and adjustments and shall comply with the public float requirements under the Listing Rules

Please refer to pages 9 to 10 of the Whitewash Circular under the paragraph headed “Number of H-Share Subscription Shares”

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SUPPLEMENTAL LETTER FROM THE BOARD

A-Share Issuance

H-Share Issuance

Lock-up Period

36 months from the completion of the A-Share Issuance

36 months from the completion of the H-Share Issuance (except for transfer to subsidiaries of CDC in accordance with PRC laws, other laws applicable to the Company and the listing rules of the jurisdiction in which the Shares of the Company are listed provided that the transferee shall also comply with such lock-up undertaking)

Listing Arrangement

Application will be made to Application will be made to the the Shanghai Stock Exchange Hong Kong Stock Exchange and for the listing of the A-Share the London Stock Exchange for the Subscription Shares listing of the H-Share Subscription Shares

Gross Proceeds proposed to be raised
N o t m o r e t h a n R M B 9 , 9 5 0 HK$5,925 million (before the million upward adjustment to the H-Share Issue Price, if any)

N o t l e s s t h a n R M B 8 , 9 5 5 million due to the A-Share Issue Floor Price and assuming 2 , 6 6 2 , 0 0 7 , 5 1 5 A - S h a r e Subscription Shares issued

Proposed Use of Proceeds A p p r o x i m a t e l y R M B4,400 G e n e r a l c o r p o r a t e p u r p o s e s million for implementation including but not limited to loan of projects and not more than and bond repayment within two a p p r o x i m a t e l y R M B 5 , 5 5 0 years after the H-Share Issuance is m i l l i o n f o r r e p a y m e n t o f completed infrastructure project loans

Issuance Date

Any day notified by the Company Any day notified by the Company to CDC within six months after to the H-Share Subscription Shares the CSRC Approval in respect of Subscriber within 12 months after the A-Share Issuance has been the CSRC Approval in respect of the obtained H-Share Issuance has been obtained

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SUPPLEMENTAL LETTER FROM THE BOARD

EFFECT ON SHAREHOLDING STRUCTURE OF THE COMPANY

As at the Supplemental 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.

Set out below is the shareholding structure of the Company (i) as at the Supplemental 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 and 2,662,007,515 A-Share Subscription Shares and 2,794,943,820 H-Share Subscription Shares will be issued):

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 Supplemental 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 6,800,984,929 36.24% 53.74% 8,738,600 0.05% 0.07% 1,296,012,600 6.91% 10.24% 1,281,872,927 6.83% 10.13% 1,260,988,672 6.72% 9.96% 2,007,769,787 10.70% 15.86% 12,656,367,515 67.44% 100% 480,680,000 2.56% 7.87% 2,794,943,820 14.89% 45.74% 2,834,997,578 15.11% 46.39% 6,110,621,398 32.56% 100% 18,766,988,913 100%	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 6,800,984,929 36.24% 53.74% 8,738,600 0.05% 0.07% 1,296,012,600 6.91% 10.24% 1,281,872,927 6.83% 10.13% 1,260,988,672 6.72% 9.96% 2,007,769,787 10.70% 15.86% 12,656,367,515 67.44% 100% 480,680,000 2.56% 7.87% 2,794,943,820 14.89% 45.74% 2,834,997,578 15.11% 46.39% 6,110,621,398 32.56% 100% 18,766,988,913 100%
			100%
			7.87% 45.74% 46.39%
			100%

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SUPPLEMENTAL LETTER FROM THE BOARD

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.
(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 Supplemental 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 the Whitewash Circular set out the top 10 A-Shareholders.
(12) The numbers in the above table have been subject to rounding adjustments. Any discrepancies in the numbers are due to roundings.

RELEVANT UPDATES TO THE WHITEWASH CIRCULAR

The following set out other relevant updates to the Whitewash Circular:

(a) in relation to the “Use of Proceeds” section in the Whitewash Circular, save that not more than approximately RMB5,550 million from the proceeds of the A-Share Issuance is proposed to be used for the repayment of infrastructure loans, the lenders of which are commercial banks independent of the Company and not Shareholders of the Company, the other disclosure in respect of the proposed use of proceeds from the A-Share Issuance and H-Share Issuance as set out in the Whitewash Circular remains unchanged;

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SUPPLEMENTAL LETTER FROM THE BOARD

(b) in relation to the “Reasons for and Benefits of the A-Share Issuance and the H-Share Issuance” section in the Whitewash Circular, under the paragraph headed “(II) Optimising the capital structure and reducing financial risks”, 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 RMB5,550 million of the A-Share Issuance is to be applied to infrastructure project loans repayment and the total proceeds from the H-Share Issuance are to be applied to loan and bond repayment;
(c) subject to CSRC Approval, the maximum aggregate nominal value of the H-Share Subscription Shares is RMB2,794,943,820 before any adjustment events;
(d) the A-Share Proposal set out in Appendix IA to the Whitewash Circular has been updated to reflect the changes brought about the A-Share Issuance Amendments, and the third revised version is set out in Appendix IA to this Whitewash Supplemental Circular. The information relating to net profit attributable to the equity holders of the Company excluding non-recurring profit/loss for the year ended 31 December 2016 set out in Appendix IA to this Whitewash Supplemental Circular is the same as that set out in Appendix IA to the Whitewash Circular and constitutes profit forecast under Rule 10 of the Takeovers Code which is required to be reported on in accordance with Rule 10 of the Takeovers Code. The relevant 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 have been set out in Appendix IB to this Whitewash Supplemental Circular. The Directors confirm that such forecast remains valid for the purpose of the Whitewash Transactions and that the financial advisers of the Company to the H-Share Issuance and the PRC domestic auditor of the Company who reported on such forecast have indicated that they have no objection to their reports continuing to apply; and
(e) the Directors confirm that the estimated loss for the annual results of the year 2016 as disclosed in the Loss Estimate Announcement, which constitute a profit forecast under Rule 10 of the Takeovers Code, and set out in Appendix IIB to the Whitewash Circular remains valid for the purpose of the Whitewash Transactions, and that RSM Hong Kong, the international auditor of the Company, and CMS HK and CSCI, the financial advisers to the H-Share Issuance of the Company as at the date of the Loss Estimate Announcement, who reported on such forecast have indicated that they have no objection to their reports continuing to apply. Please also refer to the paragraph headed “Events Subsequent to the Publication of this Whitewash Supplemental Circular” in Appendix II to this Whitewash Supplemental Circular for the expected date of publication of the preliminary audited results of the Company for the financial year ended 31 December 2016.

Save as updated or revised in this Whitewash Supplemental Circular, all the information disclosed in the Whitewash Circular remains unchanged.

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SUPPLEMENTAL LETTER FROM THE BOARD

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 meetings 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.

IMPLICATIONS UNDER THE TAKEOVERS CODE

As at the Supplemental 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 not more than 2,662,007,515 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 not more than 53.74% (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/or its nominated wholly owned subsidiary 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 and/or its nominated wholly owned subsidiary unless the Whitewash Waiver is granted by the Executive and approved by the Independent Shareholders pursuant to Note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code.

APPLICATION FOR WHITEWASH WAIVER

An application has been made on behalf of CDC to the Executive for the Whitewash Waiver pursuant to Note 1 of the Notes 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.

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SUPPLEMENTAL LETTER FROM THE BOARD

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, the final number of A-Share Subscription Shares to be issued to CDC is not less than 1,258,301,730 and the A-Share Issue Price is less than or equal to RMB7.907 (see the section headed “Revised Terms of the A-Share Issuance — Dilutive Impact of the A-Share Issuance” above for further details)), the aggregate shareholding of CDC and parties acting in concert with it is expected to 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.

As at the Supplemental 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 Supplemental 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.

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SUPPLEMENTAL LETTER FROM THE BOARD

As at the Supplemental 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 Supplemental Latest Practicable Date, save for the proposed subscription of the Subscription Shares as disclosed in the Whitewash Circular and this Whitewash Supplemental 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;
(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, save for the CDC Undertaking Letter to be dated the date of this Whitewash Supplemental Circular;
(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 Supplemental Latest Practicable Date.

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SUPPLEMENTAL LETTER FROM THE BOARD

UPDATED OPINION OF THE INDEPENDENT BOARD COMMITTEES AND THE INDEPENDENT FINANCIAL ADVISER

The Independent Financial Adviser, Gram Capital, having taken into account the information as set out in this Whitewash Supplemental Circular, has confirmed that its advice to the Independent Board Committees and the Independent Shareholders and its recommendations on voting remains unchanged.

The Independent Board Committees, having taken into account the information as set out in this Whitewash Supplemental Circular and the supplemental letter of advice from Gram Capital, confirmed that their view as given in the Whitewash Circular remains unchanged.

EGM AND CLASS MEETINGS

The EGM will be convened on 28 March 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 28 March 2017 at 10:30 a.m. and the H-Share Class Meeting will be convened on 28 March 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.

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.

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SUPPLEMENTAL LETTER FROM THE BOARD

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.

ADDITIONAL INFORMATION

Your attention is also drawn to the supplemental letter from Gram Capital and the additional information set out in the appendices to and which forms part of this Whitewash Supplemental Circular.

You are advised to read this Whitewash Supplemental Circular, in conjunction with the Whitewash Circular, carefully before deciding as to how to vote on the resolutions approving, inter alia, the Whitewash Transactions, the Subscription Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver.

Yours faithfully,

By Order of the Board of

Datang International Power Generation Co., Ltd.

Ying Xuejun

Secretary to the Board

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SUPPLEMENTAL 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 supplemental circular.

==> picture [169 x 32] intentionally omitted <==

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

13 March 2017

To: The 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 (i) 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 Whitewash Circular and the Whitewash Supplemental Circular; and (ii) our letter of advice to the Independent Board Committees and Independent Shareholders as set out in the Whitewash Circular (the “ First Letter ”). Terms used in this letter shall have the same meanings as defined in the Whitewash Circular dated 9 February 2017, the Whitewash Supplemental Circular dated 13 March 2017 and the Whitewash Circular (including the First Letter) unless the context requires otherwise.

On 15 February 2017, the CSRC passed its Decision to Amend the Detailed Rules for Non-Public Stock Offerings by Listed Companies (《關於修改〈上市公司非公開發行股票實施細則〉的決定》). The NonPublic Stock Offerings Amendment Decision was published by the CSRC on 17 February 2017. According to the Non-Public Stock Offerings Amendment Decision, the price referencing date to determine the issue price of shares proposed to be issued by way of non-public issuance shall be the first day of the non-public issuance period.

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SUPPLEMENTAL LETTER FROM GRAM CAPITAL

Subsequently, on 17 February 2017, the CSRC also published the Issuance Regulatory Questions and Answers – Regulatory Requirements regarding Guiding and Regulating Listed Companies’ Financing Activities (《發行監管問答 – 關於引導規範上市公司融資行為的監管要求》). According to the QA, the number of shares proposed to be issued by a listed company by way of non-public issuance shall not exceed 20% of the total number of issued shares immediately before the non-public issuance.

In view of the implications of the New PRC Regulations on the terms of the A-Share Issuance, the Company and CDC entered into the A-Share Subscription Second Supplemental Agreement on 13 March 2017 to provide that the number of A-Share Subscription Shares to be allotted and issued to CDC shall be subject to not exceed 2,662,007,515 A-Shares. The A-Share Subscription Second Supplemental Agreement further provides that, among others, the A-Share Price Referencing Date shall be the date the Company notifies CDC in writing to pay for the subscription amount in respect of the A-Share Subscription Shares, i.e. the first day of the non-public issuance period.

INDEPENDENCE

During the past two years immediately preceding the Supplemental Latest Practicable Date, Mr. Graham Lam was the person signing off the opinion letters from the independent financial adviser contained in (i) the circular dated 9 December 2016 in respect of the major transaction and continuing connected transactions for the Company; (ii) the Whitewash Circular; and (iii) the circular dated 17 February 2017 in respect of continuing connected transactions for the Company. Notwithstanding the aforesaid engagements, as at the Supplemental 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 Independent Financial Adviser to the Independent Board Committees and the Independent Shareholders.

Besides that, apart from the advisory fee payable to us in connection with 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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SUPPLEMENTAL 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 Whitewash Circular/Whitewash Supplemental Circular (as the case may be) 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 Supplemental Latest Practicable Date, and should there be any material changes to our opinion after the Supplemental 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 Whitewash Circular/ Whitewash Supplemental 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 Whitewash Circular/Whitewash Supplemental 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 Whitewash Circular and Whitewash Supplemental 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 Whitewash Circular and Whitewash Supplemental 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 as contained in the Whitewash Circular and Whitewash Supplemental Circular or the Whitewash Circular and Whitewash Supplemental Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Whitewash Circular and Whitewash Supplemental Circular, save and except for the First Letter and this letter of advice.

– 24 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

The Whitewash Circular and Whitewash Supplemental Circular include 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 Whitewash Circular and Whitewash Supplemental 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 Whitewash Circular and Whitewash Supplemental Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Whitewash Circular and Whitewash Supplemental Circular, the omission of which would make any statement in the Whitewash Circular and Whitewash Supplemental Circular misleading.

The information in relation to CDC contained in the Whitewash Circular and Whitewash Supplemental 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 Whitewash Circular and Whitewash Supplemental 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 Whitewash Circular and Whitewash Supplemental Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Whitewash Circular and Whitewash Supplemental Circular, the omission of which would make any statements in the Whitewash Circular and Whitewash Supplemental Circular misleading.

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 Supplemental 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.

– 25 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

A. The A-Share Subscription Second Supplemental Agreement

Subsequent to the publication of the Whitewash Circular, set out below is the updated information regarding A-Share Issuance:

Further to the sub-section headed “Principal terms of the A-Share Subscription Agreement (as supplemented by the A-Share Subscription Supplemental Agreement)” of the First IFA Letter:

(i) Number of A-Share Subscription Shares:

The number of A-Share Subscription Shares to be allotted and issued pursuant to the A-Share Issuance shall not exceed 2,662,007,515.

The Company and CDC agree that the number of A-Share Subscription Shares shall not exceed 2,662,007,515 and the final number of A-Share Subscription Shares to be issued shall be notified by the Company to CDC in writing after consultation with the sponsor to the A-Share Issuance of the Company having regard to the maximum number of A-Share Subscription Shares approved for issuance by the CSRC.

(ii) A-Share Issue Price:

(a) The A-Share Issue Price of RMB3.56 is deleted.
(b) The A-Share Issue Price shall represent not less than 90% of the 20-day average trading price of the A-Shares immediately preceding the A-Share Price Referencing Date.

The final A-Share Issue Price shall be determined by the Company after consultation with the sponsor to the A-Share Issuance of the Company, having regard to the CSRC Approval and relevant PRC laws, rules and regulations, and notified by the Company to CDC in writing.

The A-Share Price Referencing Date shall be the date of notification on which the Company notifies CDC in writing to pay for the subscription amount in respect of the A-Share Subscription Shares, i.e. the first day of the issuance period.

We noted that the A-Share Issue Price was not fixed as at the Supplemental Latest Practicable Date. For this reason, we discussed with the Directors and understood that the relevant changes regarding the A-Share Issue Price as mentioned above was due to the change of regulation regarding non-public issuance. For our due diligence purpose, we obtained the New PRC Regulations and acknowledged that the revised basis is in compliance with the regulations of the PRC.

– 26 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

In addition, the Company has been advised by Hylands Law Firm, being its PRC legal adviser, CMS HK, CSCI and CITIC CLSA, being its financial advisers to H-Share Issuance and CSC, being its sponsor to the A-Share Issuance of the Company, the New PRC Regulations apply to listed companies which propose to conduct issuance of securities in the PRC whose applications to the CSRC are accepted on or after 15 February 2017, being the date of passing the Non-Public Stock Offerings Amendment Decision (the “ Decision Date ”).

Accordingly, we have searched over 巨潮資訊網(Cninfo, www.cninfo.com.cn, being a website designated by CSRC for the purpose of information disclosure) to identify new nonpublic new A shares issuance proposal or revised non-public new A shares issuance proposal which applications had not yet been accepted (受理) by CSRC before 15 February 2017 (i.e. the Decision Date) (based on (i) 發行監管部再融資申請企業基本信息情況表 (Department of Public Offering Supervision of CSRC list of basic corporate information on re-finance application) as published by CSRC; and (ii) that the subject A share listed companies had not yet published announcement regarding the acceptance (受理) of issuance proposal or revised issuance proposal), as announced by companies listed on the Shanghai Stock Exchange/Shenzhen Stock Exchange since 15 February 2017 (i.e. the Decision Date) up to and including the Supplemental Latest Practicable Date (the “ New A-Share Comparables ”), for comparison purpose. We identified 28 New A-Share Comparables and they are exhaustive. Despite that the businesses, operations and prospects of the Company are not exactly the same as the subject companies of the New A-Share Comparables, the New A-Share Comparables are adequate and appropriate to demonstrate the market practices regarding issuance of new A shares after the New PRC Regulations becoming effective. Summarised below is our relevant findings:

				Date of
		Market		proposal/latest	Basis for A-share
Company	Principal business	capitalisation	Stock Code	revised proposal	issue price
	(Note 1)	(approximate
		RMB million)
重慶市迪馬實業股份有限公司	Manufactures and markets	16,279	SH600565	21 February 2017	Not less than 90% of the 20-day
Chongqing DIMA Industry	bulletproof cash delivery				average trading price of the A-shares
Co., Ltd.	vehicles, vehicles for police use,				immediately preceding the price
	and other specially designed				referencing date
	vehicles.				(i.e. the first day of the issuance
					period)
江蘇江南高纖股份有限公司	Manufactures polyester tops and	5,037	SH600527	21 February 2017	Not less than 90% of the 20-day
Jiangsu Jiangnan High Polymer	composite short fiber.				average trading price of the A-shares
Fiber Co., Ltd.					immediately preceding the price
					referencing date (i.e. the first day of
					the issuance period)

– 27 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

				Date of
		Market		proposal/latest	Basis for A-share
Company	Principal business	capitalisation	Stock Code	revised proposal	issue price
	(Note 1)	(approximate
		RMB million)
通策醫療投資股份有限公司	Provides dental and oral health	9,154	SH600763	24 February 2017	90% of the 20-day average trading
Top Choice Medical Investment	care services.				price of the A-shares immediately
Co., Inc.					preceding the price referencing date
					(i.e. the first day of the issuance
					period)(Note 2)
湖北雙環科技股份有限公司	Manufactures and markets a	3,973	SZ000707	25 February 2017	Not less than (i) 90% of the 20-day
Hubei Shuanghuan Science and	variety of basic chemicals. The				average trading price of the A-shares
Technology Stock Co., Ltd.	company’s products include				immediately preceding the price
	soda ash, ammonium chloride,				referencing date (i.e. the first day of
	industrial salt, carbon black,				the issuance period);and (ii) latest
	ammonia water, and other basic				audited net asset value per share of
	chemicals.				the company (Note 2)
湖北宜化化工股份有限公司	Manufactures and sells fertilizers	6,285	SZ000422	25 February 2017	Not less than (i) 90% of the 20-day
Hubei Yihua Chemical Industry	and other chemical products.				average trading price of the A-shares
Co., Ltd.	The company’s products include				immediately preceding the price
	urea and pentaerythritol that is				referencing date (i.e. the first day of
	used for the manufacturing of				the issuance period);and (ii) latest
	synthetic resin, pesticides, and				audited net asset value per share of
	industrial dynamite.				the company (Note 2)
北海銀河生物產業投資股份	Manufacturing of electricity	13,485	SZ000806	25 February 2017	Not less than 90% of the 20-day
有限公司	transmission and control				average trading price of the A-shares
Galaxy Biomedical Investment	equipment and electronic				immediately preceding the price
Co., Ltd.	components as well as				referencing date (i.e. the first day of
	software system integration				the issuance period)
	development and pharmaceutical
	biotechnology.
山東陽谷華泰化工股份有限公司	Develops, produces and sells	4,902	SZ300121	25 February 2017	Not less than 90% of (i) the 20-day
Shandong Yanggu Huatai	rubber chemicals.				average trading price of the A-shares
Chemical Co., Ltd.					immediately preceding the price
					referencing date (i.e. the first day of
					the issuance period);and (ii) trading
					price of the A-shares as at the last
					trading day immediately preceding
					the price reference date (i.e. the first
					day of the issuance period) (Note 2)

– 28 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

				Date of
		Market		proposal/latest	Basis for A-share
Company	Principal business	capitalisation	Stock Code	revised proposal	issue price
	(Note 1)	(approximate
		RMB million)
浙江久立特材科技股份有限公司	Manufactures stainless steel,	8,432	SZ002318	28 February 2017	Not less than 90% of the 20-day
Zhejiang Jiuli Hi-tech Metals	corrosion resistant alloy and				average trading price of the A-shares
Co., Ltd.	high temperature alloy seamless				immediately preceding the price
	pipe.				referencing date (i.e. the first day
					of the issuance period)
盛屯礦業集團股份有限公司	Mines and manufactures lead	10,884	SH600711	28 February 2017	90% of the 20-day average trading
Chengtun Mining Group	and zinc bulk concentrate.				price of the A-shares immediately
Co., Ltd.	The company also involves in				preceding the price referencing date
	the trading of metals and IT				(i.e. the first day of the issuance
	equipment business.				period)(Note 2 )
深圳中華自行車（集團）股份有	Manufactures and markets bicycles	6,236	SZ000017 &	1 March 2017	90% of the 20-day average trading
限公司	and accessories. The company		SZ200017		price of the A-shares immediately
Shenzhen China Bicycle	also operates in property				preceding the price referencing date
Company (Holdings) Limited	management.				(i.e. the first day of the issuance
					period)(Note 2 )
東方證券股份有限公司	Provides investment advisory	94,723	3958 &	1 March 2017	Not less than 90% of the 20-day
Orient Securities Company	and brokerage services. The		SH600958		average trading price of the A-shares
Limited	company maintains assets for				immediately preceding the price
	individual and institutional				referencing date (i.e. the first day of
	investors in equity and fixed				the issuance period)
	income portfolios.
新疆中泰化學股份有限公司	Manufactures and markets	27,475	SZ002092	1 March 2017	Not less than 90% of the 20-day
Xinjiang Zhongtai Chemical	polyvinyl chloride XResin,				average trading price of the A-shares
Co., Ltd.	caustic soda and other chemical				immediately preceding the price
	products.				referencing date (i.e. the first day of
					the issuance period)
天津凱發電氣股份有限公司	Develops and implements railway	4,901	SZ300407	1 March 2017	Not less than 90% of (i) the 20-day
Tianjin Keyvia Electric	and urban mass transit projects.				average trading price of the A-shares
Co., Ltd.	The company implements power				immediately preceding the price
	supply technology for electrified				referencing date (i.e. the first day of
	railways. The company operates				the issuance period);and (ii) trading
	in China.				price of the A-shares as at the last
					trading day immediately preceeding
					the price reference date (i.e. the first
					day of the issuance period) (Note 2)

– 29 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

Date of Market proposal/latest Basis for A-share Company Principal business capitalisation Stock Code revised proposal issue price (Note 1) (approximate RMB million) 浙江富春江環保熱電股份 Operates the business of solid 10,026 SZ002479 2 March 2017 Not less than 90% of the 20-day 有限公司 waste power generation and average trading price of the A-shares Zhejiang Fuchunjiang thermal power generation. The immediately preceding the price Environmental Thermoelectric company engages in the coreferencing date (i.e. the first day of Co., Ltd. generation of heat and power the issuance period) with its main products including steam and electricity. 北京當升材料科技股份有限公司 Develops, manufactures and 10,772 SZ300073 2 March 2017 Either (i) below but not less than 90% Beijing Easpring Material sells battery chemical. The of (a) the 20-day average trading Technology Co., Ltd. company’s products include price of the A-shares immediately lithium cobalt oxide, nikel preceding the price referencing date cobalt lithium manganate, and (i.e. the first day of the issuance lithium manganate. period); or (b) trading price of the A-shares as at the last trading day immediately preceding the price reference date (i.e. the first day of the issuance period); or (ii) not less than trading price of the A-shares as at the last trading day immediately preceding the price reference date (i.e. the first day of the issuance period) (Note 2)

安徽安凱汽車股份有限公司 Manufactures and markets large 4,841 SZ000868 2 March 2017 90% of the 20-day average trading Anhui Ankai Automobile and middle size buses and bus price of the A-shares immediately Co., Ltd. chassis. The company also sells preceding the price referencing date auto parts and provides auto (i.e. the first day of the issuance repair services. period) (Note 2) 四川沱牌捨得酒業股份有限公司 Manufactures and sells a variety of 8,922 SH600702 3 March 2017 Not less than 90% of the 20-day Sichuan Tuopai Shede Spirits liquors. The company markets average trading price of the A-shares Co., Ltd. its products throughout China. immediately preceding the price referencing date (i.e. the first day of the issuance period)

– 30 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

				Date of
		Market		proposal/latest	Basis for A-share
Company	Principal business	capitalisation	Stock Code	revised proposal	issue price
	(Note 1)	(approximate
		RMB million)
北京首創股份有限公司	Manages infrastructure facilities	21,018	SH600008	4 March 2017	Not less than 90% of the 20-day
Beijing Capital Co., Ltd.	and operates hotels. The				average trading price of the A-shares
	company manages the Jingtong				immediately preceding the price
	Highway, invests in water				referencing date (i.e. the first day of
	treatment projects, and operates				the issuance period)
	the Xindadu Hotel.
常州天晟新材料股份有限公司	Develops, produces and sells	3,615	SZ300169	7 March 2017	Not less than 90% of (i) the 20-day
Changzhou Tiansheng New	macromolecular foam materials.				average trading price of the A-shares
Materials Co., Ltd.	The company’s main products				immediately preceding the price
	are soft-foaming materials,				referencing date (i.e. the first day of
	structural foam materials and				the issuance period);or(ii)trading
	finishing products.				price of the A-shares as at the last
					tradingdayimmediately preceding
					theprice reference date(i.e. the first
					dayof the issuanceperiod) (Note 2)
浙江水晶光電科技股份有限公司	Manufactures and markets photo-	14,306	SZ002273	7 March 2017	Not less than 90% of the 20-day
Zhejiang Crystal-Optech	electric parts. The key products				average trading price of the A-shares
Co., Ltd.	are OLPF, IR Cut Filter, IR				immediately preceding the price
	filter housing assembly, thermal				referencing date (i.e. the first day of
	diffusion panel and cover glass.				the issuance period)
西藏旅游股份有限公司	Provides travel agent services,	3,953	SH600749	7 March 2017	Not less than 90% of the 20-day
Tibet Tourism Co., Ltd.	manages and operates hotels				average trading price of the A-shares
	and restaurants in Tibet.				immediately preceding the price
	The company also provides				referencing date (i.e. the first day of
	advertising agency services.				the issuance period)
四川成渝高速公路股份有限公司	Develops, invests in, and operates	15,504	107 &	7 March 2017	(i) 90% of the 20-day average trading
Sichuan Expressway Company	infrastructure projects including		SH601107		price of the A-shares immediately
Limited	toll roads, bridges, tunnels, and				preceding the price referencing date
	ancillary facilities.				(i.e. the first day of the issuance
					period); or(ii)latest audited
					net asset valueper share of the
					company,whichever is higher
					(Note 2)

– 31 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

				Date of
		Market		proposal/latest	Basis for A-share
Company	Principal business	capitalisation	Stock Code	revised proposal	issue price
	(Note 1)	(approximate
		RMB million)
青島國恩科技股份有限公司	Production and sales of modified	6,127	SZ002768	8 March 2017	Not less than 90% of the 20-day
Qingdao Gon Technology	plastic particles, modified				average trading price of the A-shares
Co., Ltd.	plastic products and functional				immediately preceding the price
	plastic plates. The Company’s				referencing date (i.e. the first day of
	products are used in home				the issuance period)
	appliances, auto, electronics,
	electric appliances, machinery
	and construction.
保定天威保變電氣股份有限公司	Manufactures and markets	10,604	SH600550	8 March 2017	Not less than 90% of the 20-day
Baoding Tianwei Baobian	electrical equipment. The				average trading price of the A-shares
Electric Co., Ltd.	Company’s products include				immediately preceding the price
	transformers, mutual inductors,				referencing date (i.e. the first day of
	reactors, tubes, software,				the issuance period)
	solar cell components, and
	other electrical equipment.
	The company also provides
	processing and technical
	services.
宜賓天原集團股份有限公司	Produces basic chemical and	5,850	SZ002386	9 March 2017	Not less than 90% of the 20-day
Yibin Tianyuan Group Co., Ltd.	chemical product. The				average trading price of the A-shares
	Company’s products include				immediately preceding the price
	PVC resin, lye, hydrazine, ADC				referencing date (i.e. the first day of
	blowing agent, calcium carbide,				the issuance period)
	STPP, and cement.
南京化纖股份有限公司	Manufactures viscose filament	4,213	SH600889	9 March 2017	Not less than 90% of the 20-day
Nanjing Chemical Fibre	fibers and produces tap water.				average trading price of the A-shares
Co., Ltd.	The company also manufactures				immediately preceding the price
	yarns and fabrics as well as				referencing date (i.e. the first day of
	develops real estate through its				the issuance period)
	subsidiaries.

– 32 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

Company
Principal business
Market
capitalisation
Stock Code
Date of
proposal/latest
revised proposal
(Note 1)
(approximate
RMB million)
欣旺達電子股份有限公司
Sunwoda Electronic Co., Ltd.
Develops, designs, produces and
sells liion battery module.
The company also produces
membrate switches and precision
structures.
15,576
SZ300207
10 March 2017
北京威卡威汽車零部件
股份有限公司
Beijing WKW Automotive
Parts Co., Ltd.
Provides passenger cars with
internal and external accessories
systems, develops supporting
products and provides related
services. The Company’s main
products include internal and
external accessories systems for
passenger cars, aluminum and
spray powder.
14,265
SZ002662
10 March 2017

Basis for A-share
issue price
Either (i) below but
not less than 90%
of (a) the 20-day average trading
price of the A-shares immediately
preceding the price referencing date
(i.e. the first day of the issuance
period); or(b)trading price of the
A-shares as at the last tradingday
immediately precedingtheprice
reference date(i.e. the first dayof
the issuanceperiod);or(ii)not less
than trading price of the A-shares as
at the last tradingdayimmediately
precedingtheprice reference date
(i.e. the first dayof the issuance
period)
(Note 2)
Not less than 90% of the 20-day
average trading price of the A-shares
immediately preceding the price
referencing date (i.e. the first day of
the issuance period)

Notes:

According to Bloomberg’s website.
Differences in pricing basis between the subject comparable and the basis of the A-Share Issue Price are underlined for easy reference.

– 33 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

As shown by the above table, the A-share issue price of the New A-Share Comparables were not fixed as at the date of their relevant proposal/latest revised proposal. Moreover, (i) the basis of the A-Share Issue Price is the same as the majority of the New A-Share Comparables; and (ii) the A-Share Price Referencing Date and the price referencing dates of the New A-Share Comparables will be the first day of the issuance period.

We also noted that the final A-Share Issue Price shall be determined by the Company after consultation with the sponsor to the A-Share Issuance of the Company, having regard to the CSRC Approval and relevant PRC laws, rules and regulations, and notified by the Company to CDC in writing. As advised by the Directors, the process of fixing the A-Share Issue Price will be independent (i.e. (i) the Company will not receive any direct or indirect guidance and/or influence (save for that the A-Share Issue Price will not be lower than the A-Share Issue Floor Price) from CDC and its associates (except for the Group); and (ii) pursuant to the terms of the A-Share Subscription Second Supplemental Agreement, CDC shall have no rights to participate or be involved in the decision making process of the Company in respect of the determination of the A-Share Issue Price and the number of A-Share Subscription Shares to be issued). The Board will also procure its sponsor to confirm that the process of fixing the A-Share Issue Price is independent (i.e. CSC will not receive any direct or indirect guidance and/or influence (save for that the A-Share Issue Price will not be lower than the A-Share Issue Floor Price) from CDC and its associates (except for the Group)).

Furthermore, on 13 March 2017, the Company received a letter of undertaking issued by CDC to the Company, pursuant to which, CDC undertake to subscribe for the A-Share Subscription Shares at not less than the A-Share Issue Floor Price of RMB3.37 per A-Share Subscription Share (the “ Undertaking ”). Accordingly, we consider that the A-Share Issue Floor Price would limit the impact of the decreasing of closing price per A-Share.

We noted that the A-Share Issue Floor Price of RMB3.37 represents discounts (the “ A-Share NAV Discounts ”) of (i) approximately 0.88% to the audited consolidated net asset value per Share (from the Company’s consolidated financial statements prepared in accordance with International Financial Reporting Standards, the “ IFRS NAV ”) of RMB3.40 as at 31 December 2015; and (ii) approximately 0.30% to the audited consolidated net asset value (from the Company’s consolidated financial statements prepared in accordance with PRC GAAP, the “ GAAP NAV ”) per Shares of RMB3.38 as at 31 December 2015. Having considered that (i) the A-Share Issue Floor Price is close to the audited IFRS NAV per Share of RMB3.40 and the GAAP NAV per Share of RMB3.38 as at 31 December 2015; and (ii) a premium of (a) approximately 0.30% over the unaudited IFRS NAV per Share of approximately RMB3.36 as at 30 June 2016; and (b) approximately 1.20% over the unaudited GAAP NAV per Share of approximately RMB3.33 as at 30 June 2016, we are of the view that the A-Share NAV Discounts are acceptable.

– 34 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

We also noted that the A-Share Issue Floor Price of RMB3.37 represents a discount of approximately 5.34% to the previous A-share issue price of RMB3.56 (the “ Discount to Previous Price ”). Having considered that (i) the A-Share Issue Floor Price was set as a minimum issue price and thus it would limit the negative impact of the possible decrease in closing price per A-Share, without limiting the upside of the possible increase in the closing price per A-Share; (ii) the previous A-share issue price was a fixed issue price regardless of the future movement of closing price per A-share; (iii) the dilution impact to the shareholding interest of the existing public Shareholders has been reduced as compared to the dilution impact of the previous subscription agreement dated 28 November 2016 due to the fact that the number of A-Share to be issued was reduced, we are of the view that the Discount to Previous Price to be acceptable.

Having considered that (i) the A-Share Issue Price will reflect the then latest market prices of A-Share; (ii) the basis of the A-Share Issue Price is the same as the majority of the New A-Share Comparables; (iii) the basis of the A-Share Issue Price is in compliance with the New PRC Regulations; and (iv) the A-Share Issue Floor Price would limit the impact of the decreasing of closing price per A-Share, we concur with the Directors that it is acceptable that the A-Share Issue Price was not fixed as at the Supplemental Latest Practicable Date and the basis for the determination of the A-Share Issue Price is on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned.

(iii) Adjustment to the A-Share Issue Price:

The A-Share Issue Price shall be adjusted according to the formulae (details of which are set out in the sub-section headed “Adjustments to the A-Share Issue Price” of the letter from the Board as contained in the Whitewash Circular) 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. the first day of the non-pubic issuance period) and the A-Share Issuance Date.

– 35 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

Gross proceeds proposed to be raised

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

A-Share Subscription Second Supplemental Agreement

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.

The gross proceeds from the A-Share Issuance is expected to amount to not more than RMB9,950 million. The net proceeds from the A-Share Issuance is estimated to be not more than approximately RMB9,950 million.

With reference to the Whitewash Circular, 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 for (i) Huludao Project; (ii) Jintan Project; (iii) Tangshan Project; (iv) Shenfu Project; (v) Gaoyao Project; and (vi) the Repayment. Details of the Uses are set out under the section headed “Reasons for and benefits of the A-Share Issuance and the H-Share Issuance and use of proceeds” of the First Letter.

Pursuant to the A-Share Subscription Second Supplemental Agreement, the gross proceeds from the A-Share Issuance is expected to amount to not more than approximately RMB9,950 million. The net proceeds from the A-Share Issuance is estimated to be not more than RMB9,950 million. With reference to the supplemental letter from the Board as contained in the Whitewash Supplemental Circular (the “ Supplemental Board Letter ”), save that not more than approximately RMB5,550 million from the proceeds of the A-Share Issuance is proposed to be used for the repayment of infrastructure project loans, the lenders of which are commercial banks independent of the Company and not Shareholders of the Company, the other disclosure in respect of the proposed use of proceeds from the A-Share Issuance and H-Share Issuance as set out in the Whitewash Circular remains unchanged. According to the proposed use of proceeds from the A-Share Issuance and the H-Share Issuance and assuming RMB5,550 million of the A-Share Issuance will be applied to infrastructure project loans repayment and the total proceeds from the H-Share Issuance, approximately 55.78% of the total proceeds from the A-Share Issuance (assuming total proceeds is RMB9,950 million) 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.

– 36 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

Based on the Undertaking and maximum A-Share Subscription Shares pursuant to the A-Share Subscription Second Supplemental Agreement, the total proceeds to be raised from the A-Share Issuance will not be less than RMB8,971 million (calculated by RMB3.37 x 2,662,007,515 = approximately RMB8,971 million), which is in line with the purpose of the Undertaking for ensuring not less than 90% of the proposed gross proceeds of the A-Share Issuance of RMB9,950 million, i.e. RMB8,955 million, to be raised. As also confirmed by the Directors, 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. Having considered that there is possibility for “90% of the 20-day average trading price of the A-Shares immediately preceding the A-Share Price Referencing Date” to be less than RMB3.37, if this being the case, the A-Share Issue Floor Price will set the minimum gross proceeds from the A-Share Subscription, which is beneficial to the Company and Shareholders as a whole.

B. H-Share Subscription Supplemental Agreement

Subsequent to the publication of the Whitewash Circular, set out below is the updated information regarding H-Share Issuance:

Following the execution of the A-Share Subscription Second Supplemental Agreement, the Company and CDC entered into the H-Share Subscription Supplemental Agreement on 13 March 2017 pursuant to which all references to “A-Share Issuance” are revised to reflect the allotment and issue of not more than 2,662,007,515 A-Share Subscription Shares. Save as supplemented by the H-Share Subscription Supplemental Agreement, all other terms and conditions of the H-Share Subscription Agreement as described in the Whitewash Circular remain unchanged.

– 37 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

Further to the section headed “H-Share Issue Price” in the First Letter, to assess the fairness and reasonableness of the H-Share Issue Price, we have updated and reviewed the price performance and extend our Review Period from 1 December 2015 up to and including the Supplemental Latest Practicable Date (the “ New Review Period ”). The diagram is shown as follows:

==> picture [366 x 250] intentionally omitted <==

During the New 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$2.13 per H-Share. The closing prices of the H-Shares fluctuated with range of HK$1.90 to HK$2.58 from 1 December 2015 to 29 July 2016 and became relatively stable afterwards until the latest practicable date as defined in the Whitewash Circular (i.e. 6 February 2017, the “ Previous Latest Practicable Date ”). The closing price of H-Share showed an increasing trend from the Previous Latest Practicable Date to the Supplemental Latest Practicable Date. As confirmed by the Directors, save as (i) the publication of the Whitewash Circular; and (ii) the publication of announcement regarding statistics of power generation for the year of 2016 on 14 February 2017, they were not aware of any specific events of the Company during the period from the Previous Latest Practicable Date to the Supplemental Latest Practicable Date that caused the aforesaid increasing trend.

– 38 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

As aforementioned, the H-Share Issue Price represents a discount of (i) approximately 44.50% or 44.21% to the audited IFRS NAV or GAAP NAV per Share as at 31 December 2015 respectively; and (ii) approximately 43.77% or 43.32% to the unaudited IFRS NAV or GAAP NAV per Share as at 30 June 2016 respectively (the “ H-Share NAV Discounts ”). We consider that the H-Share NAV Discounts are acceptable as the closing prices per H-Share for the trading days during the New Review Period were below (i) the audited IFRS NAV 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; (ii) the audited GAAP NAV per Share of RMB3.38 (equivalent to approximately HK$3.80 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; (iii) the unaudited IFRS NAV per Share as at 30 June 2016 of approximately RMB3.36 (equivalent to approximately HK$3.77 based on the reference rate of the People’s Bank of China of HK$1:RMB0.89015 as at 28 November 2016); and (iv) the unaudited GAAP NAV per Share as at 30 June 2016 of approximately RMB3.33 (equivalent to approximately HK$3.74 based on the reference rate of the People’s Bank of China of HK$1:RMB0.89015 as at 28 November 2016).

To further assess the fairness and reasonableness of the H-Share Issue Price, we have updated and reviewed the H-Share Comparables. We identified 24 transactions which met our aforesaid criteria as set out in the First Letter (the “ New H-Share Comparables ”) and they are exhaustive. Details of the selection criteria are set out as follows:

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 Supplemental Latest Practicable Date for comparison purpose.

– 39 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

Despite that the businesses, operations and prospects of the Company are not exactly the same as the New 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)	Premium/
			of the subscription	(discount) of
			price over/(to)	the subscription
			closing price per	price over/(to)
			share on the date	average closing
			of agreement	price per share
			(the “Reference	for the last five
			Date”) in relation	consecutive
			to the respective	trading days up to
			subscription of	and including the
Company (Stock code)	Principal business	Date of Announcement	share	Reference Date
Ngai Shun Holdings Limited (1246)	Foundation business, property development	2 October 2016	6.95	5.93
	business, investment securities and
	provision of catering services.
Global Mastermind Holdings Limited (8063)	Provision and operation of travel business,	12 October 2016	(8.50)	(6.79)
	treasury management and money lending.
Global Mastermind Capital Limited (905)	Investment in listed and unlisted companies	17 October 2016	(4.26)	0.22
	in Hong Kong and in the PRC.
Alltronics Holdings Limited (833)	Manufacturing and trading of electronic	31 October 2016	(47.16)	(46.79)
	products, components for electronic
	products, biodiesel products; and
	provision of energy saving business
	solutions.
Yue Da Mining Holdings Limited (629)	Exploration, mining and processing of zinc,	11 November 2016	31.03	29.69
	lead, iron and gold.
Ozner Water International	Provide water purification services and air	16 November 2016	2.40	7.41
Holding Limited (2014)	sanitisation services.		(Note 1)	(Note 2)
Beijing Capital Juda Limited (1329)	Property investment and development.	25 November 2016	(29.29)	(25.05)

– 40 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

			Premium/
			(discount)	Premium/
			of the subscription	(discount) of
			price over/(to)	the subscription
			closing price per	price over/(to)
			share on the date	average closing
			of agreement	price per share
			(the “Reference	for the last five
			Date”) in relation	consecutive
			to the respective	trading days up to
			subscription of	and including the
Company (Stock code)	Principal business	Date of Announcement	share	Reference Date
IRC Limited (1029)	Production and development of industrial	1 December 2016	(44.74)	(44.00)
	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 Co. Limited (209)	Manufacturing and trading of hard and	14 December 2016	(10.89)	(22.28)
	stuffed toys and securities investments.
Honghua Group Limited (196)	Research, design, manufacture, setting and	19 December 2016	(20.62)	(10.88)
	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 services,	21 December 2016	(12.77)	(12.95)
	including music-based entertainment
	services and game related services in the
	PRC.
See Corporation Limited (491)	Film and TV programme production and	22 December 2016	(10.38)	(11.46)
	investment; cinema operation; event
	production and investment, music
	production and others; and investment in
	securities.

– 41 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

			Premium/
			(discount)	Premium/
			of the subscription	(discount) of
			price over/(to)	the subscription
			closing price per	price over/(to)
			share on the date	average closing
			of agreement	price per share
			(the “Reference	for the last five
			Date”) in relation	consecutive
			to the respective	trading days up to
			subscription of	and including the
Company (Stock code)	Principal business	Date of Announcement	share	Reference Date
China Oil Gangran Energy Group Holdings	Development of liquefied natural gas,	4 January 2017	(12.17)	(10.14)
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, knitted	6 January 2017	(92.00)	(92.11)
	sweaters, cotton yarns, provision of
	dyeing and knitting services, and trading
	of cotton and yarns.
Ground International Development	Provision of telecommunications retail	9 January 2017	(20.00)	(19.79)
Limited (989)	sales and management services, property
	investment and property development and
	management, including planning, design,
	budgeting, licensing, contract tendering
	and contract administration.
Huarong Investment Stock Corporation	Foundation and substructure construction	12 January 2017	(73.15)	(73.37)
Limited (2277)	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 architectural	13 January 2017	(37.62)	(37.07)
	service.
National Arts Entertainment and Culture	Film production and distribution, the	20 January 2017	(4.29)	(1.15)
Group Limited (8228)	provision of management services to
	artistes, and operations of film studio and
	hotels.

– 42 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

			Premium/
			(discount)	Premium/
			of the subscription	(discount) of
			price over/(to)	the subscription
			closing price per	price over/(to)
			share on the date	average closing
			of agreement	price per share
			(the “Reference	for the last five
			Date”) in relation	consecutive
			to the respective	trading days up to
			subscription of	and including the
Company (Stock code)	Principal business	Date of Announcement	share	Reference Date
SMI Culture & Travel Group Holdings	Provision of cross-media services including	24 January 2017	(12.50)	(13.15)
Limited (2366)	investment in the production and
	distribution of films and television
	programmes and related services.
Runway Global Holdings Company	Designing, manufacturing and trading of	15 February 2017	(70.25)	(70.32)
Limited (1520)	apparels.
China Lumena New Materials	Processing and sale of powder thenardite,	16 February 2017	(99.41)	(99.42)
Corporation (67)	specialty thenardite and medical		(Note 1)	(Note 2)
	thenardite.
C Cheng Holdings Limited (1486)	Provision of comprehensive architectural	24 February 2017	(36.83)	(37.62)
	service.
Skyway Securities Group Limited (1141)	Investment holdings, securities investment,	8 March 2017	(89.84)	(89.68)
	supply and procurement, real estate and
	provision of brokerage, securities margin
	financing and related services
Maximum			31.03	29.69
Minimum			(99.41)	(99.42)
Average			(28.78)	(28.28)
The Company		28 November 2016	1.92	2.51
			(Note 3)	(Note 3)
			(5.36)	(6.19)
			(the “H-Share LPD	(the “H-Share
			Discount”)	Five-day Discount
			(Note 4)	(LPD)”)
				(Note 4)

– 43 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

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 preceding the Reference Date.
The discounts were calculated based on the closing price or last five-day average closing price of H-Share as at 28 November 2016, being the date of the H-Share Subscription Agreement.
The discounts were calculated based on the closing price or last five-day average closing price of H-Share as at the Supplemental Latest Practicable Date.

As shown by the above table, the subscription prices of the H-Share Comparables ranged from a discount of approximately 99.41% to a premium of approximately 31.03% to/over the respective closing prices on the Reference Date (the “ New H-Share Market Range ”), with an average of a discount of approximately 28.78%. Both the H-Share PRD Premium and the H-Share LPD discount are thus within the New H-Share Market Range.

In addition, the subscription prices of the H-Share Comparables ranged from a discount of approximately 99.42% 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 “ New H-Share Five-day Market Range ”), with an average of a discount of approximately 28.28%. Both the H-Share Five-day Premium and the H-Share Five-day Discount (LPD) are thus within the New H-Share Five-day 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 New H-Share Market Range and the New H-Share Fiveday Market Range are wide, the above H-Share Comparables analysis can only serve for reference purpose.

Having considered the following factors:

(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 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;
(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); and

– 44 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

(iii) the H-Share Issue Price represents a discount of (a) approximately 44.50% or 44.21% to the audited IFRS NAV or GAAP NAV per Share as at 31 December 2015 respectively; and (b) approximately 43.77% or 43.32% to the unaudited IFRS NAV or GAAP NAV per Share as at 30 June 2016 respectively. We consider that the H-Share NAV Discounts are acceptable as the closing prices per H-Share for the trading days during the New Review Period were below (a) the audited IFRS NAV 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; (b) the audited GAAP NAV per Share of RMB3.38 (equivalent to approximately HK$3.80 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; (c) the unaudited IFRS NAV per Share as at 30 June 2016 of approximately RMB3.36 (equivalent to approximately HK$3.77 based on the reference rate of the People’s Bank of China of HK$1:RMB0.89015 as at 28 November 2016); and (d) the unaudited GAAP NAV per Share as at 30 June 2016 of approximately RMB3.33 (equivalent to approximately HK$3.74 based on the reference rate of the People’s Bank of China of HK$1:RMB0.89015 as at 28 November 2016),

we consider that the H-Share Issue Price is fair and reasonable so far as the Independent Shareholders are concerned.

C. 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 Supplemental Board Letter, the shareholding interests of the existing public Shareholders would be diluted by approximately 10.57 percent point immediately upon completion of the A-Share Issuance and the H-Share Issuance assuming that (i) the number of A-Share Subscription Shares issued is 2,662,007,515; and (ii) 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. 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; (iii) our assessment and independent work done on point (i) and (ii) as mentioned in the Whitewash Circular; and (iv) the dilution impact to the existing public Shareholders has been reduced as compared to the dilution impact of the previous subscription agreement dated 28 November 2016 due to the fact that the number of A-Share to be issued was reduced, we are of the view that the aforementioned level of dilution to the shareholding interests of the existing public Shareholders is acceptable.

– 45 –

SUPPLEMENTAL LETTER FROM GRAM CAPITAL

Furthermore, in light of that the gross proceeds from the A-Share Issuance is expected to amount to not more than RMB9,950 million, if the final A-Share Issue Price is higher than RMB3.737, the final number of A-Share Subscription Shares that may be issued will decrease and will be less than 2,662,007,515. Accordingly, the dilution impact on the minority Shareholders will be further reduced.

D. The Whitewash Waiver

Subsequent to the publication of the Whitewash Circular, set out below is the updated information regarding the Whitewash Waiver:

CONFIRMATION OF OUR ADVICE ON THE A-SHARE ISSUANCE, THE H-SHARE ISSUANCE AND THE WHITEWASH WAIVER

Reference is made to the Whitewash Circular, the second supplemental announcement published by the Company on 21 February 2017 and the Whitewash Supplemental Circular. We have reviewed and considered the impact of the A-Share Subscription Second Supplemental Agreement and the H-Share Subscription Supplemental Agreement as mentioned above and have confirmed that our opinion and recommendation in respect of the A-Share Issuance, the H-Share Issuance and the Whitewash Waiver as contained in the Whitewash Circular remain unchanged. In addition, save as disclosed above, no other material changes in information as contained in the First Letter would be required to update.

Yours faithfully,

For and on behalf of

Gram Capital Limited Graham Lam

Managing Director

For identification purposes only

– 46 –

PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (THIRD 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, 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 [49 x 50] intentionally omitted <==

==> picture [309 x 36] 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 (Third Revision)

March 2017

– 47 –

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

APPENDIX IA

STATEMENT OF THE COMPANY

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, the eighth meeting of the ninth session of the Board of the Company, the ninth meeting of the ninth session of the Board of the Company and the tenth meeting of the ninth session of the Board of the Company held on 28 November 2016, 6 January 2017, 9 February 2017 and 13 March 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.

– 48 –

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

APPENDIX IA

The Company intends to issue no more than 2,662,007,515 Shares under the Non-public Issuance of A-Shares to specific target, all of which are intended to be subscribed by CDC Group. 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-right arrangements such as equity distribution, capitalisation of capital reserve or share placing from the date of the announcement on the Board’s resolutions in relation to the Non-public Issuance 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 first date of the issuance period. The issue price shall be 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).

On the basis of the aforesaid minimum issue price, the final issue price will be determined by the board of the issuer upon consultation with the lead underwriter in accordance to the Implementation Rules for the Non-public Issuance of Shares by Listed Companies (revised in 2017) and provisions of the CSRC and other competent authorities with the authorization of the general meeting after being approved of the Non-public Issuance of A-Shares by the CSRC.

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.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (THIRD 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.

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PROPOSAL FOR NON-PUBLIC ISSUANCE OF A-SHARES (THIRD 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.

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

APPENDIX IA

STATEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	STATEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	STATEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	STATEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	48
SPECIAL NOTES. .			. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	48
CONTENTS. . . .		. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	52
DEFINITIONS.		. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	55
SECTION I	OVERVIEW OF PROPOSAL FOR NON-PUBLIC
		ISSUANCE OF A-SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		58
	I.		BASIC INFORMATION OF THE ISSUER. . . . . . . . . . . . . . . . . . . . . . . . .	58
	II.		BACKGROUND AND PURPOSES OF
			THE NON-PUBLIC ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	59
	III.		OVERVIEW OF THE NON-PUBLIC ISSUANCE SCHEME . . . . . . . . . . .	65
	IV.		WHETHER THE NON-PUBLIC ISSUANCE CONSTITUTES RELATED
			PARTY TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	69
	V.		WHETHER CONTROL RIGHT CHANGES SHALL BE
			CAUSED BY THE ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	70
	VI.		APPROVALS OBTAINED FROM THE RELEVANT DEPARTMENTS
			AND APPROVAL PROCEDURE TO BE COMPLETED FOR THE
			ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	70
	VII.		RELATION BETWEEN THE NON-PUBLIC ISSUANCE OF A-SHARES
			AND THE NON-PUBLIC ISSUANCE OF H-SHARES. . . . . . . . . . . . . .	71
	VIII.		BRIEF OF THE SCHEME FOR NON-PUBLIC
			ISSUANCE OF H-SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	71
SECTION II	PROFILE OF TARGET SUBSCRIBER DETERMINED BEFORE
		THE BOARD MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		75
	I.		BASIC INFORMATION OF THE TARGET SUBSCRIBER. . . . . . . . . . . .	75
	II.		PENALTIES IMPOSED ON AND LITIGATION OR ARBITRATION
			AGAINST CDC GROUP AND ITS DIRECTORS AND SENIOR
			MANAGEMENT IN THE LATEST FIVE YEARS . . . . . . . . . . . . . . . . .	77
	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. . . .	78
	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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	78

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

APPENDIX IA

SECTION III	SUMMARISATION OF SHARE SUBSCRIPTION AGREEMENT WITH	SUMMARISATION OF SHARE SUBSCRIPTION AGREEMENT WITH
	CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		79
	I.	A-SHARE SUBSCRIPTION AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . .	79
	(I)	CONTRACT PARTIES AND SIGNING DATE . . . . . . . . . . . . . . . . . . . . .	79
	(II)	SUBSCRIPTION METHOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	79
	(III)	SUBSCRIPTION PRICE AND PRINCIPLE FOR PRICING. . . . . . . . . . . .	79
	(IV)	PROPOSED AMOUNT AND ISSUE SIZE OF
		SUBSCRIPTION SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	80
	(V)	LOCK-UP PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	80
	(VI)	PAYMENT METHOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	80
	(VII)	CONDITIONS PRECEDENT OF SUBSCRIPTION AGREEMENT . . . . . .	81
	(VIII)	BREACH OF CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	82
SECTION IV	FEASIBILITY ANALYSIS BY THE BOARD ON THE USE OF PROCEEDS
	FROM THE ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		83
	I.	INVESTMENT PLAN FOR PROCEEDS FROM THE ISSUANCE . . . . . .	83
	II.	BASIC INFORMATION ON THE INVESTMENT PLAN FOR THE
		PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	84
	III.	EFFECT OF THE ISSUANCE ON OPERATION MANAGEMENT AND
		FINANCIAL POSITION OF THE COMPANY . . . . . . . . . . . . . . . . . . . .	103
SECTION V	ANALYSIS OF THE INFLUENCES OF THE ISSUANCE ON THE BOARD.		105
	I.	CHANGES IN BUSINESS, INCOME STRUCTURE, ARTICLES OF
		ASSOCIATION, SHAREHOLDER STRUCTURE AND SENIOR
		MANAGEMENT STRUCTURE OF THE COMPANY . . . . . . . . . . . . . .	105
	II.	CHANGES IN FINANCIAL POSITION, PROFITABILITY AND CASH
		FLOWS OF THE LISTED COMPANY UPON COMPLETION OF THE
		ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	106
	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	107
	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 . . .	107
	V.	EFFECT OF THE ISSUANCE ON LIABILITY STRUCTURE OF THE
		COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	107

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

APPENDIX IA

SECTION VI RISKS RELATED TO THIS ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SECTION VI RISKS RELATED TO THIS ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	108
I.	MACROECONOMIC RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	108
II.	BUSINESS AND OPERATIONAL RISK . . . . . . . . . . . . . . . . . . . . . . . . . .	108
III.	RISK IN PROJECTS FUNDED BY PROCEEDS . . . . . . . . . . . . . . . . . . . .	109
IV.	RISK RELATED TO ENVIRONMENTAL PROTECTION . . . . . . . . . . . .	109
V.	APPROVAL RISK FOR ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	109
VI.	RISK IN STOCK MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	110
VII.	RISK OF DILUTING CURRENT RETURNS AFTER THE NON-PUBLIC
	SHARE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	110
SECTION VII ANALYSIS OF DILUTED CURRENT RETURNS REGARDING THE NON-
PUBLIC SHARE ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		111
I.	IMPACT OF THE NON-PUBLIC SHARE ISSUANCE WITH DILUTING
	CURRENT RETURNS ON MAJOR FINANCIAL INDICATORS OF
	THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	111
II.	SPECIAL RISK WARNING FOR DILUTED CURRENT RETURNS OF
	THE NON-PUBLIC SHARE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . .	114
III.	NECESSITY AND REASONS OF CHOOSING THIS FINANCING BY
	THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	115
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 . . . . . . . . . . . .	115
V.	MEASURES SHALL BE TAKEN BY THE COMPANY FOR DILUTED
	CURRENT RETURNS OF THE NON-PUBLIC SHARE ISSUANCE . . .	118
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	122
SECTION VIII PARTICULARS OF PROFIT DISTRIBUTION POLICIES PRESENTED BY
THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		124
I.	PROFIT DISTRIBUTION POLICY OF THE COMPANY . . . . . . . . . . . . .	124
II.	SITUATION OF CASH DIVIDEND AND USE OF UNDISTRIBUTED
	PROFITS IN PAST THREE YEARS. . . . . . . . . . . . . . . . . . . . . . . . . . . .	126
III.	DIVIDEND DISTRIBUTION POLICY AND PLAN FOR THREE-YEAR
	RETURNS TO SHAREHOLDERS (2016–2018) . . . . . . . . . . . . . . . . . . .	128

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

APPENDIX IA

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-Share Subscription Supplemental Agreement (II)
the supplemental agreement (II) 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

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

APPENDIX IA

CDC Group, the Group,	China Datang Corporation
the controlling shareholder
CDOHKC	China Datang Overseas (Hong Kong) Co., Limited
Datang Power, the Company,	Datang International Power Generation Co., Ltd.
the Listed Company, the Issuer
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
Price Referencing Date	the first day of the issuance period
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

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

APPENDIX IA

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

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 2,662,007,515 A-Shares to the Non-public Share Issuance, CDC Group by Datang Power under a non-public issuance the 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. (Third Revision)

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

APPENDIX IA

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

APPENDIX IA

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

APPENDIX IA

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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APPENDIX IA

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

APPENDIX IA

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:

No. Name of shareholders 1 China Datang Corporation 2 HKSCC Nominees Limited 3 Tianjin Jinneng Investment Company 4 Hebei Construction & Investment Group Co., Ltd. 5 Beijing Energy Investment Holding Co., Ltd. 6 China Securities Finance Corporation Limited 7 Central Huijin Asset Management Ltd. 8 CITIC Trust Co., Ltd. - Phase II of CITIC Wealth Specified Structural Securitues 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 CITIC Wealth Specified Structural Securitues 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 Finance Co., Ltd. Total	Number of shares held (share) 4,138,977,414 3,291,424,921 1,296,012,600 1,281,872,927 1,260,988,672 387,353,765 76,904,200 70,000,000 67,000,000 54,901,264 11,925,435,763	Proportion in the total share capital Nature of share capital 31.10% Tradable A-Shares 24.73% Tradable H-Shares 9.74% Tradable A-Shares 9.63% Tradable A-Shares 9.47% Tradable A-Shares 2.91% Tradable A-Shares 0.58% Tradable A-Shares 0.53% Tradable A-Shares 0.50% Tradable A-Shares 0.41% Tradable A-Shares 89.60% –

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

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(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 first day of the issuance period. The issue price under the Non-public Issuance of A-Shares shall be not lower 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). On the basis of the aforesaid minimum issue price, the final issue price will be determined by the board of the issuer upon consultation with the lead underwriter in accordance to the Implementation Rules for the Non-public Issuance of Shares by Listed Companies (revised in 2017) and provisions of the CSRC and other competent authorities with the authorization of the general meeting after being approved of the Non-public Issuance of A-Shares by the CSRC. 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.

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

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(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 2,662,007,515 shares, which shall be subscribed by CDC Group to the entirety. Within the scope of the above issuance, the Board and relevant directors of the Company will determine the final number of shares to be issued under the Non-public Issuance of A-Shares after consultation with the sponsor (lead underwriter) of the Issuance with reference to market conditions. In case of the Company’s ex-right arrangements such as equity distribution, capitalisation of capital reserve or share placing between the date of the announcement on the Board’s resolutions in relation to the Non-public Issuance and issue date, the maximum number of the shares under the Non-public Issuance of A-Shares shall be adjusted accordingly as follows:

QA1 = QA0 × (1 + EA)

whereas QA1 represents the maximum number of Shares to be issued after adjustment, QA0 represents the maximum number of Shares to be issued before adjustment.

EA represents the number of bonus shares per Share or number of Shares resulting from capitalisation of capital reserve being issued for each Share.

(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.

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

APPENDIX IA

(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

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.

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

APPENDIX IA

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 (THIRD 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 2,662,007,515 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 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, the eighth meeting of the ninth session of the Board, the ninth meeting of the ninth session of the Board and the tenth meeting of the ninth session of the Board held on 28 November 2016, 6 January 2017, 9 February 2017 and 13 March 2017.

The related matters of the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares are 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 (THIRD 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 the relevant matters of the Non-public Issuance of A-Shares and the Non-public Issuance of H-Shares are 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 (THIRD 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

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

APPENDIX IA

the target subscriber in writing. The equation for calculating the upward adjustment ratio and the issue price after adjustment is as follows:

==> picture [66 x 11] intentionally omitted <==

==> picture [70 x 11] intentionally omitted <==

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)

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

APPENDIX IA

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.

(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.

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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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(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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(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.

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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.

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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SECTION III SUMMARISATION OF A-SHARE SUBSCRIPTION AGREEMENT, A-SHARE SUBSCRIPTION SUPPLEMNETAL AGREEMENT AND A-SHARE SUBSCRIPTION SUPPLEMNETAL AGREEMENT (II) WITH CONDITIONS PRECEDENT

Datang Power and CDC Group entered into the A-Share Subscription Agreement in November 2016, the A-Share Subscription Supplemental Agreement in January 2017 and the A-Share Subscription Supplemental Agreement (II) in March 2017. The above-mentioned agreements shall provide for the Nonpublic Issuance of A-Shares of Datang Power as follows.

I. CONTRACT PARTIES AND SIGNING DATE

Issuer (Party A): Subscriber (Party B):

Datang International Power Generation Co., Ltd. China Datang Corporation

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-shares is the first day of the issuance period. The issue price under the Non-public Issuance of A-Shares shall be not lower 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 to A-Shares Price Referencing Date/the aggregate trading volume of A-Shares for the 20 trading days preceding to the A-Share Price Referencing Date). The final price will be determined by Datang Power after consultation with the sponsor (lead underwriter) of the Issuance of A-share in accordance with the laws of the PRC after being approved of the Issuance of A-share by the CSRC, and be notified to CDC Group in writing and be included in an appendices to this agreement. In the event 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 only: PA1 = PA0 / (1 + EA)

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

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 shall not exceed 2,662,007,515, and CDC Group agreed to subscribe such shares pursuant to A-Share Subscription Agreement, A-Share Subscription Supplemental Agreement and A-Share Subscription Supplemental Agreement (II). 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 activities (such as equity distribution, capitalisation of capital reserve or share placing) undertaken by the Company from the date of announcement on the Board’s resolutions in relation to the Non-public 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.

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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.

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.

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VIII. LIABILITY FOR 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 non-defaulting 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 non-defaulting party in handling any disputes in this connection.

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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.

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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.

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

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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.

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.

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(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 tonnes. 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.

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.

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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.

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.

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(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

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

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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;
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.

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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.

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.

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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.

(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

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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.

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.

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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.
(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.

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

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			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 2,662,007,515 shares and 2,794,943,820 shares respectively, 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 2,662,007,515 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 18,766,988,913 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;
Assuming 2,662,007,515 A-Shares and 2,794,943,820 H-Shares shall be issued, and the total share capital of the Company, upon the completion of the Issuance, shall be 18,766,988,913 shares. 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 number of shares to be issued, and should be subject to the actual number of shares to be issued;
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 Supplemental 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, 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 1,876.698.89
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	1,603,851.32
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 Supplemental 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, 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, 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.

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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.

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%.

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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.

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.

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(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.

(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

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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.

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.

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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.

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.

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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;
(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);

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(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.

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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APPENDIX IA

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.

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

APPENDIX IA

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.

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

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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.

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.

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APPENDIX IA

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;
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.

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

APPENDIX IA

(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.

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

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APPENDIX IA

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.

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.

13 March 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 to this Whitewash Supplemental Circular is the same as that set out in Appendix IA to the Whitewash Circular and constitutes profit forecast under Rule 10 of the Takeovers Code which is required to be reported on in accordance with Rule 10 of the Takeovers Code. The Directors confirm that such forecast remains valid for the purpose of the Whitewash Transactions and that the financial advisers to the H-Share Issuance of the Company and the PRC domestic auditor of the Company who reported on such forecast have indicated that they have no objection to their reports continuing to apply.

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.

The above information is the same as that set out in the Whitewash Circular.

B. REPORTS UNDER RULE 10 OF THE TAKEOVERS CODE

Set out below are the full text of the reports received from Ruihua, the PRC domestic auditor of the Company, and each of CMS HK, CSCI and CITIC CLSA, the financial advisers to the H-Share Issuance of the Company, in respect of the Profit Estimate of the year 2016, prepared for the purpose of inclusion in this Whitewash Supplemental Circular for the reference of Shareholders.

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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. 01490008

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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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 Supplemental 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

13 March 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

13 March 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 Supplemental Circular, which has been prepared to enable the Directors of the Company to make the following statement in the Whitewash Supplemental 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 13 March 2017 issued by Ruihua Certified Public Accountants, the PRC auditor of the Company, to you, which stated that, the “Profit Estimate of

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APPENDIX IB

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 Supplemental 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 Supplemental 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

13 March 2017

Dear Sirs,

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REPORTS ON THE PROFIT ESTIMATE OF THE YEAR 2016

APPENDIX IB

the report on the Profit Estimate of the year 2016 dated 13 March 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 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 Supplemental 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

13 March 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 13 March 2017 issued by Ruihua Certified

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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 Supplemental 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

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SUPPLEMENTAL FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

INDEBTEDNESS

As at the close of business on 31 January 2017, the Group had unaudited outstanding interest bearing debts of approximately RMB148.9 billion, comprising borrowings from financial institutions of RMB110.7 billion, and bonds outstanding of RMB26.5 billion, and financial leasing outstanding of RMB11.7 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 January 2017.

As at the Supplemental 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 January 2017.

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 Supplemental 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.

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SUPPLEMENTAL FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

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 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 Supplemental Latest Practicable Date.

EVENTS SUBSEQUENT TO THE PUBLICATION OF THIS WHITEWASH SUPPLEMENTAL CIRCULAR

The Company expects to publish the preliminary audited results of the Company for the financial year ended 31 December 2016 on 15 March 2017, shortly after the date of despatch of this Whitewash Supplemental Circular.

On the day of publication of the preliminary audited results of the Company for the financial year ended 31 December 2016, the Independent Financial Adviser, Gram Capital, will confirm by way of an announcement on whether its advice and recommendations set out in the Whitewash Circular and this Whitewash Supplemental Circular would be affected.

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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This Whitewash Supplemental 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 Supplemental 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 Supplemental Circular misleading.

This Whitewash Supplemental 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 Supplemental 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 Supplemental Circular have been arrived at after due and careful consideration and there are no other facts not contained in this Whitewash Supplemental Circular, the omission of which would make any statement in this Whitewash Supplemental Circular misleading.

The information in relation to CDC contained in this Whitewash Supplemental 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 Supplemental 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 Supplemental Circular have been arrived at after due and careful consideration and there are no other facts not contained in this Whitewash Supplemental Circular, the omission of which would make any statements in this Whitewash Supplemental Circular misleading.

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SUPPLEMENTAL 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 Supplemental Relevant Period; (ii) on the last Business Day immediately preceding the Announcement Date; and (iii) on the Supplemental 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
28 February 2017	2.2700
10 March 2017 (Supplemental Latest Practicable Date)	2.2400

The highest and lowest closing prices of the H-Shares as quoted on the Hong Kong Stock Exchange during the Supplemental Relevant Period were HK$2.3100 per H-Share on 20 February 2017 and HK$1.8280 per H-Share on 16 June 2016.

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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

3. SHARE CAPITAL

The registered and issued share capital of the Company (i) as at the Supplemental 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 12,656,367,515 A-Shares 6,110,621,398 H-Shares Total	RMB 12,656,367,515 6,110,621,398
	18,766,988,913

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 date to which the latest audited financial statement of the Company were made up) and up to the Supplemental Latest Practicable Date, no new Shares have been issued by the Company.

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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

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

4. DISCLOSURE OF INTERESTS

Directors, supervisors and chief executive of the Company

As at the Supplemental 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 CDC), 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 Supplemental Circular which is significant in relation to the business of the Group.

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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

Substantial Shareholders

As at the Supplemental 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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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

5. ARRANGEMENT IN CONNECTION WITH THE WHITEWASH TRANSACTIONS AND THE WHITEWASH WAIVER

As at the Supplemental 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; and
(v) save for the lock-up period in respect of the A-Share Issuance and the H-Share Issuance disclosed in the Whitewash Circular, the A-Share Subscription Shares which CDC will be acquiring pursuant to the A-Share Issuance and the H-Share Subscription Shares which the H-Share Subscription Shares Subscriber will be acquiring pursuant to the H-Share Issuance will not be transferred, charged or pledged to any other person.

The ultimate owner of the Subscription Shares acquired pursuant to the A-Share Issuance and the H-Share Issuance is CDC, which is a PRC state-owned enterprise directly held by SASAC.

6. SHAREHOLDINGS AND DEALINGS

As at the Supplemental 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;

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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

(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 and the CDC Undertaking Letter to be dated the date of this Whitewash Supplemental Circular, 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;
(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) save for the CDC Undertaking Letter to be dated the date of this Whitewash Supplemental Circular, 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; and
(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.

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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

During the Supplemental 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;
(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 Supplemental 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 the
			Percentage of	relevant issued
			the relevant issued	A-Share capital
			share capital as at	as at the
			the Supplemental	Supplemental
			Latest	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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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

CITIC CLSA

As at the Supplemental Latest Practicable Date, CITIC CLSA (together with any entity that is controlling, controlled by, or under the same control as CITIC CLSA) has interests in the Shares, the particulars of which are as follows:

			Percentage of	Percentage of the
			the relevant issued	relevant issued
			share capital	A-share capital
			as at the	as at the
			Supplemental	Supplemental
	Number of		Latest	Latest
Name	Shares	Class of Shares	Practicable Date	Practicable Date
CITIC Securities	120,000	A-Shares	0.0009%	0.0012%

8. SERVICE CONTRACTS

As at the Supplemental 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 Supplemental 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
Hylands Law Firm	PRC legal adviser
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
RSM Hong Kong	certified public accountants

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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

Name

Qualifications

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
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

CSC Financial Co., Limited

a company licensed by the PRC law to conduct investment banking, wealth management, trading and institutional client services as well as investment management

As at the Supplemental 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 Supplemental 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.

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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

11. LITIGATION

As at the Supplemental Latest Practicable Date, 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.

12. ADDITIONAL MATERIAL CONTRACTS

Save for the following additional material contracts which have been entered into since the despatch of the Whitewash Circular, there have been no changes in the information set out under the paragraph headed “Material Contracts” in Appendix III to the Whitewash Circular:

(1) the A-Share Subscription Second Supplemental Agreement; and
(2) the H-Share Subscription Supplemental Agreement.

13. ADDITIONAL DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following additional 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 Supplemental 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 “Supplemental Letter from the Board”, the text of which is set out on pages 1 to 21 of this Whitewash Supplemental Circular;
(2) the “Supplemental Letter from Gram Capital”, the text of which is set out on pages 22 to 46 of this Whitewash Supplemental Circular;
(3) the report under Rule 10 of the Takeovers Code from Ruihua, the text of which is set out in Appendix IB to this Whitewash Supplemental Circular;
(4) 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 Supplemental Circular;
(5) the report under Rule 10 of the Takeovers Code from CSCI, the text of which is set out in Appendix IB to this Whitewash Supplemental Circular;

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SUPPLEMENTAL GENERAL INFORMATION

APPENDIX III

(6) 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 Supplemental Circular;
(7) the consent letters from the experts referred to in the paragraph headed “Experts” in this Appendix;
(8) the circular of the Company dated 17 February 2017;
(9) the additional material contracts referred to in the paragraph headed “Additional Material Contracts” in this Appendix;
(10) the press release dated 28 February 2017 published by the Hong Kong Stock Exchange in respect of the public censure against the Company relating to breach of connected transaction rules under the Listing Rules;
(11) the CDC Undertaking Letter; and
(12) this Whitewash Supplemental Circular.

– 154 –

AI assistant

Datang Intnl Pwr Gen — Proxy Solicitation & Information Statement 2017

10467_rns_2017-03-13_8f7f1303-8479-43a0-8453-851e4d7830d1.pdf

(Stock Code: 00991)

DEFINITIONS

(Stock Code: 00991)

WHITEWASH SUPPLEMENTAL CIRCULAR TO THE WHITEWASH CIRCULAR RELATING TO CONNECTED TRANSACTION IN RESPECT OF THE PROPOSED A-SHARE ISSUANCE AND H-SHARE ISSUANCE SPECIFIC MANDATES APPLICATION FOR WHITEWASH WAIVER

INTRODUCTION

SUPPLEMENTAL AGREEMENTS

Second Supplemental Agreement to the A-Share Subscription Agreement

Supplemental Agreement to the H-Share Subscription Agreement

UNDERTAKING OF CDC

REVISED TERMS OF THE A-SHARE ISSUANCE

Number of A-Share Subscription Shares

where

A-Share Issue Price

Basis for determining the A-Share Issue Price

XA = YA/ZA

Adjustments to the A-Share Issue Price

A-Share Issue Floor Price

Basis for Determining the A-Share Issue Floor Price

Adjustments to the A-Share Issue Floor Price

Proceeds from the A-Share Issuance

Dilutive Impact of the A-Share Issuance

H-SHARE ISSUANCE

SUMMARY OF THE A-SHARE ISSUANCE (AS REVISED) AND H-SHARE ISSUANCE

A-Share Issuance

H-Share Issuance

A-Share Issuance

H-Share Issuance

EFFECT ON SHAREHOLDING STRUCTURE OF THE COMPANY

RELEVANT UPDATES TO THE WHITEWASH CIRCULAR

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

UPDATED OPINION OF THE INDEPENDENT BOARD COMMITTEES AND THE INDEPENDENT FINANCIAL ADVISER

EGM AND CLASS MEETINGS

ADDITIONAL INFORMATION

Yours faithfully,

Datang International Power Generation Co., Ltd.

Ying Xuejun

(I) CONNECTED TRANSACTION IN RESPECT OF THE PROPOSED SHARE ISSUANCE;

(II) SPECIFIC MANDATES; AND (III) APPLICATION FOR WHITEWASH WAIVER

INTRODUCTION

INDEPENDENCE

BASIS OF OUR OPINION

A. The A-Share Subscription Second Supplemental Agreement

(i) Number of A-Share Subscription Shares:

(ii) A-Share Issue Price:

(iii) Adjustment to the A-Share Issue Price:

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

A-Share Subscription Second Supplemental Agreement

B. H-Share Subscription Supplemental Agreement

C. Dilution effect on the shareholding interests of the existing public Shareholders:

D. The Whitewash Waiver

CONFIRMATION OF OUR ADVICE ON THE A-SHARE ISSUANCE, THE H-SHARE ISSUANCE AND THE WHITEWASH WAIVER

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

March 2017

STATEMENT OF THE COMPANY

SPECIAL NOTES

APPENDIX IA

CONTENTS

DEFINITIONS

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

I. BASIC INFORMATION OF THE ISSUER

II. BACKGROUND AND PURPOSES OF THE NON-PUBLIC ISSUANCE

(I) Background of the Non-Public Issuance

1. Company profile

2. Shareholding structure

3. Information on major subsidiaries

4. Businesses of the Company

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

1. Enhancing core competitiveness of principal businesses

2. Enhancing capital structure and reducing financial risks

III. OVERVIEW OF THE NON-PUBLIC ISSUANCE SCHEME

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

(II) Method of Issue

(III) Target Subscribers

Datang Intnl Pwr Gen Proxy Solicitation & Information Statement 2017